March 6th, 2010

In response to Mary Anastasia O´Grady´s article titled "The Ortega-Chávez Axis" published on February 22nd, 2010, in The Wall Street Journal online, I'd like to make the following observations about Nicaragua and what's really going on down here.

Although we acknowledge that moments of political tension in Nicaragua affect the investment climate, we strongly feel that Mrs. O´Grady failed to provide impartial and properly supported information about our country. It seems that many of the author's assertions were based on subjective interpretations from her sources and not on concrete evidence. The author's claim that "investors are fleeing the country" is particularly disturbing.

The region's latest statistics for foreign direct investment (FDI) inflow, available for the first semester of 2009, offer a unique scenario of how the economies were affected by the international financial and economic crisis last year. For the aforementioned period, Nicaragua attracted up to US$231 million, which concentrated mainly in the Energy, Free Zones and Tourism sectors. This figure represents a nine percent decrease in relation to the same period in 2008; however, this result has more to do with the global economic crisis than any of the political issues the author overestimates. One can even consider these results as positive if compared to the region's average drop: 42 percent. Countries like Costa Rica and El Salvador, traditional strong players in FDI attraction, experienced truly drastic plunges in their inflows, seeing their numbers decrease by 49 percent and 90 percent, respectively.

In 2007 and 2008, Nicaragua positioned itself as the regional leader when measuring foreign direct investment as a percentage of the country's GDP. In 2008 Nicaragua achieved a 9.9 percent index, ranking in the third position within Latin America, only behind Panama and Chile, according to the Latin Business Chronicle. In addition, the accumulated FDI inflows for these two years exceeded 1 billion dollars, which is more than the total flows received in the previous four year period from 2003 to 2006.

Additionally, in 2010 several investment announcements continue to demonstrate the country's success in attracting investments. One of the most important announcements for the country has been the US$700 million dollar investment of the Tumarín hydroelectric dam, which will be developed by Brazilian Queiros Galvao in collaboration with Electrobras. Other American and Canadian companies such as Ram Power, B2Gold, Amayo and Hemco, have all announced major investments in energy and mining, which will account for more than US$300 million in the next couple of years.

Investment in the country has not been limited to the extraction sector, following the strategic development plan of the Government of Nicaragua, the country has also attracted investments in both the manufacturing and services sectors, providing added value and better paying jobs to our economy.

Companies such as Mexican Grupo Denim, Brazilian Schmidt Irmaos, German Draexlmaier and American Cupid Foundation, have all begun or inaugurated investment projects totaling more than US$80 million dollars in the manufacturing sector, which will generate around 8,000 new jobs.

In the service sector, companies such as Stream Global Services Inc. and Sitel, leaders in the outsourcing of complex business processes, have either recently launched operations in Nicaragua or continued to expand their existing facilities, recognizing the country's openness and attractive conditions for these kind of investments.

Not only has the Government of Nicaragua openly expressed its interest in constructing a favorable business climate in the country, but its actions speak accordingly. The legal framework has been strengthened to offer legal securities to investors as well as to promote investment in priority sectors of the economy. The approval of the Coastal Zones Development Law in consensus with the private sector, and the opening of the Free Zones One-Stop-Shop are some examples of setting clear and transparent rules and helping ease business and facilitate the establishment of new companies. Yet another landmark was the signing of a tripartite agreement between the Government, labor unions and the private sector to protect jobs within the Free Zone sector by establishing a minimum wage policy through 2013. This agreement offers predictability to investors and, by establishing policy well into the next administration's term, effectively demonstrates how the country recognizes that this type of issues should be resolved separately from political discussions.

Though data of the country's economic performance still remains preliminary, we are far from "anemic". Macroeconomic indicators remained stable even with the impact of the global economic crisis. Experts, both from the government and independent, are optimistic that during 2010 our economy will once again continue its upward trend. Exports, tourist arrivals and FDI perspectives are looking pretty good so far.

PRONicaragua, the official investment promotion agency of the Nicaragua, works hard to attract high-quality FDI to our country and the agency's performance has been recognized as one of the best in the world by impartial and respected institutions such as the World Bank. With this response we hope to reduce the negative perception that may be generated of Nicaragua in the general public as a result of articles with unsubstantiated claims and/or inaccurate information. Foreign investors can always find reliable sources of information related to foreign investments in Nicaragua in organizations such as the World Bank, UNCTAD and ECLAC.

Javier Chamorro
Executive Director
PRONicaragua

For more information on Nicaragua and the investment opportunities the country offers, contact us at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it