Latin America Collection

Foreign-direct investment in Nicaragua, which reached a record-
high $270 million in 2004, has grown at a breakneck speed over
the last four years; a growth rate that dwarfs that of any other
Central American country.
Statistics from the Latin American Economic Commission
(CEPAL) show Nicaragua's foreign-direct investment has grown
by more than 60% since 2001, compared to Honduras (+10%),
Costa Rica (+2.6%), El Salvador (-44%) and Guatemala
(-77%).
The investment has come in all forms: from free-trade zones to
geothermal-energy production to tourism. Foreign investment is
only expected to increase as Nicaragua prepares to enter into
recently ratified U.S.-Central American Free Trade Agreement
(CAFTA).
Foreign investment has helped to elevate Nicaragua to the ranks
of Central America's fasting growing economy in 2004 (4.2%).
Nicaragua's economy has shown consistent and steady growth


every month since September 2002, according to government
statistics.
The trend appears likely to continue, following several important
votes of confidence for the investment sector last year.
In July, the U.S.-government affiliated Overseas Private
Investment Cooperation gave Nicaragua its first seal of approval
in over two decades, when it singed a bilateral agreement to
streamline procedures for U.S. companies seeking private loans
or political-risk insurance here.
The World Bank and International Monetary Fund (IMF), in
their annual report Doing Business in 2005, qualified Nicaragua
as one of seven Latin American countries to notably improve its
investment climate to become more competitive. In 2004, the
report noted, Nicaragua reduced the average time it takes to
receive business license from 71 to 45 days. The 2006 report
ranked Nicaragua the best in Central America and the third
overall in Latin America for "ease of doing business."
Nicaragua is also taking steps to improve legislation to protect
investors, such as the Ley de Carrera Judicial (a bill aimed to de-
politicize the country's Sandinista-controlled court system), and
new bill that will provide arbitration measures to commercial
investors.
Confidence in Nicaragua's banking sector has also improved
exponentially in the last three years.
Since the pro-business government of President Enrique Bolaños
took power in January of 2002, no banks have folded and bank
deposits have increased by nearly 35%, jumping from $1.3
billion to $1.9 billion at the start of 2005.


The real-estate market in Nicaragua is a potential goldmine.
Even though prices have jumped in recent years in popular
hotspots such as Granada, the Nicaraguan real-estate market is an
elevator that is still on the second floor of a 10-story building.
But buyers beware! Pitfalls abound.
The real-estate market here is unique in that Nicaragua is a
country that not so long ago was ruled by the revolutionary
FSLN government, which seized numerous properties from
wealthy landowners ­ albeit mostly from the notoriously
corrupt, U.S.-backed Somoza dynasty that ruled the country as a
fiefdom for 40 years until 1979. Many properties were also
seized from legal owners ­ both foreign and national. Most cases
have since been resolved, but many claimants are still fighting.
The U.S. embassy alone is still working to resolve 762 registered
U.S. citizen claims.
Twenty-five years after the revolution, the end-result of the land
seizers by the Sandinista government is a legal quagmire whereby
many properties have tricky and unconvincing land-title
histories. An estimated 20% of rural properties, and 10% of
urban properties still have contested land titles, meaning
unknowing buyers could potentially purchase said property from
its un-rightful owner.
The bottom line is it is important for first-time buyers to find a
seasoned real-estate firm (of which there are many) before
attempting to purchase property. Purchasing land from "sold by
owner" offerings could potentially result in a nightmare.
But if done properly, purchasing real estate in Nicaragua can
result in a windfall investment. And U.S. title insurance is
available from First American Title.


Once War-ravaged Country
is a Good Place to Invest
By Richard L. White
Nicaragua, an incredibly beautiful nation of gentle, peace-loving people,
has shaken away the ghosts of a civil war that ended 15 years ago, and is
now beckoning to the world as a "go-to" destination of strategic
importance. The past nine months have been a "tipping point" of global
recognition of these changes.
In short, Nicaragua is easily accessible, safe, attractive and inexpensive, and
investment opportunities are timely.
Nicaraguan officials, backed by voters, have driven these changes. The
World Bank, the International Monetary Fund and participating nations of
the Central American Free Trade Agreement have added their affirmations
by making sweeping decisions strengthening Nicaragua's comeback.
From my personal perspective, no United States city has done more to
assist Nicaragua than Pittsburgh. For example, when its capital city of
Managua was devastated by the Christmas 1972 earthquake, one of
Pittsburgh's own baseball superstars, Roberto Clemente, lost his life trying
to fly life-saving supplies to the city.
When Violeta Barrios de Chamorro -- the first democratically elected chief
executive in Nicaragua's history -- became president of the country in
1990, she reached out to many friends here. She appointed me as an
honorary consul representing Nicaragua in the Western
Pennsylvania/Midwest region.
In 1992, I was part of a delegation of distinguished Pittsburgh educators,
medical professionals and business leaders who went to Nicaragua at her
invitation.
The group advised Chamorro on how to strengthen international ties in
industry, education, health care and business.




Tourism, agricultural exports and free trade zones were identified as the
best opportunities for growth.
Since then, Pittsburghers have maintained steady support. Duquesne
University obtained grants to upgrade Nicaraguan health-care facilities,
established a nursing exchange program and, with Carlow College and the
University of Pittsburgh, granted scholarships to many students who have
returned to Nicaragua and now hold leadership positions.
The Pittsburgh Rotary Club, along with local foundations and corporate
support combined with significant Nicaraguan assistance, has established
two Roberto Clemente Health Clinics serving the poor in rural regions.
The first opened in LaReforma in 1998, and the second in Limon Uno was
dedicated in July. Pittsburgh-based Global Links and Brothers' Brother
have sent substantial health-care equipment, medicines and supplies for
more than a decade.
Today, many Pittsburghers are doing business in Managua and are bullish
about the future. Among them, an investor group is developing a world-
class oceanfront hotel and golf course community. Some background:
Turnaround. What has Nicaragua done to produce such profound change?
For one, the democratic process rules the country. Since 1990, voters have
turned out in record numbers to vote in three consecutive democratic
presidential elections leading to peaceful transfers of power. The police
force has been professionalized and is controlled by civilians. The army has
been reduced from more than 100,000 troops to about 7,000. Elected
leaders have developed realistic budgets, instituted tax reforms and
restructured underperforming banks and domestic debt.
Global markets and media have taken notice. The IMF and World Bank
forgave a staggering $4.5 billion in Nicaraguan debt this year. Japan agreed
in June to write off an additional $118 million. As well, CAFTA-- the
landmark U.S.-Central American Free Trade Agreement reached last year -
- will lower tariffs and other trade barriers. Major news outlets are singing
the nation's praises.


Easy Access. Recently, the Chicago Tribune observed that Nicaragua was a
"beautiful and peaceful place now courting tourism." U.S. News & World
Report has trumpeted: "Nicaragua is a hot new travel destination."
In 2003, tourism generated revenues of $150 million, and foreign arrivals
increased 10.9 percent from 2002. American Airlines, Continental Airlines
and TACA (based in El Salvador) make 10 flights daily between Managua
and Miami, Houston and Los Angeles. Major cruise lines stop at San Juan
del Sur. Holiday Inn, Inter-Continental Hotels, Best Western, the
Seminole Hotel and Princess have opened hotels.
Retirees are flocking to Nicaragua. The Wall Street Journal recently wrote:
"As legions of baby boomers prepare to retire and relocate to warmer
climates, a widening range of Central American countries are vying to be
their new home. ... As a result, a new breed of intrepid retirees is branching
out to countries including ... Nicaragua."
Safety. A study by INCAE, the Harvard Business School affiliate in
Managua, shows that Nicaragua is the safest country, and Granada is one
of the safest cities, in all of Central America. The New York Times
observed this spring, "Unarmed, crisp-shirted policemen have replaced
battle-weary soldiers patrolling the streets."
Stunning Beauty. Nicaragua boasts of spectacular natural and manmade
beauty. Founded in 1524, Spanish colonial Granada is the oldest city in the
Western Hemisphere. Freshwater Lake Nicaragua is the 10th-largest lake in
the world, and large volcanoes dot the landscape. Cloud forests, howler
monkeys and exotic species of flora and fauna exist just minutes from
Managua.
Inexpensive Living. Property in Nicaragua is much less expensive than in
the United States, and labor costs are low. The Christian Science Monitor
recently noted that Nicaragua "is emerging as a U.S. retirement haven. ...
Cheap land surrounds picturesque crater lakes and active volcanoes. And
the cost of living is a fraction of what it is in the United States." Foreigners
can become residents and acquire fee simple title to property.
Timely Opportunities. Active investment is stimulating growth. Since
instituting free market reforms in 1991, Nicaragua has privatized more


than 350 state enterprises and reduced inflation from 13,500 percent to
single-digits.
Major corporations have established local operations, including
McDonald's, Liz Claiborne, TGI Fridays, Osh Kosh B'gosh, Payless Shoes,
Kodak, United Colors of Benetton, Burger King, Radio Shack, Pizza Hut,
Domino's, Hertz, Budget and Alamo.
Government incentives also are stimulating growth. The Tourism Tax
Incentives Law is being used by Nicaraguans to invest in certified tourism
development projects as an offset of what they would have paid in ordinary
income tax.
(Richard L. White, Ph.D., of Adams, is honorary consul representing
Nicaragua; retired president of Bayer Corp.'s fibers, additives and rubber
division in Pittsburgh; and former Duquesne University board chairman.)



Things to Think About Before Moving to a
New Country or Making Foreign Investments

What is required to become a legal resident? Can I meet these
requirements? What is the cost? How often does residency have to be
renewed, What are the conditions of renewal and what is the cost?
What is required to visit, or stay while you are waiting for residency?
What is the political situation? How stable is the country?
Weather (Do you like the weather year-round?)
Income taxes (Are you taxed on income brought into the country?) (Are
you allowed to earn income in the country?) If yes, How is it taxed?
Other taxes? (Sales tax, import duties, exit taxes, vehicle taxes, etc.)
How much will it cost in fees, duties, and import taxes to bring your
personal possessions into the country? (Cars, boats, appliances,
electronic equipment, etc.)
Rental property - How much? Availability?
Purchase property - Property taxes, restrictions on foreign ownership of
property, expropriation laws, building regulations, squatters rights, etc.
Is there a capital gains tax?
Communications - Are there reliable phone and fax lines, cellular
phones, beepers, connections to Internet and other computer
communication service? Is there good mail service between the country
and the rest of the world? Are there private express mail services like
DHL, UPS and FEDEX? Are there local newspapers, radio and TV in
a language you understand? Is there cable or satellite TV available?
Transportation - How are the roads? Are flights available to places you
want to go? How are the buses and taxis ? How costly is it to travel to
and from other international destinations?
Is it difficult for friends and family to visit you?
Shopping - Are replacement parts available for the items you have
brought from home? If so, what are the costs? If not, how much will it
cost to import what you need?
Are the types of food you are accustomed to readily available in both
markets and restaurants?
If you have hobbies, are clubs, supplies and assistance available?
What cultural activities are available? (Art, music, theatre, museums,
etc.)
What entertainment is available? (Sports, movies, night clubs, dancing,
etc.)


What recreational facilities are available? (Golf courses, tennis, health
clubs, recreational centers, parks, etc.)
If you like the beach, are good beaches available? Can they be reached
easily? What is the year round temperature of the water?
What is the violent crime rate? Minor crime (theft, car and house break-
ins)? What support can be expected from the police department? Are
the police helpful to foreign residents?
How do local residents treat foreign visitors and residents?
What are the local investment opportunities? Is there any consumer or
protective legislation for investors? What return can you expect from
your investments? Is the local help reliable? What regulations are
involved in hiring employees? What are the employers' responsibilities
to the workers?
Is the banking system safe and reliable? Can they transfer funds and
convert foreign currency, checks, drafts, and transfers? Are checking,
savings and other accounts available to foreigners? Is there banking
confidentiality? Is there a favorable rate of exchange with the U.S.
dollar?
Are good lawyers, accountants, investment advisors and other
professionals available?
How difficult is it to start a business? What kind of opportunities are
there?
How is the health care system? Is it affordable? Do they honor U.S. and
Canadian health insurance? Are there any diseases which are dangerous
to foreigners, and if so does the local health care system address the
problem? What is the quality of hospitals, clinics, doctors and dentists?
What is the availability of good specialists?
How is the sanitation? Can you drink the water? Do the restaurants
have good sanitation standards? Are pasteurized milk and other dairy
products available? Do meat, fish, and vegetable markets have
satisfactory sanitary standards?
If you are interested in domestic staff, what is the cost of cooks,
housekeepers and gardeners, etc.?
What legislation is there to protect foreign residents? What rights do
foreign residents have in comparison to citizens?
What natural disasters are there? (Hurricanes, tornadoes, typhoons,
earthquakes, droughts, floods.)
Can pets be brought into the country?
Is there religous freedom?
*Courtesy of the Costa Rican Residents Association


1
NICARAGUA'S LAND,
HISTORY AND PEOPLE