Italy at a glance

Capital: Rome
Population: 58,126,212
Government Type: Republic
GDP: $1.823 trillion
Imports: $546.9 billion
Exports: $546.9 billion

Italy is largely homogeneous linguistically and religiously but is diverse culturally, economically, and politically. Italy has the fifth-highest population density in Europe — about 490 per sq. mi. Minority groups are small, the largest being the German-speaking people of Bolzano Province and the Slovenes around Trieste. There are also small communities of Albanian, Greek, Ladino, and French origin. Immigration has increased in recent years, while the Italian population is declining overall due to low birth rates. Although Roman Catholicism is the majority religion — 85% of native-born citizens are nominally Catholic — all religious faiths are provided equal freedom before the law by the constitution.

Italy has been a democratic republic since June 2, 1946, when the monarchy was abolished by popular referendum. The constitution was promulgated on January 1, 1948. The Italian state is centralized. The prefect of each of the provinces is appointed by and answerable to the central government. In addition to the provinces, the constitution provides for 20 regions with limited governing powers. Five regions — Sardinia, Sicily, Trentino-Alto Adige, Valle d’Aosta, and Friuli-Venezia Giulia — function with special autonomy statutes. The other 15 regions vote for regional “councils.” The establishment of regional governments throughout Italy has brought some decentralization to the national governmental machinery, and recent governments have devolved further powers to the regions. Many regional governments, particularly in the north of Italy, are seeking additional powers. The 1948 constitution established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers (cabinet), headed by the president of the council (prime minister). The president of the republic is elected for 7 years by the parliament sitting jointly with a small number of regional delegates. The president nominates the prime minister, who chooses the other ministers.

The Council of Ministers — in practice composed mostly of members of parliament — must retain the confidence of both houses. The houses of parliament are popularly and directly elected by a proportional representation system. Under 2005 legislation, the Chamber of Deputies has 630 members (12 of whom are elected by Italians abroad). In addition to 315 elected members (6 of whom are elected by Italians abroad), the Senate includes former presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of 5 years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both.

The Italian judicial system is based on Roman law modified by the Napoleonic code and subsequent statutes. There is only partial judicial review of legislation in the American sense. A constitutional court, which passes on the constitutionality of laws, is a post-World War II innovation. Its powers and the volume and frequency of its decisions are not as extensive as those of the U.S. Supreme Court.

U.S.-Italian Relations

The United States and Italy cooperate closely on major economic issues, including within the G-8. With a large population and a high per capita income, Italy was the United States’ 12th-largest trading partner in 2008, with total bilateral trade of $51.6 billion; exports to Italy totaled $15.5 billion, and imports from Italy were worth $36.1 billion. The United States’ $20.7 billion trade deficit with Italy in 2008 was slightly below the $20.9 billion deficit registered in 2007. Machinery and aircraft are becoming important U.S. exports to Italy. U.S. foreign direct investment in Italy at the end of 2007 exceeded $28.4 billion.

Foreign Relations

Italy was a founding member of the European Community — now the European Union (EU). Italy was admitted to the United Nations in 1955 and is a member and strong supporter of the North Atlantic Treaty Organization (NATO), the Organization for Economic Cooperation and Development (OECD), the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO), the Organization for Security and Cooperation in Europe (OSCE), and the Council of Europe. It chaired the CSCE (the forerunner of the OSCE) in 1994, the EU from July to December 1990, January to June 1996, and July to December 2003, and the G-8 in 2001 and in 2009. Italy served a 2-year term on the UN Security Council in 2007–2008.

Italy firmly supports the United Nations and its international security activities. Italy leads the UN mission in Lebanon (UNIFIL) and has actively participated in and deployed troops in support of UN peacekeeping missions in Somalia, Mozambique, and Timor-Leste. It provides support for NATO and EU operations in Afghanistan, Bosnia, Kosovo, Albania, Georgia, and Chad. Italy, under NATO’s ISAF, maintains a Provincial Reconstruction Team in the western Afghanistan province of Herat, commands RC-West, and maintains a Carabinieri police training center. Italy supports reconstruction and development assistance to the Iraqi people through humanitarian workers and other officials, particularly in Dhi Qar Province, and is a leading contributor to the NATO Training Mission-Iraq, with approximately 100 military personnel and Carabinieri police trainers. Currently almost 9,000 Italian troops are deployed, including 2,100 in Kosovo, 2,350 in Lebanon as part of UNIFIL, and more than 2,600 in Afghanistan.

The Italian Government seeks to obtain consensus with other European countries on various defense and security issues within the EU as well as NATO. European integration and the development of common defense and security policies will continue to be of primary interest to Italy.

Economy

The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state ranked as the world’s sixth-largest market economy. Italy belongs to the Group of Eight (G-8) industrialized nations; it is a member of the European Union and the Organization for Economic Cooperation and Development (OECD).

Italy has few natural resources. With much land unsuited for farming, Italy is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore in the Adriatic, constitute the country’s most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country’s energy sources are imported. Italy’s economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing.

Italy continues to grapple with budget deficits and high public debt — 2.6% and 105.9% of GDP for 2008, respectively. Italy joined the European Monetary Union in 1998 by signing the Stability and Growth Pact, and as a condition of this Euro zone membership, Italy must keep its budget deficit beneath a 3% ceiling. The Italian Government has found it difficult to bring the budget deficit down to a level that would allow a rapid decrease of that debt. The worsening of the economic situation is expected to jeopardize this effort. The deficit is expected to grow well above the 3% ceiling in 2009 and 2010.

Italy’s economic growth averaged only 0.8% in the period 2001–2008; 2008 GDP decreased 1.0%, largely due to the global economic crisis and its impact on exports and domestic demand. GDP is expected to contract further, with a huge decrease in 2009 (ranging from 2% to 3%) as the Euro zone and world economies slow.

Italy’s closest trade ties are with the other countries of the European Union, with whom it conducts about 60.1% of its total trade (2007 data). Italy’s largest EU trade partners, in order of market share, are Germany (12.9%), France (11.4%), and the United Kingdom (5.8%). Italy continues to grapple with the effects of globalization, where certain countries (notably China) have eroded the Italian lower-end industrial product sector.

The Italian economy is also affected by a large underground economy, worth some 27% of Italy’s GDP. This production is not subject, of course, to taxation and thus results in loss of revenue to local and central governments.

Agriculture

Italy’s agriculture is typical of the division between the agricultures of the northern and southern countries of the European Union. The northern part of Italy produces primarily grains, sugar beets, soybeans, meat, and dairy products, while the south specializes in fruits, vegetables, olive oil, wine, and durum wheat. Even though much of its mountainous terrain is unsuitable for farming, Italy has a large work force (1.4 million) employed in the sector. Most farms are small, with the average size being only 7 hectares.

Best Export Opportunities

Italy is a major U.S. trading partner. In 2007, U.S. exports to Italy totaled $14.1 billion, an increase of 12.8% over the previous year, and U.S. imports from Italy reached $35.0 billion. U.S. exports to Italy through November 2008 totaled $14.5 billion, an increase of 12.6% over the same period in 2007. The United States is Italy’s 11th largest supplier. The top four supplier countries are Germany, France, the Netherlands, and China. U.S. suppliers will find opportunities in several market sectors in Italy, including  medical equipment, pleasure boats, automotive parts, and pet products.

Detailed information on these and other sectors in the Italian market can be found in the Best Export Opportunities Section of the Italy country profile.

Transparency of Regulatory System

According to a 2004 World Bank study, an entrepreneur wishing to start a business in Italy must follow 16 procedures, spend an average of 62 days, and pay around US$5,000 in fees. Italian newspapers reported that in order to open a small business (such as a wedding photography business), some 50 forms from more than 20 different government agencies need to be filled out. The study found that it costs more to open a business in Italy than nearly anywhere else in Europe, with the exceptions of Greece and Austria. Government efforts to enable entrepreneurs to “open a business in a day” have not been successful. For further information on the regulatory system and property rights, please see the Trade Data section of the Official Export Guide’s Italy country profile.

Transportation

Italy has a total of 101 airports with paved runways located throughout the country. Rail services are also widespread, and the service is reliable. The country also has a large number of seaports equipped for handling ro/ro, container and bulk cargo.

Rental automobiles are available at numerous locations. A valid state driving license is acceptable, accompanied by an international license (which serves as a translation only). Traffic lights are limited and often disobeyed, and a different convention of right-of-way is observed. Italy has over 5,600 kilometers (3,480 mi.) of Autostrada, or superhighways. Commercial and individual vehicles travel and pass on these well-maintained roads at very high speeds. Accidents occur in which contributing factors include excessive speed, alcohol/drug use, and/or sleepiness of long-distance drivers. Italy has one of the highest rates of car accident deaths in the European Union.

Map of Italy

Paraguay at a glance

Capital: Asunción
Population: 6,995,655 (July 2009 estimate)
Government Type: Constitutional Republic
GDP: $28.89 billion
Imports: $9.172 billion
Exports: $8.152 billion

Paraguay’s population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region, most within 160 kilometers (100 mi.) of Asunción, the capital and largest city. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population. Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in South America. About 95% of the people are of mixed Spanish and Guarani Indian descent. Little trace is left of the original Guarani culture except the language, which is understood by 95% of the population. About 90% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Brazilians, Argentines, Germans, Arabs, Koreans, Chinese, and Japanese are among those who have settled in Paraguay, with Brazilians representing the largest number.

Paraguay’s highly centralized government was fundamentally changed by the 1992 constitution, which provides for a division of powers. The president, popularly elected for a 5-year term, appoints a cabinet. The bicameral Congress consists of an 80-member Chamber of Deputies and a 45-member Senate, elected concurrently with the president through a proportional representation system. Deputies are elected by department and senators are elected nationwide. Paraguay’s highest judicial body is the Supreme Court. A popularly elected governor heads each of Paraguay’s 17 departments.

U.S.-Paraguayan Relations

The United States and Paraguay have an extensive relationship at the government, business, and personal level. Paraguay is a partner in hemispheric initiatives to improve counter-narcotics cooperation and combat money laundering, trafficking in persons, and other illicit cross-border activities, and to protect intellectual property rights. The United States looks to Paraguay, which has tropical forest and riverine resources, to engage in hemispheric efforts to ensure sustainable development. The United States and Paraguay also cooperate in a variety of international organizations.

Paraguay has taken significant steps to combat illegal activity in the tri-border area it shares with Argentina and Brazil. It participates in anti-terrorism programs and fora, including the Three Plus One Security Dialogue, with its neighbors and the United States.

The United States has played roles in defending Paraguay’s democratic institutions, in helping resolve the April 1996 crisis, and in ensuring that the March 1999 change of government took place without further bloodshed.

Bilateral trade with the United States has increased over the last 7 years, after a steady decline before that due to a long-term recession of the Paraguayan economy. Although U.S. imports from Paraguay were only $78.4 million in 2008, up from $68 million in 2007, U.S. exports to Paraguay in 2008 were $1.6 billion, up from $1.2 billion in 2007, according to U.S. Customs data. (Not all exports and imports are reflected in Paraguayan Government data.) More than a dozen U.S. multinational firms have subsidiaries in Paraguay. These include firms in the computer, agro-industrial, telecom, banking, and other service industries. Some 75 U.S. businesses have agents or representatives in Paraguay, and more than 3,000 U.S. citizens reside in the country.

The U.S. Government has assisted Paraguayan development since 1942. In 2006, Paraguay signed a $34.9 million Millennium Challenge Corporation (MCC) Threshold Country Program (TCP) with the United States focused on supporting Paraguay’s effort to combat impunity and informality. A second MCC Threshold program for $30 million was approved in July 2009. Also in 2006, Paraguay signed and ratified an agreement with the United States under the Tropical Forest Conservation Act that provides Paraguay with $7.4 million in relief and the zeroing out of its remaining bilateral debt in exchange for the Paraguayan Government’s commitment to conserve and restore tropical forests in the southeastern region of the country. Separately, the U.S. Agency for International Development (USAID) supports a variety of programs to strengthen Paraguay’s democratic institutions in the areas of civil society, local government and decentralization, national reform of the state, rule-of-law, and anti-corruption. Other important areas of intervention are economic growth, the environment and public health. The total amount of the program was approximately $17.8 million in fiscal year 2009.

Foreign Relations

Paraguay is a member of the United Nations and several of its specialized agencies. It also belongs to the Organization of American States, the Latin American Integration Association (ALADI), the Rio Group, INTERPOL, and MERCOSUR (the Southern Cone Common Market). Paraguay is closely aligned with its MERCOSUR partners on many political, economic, and social issues. It is the only country in South America that recognizes Taiwan and not the People’s Republic of China.

Economy

Paraguay has a predominantly agricultural economy, with a struggling commercial sector. There is a large subsistence sector, including sizable urban unemployment and underemployment, and a large underground re-export sector. The country has vast hydroelectric resources, including the world’s second-largest hydroelectric generation facility, built and operated jointly with Brazil (Itaipu Dam), but it lacks significant mineral or petroleum resources. The government welcomes foreign investment in principle and accords national treatment to foreign investors, but widespread corruption is a deterrent. The economy is dependent on exports of soybeans, cotton, grains, cattle, timber, and sugar, as well as electricity generation, and to a decreasing degree on re-exporting to Brazil and Argentina products made elsewhere. It is, therefore, vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies.

Paraguay’s real GDP in 2008 of $16.1 billion (in 2000 dollars) represented an increase of 26% from $12.8 billion in 2007. The per capita GDP rose to $2,593 in current U.S. dollar terms in 2008, up from $1,928 in 2007 and $1,793 in 1996. Given the importance of the informal sector, accurate economic measures are difficult to obtain. In 2007, Paraguay had a current account deficit of $73 million, derived from a small deficit in the trade of goods, but accompanied by a significant increase in agriculture exports and services (electricity), reflecting favorable market prices for agricultural commodities and exports of electricity from the hydroelectric dams. In July 2009, official foreign exchange reserves rose to $3.2 billion, an increase of 33% over 2008, and over five times the figure for 2002 ($582.8 million). Foreign official debt rose slightly from $2.1 billion in 2007 to $2.2 billion in 2008. Inflation in 2008 was 7.5%, up from 6.0% in 2007, but down from 12.5% in 2006.

Agricultural activities, most of which are for export, represent about 20% of GDP and employ about one quarter of the work force. More than 250,000 families depend on subsistence farming activities and maintain marginal ties to the larger productive sector of the economy. In addition to the commercial sector with retail, banking, and professional services, there is significant activity involving the import of goods from Asia and the United States for re-export to neighboring countries. The underground economy, which is not included in the national accounts, may be almost twice the size of the formal economy in size, although greater enforcement efforts by the tax administration and customs are having an impact.

Best Export Opportunities

Paraguay’s potential in the short term reflects its immediate need to improve its infrastructure, become more competitive within MERCOSUR, increase its agricultural export-based production, and utilize its excess electricity for industrial programs. The country is poised to become an important player in the production of biofuels, in particular sugar-cane based ethanol. Although current production is mostly to satisfy domestic needs, the sector has the capacity and expertise to expand rapidly to meet higher export volumes for new markets.

Paraguay offers special incentives to promote its maquila assembly and distribution operations, and it enjoys lower taxes and labor costs than the other MERCOSUR countries.

Detailed information on prospects in the Paraguayan market can be found in the Best Export Opportunities section of the Paraguay country profile.

Transparency of the Regulatory System

The Civil Code and Law 1.034/83 regulate business and industrial activities in Paraguay. Under the existing framework, the Ministry of Industry and Commerce is charged with overall industrial policy coordination; the Ministry of Finance handles tax and fiscal policy; and the Central Bank is the principal coordinator of monetary policy. For further information on the regulatory system and property rights in Paraguay, see the Trade Data section of the Official Export Guide’s Paraguay country profile.

Transportation

The only U.S. air carrier that served Paraguay with daily passenger flights to Asunción suspended its operations in Paraguay in 2006. Another foreign airline that reportedly handled 60% of air travel in Latin America suspended many of its air routes including Paraguay due to financial problems. These actions have seriously hampered air travel to and from Paraguay. As of February 2009, Asunción receives an average of 11–12 international flights per day. Flights arrive from Buenos Aires, Corrientes, and Resistencia (Argentina); Rio de Janeiro and Sao Paulo (Brazil); Lima (Peru); Santiago (Chile); and Santa Cruz (Bolivia). One airline offers daily in-country air service between Asunción and Ciudad del Este.

Airlines that serve Asunción are Aerolineas Argentinas, PLUNA, TACA, Aerosur, and TAM. Many local and foreign bus companies offer in-country and international service to the major cities in Paraguay and neighboring countries. Asunción’s taxi network is reasonably well developed, but some taxis are in poor repair and most lack air conditioning. Motor vehicle rental service is available with or without driver. The urban bus transportation system is inadequate for business.

Paraguay has a well-developed river network and is working with its neighbors to improve the Paraguay-Parana waterway. Paraguay has a road network of approximately 19,591 miles, of which only 2,867 miles are paved. The Ministry of Public Works plans to spend over US$ 1,550 million on new roadwork from 2008 to 2013.

Map of Paraguay

South Africa at a glance

Capital: Pretoria
Population: 49.052 million
Government Type: Republic
GDP: $489.7 billion
Imports: $87.3 billion f.o.b.
Exports: $81.47 billion f.o.b.

South Africa’s post-apartheid governments have made substantial progress in consolidating the nation’s peaceful transition to a multiracial democracy. Programs to improve the delivery of social services to the majority of the population are underway. Access to better opportunities in education and business is becoming more widespread. Nevertheless, transforming South Africa’s society to remove the legacy of apartheid will be a long-term process requiring the sustained commitment of the leaders and people of the nation’s disparate groups.

U.S.-South African Relations

The United States has maintained an official presence in South Africa since 1799, when an American consulate was opened in Cape Town. From the 1970s through the early 1990s, U.S.-South Africa relations were severely affected by South Africa’s racial policies. However, since the abolition of apartheid and the elections of April 1994, the United States and South Africa have enjoyed a broad and mutually beneficial trade and investment relationship. U.S.-South African engagement on trade and investment issues takes place both bilaterally and via U.S. discussions and negotiations with the Southern African Customs Union (SACU), of which South Africa is a member.

Although differences of position between the two governments, mainly on political issues, do exist, these do not impede cooperation on a broad range of key issues. Bilateral cooperation in counter-terrorism, fighting HIV/AIDS, and military relations has been particularly positive. Through the U.S. Agency for International Development (USAID), the United States also provides assistance to South Africa to help it meet its development goals. In 2008, for example, South Africa received $3.35 million in trade capacity building assistance from the United States. The largest portion of this funding was administered by USAID and focused on improving customs and trade facilitation, financial sector development, and governance.

Foreign Relations

After South Africa held its first nonracial election in April 1994, most sanctions imposed by the international community in opposition to the system of apartheid were lifted. On June 1, 1994, South Africa rejoined the Commonwealth, and on June 23, 1994, the UN General Assembly accepted its credentials. South Africa served as the African Union’s (AU) first president from July 2003 to July 2004.

South Africa has become a leading international actor. Its principal foreign policy objective is to promote the economic, political, and cultural regeneration of Africa, through the New Partnership for African Development (NEPAD); to promote the peaceful resolution of conflict in Africa; and to use multilateral bodies to insure that developing countries’ voices are heard on international issues. South Africa has played a key role in seeking an end to various conflicts and political crises on the African continent, including in Burundi, the Democratic Republic of the Congo, and Comoros. South Africa has pursued “quiet diplomacy” in its approach to the crisis in Zimbabwe.

Economy

South Africa has made great progress in dismantling its old economic system, which was based on import substitution, high tariffs and subsidies, anticompetitive behavior, and extensive government intervention in the economy. Macroeconomic management has been strong over the past 15 years, with reduced levels of public debt, generally low inflation, a progression from a fiscal deficit to a fiscal surplus, and a consistently positive rate of economic growth until the beginning of the global economic crisis. The government has sought to liberalize trade and enhance international competitiveness by lowering tariffs, abolishing most import controls, undertaking some privatization, and reforming the regulatory environment.

South Africa now operates under a two-tiered economy, with tier one rivaling developed countries and the other with only the most basic infrastructure. It is a productive and industrialized economy that exhibits many characteristics associated with developing countries, such as a division of labor between formal and informal sectors and uneven distribution of wealth and income. The formal sector, based on mining, manufacturing, services, and agriculture, is well developed.

South Africa’s budgetary reforms, such as the Medium-Term Expenditure Framework and the Public Finance Management Act — which aims at better reporting and auditing and increased accountability — and the structural changes to its monetary policy framework, including inflation targeting, have created transparency and predictability and are widely acclaimed. Trade liberalization also has progressed substantially since the early 1990s. South Africa reduced its import-weighted average tariff rate from more than 20% in 1994 to 7% in 2008. These efforts, together with South Africa’s implementation of its World Trade Organization (WTO) obligations and its constructive role in launching the Doha Development Round, show South Africa’s acceptance of free market principles.

Although South Africa’s economy is in many areas highly developed, the exclusionary nature of apartheid and distortions caused in part by the country’s international isolation until the 1990s have left major weaknesses. The economy is in a process of transition as the government seeks to address remaining inequities, stimulate growth, and create jobs. Business, meanwhile, is becoming more integrated into the international system, and foreign investment has increased.

Best Export Opportunities

Opportunities for U.S. exporters in South Africa reflect the growth of its consumer base and its efforts to upgrade and develop its infrastructure to match and further fuel its economic growth. Factors benefiting U.S. exporters include a sophisticated banking sector, wide-spread infrastructure improvements, and the fact that U.S.-branded goods continue to gain market share throughout South Africa. Additionally, several South African government-owned entities, including Eskom (electricity) and Transnet (transportation), have formalized expenditure plans for more than $50 billion over the next 5 years.

South Africa’s national retail consumption patterns reflect the disparate nature of the economic status of its citizens, ranging from basic needs such as condensed milk to high-end durable consumer goods like SUVs. Such a broad economic base has given U.S. exporters ample opportunities to enter the South African market in recent years. In 2007, U.S. exports to South Africa rose 23% from the year prior, and in the first 6 months of 2008, U.S. exports climbed another 28% compared to the same period in 2007.

Furthermore, South Africa’s relatively stable economy and the growth of the middle class has led to increased spending power, thus increasing the demand for products in a variety of sectors ranging from everything to high-tech agricultural equipment to cosmetics. The 2010 FIFA World Cup Soccer tournament will be held in South Africa and is expected to result in upwards of $2 billion in improvements and investments in areas such as sporting facilities, airport and ground support equipment, building materials and supplies, and security and safety equipment.

Official Export Guide subscribers can learn more on prospects in the South African market by consulting the Best Export Opportunities section of the South Africa country profile.

Banking & Foreign Investment

South Africa has a sophisticated financial structure with a large and active stock exchange that ranks 19th in the world in terms of total market capitalization. The South African Reserve Bank (SARB) performs all central banking functions. The SARB is independent and operates in much the same way as Western central banks, influencing interest rates and controlling liquidity through its interest rates on funds provided to private-sector banks. Quantitative credit controls and administrative control of deposit and lending rates have largely disappeared. South African banks adhere to the Bank of International Standards core standards.

The South African government has taken steps to reduce remaining foreign exchange controls, which apply only to residents. Private citizens are now allowed a one-time investment of up to 2,000,000 rand in offshore accounts. During 2007, the shareholding threshold (the percentage of shareholding that must be South African) for foreign direct investment outside Africa was lowered from 50% to 25% to enable South African companies to engage in strategic international partnerships. In addition, South African companies involved in international trade were permitted to operate a single Customer Foreign Currency (CFC) account for all international transactions. Permission was also granted to the Johannesburg Securities Exchange (JSE) to establish a rand currency futures market, in order to deepen South Africa’s financial markets and increase liquidity in the local foreign exchange market.

The government has also sought to reduce its role in the economy and to promote private-sector investment. It has significantly reduced export subsidies, loosened exchange controls, cut the secondary tax on corporate dividends, and improved enforcement of intellectual property laws. A competition law was passed and became effective on September 1, 1999. A U.S.-South Africa bilateral tax treaty went into effect on January 1, 1998, and a bilateral trade and investment framework agreement was signed in February 1999.

In 1993, South Africa and the United States signed an agreement to facilitate Overseas Private Investment Corporation (OPIC) programs. OPIC announced in June 2008 that it will provide up to $250 million to banks and financial institutions to expand its lending to small businesses. The U.S. Trade and Development Agency (USTDA) has also been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for U.S. businesses.

More detailed information can be found in the Trade Finance and Investment sections of the Official Export Guide’s South Africa country profile.

Transportation

South Africa’s transportation infrastructure is well-developed and supports both domestic and regional needs, but it is beginning to face capacity constraints. Major bottlenecks occurred due to the lack of investment in infrastructure maintenance and expansion during the 1990s. At the time, the government was considering plans to privatize some of its state-run entities, and the lack of infrastructure investment is blamed on stalled privatization plans. State-controlled transport logistics group Transnet owns and operates all of the major ports and railway lines in South Africa. Transnet recently launched a 5-year R80 billion (US$10 billion) infrastructure expansion program to increase port and rail capacity to meet growing demand. The global economic slowdown has provided Transnet with some breathing space as it implements these expansion plans. Transnet is expanding capacity at the existing Port of Cape Town and the Port of Durban, the busiest port in Africa. Transnet is also developing a new deep-sea port at Coega in the Eastern Cape Province, which will be able to accommodate new-generation containerized cargo.

The Airports Company of South Africa (ACSA) is in the process of upgrading and expanding capacity at the existing international airports in Johannesburg and Cape Town in preparation for the 2010 FIFA World Cup. OR Tambo International Airport in Johannesburg serves as a major hub for flights to other southern African countries. A new international airport and freight and agricultural trade zone is also being developed in Durban for launch in 2010.

Contact information for South African seaports and airports can be found on the Official Export Guide Web site.

Map of South Africa

The Philippines at a glance

Capital: Manila
Population: 97.976 million
Government Type: Republic
GDP: $320.6 billion
Imports: $58 billion f.o.b.
Exports: $49 billion f.o.b.

The majority of Philippine people are descendants of Indonesians and Malaysians. The largest ethnic minority now is mainland Asian (called Chinese). After the mainland Asians, Americans and Spaniards constitute the next largest minorities in the country.

More than 90% of the people are Christian as a result of the nearly 400 years of Spanish and American rule. The major non-Hispanicized groups are the Muslim population, concentrated in the Sulu Archipelago and in central and western Mindanao, and the mountain aboriginal groups of northern Luzon. Small forest tribes still live in the more remote areas of Mindanao.

About 87 languages and dialects are spoken, most belonging to the Malay-Polynesian linguistic family. Of these, eight are the first languages of more than 85% of the population. The four principal indigenous languages are Cebuano, spoken in the Visayas; Tagalog, predominant in the area around Manila; Ilocano, spoken in northern Luzon; and Maranao and related languages, spoken in Mindanao. Since 1939, in an effort to develop national unity, the government has promoted the use of the national language, Pilipino, which is based on Tagalog. Pilipino is taught in all schools and is gaining widespread acceptance across the archipelago. Nearly all professionals, academics, and government workers speak some English. The Philippines has one of the highest literacy rates in the developing world; about 93% of the population 10 years of age and older are literate.

The Philippines has a representative democracy modeled on the U.S. system. The 1987 constitution, adopted during the Aquino administration, reestablished a presidential system of government with a bicameral legislature and an independent judiciary. The president is limited to one six-year term. Provision also was made in the constitution for autonomous regions in Muslim areas of Mindanao and in the Cordillera region of northern Luzon, where many aboriginal tribes still live.

U.S.-Philippine Relations

U.S.-Philippine relations are based on shared history and commitment to democratic principles, as well as on economic ties. The Philippines modeled its governmental institutions on those of the United States and continues to share a commitment to democracy and human rights. There are an estimated four million Americans of Philippine ancestry in the United States, and more than 250,000 American citizens in the Philippines.

Until November 1992, pursuant to the 1947 Military Bases Agreement, the United States maintained and operated military bases in the Philippines. In 1991, the Philippine Senate rejected the bases treaty, and the last U.S. forces departed in 1992. The subsequent era has seen U.S.-Philippine relations improved and broadened, with a prominent focus on economic and commercial ties while maintaining the importance of the security dimension. U.S. investment continues to play an important role in the Philippine economy, and a strong security relationship rests on the 1952 U.S.-Philippines Mutual Defense Treaty (MDT).

President Arroyo has repeatedly stressed the close friendship between the Philippines and the United States and her desire to expand bilateral ties further, and she has lent strong support to the war on terrorism. In October 2003, the United States designated the Philippines as a Major Non-NATO Ally. U.S. and Philippine agencies have cooperated to bring charges against numerous terrorists, to implement the countries’ extradition treaty, and to train thousands of Filipino law enforcement officers.

In FY 2008, the U.S. Government — working closely with the Philippine Government, civil society, the private sector, and other donors — provided $132 million in grant funds to support a more peaceful and prosperous Philippines. About 60% of economic assistance resources are targeted for Mindanao, for programs that promote economic growth, mitigate conflict, and promote peace and security. The United States supports programs that promote good governance at the national and local levels, improve electoral systems, promote rule of law, help address constraints to trade and investment, improve revenue collection/administration and fiscal transparency, and enhance the ability of military and civilian law enforcement agencies to maintain peace and security.

In 2006, the Millennium Challenge Corporation (MCC) granted $21 million to the Philippines for a 2-year Threshold Program targeted at addressing corruption in revenue administration and improving the capabilities of the Office of the Ombudsman. Performance under this Threshold Program contributed to the MCC’s awarding the Philippines Compact eligibility status in March 2008 and retention of such status in December 2008.

Nearly 400,000 Americans visit the Philippines each year. Providing government services to U.S. and other citizens constitutes an important aspect of the bilateral relationship. Those services include veterans’ affairs, social security, and consular operations. Many people-to-people programs exist between the United States and the Philippines, including Fulbright, International Visitors, and Aquino Fellowship exchange programs, as well as the U.S. Peace Corps.

The Philippines ranks as the United States’ 31st-largest export market and its 37th-largest supplier. Key exports to the United States are semiconductor devices and computer peripherals, automobile parts, electric machinery, textiles and garments, wheat and animal feeds, and coconut oil. In addition to other goods, the Philippines imports raw and semi-processed materials for the manufacture of semiconductors, electronics and electrical machinery, transport equipment, and cereals and cereal preparations.

The U.S. Trade Representative removed the Philippines from its Special 301 Priority Watch List in 2006, reflecting improvement in its enforcement of intellectual property rights (IPR) protection. It has maintained the Philippines on the Special 301 Watch List through 2009. However, sustained effort and continuing progress on key IPR issues will be essential to maintain this status.

Foreign Relations

The Philippines is a member of the Association of Southeast Asian Nations (ASEAN), the ASEAN Regional Forum (ARF), and the Asia-Pacific Economic Cooperation (APEC) forum. The country is also a member of the United Nations and some of its specialized agencies.

The fundamental Philippine attachment to democracy and human rights is also reflected in its foreign policy. Philippine soldiers and police have participated in a number of multilateral civilian police and peacekeeping operations, and a Philippine Army general served as the first commander of the UN peacekeeping operation in East Timor. The Philippines currently has peacekeepers deployed in eight UN peacekeeping operations worldwide. The Philippines also participated in Operation Iraqi Freedom, deploying some 50 troops to Iraq in 2003. The Philippine Government also has been active in efforts to reduce tensions among rival claimants to the territories and waters of the resource-rich South China Sea.

Economy

Since the end of World War II, the Philippine economy has been on an unfortunate trajectory, going from one of the richest countries in Asia (following Japan) to one of the poorest. Years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation and resulted in macroeconomic instability. During the 1990s, the Philippine Government introduced a broad range of economic reforms designed to spur business growth and foreign investment. As a result, the Philippines saw a period of higher growth, although the Asian financial crisis in 1997 slowed Philippine economic development once again. Long-term economic growth remains threatened by crumbling infrastructure and education systems, as well as trade and investment barriers. International competitiveness rankings have slipped.

The service sector contributes more than half of overall Philippine economic output, followed by industry (about a third), and agriculture (less than 20%). Important industries include food processing, textiles and apparel, electronics, automobile parts, and business process outsourcing. Most industries are concentrated in the urban areas around metropolitan Manila. Mining also has great potential in the Philippines, which possesses reserves of chromate, nickel, and copper. Significant natural gas finds off the islands of Palawan have added to the country’s substantial geothermal, hydro, and coal energy reserves.

The Philippine economy seems comparatively well-equipped to weather the global financial crisis in the short term, partly as a result of the efforts over the past few years to control the deficit, bring down debt ratios, and adopt internationally accepted banking sector capital adequacy standards. The Philippine banking sector — which comprises 80% of total financial system resources — has limited direct exposure to distressed financial institutions overseas. Conservative regulatory policies, including the prohibition of investments in structured products, shielded the insurance sector from exposure to distressed financial firms. The impact of external shocks to economic growth, poverty alleviation, employment, remittances, credit availability, and overall investment prospects is a concern.

Best Export Opportunities

Opportunities exist for U.S. exporters in the Philippines. Although the building sector has slowed, there is still a demand for green building products and supplies for infrastructure projects such as airports and roads. The Philippine government has committed US$43 million for a potable water supply system, which will increase the demand for treatment facilities and water supply systems. The government is also investing in the upgrade of power facilities in the country.

New sales opportunities are being created by an ongoing expansion of modern large-scale supermarket chains, continued interest in U.S. food trends, and growing demand for convenience. Also, about 15% of the population currently has sufficient income to regularly purchase imported food items, which suggests major long-term import growth potential as income distribution improves. More details on prospects in the Philippine market can be found in the Best Export Opportunities section of the Philippines country profile.

Investment and Regulatory Conditions

The United States traditionally has been the Philippines’ largest foreign investor, with close to $6.7 billion in total foreign direct investment as of the end of 2007. Since the late 1980s, the Philippines has committed itself to reforms that encourage foreign investment as a basis for economic development, subject to certain guidelines and restrictions in specified areas. Under President Ramos, the Philippines expanded reforms, opening the power generation and telecommunications sectors to foreign investment, as well as securing ratification of the Uruguay Round agreement and membership in the World Trade Organization. President Arroyo’s administration has generally continued such reforms despite opposition from vested interests and “nationalist” blocs. A major obstacle has been and will continue to be constitutional restrictions on, among others, foreign ownership of land and public utilities, which limits maximum ownership to 40%.

Potential foreign investors remain concerned about law and order, inadequate infrastructure, policy and regulatory instability, and governance issues. While trade liberalization presents significant opportunities, intensifying global competition and the emergence of low-wage export economies also pose challenges. Competition from other Southeast Asian countries and from China for investment underlines the need for sustained progress on structural reforms to remove bottlenecks to growth, to lower costs of doing business, and to promote good public and private sector governance. Many U.S. investors find business registration, customs, immigration, and visa procedures burdensome and a source of frustration. The government has been working to reinvigorate its anti-corruption drive, and the Office of the Ombudsman has reported improved conviction rates. Nevertheless, its slipping anti-corruption ranking indicates that the Philippines’ efforts are lagging and that more needs to be done to improve international perception of its anti-corruption campaign — an effort that will require strong political will and significantly greater financial and human resources.

More detailed information on intellectual property protection and the  transparency of the regulatory system can be found in the Trade Data section of the Official Export Guide’s Philippine country profile.

New E-Customs Project

The Philippine Bureau of Customs (BOC) 2005 Customs Project will streamline imports and exports processing and improve trade facilitation with e2m (electronic to mobile) application modules. To be eligible to transact in the e2m Customs environment, importers/brokers must have valid and active Client Customs Number (CCN) from the CPRS, bank account information and bank reference numbers of their Authorized Agent Banks (AABs) for electronic payment of customs duties and taxes (no cash, no checks), appropriate licenses/clearance/permits from concerned issuing agencies for their importation, applicable non-cash payment instruments (TDM, TEC and IED) and supporting documents in hardcopies.

The following items feature e2m application modules that are currently being implemented at the Philippine Customs Bureau through the BOC Customs Project: Client Profiles Registration System (CPRS); Payment Application System (PASS5); Imports and Assessment System (IAS). IAS is now in effect at the Port of Batangas, the Port of Limay, and the sub-port of Mariveles. On August 17, 2009, the IAS was launched at the Manila International Container Port. The Manila Port is scheduled to implement the IAS on September 1 of this year. A notice on implementation of BOC e-customs contains specifics regarding the program.

Transportation

The Philippines has about 85 airports, but only a few meet U.S. or international aviation standards. The country’s major airport, the Ninoy Aquino International Airport (NAIA), currently operates two terminals in Manila, one of which is being used exclusively by flag carrier Philippine Airlines for its domestic and international routes.

In 2007, the U.S. Federal Aviation Administration (FAA) downgraded the Philippines’ aviation safety oversight category from Category 1 to Category 2. According to the FAA, “Category 2 indicates that the FAA has assessed the Government of the Philippines’ Civil Aviation Authority as not being in compliance with International Civil Aviation Organization (ICAO) safety standards for the oversight of Philippine air carrier operations. While in Category 2, Philippine air carriers will be permitted to continue current operations to the United States, but will be under heightened FAA surveillance.”

Many major international airlines fly between Manila and the United States on a regular basis, but typically they have layovers or stopovers before the final destination.

Maritime transport is a major conduit for moving goods and people. Inter-island vessels or ferries serve major island routes. Being an archipelago, the Philippines has more than 1,000 ports, about a dozen of which serve as cargo and/or passenger terminals. Travel by boat or ferry tends to take longer and is less convenient than air travel, but there are areas in the Philippines that can only be reached through this mode of transport. Roll-on, roll-off vessels (RO-RO) carrying passengers and cargo are also available to serve inter-island travel and commerce.

Contact information for airports and seaports of the Philippines can be found on the Official Export Guide Web site.

For land travel, the road network varies tremendously. Distances that might be covered quickly in the United States typically take much longer in the Philippines, due to poor road quality and congestion.

Buses, elevated rail transport such as the Light Railway Transit (LRT) and the Metro Rail Transit (MRT) and “jeepneys” ply the major and minor routes within Metro Manila and serve the general commuting public. Shuttle services (locally known as FX taxis) that bring passengers to and from work are also available. In most provinces and major cities outside Manila, buses, jeepneys and tricycles are the more typical modes of land transport. Overcrowding is not uncommon.

Map of the Philippines

Lithuania at a glance

Capital: Vilnius
Population: 3,555,179 (July 2009 est.)
Government Type: Parliamentary Democracy
GDP: $63.25 billion
Imports: $30.26 billion f.o.b.
Exports: $23.48 billion f.o.b.

Lithuania, a member of the European Union, is the largest and most populous of the Baltic states. The country is situated on the eastern shore of the Baltic Sea, in northeastern Europe. It is bordered by Latvia, Belarus, Poland and Kaliningrad, a territory of Russia. It has 60 miles of coastline, of which 24 miles face the open Baltic Sea.

Lithuanians are neither Slavic nor Germanic, although a union with Poland and colonization by Germans and Russians has influenced the culture and religious beliefs of the nation. This highly literate society places strong emphasis upon education, which is free and compulsory until age 16. Most Lithuanians and ethnic Poles belong to the Roman Catholic Church; the Russian Orthodox Church is the largest non-Catholic denomination.

Lithuania is a multi-party, parliamentary democracy. The president, who is elected directly for 5 years, is head of state and commander in chief overseeing foreign and security policy. The president nominates the prime minister and his cabinet and a number of other top civil servants. The Seimas, a unicameral parliament, has 141 members who are elected for a 4-year term. About half of the members are elected in single constituencies, and the other half are elected in a nationwide vote by party lists. A party must receive at least 5% of the national vote to be represented in the Seimas.

U.S.-Lithuanian Relations

The United States established diplomatic relations with Lithuania on July 28, 1922. The Soviet invasion forced the closure of the Legation to Lithuania on September 5, 1940, but Lithuanian representation in the United States continued uninterrupted. The United States never recognized the forcible incorporation of Lithuania into the U.S.S.R. and views the present Government of Lithuania as a legal continuation of the interwar republic. In 2007, the United States and Lithuania celebrated 85 years of continuous diplomatic relations. Lithuania has enjoyed most-favored-nation treatment with the United States since December 1991.

Since 1992, the United States has committed more than $100 million in Lithuania to economic and political transformation and to humanitarian needs. The United States and Lithuania signed an agreement on bilateral trade and intellectual property protection in 1994 and a bilateral investment treaty in 1997. In 1998, the United States signed a “Charter of Partnership” with Lithuania and the other Baltic countries establishing bilateral working groups focused on improving regional security, defense, and economic issues. Since 2004, the United States deals with Lithuania on regional security and defense matters primarily through NATO fora. In November 2008 Lithuania joined the Visa Waiver Program, which allows Lithuanians short-term travel to the United States visa-free.

Foreign Relations

Lithuania became a member of the United Nations (UN) on September 17, 1991, and is a signatory to a number of UN organizations and other international agreements. It is also a member of the Organization for Security and Cooperation in Europe, the North Atlantic Coordinating Council, and the Council of Europe. Lithuania gained membership in the World Trade Organization on May 31, 2001. In November 2002, Lithuania was invited to join the North Atlantic Treaty Organization (NATO), and it officially became a member on March 29, 2004. On May 1 of that same year, Lithuania joined the European Union.

Lithuania’s foreign policy is based primarily on protecting itself and the Eastern European region from what it perceives as an expansionist Russia. Lithuania uses its membership in both NATO and the EU to promote security and democracy in Eastern Europe. It strongly advocates NATO membership for both Georgia and Ukraine and increased EU political and economic engagement with the region as a whole, including its neighbor Belarus. Lithuania maintains foreign relations with 98 countries through a network of 42 embassies and 35 honorary consuls. It has seven diplomatic missions to international organizations and one special mission to Afghanistan.

Lithuania’s liberal “zero-option” citizenship law has substantially erased tensions with its neighbors. Its suspension of two strongly ethnic Polish district councils on charges of blocking reform or disloyalty during the August 1991 coup cooled relations with Poland, but bilateral cooperation markedly increased with the holding of elections in those districts and the signing of a bilateral friendship treaty in 1994. Relations with Poland are now among the closest enjoyed by Lithuania. Although a similar bilateral friendship agreement was signed with Belarus in 1995, Lithuania has joined the United States and other European nations in urging the Government of Belarus to adopt much-needed democratic and economic reforms. President Adamkus was instrumental in brokering a peaceful resolution to the electoral challenges in Ukraine in 2004, and Lithuania plays an important leadership role in promoting democracy throughout the region.

Economy

In the second half of the 20th century, the Lithuanian economy underwent fundamental transformations. The Soviet occupation of 1940 brought Lithuania intensive industrialization and economic integration into the U.S.S.R., although the level of technology and state concern for environmental, health, and labor issues lagged far behind Western standards. Urbanization increased from 39% in 1959 to 68% in 1989. From 1949 to 1952 the Soviets abolished private ownership in agriculture, establishing collective and state farms. Production declined and did not reach pre-war levels until the early 1960s. The intensification of agricultural production through chemical use and mechanization eventually doubled production but created additional ecological problems.

The disadvantages of a centrally planned economy became evident after the collapse of the U.S.S.R. in 1991, when Lithuania began its transition to a market economy. Owing to the availability of inexpensive natural resources, the industrial sector had become excessively energy intensive, inefficient in its utilization of those resources, and incapable of manufacturing internationally competitive products. More than 90% of Lithuania’s trade was with the rest of the U.S.S.R., which supplied Lithuanian industry with raw materials for production and a market for its outputs. The need to sever these trading links and to reduce the inefficient industrial sector led to serious economic difficulties.

The process of privatization and the development of new companies slowly moved Lithuania from a command economy toward a free market. By 1998, the economy had survived the early years of uncertainty and several setbacks, including a banking crisis, and seemed poised for solid growth. However, the collapse of the Russian ruble in August 1998 shocked the economy into negative growth and forced the reorientation of trade from Russia toward the West. In 1997, exports to former Soviet states were 45% of total Lithuanian exports. In 2006, exports to the East (the Commonwealth of Independent States, or CIS) were only 21% of the total, while exports to the EU-25 were 63%, and to the United States, 4.3%.

At the end of 2008, Lithuania had accumulated foreign direct investments (FDI) of $12.1 billion, with U.S. investments amounting to $314 million, or 2.6% of FDI. The current account deficit in the fourth quarter of 2008 was 3.8% of GDP. Lithuania has privatized nearly all formerly state-owned enterprises. More than 79% of the economy’s output is generated by the private sector. The share of employees in the private sector exceeds 65%. The Government of Lithuania completed banking sector privatization in 2001, with 89% of this sector controlled by foreign — mainly Scandinavian — capital. The government has also completed privatization of the national gas and power companies, with “Lithuanian Railways” and Lithuanian Post remaining state-owned. Telecommunications have improved greatly since independence as a result of heavy investment.

After joining the EU in 2004, Lithuania saw its economy boom, reaching a record 8.9% GDP growth in 2007. Strong growth continued through much of 2008, but a weak fourth quarter, as financial stress spread through Europe, slowed growth to 3.0% for the year. In 2009, the global financial crisis hit the Lithuanian economy hard. In the first quarter, the economy shrank by 13.6% compared to 2008, which was the worst performance since comparable records began in 1995. Lithuania’s GDP is forecast to drop by 18.2% by year’s end, with another 4.3% decline projected in 2010. In the first quarter of 2009 unemployment reached 11.9%; it is predicted to rise to 13.4% in 2010. Overall salaries of Lithuanians are likely to fall by 12.3% in 2009 and 5.2% in 2010. Growing unemployment and lower income contributed to some limited social unrest in early 2009, when thousands of Lithuanians held a protest around the parliament building, demanding action from the government to save the economy. To do so, the government approved heavy budget cuts and passed a U.S. $2.3 billion stimulus plan.

Lithuania pegged its national currency, the lita, to the euro on February 2, 2002, at the rate of LTL 3.4528 to EUR 1. The initial target date for Lithuania to adopt the euro, January 1, 2007, was postponed due to the high inflation rate in 2006. Some commentators feel that euro adoption is unlikely before 2013. Temporary spikes from the necessary excise tax increases and longer-term convergence forces will probably keep inflation above the Maastricht reference value.

Best Export Opportunities

U.S. exporters have several opportunities in the Lithuanian market. Building materials and computer hardware and software offer prospects to U.S. suppliers.  In addition, there may be opportunities in the power and energy sector and pollution control.

Lithuania is a net importer of food products. In 2008, major U.S. food exports to Lithuania included dairy products and eggs, fish, shellfish, and nuts. Lithuania prohibits imports of American beef and chicken due to a dispute between the United States and the EU over technical sanitation and health issues. More information on prospects in the Lithuanian market can be found in the Best Export Opportunities Section of the Lithuanian country profile.

Transparency of the Regulatory System

The legal system of the Republic of Lithuania recognizes generally accepted principles of the legal regulation of investments and subjects both Lithuanian and foreign investors to equal business conditions. Red tape remains a problem. Local business leaders complain that bureaucratic procedures often are not user-friendly and that the interpretation of regulations is too often inconsistent and unclear. Businesses and private individuals complain of corruption, including in the process of awarding government contracts and the granting of licenses and permits. More detailed information on the transparency of the regulatory system and intellectual property rights can be found in the Trade Data section of the Official Export Guide’s Lithuania country profile.

Transportation

The transportation infrastructure inherited from the Soviet period is adequate and has been generally well maintained since independence. Lithuania has one ice-free seaport with ferry services to German, Swedish, and Danish ports. There are operating commercial airports with scheduled international services at Vilnius, Kaunas, and Klaipeda. The road system is good.

Klaipeda State Seaport is one of the largest transport hubs in Lithuania.  It is the northernmost ice-free port on the eastern coast of the Baltic Sea and handles container, Ro/Ro and oil products. 

Vilnius International Airport is located in the country’s capital and has good cargo storage facilities. There are direct flights from some Western European cities to Lithuania. As there is no direct commercial air service to the United States by carriers registered in Lithuania, the U.S. Federal Aviation Administration (FAA) has not assessed Lithuania’s Civil Aviation Authority for compliance with International Civil Aviation Organization (ICAO) aviation safety standards.

Within Lithuania, travel by car is generally the fastest and most convenient mode of transportation. Roads in Lithuania range from well-maintained two- to four-lane highways connecting major cities, to small dirt roads traversing the countryside. Violation of traffic rules is common.  Driving with caution is urged at all times.

Map of Lithuania

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El Salvador at a glance

Capital: San Salvador
Population: 7,185,218 (July 2009 est.)
Government Type: Republic
GDP: $20.4 billion
Imports: $9.75 billion f.o.b.
Exports: $4.55 billion f.o.b.

Although the smallest country in Central America, El Salvador has the third largest economy. Modest growth is expected to slow even further in 2009 due to the global slowdown and to El Salvador’s dependence on exports to the US and remittances from the US. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income.

The country is a democratic republic governed by a president and an 84-member unicameral Legislative Assembly. The president is elected by absolute majority vote and serves for a 5-year term. Members of the assembly are elected based on the number of votes that their parties obtain in each department and serve for 3-year terms. The country has an independent judiciary and Supreme Court.

Almost 90% of El Salvador’s population is of mixed Indian and Spanish extraction. About 1% is indigenous; very few Indians have retained their customs and traditions. The country’s people are largely Roman Catholic and Protestant. Spanish is the language spoken by virtually all inhabitants. The capital city of San Salvador has about 1.6 million people. An estimated 37.3% of El Salvador’s population lives in rural areas.

El Salvador is located on the Pacific’s earthquake-prone Ring of Fire and at latitudes plagued by hurricanes. An October 1986 earthquake killed 1,400 and seriously damaged the nation’s infrastructure. In 1998, Hurricane Mitch killed 10,000 in the region. Major earthquakes in January and February of 2001 took another 1,000 lives and left thousands more homeless and jobless. El Salvador’s largest volcano, Santa Ana, erupted in October 2005, spewing sulfuric gas, ash, and rock on surrounding communities and coffee plantations, killing two people and permanently displacing 5,000. Also in October 2005, Hurricane Stan unleashed heavy rains that caused flooding throughout El Salvador. In all, the flooding caused 67 deaths and more than 50,000 people were evacuated at some point during the crisis.

U.S.-El Salvador Relations

U.S.-Salvadoran relations remain close and strong. U.S. policy toward El Salvador promotes the strengthening of El Salvador’s democratic institutions, rule of law, judicial reform, national reconciliation and reconstruction, and economic opportunity and growth. El Salvador was a committed member of the coalition of nations fighting against terrorism and sent eleven rotations of troops to Iraq to support Operation Iraqi Freedom from 2003 through 2008.

The U.S. and Salvadoran governments cooperate closely to combat narcotics trafficking and organized crime. El Salvador hosts the International Law Enforcement Academy, which provides training to police, prosecutors, and other officials from throughout Latin America. El Salvador’s air force installation near Comalapa Airport houses a monitoring facility that surveils narco-trafficking routes in the eastern Pacific. The U.S. Federal Bureau of Investigation (FBI) and El Salvador’s National Civilian Police jointly operate the Transnational Anti-Gang unit, which addresses the growing problem of street gangs in both countries. In January 2009, the United States and El Salvador signed letters of agreement committing both countries to work jointly under the Merida Initiative to fight crime and drug trafficking.

U.S. ties to El Salvador are dynamic and growing. More than 19,000 American citizens live and work full-time in El Salvador. Most are private businesspersons and their families, but a small number of American citizen retirees have been drawn to El Salvador by favorable tax conditions. The U.S. Embassy’s consular section provides a full range of citizenship services to this community.

Foreign Relations

El Salvador is a member of the United Nations and several of its specialized agencies, the Organization of American States (OAS), the Central American Common Market (CACM), the Central American Parliament, and the Central American Integration System (SICA). It actively participates in the Central American Security Commission (CASC), which seeks to promote regional arms control. From 2002 to 2003, El Salvador was chair of the OAS anti-terrorism coordinating body, CICTE. El Salvador also is a member of the World Trade Organization and is pursuing regional free trade agreements. An active participant in the Summit of the Americas process, El Salvador chairs a working group on market access under the Free Trade Area of the Americas initiative. El Salvador has joined its six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA, to promote sustainable economic development in the region.

El Salvador enjoys normal diplomatic and trade relations with all of its neighboring countries including Honduras, with which it has previously had territorial disputes. While the two nations continue to disagree over the status of their maritime borders in the Gulf of Fonseca, they have agreed to settle their land-border disputes with the International Court of Justice (ICJ). In September 1992, the court awarded most of the territory in question to Honduras. In January 1998, Honduras and El Salvador signed a border demarcation treaty to implement the terms of the ICJ decree, although delays continue due to technical difficulties.

Economy

The Salvadoran economy continues to benefit from a commitment to free markets and careful fiscal management. The economy has been growing at a steady and moderate pace since the signing of peace accords that ended its civil war in 1992, and poverty was cut from 66% in 1991 to 34.6% in 2007. Much of the improvement in El Salvador’s economy is a result of the privatization of the banking system, telecommunications, public pensions, electrical distribution, and some electrical generation; reduction of import duties; elimination of price controls; and improved enforcement of intellectual property rights. Capping those reforms, on January 1, 2001, the U.S. dollar became legal tender in El Salvador. The economy is now fully dollarized.

The Salvadoran Government has maintained fiscal discipline during post-war reconstruction and reconstruction following earthquakes in 2001 and hurricanes in 1998 and 2005. Taxes levied by the government include a value-added tax (VAT) of 13%, income tax of 20%, excise taxes on alcohol and cigarettes, and import duties. The VAT accounted for about 52.2% of total tax revenues in 2007. El Salvador’s public external debt in November 2008 was about $5.6 billion, 27.4% of GDP.

Years of civil war, fought largely in the rural areas, had a devastating impact on agricultural production in El Salvador, but the sector has experienced significant recovery, buoyed in part by higher world prices for coffee and sugarcane and increased diversification into horticultural crops. Seeking to develop new growth sectors and employment opportunities, El Salvador created new export industries through fiscal incentives for free trade zones. The largest beneficiary has been the textile and apparel (maquila) sector, which directly provides approximately 70,000 jobs. Services, including retail and financial, have also shown strong employment growth, with about 48.7% of the total labor force now employed in the sector.

Remittances from Salvadorans working in the United States are an important source of income for many families in El Salvador. In 2008, the Central Bank estimated that remittances totaled $3.8 billion. UNDP surveys show that an estimated 22.3% of families receive remittances.

Under its export-led growth strategy, El Salvador has pursued economic integration with its Central American neighbors and negotiated trade agreements with the Dominican Republic, Chile, Mexico, Panama, Taiwan, Colombia, and the United States. Central American countries began negotiating an Association Agreement with the European Union in 2007. Trade agreements with CARICOM and Canada are also under negotiation, and agreements with Israel and Peru are being considered. Exports in 2008 grew 14.2%, while imports grew 12%. As in previous years, the large trade deficit was offset by family remittances.

The U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), implemented between El Salvador and the United States on March 1, 2006, provides El Salvador preferential access to U.S. markets. Textiles and apparel, shoes, and processed foods are among the sectors that benefit. In addition to trade benefits, CAFTA-DR also provides trade capacity building, particularly in the environment and labor areas, and a framework for additional reforms on issues such as intellectual property rights, dispute resolution, and customs that will improve El Salvador’s investment climate. For sensitive sectors such as agriculture, the agreement includes generous phase-in periods to allow Salvadoran producers an opportunity to become more competitive.

U.S. support for privatization of the electrical and telecommunications markets markedly expanded opportunities for U.S. investment in the country. More than 300 U.S. companies have established a permanent commercial presence in El Salvador or work through representative offices in the country. On November 29, 2006, the Government of El Salvador and the Millennium Challenge Corporation (MCC) signed a 5-year, $461 million anti-poverty Compact to stimulate economic growth and reduce poverty in the country’s northern region. The grant seeks to improve the lives of approximately 850,000 Salvadorans through investments in education, public services, enterprise development, and transportation infrastructure. The Compact entered into force in September 2007, and it is expected that incomes in the region will increase by 20% over the 5-year term of the Compact, and by 30% within 10 years of the start of the Compact.

Best Export Opportunities

El Salvador offers a strong market for U.S. products by promoting an open trade and investment environment. Tariffs are relatively low because of CAFTA-DR, and there are very few import restrictions. Consumer goods are always in demand, and the people of El Salvador appreciate the high quality of U.S. products.  Among the products from the United States that will find a market in El Salvador are automotive parts and security equipment.

For further information on export opportunities in El Salvador, visit the Best Export Opportunities section of the Official Export Guide’s El Salvadore Country Profile.

Intellectual Property Protection

An overall strategy to protect intellectual property rights (IPR) is very important when doing business in El Salvador. Intellectual property is primarily a private right, and the U.S. government generally cannot enforce rights for private individuals. It is the responsibility of the rights holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. In 2005, El Salvador revised several laws to comply with CAFTA-DR’s provisions on intellectual property rights (IPR). The Intellectual Property Promotion and Protection Law (1993, revised in 2005), the Law of Trademarks and Other Distinctive Signs (2002, revised in 2005), and the Penal Code establish the legal framework to protect IPR.

It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IPR and stop counterfeiting.

More detailed information on intellectual property rights can be found in the Trade Data section of the Official Export Guide’s El Salvador country profile.

Transportation

U.S. airlines with international flights to El Salvador include American Airlines, Continental, and Delta. United operates through a code-share with TACA. The Central American airline TACA has direct flights to and from the main cities in the United States. Most hotels offer airport shuttle services for their guests, at rates ranging between $15-$20 per one-way trip. Visitors commonly drive rental cars, and a U.S. driver’s license is valid for 60 days. Taxicab services normally provided within the perimeter of deluxe hotels are reliable. Public transit bus service is not recommended.

Major highways and thoroughfares are among the best in Central America, but road conditions throughout El Salvador are not up to U.S. standards. Mini-buses, buses, and taxis are often poorly maintained. Drivers are often not trained and generally do not adhere to traffic rules and regulations. The U.S. Embassy recommends that its personnel avoid using mini-buses and buses and use only taxis that are radio-dispatched or those stationed in front of major hotels. Robberies and violent crimes on buses are commonplace.

Map of El Salvador

Ghana at a glance

Capital: Accra
Population: 23,832,495
Government Type: Constitutional monarchy
GDP: $15.2 billion
Imports: $9.816 billion f.o.b.
Exports: $5.439 billion f.o.b.

Ghana’s population is concentrated along the coast and in the principal cities of Accra and Kumasi. Most Ghanaians descended from migrating tribes that likely came down the Volta River valley at the beginning of the 13th century. Ethnically, Ghana is divided into small groups speaking more than 50 languages and dialects. Among the more important linguistic groups are the Akans, which include the Fantis along the coast and the Ashantis in the forest region north of the coast; the Guans, on the plains of the Volta River; the Ga- and Ewe-speaking peoples of the south and southeast; and the Moshi-Dagomba-speaking tribes of the northern and upper regions. English, the official and commercial language, is taught in all the schools.

U.S.-Ghana Relations

The United States has enjoyed good relations with Ghana at an unofficial, personal level since Ghana’s independence. Thousands of Ghanaians have been educated in the United States. Close relations are maintained between educational and scientific institutions, and cultural links, particularly between Ghanaians and African-Americans, are strong.

The United States is among Ghana’s principal trading partners. The Office of the President of Ghana worked closely with the U.S. Embassy in Accra to establish an American Chamber of Commerce to continue to develop closer economic ties in the private sector. Major U.S. companies operating in the country include Newmont, ADM, Kosmos Energy, Anadarko, DHL, FedEx, UPS, KPMG, ACS, CMS Energy, Coca Cola, S.C. Johnson, Ralston Purina, Star-Kist, A.H. Robins, Sterling, Pfizer, IBM, 3M, Motorola, Stewart & Stevenson, PriceWaterhouseCoopers, and National Cash Register (NCR).

The discovery of major oil reserves in deep water in the Gulf of Guinea has led numerous American petroleum exploration firms to enter the Ghanaian market, and many other firms involved in oil and gas auxiliary services express an interest in starting operations in the country. Mining companies and agri-businesses from the United States have increased their investments in Ghana recently. Political stability, overall sound economic management, a low crime rate, competitive wages, and an educated, English-speaking workforce have increased Ghana’s potential to serve as a West African hub for American businesses.

U.S. development assistance to Ghana in fiscal year 2007 was implemented by USAID, the African Development Foundation, the Millennium Challenge Corporation, and others. Such assistance totaled more than $55.1 million that year, with programs in small farmer competitiveness, health (including HIV/AIDS and maternal child health), education, and democracy/governance. Ghana was the first country in the world to accept Peace Corps volunteers, and the program remains one of the largest. Currently, there are more than 150 volunteers in Ghana. Almost half work in education, and the others in agro-forestry, small business development, health education, water sanitation, and youth development. Ghana’s $547 million compact with the Millennium Challenge Corporation is the most recent achievement in the U.S.-Ghanaian development partnership.

Foreign Relations

Ghana is active in the United Nations and many of its specialized agencies, as well as the World Trade Organization, the Nonaligned Movement, the African Union (AU), and the Economic Community of West African States (ECOWAS). Generally, Ghana follows the consensus of the Nonaligned Movement and the AU on economic and political issues that do not directly affect its own interests. Ghana has played an increasingly active role in sub-regional affairs, including prominent roles in ECOWAS and the African Union.

Ghana is a critically important peacekeeping partner; it is the largest African nation contributor to multinational peacekeeping operations (PKO) and the 6th-largest among all peacekeeping contributing nations. Currently Ghana has 3,267 peacekeepers deployed to UN peacekeeping operations. It has large contingents deployed in the Democratic Republic of the Congo (DRC), the Darfur region of Sudan, Lebanon, Liberia, and Côte d’Ivoire, with smaller contingents deployed in Chad, Western Sahara, Kosovo, southern Sudan, and Georgia. Ghana contributes military and police personnel to UN peacekeeping operations outside of Africa, including nearly 900 troops to the UN Interim Force in Lebanon. The United States provides military support to Ghana through a variety of programs, including the International Military Education and Training (IMET) program and the African Contingency Operations Training and Assistance (ACOTA) program.

Economy

By West African standards, Ghana has a relatively diverse and rich natural resource base. Minerals — principally gold, diamonds, manganese ore, and bauxite — are produced and exported. In 2007, a major oil discovery off the coast of Ghana led to greater multinational interest in entering the Ghanaian market. Timber and marine resources are important but declining resources.

Agriculture remains a mainstay of the economy, accounting for more than 30% of GDP and approximately 55% of formal employment. Cash crops consist primarily of cocoa and cocoa products, timber products, coconuts and other palm products, shea nuts, and coffee.

Ghana’s industrial base is relatively advanced compared to many other African countries. Industries include textiles, apparel, steel (using scrap), tires, oil refining, flour milling, beverages, tobacco, simple consumer goods, and car, truck, and bus assembly. Industry, including mining, manufacturing, construction, and electricity, accounts for approximately 30% of GDP.

Ghana’s post-independence economic story has been a difficult one, but over the last 20 years, stability and growth have increasingly taken hold. Real GDP growth has averaged 4% since the mid-1980s and was approximately 5% over the past decade.

Best Export Opportunities

Ghana’s low-competition market, political stability, and welcoming business climate make it ideal for exporters looking for opportunities. Currently, Ghana is the 5th-largest export market for the United States in sub-Saharan Africa.

Since signing the 5-year, $547 million anti-poverty compact with the United States’ Millennium Challenge Corporation in 2006, the country has taken strides to modernize its infrastructure. This has led to high demand for U.S. manufactured automobiles, motor vehicle parts, machinery, electrical power systems, and construction and earth-moving equipment to allow for transportation and agricultural improvements.

There are also increasing opportunities for a broad range of consumer goods, apparel, and agricultural and food products. Though Ghana maintains a strong agricultural system, its local supply cannot meet demands for meat, meat products, poultry, rice, wheat, and various prepared foods, like sauces, soups, juices, and pastes.

For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Ghana Country Profile.

Banking & Foreign Investment

Ghana’s formal banking sector comprises the central Bank of Ghana, nine commercial banks, three development banks, five merchant banks, and more than 100 rural unit banks. Until recently, the sector was dominated by state-owned institutions and showed few signs of competition. Within the last 5 years, however, two state-owned banks have been privatized under the government’s Divesture Implementation Program.

Attraction of foreign investment has been a main feature of Ghana’s economic recovery program, which began in 1993. In recent years, the government has embarked on several missions abroad to promote investment in the emerging economy. Ghana has also established laws that encourage foreign investment, most notably the Ghana Investment Promotion Center (GIPC) Act. Established in 1994, the law governs investment in all sectors of the economy except minerals and mining, oil and gas, and the country’s free zones.

More detailed information can be found in the Trade Finance and Investment sections of the Official Export Guide’s Ghana country profile.

Transportation

Ghana has nearly 25,000 miles of public roads (25% of which are paved), one international airport in Accra, and three other domestic airports. There are two main ports, Tema and Sekondi-Takoradi. A triangular, 592-mile rail system links Kumasi, Takoradi, and Accra and Tema, but currently only the Kumasi-Accra line is operational.

International flights to Accra are currently offered by more than 17 international airlines. Delta Airlines provides direct flights to New York. Other airlines that fly into Accra include British Airways, KLM, Swissair, Alitalia, Lufthansa, and Ghana International Airlines. Flights within Ghana are available from Accra to Kumasi and Tamale through domestic airlines Antrak Air and City Link.

Despite the major expansion and improvement in the road network in Accra, traffic at peak hours is often congested. Some roads on the outskirts are relatively narrow and poorly maintained, with rather daunting open gutters. Driving after dark outside of Accra or other major cities is not recommended due to the lack of adequate street lighting, the number of disabled vehicles blocking the roadside, the presence of animals and pedestrians, and the proportion of local drivers who do not habitually make use of their headlights.

Map of Ghana

Malaysia at a glance

Capital: Kuala Lumpur
Population: 25,715,819
Government Type: Constitutional monarchy
GDP: $397.5 billion
Imports: $156.2 billion f.o.b.
Exports: $195.7 billion f.o.b.

Malaysia’s multi-racial society contains many ethnic groups, with Malays comprising a majority of just over 50%. By constitutional definition, all Malays are Muslim. About a quarter of the population is ethnic Chinese, a group which historically played an important role in trade and business. Malaysians of Indian descent comprise about 7% of the population and include Hindus, Muslims, Buddhists, and Christians. Non-Malay indigenous groups make up approximately 11% of the population.

Population density is highest in peninsular Malaysia, home to some 20 million of the country’s 27 million inhabitants. The remaining 7 million live on the Malaysian portion of the island of Borneo, in the large but less densely-populated states of Sabah and Sarawak. More than half of Sarawak’s residents and about two-thirds of Sabah’s are from indigenous groups.

U.S. - Malaysian Relations

The United States and Malaysia share a diverse and expanding partnership. Economic ties are robust. The United States is Malaysia’s largest trading partner, and Malaysia is the 16th-largest trading partner of the United States. Annual two-way trade amounts to $44 billion. The United States and Malaysia launched negotiations for a bilateral free trade agreement (FTA) in June 2006, but an agreement has not yet been concluded.

The United States is the largest foreign investor in Malaysia on a cumulative basis. American companies are particularly active in the energy, electronics, and manufacturing sectors. The U.S. direct investment position in Malaysia for 2007 was $15.7 billion.

The United States and Malaysia cooperate closely on security matters, including counter-terrorism, maritime domain awareness, and regional stability. The relationship between the military forces of the two nations is also strong, with numerous exchanges, training, joint exercises, and visits. The United States and Malaysia signed a Mutual Legal Assistance Treaty (MLAT) in July 2006 during the visit to Kuala Lumpur by Secretary of State Condoleezza Rice.

Foreign Relations

Regional cooperation is a cornerstone of Malaysia’s foreign policy. It was a founding member of the Association of Southeast Asian Nations (ASEAN) and served as the group’s chair most recently in 2005–2006. It hosted the ASEAN Summit and East Asia Summit in December 2005, as well as the ASEAN Ministerial and the ASEAN Regional Forum in July 2006.

Malaysia is an active member of the Asia Pacific Economic Cooperation (APEC) forum, the Organization of the Islamic Conference (OIC), the Non-Aligned Movement (NAM), and the United Nations. It was chair of the OIC until March 2008 and has also chaired the NAM.

Malaysia is a frequent contributor to UN and other peacekeeping and stabilization missions, including recent deployments to Lebanon, East Timor, the Philippines, Indonesia, Pakistan, Sierra Leone, and Kosovo.

Economy

Since it became independent, Malaysia’s economic record has been one of Asia’s best. Real gross domestic product (GDP) grew by an average of 6.5% per year from 1957 to 2005. Performance peaked in the early 1980s through the mid-1990s, as the economy experienced sustained rapid growth, averaging almost 8% annually. High levels of foreign and domestic investment played a significant role as the economy diversified and modernized. Once heavily dependent on primary products such as rubber and tin, Malaysia today is a middle-income country with a multi-sector economy based on services and manufacturing. Malaysia is one of the world’s largest exporters of semiconductor devices, electrical goods, and information and communication technology (ICT) products.

The government continues to actively manage the economy.  Malaysia’s New Economic Policy (NEP), first established in 1971, was a 10-year plan that sought to rectify a situation whereby ethnic Malays and indigenous peoples (”bumiputera”), who comprised nearly 60% of the population, held less than 3% of the nation’s wealth. Policy makers implemented a complex network of racial preferences intended to promote the acquisition of economic assets by bumiputera. In 1981, when the racial preferences were set to expire, the government extended the NEP for another 10 years, stating that its goals had not been achieved. The policies again were extended in 1991 and in 2001.

The Malaysian economy went into sharp recession in 1997-1998 during the Asian financial crisis, which affected countries throughout the region, including South Korea, Indonesia, and Thailand. Malaysia’s GDP decreased by more than 7% in 1998. Malaysia narrowly avoided a return to recession in 2001 when its economy was negatively affected by the bursting of the dot-com bubble (which hurt the ICT sector) and slow growth or recession in many of its important export markets.

In July 2005, the government removed the 7-year-old peg linking the ringgit’s value to the U.S. dollar at an exchange rate of RM 3.8/US$1.00. The dollar peg was replaced by a managed float against an undisclosed basket of currencies. The new exchange rate policy was designed to keep the ringgit more broadly stable and to avoid uncertain currency swings that could harm exports.

The Malaysian financial system has exhibited noteworthy resilience to the 2008 global financial crisis. Malaysian banks are well capitalized and have no measurable exposure to the U.S. sub-prime market. The central bank maintains high levels of foreign exchange reserves and a conservative regulatory environment, having prohibited some of the riskier assets in vogue elsewhere. However, decreasing demand in the United States and elsewhere is taking a toll on Malaysian exports, resulting in slower economic growth going forward.

Best Export Opportunities

Malaysia has become a high-tech competitive nation, where services and manufacturing now account for 86% of the country’s GDP. The National Association of Manufacturers reports that Malaysia is the 10th largest export market for U.S. manufactured goods.

There are increasing opportunities in the telecommunications market. In its efforts to become an industrialized nation by year 2020 and realizing the importance of broadband as the backbone of a knowledge economy, the Malaysian government is targeting 50% household penetration by 2010 using a mixture of fixed, mobile, and satellite technologies. This will include a 10-year high-speed broadband project worth US$3.2 billion, to commence in 2009. The push for broadband penetration and the network expansion of 3G and WiMAX players will create a large demand for telecommunication products and solutions. Infrastructure spending by telecommunication companies is expected to be more than US$1.14 billion (RM4 billion) per annum for 2009 to 2010.

For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Malaysia Country Profile.

Banking & Foreign Investment

The government took a number of measures to strengthen Malaysia’s banking system following the regional financial crisis in the late 1990s. The banking system remains the largest financial intermediary in the country, with total assets standing at US$364 billion (RM 1.2 trillion), as of December 2007. The Central Bank licenses and regulates businesses such as commercial banking, investment banking, Islamic banking, and money brokering.

The Government of Malaysia encourages foreign direct investment by providing a number of incentives, particularly in export-oriented high-tech industries and “back office” service operations. Inflows of FDI to Malaysia increased by 38.9% from US$6.4 billion in 2006 to US$8.4 llion in 2007, according to the UN Conference on Trade and Development (UNCTAD).

More detailed information can be found in the Trade Finance and Investment sections of the Official Export Guide’s Malaysia country profile.

Transportation

Malaysia’s central location in the Asia-Pacific region makes it an excellent gateway to Asia and the ASEAN markets. Air cargo facilities are well developed at the five international airports — the Kuala Lumpur International Airport (KLIA), Penang International Airport and Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak. Kuala Lumpur International Airport (KLIA) is the nation’s largest, located 50 kilometers south of Kuala Lumpur. Cargo import and export procedures are fully automated at KLIA.

Kuala Lumpur is served by a number of international airlines, though no U.S. airlines fly to Malaysia directly. Additional international connections are available via Singapore, from which there is a joint Malaysian Airlines/Singapore Airlines air shuttle service. Direct flights to Singapore are available from the United States, Europe, the Middle East, and Asia. Within Malaysia, the national airline — Malaysian Airlines (MAS) — provides frequent service to all major cities, as does low-cost competitor Air Asia.

Peninsular Malaysia’s network of well-maintained highways link major growth centers to seaports and airports throughout the peninsula and provide an efficient means of transportation for goods. To complement these highways, a Kuala Lumpur-Bangkok rail service known as the ASEAN Rail Express (ARX) has been initiated. The long-term aim is to expand it to become the Trans-Asia Rail Link, which will include Singapore, Vietnam, Cambodia, Laos and Myanmar before ending up in Kunming, China. Local transportation rates can be found on the Malaysian Industrial Development Authority’s Web site.

Map of Malaysia

Free photos courtesy of bigfoto.com.

Spain at a glance

Capital: Madrid
Population: 40,491,052
Government Type: Parliamentary Monarchy

GDP: $1.378 trillion
Imports: $292.8 billion f.o.b.
Exports: $444.9 billion f.o.b.

Spain’s population is mostly made up of distinct ethnic groups, including Basques, Catalans, and Galicians. The country’s population density, lower than that of most European countries, is roughly equivalent to New England’s. In recent years, following a longstanding pattern in the rest of Europe, rural populations are moving to cities. Urban areas are also experiencing a significant increase in immigrant populations, chiefly from North Africa, South America, and Eastern Europe.

Spain has no official religion. The constitution of 1978 disestablished the Roman Catholic Church as the official state religion, while still recognizing the role it plays in Spanish society. More than 90% of the population is at least nominally Catholic. Among the remaining population, there are about 1.2 million evangelical Christians and other Protestants, 1 million Muslims, and 48,000 Jews.

The 1978 constitution established Spain as a parliamentary monarchy, with the prime minister responsible to the bicameral Cortes (Congress of Deputies and Senate) elected every 4 years. The 1978 constitution also authorized the creation of regional autonomous governments. By 1985, 17 regions covering all of peninsular Spain, the Canaries, and the Balearic Islands had negotiated autonomy statutes with the central government. The central government continues to devolve powers to the regional governments, which will eventually have full responsibility for health care and education, as well as other  programs.

U.S. - Spanish Relations

Spain and the United States have a long history of official relations and are closely associated in many fields. In addition to U.S. and Spanish cooperation in NATO, defense and security relations between the two countries are regulated by a 1989 Agreement on Defense Cooperation, revised in 2003. Under this agreement, Spain authorized the United States to use certain facilities at Spanish military installations.

The two countries also cooperate in several other important areas. The U.S. National Aeronautics and Space Administration (NASA) and the Spanish National Institute for Aerospace Technology (INTA) jointly operate the Madrid Deep Space Communications Complex in support of Earth orbital and solar system exploration missions. The Madrid Complex is one of the three largest tracking and data acquisition complexes comprising NASA’s Deep Space Network.

An agreement on cultural and educational cooperation was signed on June 7, 1989. A new element, support by both the public and private sectors, gave a different dimension to the programs carried out by the joint committee for cultural and educational cooperation. These joint committee activities complement the bi-national Fulbright program for graduate students, postdoctoral researchers, and visiting professors, which is among the largest in the world. Besides assisting in these exchange endeavors, the U.S. Embassy also conducts a program of educational, professional, and cultural exchanges, as well as hosting high-level official visits between officials from Spain and the United States. Spain and the United States are strong allies in the fight against terrorism.

Foreign Relations

After the return of democracy following the death of General Franco in 1975, Spain’s foreign policy priorities were to break out of the diplomatic isolation of the Franco years and expand diplomatic relations, enter the European Community, and define security relations with the West.

As a member of NATO since 1982, Spain has established itself as a major participant in multilateral international security activities. Spain’s EU membership represents an important part of its foreign policy. Even on many international issues beyond Western Europe, Spain prefers to coordinate its efforts with its EU partners through the European political cooperation mechanism. With the normalization of diplomatic relations with Israel and Albania in 1986, Spain virtually completed the process of universalizing its diplomatic relations. The only country with which it now does not have diplomatic relations is North Korea.

Spain has maintained its special identification with Latin America. Its policy emphasizes the concept of Hispanidad, a mixture of linguistic, religious, ethnic, cultural, and historical ties binding Spanish-speaking America to Spain. Spain has been an effective example of transition from authoritarianism to democracy, and visits by Spain’s king and prime ministers to the region highlight that success. Spain maintains economic and technical cooperation programs and cultural exchanges with Latin America, both bilaterally and within the EU.

Spain also continues to focus attention on North Africa, especially on Morocco, a source of much of Spain’s large influx of legal and illegal immigrants over the past 10 years. This concern is dictated by geographic proximity and long historical contacts and more recently by immigration trends, as well as by the two Spanish enclave cities of Ceuta and Melilla on the northern coast of Africa. While Spain’s departure from its former colony of Western Sahara ended direct Spanish participation in Morocco, it maintains an interest in the peaceful resolution of the conflict brought about there by decolonization. These issues were highlighted by a crisis in 2002, when Spanish forces evicted a small contingent of Moroccans from a tiny islet off Morocco’s coast following that nation’s attempt to assert sovereignty over the island. Meanwhile, Spain has gradually begun to broaden its contacts with sub-Saharan Africa. It has a particular interest in its former colony of Equatorial Guinea, where it maintains a large aid program.

In relations with the Arab world, Spain has sought to promote European-Mediterranean dialogue. Spain strongly supported the EU’s “Barcelona Process” to expand dialogue and trade between Europe and the nations of North Africa and the Middle East, including Israel. Barcelona will serve as the headquarters of the new Union for the Mediterranean proposed by French President Nicolas Sarkozy in 2007.

Spain has been successful in managing its relations with its two European neighbors, France and Portugal. The accession of Spain and Portugal to the EU has helped ease some of their periodic trade frictions by putting these into an EU context. Franco-Spanish bilateral cooperation is enhanced by joint action against Basque ETA terrorism. Ties with the United Kingdom are generally good, although the question of Gibraltar remains a sensitive issue.

Economy

Spain’s accession to the European Community — now the European Union (EU) — in January 1986 required the country to open its economy to trade and investment, modernize its industrial base, improve infrastructure, and revise economic legislation to conform to EU guidelines. These measures helped the economy grow rapidly over the next 2 decades. Unemployment fell from 23% in 1986 to 8% in mid-2007, and the public debt-to-GDP ratio fell significantly.

The adoption of the euro in 2002 greatly reduced interest rates, spurring a housing boom that further fueled growth. The strong euro also encouraged Spanish firms to invest in the United States. Several Spanish firms have significant U.S. investments in banking, insurance, wind and solar power, biofuels, and road construction, as well as other sectors. The end of the housing boom in 2007 and the international financial crisis led to a rapid deceleration during 2008. Housing sales and construction declined dramatically, and the unemployment rate stood at 11.3% in the third quarter of 2008, the second-highest level in the European Union. By the end of November 2008, nearly 3 million Spaniards were unemployed, and some banks predict that the unemployment rate could average 14% in 2009.

The economy receded in the third quarter of 2008, and it is expected to continue into 2009 with less than 1% growth. Inflation, after peaking at 5.3% in July, had fallen below 3% as of November 2008 because of the decline in oil prices and reduced domestic spending. In part because of cautious regulation by the central bank, Spanish banks have been less affected by the international financial crisis than banks in many European countries. The Zapatero government took a series of measures in late 2008 to support the financial sector and announced €11 billion of additional spending, much of it for municipal government public works, in an effort to provide employment and encourage economic activity. This spending and declining revenues are leading to budget deficits, but surpluses in the years 2004–2007 have given the government some room to maneuver.

Best Export Opportunities

Spain has been one of the EU’s best economic performers for the past several years. It has always been a good export market for U.S. goods which have traditionally included aircraft and associated equipment, medical equipment, software, water resources equipment and telecommunications equipment. With the current economic crisis, automotive customization is seeing an upsurge in the Spanish market. Consumers are looking to improve their current vehicles instead of purchasing new. U.S. auto repair and servicing equipment has a very good reputation in Spain and, with 1/3 of the autos in the country over 10 years old, this sector should remain strong for U.S. export opportunities.

Other sectors offering good prospects include security equipment and transportation. Several agricultural products, such as tree nuts and pulses, have seen steady growth in the Spanish market. For detailed information, please see the Best Export Opportunities in the Spain Country Profile of the Official Export Guide. Although U.S. products are well respected for their high level of technology and quality, firms often fall short of their competitors in terms of flexibility on financing, adaptation of product design to local market needs, and assistance with marketing and after-sales service. Despite the effort of establishing distribution channels, export-ready U.S. firms are urged to explore opportunities in Spain.

Banking & Foreign Investment

The domestic Spanish banking system is regarded as healthy, with four institutions (banks and savings banks) dominating the market. Spanish regulators have recently focused attention on these banks’ exposure to financial instruments based on U.S. subprime loans and have required provisions against this exposure. The Spanish financial system’s exposure to such instruments thus is relatively low.

The banking system is regulated by the Directorate General of Treasury and Financial Policy in the Ministry of Economy and Finance; the Directorate General of Trade and Investments in the Ministry of Industry, Tourism and Trade; and the Bank of Spain.

The Bank of Spain is the central issuing bank and acts as a banker to the government and banking system, supervises operations of other banks and credit institutions, maintains a centralized information system, and regulates exchange controls and foreign exchange markets. The Bank of Spain is fully integrated in the European Central Bank System. The European Central Bank has had complete responsibility over monetary and exchange policy since January 1999.

There have been no significant changes in Spain’s regulations for investment and foreign exchange under either the Socialist Party (PSOE) government that took office in March 2004 and was re-elected in March 2008. Spanish law permits foreign investment of up to 100% of equity, and capital movements are completely liberalized.

Subscribers may find more information on Spanish banking and investment  in the Trade Finance and Investment sections of the Official Export Guide’s Spain Country Profile.

Transportation

Frequent direct air service is available to major U.S. cities from Madrid and Barcelona. Airports in both Madrid and Barcelona have good public transportation service to downtown. All major cities have metered taxis, and extra charges must be posted in the vehicle. Travelers are advised to use only clearly identified cabs and to ensure that taxi drivers always switch on the meter. A green light on the roof indicates that the taxi is available. Public transportation in large cities is generally excellent. Rail service is comfortable and reliable, but it varies in quality and speed. Intercity buses are usually comfortable and inexpensive. U.S. citizens are encouraged to obtain International Driving Permits if they plan to drive in Spain.

Rail transport is a key objective in the 2005–2020 Strategic Infrastructure and Transport Plan, accounting for almost 50% of the planned €248 billion (US$ 342 billion) in investments. It is expected that by 2020 all Spanish cities will have direct access to the high-speed train network and 90% of the population will be within 50 kilometers of one of its stations.

Map of Spain

Panama at a glance

Capital: Panama City
Population: 3,309,679
Government Type: Constitutional democracy

GDP: $39.33 billion
Imports: $15.18 billion f.o.b.
Exports: $10.37 billion f.o.b.

Panamanians’ culture, customs, and language are predominantly Caribbean Spanish. The majority of the population is ethnically mestizo or mixed Spanish, indigenous, Chinese, and West Indian. Spanish is the official and dominant language; English is a common second language spoken by West Indians and by many businesspeople and professionals. More than half the population lives in the Panama City-Colon metropolitan corridor.

Panama was part of the Spanish empire for 300 years (1538-1821). From the outset, Panamanian identity was based on a sense of “geographic destiny,” and Panamanian fortunes fluctuated with the geopolitical importance of the Isthmus. The colonial experience also spawned Panamanian nationalism as well as a complex and highly stratified society, the source of internal conflicts that ran counter to the unifying force of nationalism.

Panama is a representative democracy with three branches of government: executive and legislative branches elected by direct vote for 5-year terms, and an independently appointed judiciary. The executive branch includes a president and two vice presidents. The legislative branch comprises a 78-member unicameral National Assembly. The Constitution was changed in 2004, however, and beginning with national elections in 2009, the executive branch will have only one vice president, and the membership of the National Assembly will be capped at 74. The judicial branch is organized under a nine-member Supreme Court (each judge is appointed for a 10-year term) and includes all tribunals and municipal courts. An autonomous Electoral Tribunal supervises voter registration, the election process, and the activities of political parties. Anyone over the age of 18 may vote.

U.S. - Panamanian Relations

The United States cooperates with the Panamanian Government in promoting economic, political, security, and social development through U.S. and international agencies. Cultural ties between the two countries are strong, and many Panamanians come to the United States for higher education and advanced training. In 2007, the United States and Panama partnered to launch a regional health worker training center. The center provides training to community healthcare workers in Panama and throughout Central America. About 25,000 American citizens reside in Panama, many retirees from the Panama Canal Commission and individuals who hold dual nationality. There is also a rapidly growing enclave of American retirees in the Chiriqui Province in western Panama.

Panama continues to fight against the illegal narcotics and arms trade. The country’s proximity to major cocaine-producing nations and its role as a commercial and financial crossroads make it a country of special importance in this regard. The Panamanian Government has concluded agreements with the U.S. on maritime law enforcement, counter-terrorism, counter-narcotics, and stolen vehicles. In March 2007 the U.S. Coast Guard in cooperation with the Government of Panama seized over 38,000 lbs. of cocaine off the coast of Panama, the largest drug seizure in the eastern Pacific.

In the economic investment arena, the Panamanian Government has been successful in the enforcement of intellectual property rights and has concluded a Bilateral Investment Treaty Amendment with the United States and an agreement with the Overseas Private Investment Corporation. Although money laundering remains a problem, Panama passed significant reforms in 2000 intended to strengthen its cooperation against international financial crimes.

The United States and Panama signed a Trade Promotion Agreement (TPA) in June 2007. Panama ratified the agreement in July 2007; it still requires approval by the U.S. Congress to enter into force.

The Panama Canal Treaties

The 1977 Panama Canal Treaties entered into force on October 1, 1979. They replaced the 1903 Hay/Bunau-Varilla Treaty between the United States and Panama (modified in 1936 and 1955), and all other U.S.-Panama agreements concerning the Panama Canal, which were in force on that date. The treaties comprised a basic treaty governing the operation and defense of the Canal from October 1, 1979, to December 31, 1999 (Panama Canal Treaty), and a treaty guaranteeing the permanent neutrality of the Canal (Neutrality Treaty).

The Canal Zone and its government ceased to exist when the treaties entered into force and Panama assumed jurisdiction over Canal Zone territories and functions, a process that was finalized on December 31, 1999.

Foreign Relations

Panama is a member of the UN General Assembly and most major UN agencies and started its fourth term as a member of the UN Security Council in January 2007. It maintains membership in several international financial institutions, including the World Bank, the Inter-American Development Bank, and the International Monetary Fund. Panama is a member of the Organization of American States and was a founding member of the Rio Group. Although it was suspended from the Latin American Economic System — known informally both as the Group of Eight and the Rio Group — in 1988 due to its internal political system at the time, Panama was readmitted in 1994 as an acknowledgment of its democratic credentials. Panama is a member of the Central American Parliament as well as the Central American Integration System (SICA). Panama joined its six Central American neighbors at the 1994 Summit of the Americas in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA, to promote sustainable economic development in the region.

Economy

Panama’s economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism, and medical and healthcare.

In October 2006, Panamanians voted in favor of a $5.25 billion Canal expansion project to construct a third set of locks, a project that is expected to take eight to ten years to complete. The Government of Panama expects this effort to provide 7,000–9,000 direct new jobs during the peak construction period of 2009–2011 and to set the tone economically for years to come. The expansion is expected to be financed through a combination of increased tolls and debt.

GDP growth in 2007 was 11.2%, surpassing most private and government projections and the robust growth seen in 2006 and 2005, which was 8.1% and 6.9%, respectively. Growth has been fueled by the construction sector, transportation, port and Panama Canal-related activities, and tourism. Though Panama has the highest GDP per capita in Central America, about 38% of its population remains impoverished.

Panama has bilateral free trade agreements with Chile, El Salvador, Taiwan, Singapore, Honduras, and Costa Rica. Panama is exploring free trade negotiations with Mexico and other Latin American countries. Upon its entry into force, the U.S.-Panama Trade Promotion Agreement (TPA) is expected promote economic opportunity by eliminating tariffs and other barriers to trade of goods and services.

Best Export Opportunities

The United States is Panama’s most important trading partner, and U.S. products are regarded as high quality. U.S. suppliers will find opportunities in construction supplies, security equipment, and shipbuilding. For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Panama Country Profile.

Banking & Foreign Investment

Foreign and Panamanian banks compete on equal terms. Banks are organized into two groups, the Panamanian Banking Association (Panamanian and foreign banks) and the Association of Panamanian Banks (Panamanian banks). Banks are licensed and regulated by the Banking Supervisory Authority. Panama’s banking system does not have a deposit insurance scheme.

Panama actively promotes foreign direct investment, especially in the Colon Free Zone. The Panamanian government has pursued financing from international financial institutions for a number of infrastructure and social sector investment projects. Information on banking and investment in Panama is available to subscribers in the Trade Finance and Investment sections of the Official Export Guide’s Panama Country Profile.

Transportation

Panama has excellent transportation facilities. Three major U.S. airlines serve the country, as do airlines from other countries. COPA, the Panamanian airline, has a regional hub at the Tocumen International Airport, connecting Panama with major cities in the United States and Latin America.

Buses and taxis are readily available in urban areas. Taxi fares are low and usually range from $1 to $5 depending on the trip’s length. Transportation from Tocumen International Airport into Panama City can be made by a special taxi service, with prices between $20 and $30 depending on the size of the taxis. Taxis may be shared with other passengers. Car rentals are available. There is no bus service at the airport.

Major car rental companies operate in Panama and offer excellent services. There is train service from Panama City to Colon, on the Atlantic side, operated by Kansas City Southern. This is primarily a container transportation facility, but it also takes passengers.

Map of Panama