With the intention of promoting and increasing the local and foreign investments, El Salvador and the rest of countries that constitute the Central American Region created the Central American Common Market. According to this agreement new tariffs were established for customs duties for goods and commodities produced in the region, as well as for those produced outside the area. This treaty of economic integration intended to build up a custom union for the free circulation of all commodities produced in the five countries including those from outside the area.
In view of the progress of this integration, foreign investors were established in El Salvador due to the facilities that our country offered for starting up business, including taxation, tariffs, government laws and skilled labour. El Salvador is one of the most progressive countries in the region due to the stabilization policy of the monetary system.
Economic Policy and Dollarization
El Salvador’s government has adapted its economic regulatory framework to allow free enterprise and foreign investment to assist in the country’s development. There are no government controls on interest rates, foreign exchange or the repatriation of capital or profits.
On January 1, 2001, the government took the additional step of dollarization the economy, allowing dollars to be freely used for all monetary transactions in El Salvador.
For investors, dollarization offers many important advantages, by eliminating any exchange risk for investment in El Salvador, guaranteeing the value of their fixed assets in dollars, as well as a long term economic stability in the country and dramatically lowering the local cost of funds.