Guatemala's Non-Traditional Investment Areas Go Back Home

GUATEMALA'S
NON-TRADITIONAL INVESTMENT AREAS



THE NON-TRADITIONAL AGRICULTURAL SECTOR

Guatemala, a predominantly agricultural country, has long relied on traditional products such as coffee, sugar and bananas as its main source of foreign income. A new trend has been emerging in the last two decades with the cultivation of new or non traditional products such as vegetables, fruits and ornamental plants.

Guatemala's non-traditional agricultural export sector offers broad opportunities for foreign investors, both in wholly owned or joint-venture enterprises.

Guatemalan producers have achieved full market acceptance in the U.S. and Europe for the high quality and competitive prices of their exports in many categories of fruits, vegetables, flowers and ornamental plants. Exports of these products have been increasing at a vigorous average of 23% yearly for the last seven years.

Nonetheless, foreign demand for such products continues to grow faster than the exports capacity of Guatemala.

Guatemalan producers are aware of the large foreign demands for their products and are moving to respond. However, the lack of adequate available financing from local financial institutions is a limiting factor to expansion. Exporters of non-traditional agricultural products welcome co-investment, foreign partners with additional financing sources and state-of-the-art technologies and new export markets.

Foreign investors in Guatemala receive the same treatment under local laws as do Guatemalans. The Guatemalan Government and all private sector organizations are strongly committed to attracting foreign investors to the export sector.

Guatemalan exports of non-traditional agricultural products rose from US$25 million in 1986 to a US$89 million level in 1992. Preliminary figures for 1993 indicate that the total revenue of exports exceeded US$108 million. Should the trend continue, exports of these products should reach the one billion dollar level in the next decade if adequate financing and technologies are made available. To reach these goals, the growth rate would have to increase to 30%. Foreign investment will be essential in reaching the target growth rates.

The flower and vegetable sectors are presently receiving the greatest investment, but the potential for further expansion in the tropical fruit sector is in place, in-country, in the Pacific and Caribbean coastal lowlands. Given Guatemala's developed infrastructure and its proximity to major markets, the potential in the agricultural sector is enormous.

Ample land for expansion in the vegetable and flower sector is readily available in the central highlands region where high yield, temperate-zone vegetable production areas are just two hours away from Guatemala City.

As vegetable and flower exports have expanded, related industries such as wrapping, boxes, freezing plants, and packaging plants, have developed to support these export efforts.

Following is a partial list of Guatemalan companies which expressed interest in joint-venture:

Name: Exotic Plants
Product: Tillandsias and ornamental exotic plants

Name: Tucan Exportacion
Product: Bromeliads, pony, photos, arecas, broccoli, anG zuchinni

Name: Culeyvar, S.A.
Product: Roses, croto flowers, and raspberry

Name: Maria Rosa, S.A.
Product: Roses and macademia nuts

Name: AGRITEC
Product: Mini-vegetables, garlic, and onions

Name: Helechos Tropicales, S.A.
Product: Leather leaf

Name: Meta Export
Product: Tillandsias

Name: Corporacion El Acebo, S.A.
Product: Fruits and vegetables

Name: Maya Brand, S.A.
Product: Dehydrated potatoes

Name: Agricola Los Altos
Product: Snow peas


APPAREL INDUSTRY


The Guatemalan apparel industry has made robust yearly increases since it started exporting in 1980. Today it is a booming industry with over 500 factories and some 80,000 workers throughout the country. Between 1985 and 1992 Guatemala had the fastest growth rate for manufactured products exported to the United States of all Western Hemisphere countries.

While Guatemala exported apparel worth US$12 million to the United States in 1985, in 1992 such exports climbed to US$450 million and reached US$540 million in 1993, confirming the industry's rapid growth rates. There still is plenty of room for further investment in Guatemala's expanding apparel export industry.

Today the Guatemalan apparel industry no longer has to import most of the components for manufacturing. "Full package" apparel production is available from local producers who offer export quality components to the industry. As a result, many service-related producers are joining international associations to certify the quality of their products. Thanks to the on-going consolidation process of the industry, a number of medium-size firms have cut costs and now offer their customers reasonably priced, full-package production.

Guatemala receives trade benefits under the Caribbean Basin Initiative as well as under the Generalized System of Preferences. Additionally, Guatemala is a signatory of the Multi Fiber Agreement.

Almost all of Guatemala's apparel production for export takes place outside the country's two operating industrial parks. Local laws (Decree 29-89) permit free-standing factories, wherever located, to secure all fiscal and customs benefits of a free-trade zone operation. Although most of the apparel factories are actually in Guatemala City, there is a growing trend towards setting up new factories in the Central Highlands region where an abundant and skilled labor force is in place.

Guatemala encourages both foreign and national investment in the apparel industry through Decree 29-89. The goal of this legislation is to promote, encourage and develop the production of merchandise destined for countries outside the Central American region. Decree 29-89 also exonerates customs' tariffs and import duties on raw materials and machinery, as well as offering other incentives to encourage investment in the apparel industry for external markets.

Foreign-owned enterprises operate in Guatemala with the same legal status as Guatemalan firms and receive the same investment incentives. Foreign investors can obtain investment and insurance financing through the Overseas Private Investment Corporation (OPIC) under the Investment Guarantee Agreement, of which Guatemala is a signatory.

The following Guatemalan companies have shown interest in establishing joint venture operations:

Name: La Cereza Deportiva
Product: T-shirts, shorts, shirts, dresses, etc.

Name: DIPROTEX, S.A.
Products: Sewing threads

Name: MONAS, S.A.
Product: T-shirts

Name: Ropa Intima Pallaneher, S.A.
Product: Lingerie

Name: Confecciones V & B, S A.
Product: Children's clothes


THE GUATEMALAN SHRIMP FARMING INDUSTRY

The Guatemalan shrimp farming industry, located in the country's Pacific Coast region, has shown substantial increases in production during the last decade. Foreign income generated by the export of seafood during 1993 totaled US$27 million, an increase of more than 300% over 1986. Yearly growth rates of 18% have been steady during this period.

Shrimp farming has gained importance in Guatemala, both as an alternative economic activity and as a significant regional source of employment. Expanding from just 90 hectares in 1982, eighteen farms currently operate in Guatemala totaling nearly 2,000 hectares of ponds. Additionally, 4,000 hectares could be developed around the many estuaries located throughout the region. Presently more than 3,000 jobs can be directly related to shrimp farming activities.

Most farms engage in semi-intensive production operations (15 to 20 post larvae per square meter) yielding medium to large sized shrimp; however, a growing percentage of the shrimp harvested is being produced at farms stocked at high densities (80 to 100 postlarvae per square meter).

On the average Guatemalan shrimp farms produce two and a half harvests annually, depending on the size of shrimp desired. The Pacific White (Penaeus vannamei) and Pacific Blue (Penaeus stylirostris) varieties of shrimp are the two main species that Guatemalan farms harvest. Although the majority of Guatemala's shrimp production is exported to the United States, there is an increasing trend to export to the European markets spurring further market diversification. From meager beginnings, the country's total annual production has reached the 8 million pound level.

Several factors contribute to the attractiveness of shrimp farming in Guatemala: a) availability of wild fry (post larvae) from the country's estuaries; b) availability of competitively-priced high quality feeds from local mills; c) a relatively pristine environment basically void of pollution; d) market recognition of good quality farmed product; e) minimal incidence of diseases and f) close proximity to world markets.

The immediate potential for expanding farming areas could generate production levels of over 24 million pounds annually. This, in combination with the existence of modern port facilities on both Pacific and Caribbean coasts, excellent transportation infrastructure and daily servicing by international air carriers and maritime lines, ensure quick response capabilities for trade at the global level.

Shrimp targeted for export are currently processed at four plants with an annual production level of over 7 million pounds. The largest is undergoing expansion which will enable it to process up to 150,000 pounds daily. Additionally, most Guatemalan plants are capable of offering added value processing in the form of peeling, beheading, deveining, butterflying and partial steam cooking to satisfy customer needs.

A large potential for growth, availability of in-country processing, substantial experience in production along with good marketing and shipping connections make the Guatemalan shrimp industry a viable investment opportunity.


TOURISM: THE RISING ECONOMIC FORCE

Tourism reached a milestone during 1993 by closing the gap with coffee as the largest producer of foreign earnings in Guatemala. This trend is expected to continue into future years. Revenue generated by tourism during 1993 reached over US$265 million, a 9% increase over the previous year. It is estimated that during the next seven years, tourists visiting Guatemala will spend over US$2.6 billion. The number of visitors to Guatemala during 1993 exceeded 561,000 and the Guatemala Tourist Commission estimates that during the next seven years a total of over 4.7 million will visit the country.

A construction boom in Guatemala City during the last three years has brought the number of available deluxe hotel rooms in the capital to over 1,100. Significant increases in hotel rooms were also posted in the traditional tourist locations bringing the total in the Central Highlands to nearly 300 and in the northern department of El Peten to over 200. In the capital city, 630 new hotel rooms are presently under construction.

Tourism goals for the year 2000 include 816,600 annual incoming tourists, who, on average, stay 8 days with daily expenditures reaching US$85.00 per visitor. A total income of US$550 million is calculated and at that date some 5,000 new hotel rooms coupled with occupancy rates of 84% are forecast.

Due to Guatemala's privileged geographic position it offers over 300 microclimates and 28 life zones. The visitor to Guatemala can find exotic and varied land features that range from black sand beaches to deserts, from jungle rain forests to mountain highlands. All within hours from each other.

Visitors can take advantage of the many package tours that the country has to offer. These include adventure tourism, ecotourism, archaeology, ethnology and many more that can be adapted to visitors needs.

To successfully reach the goal for the year 2000 and tap Guatemala's exceptional and varied tourist alternatives several projects are currently in planning or construction stages. These include:

Mundo Maya: an ambitious project initiated in 1989 incorporating the five countries of the Meso-American region which share a cultural, historical, and environmental heritage. One of the goals of this project is to create a single tourist visa for the region. The Mundo Maya region includes over three thousand ancient Maya ruins.

Maya Inns: El Peten, a network of rustic lodgings.

El Salto Vacational Hacienda: Escuintla (Pacific Coast), ecotourism and camping.

Candelaria and San Diego Fincas: Alta Verapaz and El Peten, ecotourism and Maya sites.

Bahia de Amatique: Izabal, aquatic activities, Mundo Maya World and ecotourism.

San Buena Ventura de Atitlan: Solola, lake-side hotel.

Royal Beach Hotel and Marina: Izabal, hotel and marina.

Bahia de Santiago: Solola, lakefront housing development.

Posada del Manglar: Izabal, hotel in Rio Dulce River.


ENTRY REQUIREMENTS FOR GUATEMALA

Traveling to Guatemala is easy, both in terms of air transportation and entry requirements. Based on the principle of reciprocity, entry requirements differ for visitors from different countries, as listed below. Tourist cards maybe obtained from an airline serving Guatemala, or at any Guatemalan consulate; the cost is U.S. $5.00.

Citizens of the following countries require only a valid passport; they DO NOT require a visa or tourist card:

Argentina, Austria, Belgium, Belize, Costa Rica, Denmark, El Salvador, Spain, Finland, France, Germany, the Netherlands, Honduras, Israel, Italy, Japan, Nicaragua, Norway, Uruguay, the Vatican, Sweden, and Switzerland.

Citizens of the following countries require a visa or tourist card:

Canada, Mexico, the United Kingdom, the United States of America.

Citizens of the rest of the world should contact the nearest Guatemalan consulate for details of entry requirements.
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