Nicaragua: New Investment Law Protects Chinese Interests
and grants “discretionary powers” to Laureano Ortega
By Ivan Olivares (Confidencial)
HAVANA TIMES – The new Foreign Investment Law and its regulations, approved by the National Assembly, will make the country less attractive to foreign investment, “if Nicaragua can get any less attractive than it already is,” says economist Juan Sebastián Chamorro. At the same time, the law grants more power to Laureano Ortega Murillo and serves to protect Chinese investments by eliminating any competition, he adds.
On February 24, 2025, the new Foreign Investment Law, was published in the Official Gazette. Its stated aim is to strengthen “the promotion, encouragement, facilitation of the investment registration process, and business formalization.” Then, on June 4, the National Assembly published a decree containing the regulations for the aforementioned law, making it operational.
Some of the most significant elements of the law include the creation of a National Foreign Investment Commission, coordinated by the presidential advisor for Investment, Trade, and International Cooperation, Laureano Ortega Murillo. Another element is the creation of a mandatory foreign investment registry, which must be filed with the Ministry of Development, Industry, and Trade.
According to economist Chamorro, both elements aim to strengthen the dynastic project and provide a legal basis for the Ortega-Murillo family to appropriate any business that interests them.
“This law displays three elements characteristic of the Ortega-Murillo dictatorship and of dictatorships in general. First, a high level of discretion,” Chamorro said. The second is “extreme ambiguity,” because it doesn’t establish clear or well-defined parameters, and the third is that it grants enormous discretionary powers to Laureano Ortega, reinforcing the family’s grip on power.
These three elements are a recipe for scaring away investors, Chamorro asserts. He also points out that the government defines which sectors are to be considered “strategic,” adding further ambiguity and discretion to a policy that is supposedly meant to encourage investment, “but it does the opposite.”
In the Ortega-Murillo Family’s Interest
Reviewing the family’s business behavior, Chamorro sees that the new law and its regulations are designed to make it easier for the Ortega-Murillo family to take over any company they find appealing. He recalls that when the family has identified sectors or projects of interest, such as in the energy sector, “the State would request an equity stake, which is essentially an institutionalized bribe.”
Therefore, he doesn’t rule out that such practices will continue. “By taking an equity stake, the door is opened to expropriation through this registry, which is just as discretionary as the entire law. Once an investment is registered, it can be canceled, allowing it to be confiscated with no possibility of appeal. From now on, investors need to be clear that the investment climate is even more restrictive,” he warned.
“How much direct foreign investment does Nicaragua have to offer in order to assume the luxury of discriminating to that extent, deciding who gets in and who doesn’t, and threatening to expel those who don’t follow the plan?” asked a financial expert who requested anonymity.
“Are we misreading the numbers? Does Ortega have such strong job creation, revenue generation, exports, balance of payments, international reserves, etc., that he can afford such a luxury?” the expert questioned.
Data from Nicaragua’s Central Bank shows that net Direct Foreign Investment nearly doubled over the last five years, from $746.5 million in 2020 to $1.352 billion in 2024. The main sources were retained earnings ($882.7 million), new capital contributions ($329.2 million), and external debt with related companies ($140.4 million).
Chamorro sees the investor registry as “a fundamental element that puts the country at a disadvantage compared to others” that are competing to attract foreign capital. His thesis is that any investor examining Nicaragua’s legal investment protections “will encounter this thoroughly abusive law and will obviously be deterred.”
Protecting the Chinese Partner
The former deputy finance minister identifies another reason behind this type of law: to promote Chinese investment in Nicaragua and restrict competition. He cites the recent history of trade and contracts to support this view.
Regarding commerce, he mentions that “the Chinese are taking over markets, colluding with government officials to unfairly compete with the retail sector and dismantle it as we know it.” Additionally, he notes that Nicaragua is rapidly going into debt with hopes of seeing Chinese construction firms invest in the country.
He points out that “these investments have two components: one is the typical opacity of the Chinese and the Ortega-Murillo family in contracting these projects.” He explains that such contracts “are not governed by international procurement standards—such as transparency, publicity, competition, and equal opportunity—but are instead conducted in complete secrecy.”
In this process, the Ortega-Murillo family has the complicity of the National Assembly, which approves every proposed law it receives. This modus operandi “burdens the Nicaraguan state with extremely onerous debt, resulting in higher interest rates, shorter grace periods, and shorter debt repayment terms,” he said.
Another shortcoming—when viewed in terms of the nation’s interest—is that contracts with Chinese companies include clauses granting the contractor full autonomy and power to make changes as they see fit, obligating the state to pay for those changes. “This leaves the Nicaraguan state completely defenseless and undermines its sovereignty,” Chamorro said.
Trying to understand the logic behind Ortega passing the new Foreign Investment Law and its regulations, the financial expert asks whether the dictator has “thrown himself, with an anti-economic logic, into China’s arms thinking they’ll provide everything he needs.” His response: it would be wise to closely review the national accounts and Ortega’s specific plans involving Chinese investment.
First published in Spanish by Confidencial and translated and posted in English by Havana Times.