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Free Zones may face changes

Tuesday, October 18, 2011

Many Central American assembly plants are anxious, especially those located in so-called Free Zones.

Meanwhile, Mexico is making its maquiladoras more competitive.

Assessing a proposed Costa Rican law, which would charge corporate taxes in Free Zones, Intel said – diplomatically but pointedly - that its Asian plants have costs well below those of Central America. Intel employs about 2,000 people in Costa Rica.

Likewise, Free Zone companies in El Salvador are objecting to government proposals, which would remove many incentives, currently available to these kind of operations.

A concern for export-oriented companies in general has to with Another concern has to do with the economies of the U.S. and Europe, where import volumes are slowing.

To reduce costs, two Honduran maquiladoras last week announced that they were moving to Nicaragua, where of labor is cheaper.

For his part, Mexican President Felipe Calderon is going in the opposite direction to that of Costa Rica and El Salvador, this month announcing new tax incentives for Mexico’s maquiladora industry.

With new incentives, a recently devalued peso, and a work force four times greater than that Central America as a whole, Mexico will be more appealing to investors - and maybe not so attractive to Central Americans.

The region´s so-called maquiladoras mainly make clothing, footwear, computer parts and medical equipment. Many call centers also operate in Central American Free Zones, offering support to international customers in areas which include technology, travel and finance.