Nicaragua Investors Guide

* The right to repatriate 100% of profits.
* The right to repatriate 100% of the invested capital, after the first three years.
* Free market economy.
* Right to unlimited foreign investment participation in capital investments including the right to 100% foreign ownership in most industries.
* Access to the incentives granted by the Law, according to economic activity.

* Highest economic growth (GDP) of the Central America region (5.5% in 1996.)
* Second lowest inflation rate in Central America ( 10.8% in 1996).
* Export growth at a 33% annual rate during the period 1993-1996.
* Progressive growth of private investment with a 10% average annual rate during the period 1994-1996.
* Significant growth of the internal savings rate.
* Private banking holds 70% of total deposits.

* Central American Common Market.
* Central American Integration Treaty (CA-4):
1. Free movement of capital, services and labor.
2. Modern legal framework to expedite commerce in the region.
3. Free Trade Agreement.
4. Access to 27 million consumers.

* Free Trade Agreements with Dominican Republic and Mexico:
1. Preferential access to over 140 million consumers.
* Preferential treatment (SGP) with the United States, European Union and Canada:
1. Preferential access to over 500 million consumers.
2. There are no quotas for the textile industry.

* 65% of the population is younger than 25 years of age.
* Average cost of labor is US$0.67/hour, including social benefits.
* An educational system made up of national and foreign universities, which have contributed to the creation of a very efficient labor force.
* The majority of professionals can work in several languages: English, French, German, Portuguese, Russian and Italian.
* Literacy rate of 85%.
* Free hiring of foreign professionals at the administrative level.

5. BILATERAL AND PLURILATERAL AGREEMENTS WHICH FACILITATE INVESTMENT AND ACCELERATE COMMERCIAL DEVELOPMENT

* Free Trade Agreement with Mexico.
* Free Trade Agreement of the Americas.
* Bilateral agreements for the reciprocal promotion and protection of investments, signed with: Taiwan-Republic of China, Spain, United States, Denmark and Germany.
* In the process of negotiation with: Netherlands, United Kingdom of Great Britain and Northern Ireland, Switzerland, South Korea, Ecuador, the Russian Federation, Bulgaria and Chile.

6. THE COUNTRY WITH THE LARGEST NATURAL RESOURCES OF THE CENTRAL AMERICAN REGION

* 3.6 million hectares with agricultural potential, of which, at present, less than 20 percent are being cultivated.
* 1.3 million hectares with potential of livestock production.
* The most fertile land of the region, with excellent volcanic loam soils and with great water reserves for irrigation.
* The lowest cost of land in Central America.
* It has 8 gold and silver mines, which in the 70s produced US$150 million.
* 60% of the total area of the national territory (60,000 square kilometers) is forest.
* It has the greatest diversity of forestry species in the Central American region.
* The Caribbean maritime shelf with 551 kilometers of expanse, is the richest of Central America.
* The Pacific has 410 kilometers with similar attributes and with a potential of 39,000 hectares ( 1hectare = 2.47 acres ) for shrimp farming, equivalent to one-third of the Central American and Panama potential.
* It has 10,338 of continental waters and 7,365 kilometers of water stemming from rivers. These conditions allow Nicaragua to be the ideal country for Tilapia and Carp farming.
* The Great Lake of Nicaragua has an exploitable biomass of 50,000 tons per year, with permission to catch 8,000 tons per year.
* Highly diversified tourism potential.

* Nicaragua is located in the heart of American Continent which allows:
1. Quick access to large markets such as NAFTA and MERCOSUR.
2. Contact with Miami, Houston and New Orleans in three hours by air.
3. Contact with any maritime port n the Gulf area and Miami in four navigable days.
4. Access to the country by both Oceans.

* The Political Constitution of Nicaragua does not discriminate against foreigners.
* Decentralization and privatization of state firms.
* The Nicaraguan political system has demonstrated a great capacity to reform.
* The centralization of state power was replaced by elective democracy.
* The President is elected for a five-years period, which allows the implementation of long-term policies.

* Telecommunications: In 1997, the privatization of the Nicaraguan Telecommunications Company is programmed through international bidding.
* Energy: The energy sector is open to private participation for the generation of energy.
* Highway system: Extension of the country’s road network can be executed by the private sector through public bidding.
* Isthmus rail link ("Canal Seco" ) planned, connecting Caribbean and Pacific port facilities with high speed containerized railroad network.

About the Nicaraguan Financial System

IN a four-year period, Nicaragua has re-established a market economy with a stable currency and less than 12% annual inflation. Nicaragua’s recovery from 13.500% hyperinflation in 1990, to its current annual rate of 4% in 1992 is considered a historic first.

Nicaragua is an active member of the world’s financial community. It is up-to-date in its foreign debt payments and is qualified to receive investment insurance from OPIC and MIGA. There is financing available for projects from bilateral and multilateral organizations.

* Commercial banking is handled by eleven private banks and three state banks.
* In 1991, the Private Banks Law was issued, which allows:
1. The creation of the Banking Superintendency, to authorize and supervise the private and public banking activities.
2. The establishment of Private Banks, Foreign Exchange, Loans & Savings Institutions, Financial Companies, Fiscal Warehouses; and in 1996, authorizes the operation of Private Insurance Companies.
3. Only US $3 million of capital is required to establish a bank in the country.
* Private banking has gained a 70% market share in the credit market and they hold 70% of total deposits of the country.
* The privatization of the Nicaraguan Bank of Industry and Commerce ( BANIC ), programmed in 1997, represents a great opportunity for foreign investment.
* The national currency, Cordoba, is at C $14.00 for US $1.00 as of February 2002, with programmed mini-devaluations published monthly by the Central Bank of Nicaragua (BCN ).
* A stock exchange was created in 1993 and trades I shares of former government owned entities such as the national telecommunications company ( TELCOR ) and other government securities.
* Foreign exchange is easy to acquire in foreign exchange houses and private banks.