El Salvador - Country Commercial Guide
Design and Construction

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2020-09-30

Overview

 

2017

2018

2019

2020(Estimated)

Total Local Production

0

0

0

0

Total Exports

0

0

0

0

Total Imports

109,400,000

119,900,000

147,200,000

109,400,000

Imports from the US

13,602,882

12,289,185

13,483,436

13,602,882

Total Market Size

109,400,000

119,900,000

147,200,000

109,400,000

Exchange Rates

NA

NA

NA

NA

(total market size = (total local production + imports) - exports). Information on local production not available.

Source: Central Reserve Bank of El Salvador construction capital goods import and export; NAICS 3331U.S exports to El Salvador.  Statistics in millions of U.S. dollars.

Official currency is U.S. dollar, no exchange rates apply.

The government of El Salvador has enhanced the possibility of more participation and investment by foreign companies in public works, through the execution of infrastructure projects utilizing private public partnerships, concessions, and build, operate, and transfer contracts.

The business prospects for design and construction industry are tangible as important transport infrastructure is funded by multilateral development banks which lends billions of dollars to developing countries on projects aimed at accelerating economic growth and social development. El Salvador is predominantly supported by the Interamerican Development Bank (IDB) and the Central American Bank for Economic Integration (CABEI).  In 2019 IDB released a 2019 – 2030 infrastructure Master Plan for El Salvador which estimated $8.5 billion in infrastructure investment to boost El Salvador’s competitiveness. Relevant projects and recommendations are tied to transport infrastructure, energy and water; whereas CABEI, for instance, is providing funds to conduct studies for Railroads in El Salvador and Central America and roads infrastructure.

El Salvador has a Construction Chamber (CASALCO)  that welcomes U.S. companies as partners. This organization was created on best practices, ethics, and standards from the industry in the United States. U.S. partners will benefit from the affinity in El Salvador for the United States that will help companies ready to do business abroad.  El Salvador’s local production of building materials mostly includes concrete, asphalt, and metal processing. The country does not manufacture or assemble construction transport equipment or machinery and has insufficient capacity and technical ability to support complex projects, pre-investment studies and design where U.S. companies would be a preferred partner. 

There are a few hurdles for the construction industry. One is the level of red tape delaying construction permits for up to two years and negatively impacts competitiveness and growth of the sector. Another challenge is the lack of incentives such as subsidies on mortgage interest rates for social housing acquisitions and construction loans at preferential rates in the reactivation of low-income housing projects. Additionally, and like for many other sectors, new residential and nonresidential construction face short term challenges as the International Monetary Fund (IMF) forecasts over 7% of GDP contraction in 2020 in El Salvador.

Leading Sub-Sectors

Leading sub sector where U.S. companies would have the best opportunity of exporting:

  • Consulting business and professional services
  • Design and construction services
  • Construction Equipment and Machinery 

Opportunities

El Salvador’s logistics infrastructure portfolio includes a series of proposed strategic transportation projects broken into different phases. Among them a new airport, a mass transportation system, and  400 kilometers of rail in the pre-investment phase.  Projects at a more advanced phase include feasibility studies for border crossing infrastructure and a toll road public private partnership project that will be ready in the near term.  Projects in the final phases are receiving proposals and include a public private partnership for a cargo terminal modernization ,expansion at the international airport, and a road lighting and surveillance public private partnership.  Additionally, there are ongoing projects expected get underway in the near term - for example a six lane viaduct funded by CABEI; road and water connectivity to improve surf sites for tourists, and the design and construction of public hospitals.    

Opportunities for bilingual (spanish/ english) consultants specialized in pre-investment studies such as economic, technical, financial, contract models, engineering and design studies are identified, as well as opportunties for new and refurbished construction machinery and equipment from reputable U.S. companies, ready to do business abroad and to compete with well-known international brands.

Government procurement is open to both national and foreign suppliers. Companies may participate in all modes of procurement and while El Salvador is not a signatory to the WTO Agreement on Government Procurement, it is bound by government procurement commitments under Chapter 9 of the CAFTA-DR trade agreement.  Government procurements are channeled through Comprasal, an online portal for competitive bidding processes. All government purchases are regulated by the Acquisition and Purchasing Law (Ley de Adquisiciones y Contrataciones –LACAP), including direct purchases often announced for special projects and technology.  Calls for expression of interest open to consultants, companies or individuals, are made through FOSEP, a local entity that provides funds for pre investment studies in El Salvador, where U.S. companies and individuals can register any time. The registration with FOSEP is permanently available online and is a mandatory requirement in order to prequalify and express interest. The information should be submitted in Spanish and delivered in person.  Copy of documents are accepted, except the affidavit from company’s legal representative which must be original.  Having operations based in El Salvador can certainly be helpful to participate whether it’s a separate branch of the company, an employee who can take care of El Salvador’s operations, or a subcontracting relationship with local partners.    Aditionally, the Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the World Bank and the Inter-American Development Bank .

 

Web Resources

U.S. Commercial Service Contact

Maria Rivera, Senior Commercial Specialist, maria.rivera@trade.gov