Security Mission for Economic Prosperity Mission Statement
SECURITY MISSION FOR ECONOMIC PROSPERITY IN EL SALVADOR, GUATEMALA, AND HONDURAS
Dates: March 7-12, 2021
The United States Department of Commerce, International Trade Administration (ITA), is organizing a Security Mission for Economic Prosperity in El Salvador, Guatemala, Honduras, March 7-12, 2021. The Trade Mission will kick off with a regional conference, Regional Security Strategies for Economic Prosperity, on March 8, 2021, which the mission participants will attend. The conference is led by the regional American Chambers of Commerce and will have participation by officials from the governments of El Salvador, Guatemala, and Honduras. By joining in the mission and conference, participants will learn about regional priorities, policy and regulatory changes, and projects throughout the region. The purpose of the mission is to leverage the regional political and economic climate and include both Deal Team 2.0 and America Crece Initiative. Both events will initiate new opportunities to advance the interests of U.S. business in these markets with the development and announcement by the new governments of priority projects in safety & security, information and communication technology (ICT), infrastructure, smart cities, ports, and energy.
The cornerstone of the U.S. commercial policy for the region is the United States – Central America – Dominican Republic Free Trade Agreement (CAFTA-DR). The FTA in the region, CAFTA-DR, includes the following five Central American countries: El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The mission also supports the Alliance for Prosperity in the Northern Triangle.
The purpose of the mission is to leverage the regional political and economic climate and include both Deal Team 2.0 and America Crece Initiative to advance the U.S. Administration’s goals of reducing and stopping the flow of migration from Central America through economic growth and job creation. The government of El Salvador changed with the inauguration of President Bukele on June 1, 2019 and Guatemala inaugurated its new President in January 2020.
With the Commerce-led interagency Deal Team Initiative and the newly-expanded America Crece Initiative, it is an ideal time to promote the opportunities in the region through a show of U.S. private sector and public sector support. The Salvadoran Government is actively pursuing Public Private Partnerships (PPP) to advance their projects in a variety of sectors, all which link to the overarching mission themes of 1) security in infrastructure, 2) digital expansion throughout the government and private sector, and 3) inclusion of smart city planning, regional energy development and security, and water security. The Salvadoran Government is also prioritizing a Surf City Initiative that will expand the infrastructure and security of the country to attract tourists to its world class surfing locations and beautiful mountainous areas. Since President Bukele’s inauguration in June 2019, cruise ships have already made stops in El Salvador’s port of Acajutla, bringing increased tourism to the Mayan coast and mountains of El Salvador.
El Salvador and other countries’ digital initiatives will increase capability and requires advances in the areas of cyber security and cyber intelligence. El Salvador for instance is planning to interconnect all government services and ministries through digital means ensuring that citizens can conduct basic services with the government more easily and efficiently. This is also part of the “fourth industrial revolution” movement that many experts believe countries are experiencing.
In Honduras, port development and security as well as energy interconnectedness and security are prioritized by the current administration. These priorities link in with the new Energia del Pacifico Natural Gas facility in El Salvador that just received final approval and is funded through a private U.S. investor, local investment, and Overseas Private Investment Corporation (OPIC). Regional energy security and production is key to attracting investment to these countries that will create jobs and help slow and stop the flow of migration to the southern border of Mexico and the U.S., both U.S. Administration priorities for the region.
The Inter-American Development Bank’s (IDB) newly-released report ranking Public Private Partnership (PPP) ranks El Salvador and Guatemala 6th and 5th respectively in its ranking of potential projects, well above many other markets including Mexico (10th), the Dominican Republic (16th), and Panama (14th). The ranking, among other things, cites improvements in the regulatory framework and transparency in these countries as the reason for their high score, making these markets extremely attractive for potential U.S. involvement.
El Salvador, San Salvador
El Salvador, with a population of 6.4 million people, offers an open market for U.S. goods and services and a dollarized economy. U.S. products are generally favored, though they face strong competition from other international suppliers. El Salvador is only a 3-4 hour flight from key U.S. cities and four U.S. carriers operate in the country. Under CAFTA-DR, 100% of U.S. consumer and industrial goods enter El Salvador duty free (for goods that meet the country of origin requirements). The U.S. is El Salvador’s main trading partner with 41% of the market share for the country’s imports. In 2018, U.S. exports to El Salvador were $3.4 billion, $400 million more than 2017. Services trade to El Salvador remained consistent at $1.1 billion.
Safety and Security and Cybersecurity
The safety and security, information/communication technology (ICT), and infrastructure projects in El Salvador represent a growing market for U.S. exporters. The Bukele Administration has prioritized making El Salvador safe from gangs, increasing economic opportunities, and digitizing the government and its services.
Cybersecurity is an area of opportunity as the new government created the Technical and Innovation Secretariat and is currently developing a digital agenda which includes reduction of the digital gap, spectrum allocation, a centralized data center, electronic commerce, electronic signature, electronic invoice implementation, introduction of a biometric passport, and a national registry of mobile phone numbers.
Safety and Security technology, products, or services areas are embedded in every Deal Team Infrastructure Project and include several examples: Port and airport upgrades or concessions require scanning and security measures for passengers and cargo; customs updates require software and hardware and cybersecurity products to protect sensitive information, plate recognition and CCTV to control movements; The construction of hospitals (public and private) include safety products in their plans as well as the protection of patient records; and the lighting and surveillance of new and existing public and private spaces, such as free trade zones, parking spaces, roads, and border crossing, is increasing.
Best prospects for products and services in the security and safety sector include:
- IT security
- video surveillance systems including intrusion detention/burglar alarm systems
- electronic access control systems, door/entrance solutions, physical security
- personal protection products, fire and rescue
- equipment for scanning documents for security, retrieval and storage
- road and airport security
- command center software, video security analytics, field response, and real-time intelligence, 911 emergency management systems
- body-worn & in-car cameras
- mobile forensics software
Some of the top opportunities for U.S. involvement in El Salvador fall under the broad umbrella of infrastructure. This includes ports, airports, border infrastructure, roads, highways, bridges, water, electricity, etc. Estimated infrastructure needs are 8.5 billion in investment in the next 10 years, according to the Interamerican Development Bank (IDB), priority areas of infrastructure are water and waste water, transportation and energy.
The Government of El Salvador has several projects identified related to the integration of ports, airport expansion and new airports, and a coastal train to develop a logistics corridor along the Pacific.
El Salvador’s San Oscar Arnulfo Romero y Galdámez airport is the third most trafficked airport in Central America after Costa Rica and Panama and the only International airport in El Salvador with an estimated 3.1 million passengers a year. El Salvador’s airport is also a hub for passengers going to other parts of the region and it is estimated that growth of passenger traffic will continue as it has for the last 10 years at about 9.7% each year.
The government has proposed to expand the passenger terminal 64.500 square meters by 2032. Some expansion is already underway; however, phases II through IV of the expansion are still under review. The last three phases of the proposed expansion will require significant investment, consultancy, engineering and construction opportunities, and the purchase of safety and security equipment to meet safety requirements. There are opportunities for U.S. design and construction firms to manage the project and supply all other downstream equipment, software, vehicles, scanners and a myriad of other needs.
Besides the opportunities already mentioned, with the support of the Millennium Challenge Corporation (MCC), El Salvador developed and approved a PPP law. Under the new law, two infrastructure projects will be awarded in 2020 and studies for two additional PPPs will be finished for bidding and concession. The MCC has set up a platform for another dozen of public private partnership projects that the government plans to conduct. This is an opportunity for U.S. companies to participate in funded projects.
The port project of Acajutla, El Salvador’s only consistently used seaport, is estimated to need US$240 million and US$270 million in investment depending on the studies to determine its expansion. Upgrades and expansion will involve everything from the construction of new piers to meet demand for the movement of goods, to upgrading the grain terminal at one of its piers, to purchase of new scanning devices for inspection of cargo, and many more improvements and upgrades.
The Port of La Union in the eastern part of the country rarely sees traffic and the government is seeking to find demand driven solutions for the management and leasing of the property. Development of this underused port could present significant opportunities. Uses could include development of the port for cruise ship traffic, the initiation of a ferry that would carry cargo between Costa Rica and El Salvador, manufacturing facilities that would then use the port to help get its product to market, creation of refining facilities, and other options yet to be determined through a study that the Japanese Investment Agency is undertaking.
The United States and Guatemala have long enjoyed a largely positive working relationship, both politically and economically.
Guatemala is the gateway to a large regional market for U.S. goods and services. Guatemalan GDP reached an estimated US$78.4 billion in 2018, the largest in Central America, with an estimated 3.0% growth rate in 2018. The United States and Guatemala enjoy a growing trade relationship, which became even stronger after the implementation of the CAFTA-DR free trade agreement.
Guatemalans value conducting business with a partner who stands behind the “Made in the U.S.A” label. As a signatory member of CAFTA-DR, Guatemalan importers and business representatives of U.S. products obtain CAFTA-DR benefits for their products when conducting business with the United States. As of January 1, 2015, 100%of U.S. consumer and industrial goods enter CAFTA-DR countries duty free (for goods that meet the country of origin requirements). The United States is Guatemala’s largest trading partner accounting for nearly 40% of Guatemala’s trade. With a population of around 16 million, it is the most populous country in Central America and accounts for more than one-third of the region’s GDP. The capital, Guatemala City, has a population of approximately 4 million and features first-class hotels and restaurants.
U.S. products and services enjoy strong brand recognition in Guatemala, and U.S. firms have a good reputation in the Guatemalan marketplace. It is estimated that approximately 200 U.S. firms have a presence in the market.
U.S. products have 50% of market share. Most of the well-known brand companies from the U.S. have a distributor or agent locally and offer training, installation, and after-sales service.
CCTV cameras have gained immense popularity across the country with diverse application segments, projecting high growth in the upcoming years. The growing use of CCTV in schools, hospitals, streets, and the retail sector is expected to ensure the development of the market in the country.
Best prospects for products and services in the security and safety sector include:
- Tracking devices
- GPS and RFID technology
- Metal detectors (manual and arc type)
- Perimeter security
- Access control equipment
- Armored vehicles
Personal security products, protection products, and high-tech solutions and services have the most significant opportunities. All security products are imported since there is no local production. Import taxes for these products range from 0 to 15% (for non-U.S. products) and duty free for U.S. products under CAFTA-DR, plus the VAT of 12%.
On January 14th, newly-elected President Alejandro Giammattei took office and it is expected that he will support new business initiatives and opportunities through the Guatemalan Military and Ministry of Interior (National Police, Penitentiary system) as he was the former Director for the Prison System and knows the challenges and needs. Therefore, it is expected that there will be several tenders to acquire equipment for both security forces in 2021.
Under a Private Public Partnership (PPP) led by the Guatemalan National Agency of Partnerships for the development of Infrastructure (ANADIE) the Aurora International Airport will get an upgrade and modernization to meet today’s international standards offering more efficient and secure services.
The feasibility studies are under way and it is expected that the airport will receive a $200 million investment for physical plant upgrades and security.
Also under a PPP arrangement, Guatemala is planning a dry port on the border with Mexico. The project is still in the early stages (feasibility Study), the project consists of the design, construction and operations of a truck and railway port. The objectives of a new dry port is to offer logistical services with a more adequate infrastructure that will reduce the costs, and offer increased security and efficiency. The project budget is approximately $40 million.
The Port of Quetzal on the Pacific Ocean side of the country, is the only port in Guatemala that does not offer non-intrusive scanning services for all containers leaving and entering the facility. The other three ports in Guatemala successfully conducted procurements for the concession services of 100% inspections at their respective facilities. It is expected that in 2020, Port Quetzal will conduct their government tender project for a 5 year concession service with an estimated value of $11-$15 million. Under a new regulation by the Guatemalan customs authority, all border crossings and ports need to have, by mandate, 100% scanning services of all containers.
The demand for safety and security equipment in the country continues to grow in Honduras. Despite statistics pointing to a significant drop in violence, crime is still widespread especially in urban areas. Poverty and unemployment along with significant street gang and drug trafficking activity have contributed to the high crime rates.
U.S. firms should plan their market entry very carefully. Given its strategic location and boasting the largest maritime port in the region, Honduras is an important gateway for U.S. exports entering the Central American market.
Decisive factors in the purchasing of safety & security equipment in Honduras are price, quality, estimated delivery times, and terms of credit. This trend puts Asian-manufactured goods at the forefront of the market. However, in recent years importers have begun looking for other supply channels in the United States and Europe, as the need for more reliable, robust, and smarter systems have become a necessity. Personalized service is paramount as the evolving market demands a higher technical knowledge of the industry in order to better approach the end users in the private and public sectors with new technologies and smarter and more efficient products.
A significant advantage for U.S. exporters exists in the positive perception of U.S.-manufactured goods and the relatively close proximity between both countries. Communication and information-sharing become another critical factor as the Honduran business community traditionally prefers to establish a level of personal relationship with their suppliers.
It is critical for a successful U.S. supplier to familiarize themselves with the dynamics of doing business in Honduras as it will vary from the other countries in Central America. Despite its smaller economy, Honduras has two major commercial centers: Tegucigalpa, the capital city and San Pedro Sula, known as the industrial capital of the country. In choosing to enter this market the selection of a representative or licensed distributor with the capacity and experience to operate in both these regions is instrumental in securing a solid market share.
The Honduran government has been investing heavily in upgrading national security assets and institutions. There is currently that a US$300 million project from the Ministry of Security aimed at targeting narcotics and human trafficking activities. There is also a US$150 million project from the Ministry of Defense aimed at the purchase of vehicles and military weapons and ammunition. There is a growing demand for safety and security products by the private sector; however, these items are restricted to commercial firearms and surveillance technology. Opportunities do exist for U.S. companies looking to approach the Honduran Ministry of Defense and the Ministry of Security.
The security market in Honduras is highly competitive as demand for security services grows in the region. Currently there are 300 companies registered with the Honduran Security Service Providers’ Association, employing approximately 100,000 people. However, most providers can be found in the informal sector and are not licensed or trained; they provide mostly residential security services. The Honduran Security Service Providers’ Association is working hand-in-hand with the Honduran National Congress to regulate the informal market and bring these unlicensed operators to comply with a national regulatory standard for the industry. Current statistics place the ratio of private security guards to national police officers at 10-1.
Professional companies operating in Honduras provide mainly prevention, monitoring, and secure transport services, as well as distribute surveillance and general safety equipment. Personal security is a growing industry subset and currently the need for highly-trained personnel as well as equipment is expanding. Major exporters of security equipment to Honduras are Israel, Colombia, Mexico, Brazil, and the United States.
The state-owned company “LA ARMERIA” is currently the only licensed distributor of commercial firearms in Honduras. A small number of retailers in Tegucigalpa and San Pedro Sula distribute tactical gear, personal defense products, and accessories.
The Security Tax Commission was established back in 2012 to provide additional funding for state run security operators. As of 2019 the commission reported collections of over $590 millions USD. These funds have gone to the technification and logistical capacity building of the Honduran police force. Some upcoming projects to be funded by the security tax commission include the purchase of tactical aerial, marine and land vehicles, telecommunications equipment, tactical gear, firearms and ammunition, and border protection technologies. The estimated cost of these upcoming acquisitions is estimated at $300 Million USD.
The Honduran Ministry of Defense is developing a program that will include the acquisition of encrypted telecommunications equipment, data control centers and intelligence management and analytics infrastructure. There is a large weapons refurbishment program in the works and the total cost of these projects is estimated at over $150 million USD.
Other opportunities to explore:
Post is tracking a tender to upgrade the Roatan, La Ceiba, and San Pedro Sula airports. The tender was originally managed under the PPP entity COALIANZA and is now going to be administered by Investment Minister Luis Mata with assistance from the IDB. Potentially an $100M USD investment. This infrastructure project presents numerous opportunities for safety & security providers.
Port Development Improvements for Puerto Castilla: $250M Port Development Improvements for Puerto Castilla (PPP Project proposal). The need for surveillance, biometric security, perimeter control and telecommunications products is significant for these large scale projects.
Cargo Container Scanners for the Honduran Port of Cortes: $30M tender for X-Ray Scanning Equipment for the Customs at Port of Cortés. Works to do: (1) Sale of Cargo Container Scanners. Several security upgrades for the Port of Cortes are also in the planning stages.
Other Products and Services
The foregoing analysis of the Safety and Security opportunities in El Salvador, Honduras, and Guatemala is not intended to be exhaustive, but illustrative of the many opportunities available to U.S. businesses. Applications from companies selling products or services within the scope of this mission, but not specifically identified, will be considered and evaluated by the U.S. Department of Commerce. Companies whose products or services do not fit the scope of the mission may contact their local U.S. Export Assistance Center (USEAC) to learn about other business development missions and services that may provide more targeted export opportunities. This information may be found on the website: http://www.export.gov.
The goal of the mission is to help participating U.S. companies gain market insights, make industry contacts, solidify business strategies, and identify potential partners, agents, distributors, and joint venture partners in Guatemala, Honduras, and El Salvador. The delegation will have access to US&FCS Commercial Officers, Commercial Specialists, and other U.S. government officials during the mission, learn about business opportunities, and gain first-hand market exposure from the markets in the region. Trade mission participants already doing business in Central America will have the opportunity to further advance business relationships and explore new opportunities. U.S. companies new to the three markets will gain support in finding agents, distributors, and joint venture partners through this mission, laying the foundation for successful long-term ventures by providing business-to-business introductions and market access information.
The mission will stop in El Salvador and either Guatemala City, Guatemala or Tegucigalpa, Honduras, beginning with the arrival of companies to El Salvador on March 7th, 2021. In each of the two mission stops, participants will meet with pre-screened potential agents, distributors, and representatives, as well as other business partners and government officials. They will also attend a conference in El Salvador and networking events offering further opportunities to speak with local business and industry decision-makers.
*Note: The final schedule and potential site visits will depend on the availability of host government and business officials, specific goals of mission participants, and ground transportation.
Tuesday, March 9th
Wednesday, March 10th-12th
Friday, March 12th
All parties interested in participating in the trade mission must complete and submit an application package for consideration by the DOC. All applicants will be evaluated on their ability to meet certain conditions and best satisfy the selection criteria as outlined below. A minimum of 10 companies and a maximum of 15 companies, firms and/or trade associations will be selected to participate in the mission from the applicant pool.
FEES AND EXPENSES
After a firm or trade association has been selected to participate on the mission, a payment to the Department of Commerce in the form of a participation fee is required. The participation fee for the Security Mission for Economic Prosperity in El Salvador then Guatemala and/or Honduras will be $3,500 for small or medium-sized enterprises (SME) and $4,900 for large firms or trade associations.
The fee for each additional firm representative (large firm or SME/trade organization) is $500. Expenses for travel, lodging, meals, and incidentals will be the responsibility of each mission participant. Interpreter and driver services can be arranged for an additional cost. Delegation members will be able to take advantage of U.S. Embassy rates for hotel rooms.
If and when an applicant is selected to participate on a particular mission, a payment to the Department of Commerce in the amount of the designated participation fee below is required. Upon notification of acceptance to participate, those selected have 5 business days to submit payment or the acceptance may be revoked.
Participants selected for a trade mission will be expected to pay for the cost of personal expenses, including, but not limited to, international travel, lodging, meals, transportation, communication, and incidentals, unless otherwise noted. Participants will, however, be able to take advantage of U.S. Government rates for hotel rooms. In the event that a mission is canceled, no personal expenses paid in anticipation of a mission will be reimbursed. However, participation fees for a canceled mission will be reimbursed to the extent they have not already been expended in anticipation of the mission.
If a visa is required to travel on a particular mission, applying for and obtaining such a visa will be the responsibility of the mission participant. Government fees and processing expenses to obtain such a visa are not included in the participation fee. However, the Department of Commerce will provide instructions to each participant on the procedures required to obtain business visas.
Trade Mission members participate in trade missions and undertake mission-related travel at their own risk. The nature of the security situation in a given foreign market at a given time cannot be guaranteed. The U.S. Government does not make any representations or guarantees as to the safety or security of participants. The U.S. Department of State issues U.S. Government international travel alerts and warnings for U.S. citizens available at https://travel.state.gov/content/passports/en/alertswarnings.html. Any question regarding insurance coverage must be resolved by the participant and its insurer of choice.
CONDITIONS FOR PARTICIPATION
Applicants must submit a completed and signed mission application and supplemental application materials, including adequate information on their products and/or services, primary market objectives, and goals for participation that is adequate to allow the Department of Commerce to evaluate their application. If the Department of Commerce receives an incomplete application, the Department may either: reject the application, request additional information/clarification, or take the lack of information into account when evaluating the application. If the requisite minimum number of participants is not selected for a particular mission by the recruitment deadline, the mission may be canceled.
Each applicant must also certify that the products and services it seeks to export through the mission are either produced in the United States, or, if not, are marketed under the name of a U.S. firm and have at least fifty-one percent U.S. content by value. In the case of a trade association or organization, the applicant must certify that, for each firm or service provider to be represented by the association/organization, the products and/or services the represented firm or service provider seeks to export are either produced in the United States or, if not, marketed under the name of a U.S. firm and have at least 51% U.S. content.
A trade association/organization applicant must certify to the above for all of the companies it seeks to represent on the mission.
In addition, each applicant must:
- Certify that the products and services that it wishes to market through the mission would be in compliance with U.S. export controls and regulations;
- Certify that it has identified any matter pending before any bureau or office in the Department of Commerce;
- Certify that it has identified any pending litigation (including any administrative proceedings) to which it is a party that involves the Department of Commerce; and
- Sign and submit an agreement that it and its affiliates (1) have not and will not engage in the bribery of foreign officials in connection with a company’s/participant’s involvement in this mission, and (2) maintain and enforce a policy that prohibits the bribery of foreign officials.
In the case of a trade association/organization, the applicant must certify that each firm or service provider to be represented by the association/organization can make the above certifications.
Targeted mission participants are U.S. firms, services providers and trade associations/organizations providing or promoting U.S. products and services that have an interest in entering or expanding their business in the mission’s destination country(ies). The following criteria will be evaluated in selecting participants:
- Suitability of the applicant’s (or in the case of a trade association/organization, represented firm’s or service provider’s) products or services to these markets;
- The applicant’s (or in the case of a trade association/organization, represented firm’s or service provider’s) potential for business in the markets, including likelihood of exports resulting from the mission; and
- Consistency of the applicant’s (or in the case of a trade association/organization, represented firm’s or service provider’s) goals and objectives with the stated scope of the mission.
Balance of company size and location may also be considered during the review process.
Referrals from a political party or partisan political group or any information, including on the application, containing references to political contributions or other partisan political activities will be excluded from the application and will not be considered during the selection process. The sender will be notified of these exclusions.
TIMELINE FOR RECRUITMENT AND APPLICATIONS
Mission recruitment will be conducted in an open and public manner, including publication in the Federal Register, posting on the Commerce Department trade mission calendar (http://export.gov/trademissions) and other Internet web sites, press releases to general and trade media, direct mail, notices by industry trade associations and other multiplier groups, and publicity at industry meetings, symposia, conferences, and trade shows. Recruitment for the mission will begin immediately and conclude no later than January 8th, 2021. The U.S. Department of Commerce will review applications and inform applicants of selection decisions on a rolling basis. Applications received after January 8th 2021, will be considered only if space and scheduling constraints permit.
Senior International Trade Specialist
Global Safety & Security Team
U.S. Commercial Service-Virginia/Washington, D.C.
Senior International Trade Specialist
Global Markets, WH Trade Policy
Senior Commercial Officer
U.S. Commercial Service-El Salvador
U.S. Embassy San Salvador
Senior Commercial Specialist
U.S. Commercial Service-Guatemala
U.S. Embassy Guatemala City
U.S. Commercial Service-Honduras
U.S. Embassy Tegucigalpa
(504) 2236-9320, ext 4092
Senior Commercial Specialist
U.S. Commercial Service-El Salvador
U.S. Embassy San Salvador