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Guatemala 2014 Blog: Encouraging Investment and Entrepreneurship 

(Image: Fernando Reyes Palencia)

Tuesday, August 5, 2014

In Guatemala, the government is renewing focus on international investment and entrepreneurship, as well as making moves to facilitate business in Central America’s largest economy. After his inauguration in 2012, President Otto Pérez Molina set out to make the country an international center for business and investment. During his first two years in office, Pérez Molina conducted international tours to attract investors and sent a package of laws to Congress to promote investment and job creation, including the Law for Investment Promotion and Employment. Currently under debate in Congress, the bill would create tax-free zones and, according to Pérez Molina, would generate 100,000 new jobs and boost foreign investment.    

Nevertheless, foreign direct investment (FDI) is already on the rise. In 2013, Guatemala attracted a record FDI inflow of just over $1.35 billion. The number represents a 93 percent increase in FDI from 2009 and a 930 percent jump from a decade earlier. Guatemala also registered FDI growth for each of the past five years, an accomplishment no other Central American economy matched.  In June 2014, Pérez Molina told El Financiero that he expects FDI to double in 2015, reaching $2.5 billion.

In addition to investment promotion, a series of government initiatives have sought to aid entrepreneurship. In 2012, Guatemala launched Declaraguate, a digitized tax payment system that streamlined the payment process by reducing costs to file taxes, as well as the time needed to make payments.  In March 2013, the government premiered Mi Negocio, a website through which entrepreneurs can register a new business with the required agencies all in one place. The platform helps reduce the time needed to get registration and tax information.  

The government’s changes made it easier to open a business, pay taxes, and acquire construction permits.   "We are reducing costs and regulatory steps, improving the business climate, and facilitating the necessary steps to remove barriers and benefit Guatemalans in order to create the conditions for increased dependability in trade and jobs," Deputy Minister of Investment and Competition Claudia de Del Águila told news outlet DeGuate. Because of the government’s measures, the World Bank Group’s 2014 Doing Business ranking rated Guatemala as one of the top ten countries globally that improved business regulation. This year’s ranking also showed Guatemala improved 14 places from the previous year.