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Embassy of El Salvador
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
1
Presentation – Economic, political and social factors
Business opportunities
November 2012
El Salvador
Capital San Salvador
Official Language Spanish
Area 21,041 Km2 / 8,124 sq mi
Population 6.2 million (2011)
GDP Nominal (2011) 23,054 million USD (2011)
Currency $USD
Time Zone UTC -6
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Ahuachapán
Santa Ana
Chalatenango
Sonsonate SanVicente
Cabañas
La Paz
LaLibertad
SanSalvador
UsulutánSan
Miguel
Morazán
LaUnión
Gulf of Fonseca islands
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Foreign direct investment in El Salvador
El Salvador
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Political Stability
More than 25 years of free and democratic elections
GANA
Other
Parties
11%
9 seats
• Balance of power in congress
• Alternating governance
54%
68%
52%
58%
51%54%
40%
60%
80%
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
4
ARENA
39%
33 seats
FMLN
37%
31 seats
GANA
13%
11 seatsLegislativeAssembly
0%
20%
1984 1989 1994 1999 2004 2009
PD
C
AR
EN
A
FMLN
Presidential election: % of votes for Presidential Candidate of winning partySource: Supreme Electoral Court of El Salvador (TSE ).
President for 5 year term with no possible
consecutive reelection
1 chamber with 84 seats for
3 year terms
March 2012 Congress election results, seats won by each party
Central American Market
Country
EL SALVADOR GUATEMALA HONDURAS NICARAGUA COSTA RICA PANAMA
Central
America
Capital San Salvador Guatemala City Tegucigalpa Managua San Jose Panama City
Official Language Spanish Spanish Spanish Spanish Spanish Spanish
Area (‘000 Km2) 21.0 108.9 112.1 130.4 51.1 75.4 498.9
Population (‘000,000) 6.2 14.7 8.0 5.8 4.6 3.5 42.8
GDP PPP (Bn US$) 2011 44.6 74.8 35.7 18.9 55 50.6 279.6
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
GDP PPP (Bn US$) 2011 44.6 74.8 35.7 18.9 55 50.6 279.6
GDP per capita PPP (US$) 7,550 5,079 4,444 3,206 11,923 14,096 6,533
Average Inflation rate
2010-20113.6% 5.8% 6.0% 8.6% 5.3% 5.6%
CurrencyDollar
USD
Quetzal GTQ
Lempira HNL
Cordoba NIO
Colon SJC
Dollar USD
Time Zone UTC -6 UTC -6 UTC -6 UTC -6 UTC -6 UTC -5
Source: Multi –Purpose Household Survey, Central Reserve Banks, and IMF.
70% of the population and commerce concentrates in ES, GT, and HN.
Fringe benefitsrepresent 27.61% of nominal wage
SectorMonthly
Minimum Wage*Daily Wage
Agriculture $ 105.00 $ 3.50
Maquila $ 187.50 $ 6.25
Industry $ 219.30 $ 7.31
Commerce & Services $ 224.10 $ 7.47
0%
20%
40%
60%
80%
100%
120%
140%
Nominal
Wage
100%
Fringe Benefits
27.61%
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Annual Severance
Provision**
8.33%
Social Security (ISSS)
7.50%
Retirement Fund
(AFP)
6.75%
Christmas Bonus2.78%
Vacations paid yearly1.25%
Training Fund(INSAFORP)***
1.00%
Fringe Benefits (27.61% of nominal wage)
* Effective since May ** 2011 Provision in case of termination of contract*** Applies to companies with more than 10 employees
Source: Ministry of Labor El Salvador
0%
1
20.4
21.3
23.4
24.7
Guatemala
Honduras
Nicaragua
El SalvadorM 23.4
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
>= 70
Female
52.3%
Male
47.7%
years
Young Population
Average Age(Estimates)
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
7
24.7
27.8
29.2
0 10 20 30
El Salvador
Panama
Costa Rica
F 26.2
EAP: 2,641,133
0.0% 5.0% 10.0%
0 - 4
5 - 9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
0.0%5.0%10.0%
Source: Multi-Purpose Household Survey 2011, CIA World Factbook
El Salvador
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Foreign direct investment in El Salvador
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
International view of El Salvador
IndexEl Salvador Guatemala Honduras Nicaragua Costa Rica Panama
Human
Development Index
(2011)
105 131 121 129 69 58
Index of Economic
Freedom (2012)41 82 93 101 44 55
Ease of Doing
Business (2013)113 93 125 119 110 61
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Business (2013)
Freedom in the
World
(2012)
FreePartially
FreePartially
FreePartially
FreeFree Free
Global
Competitiveness
Index (2012 – 2013)
Infrastructure
Roads
Airports
Energy
Mobile Telephones
Taxes
101
66
52
42
70
37
56
83679158672379
90979271
1067992
1081067590
100108130
5795
131604294
119
4044496
432
96
El Salvador
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Foreign direct investment in El Salvador
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Legal Framework
Investment Law
• Equal treatment to national & international investors
• Liberty to transfer funds and profits abroad
• Access to local financing
International Services Law
• Incentives to strategic sectors (contact centers, BPO’s, maintenance and repair of airplanes, logistics, etc.)
• Total permanent tax exemptions (income and municipal taxes) and import duties.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
municipal taxes) and import duties.
Tourism Law
• Incentives to industrial activities
• Total permanent taxes exemption (income and municipal taxes) and import duties.
Free ZonesLaw
• Requires minimum $25,000 USD investment
• Corporate tax exemption (income and municipal taxes)
• Real estate transfer tax exemption
• Import tax exemption
Commercial Openness Access to a potential market of 1,200 million people
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
12
Main Trade Partners
Main Export Products
Main Trade Partners and Export Products
El Salvador Exports 2011
USD 5,308.8 million
United States
46%
Central America
36%
Germany
Japan1%
Taiwan1%
Other6%
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Source: Central Reserve Bank
Germany3%
Panama2%
Mexico2%
Spain1%
Canada1%Dominican
Republic1%
Apparel35%
Agriculture, agroindustry, and food agroindustry.
18%
Foods, beverages, tobacco and similar
8%
Metal-mechanic industry, electrical equipment
11%Paper
5%Plástics5%
Chemical products5%
Textiles 5%
Mineral Products3%
Products of stone, ceramic and others
2%
Footwear 1%
Furniture and medical devices
1%
Others1%
Strategic
Location
Close to key markets• Closeness to the vital maritime
routes.
• A natural bi-oceanic logistics
corridor.
• Container terminal ready for
post panamax ships.
• A dominant airport certified A1
by the FAA linking important
cities.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
14
Main airlines serving El Salvador
Main Freight Companies
Air Cargo• DHL• UPS• Arrow
Regular charter flights
Maritime• MAERSK• CROWLEY• MSC• SEABOARD
• NIPPON• CSAV• APL • Hamburg Süd
(Montreal, Toronto)
Strategic Location
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Strategic Location
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
El Salvador
• Solid political & economic environment
• International view of El Salvador
• Commercial openness & strategic location
• Foreign direct investment in El Salvador
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Foreign Direct InvestmentStock 2011 USD 8,141 million (35.3 % of GDP)
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities
Specialized Textiles Aeronautics Electronics Medical Devices
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Offshore Business Services Health Services
Tourism Agro-industry Logistics and Infrastructure Footwear
El Salvador offers an aircraft
maintenance, repair and overhaul
(MRO) industry for commercial aircraft,
which has successfully placed the
country on the global aviation map.
The successful operations of Aeroman,
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
The successful operations of Aeroman,
a member of Canadian MRO group
Aveos, are widely recognized within the
emerging Latin American aeronautical
clusters.
AeronauticsCompliance with international certifications ensuring the
highest quality required in aircraft maintenance services.
El Salvador:
Quality in aircraft maintenance services� Technical Universities and Institutes have specialized curricula
developed in conjunction with the private enterprise to ensure the availability of skilled labor.
� In addition to maintenance services for commercial aircraft, a variety of other companies in the emerging aerospace clusters offer the following services:
• R44 helicopter and corporate airplane maintenance.
• Distribution and warehousing services for aircraft parts.
• Component maintenance shops.
• Ground Services.
• Light sports aircraft (LSA) airframe, wing tip, and engine part manufacturing in composite materials, etc.
• Aircraft harness system assembly.
• Refurbishment on older Light Sports Aircraft (LSA) models.
� A Free Trade Zone Law and an International Services Law which provides tax incentives to these types of manufacturing.
� Available land for the development of industrial operations next door to the International Airport of El Salvador, under Public Private Partnership (PPP) mode.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Aeronautics:
• Commercial aircraft maintenance service operations.
• R44 helicopter maintenance operations.
• Light Sports Aircraft (LSA) airframe part manufacturing.
• Painting and maintenance of commercial aircraft interiors.
7
For investors in agro industry and entrepreneurs who seek a platform to produce and export, El Salvador offers
attractive opportunities in the following sectors:
• Fruit Farming
• Aquaculture
• Ornamental plant farming
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
• Ornamental plant farming
• Food & Beverages
These sectors are highly favored by good weather and easy access to
regional and international markets.
AgroindustryClimate, tax incentives and a platform connected
to additional markets.
El Salvador:
A production and export platform• El Salvador possesses suitable climatic and soil conditions for
fruit and ornamental plant farming.
• Suitable soil and climatic conditions for the production of a wide variety of tropical fruits.
• The country has optimal interconnections for the trade and transport of agro industrial products.
• Availability of water resources for the sustainable development of aquaculture.
• Negotiated trade agreements open the possibility for the sector to expand to regional and international markets.
• Competitive labor costs.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Agro Industry:
• Aquaculture Sector: Development of the production chain through the supply of young fingerlings, feed and other inputs to attain productivity and quality of aqua cultured products.
• Fruit Farming Sector: Development of supporting industries for the provision of supplies, equipment, quality vegetative materials and processing technology for the expansion of crops of avocado, Persian lime, coconut and organic products.
• Processed Foods Sector: Opportunities in the development of complementary industries in a sector in continuous growth in areas such as: packaging, process technology, machinery and equipment.
International medical device
manufacturing companies will
find in El Salvador a strategic
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
partner to be used as a
platform for export to markets
in North America, Central
America and the Caribbean.
Medical DevicesRapid access to markets
El Salvador:
A strategic partner in medical devices• El Salvador has tax incentives that encourage the
establishment of foreign companies within a regulatory framework.
• Investors enjoy rapid access to markets with a potential of 1,100 million people through the existing FTAs and thanks to its strategic location.
• The country has focused on developing industrial and service parks boosting industrial growth, especially in the textile and plastics sectors.
• El Salvador is a pioneer in Latin America in the training of professionals in prosthetics and orthotics, putting a highly skilled workforce at the disposal of businesses.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Medical Devices:• Disposable laboratory and diagnostic equipment.
• Hospital linen and disposable clothing.
• Hospital furniture.
• Orthopedic products.
• Packing and packaging of disposable medical devices.
El Salvador offers a successful platform for
electronic component manufacturing, with
over 30 years of proven credibility. The
country has experience in the manufacture of
ceramic and tantalum capacitors in
compliance with required international
standards.
This has enabled the country to acquire and
implement state-of-the-art technology and
know-how.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
The high quality, efficiency and productivity
of operations in El Salvador have ensured the
transfer of manufacturing plants from
England, the Czech Republic, Mexico, China
and the U.S., achieving continued expansion
in all processes.
ElectronicsHigh productivity and quality manufacturing at competitive costs.
El Salvador: A platform for electronic components manufacturing
• Setting of strategic alliances with academia to ensure availability of skilled workforce.
• E-cluster in formation around the AVX Kyocera Company in El Salvador.
• Wide local supply chain in place in the areas of metalworking, plastics, support systems, automation systems, engineering, transport and chemicals, among others.
• Existence of a Law on Free Zones offering tax incentives to this type of manufacturing.
• The best international airport in the region just 35 minutes from San Salvador, and 2.5 hours from Miami.
• Available land for the development of industrial operations next door to the International Airport of El Salvador under Public Private Partnership (PPP) mode.
• Electrical network system with strong capacity for expansion.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Electronics:• Electronic component manufacturing and production.
• Electronic equipment and parts assembly.
• Cell phone electronic component repair.
For offshore business service firms seeking
to enter markets in the U.S. and Spanish-
speaking countries, El Salvador is a strategic
partner for providing quality multi-region
business services.
Our dynamic business environment,
strategic location for near-shoring, time-
zone complementarity and the outstanding
performance of our bilingual human
resources (English/Spanish), makes us a
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
strategic platform for companies offering
global services.
The modern and advanced local
telecommunications infrastructure ensures
the delivery of quality services and cost-
effective location for this industry.
Offshore Business ServicesCost effective near-shore location, based on a state of the art
telecommunications platform which guarantees your global offer.
El Salvador: Complementary strategic partner for multi-region operations• Strategic location in relation to English- and Spanish-speaking
customers (shorter flight times from North and South America).
• Same time zone for primary customers (U.S. and Canada) and Spanish-speaking markets (91% of the global Spanish-speaking population).
• Time-zone complementarity for customers in Europe and Asia (24/7 possibility).
• Friendly, hardworking and service-oriented people with neutral English and Spanish accents.
• Exceptional performance against key indicators (KPIs) such as Sales, C-Sat, FCR, etc.
• Complementary service to other geographical areas and high-end front-office services.
• Young and committed workforce (60% of the population under 35 years).
• Cultural affinity of the workforce with priority markets.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Offshore Business Services:• Voice Business Process Outsourcing (Call Centers)
• Non-voice Business Processes Outsourcing (BPOs)
• Shared Service Centers (KPOs)
El Salvador offers the opportunity to
invest in health establishments
catering to patients living in the U.S.
and Canada, taking advantage of the
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
geographical proximity to those
markets, the low costs of health
professionals and the fast connections
between medical facilities and
enviable landscape sites..
Health ServicesGeographical proximity to the main countries of origin of medical
tourism, offering quality services at low costs
El Salvador: Strategic location and excellent connectivity between touristic sites
• The strategic location of El Salvador and the presence of TACA airline's hub in the country provide excellent air connectivity to the U.S. and Canada (2 hours from Miami and 5 hours from Los Angeles by direct flight).
• The best road infrastructure in the region allows visiting the wide variety of tourist attractions the country offers in a short time (beaches, lakes, volcanoes, colonial cities, etc.) .
• The community of Salvadorans abroad, about 2 million people, is A natural market who constantly visits the country and buys health treatments locally.
• The existence of qualified medical professionals who have earned postgraduate degrees abroad offer their services at very competitive costs.
• There is a Law on International Services that encourages the establishment of health centers.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Health Services:• Hospitals
• Specialized clinics
• Rehabilitation centers
• Medical spas
• Hospitals Resorts for treatment of chronic diseases.
El Salvador offers attractive
investment opportunities to
specialized textile and clothing
companies wishing to enter the
regional Central and North American
markets based on the favorable tariff
conditions of FTAs with the U.S.
(CAFTA) and the European Union.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
(CAFTA) and the European Union.
El Salvador offers a vertically
integrated industry, which promotes a
competitive high-fashion, high-
turnover garment manufacturing
industry.
Specialized Textiles and ApparelVertically integrated industry with easy access to markets
El Salvador: Specialized textile and apparel sector environment
• More than 260 textile and apparel companies have establishedthemselves in the country, including internationally recognizedcompanies such as Pettenati, George C. Moore, UNIFI, Swisstex, CSAmerica and APS.
• The rule of origin granted by the CAFTA-DR Free Trade Agreementallows free access for textiles manufactured in the region with yarnproduced in Central America.
• A cluster of companies that use synthetic fibers (nylon, polyester,micro fiber, among others –products paying a 32% tariff whenimported from Asia through the U.S.) is in the process ofconsolidation.
• The country offers a wide variety of services, including embroidery,industrial laundry, dyeing and finishing, cutting and packing, whichhave been a great support to the manufacturing operations ofcompanies such as HBI, Fruit of the Loom, Adidas and Lacoste,among others.
• The evolution of the manufacturing scheme from "maquila" to "fullpackage" has developed the supply chain through materialsdistribution centers, required for vertical integration andsustainability of the industry.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Specialized Textiles and Apparel:• Manufacture of yarn and fabrics.
• Manufacture of knitted garments with accessories and embellishments (embroidery, screen printing, heat transfers, etc.).
• Manufacture of garments included in the “Single Transformation” category: bras, girl dresses, boxer shorts, sleepwear and luggage.
El Salvador offers attractive tourism projects
in various stages of development that take
advantage of a wide array of attractions
located close to each other (surf spots,
beaches, mountains, lakes, volcanoes).
The country has a historical past inherited
from the Maya, a pleasant climate all year
round, competitive pricing of land, low
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
round, competitive pricing of land, low
construction costs and proximity to
important markets of origin of international
tourism.
TourismSurf, fishing, adventure tourism and the
Maya world ... all in one place.
El Salvador: Variety of close-by touristic attractions
• Tax incentives regulated by a Law on Tourism.
• Foreign investors have the opportunity of acquiring propertyin their own name.
• Competitively priced land and low construction costs.
• Rapid access to a variety of tourist attractions.
• Short flight times from North and South America.
• The International Airport of El Salvador handles more than470 arrivals and departures every week.
• Pleasant climate all year round.
• Warmth and friendliness in tourist service.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Tourism:• Mixed-use developments .
• Hotels: Urban, Resort, Boutique, Bed & Breakfast, Eco-lodge, Hostels.
• Vacation homes.
• Properties with tourism potential
• Marinas
For companies producing consumer
goods seeking to sell to larger markets,
El Salvador, the ‘logistics hub of Central
America,’ provides air and seaport zones
with tax incentives for manufacturing,
logistics and distribution, becoming a
gateway to U.S., Asian and European
markets.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
El Salvador has the infrastructure,
geographical proximity and free trade
agreements to ensure easy and timely
access to large markets.
LogisticsEasy and timely access to large markets.
El Salvador: Strategically located and available infrastructure
• Convenient location: Proximity to the trans-Pacific route (connecting Asia and the Americas); proximity to the Panama Canal (1. 5 days by sea); rapid maritime access to U.S. markets on the East and West coasts; and rapid road access to the Southern and Eastern U.S. markets.
• Maritime infrastructure available to receive large ships: La Union Centroamericana Port with the potential to become the leading container port on the Pacific coast of Central America.
• Land connectivity: The port is located 371 km. away from Puerto Cortes (Honduras Atlantic Coast); 8 hours from the border with Mexico; and 34 hours from the U.S. border (Texas).
• Air connectivity with rapid access to U.S. markets from the International Airport of El Salvador. Approximate flight durations: Miami: 2:30 hours; Los Ángeles: 4:00 hours; Houston: 4:00 hours; New York: 5:00 hours; Panama: 1:30 hours.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Investment Opportunities in Logistics:• Logistics activity zones in the proximity of seaports.
• Airport logistics center
• Distribution centers
Puerto de Acajutla, located in Sonsonate Puerto La Unión, located in La Unión
For companies producing footwear
seeking to sell to larger markets, El
Salvador, the ‘logistics hub of Central
America,’ provides air and seaport zones
with tax incentives for manufacturing,
logistics and distribution, becoming a
gateway to U.S., Asian and European
markets.
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
38
El Salvador has the infrastructure,
geographical proximity and free trade
agreements to ensure easy and timely
access to large markets.
LogisticsEasy and timely access to large markets.
Footwear
A platform to export to large markets.
Began in the city of Santa Ana with local artisans.
El Salvador:
Footwear Industry
Currently:
� Big companies as ADOC, DURAMAS, CARICIA, GARBAL, exports to United States, Central America and The Caribbean, Europe and Asia.
� 16 small enterprises, primarily produce to the Salvadoran market.
� 390 handicraft workshops producing for the small and large companies located in San Salvador and Santa Ana.
� ASPC: Salvadoran Association of Footwear Producers with 125 companies of La Libertad, La Paz, La Unión, San
2011� Exports: US $42 million (12% annual growth
over the last 6 years -2005/2011-).
� El Salvador has the 26th position as a footwear supplier of the United States. El Salvador exports to the US market grew 28% in 2011. Source: USITC
� The Imports grew by 23% compared to 2010 (US $106 million) and 9% annually in the last
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
with 125 companies of La Libertad, La Paz, La Unión, San Vicente and San Salvador.
(US $106 million) and 9% annually in the last 6 years.
Services provided by PROESA
� Information on the business climate, economic factors, set-up and operational costs, regulations, availability of human capital and any other information required in the early stages of the evaluation process.
� Personalized attention to specific enquiries.
Informationand Advisory
Facilitates the evaluation process of the country by offering:
Advises international companies on investment opportunities in El
Salvador by providing:
� Information on investment opportunities in strategic industries, as well asincentives and investment advantages of those industries.
� Statistics and customized industry information.
Business Opportunities
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
Works to identify contacts and locations
for international investors through:
� Finding of specific locations and sites for each project.
� Facilitating contacts of potential partners, government institutions and providers of goods and services including legal, financial, customs, real estate, among others.
� Organization and coordination of customized site visits to El Salvador.
Assists potential and established investors with:
� Integral support on procedures required to establish or expand business operations in the country.
Establishment and Expansion
Assistance
www.proesa.gob.sv
Agencia de Promoción de Exportaciones e Inversiones de El Salvador
EXPORT AND INVESTMENT PROMOTION AGENCY OF EL SALVADOR
TEL +503 2246 6400
Edificio D'Cora Primer Nivel, Urb. Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador, C.A.
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