Boston, MA -- (SBWIRE) -- 07/11/2013 -- The Central America region as a whole remains small in scale, with combined industry value of just US$9.6bn in 2012. With that in mind, the high risks and small scale make the region broadly unattractive for new companies who do not have existing operations in the region or surrounding areas to leverage off. That said, we do see strong growth in a number of sectors, including social housing, renewables and hydropower, gas conversion, and airports and ports.

Central America presents a broad range of opportunities across the infrastructure and wider construction sectors as infrastructure deficits across the region are addressed. However, it also poses significant risks. Home to deep-run corruption, high crime rates and unsophisticated institutions, the generally small industry sizes offer little to make those risks palatable. However, we do see sporadic growth opportunities, and highlight Panama, Costa Rica and Nicaragua as outperformers.

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These opportunities are most likely to be picked up by a combination of smaller domestic players, regional players from Mexico and Brazil, Spanish companies which have a strong presence in the region already, and Chinese companies, which can provide their own financing and have higher tolerances for risks. Broadly speaking, opportunities can be found across the region, with a handful of sectors having a positive medium-term growth outlook:

- Public-Private Partnerships: A number of countries in the region are pursuing public-private partnerships (PPPs) to develop infrastructure. In addition to Guatemala having established a PPP agency in November 2011, El Salvador announced in December 2012 that a PPP will be used to develop the Cuscatlan International Airport, and in April 2013, Honduras' public-private promotion agency, Coalianza, released the tender for construction and operation of the Palmerola Airport. However, on the whole, regulations across the region are largely in their infancy, and the longer-term policy environment does not instil enough confidence to attract long-term commitments from investors. Securing financing for investments in the region would also be a tall order. However, if we see a couple of projects move forward successfully, an encouraging precedent would be set.

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