The expectations and opportunities for foreign investment are growing and turning Latin America into an exciting place to start a business. Some of the best business opportunities are now in Latin America (LATAM); with lots to offer, attractive incentives for new companies to invest, an abundance of natural resources and good human talent. For these reasons and more, LATAM is a good business option.

Latin America’s current economic growth levels are among the world’s highest, and the region is preparing its regulations to meet new economic challenges. As such, the fostering of foreign trade and foreign direct investment (FDI) is important to increase GDP growth, create job opportunities, and improve logistics and production. In the pursuit of economic and social development, modern economies are implementing new regulations to develop strategies aimed at attracting new investments and facilitate trade. In this article, we analyse the most important regulatory tools that Latin American countries are developing, with the aim of improving their economic and social conditions, and ultimately consolidating Latin America as a region open to business with favourable conditions for the development of high-value investment projects.

One of the region’s most important mechanisms for customs regulation is the free trade zone. This is generally recognised as an area where foreign companies can import materials, manufacture goods, export products, and benefit from special treatment regarding tax and customs. Colombia, Mexico and other Latin American countries are focusing on this as the cornerstone of economic growth. Each of these countries, while sharing the general principles of the free trade zone, has developed certain particularities adjusted to its individual economy to make this special regime a much more attractive instrument for business development.

As stated, each country has developed the instrument in a specific way, and they may have different names for it — for example, Colombia’s free trade zones are comparable to the special economic zones of Mexico and Peru. This instrument promotes foreign investment and develops economic and social policies enabling the growth of the national manufacturing and service industries. It offers prerogatives to users via conditions that allow them to compete efficiently, thus establishing regulations adapted to international regulatory trends. These conditions include financial, tax, customs, foreign trade and foreign exchange benefits.

Each country has its own regulation regarding the benefits it offers. However, there are some common conditions for foreign investment, such as:

the centralisation of export operations and, consequently, the elimination of certain expenses;

tax exemptions — no VAT; reduced or lowered income tax; and no tariffs;

the development of productive operations without VAT or customs charges; and

legal stability regarding the benefits provided by the countries to the free trade zones.

In Colombia, the free trade zones regime has evolved rapidly since its creation in the mid-1950s. It now has the largest number of free trade zones (over 100) and the total investment made in the country through this mechanism is about US$16 billion. The Colombian free trade zone regime has different types of users and was created to foster the development of both the manufacturing and service industries. It also allows companies to serve the local market (the current population of Colombia is almost 50 million), something that is restricted in many free trade zone regimes developed in Central America. On the other hand, free trade zones in Peru were established in certain areas to promote development in these specific regions of the country; currently, there are only four special economic zones and the instrument is only just starting to develop. This has also happened in Brazil: the government developed free trade zones in the north, a region isolated from the rest of the country. The objective was to promote the economic development of this area through the special regime of free trade zones. At present, the free trade zone of Manaus has successfully helped in the development of the automotive, electronics and chemical products industries. Argentina has nine free trade zones, all of them promoting the storage, commercialisation and industrialisation business industries. The instrument is used to simplify the different processes, and to promote trade and industrial activities in the country.

The use of free trade zones, then, aims towards the development of the region as well as the expansion of trade and industrial activities. Foreign trade is improved by free trade zones as they allow users to create a centralised operation, reducing costs according to the benefits established in each country’s regulations. The operations are more efficient, as users can consolidate exports from these zones; control information from one trade centre; and access markets through available free trade agreements. Through this mechanism countries can expect to increase export rates, enable national industry to access new markets, create more job opportunities in strategic areas and promote foreign investment.

PAX PAGO Opportunity

Latin America / South America faces an economic crisis with the declining value of fiat currency and sparse banking options. Additionally, there are concerns with the allocation of monetary funds stemming from high inflation in large segments of the economy. These challenges are heightened by slow blockchain (technology) adoption, market manipulation, and the hedging of traditional institutions against Finance Tech (Fintech) Industry. Furthermore, there has been no considerable breakthrough in business models to implement tokenization for the long-term extending to businesses, government institutions and financial entities; which are in conflict with one another over Fintech regulations.

The PAX Pago platform will offer solutions to mitigate these challenges. The goal is to return liberty into the hands of citizens by opening new channels of commerce. PAX Pago is utilized as payment for items produced, products sold or services rendered. Our platform offers high-speed reliable transfer, and enables transparent information flow in addition to Combating problems of inflation, inefficient public services, and slow technological advances. PAX Pago will be a medium of exchange.

PAX Pago will be a borderless payment and settlement platform. The project provides transparent transactions and will be a medium of stability in the event of economic turmoil. Independent from economic cycles, the project builds an ecosystem supporting the trading of goods and services.

As the platform progresses, there will be features introduced to further develop the overall growth of the ecosystem such as: Validation System, Point System.