Nextil Elastic Fabrics, a textile factory and Pakka, a company to establish itself in the country that transforms compost to make biodegradable products, are two international companies that decided to invest in Guatemala and bet on the Nearshoring. The next big company could be part of the textile or manufacturing sector, said Alejandro Moscoso, advisor for attracting foreign investment, within the Foreign Investment Agency of the Ministry of Economy (Mineco).
This is because there has been dynamism in companies interested in the sector, which are mostly in textiles and manufacturing, in addition to services, explained Moscoso, who clarified that the next great project is within this dynamic.
Carlos Martínez, Minister of Foreign Affairs of the Ministry of Foreign Affairs (Minex), also said that there is a special interest in the area of investment in textiles, agro-industry and vehicles. In the same way, Martínez said that among the countries that have been interested in Guatemala are Japan, Taiwan and Spain.
Moscoso argued that the time of entry of these companies to the country varies depending on the sectors. Most enter in the short term of approximately two years, however, medium-term sectors can take three to four years and some even more than four years, Moscoso said.
What is Nearshoring?
According to an article published by AmCham entitled Why Is Nearshoring an opportunity for Guatemala? Nextil Group is a clear example of Nearshoring.
Nextil Elastic Fabrics is a Spanish company with origins in Barcelona, which decided to invest in Guatemala to open a new plant. This plant, located in Guatemala and inaugurated last October, will be dedicated to the manufacture of circular point fabric and elastic knitting fabrics for the market of luxury, sports, bathroom and medical and hospital use. In the region will focus on the creation of these fabrics to supply the factories of the United States, where the garments are manufactured.
The plant located in Fraijanes had its official inauguration on October 16 and is expected to grow rapidly. According to Prensa Libre Santiago Palomo, from this plant in the national territory it is sought to serve the American market, with a production capacity of approximately US$32.7 million.
The reason Nextil decided to enter Guatemala is due to the country’s competitive advantages to offer, in particular, the savings of production costs. Guatemala is also a textile hub and has free trade agreements with the United States, allowing them to export duty-free to the United States.
According to Moscoso, official data from the Bank of Guatemala show that, until June of this year, US$803.1 million in foreign investment was counted, which, says Moscoso, exceeds 50% of the target from the investment attraction strategy.
Although Amcham analyzes that in the country – it is mainly observed in sectors of clothing, technology and light manufacturing items, Moscoso reiterated that they do not want to be closed to a single sector. Instead, the investment attraction adviser says they seek to attract more sophisticated sectors to Guatemala, companies that are in the auto parts or pharmaceuticals industry.
What does Guatemala offer?
Moscoso explained that companies are usually established in Guatemala due to two main factors: the supply of the local market and the use of Guatemala as a logistics production center within the region. Moscoso pointed out that the strategic location positions the country as an attractive destination, as it brings companies closer to the United States.
The Minister of Minex said that companies are interested in settling in Guatemala because there is access to both seas and the free trade agreement between the United States, Mexico and Canada.
Similarly, industrial parks have become a pro-dollar point for foreign investment. Moscoso said this is an effort on the part of the private sector, despite the fact that there are challenges to offer differentiated incentives in this sector.
This article has been translated after originally appearing in Prensa Libre