Growing the Americas

The past few years we have been experiencing two migrations going on in the world – the migration of apparel sourcing out of China and the migration of people from the Northern Triangle.

This shift and the desire to make the Western Hemisphere more competitive was the impetus for the launch of the Coalition for Economic Partnerships in the Americas (CEPA). CEPA brings together companies, trade associations, think tanks, and other stakeholders who have a decades-long track record of creating thousands of jobs in the Americas through investment and trade. CEPA has been advocating for a whole of government approach to include the Dominican Republic-Central America free

Beth Hughes Vice President of Trade and Customs Policy American Apparel & Footwear Association

trade agreement (CAFTA-DR) and regional infrastructure and customs operations in the policy toolbox to address the root causes of migration. By working in partnership with the Biden-Harris Administration, partners in Central America, and committed private sector peers, we can chart an economically sustainable path towards alleviating today’s humanitarian, security and economic crises, and modernize the U.S.-Central America economic relationship to help reach its full potential. from outside the CAFTA-DR countries for use in textile or apparel products and imported to the U.S. duty-free under the agreement.

CEPA has recommended several policies to make the CAFTA-DR region a more attractive sourcing hub for U.S. companies seeking to move away from Asia. However, due to the lack of sufficient quantities of diverse yarns and fabrics in the region, CAFTA-DR has not reached its full potential. Fortunately, CAFTA-DR contains a special mechanism to course correct and grow and sustain apparel production and investment in the region. The short supply mechanism allows certain individual fibers, yarns, and fabrics that are unavailable in commercial quantities in a timely manner, to be sourced

By gaining access to yarns and fabrics that are not available in the region, there will be more demand that will mean more jobs in the region. The sourcing that currently goes elsewhere will now flow to Central America. This will also support more textile investments.

To really move the needle, we need to really examine the tools like short supply to create an integrated and vertical supply chain right here in our own backyard. It is through trade, specifically incentivizing the utilization of CAFTA-DR in apparel, where we will see progress.

Rosemarie Luna Partner in the International Trade and Customs Practice

Expansion opportunities for agribusiness in Guatemala

Agriculture is the most important economic sector in many countries, having special relevance in Latin America. According to recent data from the Inter-American Institute for Cooperation on Agriculture (IICA, acronym in Spanish), this sector generates large exports representing close to 14% of agri-food product exports in the world and 25% of total exports in the region (IICA, 2021).

Guatemala is a country with an agro-export sector that has shown a 6% annual growth in a sustained manner in the last 20 years, directing agricultural production to different international markets such as the US, the EU, Asia and Latin America.

Additionally, Guatemala has a vast natural wealth that allows it to have competitive advantages over other markets due to its climate conditions: With 360 microclimates, different altitudes that provide the country with hot, temperate and cold lands that offer varied soils all throughout the year. Such natural conditions facilitate the attraction of investment, as well as scientific and experimental research for various agro-industrial products which has come to strengthen the establishment of agribusiness production chains, contributing 14% of the GDP and above all, being the main source of employment in the country. Guatemala is a country with great growth opportunities for both traditional and nontraditional agricultural sectors. Maybe the most well-known focus, a motive for great national pride, belongs to traditional agriculture, being Guatemala the largest cardamom exporter in the world, the third largest banana exporter, 90% of produced coffee is exported to different markets and sugar is a product of great importance (Guatemala, 2021). Still, there is an increasing participation in non-traditional markets and this has allowed diversifying markets and trading partners, opening and seeking openings for different fruits and vegetables, forestry and fishery products, among others for which there is a considerable demand, Guatemala having the capacity to supply these needs with high quality products and at the same time the access provided by the trade agreements signed.

The main opportunities are given to the agri-food sector by focusing on safe products that comply with the required phytosanitary conditions to ensure vegetable and animal health in a sustainable manner.

The future of the agri-food system is determined by climate issues, technological innovation and the evolution of consumer preferences. Strengthening the agri-food system requires institutional, technological and investment policies that favor the promotion of food security and the development of sustainable food systems in the region. Opening to the market will facilitate trade and the international supply of food products, provide support to vulnerable populations and promote environmentally friendly production and investment in agriculture.

New consumption habits emerge every day and this provides an enormous opportunity for those prepared to face innovation based on sustainability, compete on prices, focus on health and take advantage of the demand for fresh and quality products.

Well into the 21st century, the pandemic changed the way of doing business and providing services, making organizations more dependent on technology and becoming the main driver of digital transformation for many organizations globally. Guatemala and its public and private institutions not being the exception. Consequently, there is a high dependence on technology and information that should be treated confidentially in many cases.

Recently, during the pandemic, many organizations have been victims of cyber-attacks which have represented considerable economic losses and loss of valuable information assets. In

Luis Gálvez Advisory Manager

addition, these organizations have had to face reputational damage and legal actions for disclosing information and sensitive data to third parties.

Technological controls to mitigate information security risks have been strengthened over the years. Companies are investing more and more in this type of controls, which, by their nature, work automatically in most cases. That is, they go through a life cycle that involves their installation and implementation, configuration, continuous monitoring and updating.

Firewall, antivirus software, web browsing filtering, intrusion detectors, etc., are expensive controls that generally work alone and only need to be monitored and updated periodically. Nonetheless, it is of little or no use to have the best antivirus software if a user accidentally or intentionally discloses in advance the selling price of the company’s flagship product or the chemical formula of the most innovating product that the company will massively sell over the following quarter, for example.

It is undeniable that the region is transforming digitally by leaps and bounds, but it is also very important that organizations implement the cultural change that seeks to align technology departments and their services with the company’s business goals, visualizing the problem of technological and information security risks as an institutional problem where all users and employees without exception have a degree of responsibility.

The expenditure of economic resources whose objective is to mitigate information security risks must no longer be considered as an expense, but as an investment that within a globalized and interconnected world with multiple threats to information security will generate competitive advantages and an environment of trust for customers and strategic business allies of companies and public organizations that adopt an integral management of technology and information risk.

It has been statistically proven that it is internal users, the employees, who are the main threat for the security of information. More than 80% of the attacks suffered by organizations today come from within them. In most cases, distracted, unaware or simply ill-intentioned users, intent on doing harm or obtaining personal benefits are to blame for the economic losses or reputational damage suffered by organizations as a result of a leak of sensitive information. A careless user who clicks on a link in a malicious email can compromise the security

Carlos Vides Assistant Manager, Modern Banking

Banking for a better society

Never in the history of mankind has there been an era of such rapid changes as today, changes driven thanks to the emergence of new technologies and the speed of distribution the Internet provides to reach thousands of people. This gives way to the construction of digital files that can benefit many people and make great changes for society to secure abundance and prosperity. In this sense, Guatemala’s banks have a great responsibility, since with technology and the available connectivity level, financial services that add value to the lives of the most vulnerable population can be performed. Banks had to be transformed in order to become born-toserve institutions in a physical manner for their customers, from a limited coverage, to digital institutions with great coverage capacity and exponential levels of attention in real time. The mobile apps that banks have developed which have solved transactional and closeness problems between them and their customers are proof of this.

How to bring financial services to unbanked individuals? Even though Guatemala is a country with high poverty rates, access to technology through mobile phones is massive, with a population of 17.1 million inhabitants and over 22.1 million mobile phones, this is a way to reach the most vulnerable population through their mobile devices. Nevertheless, connection to the Internet is limited due to its cost. This is why Banco Industrial, for example, has adopted a strategy of absorbing the cost of data consumption of its mobile application Bi en Línea (BI Online) so that users do not need to have data allowance to use it and thus democratize banking.

What is next?

In order to build a better society, it is necessary that besides the possibilities that enable technology and connectivity, banks focus beyond banking, educating the population in financial matters and building long term relationships through solutions that make people’s lives easier. Times are coming where payment methods can revolutionize the way economies move and improve the economic growth of countries, but it is very important to think about the benefit that will be given to users so that they can easily migrate from the use of cash, for instance, to digital payment methods that allow them to enter the financial system and have access to credit as a driver for improving the quality of life of families and society in general. Banking’s digitalization and the massification of financial services are key factors for the planet’s sustainability through the reduction of paper use and carbon emissions, being major players in building a better society.

It is possible that we have all heard about Bitcoin on a social network or in the news. The likeliest thing is that we have heard about its price, whether if it went dramatically up or down.

This type of exposure has made most people see Bitcoin through the eye of an investor, however, it is much more than that. This article will focus on one of its main attributes: Bitcoin as a monetary network.

Let’s imagine that a currency is a train and that the monetary network is the rails on which it travels. Even though the rails were built with the main purpose of allowing the train to pass over them, once available, many more things other than trains can pass over them. Let’s see some characteristics that make Bitcoin an extraordinary monetary network:

1. It is fast. Making a transaction only takes a few seconds.

César Tánchez Founding Director and Host of the radio program and

podcast Bitcoin Economics

Let’s put it in context, this is the possible number of transactions per second that can be carried out: a PayPal: 194 b Visa: 24,000 c Bitcoin Lightning: 40,000,000

2. It does not have minimum or maximum limits for the transfer of funds. The minimum amount that can be sent between two wallets is 1 Satoshi, the smallest unit in Bitcoin which is equivalent today to $0.0002. The largest transaction ever recorded was 161,500 Bitcoins, which at the current price of $20,000 per Bitcoin, amounted to more than $3.2 billion.

3. Low transaction cost. Whereas all wallets are anonymous, transactions are public. Recently, one was picked at random with a value of $5,091,377, where the transaction cost was as low as $0.81.

4. Secure. Bitcoin has one of the most powerful cryptographic systems in existence. It has never been hacked operating 24 hours a day, 365 days a year for more than 13 years (2022) with an open source.

5. Cross-border. Bitcoin can be sent anywhere in the world with no limitations. It is possible to send Bitcoin from Guatemala to Timbuktu (I had to look up this city to see if it was real and it is really a part of Mali) or any other country in the world. Unlike physical valuable resources such as paper money, gold, etc., digital money is the only one that has a chance of being used in space one day.

6. Point to point. A third party is not needed to send resources as it is performed directly by the interested parties.

7. Accessible to everyone. There are no fees to open an electronic wallet, for maintenance, subscription, contracts and a long etcetera. The required information is minimal and Internet is the only thing needed to use this monetary network and not even permanently.

8. Decentralized. The Bitcoin monetary network delegates control and decision making to all participants in the network which allows it not to be manipulated by any particular individual, company or institution. Decentralized systems are less likely to fail because they rely on many separate components. They are very costly to attack or destroy because they lack sensitive central points that can be attacked.

If you have come this far reading, you may have realized that Bitcoin is not only a form to invest, but also a disruptive monetary network, useful and innovating. As time goes by, it gets stronger and its adoption grows among individuals, companies, institutions and governments.

Nothing stops

E-commerce

When we mention e-commerce, the first thing that comes to mind is the opportunities that this way of doing business left us in the wake of the pandemic. The need to obtain products and services during lockdown with the least possible human contact and delivered to our doorstep made sales through this mode increase exponentially.

E-commerce went from being a model that did not inspire trust, with unreliable and insecure payment methods and uncertain delivery times, to become a necessary model where to migrate due to the need created during the pandemic.

Over time, it has been made evident how e-commerce has contributed to the emergence of new ventures and continues to have a direct impact on the growth of companies. Local and cross-border sales through web platforms (online stores), mobile phone applications (mobile

Luis Eduardo González General Manager

commerce), open shopping portals (marketplace) and social networks (social commerce) continue growing.

According to statistics provided by Combex-IM, there was an increase of 43.5% in processed packages that entered the country when compared to the volume processed in 2019. On the other hand, the report “E-commerce Status in Guatemala” states that sales from national stores that use e-commerce had a sales increase of up to 154% and an increase in stores of 52%.

New trends indicate that companies that adopt this commerce model will have to implement process automation, care for the environment, efficient payment systems, free-of-charge deliveries or included in the price (defined as Amazon), absolute presence in social networks, user-friendly and secure mobile applications that are easy and safe to use and become experts in the last stretch.

Similarly, it is essential to mention the importance of the proper functioning of the supply chain since its optimization will bring greater benefits, such as lower and optimal inventories, decrease in points of sale, lower supplierseller costs, reduction of times to deliver products to the final customer and elimination of products with low inventory turnover.

There is still a long way to go to continue promoting e-commerce as work must be done on intellectual property issues, consumer protection, tax obligations, regulations that include benefits and incentives for its proper implementation, both for local companies and for users who wish to use crossborder e-commerce, such as tax exemptions or tariff exemptions (de minimis application for imports), among others.

In conclusion, creativity, innovation and technological solutions play a fundamental role in the success of businesses. The speed at which news and advertising spread, the essential and powerful communication through social networks, the influence and the trend towards ease and simplicity, the care for the environment and having a robust supply chain and rule of law, are key factors for success when we talk about e-commerce. E-commerce is a sales model that not only came to stay but to become - without fear of being wrong – the preferred method of consumers in a very short time.

Digital Transformation

The new World: Order with special attention to cybersecurity

We live in the world that our questions create. Asking a question makes the mind develop innovating scenarios. Companies strategically wonder if they should digitalize themselves. The digital transformation “is the change associated with the application of digital technologies in all aspects of human society.”

Not all companies, processes or business models need to digitize and it is not mandatory to digitalize the company with disruptive technologies to take advantage of the benefits from this technological wave. The number of executives who wish to digitally transform their companies is really low because who wants to change if things are going smoothly?

The demand for digital solutions in 2032 will be $2.3 trillion, which represents not only a great opportunity, but also an

lan Reyes General Manager

enormous threat, with emerging players and competition trying to position themselves.

On the other hand, a question arises: Where to begin? There is no easy answer to this question given the great amount of available solutions and the complexity involved to align them with strategic plans.

The article Top 10 Digital Transformation Trends for 2022 provides a non-exhaustive list of the main technologies. Regardless of the choice made, companies must take into account the following key elements when defining their digital strategy:

1. Have the customer at the core.

2. Be surrounded by the best people and consider the new requirements of the mega change in on-site and remote work.

3. Hyper acceleration of the automation of business processes, document digitization and robotization of repetitive functions.

4. The new regulations go beyond compliance. Applications demand new regulations through accepting cookies and terms of use that with the aim of improving the experience, encourage to willingly provide sensitive data, which presents a risk by not having control of the ultimate use of our data.

5. Cybersecurity and the increasing risk of cybercrime. Seven out of ten companies have suffered some type of attack or fraud which has led to an annual growth of over 100% in Ransomware.

Bank institutions, in the face of the increase of cybercrime are promoting some recommendations that are summarized below: a Update software and operational processes through Auditing mechanisms b Implement Access Control tools c Establish Ethical Hacking programs d Update the Disaster Recovery Plan (DRP) e Automate monetary processes f Encrypt Connectivity g Prohibit external devices h Establish Cybersecurity as a measurable objective (Binance Smart Chain, BSC) i Training in the importance of the proper use of passwords j Carry out the due process for new employees and periodical revisions for critical positions, suppliers and customers k Strengthen Clean Desk Policies

Transformation is not the same as innovation, but a response to the need of serving our customers in a better way. The goal is, besides developing digital skills, changing the mentality. Thus, we have to ask new questions.