Nicaragua enjoys an excellent investment climate; and the forecast calls for continued sun.

The Law of Foreign Investment provides equal treatment under the law for foreign and national investors, offers access to local financing, eases the transfer of funds abroad and offers added protection to properties.

The pro-business, anti-corruption government of President Enrique Bolaños (2002-2007) has aggressively sought increased Foreign Direct Investment and worked to boost international confidence in Nicaragua.

The result has been record high levels of foreign investment, tourism, bank reserves and exports, as well as the highest economic growth rate in Central America for 2004. In 2004, Foreign Direct Investment in the areas of trade and services (namely free-trade zones and telecommunications) increased by a whopping 447%, from $14.8 million in 2003 to $81 million last year. Overall, Foreign Direct Investment in Nicaragua in 2004 was $260.7 million, and that number is projected to grow an additional 30% in 2005, to close the year at $346 million.

The tourism sector last year also generated record-breaking statistics, creating $166.7 million in revenue, for a 9.8% growth rate.

Fueled by the increases in trade and tourism, Nicaragua’s construction sector in 2004 grew by a monstrous 646%.

Building upon its success, the government in early 2005 drafted an innovative new tourism-investment law – billed as the best in Latin America – to offer new tax breaks and benefits to a wider cross-section of foreign investors. The reform measures, expected to go into effect later this year, would improve Nicaragua’s already progressive Tourism Incentive Law, known popularly as Law 306 (see separate section).

In comparison to Nicaragua’s efforts to further open its doors to foreigners hoping to live and invest here, Costa Rica is repealing its tourism investment incentives, again prompting foreigners living there to consider moving north.

Nicaragua has also worked to streamline bureaucracy in recent years. The World Bank and International Monetary Fund, in their annual report Doing Business in 2005, qualified Nicaragua as one of seven Latin American countries to notably improve its investment climate by reducing the average time it takes to get a business license from 71 to 45 days.

The increase of tourism and foreign investment has also spawned improvements to Nicaragua’s infrastructure. A new four-lane highway connecting Granada to Managua, scheduled for completion in November, will bring the capital a lot closer to the colonial city by the lake. And a new Pacific coast tourism highway – known as La Costanera – is scheduled to break ground in 2006 (with a completion date of 2008), and promises to have an explosive effect on coastal tourism and real estate values. In the last three years, the government has paved, bricked or repaired more than 600 kilometers of road, averaging almost 17 kilometers a month, mostly on the Pacific coast. Most of Nicaragua’s interior is still inaccessible jungle.

Other infrastructure improvements include a $12 to modernize the port of San Juan del Sur, and $10 million investment to modernize the northern Pacific port of Corinto, as well as the Atlantic ports El Rama and El Bluff (Bluefields). Also, just north of Nicaragua, on the border of Honduras, a new $170 million mega-port/tourism project is being built on the Gulf of Fonseca, which promises to be the largest Pacific coast port in Central America.

The improved infrastructure, particularly the ports, will help facilitate trade as Nicaragua – and the rest of Central America, and the Dominican Republic – prepare to enter into a $25 billion free-trade agreement with the United States, known as CAFTA.

Nicaragua is also currently negotiating a free trade agreement with Taiwan, and free trade negotiations are expected to start this year between Central America and the European Union. Nicaragua already has free-trade agreements with Mexico and the Dominican Republic.

To facilitate free trade and the movement of merchandise, Nicaragua is in the process of integrating into a joint-customs union with the rest of Central America. The joint customs union, which should be fully operational by the end of 2005, will expedite border crossings between the five Central American countries (or at least the four northernmost countries; Costa Rica is dragging its feet in opening its borders with the rest of the region).

Telecom and Internet infrastructure in Nicaragua has also been privatized, with three separate cell phone providers to choose from. Foreigners can purchase cell phones, and Internet service is widely available from half a dozen service providers (see separate section).

Nicaragua also has a very young and willing workforce of 1.5 million people, mostly under 25 years of age. Nicaragua is still a predominantly agricultural country, but two-thirds of the population is now living in urban areas, and 65% of the 5.2 million population lives on the Pacific coast – the most developed region of the country.

With the implementation of CAFTA, even larger numbers of rural Nicaraguans are expected to be displaced to the ever­growing cities. Nicaragua has a $50 million fund to help the anticipated influx of displaced campesinos in years to come.

While a majority of the workforce is low-skilled labor, there is a growing pool of U.S. and foreign trained, multi-lingual managers available for hire. Investment promotion group Pro Nicaragua in 2004 created the website www.nicasearch.com to create a database of bilingual Nicaraguans. The response was enormous, attracting some 4,000 Nicaraguans to sign up in the first year alone, 2,000 of whom have been certified by Berlitz as having “advanced” English language skills.

Nicaragua’s minimum wage for unskilled labor is $.67/hour, the lowest in Central America (compared to Costa Rica’s $2.25/hour). Bilingual employees usually expect to make about four or five times that amount, and efforts are underway to raise the $.67 minimum wage to a more dignified and livable salary.

Because of the aforementioned benefits, an increasing number of foreign investors – mostly Asian and North American – have found Nicaragua an attractive country for foreign investment in areas such as: tourism (the country’s number-one money maker); textile and apparel; light manufacturing and assembly; agribusiness and forestry; export services and contact centers.

Before investing or starting a business here, however, you should take the time to do your homework and acculturate to Nicaragua to make sure the country is a comfortable fit for you. This is still a very poor and underdeveloped country. While the situation lends itself to unique business and investment opportunities, it is not a good fit for everyone from the World North.

Make a special effort to learn the language; it will help you feel less like a stranger, and make you less vulnerable to scams, rip-off artists, corruption and over billing.

Under no circumstances should you invest right off the plane, or throw your money at investment projects without doing diligent investigation beforehand. Before starting a business, take the time to meet with other expats in the area and learn about their experiences. Listen to their recommendations, and take note of the pitfalls they mention. Don’t go it alone. There are organizations that can help you before you decide to invest.

American Embassy Managua Economic and Commercial Section: e-mail amembmga@tmx.com.ni; phone 011-505-266-

2291; fax 011-505-266-9056;web site http://www. usia.gov/abtusia/posts/nul/wwwhcom.html.

The American Chamber of Commerce of Nicaragua(AMCHAM) (English- speaking contact is Executive Director Desiree Pereira): e-mail business@amchamnic.org.ni; phone 011-505-267-3099; fax 505-267-3098; web site www.amchamnic.org.ni

You may contact them at: www.liveinnicaragua.com, or e-mail: crbooks@racsa.co.cr.