For the past several years, Guatemala has shown stable economic growth and the political will to pursue reforms conducive to a better business climate. Many reforms were initiated during the previous administration of President Berger, intended to promote market attractiveness, investment and economic growth. Outgoing President Colom pledged to further improve the business environment and to promote foreign investment. Nevertheless, according to the US Department of State 2011, while the Colom administration prioritised government resources on social, health and development programmes, it has reduced funds available for efforts aimed at strengthening rule of law and attracting foreign investment. Colom also advocated a zero tolerance policy towards corruption and announced his intentions to strengthen and coordinate public entities created to fight corruption in the country. In November 2011, Otto Pérez Molina won the presidential elections after running a campaign vowing to crackdown on rampant crime and corruption.

Positive developments in relation to corruption and investment:

• Since President Colom took office in 2008, several senior officials have been dismissed in response to scandals, corruption charges, or policy ineffectiveness.
• Surveys indicate that the country has made progress in reducing the burden of corruption on companies over the past few years, especially in relation to bribes solicited by lower level public officials.
• The government launched an initiative in 2004 to enhance transparency, the Guatecompras web portal (in Spanish), where all bids and information about awarded public contracts above a certain threshold have to be published. Computerisation of public procurement is intended to reduce the number of direct contact points between public officials and companies, thus reducing the opportunities to solicit bribes in return for contracts. According to various sources, this initiative has had some success in curbing corruption.

Risks of corruption:

• Companies are likely to encounter demands for unofficial payments when applying for several permits and licences and when connecting to public utilities, as a large proportion of companies report that they pay bribes in return for government contracts.
• Guatemala's legal and regulatory systems are confusing and non-transparent and leave space for discretion. As a consequence, government regulations are inconsistently enforced, and companies have to deal with a cumbersome bureaucracy when carrying out business activities.
• Regulation regarding conflict of interests in the public procurement process is insufficient, and public officials are able to pursue their personal interests by creating front companies and then awarding them public contracts.
• The backlogged and allegedly corrupt judiciary is a major impediment for settling commercial disputes, especially in terms of property rights.