General information for investing in Nicaragua

Nicaragua

Nicaragua at a glance

Population 5,210,000 Population growth rate

2.8% Fifteen departments and

Two Autonomous Regions Capital City: Managua

(pop. 1 million) Other Major Cities:

Granada Leon Masaya Matagalpa Jinotega Bluefields Puerto Cabezas

Nicaragua has beach property

352 Km of coastline on the Pacific

10,333 square km of lakes and lagoons

Nicaragua has lake property

Political climate

Two major political parties PLC FSLN

President Enrique Bolaños Term 2002-2006 Economic

Stability

Cellular service

• BellSouth, PCS and Enitel operate cellular phone networks.

• Average local cost is $.26/min.

Internet access

• Several companies offer dial-up, cable, radio and satellite services.

• Largest ISP’S are IBW, CABLENET and TMX.

• Monthly fees range from $20 for basic dial-up connections to over $500 for satellite services.

Air transportation • Managua International Airport

has recently been expanded to double its original capacity.

• Daily non-stop flights to Miami via American, TACA and SANSA. Continental offers daily non-stop flights to Houston. Direct connections to Los Angeles also available.

• National flights are available for travel to Corn Island, Bluefields, Puerto Cabezasand San Carlos.

• NatureAir runs daily flights between Granada, San José and Liberia in Costa Rica.

Banking system• 70% of all deposits are in U.S. Dollars

• Residency or local property ownership is required to open a personal bank account

• Six banks, all offer international financial services

– BAC (Banco de America Central)– BANCENTRO (Banco

Centroamericano)– BDF (Banco de Finanzas)– BANEXPO (Banco de Exportacion)– BANPRO (Banco de la Produccion)– BANCO CALEY DAGNALL

Economic indicators Gross Domestic Product

(GDP) $2.45 billion (locally produced)

Estimated 2002 Real GDP Growth 3.5%

Low growth due to the end of Post Hurricane Mitch construction boom and presidential elections

Inflation 3.7% estimated

• Exports US$ 770.4 million– Coffee– Beef– Seafood– Sugar

• Major trade partners

– U.S.– Western Europe– Central America

• Working population 1.85 million

– Rural based– Largely unskilled

Economic indicators

Principal growth sectors

• Tourism• Commerce• Construction• Telecommunications• Agriculture• Textiles

Investments

Metrocentro Shopping Mall in ManaguaPlaza Inter Shopping Mall in ManaguaLa Colonia SupermarketHotel Intercontinental ManaguaHotel MontelimarHoliday InnPlaza IntercontinentalHotel PrincessLegends HotelExpansion of International AirportHighway SystemTelecommunications

Recent significant investments include: Recent significant investments include:

Major foreign investors

Tourism

• $112.5 million market• Will eventually overtake coffee as leading hard

currency earner

0%

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60%

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120%

140%

1996 1997 1998 1999 2000 2001 2005

Tourism Incentives Law

Law 206• Designed to promote the growth of

tourist activities.• Provides tax breaks for

investments in:– Hotel services industry– Food, beverage and

entertainment services– Tourism infrastructure– Arts and craft facilities

• Over 65 projects have been approved, under this law, value US$65 million.

Construction costs• Cost of building is approximately $35-$50

per square foot.• Most construction is of cinder block, cantera

block, cement, and tile.• Estimated sample costs:

-Concrete $4.00/bag

-Cinder block $.30/each

-Cantera block $1.00/each

-Steel Rebar $18.00 per 100 lbs

Labor information• Average monthly wages:

– Manufacturing $127.70– Transportation $199.63– Construction $113.99– Agriculture $81.47– Services $91.24

• Work week– 6 days/45 hours

• 30 days vacation for 12 months worked

• All employees receive 13th

month Christmas Bonus

Foreign investment Law 344

• Assures that foreign and domestic investment receive the same treatment.

• Eliminates restrictions on the way in which foreign capital can enter the country.

• Recognizes the investor’s right to own property and establish business enterprises as they wish.

• 100% foreign ownership is allowed, no requirement to have a local partner.