ormer Guatemalan President (1996-2000) and current Guatemala City Mayor Álvaro Enrique Arzú Irigoyen addressed a Guatemala Investment Summit on May 30th to encourage investors to consider seriously his metropolitan area the next time they are seeking a location for BPO, manufacturing or other facilities. Arzú is serving his third consecutive term. He was elected mayor twice prior to serving as president – in 1982, when he was prevented from assuming office due to a coup, and in 1986. Arzú's chief accomplishment as president was a peace accord with the Guatemalan National Revolutionary Unity group, ending a 36-year civil war.
Close proximity to the US – this most populous Central American country's largest trading partner – and the rest of Latin America; a stable and business-friendly political climate, first class transportation and telecom infrastructure and favorable labor and other business costs are among the attributes the Mayor Arzú hopes will resonate with visitors to this metro area of 5 million.
The following day, Site Selection Editor in Chief Mark Arend met with Arzú for elaboration on points he made to the conference attendees, particularly concerning what it will take for more investors to establish operations in Guatemala. Following are excerpts from the interview:
Guatemala City is the capital and largest city, but could you put it in context as a potential location for new investment. What should readers understand about it?
Two thirds of Guatemala's economic output is produced in Guatemala City, and 90 percent of tax revenues are from the city. Also, the federal government has limited resources to invest elsewhere in the country, so this area has a high percentage of investment. We have strong communications systems and are located on the border of the largest market, which is the US, Canada and Mexico.
One of our biggest advantages is a population that wants to serve, which is not the case everywhere. But it is in Guatemalans' DNA. Investors will find here a work ethic like no other. Workers here are trustworthy, have a very kind spirit and a high capacity to work. This can be seen in the service industry, for example. Half of the population of the city is under 20 years of age.
You spoke to the Summit about tax and other advantages to a Guatemala City location. What is preventing a higher rate of investment from outside the country?
The excuse is that corporations are always seeking profits or bigger profits. Another reason given by some companies investing elsewhere is security, but then some of those companies are the first ones to invest in construction projects in Iraq or Afghanistan. It's about profit.
Describe the companies or sectors that would be most successful in Guatemala.
Medium-sized companies come into Guatemala, and they can be profitable after two or three years, whereas in a more developed market it might take them 10 years to recoup their investment. This is a very important point. Also, it is important for companies to lead by example. Much of the wealthy private sector in Guatemala – business owners – have their capital outside the country. They're earning 1 or 1.5 percent in foreign banks, with more risk now in the US and Europe of losing the money than here. We want to see some of that capital reinvested here in Guatemala.
Is there a perception in the investment community that Guatemala is a difficult location in which to invest, for whatever reason? If so, how can your office address that?
Foreign investors should talk to me. I will see that they are facilitated into the country. I am interested in them setting up operations here. I am very interested in employment and wealth generation. I will make sure investors are looked after as they come to Guatemala. I am not worried about hurting anyone's feelings here. Investors should consider me an enabler, as one that will make their operation happen here.
Will investors find the work force they need in the Guatemala City area?
There is much being done today here in the area of work-force development. Guatemala City has eight universities operating, so there is good educational infrastructure and a supply of graduates. In the call center sector, there was nothing four or five years ago in terms of work-force development, but the economics of the city have helped train people in English very quickly, prompting more growth in the sector. The city has the ability to react quickly to the requirements of employers.
Our focus is on mid-range enterprises. The points for investors to know are trust and profitability, and profitability can be realized in a short amount of time. That reinforces the trust companies can place in this market. Conditions here are ripe for investment.