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U.S. Department of State 
1996 El Salvador Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
                1996 COUNTRY COMMERCIAL GUIDE 
                        EL SALVADOR 
 
This Country Commercial Guide (CCG) presents a comprehensive look at El 
Salvador's commercial environment through economic, political and market 
analyses.   
 
The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annualy at U.S. Embassies through 
the combined efforts of several U.S. governement agencies.   
 
 
                         Table of Contents 
 
I.    Executive Summary       
II.   Economic Trends and Outlook       
III.  Political Environment       
IV.   Marketing U.S. Products and Services       
V.    Leading Sectors for U.S. Exports and Investment        
VI.   Trade Regulations and Standards       
VII.  Investment Climate       
VIII. Trade and Project Financing       
IX.   Business Travel       
X.    Appendices 
   a.  Country Data       
   b.  Domestic Economy       
   c.  Trade       
   d.  Investment Statistics       
   e.  US and Country Contacts       
   f.  Market Research       
   g.  Trade Event Schedule          
 
 
 
                       Chapter I - EXECUTIVE SUMMARY  
 
El Salvador's economy is expected to continue its solid growth through 
1995-96, presenting greater opportunities for U.S. exporters and 
investors.  The post-war economic boom has doubled the value of U.S. 
goods imported into El Salvador since 1993 and increased the U.S. share 
of El Salvador's imports to over 50 percent.  Liberalization of the 
country's tariff structure, such as the reduction to one percent of the 
levy on capital goods, is expected to further promote the re-tooling of 
Salvadoran industry and spur consumer spending.   
 
With abundant and inexpensive labor, liberal investment laws such as 
unrestricted remittance of net profits, and an expanding industrial 
base, El Salvador is evolving as a center where raw or partially 
finished products are imported, processed and/or packaged, and then re-
exported throughout the region.  Such maquiladora or toll-packing 
industries are booming in El Salvador.  Despite recent incidents of 
labor unrest, and disorganization in the government's regulatory bodies, 
prospects for future growth in this sector remain good. 
 
El Salvador's currency is stable, the result of relatively sound 
monetary and fiscal policies.  It has remained at approximately 8.7 
colones to the dollar since 1993, and is freely convertible.  Inflation 
is single-digit, and the government is committed to keeping it under 
control.  Although the country's balance of trade shows a large deficit, 
it is offset by remittances flowing into the country from Salvadorans 
living overseas, primarily in the U.S.  These remittances, combined with 
foreign aid, resulted in an overall balance of payments surplus in 1994.  
These positive indicators will likely continue in 1995-6.   
 
Although U.S. products are well-received and business laws relatively 
straightforward, firms are recommended to choose carefully a local 
agent, distributor or partner when first entering the Salvadoran market.  
The local representative can assist with the often-opaque business-
registration process and can help avoid the pitfalls of the country's 
slow and at times, corrupt legal system.  Exporters should ship to El 
Salvador using irrevocable letters of credit to avoid the possibility of 
protracted, expensive and often unsuccessful attempts to collect debts.   
 
The government has announced plans to privatize state-owned electricity, 
telecommunications and water companies.  Although movement towards this 
end has been slow, it will offer opportunities to U.S. investors when it 
occurs.  Privatization of the electricity distribution network may begin 
as early as the end of 1995.  Other trade opportunities will arise from 
the Inter-American Development Bank (IDB), which approved loans 
totalling nearly $500 million dollars for El Salvador in 1994.  These 
funds will be disbursed over the next five years, and will be invested 
in road, electric generation and public health projects.   
 
The political and social propects for El Salvador remain generally 
positive.  The decade-long civil war, which deeply damaged the country's 
infrastructure and social fabric, is clearly over and ex-guerillas now 
participate vigorously in the freely-elected congress.  The government's 
budget, which shifts spending away from military to social goals, 
reflects the transition from a country at war to a country rebuilding a 
peacetime economy.  With continued political and social stability and 
free-market, common-sense economic reforms, El Salvador presents a 
positive economic and commercial environment for U.S. businesses and 
investors. 
 
Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following World Wide Web address:  
WWW.STAT-USA.GOV.  CCGs can also be ordered in hard copy or on diskette 
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.  
 
 
 
                Chapter II - ECONOMIC TRENDS AND OUTLOOK 
 
Major Trends and Outlook 
 
The Central Bank of El Salvador forecasts continued GDP growth for 1995, 
led by finance, construction and agriculture.  Other sectors of the 
economy show steady growth, but below 1994 levels.  Public and private 
investment are increasing as a result of post-war rebuilding and 
expansion in manufacturing and services.  Inflation is expected to be 
kept under control by tighter fiscal and monetary policies, and the 
overall fiscal deficit as a percentage of gross domestic product is 
falling.  Consumption per capita is estimated to increase more than 10 
percent in 1995, to the equivalent of USD 1,620 dollars per person. 
 
Exports are expected to increase in 1995, sparked by a surge in coffee 
prices.  Imports of capital goods also are expected to remain strong, 
but the balance of payments will remain positive due to remittances from 
Salvadorans living abroad.   
 
GDP Growth by Sector (percent increase) 
                              1993      1994      1995 
 
Agriculture                   0.5       0.1       7.0 
Manufacturing                 7.6       7.9       6.8 
Construction                 10.3      10.1       8.4 
Transport, Storage, 
 Communications               8.2       8.1       8.1 
Finance                       8.8       9.8      11.2 
Public Administration         0.9       2.6       4.7 
Retail                        n.a.      8.4       7.2 
 
Overall Growth                5.5       6.0       6-7 
 
Source:  Central Bank of El Salvador (1994 revised, 1995 projected) 
 
(In 1995, the statistical base year was changed from 1960 to 1990.  This 
will change some statistics that appear in tables published before 
1995.) 
  
Unemployment in 1994 was about 7.7 percent while the minimum wage in 
urban areas was 1050 colones, roughly 121 dollars per month.  According 
to a study done in mid-1993, unskilled workers in urban areas generally 
earn twenty percent over the minimum wage.   
 
Principal Growth Sectors  
 
The fastest-growing sectors, according to Central Bank estimates, will 
be finance and construction.  The financial sector only constitutes 2.5 
percent of GDP, but its strength indicates a growing demand for capital 
and financial services caused by growth throughout the economy.  Several 
new financial institutions, including two new foreign banks, entered the 
scene in 1994.  In addition, an development-finance institution, the 
Banco Multisectorial de Inversiones, took over the small business 
development/financing role of the Central Bank, and now lends to worthy 
businesses or projects that would not normally qualify for commercial 
financing.   
 
Growth in construction has slowed from last year's pace, but is expected 
to remain strong.  Land prices have reached all-time highs in urban 
areas, fueled by speculation and demand for improved housing from an 
emerging middle class.  In addition, remittances are being invested in 
real estate.  The overall number of construction works is projected to 
continue to increase, and government spending on large public works 
projects in transportation and energy will further reinforce this 
sector.   
 
Agricultural production, although growing more slowly than some sectors, 
constitutes 14 percent of the GDP, and is a third significant force 
driving GDP growth for 1995.  Production estimates for 1995 are strong, 
after a stagnant 1994 caused by the "El Nino" weather phenomenon and a 
reduction in the area planted in basic grains.  The improved outlook for 
1995 is due to improved weather and high world coffee prices.  Coffee 
production will rise approximately ten percent in 1995, but revenue is 
expected to double.  Although still the country's single largest cash 
crop, the conversion of prime land into housing developments and a 
growing scarcity of workers to bring in the harvest will eventually 
reduce the country's dependence on coffee. 
 
Growth in manufacturing is expected to be stimulated by a steady 
increase in capital goods imports.  In 1993 and 1994, capital goods 
imports increased 31 and 15.5 percent, and preliminary Central Bank 
estimates show an 18 percent growth rate for 1995.  Within the 
manufacturing sector, apparel assembly is the fastest growing segment.  
FUSADES, a private economic think tank and trade-promotion organization, 
estimates the gross value of maquila exports in 1994 to be 430 million 
dollars.  This figure represents one-third of the country's total 
exports, but is deceptive in that it includes the value of the materials 
imported into El Salvador to be made into clothing.  The actual net 
benefit that remained in El Salvador, which includes labor costs, rent 
paid for factory space, electricity, and a small amount of Salvadoran-
manufactured inputs such as thread, was USD 105 million.  This is a 45 
percent increase over 1993's figure.  The Central Bank projects that 
1995's net revenues will be USD 120 million, a 14 percent rise. 
 
FUSADES estimates that approximately 50,000 workers were employed in 
maquila firms at the end of 1994, up from 32,500 at the end of 1991.  
Although this sector is expected to continue expanding, recent 
regulatory, law-enforcement and labor problems may dampen the sector's 
growth rate for 1995-96.  
 
Government Role in the Economy 
 
The government's role in El Salvador's economy is significantly less 
than the previous decade, when banks, sugar refineries, and other 
businesses were state-controlled.  Free-market economic and regulatory 
reforms undertaken in the 1990's are being continued under the current 
president, which will further lessen the government's direct involvement 
in the economy.  The privatization of state-run entities, such as ANTEL, 
the telecommunications company, and CEL, the electricity company, and 
the creation of regulations that will allow competition in these state-
run sectors, is likely to occur within the next few years.  
 
The government's 1995 budget shows increased spending, especially in 
health and education.  This is consistant with U.S. government foreign 
aid objectives.  The Ministry of Education received a 23.8 percent 
budget increase, and the Ministry of Health 36.6 percent.  The greatest 
percentage increases went to the general prosecutor's and public 
security budgets, with hikes of 209 and 180 percent respectively.  The 
largest expense in the budget is debt service, at 20.1 percent.  
Overall, government spending will increase 16.1 percent in nominal terms 
in 1995, to reach 13.2 percent of GDP.  Most of the funds for this 
spending will come from a projected 33.6 percent increase in tax 
collections.  This does not include a three percent increase in the 
country's value added (VAT) tax took place in July, 1995, increasing the 
overall VAT rate to 13 percent.  In addition, the number of businesses 
and citizens who filed income tax declarations increased by 38 percent 
in 1995, surpassing the government's projections by 34 percent.  The 
fiscal deficit is projected to drop from 0.7 to 0.6 percent of GDP at 
the same time that total tax collection as a percentage of GDP is 
projected to rise from 10.7 in 1994 to 11.5 in 1995.   
 
Balance of Payments 
 
The 1994 merchandise trade account showed a deficit of USD 1.41 billion.  
A steady flow of remittances and still-significant amounts of foreign 
aid combined to offset this deficit and produce a balance of payments 
surplus for the year.  The Central Bank estimates that this trend will 
continue, and has projected a 33.3 percent increase in the country's 
payments surplus in 1995.  Non-traditional exports continued their 
strong growth in 1994 and are expected to continue doing so in 1995.  El 
Salvador is also benefitting from high world prices for coffee.   
 
Infrastructure Situation 
 
Ports - El Salvador's major cargo seaport is located in Acajutla.  A 
second minor cargo port exists in the eastern part of the country at 
Cutuco.  Acajutla is considered to be expensive and has tidal conditions 
that make loading and unloading difficult.  Some Pacific carriers unload 
their cargo in Puerto Quetzal in Guatemala and truck their freight to El 
Salvador.  The majority of sea freight comes in through Guatemala's and 
Honduras' Atlantic ports.  Acajutla has four docks and is capable of 
handling containers and heavy loads up to 25 metric tons.  Most of the 
containerized cargo is dry, and refrigerated cargo is limited.  For 
solid bulk goods, it has a telescopic unloader and clam ladle .  It also 
has two mobile electric cranes with three metric ton capacity, a 
platform scale and a truck overturner-platform with a capacity of 55 
metric tons.  There are five tugboats available to assist in docking, 
warehouses, and roofed modules for storage.  There is a rail link that 
runs to Sonsonate and San Salvador.  Petroleum can be unloaded at an 
offshore buoy connected to the RASA (Esso-Shell) petroleum refinery. 
 
Airports - El Salvador International Airport is currently expanding at a 
cost of approximately USD 40 million dollars to CEPA, the port and 
airport authority.  The passenger terminal and cargo-handling facility 
will be enlarged, and more air passenger bridges will be built.  
Currently, the airport has six air bridges for passenger traffic.  It 
handled 831,000 passengers in 1994, a 6.4 percent increase over 1993.  
Air cargo imports for 1994 were 15.2 million kilograms, a 13.5 percent 
increase over 1993, and exports were 15.6 million kilos, a 16.6 percent 
rise.  Fine, Challenge, Florida West, Emery and all of the passenger 
airlines offer frequent cargo service to and from the U.S.  A smaller 
airport, Ilopango, on the eastern border of San Salvador, is being 
considered for development as a regional cargo-handling center, but 
currently is used only by military and small craft.  The airport in San 
Miguel, the country's second-largest city, is unpaved and infrequently 
used.   
 
Roads/Highways - Currently, the country has nearly 12,500 kilometers of 
roads, of which 1,970 km. are paved.  The major cities, airport, and 
port are all linked by paved highways is various states of disrepair.  
The Inter-American Development Bank (IDB) has loaned a total of USD 225 
million dollars towards the construction and maintenance of rural roads, 
trunk highways, bridges, and urban streets and overpasses.  An 
additional USD 241 million will be provided by the Salvadoran and 
Japanese governments, and the Central American Bank for Economic 
Integration (CABEI).  
 
Trains -  El Salvador has a money-losing 564-kilometer rail system, 
administered by CEPA.  Both the U.S. and Canadian governments are 
funding studies that will recommend which parts, if any, of the system 
should be rehabilitated and modernized.  With the opening of the 
privately-owned Coastal Power electricity plant in Nejapa, it is 
possible that the Acajutla/Nejapa portion of the line will be improved 
to carry fuel oil to the plant.  Currently, the most actively-used 
portions are between Metapan and Apopa/San Salvador (carrying cement), 
and Acajutla to Sonsonate (general freight).   
 
Telecommunications -  A 1994 survey of businessmen by FUSADES indicated 
that inadequate telecommunications are regarded as the greatest obstacle 
to doing business in El Salvador.  Since that time, ANTEL has added new 
phone lines, but ads in the newspaper selling phone lines for as much as 
USD 1,000 indicate that the supply remains inadequate.  Some companies 
have set up their own direct data transmission links to their overseas 
headquarters, and many use cellular phones, which can be used in most 
parts of the country of commercial interest.   
 
Electricity - CEL, the Salvadoran state-owned electricity company, will 
likely be able to generate enough electricity to meet demand in 1995-96.  
However, large factories and industrial parks generally have their own 
backup power generating facilities, due to frequent periods of 
electricity rationing that took place as recently as 1992.  
Infrastructure problems and weather conditions still interrupt service 
on a regular basis.  Electrical generation is highly dependent on 
seasonal rains, because hydroelectric plants provide more than 40 
percent  of the country's generating capacity.  CEL, aided by the Inter-
American Development Bank (IDB), is developing geothermal and fuel-
powered electrical plants to diversify its sources of power.  In 
addition, privately-owned generating plants, such as Coastal 
Technology's Nejapa project, and an IDB-sponsored interconnection with 
Honduras' electrical grid, will likely lessen the probability of 
electricity shortages in the future.   
 
 
 
                   Chapter III - POLITICAL ENVIRONMENT 
 
El Salvador's successful three-year peace process culminated in the 
Spring of 1994 with peaceful presidential, legislative, and municipal 
elections, in which the political party of the ex-guerrillas, the FMLN, 
participated.  Though losing the presidential election, the FMLN and an 
allied party won 22 seats in the 84-seat Legislative Assembly, becoming 
the second major political force in the country.  The presidential 
election was won by Armando Calderon Sol, the candidate of the right-of-
center ARENA party, which won 39 seats in the Assembly.   While most 
elements of  the peace process have been implemented, problems remain 
with land distribution and judicial reform.  
 
Since its inception as an anti-communist nationalistic party in the 
early 1980s, ARENA has evolved into a moderate political force committed 
to free enterprise and democracy.  Under the  previous administration of  
President Alfredo Cristiani,  the government ended the 12-year civil 
war, greatly liberalized the economy and reduced corruption.  President 
Calderon Sol has continued these policies.   
 
Shortly after the 1994 elections the FMLN split into two parties, one 
keeping the FMLN name and the other naming itself the Democratic Party 
(PD).  The PD has advocated a more moderate political line than the 
FMLN, recently associating with ARENA in a committment to pursue free-
market and social modernization policies.  While taking a more radical 
tone, the FMLN has strongly supported the democratic process.  The 
center-left Christian Democratic Party (PDC) has seen its support slowly 
erode since controlling the Presidency and Assembly in the mid-1980s.  
It also recently split into two parties.  There are several other small 
parties. 
 
El Salvador has an excellent relationship with the United States, 
solidified by 12 years of close cooperation during the Salvadoran civil 
war.  Leaders of the FMLN have established close relations with the U.S. 
government, seeing it as an honest broker during the peace process.  The 
vast majority of Salvadoran people also view the U.S. in a favorable 
light, a sentiment augmented by the fact that almost a million 
Salvadorans live in the U.S. 
 
 
 
          Chapter IV - MARKETING U.S. PRODUCTS AND SERVICES 
 
Distribution and Sales Channels 
 
Most products are imported by large distributors who then sell to 
retailers, although large department stores import directly from 
manufacturers or exporters.  The large distributors have well-
established networks of buyers, but handle such a wide range of products 
that they often cannot dedicate the time and resources necessary to 
promote a new or lesser-known product.  Many well-known U.S. products 
are imported via U.S. distributors and not directly from the producer.  
Through this means, many U.S. products gain name recognition before a 
formal supplier/distributor relationship is set up.  Small retailers 
often travel to the U.S. to purchase and carry back products themselves.  
This is especially true for used vehicles and auto parts, computers and 
household goods. 
 
Use of Agents/Distributors - Finding a Partner 
 
When a U.S. firm wishes to sell in El Salvador, it usually appoints an 
agent or distributor.  Companies seeking information on potential 
agents, distributors or partners in El Salvador should purchase an Agent 
Distributor Service (ADS) from the nearest U.S. Department of Commerce 
District Office, contact the Commercial or Agriculture section of the 
embassy, or the PRIDEX division of Fusades, a private trade-promotion 
organization (see Appendix E).   
 
Sections "B" and "C" of Chapter III, Title III of the Salvadoran 
Commercial Code define the role of representative agents and 
intermediary agents.  According to article 392, an agent, representative 
or distributor is any natural or juridical person who, on a permanent 
basis and with or without legal representation and through a contract, 
is appointed by a principal to establish an agency, representation or 
distribution for some product or service in the country.  The agency, 
representation or distribution may be either exclusive or of any other 
type agreed upon by the parties.  The Commercial Code also categorically 
establishes some justified causes to terminate, modify or not renew the 
contract, as in the following cases: 
 
A. Failure in fulfilling the contract of representation agency or 
distribution; 
 
B. Fraud by the agent, notwithstanding the criminal sanction if there 
is one; 
 
C. Inability or serious negligence by the representative agent or 
distributor; 
 
D. Continued decrease of the sale or distribution of the merchandise 
or services due to causes attributable to the representative agent; 
 
E. Revealing confidential information; 
 
F. Acts attributable to the representative agent that prejudice the 
introduction, sale or distribution of the products that have been 
committed to him. 
 
If the principal should terminate, modify or not extend the 
representation, agency or distribution without having met any of the 
conditions specified in Art. 398 of the Commercial Code, the agent shall 
be entitled to compensation for the damages caused to him.  The law 
allows compensation as follows: 
 
A. The expenses incurred by the agent or distributor, in benefit of the 
business which is being deprived, whenever such expenses cannot be 
recovered due to a unilateral decision to rescind the contract; 
 
B. The value of the investment made for a particular place, equipment, 
installations, furniture and utensils, if such investments are only 
useful for the business for which is being deprived;  
 
C. The value of the merchandise and accessories in stock if, due to the 
expiration of the contract, the representative agent or distributor can 
not continue selling them, or if sale is especially difficult.  This 
value shall be calculated taking into account the acquisition cost, plus 
freight, to the agent or distributor place, taxes and charges that he 
has had to pay for possessing the stock.  Once this value has been paid 
by the principal, he shall be entitled to possess the goods;  
 
D. The amount of gross profit obtained by the representative, agent or 
distributor during the performance of the representation or distribution 
for the last three years, or during the shortest period in which he 
performed it;  
 
E. The value of the credits that the representative, agent or 
distributor has granted to third parties, to pay the value of the 
merchandise that he distributes.  Once the principal pays the value of 
the credits, he shall assume the rights of the representative agent or 
distributor. 
 
According to Article 399 A of the Commercial Code, disputes that arise 
from applying the above articles shall be resolved by a summary trial in 
the commercial courts under whose jurisdiction the representative agent 
or distributor resides. 
 
Franchising 
 
In 1994-95, several new U.S. fast-food franchises were established in El 
Salvador.  As the economy has grown and investor confidence has 
increased, the Commercial Section has received more and more inquiries 
about establishing U.S. franchises.  With a continued rise in consumer 
spending, opportunities in this sector are expected to increase.  
 
Direct Marketing 
 
Inadequate telecommunications and mail delivery in El Salvador are 
obstacles to direct marketing.  However, door-to-door sales by U.S. 
cosmetics and household products firms, and direct-from-television sales 
are increasing. 
 
Joint Ventures/Licensing 
 
Joint ventures and the use of licenses of U.S. firms must be legally 
established in a contract signed by both parties.  Both types of 
relationships are regulated by the Salvadoran Commercial Code.  The 
Commercial Section of the American Embassy in San Salvador regularly 
reports on Salvadoran firms interested in pursuing joint ventures or 
licensing agreements.  
 
Steps to Establish A Business Office in El Salvador 
 
The steps necessary for establishing a business office in El Salvador 
are: 
 
i.    Find a legal representative or a lawyer. 
ii.   Request a permit to operate in El Salvador from the  
      Superintendencia de Empresas y Sociedades Mercantiles, 
      1a. Calle Poniente y 45 Avenida Norte 
      San Salvador, El Salvador 
      Tel. (503) 79-2152 
iii.  The Superintendencia de Empresas y Sociedades Mercantiles 
      authorizes all types of commercial activities that take place 
      in the El Salvador and establishes the minimum starting 
      capital required for businesses to begin operations.  
      These start at approximately USD 25,000 dollars. 
iv.   Obtain an income and property clearance from the Direccion 
      General de Impuestos Internos from:  
      Ministerio de Hacienda 
      Avenida Alvarado y Diagonal Centroamerica 
      Condominio Las Tres Torres No. 2 
      San Salvador, El Salvador 
      Tel: (503) 225-1022; Fax: 226-7170 
v.    Request a license at the Commerce Registry (Registro de 
      Comercio), in the Commerce and Industry License Registry 
      Department.  (The industrial and/or commercial patent registry 
      is also requested in this office.) 
vi.   Register both the firm's board of directors and administrative 
      personnel at the Commerce Registry. 
vii.  Obtain a municipal services clearance from the appropriate 
      township or city. 
viii. Obtain certification that the firm is properly registered in 
      the Industrial and Commercial National Establishments 
      Directory at: 
      Direccion General de Estadistica y Censos 
      1a. Calle Poniente y 43 Avenida Norte 
      Tel. (503) 224-1603; fax 223-1520 
ix.   If the firm sells or manufactures pharmaceuticals, obtain a 
      permit from: 
      Consejo Superior de Salud Publica  
      Avenida Espana No. 736 
      San Salvador, El Salvador 
      Tel: (503) 221-0497 or 221-0151 
x.    Publish the firm's license in a local newspaper. 
xi.   Register the investment at the Foreign Capital and 
      Technology Transfer Department of the Ministry of Economy. 
xii.  Hire both an accountant and an external auditor that has 
      been certified by the government of El Salvador. 
 
 
Selling Factors/Techniques 
 
Sales and marketing methods are still in their infancy in El Salvador.  
Sellers can get an edge by offering good service and follow-up.  New 
products are often introduced at a reception at an upscale hotel, 
together with a newspaper and billboard ad campaign.  As competition 
increases, creative sales promotions such as contests, drawings, 
raffles, etc., are becoming more prevalent. 
 
Advertising and Trade Promotion 
 
Advertising in El Salvador is made mainly through TV, radio, newspapers, 
billboards and leaflets.  A typical ad budget for a consumer product 
would be 50 percent for T.V., 30 percent for radio and 20 percent for 
newspaper and billboard advertising.  Radio advertising can cost as 
little as USD 3.40 per 30-second ad.  Prices for newspaper advertising 
will likely become more competitive as the country's two principal 
newspapers fight for readers.  Television advertising is more costly, 
ranging from approximately USD 115 dollars to USD 450 dollars for a 30 
second spot on a major VHF channel.  Three television stations attract 
approximately 80 percent of the viewers.  Chamber of Commerce and other 
trade association publications generally accept advertisements.  The 
principal Salvadoran newspapers are: 
 
La Prensa Grafica  TEL. (503) 281-3333; FAX: (503) 271-1676 
El Diario de Hoy   TEL. (503) 271-0122; FAX: (503) 271-2270 
Diario El Mundo    TEL. (503) 271-4400; FAX: (503) 271-4342 
Diario Latino      TEL. (503) 222-1009; FAX: (503) 271-0971 
Primera Plana      TEL. (503) 225-1100; FAX: (503) 225-1155 
 
There are no business journals of note in El Salvador. 
 
Pricing Product 
 
Generally, there are no controls on prices in El Salvador.  The the 
exceptions are liquid propane gas and diesel fuel, which are subsidized.  
There is a value-added tax (VAT) of thirteen percent that must be added 
to the purchase price of all products except for some basic food 
products such as rice, beans and milk. 
 
Sales Service/Customer Support 
 
It is important for firms that sell equipment, machines or electric 
appliances to provide effective customer support.  The availability of 
good service and support strongly influences buyers, especially on 
government orders. 
 
Selling to the Government 
 
For small government purchases, sellers should contact the procurement 
office in each ministry or autonomous institution.  Generally, sellers 
need to speak Spanish to be successful.  For purchases worth more than 
USD 10,000 - 20,000 dollars (depending on the ministry or agency), the 
government publishes a tender in the major newspapers and/or sends 
written notices to various embassies.  Salvadoran law calls for civil 
engineering and construction projects that are financed by government of 
El Salvador's own funds to be given to Salvadoran companies.  The USD 40 
million dollar expansion of the international airport falls under these 
guidelines.  However, since most large projects receive aid or 
concessionary loans from international financial institutions, and 
therefore are open to U.S. companies, this law is not seen as a major 
trade barrier.  Government bids received by the U.S. Embassy are placed 
on the Department of Commerce's National Trade Data Bank or on-line 
Electronic Bulletin Board as "Foreign Government Tenders".  In the first 
five months of 1995, the Embassy reported more government bids than in 
all of 1994. 
 
Protecting Your Product fromof IPR Infringement  
 
In June, 1994 El Salvador's revised intellectual property rights (IPR) 
law took effect.  It provides protection for patents, copyrights, 
trademarks, and sound and video recordings.  El Salvador is a signatory 
of the Geneva Phonograms Convention, the Rome Convention, the Berne 
Convention for the Protection of Literary and Artistic Works, and the 
Paris Convention for the Protection of Industrial Property. 
 
The new law improves protection in several key areas.  Patent terms were 
lengthened to 20 years, and the definition of patentability is broad.  
Compulsory licensing applies only in cases of national emergency.  
Computer software is also protected, as are trade secrets and semi-
conductor designs. 
 
Although El Salvador's IPR laws are considered to be world-class, 
enforcement of these laws is irregular.  Some U.S. trade groups have 
raised questions about whether the government has the will or ability to 
provide effective protection of their property.  Because of the sharp 
rise in street crime, enforcement of IPR rights is not a primary concern 
of El Salvador's police.  To bring about a confiscation of pirated 
goods, the offended party must have good lawyers, present a completed 
case with a judicial order to the police, and apply pressure until they 
act.  Several hundred pairs of counterfeit blue jeans were seized in 
1995, but this and other sporadic enforcement actions have not stopped 
the manufacture or sale of pirated goods.  El Salvador is on USTR's IPR 
watch list, and its Generalized System of Preferences (GSP) benefits 
will be reviewed in 1995 under intellectual property rights criteria.   
 
Need for A Local Attorney 
 
Hiring a local attorney is recommended to help open a business in El 
Salvador, to prepare contracts and to help avoid or resolve business 
disputes.  The Commercial Section of the American Embassy in San 
Salvador maintains a list of lawyers that regularly assist U.S. firms. 
 
 
 
      Chapter V - LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
 
Besides the sectors listed below, U.S. businesses should be aware that 
opportunities exist for many products and services in EL Salvador.  Due 
to the change in February 1994 of tariff systems used to categorize 
imports, and the lack of reliable data from previous years, data tables 
have been omitted from this section. 
 
Best Prospects for Non-Agricultural Goods and Services 
 
1 - Automotive Parts and Service Equipment (APS) 
 
In 1994, more than USD 48 million dollars worth of vehicles, ranging 
from cars to tractor-trailers, were imported into El Salvador from the 
U.S.  Many of these vehicles were driven from the U.S. and are older 
models likely to need repair.  The majority of cars in El Salvador are 
Japanese brands.  Badly-maintained roads and exuberantly unskilled 
driving result in a high demand for replacement parts and service.  
Although there are hundreds of auto repair and parts shops, this market 
is not yet saturated with suppliers.  As the economy continues to grow 
and vehicles continue to flow into the country, this sector is expected 
to continue its strong growth.  
 
2 - Foods - Processed (FOD) 
 
Preliminary figures show that imports of consumer-ready food products in 
1995 have risen nearly 50 percent over last year's level.  A general 
rise in consumer spending, along with the U.S. Department of 
Agriculture's efforts to promote U.S. food products at supermarkets 
throughout the country, have sparked growth in this sector.  More 
products from Mexico have appeared on the shelves since the peso's value 
dropped sharply, and Guatemalan and Costa Rican products also compete 
against U.S. goods.  However, the economies of scale enjoyed by U.S. 
companies, combined with creative merchandising and an expected 
reduction in tariffs will allow for further strong growth in this sector 
for U.S. products. 
 
3 - Architecture/Construction/Engineering Services (ACE) 
 
In 1994-95, the Inter-American Development Bank (IDB) and World Bank 
approved loans for hundreds of millions of dollars for major 
infrastructure work in El Salvador.  In addition, the Salvadoran 
government and foreign aid agencies are investing in improvements health 
care, roads and bridges, airports, water and electrical generation.  
U.S. design, engineering and construction companies already compete 
against counterparts from France, Italy, Germany, Japan and Taiwan in El 
Salvador.  The sheer amount of projects in the pipeline, the good 
reputation of U.S. firms, and the tendency to form joint ventures or 
subcontract out large portions of major projects, assures a strong 
market for U.S. companies in this sector. 
 
4 - Computers/Peripherals (CPT) 
 
Sales of computers and peripherals, which were already booming, 
benefitted from the reduction of the tariff on capital goods.  Although 
competition is fierce and profit margins are slim in this market, 
increasing modernization throughout the business sector will assure 
strong growth throughout 1995-95.   
 
5 - Plastic Materials/Resins (PMR) 
 
Demand for plastics and resins to produce bags and containers has 
increased as manufacturing, maquila, processing and packaging industries 
have grown.  In 1994, El Salvador's 14th largest import by value was 
polyethylene of less than 0.94 density.  Its 22nd largest import by 
value was polyethylene of greater than 0.94 density.  If tariffs on raw 
materials are lowered as planned in 1996, and the economy continues its 
strong growth, demand for this product is expected to increase.  
 
6 - Paper/Paperboard (PAP) 
 
All newsprint and nearly all paper used in schools and offices in El 
Salvador is imported.  Sellers of finished paper products enjoy high 
profit margins.  Newspaper readership is increasing, and advertising to 
compete for increased consumer spending is rising.  In addition, demand 
for paperboard for packaging is rising as manufacturing, maquila and 
processing industries grow.  
 
Best Prospects for Agricultural Products 
 
Preliminary statistics from the first quarter of 1995 indicate that El 
Salvador's agricultural imports from the U.S. have increased 128 percent 
over the first quarter of 1994. 
 
Cottonseed Oil 
 
Cottonseed is the primary vegetable oil used for cooking in El Salvador.  
Industrial and household use of vegetable oil has risen steadily as the 
economy has grown.  Oilseed crushing is not a profitable venture for 
local companies, and many plants have closed or been idled in recent 
years.  Therefore, the amount of imported oil is increasing, and U.S. 
suppliers, with their economies of scale, are well-positioned in this 
market.  Cottonseed oil benefits from both the Cottonseed Oil Assistance 
Program and credit guarantees of the GSM 102 program (for financing up 
to three years), which lowers cost for local buyers.   
 
Cotton  
 
The U.S. is the principal supplier of cotton to El Salvador's textile 
industry.  Domestic cultivation of cotton has collapsed to the point 
where there will be no commercial harvest in 1995.  If as a result of 
the Crane Bill, currently under consideration by the U.S. Congress, El 
Salvador's textiles are granted NAFTA parity for import into the U.S., 
demand for cotton is likely to rise sharply.  In addition, as of July, 
1995, cotton exports to El Salvador are eligible for credit guarantees 
under the GSM 102 program, which will lower costs for local buyers and 
further spur demand.   
 
Rice 
 
Rice is a basic grain in the Salvadoran diet.  Although still largely an 
agrarian economy, El Salvador is not self-sufficient in basic grain 
production.  As production of rice in El Salvador and throughout Central 
America has fallen, and consumption has risen, U.S. rice has helped fill 
the gap.  A 20 percent tariff is imposed on rice imports.  A drought in 
1994 hurt producers, who in turn, planted 11 percent less cropland in 
1995.  In addition, urban development has encroached on ricelands east 
of San Salvador, cutting production further.  Competition exists from 
Vietnam and other producers, but the opportunities for U.S. producers 
should continue to grow.  
 
Corn 
 
Although corn is its largest single crop in terms of land cultivated, El 
Salvador does not produce enough to satisfy demand.  A drought in 1994 
reduced the year's harvest, and as a result, the import tariff on white 
corn, a basic component of the Salvadoran diet, was temporarily dropped 
from 20 to 10 percent to spur imports.  The tariff on yellow corn, which 
is used as animal feed, was also cut early in 1995 to promote production 
in the chicken and cattle industries.  Imports of white and yellow corn 
combined in 1994 were 142,000 metric tons, a 50 percent increase over 
1993.  Imports for 1995 are estimated to reach 170,000 metric tons, a 
further 20 percent increase.  The U.S. supplies over 90 percent of El 
Salvador's imported corn.   
 
 
 
              Chapter VI - TRADE REGULATIONS AND STANDARDS 
 
Trade and Investment Barriers 
 
El Salvador has significantly reduced bureaucratic impediments to trade 
and investment in the last few years.  It offers virtually unrestricted 
remittance of net profits for investors in industrial activities, a 
fixed tax rate for resident corporations, and duty free importation of 
raw materials, intermediate products and machinery for free trade zone 
investors.  El Salvador is a member of the World Trade Organization, 
International Center for the Settlement of Investment Disputes (ICSID), 
and the Multi-lateral Investment Guarantee Agency (MIGA), and is party 
to an investment guarantee treaty with the U.S. since 1960.  The country 
qualifies for Eximbank and OPIC programs.   
 
Independent of the registration process, foreign investors must also 
fulfill prerequisites with the Superintendencia de Empresas y Sociedades 
Mercantiles of the Ministry of Economy such as proof of legal 
incorporation of parent firm's domicile and proof of sufficient assets 
to meet legal establishment and operating costs.  Investment 
legalization procedures sometimes require months.  Informal "fees" are 
sometimes requested by officials to expedite routine tasks.  Customs 
offices are understaffed and service is slow and poor.  There are 16 
customs offices at border posts, but the majority of cargo is cleared at 
customs' San Bartolo headquarters.  Customs clearance in Santa Ana is 
particularly difficult and should be avoided, if possible.  Information 
regarding required documents and signatures is difficult to obtain and 
often inconsistent.  As many as eight approvals may be required for one 
document. 
 
Tariffs and Import Taxes 
 
On April 1, 1995, El Salvador lowered its import tariff on capital goods 
from five to one percent.  Preliminary reports indicate that in 1995, 
capital goods imports have increased 18 percent over the same period in 
1994.  A further reduction in tariff rates is planned for January 1996, 
which may abolish the capital goods tariff, and lower tariffs on 
intermediate goods and raw materials.  Government officials have 
indicated that they would like to establish a tariff ceiling of 15 
percent for finished goods, which would gradually be lowered to six 
percent over a period of five years.  Currently the tariff ceiling is 20 
percent.  These new tariffs would apply to products coming from outside 
the Central American Common Market.  Some powerful businessmen and labor 
organizations are not in agreement with these reforms, which may result 
in the plan being modified before the next steps are implemented in 
1996.   
 
El Salvador is a signatory to the Agreement on Central American Tariffs 
and Duties, which sets the basis for statistical and fiscal control on 
imports and exports and standards or regulations of regional trade.  As 
its main annex the Agreement originally used the Uniform Tariff for 
Central American Nomenclature (NAUCA II).  This was replaced by the 
Central American Tariff System (SAC) in February, 1994.  This mid-stream 
change has affected statistic-gathering for 1994, but is regarded as an 
improvement on the old system.    
 
The SAC is made up of 5,653 levies divided into 95 chapters with duties 
of 5, 10, 15, 20, 25 and 30 percent ad-valorem; duties are distributed 
as follows: Part I has 5,327 items (94.2 percent) assigned a common 
external Central American tariff, with a maximum of 20 percent.  Part II 
has 135 items (2.4 percent), for which negotiations on a common external 
tariff are expected to be completed by December 1995.  Part III has 182 
items (3.2 percent) which are not scheduled to be part of the common 
external tariff regime, and 9 items (0.2 percent) with tariffs 
applicable only in El Salvador. 
 
Customs Valuation 
 
Customs valuation is performed by the Direccion General de la Renta de 
Aduanas (Customs Bureau) for all articles.  In general, the value in the 
commercial invoice is used for tax purposes.  If there is doubt about 
the accuracy of the stated price, Customs assesses their own value, 
which often is higher than the actual purchase price.  For valuing used 
cars, Customs uses N.A.D.A., Edmund's and the Truck Blue Book. 
 
Import Licenses 
 
Customs does not generally require import licenses.  However, when the 
imported goods are vegetables or animals, a license from the Ministry of 
Agriculture is needed to certify that the goods meet local health and 
sanitary regulations.  In addition, firearms require a license from the 
Ministry of Defense. 
 
Export Controls 
 
All exporters must register in the Centro de Tramites de Exportacion 
(Export Procedures Center) in the Banco Central de Reserva.  For 
agricultural products, animals and veterinary products, the exporter 
must be registered in the Consejo Salvadoreno del Cafe (for coffee), 
Centro de Desarrollo Pesquero CENDEPESCA (for seafood), Inspeccion de 
Productos de Origen Animal-IPOA (animal products) and Direccion de 
Defensa Agropecuaria (for live animals).  El Salvador's iguana-export 
industry is regulated by the provisions of CITES, which oversees trade 
in endangered species.  In addition, in 1995, an agreement was reached 
that restricts the importation of certain categories of pre-hispanic 
archaeological materials from El Salvador into the U.S.   
 
Import/Export Documentation 
 
Documents needed for processing imported goods through Customs include: 
 
i.   Import license (if animal, vegetable or firearms) 
ii.  Commercial invoice 
iii. Bill of lading, airway bill or carta de porte. 
 
When imports come from the Central American Region the only document 
required is the customs form (Formulario Aduanero). 
 
The following documents are required by CENTREX, a part of the Banco 
Central de Reserva, when exporting: 
 
i.   Export license (Registro de exportador) 
ii.  Application for export registry (Solicitud de 
     Registro de Exportacion). 
iii. Commercial invoice (factura comercial). 
iv.  Authorization of the Ministry of Agriculture when required. 
v.   Authorization of the Ministry of Finance and of the  
     Ministry of Labor for machinery and industrial equipment. 
 
Temporary Entry 
 
Customs may authorize temporary entry of foreign merchandise with 
temporary or partial suspension of duties for specific purposes under 
the condition that they must be re-exported within the time authorized 
and without any modification or transformation.  A bond must be 
presented as guarantee that the temporarily imported goods will be re-
exported within the time authorized.  Temporary entry of goods for 
transformation, manufacture or repair is granted under laws that 
regulate free trade zones. 
 
Labeling, Marking Requirements 
 
These requirements are included in the Law for the Protection of the 
Consumer (Ley de Proteccion del Consumidor).  The key provisions are: 
 
i.   Retailers must have the price of the product either 
     on the packaging or on a visible place. 
ii.  Products that are sold by weight or volume or any other 
     measure must have the weight, volume or an exact measure 
     of its content on the label. 
iii. For pharmaceuticals, the list of ingredients, expiration 
     date, dosage, contraindications, risks involved when used, 
     residual toxic effects, etc. as established by the Ministry of 
     Public Health must be printed on the label. 
 
Prohibited or Restricted Imports 
 
Weapons - The import of certain high-caliber firearms is prohibited.  
Arms for personal defense or hunting may be imported, but are strictly 
controlled by the police and Ministry of Defense.   
 
Drugs - Cocaine, opiates and barbituates may be imported solely for 
medical use, with the permission of the Consejo Superior de Salud 
Publica.  The Consejo controlls the sale of these substances to the 
public.  
 
Other items that either prohibited or restricted: 
 
i.    Books, booklets, budgets, emblems, posters and any other  
      articles of a subversive character or doctrines contrary to 
      the established political, economic and social order. 
ii.   Figures, statues, books, booklets, almanacs, magazines, 
      engraved or lithographed articles, newspapers, lithographs,  
      stamps, photographs, and cards of an obscene nature or 
      any other obscene articles. 
iii.  Movies contrary to ethics and good behavior. 
iv.   Abortives. 
v.    Gambling machines. 
vi.   Roulette wheels, gambling tables, and any other item or  
      article used for gambling. 
vii.  Opium with less than nine percent of morphine, scrapes 
      and opium ashes, and any material used for smoking those products. 
viii. Non-stamped paper for cigarettes, white or colored in rolls, 
      spools, booklets or small tubes. 
ix.   Machines and tools for making coins. 
x.    Counterfeited coins and bills. 
xi.   Plain silver coins of less than 0.900 purity. 
xii.  Tokens of any metal or alloys that may be used as substitutes  
      for legal coins. 
xiii. Coffee trees. 
xiv.  Coffee seeds for planting. 
 
The Customs administrator on the scene determines if an item falls under 
any of the above categories.  Anyone considering the import of such 
items should consult with the appropriate government regulatory agency 
for exemptions or special permits. 
 
Standards 
 
There is no legislation regarding the use of standards, but consumers 
look for U.S. standards markings on when purchasing imported goods.  
Many multi-national firms adhere to ISO 9000 standards, but they are not 
widely used among local companies. 
 
Free Trade Zones/Warehouses 
 
Under the Foreign Investment Promotion and Guarantee Law of 1988 and the 
1990 Export Reactivation Law, the government of El Salvador provides tax 
breaks and other incentives for manufacturers that export.  Free trade 
zones have boomed because companies that manufacture exclusively for 
export are exempt for ten years (renewable for up to ten more years) 
from all income, dividend and capital taxes, and any taxes on the export 
or import of goods or equipment used in manufacturing the exported 
product.  Any export firm can have itself declared a free trade zone.  
Foreign investors are not restricted in any way regarding ownership of 
free-trade zone properties.  El Salvador currently has five large free 
trade zones and many individual factories that enjoy free zone status.  
Labor regulations in these zones are identical to those throughout the 
country.  The free trade zones that are operating in El Salvador are the 
following: 
 
A.  San Bartolo - currently being privatized, located 10 kms. east of 
San Salvador on Boulevard del Ejercito. Tel. (503) 224-6677  fax 224-
4956   
 
B.  El Progreso Industrial Park - located on the road to La Libertad, 
about seven miles west of San Salvador.  It has 12,000 square meters of 
space in ten buildings.  Tel. (503) 228-5075  fax 228-3492 
 
C.  El Pedregal - located five miles from El Salvador's International 
Airport and 23 miles from San Salvador.  Tel. (503) 334-6011  fax 334-
6060 
 
D.  Exportsalva - located 15 miles from San Salvador and 35 miles from 
the international airport, on the Santa Ana - San Salvador highway.  
Tel. (305) 591-1844  fax 593-0498  
 
E.  San Marcos Free Zone - located three miles from San Salvador, on the 
road to El Salvador International airport.  Tel. (503) 220-2333  fax 
220-1012 
 
Special Import Provisions 
 
Importers of fresh produce, livestock, and food products should check 
with the Ministry of Agriculture, the USDA office in Guatemala or the 
local USDA employee at the U.S. Embassy in San Salvador for the latest 
phytosanitary regulations.  Generally, El Salvador's phytosanitary 
regulations are transparent and scientifically based.  However, sanitary 
regulations are clearly used as a tool to keep poultry from being 
imported into the country.  El Salvador is a member of the Organismo 
Internacional Regional de Sanidad Agropecuaria (OIRSA), a regional 
zoo/phytosanitary organization based in San Salvador. 
 
Membership in Free Trade Arrangements 
 
El Salvador has approximately 50 commercial and technical cooperation 
treaties in effect.  It is a member of the Central American Common 
Market, and a beneficiary of the Generalized System of Preferences (GSP) 
and the Caribbean Basin Initiative (CBI).  Trade treaties with Mexico, 
Spain, and Venezuela look to promote investment and joint-ventures.  El 
Salvador has made preliminary efforts to join with Guatemala and 
Honduras to negotiate a free trade agreement with Mexico, Venezuela and 
Colombia.  El Salvador is a member of the World Trade Organization.  
Some of the most important treaties are: 
 
FREE TRADE AND ECONOMIC INTEGRATION AGREEMENT BETWEEN THE REPUBLICS OF 
EL SALVADOR AND GUATEMALA. 
In 1992, an agreement promoting Free Trade and Economic Integration was 
signed by both countries.  It included customs standardization within a 
maximum of two years beginning on the date of signature.  This agreement 
grants free trade on all products originated in both countries, except 
raw coffee in all forms (berry, pergamin and bean), wheat flour, refined 
and unrefined sugar, oil and petroleum by-products.   
 
NUEVA OCOTEPEQUE AGREEMENT ON TRADE AND INVESTMENT. 
In 1992, the Governments of Guatemala, El Salvador and Honduras signed 
the Nueva Ocotepeque Agreement, which calls for the organization of free 
trade within the three countries, customs standardization, adopting the 
Common External Duty (SAC), the free establishment of bank branches in 
all three countries, integration of the stock markets, and coordination 
of financial legislation. 
 
FREE TRADE AGREEMENT AND PREFERENTIAL EXCHANGE EL SALVADOR-PANAMA. 
This agreement was signed in August, 1970 and includes 366 levied items 
already negotiated.  The treaty is administered by a permanent 
commission formed by representatives of both countries.  It is 
indefinite, but it may be terminated by either party provided there is 
three years notice. 
 
COMPLEMENTARY AGREEMENTS -- CENTRAL AMERICA-MEXICO, CENTRAL AMERICA-
VENEZUELA, CENTRAL AMERICA-COLOMBIA. 
In 1992 the Ministers of Finance of the Central American countries and 
the Minister of Trade of Mexico signed the Multilateral Framework 
Agreement (Acuerdo Marco Multilateral) promoting trade liberalization 
between the signatories.  This agreement is seen as the basis for an 
eventual free trade agreement between the Central American countries and 
Mexico. 
 
In February 1993, the presidents of the Central American countries, 
Venezuela and Colombia signed a Trade and Investment Agreement which 
supercedes previous agreements signed bilaterally by Venezuela and 
Colombia with the Central American countries.  By this agreement the 
countries began a process of free trade that is projected to be 
completed in 2003. 
 
 
 
                   Chapter VII - INVESTMENT CLIMATE 
 
Openness to Foreign Investment  
 
The Salvadoran Government is committed to attracting foreign investment. 
Companies from the United States, Canada, Germany, Korea, Taiwan,  and 
Mexico have made investments here with favorable results.  The primary 
legislation governing foreign investment  in El Salvador is the 1990 
Export Reactivation Law; and the 1988 Foreign Investment Promotion and 
Guarantee law. 
 
The 1988 Foreign Investment and Promotion Law is a comprehensive 
statute.  To investors who register with the Ministry of Economy this 
law provides: 
 
--  Unrestricted remittance of net profits for investors in industrial 
activities. 
 
--  Remittance of net profits up to fifty percent of the registered 
foreign capital per year for investors in commercial and service 
activities.  In practice, however, there is free convertibility of 
capital. 
 
--  Unrestricted remittance of funds obtained from the liquidation of a 
business in proportion to the foreign funds invested. 
 
--  Unrestricted remittance of royalties and fees for use of foreign 
patents, trademarks, technical assistance and other similar services. 
 
--  Foreign investors may hold dollar accounts in El Salvador and may 
use these accounts to obtain local financing. 
 
Firms located in export processing zones or bonded warehouses that 
export 100 percent of their production outside the Central American 
market, including drawback/assembly operations, can enjoy the following 
benefits: 
 
--  Up to 20 years exemption from income tax. 
 
--  Duty free importation of machinery, equipment, tools, spare parts, 
furniture, and other products necessary for the operation. 
 
--  Duty free importation of raw materials, semi-manufactured, and 
intermediate products. 
 
--  Duty free importation of fuels and lubricants. 
 
Under the Export Reactivation Law of 1990, firms not located in free 
zones and exporting less than one hundred percent of their production 
may apply for tax rebates of six percent of the FOB value of these 
exports.  However, the paperwork to obtain this rebate is cumbersome. 
 
In 1994 the government announced that it was setting up a one-stop 
office for foreign investment in the Ministry of Economy, where 
investors now register their investments.  To date, no concrete steps 
have been taken towards this end.  The registration process is supposed 
to be non-discriminatory and is not considered an impediment to 
investment.   
 
It is not necessary to have a local partner in El Salvador.  Some 
maquila operations are completely foreign-owned.  Three multinational 
oil companies operate in El Salvador, and two of these companies share a 
small refinery.  Two U.S. banks have offices in El Salvador.  The 
banking law has been modified to encourage other foreign banks to enter 
the country.  Although foreign investment in newly-privatized banks is 
limited, there are no restrictions on ownership of new banks. 
 
Conversion and Transfer Policies  
 
El Salvador has a freely convertible currency that trades at 
approximately 8.75 colones per dollar.  This currency is buoyed by 
family remittances of nearly one billion dollars per year from 
Salvadorans who reside outside the nation.  The nation's banks and many 
foreign exchange houses actively trade dollars and colons.  Foreign 
businesses freely remit profits, repatriate capital, and bring in 
capital for additional investments.  Banks publish their exchange rates 
daily in local newspapers. 
 
Expropriation and Compensation  
 
The last case of expropriation began in 1986, when the government 
nationalized the assets of CAESS, San Salvador's electric distribution 
company.  Six years later, shareholders received the first payment of 
ten million dollars.  In March 1993, the government concluded payments 
of cash and bonds and the case was settled to the satisfaction of all 
parties.    
 
In 1960 the United States and Salvadoran governments signed an 
investment guarantee treaty, which guaranteed U.S. investors against 
losses that could arise from currency inconvertibility or expropriation.  
As of July 1995, the US and El Salvador have nearly completed 
negotiating a bilateral investment treaty (BIT) that would encompass all 
aspects of investment.  It has not been signed for technical reasons.   
 
Dispute Settlement 
 
El Salvador is a member of the International Center for Settlement of 
Investment Disputes (ICSID).  Resolving business disputes through the 
slow-moving legal system can be costly and unproductive.  Some 
disputants allege that legal decisions can be bought, and final rulings 
are often not enforced.  A common tactic is to have your opponent 
arrested on some pretence on a Friday afternoon, so he or she has to sit 
in jail all weekend waiting for a hearing to be released.  Arbitration 
clauses should be included in contracts as a means to resolve business 
disputes. 
 
Political Violence (as it may affect investments) 
 
El Salvador continues its transition to a peacetime society after 12 
years of civil conflict.  There have been few confirmed acts of 
political violence since the elections in mid-1994.  Although general 
crime levels are high and are of concern to the business community, we 
are not aware of political violence specifically aimed at foreign 
investors, their businesses or their property. 
 
Performance Requirements 
 
El Salvador's investment legislation does not require investors to 
export specific amounts, transfer technology, incorporate set levels of 
local content, or fulfill other performance criteria. 
 
Right to Private Ownership and Establishment 
 
Foreign citizens and private companies can freely establish businesses 
in El Salvador.  However, foreigners are prohibited from operating small 
businesses with start-up capital of less than the equivalent of USD 
25,000 dollars.  This is not seen as an impediment to foreign 
investment, and does not seem to be strictly enforced.  There are 
several sectors shielded from foreign and local private investment or 
competition.  The national telephone company (ANTEL), the water and 
sewer company (ANDA), and the electric company (CEL) are owned by the 
state, but their monopolies are slowly being dismantled.  For example, 
private power generation is now allowed (although for practical 
purposes, it must be sold to CEL for distribution), and a U.S. company 
has formed a partnership with ANTEL to operate the country's cellular 
phone system.  Artesanal fishing within 12 miles of the coast is limited 
to citizens of El Salvador.  Commercial fishing between 12 to 200 miles 
from the coast can be undertaken by Salvadoran citizens, foreigners 
legally residing in El Salvador, or joint ventures legally registered 
with the government.  Commercial fishing licenses must be obtained from 
CENDEPESCA, a government entity.  Foreigners may engage in sport fishing 
without restriction in any of El Salvador's coastal waters. 
 
Protection of Property Rights (as they pertain to investments) 
 
Although the laws of El Salvador protect property rights, in practice, 
these laws are not always enforced even-handedly.  The judicial system 
is being reformed, and corrupt judges and administrators are slowly 
being removed from their posts.  However, investors must be aware that 
the legal and regulatory system can act arbitrarily, and should take all 
due precautions to protect their property and investments. 
 
Regulatory System (laws and procedures as they pertain to investment) 
 
The laws and policies of El Salvador are relatively transparent and 
generally foster competition.  Bureaucratic procedures, although 
cumbersome, have improved in recent years and are relatively streamlined 
for foreign investors.  Sectors that are still regulated or owned by the 
state, such as electricity, water and telecommunications, are slowly 
moving towards privatization or de-regulation that will allow for 
investment and competition.  The Superintendent of Banks supervises the 
banking system, but interest rates are determined by market forces.  
Banking-law reforms have attracted two new foreign banks to the country 
in the last year, and several new financial institutions have been 
established by Salvadoran investors.  Gasoline prices are "controlled" 
by the government, but are actually based on an average of U.S. Gulf 
Coast refinery prices.   
 
Bilateral Investment Treaties 
 
The United States and El Salvador signed an investment guarantee treaty 
in 1960 designed to protect U.S. investors against expropriation or 
currency inconvertibility.  The United States and El Salvador also have 
a framework agreement for a Trade and Investment Council (TIC).  An all-
encompassing bilateral investment treaty which would address issues such 
as as national treatment for foreign investors, transfers, 
expropriation, investment disputes, tax policies, etc., is being 
negotiated, but has not been signed for technical reasons.  The US and 
Salvadoran governments are working towards but have not yet reached 
agreement on a Tax Information Exchange Agreement. 
 
El Salvador is a member of the Central American Common Market, and has 
approximately 50 commercial and technical cooperation treaties in 
effect.  Three of these treaties (Mexico, Spain, and Venezuela) look to  
promote coinvestment.  Mexico's economic difficulties have led to the 
deferral of planned negotiations on a free trade agreement.  El Salvador 
is a member of the World Trade Organization. 
 
OPIC 
 
The Overseas Investment Corporation (OPIC) has a bilateral agreement 
with El Salvador.  OPIC has approved insurance coverage for the 
expansion of a U.S. bank in El Salvador, and is considering several 
other projects.  OPIC insures currency inconvertibility, expropriation 
and civil strife, as well as corporate financing.  El Salvador is a 
member of the Multilateral Investment Guarantee Agency (MIGA). 
 
Labor  
 
Of El Salvador's labor force of approximately 1.5 million workers, 34 
percent work in the agricultural sector.  This is followed by services 
(21 percent), commerce (18 percent) and manufacturing (15 percent).  The 
minimum wage in the industrial and commerce sectors is 1050 colons. 
roughly 120 dollars a month.  Urban employees with minimal skills 
generally earn at least twenty percent more than the minimum wage.  
Although the minimum wage is less for agricultural workers, coffee 
plantation owners report that they pay above the minimum wage to attract 
workers during the harvest.   
 
According to a Planning Ministry survey of 5,000 urban and rural 
families, unemployment in 1994 was 7.7 percent.  Visible underemployment 
could add three to seven percent to that figure.  However, some 
construction contractors cannot find sufficient skilled workers, due to 
the amount of projects now underway in El Salvador.  According to the 
above survey, 150,000 more people are employed in 1994 than 1993.  The 
statistics from this survey are not considered precise, but do indicate 
trends. 
 
Salvadoran labor is perceived as hard working and trainable.  The 
general educational level is low, which may inhibit the development of 
industries needing skilled, educated labor.  In addition, there is a 
lack of middle management-level talent, which often results in 
foreigners being brought in to perform such tasks.   
 
The Constitution of December 1983 guarantees the right of employees to 
organize into associations and unions.  Employers are free to hire union 
or non-union labor.  Closed shops are illegal. 
 
Labor law requires that disputes go through separate stages of 
collective bargaining, conciliation and arbitration before a strike can 
be legally declared.  In 1994-95, labor activism increased, with several 
work stoppages against Asian-owned clothing assembly factories in free-
trade zones.  Labor law, although in accord with internationally-
recognized standards, is often not enforced by government authorities.  
There are about 150 active unions, public employee associations, and 
cooperative organizations, that represent over 300,000 Salvadorans, 
approximately twenty percent of the labor force. 
 
Capital Outflow Policy 
 
There are no restrictions on capital outflow for Salvadorans, nor are 
there any specific incentives to invest capital outside El Salvador.  
Regarding investment outflow, Salvadoran investors have interests in 
hotels, real estate and industry in Mexico, Guatemala, Honduras, Costa 
Rica, Panama and the U.S.  Accurate statistics about the size of these 
investments are not available. 
 
Major Foreign Investors  
 
Coastal Technologies - owner/operators of the Nejapa power-generating 
plant.  Estimated value over USD 140 million dollars. 
 
Kimberley Clark de C.A. - owns a paper products factory. 
 
Texaco Caribbean - fuel storage and lubricant blending plant in 
Acajutla, and service station/grocery markets throughout the country. 
 
Esso Standard Oil - together with Shell, owns and operates a small oil 
refinery in Acajutla.  Also own service station/grocery marts throughout 
the country. 
 
Shell El Salvador - shares an oil refinery with Esso, and owns service 
station/grocery marts throughout the country. 
 
Bayer de El Salvador- owns a modern pharmaceutical processing plant. 
 
Sara Lee Knit Products - owns a clothing assembly plant in the El 
Pedregal free trade zone. 
 
Xerox de El Salvador - sells and services office equipment and 
computers. 
 
Western Petroleum - produces and exports alcohol to the U.S.   
 
British American Tobacco - manufactures cigarettes.  
 
 
 
           Chapter VIII - TRADE AND PROJECT FINANCING 
 
Brief Description of the Banking System 
 
The Salvadoran banking system, which was state-owned from 1980 to 1990, 
is now controlled by private investors.  In 1990 and 1991, the 
government implemented market-oriented reforms that encouraged 
competitiveness in the financial system.  Between December 1993 and 
March 1995, nine banks or savings and loans were founded in El Salvador.  
Interest rates and fees for services are set by the market, and banks 
can offer services using both local currency and U.S. dollars.  There 
are at present twelve commercial banks, six savings and loans and 
several smaller institutions similar to credit unions.   
 
In 1994, the government created the Banco Multisectorial de Inversiones 
(BMI) to promote private sector development.  The BMI can lend up to USD 
8 million dollars at market rates for periods up to 25 years to worthy 
private sector projects in El Salvador that might not be able to obtain 
financing through regular commercial channels.   
 
Foreign and domestic financial operating in El Salvador are regulated by 
the December 1990 Ley Organica de la Superintendencia del Sistema 
Financiero (Organic Law for the Financial System Regulatory Agency), the 
April 1991 Ley de Bancos y Financieras (Banks and Savings and Loans 
Institution Law), and the May 1991 Ley Organica del Banco Central de 
Reserva de El Salvador (Organic Law for the Central Bank of El 
Salvador).  All financial institutions are audited, authorized and 
supervised by the Superintendencia del Sistema Financiero, an autonomous 
agency. 
 
Salvadoran banks offer the same services and operations as any bank in 
the U.S., such as  savings accounts, certificates of deposit, loans, 
checking accounts, letter of credit, etc.  Services in colones, U.S. 
dollars, Guatemalan quetzales and Honduran lempiras are usually 
available. 
 
Foreign Exchange Controls Affecting Trading 
 
The banking reforms of 1990/91 abolished virtually all controls on 
foreign exchange affecting trade.  However, in the event of a 
convertibility crisis or other unforseen event, foreign investment would 
likely receive certain preferential treatment if it is registered with 
the Ministry of Economy.   
 
General Financing Availability 
 
In general, financing for business is available, but expensive in El 
Salvador.  Commercial banks are careful lenders, with strict credit 
regulations and collateral requirements.  Currently, interest rates 
range from 16 to 22 percent, and terms from one to 10 years.  Larger 
Salvadoran companies prefer to borrow funds in the U.S. when possible.  
Credit policies tend to favor consumer finance, agriculture, and 
manufacturing over trade.  El Salvador's top banks are among the largest 
and most profitable in Central America.  Its capital base is relatively 
large, with the equivalent of approximately USD 3.38 billion dollars in 
deposits in banks and savings and loans in the country at the end of 
1994.   
 
How to Finance Exports/Methods of Payments 
 
U.S. exports to El Salvador are usually financed by loans made by local 
banks to importers.  Rates for loans to finance consumption goods 
imports are approximately 20 percent for terms of less than a year.  
Intermediate goods are financed at more favorable rates and terms.  
Local banks offer a variety of letters of credit, sight drafts, and 
other methods of payment at competitive prices.  The Embassy recommends 
using confirmed irrevocable letters of credit in any commercial 
transactions in El Salvador. 
 
Types of Available Export Financing and Insurance 
 
The U.S. Overseas Private Investment Corporation (OPIC) provides medium 
to long-term financing in the form of investment guarantees and direct 
loans to projects with at least 25 percent U.S. investor interest.  In 
addition, it offers political risk insurance that protects against 
expropriation, political violence and inconvertibility.  Machinery and 
other capital goods exports to El Salvador may be financed at low rates 
and long terms through special credit lines offered by international 
financial institutions for these purposes.  The IDB, through the Banco 
Multisectorial de Inversiones, offers credit to small businesses.  These 
credits to date, have not been widely used to the difficult paperwork 
required.  Export-Import Bank of the U.S. also offers a wide range of 
guarantees, insurance and financing to U.S. exporters.  For exporting to 
El Salvador, Ex-Im loan insurance is the most useful program because it 
deals with transactions under USD 10 million dollars, and the paperwork 
required is much less than for other programs.  
 
Project Financing Available 
 
The Inter-American Development Bank (IDB) is the largest lender to El 
Salvador.  It approved loans worth nearly USD 500 million dollars for El 
Salvador in 1994, and several others are in the pipeline for 1995-96.  
These loans are for projects ranging from electric power plants to 
highway construction to health care.   
 
US firms seeking information on IDB-financed commercial opportunities 
should contact: 
 
Judith Henderson 
US Department of Commerce Liaison to the Inter-American Development Bank 
US Executive Directors Office 
1250 H Street, NW 
10th Floor 
Washington, DC  20005 
Tel:  (202)  942-8260 
Fax:  (202)  942-8275 
 
or in El Salvador: 
 
Stephen E. McGaughey 
Condominio Torres del Bosque 
10 Piso, Colonia La Mascota 
Apartado Postal No. (01) 199 
San Salvador 
tel: (503) 223-8300 
 
Financing for projects may also originate from The Central American Bank 
for Economic Integration (CABEI), or directly from USAID or other donor 
agencies.  The Investment Finance Corporation, a member of the World 
Bank group, has approved a USD 30 million dollar loan (as part of an USD 
80 million project) to Cemento de El Salvador (CESSA) to expand and 
modernize their plant.   
 
List of Banks with Correspondent U.S. Banking Arrangements 
 
BANCO CUSCATLAN, S.A.  
Gulf Bank, Miami 
Bank of America NT & S.A., San Francisco, CA 
Chemical Bank, New York 
Universal National Bank, Miami 
The Bank of New York, New York 
American Express Bank Ltd., New York 
Bankers Trust Co., New York 
Nations Bank, Miami 
First National Bank of Commerce, New Orleans 
Popular Bank of Florida, Miami 
Pine Bank, Miami 
Banesto Banking Corp., New York 
Republic National Bank of New York 
Capital Bank, Miami 
Citibank, New York 
Republic National Bank of Miami 
Banco Atlantico, Miami 
Amtrade International Bank, Miami 
Barclays Bank Plc., Miami 
Atlantic Security Bank, Miami 
Hamilton Bank N.A., Miami 
The International Bank of Miami 
Capital Bank, Washington D.C. 
Intercredit Bank N.A., Miami 
Banco Internacional de Costa Rica, Miami 
Barnett Bank, Miami 
 
BANCO SALVADORENO  
Atlantic Security Bank, Miami 
Gulf Bank, Miami 
Bank of America NT & S.A., San Francisco, CA 
Bank One Texas N.A., Houston 
Chemical Bank, New York 
First Union National Bank of Florida, Miami 
The Bank of New York, New York 
Bankers Trust Co., New York 
NationsBank, Miami 
First Trade International Bank, Miami 
Banco Intercional de Costa Rica, Miami 
Popular Bank of Florida, Miami 
Pine Bank, Miami 
Capital Bank, Miami 
Citibank, New York 
Republic National Bank of Miami 
Banco Atlantico, New York 
Barclays Bank Plc., Miami 
Atlantic Security Bank, Miami 
Hamilton Bank N.A., Miami 
The International Bank of Miami 
The Riggs National Bank, Washington, D.C. 
Barnett Bank, Miami 
 
BANCO DE COMERCIO DE EL SALVADOR  
Citibank, New York 
The Bank of New York, New York 
Credit Suisse Bank, New York 
The Chase Manhatten Bank, New York 
Banco Nacional de Mexico (Banamex), New York 
Whitney National Bank, New Orleans 
Texas Commerce Bank, Houston 
Bank of America NT & S.A., San Francisco, CA 
Hamilton Bank N.A., Miami 
The International Bank of Miami 
Barnett Bank, Miami 
Capital Bank, Miami 
Barclays Bank Plc., Miami 
Atlantic Security Bank, Miami 
Gulf Bank, Miami 
Banco Atlantico, Miami 
Universal National Bank, Miami 
NationsBank International, Miami 
Pine Banking Corporation, Miami 
AmTrade International Bank, Miami 
First Union National Bank, Miami 
 
BANCO AGRICOLA COMERCIAL  
Citibank N.A., New York 
The Chase Manhatten Bank, New York 
Chemical Bank, New York 
The Bank of New York, New York 
Bank of America, San Francisco 
B.I.C.S.A., Miami 
Popular Bank of Florida, Miami 
Banamex, New York 
Whitney National Bank, New Orleans 
American Express Bank, Ltd., New York 
Capital Bank, Miami 
Banco Atlantico, Miami 
Republic National Bank, Miami 
NationsBank International, Miami 
Amtrade International Bank, Miami 
Barnett Bank, Miami 
Barclays PLC, Miami 
The International Bank of Miami, Miami 
Atlantic Security Bank, Miami 
First Interstate bank of California, Los Angeles 
Intercredit Bank, Miami 
Pine Banking Corporation, Miami 
First Union National Bank, Miami 
 
BANCO DE DESARROLLO E INVERSION  
American Express Int. Banking Corp., New York 
AmTrade Intl. Bank of Miami 
Atlantic Security Bank, Miami 
Banco Atlantico, New York and Miami 
Banco Intl. de Costa Rica, Miami 
Bank of America, San Francisco 
Barclays Bank PLC, Miami 
Capital Bank, Miami 
First Union National Bank, MiamiGulf Bank, Miami 
Hamilton Bank, Miami 
NationsBank Intl., Miami 
Pine Banking Corp., Miami 
Popular Bank of Florida, Miami 
The International Bank of Miami 
Citibank, N.A., New York 
Republic National Bank, Miami 
Royal Bank of Canada, New York 
 
BANCO HIPOTECARIO  
The Chase Manhatten Bank, New York 
Citibank N.A., New York 
The Riggs National Bank of Washington, Washington, D.C. 
NationsBank Intl., Miami 
Capital Bank, Miami 
Amtrade Intl. Bank, Miami 
Bank of America NT & S.A., San Francisco 
Bankamerica International, Miami 
Hamilton Intl. Bank, Miami 
Popular Bank of Florida, Miami 
Gulf Bank, Miami 
Deutsche Sudamerikanische Bank, Miami 
Atlantic Security Bank of Miami 
The International Bank of Miami 
Banco Intercional de Costa Rica, Miami 
Pine Bank, Miami 
 
BANCASA 
Banco de Construccion y Ahorro S.A. 
Citibank N.A., New York 
Popular Bank of Florida, Miami 
International Bank of Miami 
Barclays Bank PLC, Miami 
Deutsche Sudamerikanische, Miami 
Gulf Bank, Miami 
Pine Bank, Miami 
Amtrade Bank, Miami 
 
BANFIDEX  
Barclays Bank PLC, Miami 
Chase Manhatten Investment Services, Inc. New York 
Universal National Bank, Miami 
Popular Bank of Florida, Miami 
Hamilton Bank, Miami 
Gulf Bank, Miami 
 
 
 
                    Chapter IX - BUSINESS TRAVEL 
 
Business Customs 
 
The U.S. is the main trading partner for El Salvador and U.S. citizens 
are considered to be trustworthy.  Traffic is always a problem so 
visitors should allow ample time between business appointments.  Travel 
arrangements should be made in advance.  U.S. businesspeople are in a 
hurry but Salvadorans are not always available.  Greetings and 
formalities are more elaborate, so meetings often take longer to get to 
essential issues.  Business lunches often last more than two hours, and 
business suits are appropriate attire. 
 
Travel advisory 
 
Summary: The Department of State warns United States citizens to 
exercise caution when traveling to El Salvador because of the high rate 
of crime.  For additional information please contact the Bureau of 
Consular Affairs, Office of Overseas Citizen Services (CA/OCS)  (202) 
647-6137 or El Salvador Desk, U.S. Department of State, Tel. (202) 647-
3681.  Also, the Travel Advisory Service of the Department of State can 
provide information in recorded and fax form for any travel warnings on 
traveling to foreign countries.  For recorded information contact Tel:  
(202) 647-5225.  To receive a facsimile, call (202) 647-3000. 
 
Visas 
 
A valid passport and either a visa or a tourist card are required in 
order to visit El Salvador.  Visas are provided at Salvadoran consulates 
located in Washington, D.C.; New York; Los Angeles, San Francisco, 
Chicago, New Orleans, Louisiana; Dallas, Houston, Miami and San Juan, 
Puerto Rico.  Tourist cards, which cost USD 10 dollars and are valid for 
one entry for up to a 90-day stay, may be obtained prior to departure at 
Salvadoran consulates, major airlines servicing El Salvador, and at El 
Salvador International Airport after arrival.    
 
Holidays 
 
The holidays to be observed for calendar year 1995 are: 
 
January 1               New Year's Day 
January 16              Salvadoran Peace Day 
Variable                Holy Thursday 
Variable                Good Friday 
May 1                   Labor Day 
June 30                 Bank Holiday 
August (date varies)    San Salvador Feasts 
September 15            Independence Day 
October 12              Columbus Day 
November 2              All Souls Day 
November 5              Day of First Cry of Independence 
December 25             Christmas Day 
 
Business Infrastructure 
 
The International Airport is located 25 miles from San Salvador and can 
be reached in 45 minutes.  The Panamerican Highway crosses the country 
east to west from the Guatemalan to the Honduran border, connecting the 
main Salvadoran cities.  There is one major port in Acajutla.  The 
country is also served by cargo ports in Puerto Barrios and Puerto 
Quetzal in Guatemala and Puerto Cortes in Honduras. 
 
American Airlines, United Airlines, Continental Airlines and TACA 
International Airlines fly between El Salvador and Miami, Los Angeles, 
Houston and New Orleans. 
 
The official language is Spanish, but English is spoken by a many 
educated Salvadorans.  An inadequate telecommunications network connects 
to a microwave satellite system serving the other countries of the 
world.  Many businessmen use cellular phones since it is extremely 
difficult to obtain new phone lines for homes and businesses.  There are 
direct dialing, fax and telex facilities to most countries in the world.  
The official mail system is inadequate, but there are many private 
courier services.  International telephone services available in El 
Salvador include: AT&T, MCI, and SPRINT.  El Salvador has good taxi 
service from the major hotels, but traffic is a problem.  Buses run 
throughout the country, but are often targets for crime. 
 
Accommodations in El Salvador vary from deluxe hotels to inexpensive 
guest houses.  The main hotels are: 
 
Hotel Camino Real 
Boulevard de Los Heroes y Avenida Sisimiles 
San Salvador, El Salvador, C.A. 
Tel. (503) 279-3888 
FAX: (503) 223-5660 
 
Hotel El Salvador 
89 Avenida Norte y 11 CallePoniente 
Colonia Escalon 
San Salvador, El Salvador, C.A. 
Tel. (503) 279-0777 
FAX: (503) 223-2901 
 
Hotel Presidente El Salvador 
Avenida La Revolucion 
Colonia San Benito 
P.O. Box 888 
San Salvador, El Salvador, C.A. 
Tel. (503) 279-4444 
FAX: (503) 223-4912 
 
Your U.S. driver's license is valid for a limited period of time.  There 
are several firms which rent cars: 
 
   AVIS 
   43 Avenida Sur 137 
   Tel.224-2623 
   FAX 298-6272 
 
   HERTZ RENT A CAR 
   Calle Los Andes J-16 
   Colonia  Miramonte 
   Tel. 226-8099 
   FAX 225-8412 
 
   BUDGET 
   79 Avenida Sur No. 6  
   Colonia La Mascota 
   Tel. 223-1668 
 
   SURE RENT 
   Boulevard de Los Heroes 
    y 23 Calle Poniente 
   Tel. 225-1810 
 
   DOLLAR 
   Avenida Roosevelt No. 3119 
   Tel. 224-4385 
 
There are many U.S. or European-trained doctors in San Salvador, but for 
complicated procedures or illnesses, treatment is often short of U.S. 
standards.  Pharmacies stock most medicines. 
 
 
 
                       Chapter X - APPENDICES 
 
 
Appendix A - COUNTRY DATA 
 
Population: million people - projected: 5.17 (93), 5.28 (94), 5.38, (95) 
Population growth rate: 1.80 percent 
Religion: 75 percent Roman Catholic 
Government system: Republic 
Languages: Spanish, but English is widely spoken 
     among business community. 
Work week: 44 hours for industry, commerce and 
      services, 40 hours for government. 
 
* Source: 1992 Population Census.  Figure at mid year. 
 
 
Appendix B - DOMESTIC ECONOMY 
 
a) Macroeconomic data  
 
(Projected)                        1993        1994        1995 
                                         (U.S.D. Million) 
 
GDP                              7,570.00    8,100.00    9,634.00 
GDP growth rate (real)               7.40        6.00        7.00 
GDP per capita (USD)             1,464.00    1,534.00    1,790.00 
Gov't spending percent GDP          13.20       14.10       13.20 
Inflation (percent)                 12.10        8.70       10-12 
Unemployment (percent)               9.90        7.70        n.a. 
Foreign Exchange Reserves          667.00      788.00      968.00 
Average Exchange rate/ 1 USD         8.70        8.72        8.75 
Foreign Debt                     1,722.00    1,872.00    2,214.00 
Debt Service Ratio: 
(Prin.+int. on foreign income)      29.10       27.70       19.80 
U.S. Econ. Assistance:             207.90       57.80       70.00 
(USD Millions, Military Assistance excluded, includes PL-480) 
 
Source: Banco Central de Reserva, Economic Studies Dept. - 1990 base 
year, 1994 preliminary figures; 1995 projections from BCR's Monetary 
Program.  Unemployment estimate based on Ministry of Planning surveys. 
 
 
Appendix C - TRADE 
 
(Projected)                      1993      1994      1995 
                                   (USD Millions) 
 
Total Country Exports            731.7     831.0    1,210.0 
Total Country Imports          1,912.2   2,242.0    2,580.0 
U.S. Exports to El Salvador      844.3   1,236.0    1,620.0 
U.S. Imports from El Salvador    218.6     606.0      780.0 
 
Source - Central Bank.  Total country export figures do not include the 
maquila industry. 
 
Commerce and Foreign Trade 
 
Imports to El Salvador 1992-94 (USD Millions) 
 
Category                   1992      1993    %Change   1994     %Change 
 
A. Consumer Goods          489.1     522.0     6.7     603.9     15.7 
   Durables                 71.2      81.2    14.0     105.2     29.5 
   Non-durables            417.8     440.8     5.5     498.7     13.1 
B. Intermediate Goods      778.4     825.4     6.0     985.1     19.3 
   Manufacturing sector    606.4     630.1     3.9     753.0     19.5 
   of which petroleum was: 128.2     123.0     4.0     114.1     (7.3) 
   Agricultural             70.8      70.2    (0.9)     85.3     21.5 
   Construction             90.6     111.0    22.5     129.6     16.8 
   Other                    10.6      14.1    33.3      17.2     22.0 
C. Capital Goods           431.0     564.9     4.0     652.6     15.5 
   For manufact.           121.4     170.5    45.5     175.1      2.6 
   Transportation          205.5     257.4    25.2     328.5     27.7 
   Agriculture              11.8      10.9    (7.4)     11.9      9.1 
   Construction             15.4      29.7    93.1      37.7     27.3 
   Other                    76.9      98.4    25.3      99.4      1.0 
 
According to the Central Bank, in 1994, El Salvador's exports were 831.2 
million dollars, an increase of 13.6 percent over 1993.  Much of the 
increase was in coffee exports and non-traditional exports destined to 
the Central American market.  The composition of the exports is as 
follows: 
 
Exports of El Salvador 1992-1994 (USD Millions) 
 
Category                 1992      1993   %Change   1994    %Change 
 
Coffee                   151.2     226.3    30.5    273.2     20.7 
Sugar                     44.7      31.1   (31.3)    33.1      6.4 
Shrimp                    19.8      25.8    30.3     25.8      0.0 
Non-trad. Cen.Amer.      257.3     309.2    20.1    340.1     10.0 
Non-trad. Rest of World  123.0     139.1    13.1    159.0     14.3 
 
Totals                   597.5     731.7    22.4    831.2     13.6 
 
Source - Central Bank. This table does not include the maquila industry. 
 
 
Appendix D - INVESTMENT STATISTICS 
 
There are no reliable statistics on foreign direct investment in El 
Salvador.  Incomplete statistics gathered by the Ministry of Economy 
indicate that the U.S. is the largest investors in El Salvador, followed 
by Panama, Japan and Canada.  The Central Bank estimates that gross 
internal investment for 1995 will reach USD 1.87 billion dollars, a 23 
percent increase over 1994.   
 
 
Appendix E - U.S. AND COUNTRY CONTACTS 
 
Country Government Agencies 
 
Ministry of Economy 
Eduardo Zablah Touche, Minister 
Paseo General Escalon 4122 
San Salvador, El Salvador, C.A. 
Tel. (503) 224-3536 
FAX (503) 298-6356 
 
Ministry of Finance  
Manuel Enrique Hinds, Minister  
Condominio Las Tres Torres, Torre 2  
Avenida Alvarado, Diagonal Centroamerica  
San Salvador, El Salvador, C.A.  
Tel. (503) 271-0250  
FAX (503) 271-0591  
 
Ministry of Agriculture and Livestock  
Oscar Manuel Gutierrez, Minister  
Carretera a Santa Tecla 
(antiguas instalaciones ISTA) 
San Salvador, El Salvador, C.A.  
Tel. (503) 224-4898  
FAX (503) 279-1941  
 
Minister of Public Works  
Jorge Sansivirini, Minister  
1a. Avenida Sur 630  
San Salvador, El Salvador, C.A.  
Tel. (503) 271-5873  
FAX (503) 271-0163  
 
Minister of Public Health 
Eduardo Interiano, Minister 
Calle Arce No. 827 
San Salvador, El Salvador, C.A. 
Tel. (503) 271-0008 
 
General Directorate of Air Transportation  
Jose Roberto Corleto, Director 
Aeropuerto de Ilopango  
San Salvador, El Salvador, C.A.  
Tel. (503) 295-0265  
FAX (503) 295-0345  
 
Alcaldia Municipal de San Salvador  
Mario Valiente, Mayor  
9a. Calle Oriente No. 320  
San Salvador, El Salvador, C.A.  
Tel. (503) 222-1788; 221-1579  
FAX (503) 222-8670  
 
 
Country Trade Associations/Chambers of Commerce: 
 
Camara de Comercio e Industria de El Salvador 
(Salvadoran Chamber of Commerce and Industry) 
Ricardo Siman, President 
9a. Avenida Norte y 5a. Calle Poniente 
San Salvador, El Salvador, C.A. 
Tel. (503) 271-2055 
FAX (503) 271-4461 
 
Asociacion Nacional de la Empresa Privada  
(Salvadoran National Association of Private Enterprise) 
Roberto Villanova, President  
1a. Calle Poniente y 71 Avenida Norte 204  
San Salvador, El Salvador, C.A.  
Tel. (503) 223-3893  
FAX (503) 223-8932  
 
Asociacion Salvadorena de Industriales  
(Salvadoran Association of Industrialists)  
Leonel Mejia, President  
Calles Roma y Liverpool, Colonia Roma  
San Salvador, El Salvador, C.A.  
Tel. (503) 279-2488  
FAX (503) 279-2070  
 
American Chamber of Commerce of El Salvador  
Carlos Iraheta, President  
87 Avenida Norte No. 720  
Apto. A, Colonia Escalon  
San Salvador, El Salvador, C.A.  
Tel. (503) 223-3292  
FAX (503) 224-6856  
 
Corporacion de Exportadores de El Salvador (COEXPORT)  
Salvadoran Exporters Corporation  
Jose Antonio Quiros, President  
Condominios del Mediterraneo  
Edificio A-23, Jardines de Guadalupe  
San Salvador, El Salvador, C.A.  
Tel. (503) 224-4019;223-1388  
FAX (503) 298-0951  
 
Fundacion Salvadorena para el Desarrollo Economico y Social (FUSADES) 
Edificio FUSADES 
Blvd. y Urb. Santa Elena 
Antiguo Cuscatlan 
San Salvador, El Salvador C.A. 
Tel: (503) 278-3380 Fax: (503) 278-3354 
 
 
Country Market Research Firms: 
 
RIMO, S.A. DE C.V.  
Rigoberto Monge  
Centro Profesional Presidente  
Edificio A, Local 31  
Avenida Revolucion y Calle Circunvalacion  
Col. San Benito  
San Salvador, El Salvador, C.A.  
Tel. (503) 279-0679  
FAX (503) 279-0725  
 
PROCISA DE C.V.  
Paola Castaneda  
Residencial Altos de Montebello  
Calle Paracutin, Grupo 2 No. 22  
San Salvador, El Salvador, C.A.  
Tel. (503) 274-1976  
 
CCM 
Calle El Progreso, Pasaje El Rosal No. 23  
P.O. Box 2790 (CG)  
San Salvador, El Salvador, C.A.  
Cesar Chicas  
Tel. (503) 224-4374  
 
Pridex 
Patricia Figueroa 
Edificio FUSADES 
Blvd. y Urb. Santa Elena 
Antiguo Cuscatlan 
San Salvador, El Salvador C.A. 
Tel: (503) 278-3380 Fax: (503) 278-3354 
 
A.C. Nielsen has announced that it is expanding its retail tracking 
services for food and drug products throughout Central America.  For 
more information, contact Elliot Bloom at (708) 605-5120  
 
 
Main Commercial Banks and Financial Institutions: 
 
BANCO CUSCATLAN, S.A.  
Alameda Roosevelt y 41 Avenida Sur  
San Salvador, El Salvador, C.A.  
Roberto Ortiz Avalos, President  
Tel. (503) 223-2076  
FAX: (503) 223-2016  
 
BANCO SALVADORENO  
Calle Ruben Dario y 21 Avenida Norte No. 1236 
San Salvador, El Salvador, C.A.  
Felix Siman, Presidente  
Tel. (503) 222-9881  
FAX (503) 221-3778  
 
BANCO DE COMERCIO DE EL SALVADOR  
43 Avenida Norte y Alameda Roosevelt  
Edificio Grane  
San Salvador, El Salvador, C.A.  
Jose Gustavo Belismelis, Presidente  
Tel. (503) 298-1958  
FAX: (503) 224-3238  
 
BANCO AGRICOLA COMERCIAL  
Boulevard del Hipodromo No. 803  
Colonia San Benito  
San Salvador, El Salvador, C.A.  
Archie Baldocchi, Presidente  
Tel. (503) 271-6126  
 
BANCO DE DESARROLLO E INVERSION  
67 Avenida Norte, Plaza Las Americas  
San Salvador, El Salvador, C.A.  
Jose Antonio Salaverria, Presidente  
Tel. (503) 223-7888  
 
BANCO HIPOTECARIO  
4a. Calle Oriente No. 124  
San Salvador, El Salvador, C.A.  
Eduardo Enrique Barrientos  
Tel.(503) 222-2122  
 
CITIBANK, N.A.  
Alameda Dr. Manuel Enrique Araujo  
3530 Edificio SISA, 2 piso  
San Salvador, El Salvador, C.A.  
Juan Miro  
Tel. (503) 224-3011 
 
BANCASA - Banco de Construccion y Ahorro S.A. 
75 Avenida Sur No. 209 
Colonia Escalon 
San Salvador, El Salvador, C.A. 
Jose Luis Zablah 
Tel. (503) 298-0122  
 
BANFIDEX  
1a. Calle Poniente 3649  
Colonia Escalon  
Ricardo Hill, Presidente  
San Salvador, El Salvador, C.A.  
Tel. (503) 298-5777  
FAX (503) 298-0772  
 
FINANCIERA CREDISA, S.A.  
Edificio Credisa  
Alameda Juan Pablo II Pte.  
San Salvador, El Salvador, C.A.  
Jose Alfredo Dutriz, Presidente  
Tel. (503) 298-5633  
 
FINANCIERA ATLACATL, S.A.  
Alameda Roosevelt y 55 Avenida Sur  
Centro Comercial Roosevelt  
San Salvador, El Salvador, C.A.  
Ricardo Ruiz Quiros, Presidente  
Tel. (503) 279-0033  
 
FINANCIERA AHORROMET S.A.  
Inicio Paseo General Escaltn  
Edificio Ahorromet  
San Salvador, El Salvador, C.A.  
Juan Federico Salaverria, Presidente  
Tel. (503) 271-0888 
 
U.S. Embassy Trade Personnel 
All located at:  
U.S. Embassy - San Salvador  
Econ/Commercial Section, Unit 3112  
APO  AA  34023  
Tel. (503) 278-4444  
FAX (503) 298-2336 
 
Mr. Chris Lynch - Economic Counselor  
Ms. Jean Bonilla  - Economic Officer 
Mr. Brian Doherty  - Commercial Attache (until 7/21) 
Ms. Colleen Hyland - Commercial Attache (after 7/95) 
Ms. Mary Turner - Secretary (until 7/95) 
Ms. Kay Spivey - Secretary (after 10/95) 
Ms. Ana Maria Manzano - Commercial Specialist  
Ms. Sonia Rivas - Commercial Assistant  
Eduardo Pena - Economist 
Elida Fuentes Delaney - Secretary 
 
 
Washington-Based USG Country Contacts 
 
Overseas Private Investment Corporation (OPIC) 
Richard Greenberg, Manager, Latin America 
1100 New York Ave., NW 
Washington, D.C.  20527 
Tel:  (202) 336-8579 
Fax:  (202) 408-5142 
 
US Trade and Development Agency 
Al Angulo 
Room 309, S.A. - 16 
Department of State 
Washington, D.C.  20523-1602 
Tel:  (703) 875-4357 
Fax:  (703) 875-4009 
 
Export-Import Bank of the United States 
Paula Swain Priestley, International Business Development 
811 Vermont Ave., NW 
Washington, DC  20571 
Tel:  (202) 565-3921 
Fax:  (202) 565-3380 
 
US Agency for International Development 
Kathleen Barrett 
Desk Officer for El Salvador 
U.S. Department of State 
2201 C Street, NW 
Washington DC  20571 
Tel:  (202) 647-9555 
Fax:  (202) 647-0102 
 
U.S. Agency for International Development 
Center for Trade and Investment Services (CTIS) 
Mary Peschka 
Room 100, SA-2 
Washington, D.C. 20523-0229 
Tel: (202) 663-2663 
Fax: (202) 663-2670 
 
US Treasury Department 
Desk Officer for El Salvador 
1500 Pennsylvania Avenue, NW 
Washington, DC  20523 
Tel:  (202) 622-1740 
Fax:  (202) 622-1273 
 
Office of the US Trade Representative 
Ralph Ives 
Deputy Assistant USTR for Latin America and the Caribbean 
600 17th Street, NW 
Washington, DC  20506 
Tel:  (202) 395-5190 
Fax:  (202) 395-3911 
 
US Department of Agriculture 
Foreign Agricultural Service 
12th and Jefferson Street, NW 
Washington, DC  20250 
Tel:  (202) 720-1340 
Fax:  (202) 690-2079 
 
U.S. Department of Commerce  
International Trade Administration  
OLA/ CBD  
Juan Verde (until 8/95) 
Room HCHB 3025 
14th and Constitution Avenue, N.W.  
Washington, D.C. 20230  
Tel. (202) 482-2375 
FAX (202) 482-0464  
 
Brian Nichols  
Office of Central American Affairs, El Salvador Desk, ARA/CEN  
U.S. Department of State  
Washington, D.C. 20250  
Tel. (202) 647-3681  
FAX (202) 647-2597 
 
 
Appendix F - MARKET RESEARCH 
 
International Market Insight reports on El Salvador available on the 
NTDB and EBB: 
 
1995 Budget 
1995 Economic Outlook 
1995 Electrical Sector Overview 
Economic Impact of Family Remittances 
Inter-American Development Bank Programs in El Salvador 
 
There are also periodic IMI reports on specific sectors and trade 
opportunities.  
 
Upcoming Reports 1995: 
 
Privatization of Telecommunications and Electricity 
Textile Industry Update 
Economic Trends Update 
Bilateral Civil Aviation Agreements and TACA's Role in the Region 
 
Commodity Reports and Market Briefs available from the USDA: 
 
Report Name                       Month Available  
 
Foreign Buyers List               October 
Sugar Annual                      April  
Coffee Annual                     May   
Oilseeds & Products Annual        March 
Livestock                         August 
Agricultural Situation Report     September  
Trade Leads Report                October 
Grains Update                     July  
Coffee Semi-Annual                November 
 
 
Appendix G - TRADE EVENT SCHEDULE 
 
The largest trade event in El Salvador is the International Trade Fair 
which is bi-annual and is supported by the American Embassy.  The next 
International Fair will take place in November, 1996. A smaller, 
consumer-oriented fair, CONSUMA, alternates every other year with the 
International Fair.  Smaller fairs related to construction equipment and 
materials, household goods and medical products, which can be useful for 
promoting new products, take place on an irregular basis. 
 
For more information about upcoming events, contact Maximiliano Figueroa 
or Nora Elizabeth Ruano at the Feria Internacional de El Salvador - Tel: 
298-3373 fax: 298-5388 
 
This report was completed in July 1995
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