El Salvador - Foreign investment

The Salvadoran government has fostered foreign investment since the 1988 Foreign Investment and Promotion Law came into force. Incentives include unrestricted remittance and reinvestment of profits and, for firms located in the free zones, the government offers up to a 20-year income tax holiday and duty-free importation of materials needed for production.

The inflow of foreign direct investment (FDI) spike in 1998 to over $1 billion (up from only $59 million in 1997), but then averaged about $219 million a year 1999 to 2001. Contrary to the global trend, and due primarily to the international relief effort following the earthquake of January 2001, FDI inflow increased to El Salvador in 2001 and in 2002 rose to an estimated $277.8 million, $10 million above the year before. Major foreign investors include Coastal Technologies (power generation), Kimberly Clark (paper products), Texaco (fuel storage and distribution), Esso and Shell (petroleum refining), Bayer (pharmaceuticals), Sara Lee (clothing assembly), Xerox (sales), AIG (insurance), and British American Tobacco. El Salvador received approximately $250 million in direct investments in 1999, the majority from the United States.