UHY GLOBAL MAY 2021 FEATURE


BEATING THE ODDS


Like the earthquakes and volcanoes which define the region’s geology, the eight nations comprising Central America define its future. Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama, are set to drive the region's growth and prosperity. They have fought hard, first for their independence, and latterly their reintegration into a more cohesive whole. 2021 marks 30 years since the Organización de Estados Centroamericanos (ODECA) set a new treaty of cooperation in motion, supported, since 1993, by the Central American Integration System (SICA) which is observed internationally by eleven regional advisors, including the US and Canada. SICA’s four main pillars of support revolve around political, socio-cultural, economical and sustainable management of natural resources and their ongoing commitment has always been to achieve ‘peace, freedom, democracy and development.’ STRONGER IN RECOVERY Armed with support from SICA and other organisations, together with clear engagement from regional UHY member firms, clients and


governments in individual jurisdictions, everyone is working hard to adapt to global and intra-regional opportunities as well as dealing with difficult public health and political challenges. The will to thrive as a nation is beyond question – indeed, there’s a general optimism that the region will be stronger in recovery than ever before. According to Omar Pérez, managing partner, UHY Auditores y Consultares SA, in Honduras: "All our UHY member firms across this region agree that a positive, far-reaching response to the crisis must look further than fire-fighting the immediate post-Covid impact with all its economic and health challenges. Sustainable recovery and new opportunities will only happen with bold emergency measures and


these must work hand in hand with a longer-term vision. We are here to support our clients to make these new measures work for them.” “Everything we do collectively now could affect our national development over the next decade, and beyond,” he says. Foreign investment and technical assistance are key to new economic success. The US, currently Central America’s most important trade and investment partner, must target investments aimed at generating new employment opportunities and supporting sectors, essential for growth and regional integration. As with other countries hit by the pandemic, Central America has experienced weakened fiscal positions and strained public resources. Multilateral development banks and international financial institutions must play a major role in financing Central American economies. POST-COVID PLAN The region’s major income relies on agricultural exports such as coffee, bananas and pineapples. Tourism is also fundamental to Central America’s sustainability – and this has collapsed in the wake of Covid’s travel restrictions. The impact


on both industries has been devastating but UHY member firms across the region are positive about building back. The Adrienne Arsht Latin American Center (AALAC) points to strong regional benefits, such as dedicated economic zones and tax advantages – designed to improve ease of doing business. The opportunities are out there to trigger success but now Central America must find ways to capitalise on them by creating an economic reactivation plan for a post Covid-19 world. The AALAC identifies three key areas of opportunity, confirming the region’s unique potential to be an integral part of a robust and sustainable recovery. In short, these potential building blocks for long-lasting change are the demographic bonus of a large


working-age population, nearshoring of multinational firms to Central America and a renewed appetite for regional economic integration. AALAC delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity and position the region as a core partner in the transatlantic community. The challenges are clear. An economic reactivation plan needs to create an incentive for individual jurisdictions to attract nearshoring business opportunities; and AALAC's support must be harnessed by both public and private sectors working together to train and empower low-income youth. There is also a role for the international community in helping the region to promote growth and investment. INVEST IN CHANGE In recent years US companies have been looking to grow their nearshore trade into Central America – attracted by the region’s competitive wages, growing young working population and preferential trade access. The understanding is that by diversifying supply chains and relocating, US businesses will be better protected against


future global disruptions. The advantages for Central America, if this happens, is that the region will be in a strong position to become the first US choice for nearshoring and foreign investment – both of which are critical for boosting job creation and creating competitively-priced supply chain resilience. Longstanding foreign investment relies on newly revitalised cooperation between leaders from the public and private sectors so that together they can create workable solutions to address the region’s historic barriers to growth. The region’s second-largest trading partner is Central America itself. Intraregional trade between Honduras, El Salvador, Guatemala, Costa Rica and Nicaragua accounts for 27% of total exports and


13% of total imports – a status quo that will continue to flourish as each nation’s understanding of the power of togetherness grows. It is imperative that governments seize Central America’s demographic bonus of a thriving workforce and build initiatives that encourage young people not to move away from home. Emigration, especially to the US, is a financial security and welfare risk – failure to employ and occupy an enviable native young workforce is crucial for the region’s recovery. Central American nations must invest in policies, new sectors and industries that will reduce educational and economic disparities, improve training for work in a changing economic landscape, create new jobs and attract more women to the labour market. The Inter-America Development Bank indicates that these measures could result in a 33% increase in GDP per capita. An immediate priority for all Central American nations is to achieve structural change for sustainable development. Employment opportunities must be protected and company closures avoided. UHY member firms work closely with


clients to strengthen the liquidity of their businesses and to guide them towards operating under a ‘new normal’. “We are introducing new service lines such as forensic auditing and payroll administration and we are working with associated consultants in some specialised areas,” says Arabellis Calderon, managing partner, UHY Calderon Gonzalez & Asociados, Dominican Republic. “All our staff understand the importance of excellent service and we are learning to develop new options and new thinking whenever we can.” AN INTEGRATION RESTART Better understanding and expertise in business technology is central for achieving sustainable development – full economic integration has stalled partly because of long-


standing technical and practical hurdles. A sophisticated uptake of technology across the nations will encourage growth and unity. Political leaders must put any tensions aside and prioritise an integration agenda with technology as its beating heart. This will comprehensively boost advances in the implementation in policy, fiscal and monetary coordination, tax harmonisation, the adoption of common standards and financial sector integration. If the countries of Central America act as one now, they will take their place as a market that offers the economies of scale that will lead to new market opportunities, enhanced regional competitiveness and dynamic job creation programmes. “Our offer as UHY member firms in Central America is to build our reputation on consistent excellence and responsive advisors. Our ability to work across our region’s national borders is unparalleled and one which we are very proud of,” says René Pérez, founding partner of UHY Pérez & Co in Guatemala. “These are unique times though and we will not rest until we have done everything we can to


support our clients through the pandemic crisis and on to much better times.” UHY'S MAIN MAN IN CENTRAL AMERICA It is largely due to one man, René Pérez, founding partner of UHY Pérez & Co, that UHY has such a strong presence across much of Central America. Since its inception in 2004 with one office in Guatemala, this single member firm has now expanded into Costa Rica, Honduras, El Salvador, Dominican Republic, Nicaragua and Panama, and it remains very much a family affair. René’s son Omar is now a partner at UHY Auditores y Consultores, S.A., Costa Rica and UHY Auditores y Consultores, S.A., Honduras, while another son, Bryan, is a partner at UHY Asesores y Consultores, SA De CV in El Salvador. René’s daughter,


Fabiola, is UHY Perez & Co’s administrator, and his youngest son René has recently graduated. Very much a part of this close-knit group, Diogenes Botello heads up the team at UHY Botello & Marquez in Panama and Arabellis Calderon is managing partner of the Dominican Republic member firm, UHY Calderon Gonzalez & Asociados. “My aim now is to consolidate our offices in Guatemala and across Central America so we are in a better position to help communities develop exceptional entrepreneurs, and advise the countries we work in about how to create new opportunities and stimulate greater economic growth,” says René. “In these critical Covid times, and beyond them, this is more important than ever. We want to offer our clients all the security we are able to give them.” Outside of work René has never forgotten the support he had in his early days and he has created and self-funded a foundation, Fundación Pérez. “The principle of the foundation is to support people in distress with our own resources, and in the future we may accept funds from other businesses and organisations.


So far, we have equipped a computer centre in Retalhuleu, where there is a home for abused children whose education and wellbeing we also look after. At Christmas we give gifts and food to over a hundred children in need. We have also kitted out a school with as many desks as they needed and provided 3,000 pairs of shoes for poor people in San Agustín Acasaguastlán, El Progreso.” “There are so many people in desperate need in Guatemala and around the world, but we want to do what we can to help some of them in our own country and throughout Central America,” says René. In recognition of his reputation for outstanding professional service, René was nominated President of the Latin American Institute of Tax


Law in 2018. Clearly an expert and dedicated accountant, always looking for new expert ways to make a difference, it is no wonder that René is so well thought of throughout the UHY network and Central America.


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