CENTRAL AMERICA: INVESTMENT OPPORTUNITIES

1
CENTRAL AMERICA INVESTMENT OPPORTUNITIES The
Vision and Role of CABEI
Marvin Taylor-Dormond, Ph.D Executive
Vice-President, a.i., and Chief Economist of the
Central American Bank for Economic
Integration 2005 Focus Americas At the
Crossroads Investment Flows to Latin America
Banks as Intermediaries. Miami, Florida. April
20, 2005
2
CONTENT

• Investment Opportunities The Current Trends in
  Central America.
• CABEIS Response Strategy and Investment
  Opportunities identified in Central America.
• Doing Business with CABEI in Central America.
• Concluding Remarks.

3
I. INVESTMENT OPPORTUNITIES THE CURRENT TRENDS
IN CENTRAL AMERICA
The region that CABEI serves is going through an
extraordinary period in terms of business and
investment opportunities, capable of tapping the
regions strengths in the world economy
4
Three Distinctive Characteristics of Central
America

• 1. Privileged Geographic Location
• Coasts in both the Atlantic and Pacific Oceans.
• Main productive zones are located in a distance
  smaller than 100 miles (160 km) from the
  coastlines.
• Potencial to become the the economic and cultural
  bridge between the most important commercial
  blocks of the world.
• Close proximity to the US market.

5
Three Distinctive Characteristics of Central
America

• Ecological Diversity and Unique Environmental
  Resource Base
• Ecological Bridge between the North and South of
  the American Continent.
• Central America, in particular, is home to 7 of
  the biological diversity of the planet. This
  diversity is hosted in its almost 20 million
  hectares of primary and secondary forest.
• Regions exceptional biological treasure offer a
  clear attractiveness for scientific and
  technological research, and a great opportunity
  for the development of new biological products
  and industries.
• Natural resources and tropical climate, as well
  as places of historical, cultural and
  arqueological significance, make the region an
  impressive tourist destination.

6
Three Distinctive Characteristics of Central
America

• Agricultural and Forestal Potential all Year
  Round
• Location and tropical climate turn the region
  into a potential zone for high agricultural and
  forest production all year round.
• Free from seasonal factors, the region has the
  capacity to supply a variety of tropical and
  agricultural products that can be exported to
  different markets all year round.
• Attractive destination for investment, research
  and agribusiness development.

7
Based on its comparative advantages, the region
is pursuing integration and trade openness
vigorously, within a framework of macro stabiliy
and a healthy business environment
Current Investment and Business Opportunities

• OPPORTUNITIES ARISING FROM A RENEWED DYNAMISM OF
  THE REGIONAL INTEGRATION PROCESS AND THE ONGOING
  PLAN PUEBLA PANAMA INITIATIVE (PPP).
• OPPORTUNITIES ARISING FROM THE REGIONS TRADE
  LIBERALIZATION PROCESS AND FREE TRADE AGREEMENTS
  (DR-CAFTA, FTAA, EU)

8

• OPPORTUNITIES ARISING FROM A RENEWED DYNAMISM OF
  THE REGIONAL INTEGRATION PROCESS AND THE ONGOING
  PLAN PUEBLA PANAMA INITIATIVE (PPP).

• Regional Integration will promote
• THE CONSOLIDATION OF A REGIONAL ECONOMIC SPACE
  AND DEVELOPMENT OF KEY INFRASTRUCTURE AND TRADE
  SERVICES, IN ORDER TO LOWER TRADE COSTS AND
  PROMOTE REGIONAL ECONOMIC ARTICULATION. This
  will demand physical infrastructure, customs and
  border modernization, harmonization of
  regulations and implementation of best
  practices...
• THE TRANSFORMATION AND DYNAMISM OF PRODUCTIVE
  SECTORS AND PROMOTION OF HUMAN DEVELOPMENT, IN
  ORDER TO INCREASE COMPETITIVENESS AND GROWTH.
  This will demand the promotion of clusters, such
  as Tourism, Agribusinesses, Fishery,
  Silviculture, Textiles and Clothing, Electronics,
  Software and Hardware

....
9

• . OPPORTUNITIES ARISING FROM A RENEWED DYNAMISM
  OF THE REGIONAL INTEGRATION PROCESS AND THE
  ONGOING PLAN PUEBLA PANAMA INITIATIVE (PPP).
• Regional Integration will promote

• OPPORTUNITIES TO REDUCE SOCIAL, GEOGRAPHIC AND
  SECTORIAL GAPS WITHIN THE REGION AND PROMOTION
  OF A GREATER REGIONAL SOCIAL COHESION. This will
  demand access to basic social services by
  vulnerable population, greater cultural and
  ethnic respect, capacity building and generation
  of formal employment opportunities...
• ESTABLISHMENT OF FUNDAMENTAL BASES FOR THE
  SUCCESS OF CENTRAL AMERICAS TRADE LIBERALIZATION
  PROCESS. This will demand strengthening and
  deepening of an integrated market of goods and
  services, the articulation of production chains,
  and the modernization of financial markets

10
Within the integration process,the Plan Puebla
Panama initiative is of great importance for the
fostering of investment and business
opportunities

• Plan Puebla Panama is a
• Fundamental complement to the regions trade
  openness process.
• Platform to increase the regions readiness level
  to participate competitively in the world economy
  because it aims to enlarge and modernize key
  infrastructure foundations, such as roads, ports,
  airports, energy, telecommunications and trade
  facilities, with a regional vision.
• A window of opportunity to foster development and
  integration in the Mesoamerican region, using
  natural resources in a sustainable manner and
  respecting cultural and ethnic diversity.

11
So far we have identified investment
opportunities in Plan Puebla Panama projects for
an amount of US6.1 billion. Of these, 95 are
investments in infrastructure initiatives.
Preliminary Data.
12

• OPPORTUNITIES ARISING FROM THE REGIONS TRADE
  LIBERALIZATION PROCESS AND FREE TRADE AGREEMENTS
  (DR-CAFTA, FTAA, EU)

• The implications of DR-CAFTA and similar
  treaties
• Access to larger and richer markets.
• Possibility to improve the allocation of
  resources.
• Promotion of specialization based on
  comparative advantages.
• New investment flows.

13

• OPPORTUNITIES ARISING FROM THE REGIONS TRADE
  LIBERALIZATION PROCESS AND FREE TRADE AGREEMENTS
  (DR-CAFTA, FTAA, EU)

The opportunities of DR-CAFTA and similar
treaties

• Strategic alliances for production and trade.
• Public private partnerships for investing in
  regional infrastructure.
• Enlargement of internal supply chains to satisfy
  a larger market.
• Deepening of financial markets and provision af
  new financial solutions.
• Transfer of best practices, technology and
  knowledge consulting services.

14
(No Transcript)
15
II. CABEIS RESPONSE STRATEGY AND INVESTMENT
OPPORTUNITIES IDENTIFIED IN CENTRAL AMERICA
CABEI, with almost 45 years of experience, plays
an strategic role in cooperating with its member
countries to foster investment and business
opportunities that bring development and
prosperity in the region
16
CABEI Strategic Themes and Long-Term Objectives
2004-2009

17
With these objectives in mind,

• CABEI HAS IDENTIFIED CLOSE TO US2.0 BILLION IN
  INVESTMENT OPPORTUNTIES WITHIN THE CENTRAL
  AMERICAN COUNTRIES.
• WE FIRMLY BELIEVE THAT ECONOMIC LIBERALIZATION
  (I.E. CAFTA) AND THE INTEGRATION PROCESS (I.E.
  PPP) WILL OPEN GREATER INVESTMENT OPPORTUNITIES.
• IN EFFECT, OUR COUNTRIES WILL NEED TO DEVELOP KEY
  INFRASTRUCTURE AND TRADE SERVICES, STIMULATE
  PRODUCTIVE SECTORS AND PROMOTE HUMAN DEVELOPMENT,
  IN ORDER TO INCREASE COMPETITIVENESS AND GROWTH.

18
GUATEMALA
US768.8 MILLION
19
EL SALVADOR
US179.4 MILLION
20
HONDURAS
US58.8 MILLION
21
NICARAGUA
US 110.6 MILLION
22
COSTA RICA
US863.6 MILLION
23
III. DOING BUSINESS WITH CABEI IN CENTRAL AMERICA
CABEI has a wide range of financial and non
financial products and services that are designed
to meet the needs of regional and international
investors
24
What does CABEI offer to private investors?

• Knowledge of the region, experience and market
  position.
• 44 years acting with a regional mandate and
  vision.
• 43 of multilateral development bank lending to
  the region.
• 200 specialized staff members.
• Leadership in the financing of regional
  infrastructure. We have financed
• 25 of electric generation capacity of the
  Central American region.
• 21 of Central American paved roads.
• 14 of Central American primary lines of the
  telecommunications network.
• Main source of medium and long-term financial
  funds for the financial sector.
• Close ties to stakeholders and business
  associations.

25
CABEI A Key and Solid Institution for the
Development and integration of the Region

• Regional Vision and Presence
• Sustained Profitability
• High Quality of Assets
• High Liquidity
• Preferential Creditor Status
• Regional Market Position
• Ample Network for the Channeling of Resources
• Strong Capacity for Regional Project Analysis
  and Execution in both the Public and Private
  Sector

Investment Grade Ratings
26
Financial Products and Services used by CABEI
Credit
Services
Technical cooperation
Direct and co-financed credit
Trust funds
Technical assistance
Two tier loans
Letters of credit
Technical cooperation
Financial engineering
Guarantees
Pre-investment and feasibility studies
Leasing
Emission reduction certificates
27
PRODUCTS AND SERVICES IN DEVELOPMENT
Investment Banking and Capital markets
Regional Banking Services
Financial Structuring
Swaps
Central American Liquidation, Compensation and
Custody
Issuance of Securities in Capital Markets
Corporate Finance and Financial Assistance
Regional Payment System
Underwriting
Syndications
Issuance of Partial Guarantees
Structuring and Management of Investment Funds
Securitization
Systems oriented to provide access to public
securities auctions for brokerage houses
28
In Sum,

• The regions comparative advantages rest on its
  privileged geographic location, ecological
  diversity, unique environmental resources, and
  agricultural potential all year round.
• Currently, new investment opportunities in the
  region arise as a result of the new dynamism of
  the regional integration process, the Plan Puebla
  Panama, the regions trade liberalization process
  and free trade agreements (DR-CAFTA, FTAA, EU).
• CABEIs response and strategic vision for the
  next five years is based on three strategic
  themes Poverty Reduction, Integration and
  Globalization. We have identified investment
  opportunities for the next two years in these
  three strategic themes for an amount of US 2.0
  billion.
• CABEI is prepared to support private and public
  initiatives in the region with financial and
  non-financial products and services tailored to
  the needs of local and international investors.

29
CENTRAL AMERICA INVESTMENT OPPORTUNITIES The
Vision and Role of CABEI
Marvin Taylor-Dormond, Ph.D Executive
Vice-President, a.i., and Chief Economist of the
Central American Bank for Economic
Integration 2005 Focus Americas At the
Crossroads Investment Flows to Latin America
Banks as Intermediaries. Miami, Florida. April
20, 2005