Nicaragua Network

1. International FTZ conference held in Managua
2. Government approves canal Environmental Impact Study
3. Nicaragua prepares for the Paris environmental summit
4. Education news: registration for 2016 starts, universities get funding
5. Economic briefs: El Limon talks, World Bank lauds Nicaragua, new home sales up
6. Russia to assist in health efforts
7. Ortega receives credentials of new ambassadors

1. International FTZ conference held in Managua

The Nineteenth Conference of Free Trade Zones of the Americas was held in Managua last week with representatives from Latin America, the United States and Asian countries attending. Among those participating in the conference were representatives of the German automotive components supplier Dräxlmaier, South Korean clothing manufacturer Sae A Trading, and US retailer Walmart. Juan Pablo Rivera, president of the Association of Free Trade Zones of the Americas (AZFA) said that there are 385 FTZs in Latin America and Spain, with 8,000 factories generating two million jobs.

Alvaro Baltodano, President Daniel Ortega’s advisor on investment and exports, said that hosting the event was very important for Nicaragua, adding that, “In Nicaragua we have decided to take the road toward growth.” He stated that while Nicaragua was one of the poorest countries in Latin America, it was demonstrating its desire to grow both economically and socially. He added that both Yasaki, a Japanese automotive supplier, and Hansae, a South Korean apparel company, were increasing their production for next year and hiring more workers. He said that Nicaragua’s 175 FTZ factories currently employ 109,800 workers, reflecting a loss of 5,000 jobs at the beginning of the year due to the expiration of tariff preference level protection (TPL) under the Central America Free Trade Agreement (CAFTA).

Rivera of AZFA said that the tax incentives that governments grant the free trade zones pay off for the economies involved. [Critics say that the fact that the factories pay no import or export taxes and that wages are extremely low limit the benefits to the countries involved.] Dean Garcia, director of the Nicaraguan Textile and Garment Industry Association (ANITEC), said that the main benefit for the Nicaraguan economy has been the salaries the companies pay the workers which the workers then use to buy the goods and services they need. He added that, in addition, these formal sector jobs pay into the Social Security system US$7 million per year. The FTZ sector also serves as a development platform and a vehicle for technology transfer, he stated. Currently, FTZ exports represent half of the total value of Nicaragua’s exports. [However, the government does not receive same the tax benefits from those exports that it does from the country’s beef, coffee, gold, and sugar exports.]

Baltodano said that, “We want to have the whole chain of production, because now we just assemble the garments and export them…. We want to be producing the thread, the buttons, the whole process in the case of clothing.” He added that Nicaragua wants to attract investment in auto assembly plants, home appliance assembly, and others. Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP), said, “In the last ten years we have been able to diversify—from 100% garment assembly we have moved to 60 / 40 with other sectors such as auto chassis, call centers, and cigar manufacturing.”

Garcia said that some factories likely will be moving from El Salvador and Guatemala to Nicaragua next year when World Trade Organization benefits for FTZ factories in poor countries expires for those countries. When a country maintains a US$1,000 per capita GDP (in 1990 dollars) for three years, it loses benefits under the Agreement on Subsidies and Countervailing Measures of the WTO. According to Garcia, Nicaragua’s GDP per capita now stands at US$1,855 but, in 1990 dollars, it only reaches US$850. Nicaragua will probably meet the target and lose those WTO benefits in 2025, he said.

After a private meeting with President Ortega on Nov. 5, Yazuhiko Yazaki, Chief Executive Officer of YAZAKI, said the company plans to increase and diversify its investments in Nicaragua next year. “Presently we have four auto-part plants and we are studying the building of a new one. We are also interested in solar energy, reforestation and other environmentally friendly projects,” he said. YAZAKI is a manufacturer of auto parts for Chrysler, Ford, Nissan, Isuzu, Mazda, Mitsubishi, Subaru and Toyota. The company employs between 13,000 and 14,000 workers in Nicaragua. Ortega also met with W.K. Kim, president of Sae-A Trading. (El Nuevo Diario, Nov. 5, 6, 7, 8; Informe Pastran, Nov. 6; Nicaragua News, Nov. 9)

2. Government approves canal Environmental Impact Study

The Nicaraguan government approved the Social and Environmental Impact Study (SEIS) for the proposed shipping canal across the country that was completed by the British company Environmental Resources Management but authorities said that further studies still have to be made. Manuel Coronel Kautz, president of the Canal Commission, said, “We are authorizing HKND [the company that holds the canal concession] to initiate the processes of structural design, of construction design.” Coronel Kautz said that studies would continue on elements of the impact of the canal that have to be examined in greater depth. The entire 14 volume SEIS is now available on the HKND web page at http://hknd-group.com/portal.php?mod=view&aid=293

Bill Wild, principal adviser for the project at HKND, said, “The SEIS process has been exhaustive. We have spent more time completing it that we originally planned because we have listened to the proposals that we have received about the design and we have made several changes that have improved it. Our commitment was always to fulfill and surpass the Terms of Reference [of the Nicaraguan Environmental Ministry] and fully satisfy the best international practices norms.” He noted that last month the company held nine public meetings about the project and said that Lake Cocibolca (Lake Nicaragua) and reforestation were the topics of greatest concern for the public. He stated that HKND has tried to design a project that would minimize the impact on the mangrove swamps at Brito, the San Miguelito wetlands, the palm tree forests of the south Caribbean region, and that would preserve the lower courses of the Brito, Tule, and Punta Gorda Rivers while limiting the disturbance of the sediments of Lake Cocibolca. In a statement, HKND Vice-President Pang Kwok Wai said that an ambitious program of reforestation is planned for the canal watershed while the design of the locks will assure that there will be no net loss of water in the lake and no intrusion of salt water.

The SEIS indicates that the construction of the canal would involve 1,721 square kilometers (equivalent to the total area of the Departments of Estelí and Masaya) plus 1,188 square kilometers that would be used while the project is being built. Those lands used temporarily would be returned to their owners in similar or better conditions than before or the owners would be compensated for damages. The study also projects that of the 50,000 workers on the canal, 1,500 would be administrative and 48,500 would be in the field and adds that “Nicaragua offers a very limited highly qualified labor force.” The report posits that foreign labor would be used at first but that the necessary training would be provided in order for the company to contract local labor.

Meanwhile, reactions continued to the march against the canal on Oct. 27. The Center for Communications Research (CINCO) said on Nov. 5 that “the march confronted obstacles and attacks which were ineffective because peasant farmers came to Managua and marked a new milestone in the struggle for the defense of their lands.” Silvio Baez, Auxiliary Bishop of Managua, said that the organizing of activists to clash with the protesters “was a clear demonstration of intolerance, of a lack of capacity to take criticism and a violation of human rights” and he added, “An authentically democratic government does not fear criticism.” (El Nuevo Diario, Nov. 6, 8, 9; Informe Pastran, Nov. 4, 5)

3. Nicaragua prepares for the Paris environmental summit

Government spokeswoman Rosario Murillo said on Nov. 9 that a series of conferences will be held in the in the next few days at the country’s universities to discuss a proposal that Nicaragua will make at the environmental summit [called Conference of the Parties (COP) 21] beginning on Nov. 29 in Paris.  She said that Nicaragua will take to Paris “a Specific Country Proposal on compensation to the countries most affected by depredation, destruction, and climate change.”

Presidential adviser Paul Oquist said that he hopes that the Paris conference will show a commitment to environmental justice.Oquist reaffirmed Nicaragua’s commitment to sustainable development and climate change mitigation at a recent meeting in Germany with Christiana Figueres, United Nations Secretary for the Climate Change Convention Framework. Oquist noted that at the Paris summit, Nicaragua will advocate for greater commitment to climate justice, funding, technology transfer and capacity building in developing countries to mitigate the effects of climate change.

Ernesto Medina, president of the Universidad Americana (UAM) said that there will be 27 discussion roundtables organized by the UAM, the Nicaraguan Academy of Sciences, the Center for the Understanding of Nature and the National Agrarian University. Experts will sit down at separate workshops to discuss desertification, food security, impact of climate change on coffee cultivation, impact on cattle ranching, education on climate change, and other topics.(Informe Pastran, Nov. 4, 9; El Nuevo Diario, Nov. 4; Nicaragua News, Nov. 3)

4. Education news: registration for 2016 starts, universities get funding

The government officially inaugurated the registration period for the 2016 school year which will begin in February and run through November. The Education Ministry said that this was the first time that registration the next school year would begin before the end of the current year adding, “We want families to be assisted [in the process] with agility and order.” The Ministry of Education predicts a total enrollment of 1.7 million students for next year and reported that 45,000 enrolled on Nov. 5, the first day, for preschool and Saturday secondary courses. Primary school students were scheduled to begin to register on Nov. 9, and high school students on Nov. 20.

Meanwhile, Nicaragua’s universities will receive the constitutionally mandated 6% of the national budget which this year amounts to US$156 million of which US$15 million will go for capital improvements, including building and repairing classrooms, libraries and laboratories. The universities that belong to the National Council of Universities have a total enrollment of 110,000 students. (Nov. 4, 5, 6; El Nuevo Diario, Nov. 7)

5. Economic briefs: El Limon talks, World Bank lauds Nicaragua, new home sales up

Gustavo Porras, coordinator of the National Workers Front (FNT) said on Nov. 5 that an accord had been reached between the B2Gold mining company and the unions at the El Limon Mine. Porras said that, “The company promised to name new officials at the mine to improve relations [with the workers].” He added that, “The accords go in that direction, forming a commission that will do follow-up, guarantee productivity, job stability, [and] workplace safety….” A strike at the mine had resulted in violence with one police officer dead and 23 officers and 8 civilians injured and had held up production for 21 days. (Informe Pastran, Nov. 5)

The World Bank representative in Managua, Luis Constantino told journalists accompanying him and Nicaraguan government officials on a tour of road projects in the South Caribbean Autonomous Region that Nicaragua has the best project administration portfolio in Latin America, particularly in the infrastructure area. “We are pleased with the successful results and the World Bank wants to continue to support the efforts by the Nicaragua government to improve infrastructure nationwide,” Constantino stated. He was visiting World Bank financed projects in Bluefields and Nueva Guinea with officials of the Transportation and Infrastructure Ministry. (Nicaragua News, Nov. 9)

The sale of new houses in Nicaragua has multiplied in value by ten since 2009, according to Jose Adan Aguerri, president of the Superior Council of Private Enterprise. Aguerri, speaking on the eve of “Housing Expo 2015,” said that the country’s lenders held only US$50 million in mortgages for private dwellings in 2009 and that figure is now at US$500 million. Builders participating in the fair will be offering houses with prices that range from US$21,000 to US$250,000 and expect to sell a total of about 6,000 new homes this year. (El Nuevo Diario, Nov. 6)

6. Russia to assist in health efforts

Russian Minister of Health Veronika Skvortsova said in Managua on Nov. 4 that her country would help to build a plant to make influenza vaccine in Nicaragua. Skvortsova was in Nicaragua to participate in the second Nicaragua-Russia conference focused on “Innovation in Universal Health Care Coverage.” Construction will begin next month on the plant which will cost US$14 million. Nicaragua and Russia also signed an accord to develop together specialized cancer treatment centers in Nicaragua. Government spokeswoman Rosario Murillo said that in a few weeks Health Minister Sonia Castro and a team would travel to Moscow to visit cancer centers and explore other possibilities for health care collaboration between the two countries.

While in Nicaragua, Skvortsova gave to President Daniel Ortega the medal of the Russian Order of Friendship saying, “We greatly value our relationship with Nicaragua and we are ready to contribute all our efforts so that the people of Nicaragua can have the best quality of life possible.” Ortega said, “We receive it with pride, thank you. Tell President Putin that he has honored us with this recognition.”  (Informe Pastran, Nov. 4; El Nuevo Diario, Nov. 5, 6)

7. Ortega receives credentials of new ambassadors

President Daniel Ortega has received the credentials of several new ambassadors in the past week. On Nov. 5, the ambassadors of Germany, Colombia, Italy, and El Salvador presented their credentials and on Nov. 9, it was the turn of France, the United States, Chile, and Palestine. Upon receiving the credentials of German Ambassador Ute König, Ortega remembered the great friend of Nicaragua in the 1980s, the late German Chancellor Willy Brandt, and said that “Germany is now giving an example of humanism in opening its borders [to refugees] that would be the ideal for all countries.” He noted Germany assistance with sewage plants in Managua and Granada and in the conservation of the Bosawas Nature Reserve.

Colombia’s new ambassador to Nicaragua Carlos Eduardo Salgar Vargas noted investment by Colombian companies in mining, agriculture and industry in Nicaragua marked a reactivation of the economic relationship between the two countries. Ortega said that he understood that patience was necessary in the relations between the two countries and that the Nov. 2012 ruling of the World Court [which was in Nicaragua’s favor] would eventually be ratified by the Colombian congress. (Informe Pastran, Nov. 6, 9; El Nuevo Diario, Nov. 6, 7)