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Japan, Hong Kong, France, Switzerland, and Italy. Among the companies that maintain a presence in the country are 3M, Rayovac, Sumitomo, Procter & Gamble, Walmart, Colgate-Pal- molive, Xerox, Pfizer, and DuPont.
The government of Guatemala, to facilitate development in the light manufacturing industry, is actively involved in estab- lishing legal incentives to both domestic and foreign companies. Through the implementation of the Foreign Investment Law, Free Trade Zones Law, the Development and Promotion of Exports and the Drawback Law, the government offers import duty and other tax exemptions to stimulate growth in the industry.
MADE IN GUATEMALA
These pro-growth laws have also led to progress in other sec- tors of the Guatemalan economy. Chief among these is the gar- ments and textiles industry, which grew by around 70 percent over the last decade to a production level of approximately US $15 billion in 2013, with US $1.5 billion in exports in 2014, an increase of 12.6 percent over the previous year. Garments and textiles represent 4 percent of the country’s GDP and 19 per- cent of industrial production. Guatemala supplies about two- thirds of the industry’s raw materials itself, including synthetic filaments and woven, knitted, and dyed fabrics. The nation imports the other one-third of its raw materials. A shortage of synthetic and cotton textile mills in Guatemala represents an investment opportunity in this growing industry.
With almost 150 clothing companies, over 40 textile compa- nies, and 260 accessories producers, the garments and textile industry in Guatemala gives direct employment to almost 100,000 people. Most national production, about 80 percent, goes to the United States, with the bulk of the rest going to other Central American countries. Much of the foreign invest- ment in the garments and textile industry in Guatemala comes from South Korea; more than 80 South Korean companies now operate within the country’s borders. According to the organi- zation Invest in Guatemala, between 2007 and 2013, this sector attracted US $2.21 billion in foreign direct investment.
BENEATH THE SURFACE
Recent studies have shown that Guatemala’s gold, silver, nickel, jade, and other mineral deposits are among the largest in Latin America. The Ministry of Energy and Mining has approved almost 100 exploration licenses and an additional 100 exploitation licenses, while five times that many are currently being processed. In 2013, almost US $1 billion in extracted resources was produced, four-fifths of which was exported, making the mining industry one of the biggest growth sectors of the Guatemalan economy.
According to the International Organizing Committee for the World Mining Congress, Guatemala is the 15th-largest pro- ducer of silver in the world and the 43rd-largest producer of gold. Identified mineral deposits include coal, cobalt, iron ore, limestone, lead, zinc, antimony, tungsten, and uranium, which provide investment potential for further development. As for oil, production is low. Although some experts maintain that Guatemala’s oil reserves may top 750 million barrels, only 2.4 million barrels were produced in August 2015, down 2.5 per- cent from the previous year, due in large part to low interna- tional oil prices.
Thanks to increasing international mineral demand and higher global market prices, the cost structure is extremely competitive, leading to even more growth. Guatemala is the first Central American country, and only the second in Latin America, to be certified by the Extractive Industries Transpar- ency Initiative for its transparency and accountability, which helps improve the business climate and strengthen the rela- tionships among the private sector, government entities, and non-governmental watchdog agencies.
From 2011 to 2013, mining production increased by almost 5 percent, with gold, silver, and nickel comprising 95 percent of the minerals extracted. For the years 2013–2015, almost US $4 billion in foreign investment has flowed into Guatemala for just six mining projects alone.
Taken together, light manufacturing, garments and textiles, and mining, when paired with Guatemala’s signature agricul- tural production and its burgeoning tourist industry, create
a varied and vibrant Guatemalan economy. With increased growth in all sectors of the business environment, more foreign capital inflows into the country will spur even greater innova- tion and production.
SPECIAL REPORT
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