A move to Nicaragua will help you

[URRACA]

A move to Nicaragua will help you maintain your competitive edge in Business.

More than 60 textile and apparel companies, including many of the apparel industry's top brands, already call Nicaragua home. (In which two were clients) The country offers a variety of services, including sewing, industrial
laundry, dyeing and finishing, cutting rooms and packaging, which help Levi’s, Liz Claiborne, Dickey’s,
AMC, Wal-Mart, and other brands compete in today’s crowded marketplace. These top brands have
helped Nicaragua’s textile & apparel exports double over the last three years.

The Real Nicaragua

In the past 10 years, Nicaragua has transformed itself into one of the safest countries in Latin America, and is now a stable, multi-party democracy on the road to entering a Free Trade Agreement with the U.S. Nicaragua is on a disciplined economic program, supervised by the IMF, to reduce its debt and achieve full macroeconomic independence. This discipline has allowed Nicaragua to achieve an inflation rate of less than 6%, and enjoy a stable currency with a crawling peg to the US dollar.


• Sustained GDP growth

• Safest country in Central America

• Less than 6% inflation

• Stable local currency on a “crawling peg” to the US
dollar

• Regional banking leadership (many of the top financial institutions
in Central America have Nicaraguan origins), and free movement of capital
and profits.

• A Government that encourages foreign investment through generous
fiscal incentives and world-class facilitation services

• Special WTO designation (Doha article 7) allows Nicaragua to maintain
free zones tax holidays after 2008, when most of Latin America will have
to eliminate such benefits.

Labor Force

Nicaragua’s people are its most valuable asset. With low attrition rates, a fast learning curve
and low absenteeism, the Nicaraguan labor force is quickly becoming recognized as the best
value in Latin America.

• Population: 5.3 million

• Labor force: nearly 2 million

• Population under 30 years: 75 percent

• 45,000 workers in the textile industry alone

• Underemployment: 45 percent

• Less than 8 percent employee attrition rate per year

Operational costs

The cost structure of textile and apparel operations in Nicaragua is among the two most
competitive in Latin America.

• Save 25% - 30% in operating costs compared to:

• El Salvador, Guatemala or Honduras


• Fully-loaded wages and benefits: $0.42 per hour (minimum wage)

• Fully-loaded wages and benefits: $0.64 per hour (average market
wage)

• Energy: $0.08 per Kw/h (over 200 Kw/month)

• Industrial rent space: $2.50 - $3.50 m2 per month

Investment Incentives

Textile, apparel and related companies, whether located inside a free zone or as a stand-alone
operation (called a ZOFA), may apply for incentives under the Free Zone Law

CBI Trade Enhancement Legislation
• 100 percent income tax exemption

• 100 percent value added tax exemption

• 100 percent municipal tax exemption

• No taxes on capital gains

• Duty free import of machinery and equipment, raw material and intermediate
goods

• Duty free import of transportation equipment and vehicles.

• Minimal registration procedures

• No limits on foreign capital

• Full currency convertibility

• No double taxation

The CBI Trade Enhancement Legislation broadens the scope of products that can be exported
duty-free and quota-free from Nicaragua to the United States. In the textile and apparel sector
this legislation grants duty-free and quota-free treatment to:

• Apparel assembled in Nicaragua from U.S. fabrics wholly formed with U.S. yarn and cut in the United States (known as the 807-A+ program). The 807-A+ is applicable to both U.S.- knit and woven fabric and all types of textile fibers.
• Apparel assembled in Nicaragua from local or CBI-knit fabric, subject to a limit. CBI Enhancement Legislation grants similar treatment to T-shirts of category 388-339/638-639.
• Under the 807-a and regular 807 programs, apparel produced in Nicaragua from U.S.-formed fabric (either with U.S. or foreign yarn) cut in the U.S. (807-A) or cut in Nicaragua (regular 807), receives a tariff-reduction benefit.

WTO Privileges

Special WTO designation (under Doha article 7) allows Nicaragua to maintain free zones tax holidays after 2008, when most of Latin America will have to eliminate such critical benefits.


Jorge Giraldez-Benard
Latin American Advisors Company Ltd.
e-mail JGiraldezB@yahoo.com YahooPager or MSN User name: JGiraldezB
P.O. Box 140064 Coral Gables, Florida 33114 EEUU
Private: Voice/ (305) 597-1555 e-fax 1-425-9405605