An opportunity to increase the attractiveness of investment

The National Competitiveness Policy is a coordinated effort between the production sector, civil society, the academy, the trade union sector and the public sector. It aims to address three compelling demographic phenomena: the population growth, by 2032 the Guatemalan population will be around 22 million people. Then, there will also be the demographic dividend phenomenon, which will be when the workforce will outnumber the retired, and this will cause an extraordinary increase in the employment demand. Finally, there will be a transition from rural to urban. By 2032, it is estimated that 79% of the population will live in the urban centers.

It is organized under three strategic guidelines called 11-11-9: 11 clusters -11 competitiveness priorities – 9 suitable territories to be established as intermediate cities. The foundations are located in the 12 pillars of World Economic Forum, incorporating two additional cross pillars: social and environmental sustainability. This thereby increases productivity and creates greater economic growth for the country.

Guatemala is currently at a defining moment in creating conditions that will allow the Guatemalan population to have greater access to employment opportunities and, consequently, higher levels of well-being and prosperity. In order to enhance this opportunity, this policy suggests the development of cluster structures. These helps strengthen the productive and economic dynamics generated from the territory. In addition, it makes it possible to consider the differentiated social and productive characteristics of clusters, promoting inclusive economic development. The Policy defines actions to consolidate the economy between agglomerations of people with better productive and purchasing capacities, promotes increased productivity, allows the generation of scale and operational efficiency, while stimulating innovation and facilitating marketing, and the development of new businesses and resilience. 

The eleven main clusters are: 1) Forest, furniture, paper and rubber, 2) Fruit and vegetables, 3) Processed foods, 4) Beverages, 5) Textiles, clothing and footwear, 6) Metal Mechanics 7) Tourism and health services, 8) Transport and logistics, 9) TIC´s, software and call centers 10) Construction 11) Light manufacturing. By 2032, these are capable of creating more than five million production jobs in high demand industries both nationally and internationally. Plus, they remain quality products and services provided. 

The development of clusters requires different productive sectors to overcome gaps that restrain competitiveness. That is why the Competitiveness Policy develops the Priorities, divided into two agenda. The first addresses issues that impact at the national level (Horizontal Agenda): to eliminate corruption, increase legal certainty, increase security, improve educational quality, end chronic malnutrition. The second addresses local and sectoral levels (Vertical Agenda): to reduce the costs of bureaucratic processes, improve infrastructure and logistics, sustainability of the electricity subsector, boost research, development and innovation, strengthen the entrepreneurial ecosystem and increase the attractiveness of foreign investment. 

Guatemala is a perfect investment destination because it has an excellent geographic location to access booming markets, outstanding macroeconomic stability, free currency negotiation and financial resources under optimized conditions. The Competitiveness Policy advocates for the generation of greater political stability, institutional strength, legal certainty, flexibility in labor laws, private property respect, skilled labor and good infrastructure, among others. 

The Competitiveness Policy actions include: the process simplification through the tool, the regulations update such as the Code of Commerce amendments which reduces costs and time in the companies’ registration, the amendments to movable guarantees law which gives access to credits to people who do not have real estate guarantees, the factoring law and a legislative agenda aimed at encouraging investment and employment generation.  They also support actions to improve the population’s skills, including educational programs, entrepreneurial ecosystem promotion and innovation through business training, innovation encouragement. Plus, it supports strengthening local economic development by providing competitive tables. 

The identification of nine territories suitable for development established as Intermediate Cities would improve the coverage of basic services, provide a response to the economic, political and social dynamics between the city and the countryside and would guarantee the flow of people, goods, capital and knowledge. The following map shows the location of these territories.

The National Competitiveness Policy enables an appropriate approach to interventions and investments required to address competitiveness gaps and enhance the productive activity of clusters identified in territories suitable for urban development. It represents a greater degree of detail regarding analysis, the actions to be executed and the interinstitutional and intersectoral coordination as strategic planning tools, in order to unify the efforts towards the fulfillment of the same goal: Improve competitiveness to increase national productivity and thus generate inclusive, accelerated and sustainable economic growth. 

Víctor Asturias
Presidential Commissioner for Competitiveness and Investment
National Competitiveness Program – PRONACOM

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The importance of Regulatory Compliance Program

In Central America, Panama and the Dominican Republic, current laws against asset laundering and other related crimes define measures which, according to the level of risk, must be implemented by natural or legal persons who engage in non-designated financial activities and professions to prevent their use or their direct participation in the asset laundering crime. 

To that end, said laws impose on companies, legal firms and professionals like lawyers and notaries, among others, the obligation to report certain transactions and carry out due diligence of current and potential customers.

Penalties for non-compliance with the aforementioned laws include fines and imprisonment of four to twenty years depending on the type of participation of the natural or legal person in the crime or crimes persecuted, for example, for having participated, having acquired, being an accomplice and/or having provided advice. 

Until the enactment of the laws on the prevention of money laundering and other related crimes, these measures to prevent money laundering fell solely on the banks. However, as it is not only banks that handle money, it became necessary to also control transactions made by companies, legal and professional firms such as lawyers and notaries, and demand that they take measures to know their customers, contractors and suppliers and have the backing of all the necessary information.

Laws against money laundering and other related crimes are some of the norms that every company, including legal firms, must comply with. 

To better control compliance, it is advisable that all related rules be included in a Compliance Program. This program, to be fulfilled by all the members of the organization, has to be created by a team with expertise in the subject and with as many resources as possible. 

In this sense, a Regulatory Compliance Program must contain not only the internal rules of the company or law firm, such as regulations, trademark manuals, and code of ethics, but also external regulations that, depending on its activity, industry or sector, or the jurisdiction where it is located, must comply with together with the rules that the stakeholders, whether private and/or public, with which they do business, require from them.

It is important that, inv view of the number of standards that the Compliance Program may include, it design the necessary procedures that ensure their compliance, and which is supervised, updated, and which lists who is responsible for their monitoring. 

The importance of the design of a Regulatory Compliance Program lies in clearly establishing the action policies that will be necessary to comply with all the internal and external regulations of the company and, at the same time, to detect the risks due to non-compliance and mitigation. Failure to comply with these rules could result in millions in losses for companies, and both the law firms and independent professionals must be up to date with new legislation, its regulations and its enforcement, to be able to provide internal and external advice based on them.  

The legislation and the current global trend in Compliance shows a way forward and leads to awareness that compliance, with all internal and external regulations by companies, law firms, professionals such as lawyers and notaries, among others, not only gives these orders, but also provides greater security and transparency when doing business in the region.    

Guadalupe Martínez Casas – Director of Law Services
CENTRAL LAW – Central America, Panama and the Dominican Republic

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Agile or irrelevant – Redefining resilience

During 2019, KPMG International carried out a study named “Global CEO Outlook Agile or irrelevant – Redefining resilience”, that offers a three-year perspective from 1,300 global CEOs on business and economic growth.

 “Different leadership skills are needed to succeed in a world of volatility and uncertainty. At present, CEOs must feel comfortable being disruptive in their business models, building new strategic partnerships and enhancing the skills of their workers, says Bill Thomas, CEO of KPMG International.

“In today’s dynamic market, resilience is the ability to constantly evolve and adapt to accelerated changes. This involves CEOs reacting with agility to meet the needs of customers and focus their efforts where it will have the most significant impact”, says Víctor Esquivel, General Managing Partner of KPMG in Mexico and Central America.

“The challenges for CEOs are constant; so, their ability to respond to changes will be tested. As long as leaders remain open to new ways of doing business; take risks by betting in favor of diversification in their operations, and include efficient changes in their processes, they can stay in the game and provide comprehensive solutions to customers”, adds Milton Ayón, Managing Partner of KPMG in Panama and Leader in Central America.

“Constant in business today are accelerated and continuous changes, which results in the visionary and innovative response capacity to address the solutions that these changes require”, explains Hugo Rodríguez A., Managing Partner of KPMG in Guatemala.

Company resilience is based on the ability of CEOs to detect and anticipate possible operational or financial risks in organizations, motivated mainly by two objectives: to generate short-term growth and to facilitate long-term business success.

The challenges for CEOs are diverse; therefore, their ability to respond to changes forces them to remain open to new ways of doing business, taking risks around business diversification, including fundamental changes in their processes to be more efficient and, consequently, more competitive.

Source: 2019 Global CEO Outlook Study

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Investors in Guatemala: Chemelco Group is expanding in the country

The Chemelco Group is a family-owned, private company with headquarters in The Netherlands. Since 1965, we have been sourcing and distributing raw materials and innovative specialty food ingredients for a range of applications within the food and animal nutrition industries, as well as for the home and personal care industries.

At Chemelco we count with a strong team of international professionals who strive every day to bring healthy products to make better food and sustainable solutions for people and the environment. The main markets in which we operate are Central and South America, southern Africa and Caribbean Islands. In 2016, we have established our sales office in San José, Costa Rica. Expanding further, this year we proudly started our office in Guatemala City, to cover the market opportunities in the region, including the surrounding countries Honduras, El Salvador, Belize and Nicaragua.

We are focusing in the big business opportunities that Guatemala and its surrounding region have to offer, not only due to its geographical importance and astonishing natural beauty, but also due to the fast-growing diversity of its industries.

Especially in the food industry, we recognize the rich variety of flavours of this exceptional mix of cultures, conveying in a singular and very attractive place for the world to visit. Guatemala is a country that has a lot to offer, and yet still has many interesting fields to be explored for doing business and enjoying the beautiful weather and natural friendship of its people. Chemelco offers a clever combination of product expertise and technical advice, a clear understanding of the market and where the opportunities are, all of which allow us to offer the best materials and solutions to our customers.

For more information:

Heidy Krings
Sales manager

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Spain: new business models comply with current legislation

The fast food delivery companies, with a vertiginous boom in many countries of the world, have had to overcome legal obstacles to its operation, since the new business models that they implement in the different national economies were not foreseen in the current legislation of the same.

The first major setback of these new models, also suffered by similar work models in transport companies such as Uber or Cabify, is the stigmatization by public opinion of the lack of regulation, an issue that was used to propose limitations to its economic exercise.

For this reason, the Spanish Association of the Digital Economy welcomed Uber Eats, Deliveroo, Glovo and Stuart, companies that implement deliveries of food at home in which orders are made online and to third parties that are responsible for prepare the food, facilitating purchases at home in well-known restaurants that, otherwise, would not reach the homes of the clients so easily.

In France there are already new bills that seek to define exactly the legal relationships between the parties. In contrast, in Spain, these joined the State Hospitality Work Agreement, legislation already in force and which places the delivery drivers out of the “legal limbo” in which they usually are, according to the Economist, a Spanish newspaper specializing in economics and business.

With these examples, countries like Chile are adding to the growth of these platforms and citizens are beginning to think about new legislation proposals that guarantee the optimal functioning of the new business models.

For this reason, public policies and new legislation that join the legal system of countries such as Guatemala, taking into account companies of use and digital implementation, are essential for the flourishing of its economy and labor markets, guaranteeing legal security for all involved parties and new ways of doing business in regions with economic potential.

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