El Salvador - Country Commercial Guide
Information and Communications Technology

This is a best prospect industry sector for this country. 

Last published date: 2021-11-05

Overview

El Salvador ICT operates under a privatized legal and institutional framework since 1997, one of the most liberal ICT sectors in Latin America, encouraging competition in most areas and allowing foreign investment. The country’s transition to digital transmission began in 2018 along with adaptation of the Japanese-Brazilian Digital Standard (ISDB-T). The regulatory authority with responsibility over spectrum development is the General Superintendence of Electricity and Telecommunications (SIGET).  The Superintendence of Competition controls the concentration of telecommunication operators. 

 In 2020 mobile cellular subscriptions was 9.47 million exceeding total population of 6.5 million.  The total number of internet users in 2020 was about 34% of the population and penetration was estimated in 50%, mostly using internet for social media, education, and business. Mobile penetration is remarkably high considering El Salvador’s economic indicators, about a third higher than average for Latin America and the Caribbean. The growth in fixed-line services slowed in the face of mobile-cellular competition, fixed lines were 14 per 100 inhabitants, and mobile cellular was 148 per 100 inhabitants in 2019.  The broadcast media sector of the ICT industry in El Salvador combines multiple privately owned national terrestrial TV networks, supplemented by cable TV networks that carry international channels, and hundreds of commercial radio broadcast stations. The country was one of the last in the region to provide 4G LTE services, mainly due to the inadequacy of suitable spectrum, but in 2019 the telecommunications regulator (SIGET) awarded more spectrum through a public tender after which LTE 4.5G has been deployed by private operators, and it is estimated that by 2022 it would reach close to 30% of the mobile subscriptions market.

 

 

2018

2019

2020

2021

Total Local Production

0

0

0

0

Total Exports

14.0

14.4

14.8

14.8

Total Imports

607.0

605.5

554.3

554.3

Imports from the US

33.1

32.7

32.8

32.8

Total Market Size

593.0

591.1

539.4

539.4

Exchange Rates

NA

NA

NA

NA

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

Units: $ millions

Source: Central Reserve Bank of El Salvador. Trade data classification based on U.N. ICT goods and NICS 334 computer and electronic products.   Official currency is U.S. dollar, no exchange rates apply.

The United States is among the top four source of ICT goods imports in El Salvador, with about 6% of the imports market share in 2020, China leads with 60% followed by Mexico and Vietnam, each with 11% of market share. There is no significant local production of information and communication technology, except for capacitors used in electronic equipment produced at a free trade zone for specific clients.  Import duties for information and communication technology and equipment are zero percent, subject to a 13% value added tax.  To do business in El Salvador companies should either register an office or work with a local agent.

Leading Sub-Sectors

The following subsectors have high probability of success:

Consulting, professional and technical services
Software development
Database management
Data center operations
Cybersecurity operations
Computer and network hardware and software
Telecommunication systems and products
Opportunities

The Technical and Innovation Secretariat has made comments that show an understanding of the importance of digitalization, and a firm intention to drive this process in the country. 

The Technical Secretariat’s 2020 - 2030 Digital Agenda  aims to implement a digital transformation through four pillars: 1. digital identity; 2. innovation, education, and competitiveness; 3. modernization of the government; and 4. digital governance.  Necessary ICT solutions identified within the Digital Agenda include:

  • Digital identity
  • Digitalization of medical records at selected public hospitals
  • Reduction of digital gap
  • Centralized data center
  • Electronic commerce, electronic signature, and electronic invoice implementation
  • Biometric passport
  • National registry of mobile phone numbers
  • Software and hardware for online education

Smart Cities initiatives in El Salvador were initially pursued in video surveillance to confront crime and violence. Connectivity and technology have made Smart Cities initiatives possible, but has also opened up opportunities around the internet of things to improve the lives of the citizens and business.  El Salvador has ambitious plans to modernize ports, airports, water and sewage systems, improve and expand mass mobility, lighting and surveillance of roads. There are opportunities for water metering, smart traffic solutios, smart lighting systems, cctv cameras, and city monitoring systems.

El Salvador’s private and public sector prefers U.S. products, services, and technologies.  The main buyer is the public sector and purchases 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.

Main challenges facing ICT plans and agendas in El Salvador:

  • Broadband: El Salvador does not have a radioelectric spectrum tender plan to stimulate investment in mobile broadband networks. 
  • Regulations and the use of international standards that promote infrastructure sharing and standardized permitting are crucial to increase investment in telecommunications infrastructure, antennas, repeaters, and base stations.
  • Emerging national cybersecurity policy and data flow regulations; the right policies are necessary to encourage an innovative digital economy while avoiding unnecessarily costly or overly restrictive policies. 

Resources

  • Telecommunication Regulator SIGET
  • Trading economics World Bank indicators

Interested parties may contact Senior Commercial Specialist Maria Rivera at maria.rivera@trade.gov