Exports from free trade zones in Nicaragua rose by a little over 48% in the first half of 2021 when compared with the same period in 2020. (Source; Central Bank of Nicaragua)
The zona francas (as they are called) reported sales of almost US $1.587 billion compared to US $1.070 billion in the same period last year.
The textile, tobacco and wiring harness sectors accounted for the lion’s share; 82.4% of total exports from the tax free zones (US $1.307 billion of the total) which was an increase of 51.1% for the trio of top exporters.
The textile sector alone accounted for US $836.7 million dollars, up 36.4% from the same period last year and with a 46.7% increase in volume.
The USA was the main export market for the textile sector, taking an 83.4% share of the total, followed by Honduras (12.7%) and El Salvador (1.4%).
The wiring harness sector reported an increase in sales of 108.7% which produced total exports of US $314.7 million dollars, most of which went to Mexico (83.2%).
FREE TRADE ZONES – “Zona Francas”
The Zona Francas or Tax Free Zones in Nicaragua are created under the Tax Fee Law 917 (Ley de Zonas Francas de Exportación) which sets out incentives and the rules that are policed by customs regulators (ADUANA).
In brief, investors can build a tax free zone as an industrial park. Modules are then occupied by various tax free businesses, importing raw materials and manufacturing equipment without paying duty. The tax free materials and equipment are then used to assemble products which are shipped (for export), also without taxes or duty.
The businesses can also be outsourcing businesses such as call centers, payroll, accounting, telemarketing, social media marketing and customer support.
There are over 50 zona franca industrial parks and 226 individual businesses occupying more than 2 million square meters. They generate 116,500 direct and 350,000 indirect jobs.
