Tips for Doing Business in Guatemala?

At first glance, Guatemala might not be the first place in Latin America to move into and set up a business. But with its consistently growing economy, tax-free economic zones and close proximity to the larger markets of Mexico and the United States, doing business in Guatemala might be the right choice for certain businesses and individuals.

Read on to find out more information and tips about doing business in Guatemala.

What are the advantages of doing business in Guatemala?

Some positives to doing business in Guatemala include the following:

  1. Guatemala is welcoming of foreign investment
  2. It boasts consistently strong economic growth
  3. Possesses a skilled labor force
  4. Is home to modern telecommunications infrastructure
  5. Has free trade agreements with the US, Central America

SEE ALSO: How to Incorporate a Company in Guatemala

1. Open to foreign investment

There are very few barriers for foreigners who are thinking of doing business in Guatemala. It’s an open, free-market economy, and almost all sectors of its economy are open to foreign investment. Foreigners can own property such as vehicles and real estate free of any need for local co-signers, partners, or stakeholders, and there is no limit to how much of a company a foreigner owns. There are also no restrictions concerning the maximum proportion of foreign shareholders in a business.

2. A consistently growing economy

The Central American country’s economy dwarfs its neighbors in terms of size. Guatemala represents 35 percent of the region’s GDP and has seen foreign direct investment grow by 376 percent since 2013. The principal sectors of the Guatemalan economy are manufacturing, services, and retail commerce, which combined represent 45 percent of its GDP. Guatemala’s currency, the Quetzal, has been stable against the US dollar for the last decade – this alone might be reason enough to consider doing business in Guatemala.

Biz latin hub infograpfic about Guatemala services export
Most companies doing business in Guatemala are in one of these service sectors.

3. A skilled labor force

One might think that a relatively poor, unequal country like Guatemala has high unemployment and a low-skilled labor force. While that aspect is true, there is a growing segment of the workforce that is well-educated and highly skilled – particularly among the young. Roughly 81 percent of young Guatemalan workers hold diplomas or degrees from colleges or universities. Furthermore Guatemala’s workforce is made up of about 6.7 million people, 70 percent of whom are under the age of 30, so for people or companies thinking of doing business in Guatemala, there’s no shortage of local talent to choose from. 

4. Modern telecommunications infrastructure

Companies that are doing business in Guatemala have access to a robust telecommunications infrastructure of a highly privatized, free-market telecoms sector. The country is highly connected with 99 percent redundancy of fiber optic cable connections. Pretty much everyone has a smartphone in Guatemala – there are more than 20 million in the country, which is equivalent to 110 percent of the population.

5. Free trade agreements with the US and Latin America

Those doing business in Guatemala will have been able to take advantage of the free trade agreements that the government has negotiated. Among the countries with which Guatemala has free trade agreements are the entirety of Central America, the United States, Mexico, the Dominican Republic, Colombia, Panama, Chile, and the European Union. 

Like anywhere else in Latin America, Guatemala has a host of social and political issues that can complicate any decision to do business or domicile there. 

GDP across central america an infographic by Biz Latin Hub
If you are thinking of doing business in Guatemala, it is worthwhile learning some statistics about the region.

What are some of the challenges of doing business in Guatemala?

Here’s a breakdown of the challenges that you should consider before doing business in Guatemala:

  1. Bureaucracy
  2. Corruption
  3. Political risk
  4. Internal security risk
  5. High reliance on exports, remittances

1. Bureaucracy is alive and well

Latin Americans seem to have a love affair with bureaucracy, and Guatemala is no different. When setting up a business there, be prepared for red tape – the country is rife with it. The relatively straightforward act of setting up a business in Guatemala can take up to 40 days to complete. Notarized documents are required at various stages of the process and the business must be registered with several government and business entities. Legal representation is required for any business, so anyone doing business in Guatemala will have to hire a lawyer. 

2. Corruption is widespread

The political situation in Guatemala is marked by continuing allegations of corruption and widespread calls for reform. As a consequence, in Guatemala many commercial successes are hard fought. A growing number of US stakeholders in the country have complained of rampant corruption in Guatemala and say that transparency is non-existent. However, corruption tends to be industry specific, so people doing business in Guatemala may or may not encounter this, depending on the industry within which they operate.

3. Guatemala has no shortage of political risk

An ongoing scandal involving alleged persecution/abuse of power of Guatemalan judges by the executive branch has led to an increase in political tensions in the country. Recently the International Bar Association’s Human Rights Institute condemned what it called an assault on the independence of the legal profession and the ongoing deterioration of the rule of law. Incidents of Guatemalan judges and prosecutors – particularly those concerned with cracking down on corruption – are being harassed, intimidated, arrested, and forced to resign, according to media reports. For now, this is largely a political fight, but for those who are thinking of doing business in Guatemala, it’s something that can’t be ignored.

4. Internal security risk

While Guatemala is relatively stable economically, growth is distributed unequally, and rates of poverty and hunger remain high. Those doing business in Guatemala are probably well aware that the country has one of the highest violent crime rates in Latin America. Crime rates are high in Guatemala, especially near border crossings. Drug-related armed attacks occur in regions close to its borders. The southwestern department of San Marcos at the Guatemala-Mexico border and the zone at the border with Belize are especially affected.

5. High dependency on agriculture, remittances

Agriculture is the biggest industry in Guatemala’s economy. The work is labor intensive but largely unskilled, and this type of work employs one-third of Guatemala’s population. A large percentage of people of all ages rely on money made by relatives working abroad – more than 15 percent of the country’s GDP comes from remittances. These kinds of statistics suggest that the country is still quite underdeveloped, and they’re things that people thinking of doing business in Guatemala might want to mull over before making the move there. 

Biz Latin Hub Can Help You With Doing Business in Guatemala

At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.

Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.

As well as knowledge of doing business in Guatemala, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.

Contact us today to find out more about how we can assist you finding top talent or otherwise doing business in Latin America and the Caribbean.

If this article on the advantages and challenges of doing business in Guatemala was of interest to you, check out the rest of our coverage of the region. Or read about our team and expert authors.

A BLH infogrpahic showing key services offered by the company
Doing Business: Key services offered by Biz Latin Hub

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Craig Dempsey

Craig Dempsey

Craig is a seasoned business professional in Latin America. He is the Managing Director and Co-Founder of the Biz Latin Hub Group that specializes in the provision market entry and back office services. Craig holds a degree in Mechanical Engineering, with honors and a Master's Degree in Project Management from the University of New South Wales. Craig is also an active board member on the Australian Colombian Business Council, and likewise also active with the Australian Latin American Business Council.

Craig is also a military veteran, having served in the Australian military on numerous overseas missions and also a former mining executive with experience in various overseas jurisdictions, including, Canada, Australia, Peru and Colombia.

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