General information for investing in Nicaragua Nicaragua Nicaragua at a glance Population 5,210,000 Population growth rate 2.8% Fifteen departments and Two Autonomous Regions Capital City: Managua (pop. 1 million) Other Major Cities: Granada Leon Masaya Matagalpa Jinotega Bluefields Puerto Cabezas Nicaragua has beach property 352 Km of coastline on the Pacific Nicaragua has lake property 10,333 square km of lakes and lagoons Political climate Two major political parties PLC FSLN President Enrique Bolaños Term 2002-2006 Economic Stability Cellular service • BellSouth, PCS and Enitel operate cellular phone networks. • Average local cost is $.26/min. Internet access • Several companies offer dial- up, cable, radio and satellite services. • Largest ISP’S are IBW, CABLENET and TMX. • Monthly fees range from $20 for basic dial-up connections to over $500 for satellite services. Air transportation • Managua International Airport has recently been expanded to double its original capacity. • Daily non-stop flights to Miami via American, TACA and SANSA. Continental offers daily non-stop flights to Houston. Direct connections to Los Angeles also available. • National flights are available for travel to Corn Island, Bluefields, Puerto Cabezas and San Carlos. • NatureAir runs daily flights between Granada, San José and Liberia in Costa Rica. Banking system • 70% of all deposits are in U.S. Dollars • Residency or local property ownership is required to open a personal bank account • Six banks, all offer international financial services – BAC (Banco de America Central) – BANCENTRO (Banco Centroamericano) – BDF (Banco de Finanzas) – BANEXPO (Banco de Exportacion) – BANPRO (Banco de la Produccion) – BANCO CALEY DAGNALL Economic indicators Gross Domestic Product (GDP) $2.45 billion (locally produced) Estimated 2002 Real GDP Growth 3.5% Low growth due to the end of Post Hurricane Mitch construction boom and presidential elections Inflation 3.7% estimated Economic indicators • Exports US$ 770.4 million – Coffee – Beef – Seafood – Sugar • Major trade partners – U.S. – Western Europe – Central America • Working population 1.85 million – Rural based – Largely unskilled Principal growth sectors • Tourism • Commerce • Construction • Telecommunications • Agriculture • Textiles Investments Recent significant investments include: Metrocentro Shopping Mall in Managua Plaza Inter Shopping Mall in Managua La Colonia Supermarket Hotel Intercontinental Managua Hotel Montelimar Holiday Inn Plaza Intercontinental Hotel Princess Legends Hotel Expansion of International Airport Highway System Telecommunications Major foreign investors Tourism • $112.5 million market • Will eventually overtake coffee as leading hard currency earner 140% 120% 100% 80% 60% 40% 20% 0% 1996 1997 1998 1999 2000 2001 2005 Tourism Incentives Law Law 206 • Designed to promote the growth of tourist activities. • Provides tax breaks for investments in: – Hotel services industry – Food, beverage and entertainment services – Tourism infrastructure – Arts and craft facilities • Over 65 projects have been approved, under this law, value US$65 million. Construction costs • Cost of building is approximately $35-$50 per square foot. • Most construction is of cinder block, cantera block, cement, and tile. • Estimated sample costs: -Concrete $4.00/bag -Cinder block $.30/each -Cantera block $1.00/each -Steel Rebar $18.00 per 100 lbs Labor information • Average monthly wages: – Manufacturing $127.70 – Transportation $199.63 – Construction $113.99 – Agriculture $81.47 – Services $91.24 • Work week – 6 days/45 hours • 30 days vacation for 12 months worked • All employees receive 13th month Christmas Bonus Foreign investment Law 344 • Assures that foreign and domestic investment receive the same treatment. • Eliminates restrictions on the way in which foreign capital can enter the country. • Recognizes the investor’s right to own property and establish business enterprises as they wish. • 100% foreign ownership is allowed, no requirement to have a local partner.