Welcome To Latam Insights Encore, a deep view of Latin America’s most relevant economic and cryptocurrency-based news last week. In this edition, we discuss the import duties exemption measure President Nayib Bukele pushed for and passed in Congress and its possible effects on El Salvador.
Bukele Passes Import Duties Exemption Bill for a Decade in El Salvador, Leaving National Producers Worries
President Nayib Bukele surprised many with a measure that ramps up its commitment to take down inflation in basic products and curb distributors’ speculation practices. Using his leverage in the national congress, Bukele pushed and quickly passed a bill that enacted an exemption for basic products’ import duties for a decade, extending a bill that had been enacted years ago and including new products under its scope.
The measure, which follows a set of actions qualified as counter-free makers by national analysts and experts, includes over 116 products that will now be imported duty-free. And while this might benefit Salvadorans in the short term, it means bad news for national entrepreneurs who build their businesses by producing these items in the long term.
The model might be compared with how Venezuela tackled the generalized food and item scarcity that affected its citizens circa 2017. Instead of strengthening national production, the country took the easy way, adopting an import policy that made products brought from abroad cheaper than national products, bringing an imbalance to the economy.
While Bukele has also freed some agricultural products like fertilizers and supplies, the effect of this measure can only be appreciated in the long term, given the nature of the agricultural crop periods. Corn has been an example of how imports have affected the national product, flooding the country with cheap products and causing a price difference that makes the Salvadoran produce impossible to compete.
Meanwhile, Bukele is promoting “Bean of Fire,” a coffee brand produced in his fields, donating 200 lb of this, sugar and 8,000 cups to a different business every day.
What do you think about the national product import substitution practice that Bukele is leading in El Salvador? Tell us in the comments section below.
