CENTRAL AMERICA AND THE ROLE OF CABEI

1
CENTRAL AMERICA AND THE ROLE OF CABEI

• Harry E. Brautigam, Phd
• Executive President of CABEI

2
A TIME OF HOPE AND OPPORTUNITIES FOR CENTRAL
AMERICA II. CABEI STRATEGIC PARTNERS
FOR THE DEVELOPMENT OF CENTRAL AMERICA
III. CABEIs ROLE AND STRATEGY IN CENTRAL
AMERICA IV. FINAL REMARKS
AGENDA
3
A Time of Hope and Opportunities for Central
America
4
Three Distinctive Characteristics of Central
America

• 1. Priviliged Geographic Location
• Coasts in both the Atlantic and Pacific Oceans.
• The big majority of productive areas are located
  in a distance smaller than 100 miles (160 km)
  from the Coast.
• Potencial to become the the economic and cultural
  bridge between the most important commercial
  blocks in the world.

5
Three Distinctive Characteristics of Central
America

• Ecological Diversity and Unique Environmental
  Resources
• Ecological Bridge between north and south of the
  American Continent.
• Central America holds 7 of the biological
  diversity of the Planet. This diversity is hosted
  in its almost 20 million hectares of primary and
  secundary forest.
• Its exceptional biological treasure offer a
  clear atractiveness for scientific and
  technological research, and a great opportunity
  for the arisement of new products and industries.
  

6
Three Distinctive Characteristics of Central
America

• Agricultural and Forestal Potential the Whole
  Year
• Central Americas location and tropical climate
  makes the region a potential zone for high
  agricultural and forestal production during all
  the months of the year.
• The above statement gives an advantage to Central
  America allowing the region to have a greater
  production with relatively less stationality in a
  big variety of tropical products that can be
  destined to different markets.
• All this favorable conditions turn the region in
  an attractive destination for investment,
  investigation and agribusiness development.

7
Investment Opportunities

• OPPORTUNITIES FROM NEW IMPULSE GIVEN TO REGIONAL
  INTEGRATION AND THE PPP INITIATIVE.
• OPPORTUNITIES FROM REGIONS TRADE LIBERALIZATION
  PROCESS AND FREE TRADE AGREEMENTS (CAFTA, ALCA,
  EU)

8

• OPPORTUNITIES FROM NEW IMPULSE GIVEN TO REGIONAL
  INTEGRATION AND THE PPP INITIATIVE

• POSSIBILITY TO CONSOLIDATE A REGIONAL ECONOMIC
  SPACE AND DEVELOP KEY INFRASTRUCTURE AND TRADE
  SERVICES, IN ORDER TO DECREASE TRADE COSTS AND
  PROMOTE REGIONAL ECONOMIC ARTICULATION Phisical
  Infrastructure, customs and border modernization
  and opportunities to harmonize regulations and
  implement best practices.
• POSSIBILITY TO TRANSFORM AND STIMULATE PRODUCTIVE
  SECTORS AND PROMOTE HUMAN DEVELOPMENT, IN ORDER
  TO INCREASE COMPETITIVENESS AND GROWTH Promotion
  of Clusters according to each countrys
  resources, such as Tourism, Agribusinesses,
  Fishery, Silviculture, Textiles and Clothing,
  Electronics, Software and Hardware.

....
9

• .OPPORTUNITIES FROM NEW IMPULSE GIVEN TO
  REGIONAL INTEGRATION AND PPP

• OPPORTUNITIES TO REDUCE SOCIAL, GEOGRAPHIC AND
  SECTORIAL GAPS WITHIN COUNTRIES IN THE REGION AND
  PROMOTION OF A GREATER REGIONAL SOCIAL COHESION
  Access to Basic Social Services by vulnerable
  population, development of cultural and ethnic
  diversity, Capacity Building and generation of
  opportunities.
• ESTABLISHMENT OF FUNDAMENTAL BASES FOR THE
  SUCCESS OF CENTRAL AMERICAS TRADE LIBERALIZATION
  PROCESS Profundization and strengthening of an
  integrated market of goods and services and
  possibility to add regions volumes and
  articulate the production chain.

10

• OPPORTUNITIES FROM REGIONS TRADE LIBERALIZATION
  AND FREE TRADE AGREEMENTS (CAFTA, ALCA, EU)

• MARKET-INVESTMENT-KNOWLEDGE
• MARKET ENLARGEMENT IN BENEFIT OF EFFICIENT
  PRODUCER.
• COSTS REDUCTION DUE TO ECONOMIES OF SCALE.
• COSTS REDUCTION DUE TO SPECIALIZATION DEPENDING
  ON COMPARATIVE ADVANTAGES.
• IMPROVEMENT OF THE INTERNATIONAL RESOURCE
  ASSIGNMENT.
• INCENTIVES TO PRESERVE MACROECONOMIC STABILITY
• GREATER ACCESS TO BEST PRACTICES AN TECHNOLOGICAL
  AND KNOWLEDGE TRANSFER .

.
11

• OPPORTUNITIES FROM REGIONS TRADE LIBERALIZATION
  AND FREE TRADE AGREEMENTS (CAFTA, ALCA, EU)

• MARKET-INVESTMENT-KNOWLEDGE
• STRATEGIC ALLIANCES FOR INVESTMENT.
• ENLARGEMENT OF INTERNAL SUPPLY IN BENEFIT OF THE
  CONSUMER THROUGH PRODUCTS AND SERVICES WITH
  BETTER QUALITY.
• ENLARGEMENT AND PROFUNDIZATION OF FINANCIAL
  MARKETS AND ACCESS TO NEW FINANCIAL SOURCES.
• CABEI HAS IDENTIFIED CLOSE TO US2.5 BILLION IN
  INVESTMENT OPPORTUNITIES WITHIN THE CENTRAL
  AMERICAN COUNTRIES.

.
12
Nonetheless Opportunities demand overcoming key
challenges in the Region

• Governance.
• Macroeconomic stability and growth.
• Poverty reduction human and social development.
• Environmental protection.
• Regional integration.
• Financial markets development.
• Competitiveness and insertion into the global
  economy.

13
CABEIs Role and Strategy in Central America
14
CABEIS MISSION The purpose of the Bank shall
be to promote the economic integration and the
balanced economic and social development of the
Central American Countries.
15
CABEI HIGHLIGHTS

• Founded in 1960 in order to promote development
  and integration in Central America
• 5 founding members
• Costa Rica
• El Salvador
• Guatemala
• Honduras
• Nicaragua
• 5 extraregional member countries
• México
• China (Taiwán)
• Argentina
• Colombia
• Spain
• Initiatives underway to incorporate
• New non-regional countries
• New beneficiary member countries

The Central American market Population
35 million GDP US71.4 billion GDP
per capita US2,040
16
A RECORD YEAR FOR CABEI
( Dec 2003)
17
CABEI Ratings-Fitch
Long-term
BBB
F2
Short-term
Outlook
Stable
March 2004
18
CABEIs Financing compared to Foreign Direct
InvestmentMillions US
19
Portfolio Distribution
Sectorial Economic Exposure
Net Approvals by Economic Sector, 1961 2002 ()
20
CABEIs PARTICIPATION IN CENTRAL AMERICA
MULTILATERAL FINANCING (2000 2003)
21
CABEIS LOAN PORTFOLIO
MAY 2004
Portfolio amount US2.7 billion
22
TOWARDS THE FUTURE
23
VISION To assume and maintain leadership in
financial solutions for the poverty reduction,
regional integration and competitive insertion of
our countries in the world economy, acting
according to the highest quality standards and
giving special attention to the environment.
24
CABEIs Strategic Themes and Objectives 2004 -
2009
Poverty Reduction
Integration
Globalization
25
CABEIS STRATEGIC THEMES AND OBJECTIVES 2004 -
2009

26
POVERTY

• Micro, small and medium enterprises
• Sustainable Rural Development
• New Entrepeneaurs
• Promotion of the Information Flow between
  employment supply and demand.

• To generate opportunities that contribute to the
  creation of formal employment.

• Formalization of the property rights over assets.
  
• Instruments and financial services for SMEs
  (Collaterals, leasing, remittances flow)
• Strenghthening of the existing institutions that
  fund the SMEs

• Water and sanitation infrastructure
• Standards to reduce risks associated to natural
  disasters.
• Training in Labor Skills
• Popular Housing
• Public Service Concessions

• Programs for Municipalities in Borders
• Technological infrastructure to improve
  perfomance.

• Vocational Education and technology
• Innovation and technology transfer
• Best Practices ( Transfer, standarization, etc.)

27
INTEGRATION

• Development of the Regional Capital Market
• Financial System Supervision and Regulation
• Desarrollo de Sistema de Pago y Cámara de
  Compensación
• Captación de recursos provenientes de Fondos de
  Pensión.
• Captación de Reservas para el blindaje
  macroeconómico.

• Taxing Systems
• Regulatory Framework of the Financial System
• Adopción de normas Basilea II
• Sistema de Liquidación y Compensación

• Plan Puebla Panamá (infrastructure projects of
  regional impact)
• Customs Union
• Reduction of the knowledge gap
• Infraestructura integrada de comercio exterior
• Regional Productive Groups
• Binational and Regional Projecs

• Hydric Resource Management.
• Environment Legislation
• Market of Emission Reduction

28
GLOBALIZACIÓN

• Seguridad ciudadana y seguridad jurídica
• Gobernabilidad
• Transferencia de Tecnología de Información y
  Comunicaciones

• Clusters Development -Identified in the
  Competitiveness Agenda of the XXI
  Century(Agribusinesses, Industrial Parks,
  Tourism, forestal)
• Apoyo a la Estructura Institucional Regional de
  Impulso a la Competitividad
• Development and articulation of medium
  enterprises in the productive chains
• Standarization and Best Practices in the Region
• Infraestructure and services in support of
  competitiveness
• Productive Reconvertion
• Educación Vocacional para la Productividad

• Diseminación del conocimiento sobre los alcances
  de la Apertura y sus instrumentos
• Creación de capacidad para la negociación de
  tratados
• Promoción de Comercio Exterior e IED
• Desarrollo de Estudios de Mercado

• Reasignación de Recursos Productivos entre
  sectores
• Training for the reinsercion in new markets

29
VENTAJAS COMPETITIVAS

• Amplia red de organizaciones no gubernamentales e
  instituciones financieras no bancarias asociadas
  al BCIE
• Compromiso con la región en el combate a la
  pobreza
• Amplia experiencia adquirida durante 40 años
• Posibilidad de canalizar fondos a los gobiernos
  locales
• No condicionalidad cruzada en los préstamos al
  sector público
• Grado de inversión
• Conocimiento de la región
• Ubicación geográfica
• Relación con la banca comercial local e
  internacional

• Experiencia acumulada
• Cobertura y conocimiento de la región
• Estatus de acreedor preferente
• Capacidad de formulación de proyectos regionales
• Calificación institucional de carácter regional e
  internacional
• Liderazgo y credibilidad
• Poder de convocatoria regional
• Disponibilidad de recursos para la integración
• Sólido posicionamiento en la institucionalidad
  regional.

30
Strategic Direction
RELEVANT SOLID EFFICCIENT PERMANENT
CABEI
FINANCIAL
CREDIT
OPERATIVE
INSTITUTIONAL LIDERSHIP
POVERTY GLOBALIZATION INTEGRATION
31
CABEI TOTAL PLANNED FINANCING FOR THE NEXT TWO
YEARS
TOTAL US 2.0 BILLION
32
ESTIMATED DISTRIBUTION OF FINANCING FOR THE NEXT
TWO YEARS BY STRATEGIC THEMES
TOTAL US2,000 MILLONS (ESTIMATE)
33
FINAL REMARKS
34

• SUMMARIZING
• Working closely with International Donors,
  including Japan, CABEI represents the main source
  of multilateral financing for the region.
• Therefore CABEI is a major and strategic agent in
  the development and integration of Central
  America and Japan has been an ally in the
  development of Central America.
• Central America faces unique opportunities and is
  going through a special time to build foundation
  for economic growth. Nonetheless the region faces
  key challenges that need to be overcomed.
• CABEIs strategic intention is to become a more
  Relevant, Solid, Efficient and Permanent
  institution. Our vision for the next five years
  is based on three strategic themes Poverty
  Reduction, Integration and Globalization.
• .

35
CENTRAL AMERICA AND THE ROLE OF CABEI

• Dr. Harry E. Brautigam
• Executive President of CABEI