Country Presentation July 2013

7/30/2019 Country Presentation July 2013

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CAPITAL:

GuatemalaAREA:

108.889 Km2AVERAGE TEMPERATURE:

15C 25C (59F 77F)

POPULATION:15.073.375 inhabitants(projected 2012)

OFFICIAL LANGUAGE:

SpanishCURRENCY:

El QuetzalEXCHANGE RATE:US$ 1,00 = Q 7,84 (2013)

GDPper capita:

US$ 3.330,3

REPUBLIC OF GUATEMALA


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WHY INVEST IN GUATEMALA?


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1. Guatemala guarantees a safe and profitableinvestment

2. Government is firmly committed toencouraging investment

3. Excellent economic performance thatguarantees a competitive business climate

4. Guatemala is an export platform withpreferential access to the region


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6. The human resource in the country is ideal for

optimal business performance

7. In Guatemala there are multiple areas of

development with investment opportunities

5. A privileged location, ideal for business


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Guatemala continues to work to improve the country risk ratings. Inrecent years, the major rating agencies have kept Guatemalas ratingsstable.

AGENCIES Jul-05 Jul-08 Jul-12

FITCH BB- (1) BB+ (Stable) BB+ (Stable)

MOODY'S Ba2 (Stable) Ba2 (Stable) Ba1 (Stable)

S&P BB-(Stable) BB (Stable) BB (Stable)

OCDE 6 5 5

Fuente: Fitch, Moodys, S&P, OCDE

1. Guatemala guarantees a safe and profitableinvestment


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Improving results in the Doing

Business Report 2013

DOING BUSINESS

2013 RANKING

DOING BUSINESS

2012 RANKING

RANKING

CHANGE

93 98 5

Improving in areas such as:

Main IssuesDB 2013

Ranking

DB 2012

Ranking

RANKING

CHANGE

Dealing with Construction Permits 94 146 52Registering Property 20 22 2Enforcing Contracts 96 98 2

Source: Doing Business 2012


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An exceptional growth of foreign direct investmentsince 2009: 100% between 2009 and 2012

Source: BANGUAT*Estimated

263.3 296.0

508.2591.6

745.1 753.8600.0

805.8

1,026.1

1,206.6

1,347.1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

- in millions of US$ -


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Having incentives to promote foreign direct investment in the country suchas:

Law for Foreign Investments (Decree 9-98)

Law for Free Negotiation of Foreign Exchange (Decree 94-200)

Law for Free Trade Zones (Decree 65-89)

ZOLIC (Decree 22-73)

Law for The Development and Promotion of Export Activities and

Maquila draw back - (Decree 29-89)

Public-Private Partnership Law (Decree 16 2010)

2. Government is firmly committed toencouraging investment


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Free Trade Zones in Guatemala

2 Free Trade Zones inPuerto Barrios, Izabal

9 Free Trade Zonesin the City

2 in Amatitln1 in Villa Nueva

1 Free Trade Zone inSanta Rosa

2 Free TradeZones inEscuintla

2 Free TradeZones in San

Marcos

Currently, Guatemala has 19 active zones and 8 pending startoperations

Source: MINECO


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Guatemala represents 35% of theregions economy (US$ 50 of $145Billion)

Moderate Fiscal Debt (2.5% of the

GDP-2012)

Important Monetary Reserves (US$ 7.3billion May 2013)

Stability: controlled inflation

Least indebted country in Latin America(22.3% of the GDP)

35%

17%

13%

5%

30%

Source : FMI / BANGUAT

3. Excellent economic performance thatguarantees a competitive business climate


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Gross Domestic Product

*Estimated**PreliminarySource: BANGUAT

2.5 2.4

3.9

2.5

3.2 3.3

5.4

6.3

3.3

0.5

2.9

4.1

3.0

3.5

3,9%

One of the few Latin-

American countries with

positive growth after the

economic crisis, and with animportant recovery for

2010.


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GDP Diversification11 Sectors with highproductive potential

Source: BANGUAT

18%

16%

13%12%

11%

10%

8%

5%

3% 3% 1%

MANUFACTURE

PRIVATE SERVICES

TRADE

AGRICULTURE

HOUSING RENTS

TRANSPORTATION

PUBLIC ADMINISTRATION

CONSTRUCTION

FINANCIAL INTERMEDIARIES

ELECTRICITY AND WATER

MINES AND QUARRIES


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(in billions of US$)

Source: BANGUAT

Exports have almost

tripled over the last 11

years

TOTAL EXPORTS: US$

10,1 BILLIONS (2012)

4. Guatemala is an export platform withpreferential access to the region

1.0

4.10.3

0.6

0.9

3.0

0.5

2.4

2000 2012

UNITED STATES EUROZONE CENTRAL AMERICA REST OF THE WORLD


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Guatemala: Trade Balance

Source: BANGUAT

4.2 4.5 5.05.4

6.0 6.97.7

7.2

8.5

10.510.1

7.7 8.19.5

10.511.9

13.614.5

11.5

13.8

16.616.9

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

- in billions of US$ -

EXPORTS IMPORTS


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Free Trade Agreements

Active: DR-CAFTA, CentralAmerica, Colombia,Mexico, Panama, Taiwan,Dominican Republic, Chile,Customs Union with El

Salvador

In process of approval:Association Agreement withthe European Union

In negotiation: Canada,

Peru, Ecuador, Trinidad andTobago.


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Investment agreements worldwide

Germany Argentina Austria Belgium Luxembourg

Chile Korea Cuba

Spain Finland

France Israel Italy Netherlands

Czech Republic Suecia Switzerland

Taiwan *=Pending


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Export platform

US$100 Milliona year in Software and Visual Effects

No. 1 Exporterof Snow Peas to the US.

No. 1 Exporterof Cardamom in the world.

No. 1 Exporterof Poinsettia cuttings in the world.

No. 1 Supplierof Yamaha wooden keys and Gibson guitars

No. 1 Supplierof manufactures for the Central American region.

No. 1 Supplierof coffee for Starbucks Coffee y No. 3 Supplier fora Japan

No. 1 in efficiency with regard to bulk sugar ports and No. 2 Exporterof sugar

at the Latin American level

No8 Exporterof bananas in the world

Key US Market Position: 28% broccoli, 24% cauliflower y 21%snow


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Population:68 Million

Economy:US$ 319 Billion

MESOAMERICA

SOUTH OF MEXICO

Economy: US$ 184 BillPopulation: 28 MillTourism: 10 Mill

CENTRAL AMERICAEconomy: US$ 135 BillPopulation: 40 MillionTourism: 8 Million

Tourism:18 Million

5. A privileged location, ideal for business


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Mexico

1h 55

Chicago4

h 10

Panama

2h 15

NY

4h 30

Miami 2h

50

More than 160 weeklyflights, with direct

connections to 6 different

cities in USA, Mexico,

Central America, Peru and

Spain.

Flight times


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Mundo Maya

Aeropuerto

Internacional La

Aurora

Airport system 2 International airports and a network of

17 local ones

La Aurora International Airport:

Modernization and expansion plan Category 1 according to FAA

Capable of receiving 4 millionpassengers per year

160 weekly flights

Projects to strengh airport system:

San Jos-Escuintla Airfield Puerto Barrios Airfield Retalhuleu Airfield

Aeromxico and Delta will

increase flights

LAN Chile Hub de Carga P.S.J.


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297 Km

98 Km

Atlantic: Port Santo Tomas de Castilla and Puerto Barrios, located 297kmfrom Guatemala City

Pacific: Quetzal Port is located 98km from Guatemala City.

The two state ports (SantoTomas and Quetzal)are certified BASC (Business CommerceSecurity Alliance) which is recognized byUSA.

Port system modernization

Source: ComisinPortuaria Nacional

63%

26%

11%

Guatemala: Foreign TradeChannels

SEA LAND AIR

Port system projects: construction of a terminal for cruise

ships in the Bay d Puerto BarriosUS$ 50 70 million
http://www.anglicanos.net/ancla.gifhttp://www.anglicanos.net/ancla.gifhttp://www.anglicanos.net/ancla.gif


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Guatemala has the largestpopulation in Central America:

15,073,375 people (projected2012).

Young Guatemalanpopulation: over 70% of thepopulation is less than 40years

The education sector (publicand private) is very dynamicand comprehensive, providinga solid academic capacitation.

Source: INE

6. The human resource in the country is ideal foroptimal business performance

-20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0

0- 4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80 y ms

AgeGroups

Guatemala:Percentage of Distribution of the Total Population

by Gender.

According to quinquennal age groups. Year 2012

Men Women


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In Guatemala there are great opportunities in sectors suchas:

- Agribusiness Sector

- Apparel and Textile Sector- Manufacture and Assembly Sector

- Call Centers & BPO Sector

- Tourism Sector

- Energy Sector

- Mining and Oil Sectors

7. In Guatemala there are multiple areas ofdevelopment with investment opportunities


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SECTOR CARACTERISTICS

Variety of climates (more than 350 micro climates)

Proximity and easy access to major markets (USA, Mexico)

Available trained personnel

Competitive operating costs (sugar, agricultural products, labor): Guatemala isone of the leading sugar producers worldwide.

OPPORTUNITIES AREAS

Confectionary

Juices and beverages

Snacks

Fruits and vegetables

Hydrobiological

Producing biofuels from jatropha and African palm

Sector de Agroindustria

Forestry potential


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Total forest area: 82% hardwood forest 10% coniferous forest 8% mixed forest

Source: Cluster Forestal Guatemala

Forestry potential Forestry incentives program Suitable environment Technical capabilities and infrastructure Cluster

Forestry Sector

Main Export Products Timber: 24% Furnitures: 21% Doors: 14%

Description HectaresNatural Forests 196.693,24

Plantations 92.402,70

Forest Concessions 482.983,00

Total 772,078.94


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Forestry exports of Guatemala

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

400000000

450000000

500000000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: SIFGUA

Lpices de madera y pizarrones

Muebles de madera y sus partes

Papel y cartn

Pasta de madera

Madera y sus manufacturas

Ltex, caucho y gomas naturales

Semillas forestales


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An apparel and textile industry

booming


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As an economic activity, the apparel and textileindustry accounts for 4% of domestic production (GDP)and 19% of industrial (industrial GDP).

This sector includes 140 companies in apparel, 41 intextile, 260 companies of accessories and services.Altogether generate over 90,000 direct and indirect

jobs, of which 46% are women.

Apparel and textile industry continues to be an

engine for the Guatemalan economy

Source: VESTEX


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Apparel and Textile Sector

768.7698.6

766.5

919.3 935.81,033.9 1,042.6 1,019.9 1,004.5

1,121.3 1,115.3 1,123.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

- in millions of US$ -

61%

31%

7%

1%

Origin of the invested capital

KOREA

GUATEMALA

UNITED STATES

OTHERS

Source: Banco de Guatemala - VESTEX


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Some global brands manufactured in Guatemala

are:

Among othresFuente: VESTEX


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Guatemala:

Potential to do business with companies in

light manufacturing and assembly

Manufactura Ligera


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STRATEGIC SUB-SECTORS:

Electronic assembly

Auto parts

Medical Devices

Other manufactures: software, plastics, chemical products, rubber materials, ironand steel products

- Products and Services ofSOFTWARE DEVELOPMENT offered 18 categories and21 national and international companies.

Manufactura Ligera


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Guatemala:

Infrastructure and connectivity for world

class operations


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Telecommunications


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Telecommunications

Favorable legal framework for investment:

Telecommunications law is one of the most flexiblein Latin America.One of the most competitive markets in Latin

America.Strong redundancy: 99.98% (SLA)

Steady increase in coverage

500,000 (1995) to 20,7 million (2012)Mobile: 65% annual growth vs. 45% Latin America

average

In the last 10 years,

the sector has

invested $ 300

million annually.

1st. Place in Central

America


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Guatemala:

a country with tourism potential


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Tourist Arrivals and Receipts

Source: INGUAT

880,223

1,181,526

1,315,646

1,502,0691,627,551

1,715,426 1,776,8681,875,777 1,822,663

1,951,173

599,700

770,100868,800 1,012,700

1,199,400 1,275,600 1,298,000

1,378,000

1,350,200

1,418,900

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

TOURISTS RECEIPTS (in thousand US$)


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Source: INGUAT

Guatemala has experienced anaverage annual growth in the

number of tourists of 8.8% duringthe last years, with an occupancygrowth rate of 2.5% during thesame period which does not meetthe tourist demand capacity.

Source: INGUAT

0

10,000

20,000

30,000

40,000

50,000

0

500,000

1,000,000

1,500,000

2,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Room Supply and Tourism Demands

TOURISTSROOMS

24%

19%41%

16%

Main Reasons to Visit Guatemala 2011

Family Visit /Friends

Work / Business

Tourism

Others


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Guatemala:

Mesoamerican Energetic Center ENERGY MATRIXSECTOR


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A

CHALLENGE

SECTOR

PLAN

YEAR 2012

YEAR 2027

51%

24%

11%

11%

3% 0%

HIDRAULIC

BUNKER

BIOMASS

COAL

GEOTHERMAL

DIESEL OIL

46%

26%

8%

8%

7%5%

0% 0%

HIDRAULIC

COAL

LNG IMPORTSBIOMASS

GEOTHERMAL

BUNKER

OTHER RENEWABLES

DIESEL OIL


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Guatemala: great energetic potential

Investment Potential: more than US$ 6 millions

200 MW in construction

800 Km in construction for transmission system

Potential 10,000 MW

6% usedHydroelectric

Potential 10,000 MW2.65% usedGeothermalPotential 25,040 MW

0% usedEolic5-6.5 Kwh per square meter per day

0% usedSolarPotencial no disponible

187.8 MW usedBiomass


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Modern legal framework to foster investments: General Electricity Law. 75% of generation from private investors

From 1995 to 2015 the energetic offer will triple

Total: 700 MW (1995) to 2,300MW (2015) More than 90% of new projects will produce energy from renewable

sources

High potential for renewable energy exploitation, over 40 power generationcompanies are present in Guatemala

El sector energtico tiene un gran potencial en elpas, siendo esto reconocido a nivel internacional

Energetic center interconnected with the


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Ro Claro

Parrita

Len

Ro Lindo

Suyapa

Pavana

El Cajn

Veladero

Caas

PepescaTapachula

Los Brillantes

AhuachapanNejapa

15 de setiembre

Ticuantepe

Guate

Santa Elena Belice City

SIEPAC

Interconnection Guatemala Mexico 200 MW Interconnection Guatemala Belize 50MW Interconnection Guatemala-Salvador 200MW Geothermal Potential 200 MW

KM

GUATEMALA 1.240,0

EL SALVADOR 286,0

HONDURAS 270,0NICARAGUA 310,0

COSTA RICA 493,0

PANAM 150,0

TOTAL 2.749,0

Energetic center interconnected with theregion


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Guatemala:

Mining and oil potential sectors

Petroleum & Natural Gas


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CUENCA DE PETEN

Norte

CUENCA DEAMATIQUE

CUENCA DE PETENSur

CUENCA DELPACIFICO

Xan field:35 oil wells in production

This basin has more than

10,000 ft deep, associated with

the presence of natural gas

Petroleum & Natural Gas

540 million bbls in reserve

Current government's interest to advance the

bidding : 9 areas in Peten, and three in the

Pacific zone , for increase the production to

60.000 barrels per day between 2012 - 2016

We are a country with a


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We are a country with agreat mining potential

New opportunities


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New opportunities

Minas Ixtahuacn

Gold/ silver

Marlin

Gold/ silver

Progreso VII

Cement

El SastreCement

Oasis

Gold /Silver

El Pato

Gold / Silver

Cerro Blanco

Gold / Silver

Mayaniquel

Nickel

Fnix

Nickel

Montufar

Nickel

Operating minesImportant Projects without

exploitation Medium projects not operating

In the next decade, mining and petroleum sector have


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+4 Gold and Silver MinesMarlin size(Cerro Blanco JU y ElEscobal, Marlin ampliation, 2 more)

Investment: US$2.200Million2012-2018

+2 Nickel mines (CGN,Mayaniquel)

Investment US$2.000Million2009-2018

6 petroleum concessions, togenerate 75.000 barrels by day

in 2019. US$2.900MAverage investment US$ 30M for each1,000B/d in explotation and US$3,5M

en exploration. Time 2012-2020

, g pthe potential to generate more than $6.000 million

Foreign companies that have believe in


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Foreign companies that have believe in

Guatemala

WHAT IS INVEST IN GUATEMALA?
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WHAT IS INVEST IN GUATEMALA?

The National Foreign Investment Promotional Agency, with the mandate of:

- Promoting Guatemala as the best investment destination.- Offering foreign investors all the necessary support and assistance in seekingopportunities in the country.- Contributing to the economic growth and development of the country.

Its specialized Consultants assist foreign investors by:

- Providing updated and reliable information on Guatemalas economy,legislation, incentives and investment climate.- Offering contacts with service entities and raw material suppliers.- Organizing agendas for ion-country visits, during the time investors consider

it necessary.- Supporting investments during and after operations are set up in the country.

www.investinguatemala.org

Documents

Country Presentation July 2013