For our latest Industry Expert Q&A, Douwe Westerveld had the pleasure to connect with William Turton Furlan, commercial counselor at the Embassy of Guatemala in the Netherlands, who spoke about business and investment opportunities in the Central American country.
For anyone considering doing business in Guatemala, his insights could be of great interest.
William studied International Relations at the Rafael Landivar University in Guatemala City and later completed several training programmes focused on economic diplomacy and trade.
He started his career at the KOTRA – Korea Trade Invesment Promotion Agency, based at the Embassy of the Republic of Korea in Guatemala, where he worked as a trade consultant.
In 2019, he joined the Guatemalan diplomatic corps and was sent to The Hague in the Netherlands, where he has been serving as a trade counsellor in the Embassy of Guatemala to The Kingdom of The Netherlands.
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What have been the effects of the COVID-19 pandemic on the performance of the economy of Guatemala and how is it performing at the moment?
Just like the rest of the regions and the world, the effects of the pandemic have been hard on the country. We’ve also been in stages of confinement, but things are getting better with the vaccination programmes. This is also the case in terms of economic recovery. Last year, 2021, our economy experienced a growth of 7.5% which is among the highest in the region as well as worldwide.
This is an aspect that we would like to maintain for the country, as sustainable growth is high on the agenda of our government and President Giammattei. This is exemplified by the fact that sustainable economic growth has been one of the fundamental pillars of the current presidency, which was crucial to the establishment of an effective national COVID recovery plan.
In a mark of the success of its pursuit of sustainable economic growth, the Guatemalan government established a goal of reaching USD 1.2 billion in foreign direct investment (FDI) during 2021, but ended up reporting more than USD 3 billion, a figure triple that seen the previous year. Consequently, we can state that the national economy, as well as investments and GDP, are doing quite well after the pandemic.
Prior to the pandemic, how had the performance of the national economy been?
The economic growth of Guatemala has been good over the past five years, exemplified by sustained growth witnessed during this period. For example, in 2020, during the pandemic, our economy experienced a growth of 3.5% according to the Guatemalan Central Bank. Also, during the worldwide financial crisis, the economy still achieved some growth, while many around the world suffered severely.
The strength and resilience of the Guatemalan economy are are due in part to the fact that Guatemala possesses strong macroeconomic tenets, such as a stable exchange rate, stable inflation rates, and a level public debt that is manageable for the Central Bank.
What makes Guatemala such a good prospect for business and investment?
The first factor that I would like to emphasize is our macroeconomic stability, which is of great importance for prospective investors. Additionally, speaking about Guatemala in the light of the rest of Central America, currently, four out of 10 products coming out of the region are made in Guatemala, and the country represents 38.9% of the sub-region’s estimated economic participation. This signifies that we have a well-established and productive industrial sector compared to the rest of the countries. This also exemplifies the trust that our economy enjoys.
Additionally, Guatemala serves as a logistical platform for the region, due to the geography of the country, which compares favourably to other countries in the region in a number of ways. We are very close to the US market, which is the biggest market in the world. Moreover, we are next to the Mexican market, which, after the Brazilian market, is the second-largest economy in Latin America. The European Union is also within reach, through the European Union- Central American Association Agreement (EU-CAAA).
This direct access to a diverse range of major markets makes Guatemala a particularly interesting prospect for investors. However, it is also worth mentioning that Guatemala is recognized for its ease of doing business, with company formation in Guatemala generally completed in between one and three weeks, and the process generally costing between USD 500 and USD 700 — which is reasonably priced by any standard.
The fact that starting a company in Guatemala is so straightforward and relatively inexpensive is a prime example of how our government is committed to creating a climate of accessibility and accommodation for investment and businesses.
What are the biggest untapped investment opportunities in Guatemala right now?
We have a wide range of sectors that show great potential. First, I can refer to the textile industry, with strong fiscal incentives schemes. On the other hand, the skilled labor force, optimal learning curve and an integrated cluster of more than 270 different suppliers make the apparel and textile sector attractive for new investors.
Beyond that, right now our country is becoming increasingly established in more sophisticated sectors. They include the pharmaceutical sector, with particular emphasis on the production of medical devices. Others include business process outsourcing and call centers (BPO) and information technology outsourcing (ITO) related to the software sector. Guatemala is a viable destination for foreign companies focused on these industries, thanks in part to good infrastructure, high English proficiency levels, and the availability of highly-skilled workers.
But there are also many opportunities to be seized in sectors that have been more traditional destinations for investment in Guatemala, such as the agricultural sector, especially those related to coffee, fresh fruits and vegetables. Additionally, the production of plastics, rubber, and electronics are well established industries with room for significant growth.
Being based in the Netherlands, I would add that agriculture, flowers, foliage and ornamentals, as well as software developing and outsourcing activities are also of particular interest to Dutch investors, given that the Netherlands is the second-biggest agricultural exporter in the world, a referent in the flowers and ornamental industry, and is one of the most important tech hubs and developers worldwide.
What would you say to companies considering nearshoring to Latin America to encourage them to look at Guatemala?
I would say that Guatemala is a perfect destination for nearshoring. Due to our established and highly skilled workforce in, for example, the software industry, Guatemala possesses the right people and facilities to meet the needs of almost any company seeking to relocate its operations to the region.
When you add to that our strategic location, with the US and Mexico so close, and the infrastructure in place to easily arrive to those and other markets, Guatemala becomes an even more interesting prospect to investors.
Also, given that nearshoring generates foreign direct investment (FDI), which is of considerable importance to our economy, the Guatemalan government tries to create an environment that accommodates this practice, and will continue to provide as much support to these types of new investors as possible for the foreseeable future. Meaning that when you choose Guatemala, you choose a country that is open for business and eager to do what it can to assist those who choose us.
International trade is often an important aspect of doing business, so what does Guatemala offer in this respect?
Guatemala has more than 20 bilateral investment treaties all over the world, and also has agreements with big Latin American economies such as Mexico and Colombia. During the period 2008 to 2020, those two countries together accounted for more than 10% of Guatemala’s GDP, demonstrating how important these treaties are for my country.
Because we have so many FTAs in place, Guatemala is incredibly well connected and offers a wide range of financial benefits to investors and businesses based in our country and doing business with any of those markets.
Moreover, thanks to the hard work we have been part of in developing the Central American Association Agreement, doing business around this sub-region, which has witnessed significant growth this century, also provides a range of advantages when it comes to doing business, including ease of movement between and access to the other markets in Central America.
Biz Latin Hub can assist you 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 17 key cities around the region, including Guatemala City. Our unrivaled regional presence means we are ideal partners to support multi-jurisdiction market entries and cross-border operations.
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