Ana Vilma de Escobar Speech

Thank you Luis, for your introduction. Distinguished panelists, distinguished audience; Secretary Gutierrez, I would like to congratulate you and the members of your team for organizing this Forum. I was especially interested in participating in this encounter because I believe that it is of utmost importance that government and business leaders join efforts to put together action plans that promote competitiveness, not only in each one of our individual countries but also in the regional blocs we represent. Competitiveness is crucial for increased productivity, and increased productivity generates growth. Therefore, I believe that improved competitiveness is the greatest challenge that our nations face. We need to create wealth to fight poverty, to respond to the urgent needs of our people. We need to create wealth to keep peace and democracy in our hemisphere.

I would like to share with you that only five years ago, for El Salvador, attaining levels of four percent growth seemed very unlikely. But in 2006, not only did we attain the highest growth rate of the last ten years, but also we set higher standards for 2007. Last year our fiscal revenue grew by 15%. Credit to the private sector grew by 14%. Our exports grew by 4.8% and our employment levels in the formal sector grew by 6.2%. Also, before December last year, five major financial conglomerates –HSBC, Scotia Bank, Citigroup, GE Captial and BanColombia –committed to the acquisition and globalization of the Salvadoran Banking system. And as a result, we will be seeing significant inflows of capital into the country in the next few months. This to us is a sign of trust in our country’s potential. It is a sign that we are definitely advancing in our competitiveness efforts.

But I wish to emphasize that getting to this point has required long-term vision, commitment, concrete action. This progress has taken almost fifteen years. And it has been a process. And in that period we have continued to consolidate our democracy, we have achieved political stability; we have defined and maintained continuity in our economic policy. We open and expand in our markets to compete globally. We sign free trade agreements with Chile, with Mexico, with Panama, the Dominican Republic, with Taiwan. We promoted, together with the rest of our Central American neighbors, regional integration and the completion of our customs union to project ourselves as a regional economic bloc. We signed CAFTA and successful implementation will also happen over time. But already in 2006, Salvadoran non-traditional exports to the United States, not including textiles, grew by 68%. And together with the rest of the Central American nations we are about to initiate the negotiation of an association agreement with the European Union.

Other actions we have taken in El Salvador, also over time, are that we have privatized our telecommunications sector; we have privatized our energy distribution sector, our pensions system and we have re-privatized the banking system, which had been nationalized back in the eighties. And we managed to maintain our fiscal discipline all along, and this is particularly important since we have a dollarized economy with no access to monetary policy in the case of external shocks. In the same line, in almost two decades, we became the second most open economy in Latin America according to Heritage Foundation, the fifth most competitive economy in Latin America according to the World Economic Forum, and the fourth most transparent economy according to Transparency International. Also, we have kept our investment rate from Moody’s for the last eight years. And I want to say that we are very proud to exhibit these macroeconomic figures. But these figures are meaningless unless they result in healthier, better educated human beings with improved housing conditions, but above all, if they represent people that have access to a better future that is made available through opportunity. In the last fifteen years, therefore, we focused on cutting our poverty levels in half and we were able to reduce our poverty levels from sixty to thirty points. And currently we monitor progress in attaining the Millennium Challenge Goals. A result of our efforts in the last five years, more than 200 foreign companies have come to invest in El Salvador. And, as I had said on several occasions, foreign direct investment is a driving force for enhanced competitiveness and for meeting the big challenges countries or regions have. And this has been the case in El Salvador. And I wish to focus on two challenges which I consider particularly important, not only for our country, but also for the region. The first one is definitely higher educational levels to enhance the quality of our talent pool. How can we train our human resources to absorb higher value-added jobs generated by the companies which we are successful in attracting?

Looking at our indexes, today the literacy rate in El Salvador is at eighty-five percent and for young people between the ages of fifteen and twenty-four it goes up to 95%. But this is not enough. President Saca launched a long-term educational plan and it is based on four pillars: Increasing the number of schooling years for children, strengthening our math and science programs, providing access to technology to young people before they graduate high school, and becoming a bilingual country in the long run. Additionally, we have brought together the academia and the private sector to better protect the demand for trained human resources to absorb new jobs.

And I wish to comment on the case of our aircraft maintenance operation to illustrate El Salvador’s efforts at increased competitiveness in the educational field. El Salvador has its own airline, it is Taca, it is 100% privately owned and it flies daily to twenty-five cities in the Americas. And for the last ten years, Taca has been providing maintenance to its thirty-three airbuses and servicing aircrafts from Jet Blue, America West, US Airways and others with personnel that is 100% Salvadoran. And this maintenance repair, overhaul facility is one of sixteen worldwide and it is certified by Airbus, by the FAA and by the European Aviation Safety Agency. And last year, Taca sought new customers and talked to Lufthansa and Swiss Air and Singapore Airlines and ended up selling 80% of its shares to Air Canada. And this would allow for a four-time expansion of the one thousand-three hundred employee operations. This agreement was a decisive step, not only for Taca but also for the government of El Salvador, for the whole of El Salvador. Our Ministry of Education immediately sat down with local university and technical institute representatives, with the MRO and Air Canada representatives to lay out the plan for training the human resources which would be needed for the future operations. The “Ironman”? project brought to the table government and private sector decision-makers to determine the feasibility of the project, to determine what we could commit to as a country, to discuss the implementation period, and also to discuss the cost of the endeavor. The success of this project and others is definitely based on effective cooperation, monitored due dates and joint efforts.

The second challenge I would like to stress is the development of public infrastructure for sustained economic growth –one of the biggest challenges that Latin American countries face. And I would like to focus on energy generation, which is strategic. El Salvador has not seen significant investment in energy generation since 1998. And in order to address this issue, a few months ago we passed legislation which allows for the signing of long-term contracts between energy generators and energy distributors. Additionally, we developed the project profile for a five-hundred megawatt increase in clean energy generation and this is about a 50% increase in our current energy supply. We are also passing legislation to incentivate small energy generation projects with renewables. El Salvador will also be a beneficiary of the agreement signed between President Lula and President Bush for the production of ethanol and biofuels. We are also exploring the possibility of public-private partnerships to promote private investment in public infrastructure. We are impressed by the success stories of some Latin American countries, particularly Chile, which managed to attract investment levels of more than seven billion dollars in the last sixteen years. El Salvador is busy, it is taking the actions to meet the energy generation challenge. Already 50% of the country’s energy is generated with renewables. This hemisphere must commit to enhance competitiveness not only as individual countries but as a hemispheric bloc. The expected impact on the well-being of our people is worth every effort. I want to end by saying that both public and private sector representatives are responsible for this endeavor and those of us present cannot afford to ignore this responsibility if we consider ourselves worthy of leading our nations. Thank you very much.