El Salvador’s New Law to Attract Spanish Investment and Foster Economic Growth

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Spanish Investment

In June 2023, the Congress of El Salvador approved the Law for the Creation of the Investment and Export Promotion Agency. This legislation has the goal of attracting a significant amount of Foreign Direct Investment (FDI), with a particular focus on Spanish investment. The reason for this emphasis on Spanish investment lies in the strong partnership that El Salvador maintains with Spain, both in the political and economic spheres.

Spain is recognized as El Salvador’s primary political and economic ally in Europe, a relationship strengthened by their bilateral treaty for the Promotion and Reciprocal Protection of Investments. Additionally, there is an agreement in place to prevent double titling, further solidifying the commitment between these two nations.

The core objective of this new law is to establish a platform for public-private cooperation that will, in turn, foster economic growth in El Salvador. It does so by creating a conducive environment for attracting both domestic and foreign private investment, ultimately contributing to economic expansion, job creation, and national development.

Spanish investment in El Salvador currently holds a noteworthy position, ranking third in terms of capital flow to the country. This Spanish investment represents a significant 10% of the total Foreign Direct Investment (FDI) in El Salvador, amounting to a substantial sum of US$900 million. These investments from Spain have already made significant strides in the modernization of transportation and energy infrastructure and have become key players in sectors like agribusiness and tourism.

El Salvador’s economic landscape is a diverse one, with investments spread across various sectors including services, industry, and agriculture. These investments not only boost the nation’s economy but also open up new avenues for trade and manufacturing, which can potentially lead to an increase in export opportunities.

For those seeking opportunities in foreign investments in El Salvador, the Central Reserve Bank of El Salvador has identified promising prospects in sectors like construction, real estate, energy, commerce, and healthcare. The combined value of these investment prospects surpasses an impressive US$2.4 billion.

To further catalyze the nation’s economic growth, the governments of El Salvador and Spain have embarked on a comprehensive collaborative framework. This partnership, spanning the years from 2003 to 2026, is designed to support and amplify development initiatives. The commitment is substantial, with a combined investment pledge totaling US$117 million.

This important announcement was made during the IX Spanish-Salvadoran Joint Commission held in June. The event was graced by the presence of high-ranking officials, including the Chancellor of the Republic, Alexandra Hill, and the Spanish Ambassador to El Salvador, Carlos de la Morena. This collaboration between the two nations is set to have far-reaching implications, driving economic growth and development in El Salvador while strengthening the ties between El Salvador and its Spanish partner. The Spanish investment in El Salvador is expected to play a pivotal role in realizing these aspirations.

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