flag Guatemala Guatemala: Investing

In this page: FDI in Figures | What to consider if you invest in Guatemala | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

According to the UNCTAD 2021 World Investment Report, Guatemala received USD 915 million in FDI inflows in 2020, a slight decrease from USD 975 million in 2019, as a result of the global economic crisis triggered by the Covid-19 pandemic. FDI inflows into Guatemala were estimated at USD 17.3 billion in 2020. Investment levels in Guatemala are lower as a percentage of GDP (less than 15%) than in Latin American (22%) or emerging economies (33%) (El Periódico). Causes include low investor confidence, institutional bottlenecks and uncertainty, recognised by the Bank of Guatemala as even greater factors in investment decisions than interest rates or workforce cost. Main investing countries include the U.S., Mexico, Columbia and Luxembour. Some of the activities that have attracted the most FDI flows in recent years have been manufacturing, trade and vehicle repair, financial and insurance activities, and water, electricity and sanitation services.

Guatemala ranks as the 96th country in the World Bank's last Doing Business Report, released in 2020, which represents a two-spot improvement from the previous year. The Guatemalan government promotes foreign investment, and investors technically receive equal treatment to national investors, but a variety of regulatory hurdles can serve as a barrier to investment. Guatemala is bolstered by free trade agreements with the U.S. and the E.U., its strategic location, abundant natural resources, a good business environment, strong performance in logistics and tourism, interest in technological development and aspiration to become a regional hub. There are also eight free economic zones in Guatemala, which offer tax incentives to investors. However, obstacles to FDI include insecurity, lack of a highly skilled population, low quality infrastructure, weak legal institutions, administrative burdens, social and political instability, and severe levels of crime and drug trafficking. Investors were also wary of a decrease in public investment and the political tensions between the Presidency and the International Commission against Impunity in Guatemala (El Periódico).

 
 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 981975915
FDI Stock (million USD) 15,61316,59517,294
Number of Greenfield Investments* 15207
Value of Greenfield Investments (million USD) 466774130

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

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What to consider if you invest in Guatemala

Strong Points
Guatemala’s strong points to attract investment are:

- Prudent macroeconomic policy framework
- Access to international financial support
- Trade agreement with the U.S. (DR-CAFTA)
- Adequate business environment
- Geographical proximity of the United States and Mexico
- Strong potential of tourism, agricultural, mining, hydroelectric and geothermal sectors
Weak Points
Guatemala’s weaknesses impeding FDI are :

- Social and political instability
- Weak infrastructure
- Vulnerability to external shocks (natural disasters and commodity prices)
- Strong dependence on a low value-added industry and the remittance flows of expatriates
- Low tax revenues
- Rural poverty, inequality, underemployment, informality, ethnic cleavages
- Severe levels of crime and drug trafficking.

Government Measures to Motivate or Restrict FDI
The Guatemalan legal structure promotes investment and includes provisions that recognize and protect private property rights for both national and foreign investors. Additionally, Guatemalan law favours foreign investment under the Foreign Investment Law (Ley de Inversión Extranjera-Decree 9-98). 

Foreign investors technically receive national treatment, but a variety of regulatory hurdles can serve as a barrier to investment. Some professional services may be supplied only by local accredited enterprises. Mining activities face additional restrictions as minerals and petroleum are the property of the state.

There exist eight free economic zones in Guatemala, which offer tax inventives to investors. It is also important to note that Guatemala is part of  the  MIGA: Multilateral Investment Guarantee Agency, a branch of the World Bank in charge of promoting and protecting foreign investment. It has also been ratified by the OPIC: Overseas Private Investment Corporation. Guatemala's membership to these types of organizations shows its determination to create a safe and attractive environment to foreign investors.

Bilateral Investment Conventions Signed By Guatemala
Guatemala has signed bilateral conventions on FDI with 21 countries. To find out more, please visit the investment policy hub website of the UNCTAD.

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Procedures Relative to Foreign Investment

Freedom of Establishment
While Guatemala’s laws provide a relatively hospitable climate for trade and investment and there is no restriction on foreign ownership of a company, the bureaucratic approval process can be cumbersome. Generally most sectors of Guatemala's economy welcome foreign investment and business relationships. Other than applicable taxes, no restrictions apply to the remittance of profits and repatriation of capital.
Acquisition of Holdings
A majority holding interest of stock in a local company is legal in Guatemala. There is however restrictions regarding certain sectors like the press, aviation, the navy for security and independent reasons.
Obligation to Declare
The Ministry of Economy ‘s website (in Spanish) provides a one-stop online portal with information for company registration.

The most popular registration in Guatemala is the corporation (Sociedad Anónima/ S.A.). Another option is the limited-liability company (Sociedad de responsabilidad Limitada - SARL), in which ownership is limited to 20 persons, and the managing director must be a legal resident. To learn more about the different legal form of companies in Guatemala, you can visit PWC guide for doing business in Guatemala.

In March 2013, Guatemala introduced Mi Negocio a one-stop portal that enables businesses to register simultaneously with the Mercantile Registry (Registro Mercantil), the tax authority (SAT), the social security institute (IGSS) and the Ministry of Labour. This online platform has significantly eased the business-creation process for entrepreneurs by reducing the time required to obtain registration, tax and social security numbers, and the authorization to print invoices.

For additional information please visit Asisehace website developed by the Ministry of Economy (In Spanish).  Additional information on the ease of Doing Business in Guatemala can be obtained from the World Bank Group.
Competent Organisation For the Declaration
One-step portal to register a company
Merchant Record (Spanish)
Requests For Specific Authorisations
Mining has historically been a sensitive social issue in Guatemala and mining operations in Guatemala have been subject to protests. Sub-surface minerals and petroleum are the property of the State, and the Ministry of Energy and Mines (MEM) is in charge of approving mining licenses. An initial exploration license is issued for three years, which can be extended for two additional two-year periods, if needed.
After completing the exploration phase, a company may then apply for a separate exploitation license. Mining exploitation licenses are granted for twenty-five years and can be extended for an additional twenty-five years. Petroleum contracts are granted through a public tender process. One contract is awarded covering both exploration and exploitation. This contract is granted for a period of twenty-five years and can be extended for an additional fifteen years. Contracts for petroleum extraction are typically granted through production-sharing agreements.

Find out more about Investment Service Providers in Guatemala on GlobalTrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
E-regulation in Guatemala (in Spanish)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Guatemala
Globaltenders, Tenders & Projects from Guatemala
DgMarket, Tenders Worldwide
Other Useful Resources
Ministery of Economy (in Spanish)
Labour Code (in Spanish)
 
 

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Find out more about Investment Service Providers in Guatemala on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: April 2022