Pro-Nicaragua Country Overview 2016

Managua, Nicaragua ● 2016

PRONicaragua is the Official Investment Promotion Agency of the Government of Nicaragua.

• Information about Nicaragua and business opportunities

• Customized information packages

• Organization of site visits: meetings with companies and institutions

• Support with information on the structure of operational costs and fiscal charges

• Identification of options for locations for real estate

• Legal advice• Directory of suppliers of

related goods and services

• Support and facilitation

• Facilitate and expedite government procedures

• Support in facilitating the exporting process

• Information about business opportunities in the Caribbean Coast through our regional office PRONiCaribe

Assessment and decision making

Implementation of the project

Aftercare

OUR SERVICES

Capital Managua

Area 130,373.4 km2

Official Language Spanish

Population 6.2 million

Currency Córdoba

Exchange Rate

(2016 Average)C$28.62 = US$1.00

Time Zone UTC/GMT – 6 hours

Source: Central Bank of Nicaragua.

Región Central /Central Region

Región Pacífico/Pacific Region

Región Caribe/Caribbean Region

COUNTRY PROFILE

STRATEGIC LOCATION

Sources: Central Bank of Nicaragua, Ministry of Development, Industry and PRONicaragua. *Estimates Data

Gross Domestic Product US$12.69 billion (4.9% growth vs 2014)

GDP per capita US$2,027

Exports US$4.89 billion

FDI Inflows US$1.22 billion*

Gross International Reserves US$2.49 billion (2.35 times the monetary base)

Inflation 3.05%

Devaluation of Currency 5% annual vs. US Dollar

ECONOMIC PERSPECTIVE

6.797.46

8.49 8.38 8.74

9.7610.46

10.85

11.8112.69

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bill

ion

US$

Gross Domestic Product

Min Zhu, Deputy Managing Director of the IMF, described Nicaragua´s economic growth as “excellent” as it has outperformed Latin America´s average growth rate of 1.2% and

Central America´s 2.2%.


Real GDP Growth (%)

2011 2012 2013 2014 2015

6.2 5.1 4.5 4.7 4.9

ECONOMIC GROWTH

NICARAGUAGDP 2015: 4.9%Average of 5 years: 5.1

GUATEMALAGDP 2015: 4.1%Average of 5 years: 3.8%

Source: Central Bank of Nicaragua and IMF.

EL SALVADORGDP 2015: 2.6%Average of 5 years: 2.1%

COSTA RICA GDP 2015: 3.5%Average of 5 years: 4.0%

HONDURAS GDP 2015: 3.6%Average of 5 years: 3.5%

PANAMA GDP 2015: 6.0%Average of 5 years: 8.4%

GDP GROWTH IN THE REGION

Nicaragua maintains positive relations with different multilateral organizations such as theInternational Monetary fund (IMF), World Bank (WB), the Inter-American Development Bank(IDB), and the Central American Bank for Economic Integration (BCIE)

• On July 2015, Moody´s announced an improvement in thecredit rating of Nicaragua, going from B3 to B2.

• On December 2015: Fitch Ratings assigned B+ for the firsttime to Nicaragua with steady perspective.

• On February 2016: Standard & Poor's assigned B+ forcredit ratings, local and foreign currency. The perspectiveof the qualification is long term steady.

“¨The macroeconomic policies implemented by the Government of Nicaragua are positive, and shouldserve as an example for Latin America”

Min Zhu, Deputy Managing Director of the IMF

ECONOMIC STABILITY

0.280.38

0.63

0.430.51

0.97

1.281.39

1.45

1.22

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

Bill

ion

US$

18% compound annual growth rate

According to preliminary statistics from 2015, the sectors that registered more FDI inflows were: telecommunications, industry, and commerce and services.

Source: Central Bank of Nicaragua, Ministry of Development, Industry and Tradeand PRONIcaragua.*Estimated data

EVOLUTION OF FOREIGN DIRECT INVESTMENT

1.992.33

2.74 2.62

3.45

4.36

4.82 4.745.14

4.90

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$

Bill

ion

14% compound annual growth rate

For 2015, total exports reached US$4.90 billion. The main export destinations were: the United States, Central America, Mexico, the European Union and Venezuela.


EVOLUTION OF EXPORTS

8 1016

31

66 69

8 11 11

35

57

101

0

20

40

60

80

100

120

Nicaragua Costa Rica Panama Guatemala Honduras El Salvador

Homicide Rate in Central America(per every 100,000 inhabitants)

2014 2015

Mean L.A: 28.5

Sources: Commission of Police Chiefs and Directors of Central America, Mexico , the Caribbean and Colombia; World Economic Forum.

0.0

0.4

0.6

1.1

1.1

1.1

1.8

2.0

3.0

4.2

4.5

4.7

5.4

6.8

7.2

7.3

13.3

16.0

17.0

20.2

24.3

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Canada

Brazil

Nicaragua

United States

Bolivia

Uruguay

Costa Rica

Argentina

Chile

Paraguay

Haiti

Colombia

Panama

Peru

Venezuela

Dominican Republic

Mexico

Jamaica

Honduras

Guatemala

El Salvador

Crime and Theft as a Main Problem to do Business in the Americas 2015

SAFETY INDICATORS

Demographic Indicators

Population under 39 years old 76.1% Unemployment* 6.7%

Labor Force* 3.2 million Underemployment 46%

Source: Central Bank of Nicaragua. *2014 third quarter estimated data

420459

493 504535

578624

674710

773

0

100

200

300

400

500

600

700

800

900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tho

usa

nd

of

emp

loye

es

Formal Employment

LABOR FORCE

MODEL OF DIALOGUE AND CONSENSUS

The Government of Nicaragua, the private sector and workers coordinate efforts and designstrategies to:

1. Promote economic development

2. Generate new decent jobs

3. Reduce poverty

Governmental entity chaired by the President with government and private sectorrepresentatives, to follow up on agreements and promote better working relationships.

The model of dialogue and consensus has been

included in the article 101 of the Political Constitution of

Nicaragua.

Signing of tripartite agreement between

government, private sector and union leaders to fix

minimum wage increases and social responsibility

strategies in the long term.

More than 100 laws passed by consensus with the Superior Council of the

Private Enterprise (COSEP).

Since 2007, the Government of Nicaragua set out to: Increase generation capacity, Expand

coverage, and Go green, as part of its key development strategies of the country.

Source: Nicaraguan Energy Institute (INE, for its acronym in Spanish). *Estimated data to September 2015

Installed Capacity: 1,346 MWInstalled Capacity: 819 MW Expected Capacity: 1, 666 MW

Installed capacity has increased 64% since 2007.Coverage has reached 85% of the national territory.

Thermal Renevable Energy

DEVELOPING THE ENERGY SECTOR

74%

26%

2007

90%

10%

2020

54%

46%

2015*

The Foreign Investment Promotion Law (344) offers investors fundamental guarantees such as:

• Full currency convertibility

• Freedom to expatriate all capital and profits

• Full international ownership

• No discriminatory treatment for foreign investors

• Full protection of intellectual property rights, patents, and brands

• Access to loans through local banks, according to their terms and conditions ofapproval.

Nicaraguan legislation allows the setup of companies with 100 percent of foreign capital; in other words, the participation of national partners is not necessary.

Additionally, the Mediation and Arbitration Law (Law 540) governs two alternate methods to the judicial process to expeditiously solve any dispute resulting from contractual relations between parties.

LEGAL FRAMEWORK FOR FOREIGN INVESTMENT

“Over the last five years, Nicaragua evolved from a 3.2% growth ratein GDP to 4.7%, and it is the nation – after Panama – with the fastestgrowth in Central America”.

Forbes México “Nicaragua, the new jewel of Business in Central America” –March 2016

Outsourcing Services in Nicaragua

OUTSOURCING SERVICES IN NICARAGUA

Source: PRONicaragua, Outsourcing Survey 2016.

Top Services Offered in Nicaragua: • Customer Services• Medical Billing• Back Office• Tech Support• Chat Services• Mobile and Web App Development• Software Development• Digital Marketing• Market Research

+7800 employees by 2015

22% average employment annual growth rate

US$ 80 million in FDI (2007-2015)

US$ 110.84 million in exports in 2015

TOTAL SALES: OUTSOURCING SECTOR

In the year 2015, sales totaled US$121 million, a growth of 32% when compared to the year 2014. Exports totaled US$110.84 million, a growth of 30.8% when compared to the year 2014.

$3.80 $6.97 $4.31 $7.16 $10.77

$73.23

$86.51

$95.87

$84.71

$110.84

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

2011 2012 2013 2014 2015

Mill

ion

US$

Local Sales Exports


78%

22%

Percentage of Companies Exporting their Services

Yes

No

49%

12%

17%

15%

7%

Main Export Markets

USA

Canada

Latin America

Europe

Rest of the World

Approximately 78% of companies in the outsourcing sector export their services. The sector’s export markets have diversified throughout the years - Canada has grown from a participation

of 3% in 2014, to 12% in 2015.

TOTAL EXPORTS: OUTSOURCING SECTOR


3548

4324

5626

6810

7882

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2011 2012 2013 2014 2015

In the year 2015, employees in the outsourcing sector grew 16% when compared to the year 2014. The average annual growth between 2011-2015 is of 22%

TOTAL EMPLOYEES: OUTSOURCING SECTOR


The Industry has had a growing trend of providing services in English, thus Jobs in English have always outgrown Spanish jobs.

In the year 2015 English jobs experienced a growth of 4.84% when compared to the year 2014. Jobs in Spanish also saw a growth of 81%.

TOTAL EMPLOYEES BY LANGUAGE

3099

3655

4525

58476130

449669

1101 963

1752

0

1000

2000

3000

4000

5000

6000

7000

2011 2012 2013 2014 2015

English Spanish


BUILDING A SOLID EDUCATIONAL FOUNDATION

Sources: National Council of Universities, National Technological Institute, América Economía and PRONicaragua.

#1In Latin America

Harvard-Affiliated

97%literacy rate

(2012)

173,997students enrolled in 49 universities

295,885students in 17 areas of technical

training courses

30,793students in 13

different technical careers

12bilingual high schools and 8

language centers

11bilingual colleges with more

than 4,000 enrolled students

1US accredited English Language University

Reverse Brain-Drain: Nicaraguans who have lived abroad with international career

experience and have returned to the country.

Source :PRONicaragua Study University Population 2014

32.9%

27.2%

15.8%

8.3%

3.8%

5.5%5%

Students Enrolled in Business

Accounting and Auditing

Business Administration

Marketing and publicity

Tourism

Global Business

Banking and Finance

Economics

28.8%

23.5%

20%

11%

9.4%

Economy and Business

Other Areas

Engineering and Architecture

Medicine

Law and Political Science

Universities Enrollment

HUMAN RESOURCE AVAILABILITY

Most Studied Bilingual Careers in

Nicaragua:

• Business Administration

• Finance

• Global Business

• Strategic Marketing

• Pre- Engineering

• Software Engineering

• Industrial Engineering

• Biology

• Psychology

Source: Bilingual population Study PRONicaragua 2014.

Language Programs:

• The United States Embassy in Nicaragua offersEnglish programs both for teachers and studentswho would like to learn the language. In total,both programs have +1,200 graduates.

• On average, more than 2,200 students graduateevery year from English Language Centers fromspecialized English courses, such as businessvocabulary for careers and vocabulary for callcenters, TOEFL, SAT, GRE, and GMAT.

• 52.7% of students graduated are between theages of 15 to 25 years old, 26.5% are older than 25years old and 20.9% are younger than 15 yearsold.

+38% of students of bilingual careers arefrom Managua.

BILINGUAL HUMAN RESOURCE AVAILABILITY

23%

23%

12%

9%

9%

6%

6%

4%4%

4%Social Networks

References

Job Banks & Agreements with Universities

Job Fairs

Press

Street Adds

Recruitment Agencies

Radio

Billboards

Others

The main recruitment methods in Nicaragua are referrals and social media. The third most common methods are Job Banks and university databases.

RECRUITMENT METHODS


BENEFITS FOR EMPLOYEES

44%

42%

39%

39%

25%

22%

8%

Meal Subsidy

Uniforms

Discount Cards

Night Transportation

Life Insurance

Others

None


On average, 44% of companies provide food subsidies to their employees, 42% uniforms and 39% discount cards and transportation services.

National Holidays **

Morning Shift

48 Hours

Mixed Shift

45 Hours

Night Shift

42 Hours

Labor Shifts

Fringe Benefits Costs for the Employer

% of Ordinary

Gross Income

Vacation 8.33%

Christmas bonus – 13th month 8.33%

Severance Pay 8.33%

Holidays 3.01%

Social security 18.5%

INATEC (Technological Institute) 2.0%

Total 48.50%

1st year of labor 1 month of salary

2nd year of labor 1 month of salary

3rd year of labor 1 month of salary

4th year of labor 20 days of salary



Total 5 months of salary

Termination Compensation

1. January 1st2. Holy Thursday3. Good Friday4. May 1st 5. July 196. September 147. September 158. December 89. December 25

** Managua has two Holidays more in Ausgust 1st and 10th

LABOR LAW

Free Zones Incentives Law (Law 917)

• Income tax 1

• Import taxes for machinery, equipment, andraw materials

• Municipal tax

• Sales tax

• Capital and property tax

• Real state taxes

1Valid for 10 years with the possibility to be extended once with previous authorization.

Nicaragua offers significant fiscal incentives under the free zones regime for industrial companieswith an export – oriented focus.

100% of exemption in:

ATTRACTIVE FISCAL INCENTIVES

COMPETITIVE & MODERN TELECOM INFRASTRUCTURE

• Fully privatized telecommunications

sector

• Multinational carriers

• Reliability and redundancy

• Fiber optic & digital switching;

Metropolitan area fiber networks

• International private leased circuits

(IPLC)

BPO/KPO

BPO/KPO JOBS

380 580998 876

1638

30553580

4424

57426014

0

1000

2000

3000

4000

5000

6000

7000

2011 2012 2013 2014 2015

BPO/KPO Spanish BPO/KPO English

When compared to 2014, BPO/KPO companies experienced a growth of 4.73% in Jobs in English, and a growth of 86% in Jobs in Spanish. The sector continues to provide more services in English to foreign clients.


BPO/KPO EXPORTS

$73.23

$85.92 $92.74

$83.20

$107.36

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

2011 2012 2013 2014 2015

US$

Mill

ion

In the year 2015, BPO/KPO exports totaled US$107.36 million, a growth of 29% when compared to the year 2014.


BPO/KPO SERVICES OFFERED IN NICARAGUA


18%

15%

12%

9%

9%

9%

7%

6%

5%

3%

3%2%

1%1%Customer Service

Sales

BackOffice

Chat Services

Collections

Technical Support

Data Processing

Social Media Management

Telemarketing

Digital Marketing

Lead Generation

Shared Services Center

Patent Design and Development

Finance Services

PositionSalary Ranges

Without Fringe Benefits

Site Director $1,200 - $5,000

Senior Operations Manager $1,000 - $4000

Operations Manager $1,600 - $3,500

IT Manager $375 - $3,000

Human Resources Manager $540 - $4,000

Recruitment Manager $1,000 - $3,000

Trainer $700 - $1,800

Recruiter $500 - $1,100

Coach $600 - $900

Senior Supervisor $550 - $1,400

Supervisor $500 - $950

Quality Control $450 - $950

Bilingual Agent $450 - $750

Spanish Agent $220 - $610

SALARY RANGES FOR BPO/KPO


44

75

101 105116

69

89103

87

114

0

50

100

150

200

250

300

2011 2012 2013 2014 2015

ITO English ITO Spanish

ITO JOBS

When compared to 2014, ITO companies experienced a growth of 10% in Jobs in English, and a growth of 31% in Jobs in Spanish.


ITO EXPORTS


$0.59

$3.12

$1.51

$3.58

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2012 2013 2014 2015

US$

Mill

ion

In the year 2015, ITO exports totaled US$3.58 million, a growth of 136% when compared to the year 2014.

Compared to 2014, the top 3 services remain the same. However, there’s a slight increase in the percentage of companies developing mobile applications.

ITO SERVICES


13%

13%

12%

12%8%

6%

6%

5%

5%

4%

4%

3%3%

2% 4%Mobile Application Development

Web Application Development

Custom Software Development

Web Page Design

IT Consulting

Search Engine Optimization

Data Base

Web Hosting

Cloud Services

Technical Support

SEM and SEO Campaigns

Testing and Quality Assurance

Web Analytics

Remote Assistance

Others

11%

10%

10%

9%

9%9%

5%

6%

6%

5%

5%

5%

4%3% 3%HTML5

JAVA

JavaScript

PHP

CSS

SQL

XML

.NET

Asp.Net

C#

Python

Ruby

Objective-C

C++

Others

PROGRAMMING LANGUAGES USED BY ITO COMPANIES


SALARY RANGES FOR ITO


PositionSalary Ranges Without Fringe

Benefits

Project Manager $800 - $1,200

Senior Developer $500 - $2,500

Junior Developer $400 - $1,200

Programmer $500 - $1,800

Programmer Analyst $385 - $1,500

Programmer Architect $500 - $2,000

Graphic Designer $300 - $1,000

Web Developer $400 - $2,000

2D/3D Animator $400 - $1,000

3D Modeler $700 - $700

Technical Support $500 - $800

A Competitive CostStructureLow labor costs + generous fiscal incentives+ FTAs with main international markets

High degree of social cohesion resulting from dialogue between the Government, the private sector and workers

Pro-business government that understands the value of foreign investment and supports their successful development.

High levels of personal safety and great quality of life.

NICARAGUA’S VALUE OFFER

“Over the last five years, Nicaragua evolved from a 3.2% growth ratein GDP to 4.7%, and it is the nation – after Panama – with the fastestgrowth in Central America”.

Forbes México “Nicaragua, the new jewel of Business in Central America” –March 2016

Pro-Nicaragua Country Overview 2016

Documents

Transcript of Pro-Nicaragua Country Overview 2016