VZCZCXRO5873
RR RUEHLMC
DE RUEHSN #1844/01 2552239
ZNR UUUUU ZZH
R 122239Z SEP 07
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 7808
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 02 SAN SALVADOR 001844 
 
SIPDIS 
 
STATE PASS USAID/LAC 
STATE ALSO PASS USTR 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
3134/ITA/USFCS/OIO/WH/PKESHISHIAN/BARTHUR 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV ES
SUBJECT: CAFTA-DR EARLY SUCCESS STORIES: SERVICES & MANUFACTURING 
 
REF: A. SAN SALVADOR 1779  B. SAN SALVADOR 1484 
 
Summary 
------- 
¶1. CAFTA-DR has shown very positive results in El Salvador during 
its first year of implementation. In the services sector, an 
innovative, USAID-supported health firm has started exporting 
medical services.  Software and logistics firms have also expanded, 
with new investments generating 645 jobs.  Similarly, firms in the 
manufacturing sector have seen a significant boost in exports and 
received more than $58 million in new investments, creating more 
than 3,300 new jobs.  Reftel A reported successes in the textile 
sector and septel will describe increases in handicrafts and food 
and beverage sectors. End Summary. 
 
HEALTH & MEDICAL SERVICES 
------------------------- 
 
¶2. El Salvador is now exporting medical services through the Export 
Chamber of Medical Services, EXPORTSALUD, which includes over 200 
doctors and dentists. Through EXPORTSALUD, a patient is able to 
contact a medical professional in El Salvador from the U.S. by 
telephone or the Internet. 
 
¶3. EXPORTSALUD's important target market is Salvadorans living 
abroad, but they also want to reach the U.S. and Canadian market. 
Similar to Costa Rica, they plan to target "baby boomers," who may 
not have enough money to cover their medical expenditures and are 
looking abroad for treatment. 
 
¶4. EXPORTSALUD established strategic business alliances with 
airlines and local hotels to facilitate tourism packages in 
conjunction with medical visits. It also established an alliance 
with the international bank HSBC, which recently acquired Banco 
Salvadoreno, to provide financing up to $5,000 for Salvadoran 
residents in the United States who require medical services. 
 
¶5. USAID supported EXPORTSAULD with $65,000 for training in 
marketing, business plans, and website development.  Their website 
address is www.exportsalud.org. 
 
SOFTWARE 
-------- 
 
¶6. U.S. software developer Enterprise Database Corp (U.S.) invested 
$600,000, creating 25 direct and 50 indirect jobs. 
A French software developer, Central American Software Services, 
invested $250,000, creating 30 direct and 60 indirect jobs. 
 
 
LOGISTICS AND TRANSPORTATION SERVICES 
------------------------------------- 
 
¶7. U.S. firm Crowley Logistics invested $300,000 thousand in a 
"Business Processing Office" for outsourcing administrative 
services. They created 60 direct jobs and 120 indirect jobs. 
DHL/Cormar expanded its local operations, investing in a 
distribution center and creating 100 direct and 200 indirect jobs. 
Aviotechnology plans to offer aeronautical component repair services 
to foreign markets. 
 
 
MANUFACTURING 
-------------------------- 
 
¶8. Arnecom, a Mexican-Japanese automobile wiring harnesses firm, has 
invested $15 million and generated 650 direct jobs since 2006. They 
supply Chrysler, Ford, Nissan, Isuzu, Mazda, Mitsubishi, Subaru, and 
Toyota assembly plants in Mexico and the U.S. During the first year 
of CAFTA-DR, Arnecom exported around $4.7 million to the U.S. 
(reftel B).  The firm plans to triple its industrial floor in the 
western city of Santa Ana and hire around 3,000 additional persons, 
mostly women, within two and a half years. 
 
¶9. Local towel producer Hilasal currently exports 30% of its 
production to the U.S. and credits CAFTA-DR with helping compensate 
for increased Chinese competition. During the first year of 
CAFTA-DR, towel exports to the U.S., mainly from Hilasal, grew by 
36% to $9.6 million (reftel B). 
 
¶10. Pharmaceutical company Laboratorios VIJOSA will start exporting 
to the U.S. by October 2007. Currently, they export 35% of 
production, but by entering the U.S. market they project to increase 
exports by at least 40% during 2008. 
 
 
SAN SALVAD 00001844  002 OF 002 
 
 
¶11. Exports from balsam producer J. Raul Rivera increased by 55% 
during 2006.  Company vice president Jose Rivera stated that 
CAFTA-DR has improved the commercialization of their product, and 
they expect to increase exports to the U.S. by 15% during 2007. 
 
¶12. Torogoz, which produces copper, bronze, nickel, silver and 
gold-plated sculptures and decorating products, expects to achieve 
40% export growth during 2007. Recently, the company won Salvadoran 
Exporters Corporation's (COEXPORT) "Exporting Innovation" prize. 
According to design manager, Maria Eugenia de Panameno, they have 
created a line of decorating tiles specifically for the U.S. market. 
 
 
¶13. Consorcio Internacional, a division of Procesadora de Acero El 
Salvador (PROACES), is exporting 15% of its total exports to the 
U.S. They export cold steel flat laminated sheets and plan to expand 
sales by 5 percent in 2008, generating 100 new jobs. 
 
¶14. A Brazilian shoe producer invested $2 million in November 2006, 
creating 200 direct and 400 indirect jobs. 
 
¶15. AVX Corporation, a U.S. and Japanese electronic components 
manufacturing company, invested an additional $40 million, creating 
600 direct and 1,200 indirect jobs. 
 
¶16. UNIVERSAL, a joint U.S.-Costa Rican Motorola repair center, 
invested $1.6 million in August 2006, creating 140 direct and 280 
indirect jobs. It repairs around 1,500 phones per week. According to 
the National Investment Promotion Agency, PROESA, they plan to 
establish a phone assembling plant in El Salvador. They were 
previously located in Panama but said that efficiency is higher in 
El Salvador. 
 
COMMENT 
------- 
 
¶17.  Clearly, CAFTA-DR, along with a stable government, sustainable 
economic policies and an aggressive investment campaign by the GOES 
have stimulated investment, job creation and export opportunities in 
El Salvador.  Notably, the investors are not just U.S. and 
Salvadoran companies, but also investors from Brazil, Costa Rica, 
France, Japan, Mexico and elsewhere.  Septel will provide examples 
of business expansions and jobs creation in the handicrafts and food 
and beverage sectors. 
 
Butler