1. What is the Government of Nicaragua’s stand on foreign direct investment?
The Government of Nicaragua recognizes the positive impact of foreign direct investment (FDI) in an economy such as Nicaragua’s and therefore actively and openly promotes foreign investment in a country that is responsible with its employees, the community and the environment. Proof of this is the existence of PRONicaragua, the official investment promotion agency of the country, which has full support of and works alongside the government. Additionally, the naming of a Presidential Delegate for Investments to coordinate investment promotion efforts and ensure the successful development of these projects further affirms the government’s positive stand towards FDI.
2. What service does PRONicaragua provide to investors?
PRONicaragua provides complimentary support services to qualified investors throughout the entire investment process. These services include:
Complete information on business opportunities in Nicaragua and key investment information.
Organization of customized site visits with tailor-made information packages.
Facilitation services including advisory and advocacy for foreign investors. We support companies throughout the entire investment process by providing referrals, government contacts and general start-up facilitation services.
Assistance in finding local companies for possible joint ventures and identifying suppliers and other forms of business alliances.
Assistance with identifying the ideal Real Estate option for your project and support with due diligence.
Aftercare services to identify main problems affecting established investors to improve the business environment.
3. What legal guarantees does Nicaragua offer investors?
The main legislation that governs foreign investment is the Foreign Investment Promotion Law (344) and its bylaws. This law provides: a) equal treatment of foreign and domestic investment; b) eliminates restrictions on the way in which foreign capital can enter the country, and c) recognizes the foreign investor's right to own and use property without limitation, and in the case of a declaration of eminent domain, to receive proper indemnification. The law makes no distinction between acquisition, merger, takeover, or green-field investment.
Additionally, the Mediation and Arbitration Law (540) governs two alternate methods to the judicial process to expeditiously solve any dispute resulting from contractual relations between private parties.
4. Does the government offer incentives to investment projects?
The Government of Nicaragua offers a series of investment incentives in priority sectors of the economy, such as:
• Renewable Energy Generation
• Agribusiness & Forestry
• Social Housing
• Export-oriented activities:
o Textiles & Apparel
o Manufacturing & Assembly
o Business Process Outsourcing
5. What are Nicaragua’s main export products?
Nicaragua has been a traditionally agricultural country; therefore most of its main export products are from this sector, which include: meat, coffee, fishery products, sugar and dairy products. Gold has also become one of Nicaragua’s major export products.
Within the free zone regime, the main export products include apparel, auto wire harnesses and agricultural products. The service sector within the free zone regime has become an emerging force in Nicaragua, offering diversified and higher value added service such as BPO, KPO and ITO.
6. What kind of trade agreements does Nicaragua have?
Nicaragua has free trade agreements with the United States, Mexico, Panama, Taiwan, Dominican Republic, Chile and the European Union. Additionally, the country is currently negotiation free trade agreements with Ecuador, Canada, CARICOM and Cuba.
Furthermore, the country enjoys preferential access agreements to key markets in Central America, the Caribbean and South America. In total, Nicaragua has preferential access to a worldwide market of over 1.5 billion people.
7. What is the minimum wage in Nicaragua’s free zone sector?
On January 20, 2010, the Nicaraguan Government, union leaders and the private sector signed an agreement establishing salary adjustments in the free zone sector for the next three years (2011 - 2013) with the aim of both protecting and promoting job growth. This is the second time an agreement of this type has been made. The first agreement was signed in March of last year when minimum wage adjustments were agreed for 2009 at 8 percent, and 2010, at 12 percent.
Minimum wage increases in 2011, 2012, and 2013 for the Free Zone sector will be 8, 9, and 10 percent, respectively. Nicaragua is the only country in Latin America that has defined its minimum wage for the next three years, providing not only stability and predictability for investors, but also enabling them to more effectively make financial plans for their businesses.
Currently, hourly minimum wage within the free zone sector in Nicaragua, including fringe benefits, sums up to US$1.
8. How large is Nicaragua’s labor force?
The Nicaraguan workforce is young and dynamic, as 77 percent of the population is under the age of 39 and the labor force, comprised of 2.99 million people, is known to be flexible and highly productive, with good working habits and fast learning skills. These qualities have allowed Nicaragua to position itself as one of the most competitive and productive in the region in terms of human capital.
The Economist Intelligence Unit positions Nicaragua as the second country in Central America with the greatest labor market stability, according to its Labor Market Risk Index from April 2012. This measure considers Nicaragua’s low level of absenteeism and rotation reported by different companies surveyed locally.
9. What kind of labor shifts are allowed under the Nicaraguan Labor Code?
The Nicaraguan Labor Code recognizes 4 types of labor shifts:
Day shift: Work undertaken between six in the morning and eight at night is considered a day shift. Regular day shift hours are 8 working hours daily for a 48-hour work week. Additional work must be compensated as overtime.
Night shifts: Work undertaken between eight at night and six in the morning of the following day is considered a night shift. Regular night shift hours are 7 working hours daily for a 42-hour work week. Additional work must be compensated as overtime.
Combination day-night shifts: A combined work shift is 7.5 hours per day for a 45-hour work week. Additional work must be compensated as overtime.
Overtime: Work outside regular working hours is always considered overtime. According to the National Labor Code, overtime is paid double the amount stipulated for regular working hours. A maximum of 3 hours beyond regular hours may be worked, not exceeding a total of 9 hours per week.
10. How long does it take to set up a new company in Nicaragua?
The process of registering a company in Nicaragua can be fast tracked by using the services provided by the Investment One-Stop Shop (VUI, for its acronym in Spanish). The office, which gathers the main government institutions involved in the process, provides top-quality services free of charge for investors, reducing the registration time to approximately 31 days.