El Salvador Rolls Out the Red Carpet for Google

El Salvador set up the terrain for Google’s arrival, a development which feeds into the country’s hopes of becoming one of Central America’s major tech hubs.

Google announced in late August that it will set up a legal entity and an office of Google Cloud in El Salvador, as well as a Cloud Center of Excellence that will provide “technical guidance” for businesses and other organizations seeking to leverage the capabilities of cloud technology.

Just days after the announcement, the Salvadoran Legislative Assembly approved the General Law for State Modernization, a bill explicitly designed to facilitate a seven-year agreement between Google and public entities in El Salvador, in which Google will act as a service provider.

“The objective [of this law] is to establish the necessary dispositions for the implementation, development, digital transformation and modernization of the Salvadoran State, recognizing in a general and obligatory manner the commitments that the State acquires to those ends, with public or private entities, particularly those derived from the Strategic Alliance subscribed between the Government of the Republic of El Salvador and Google LLC,” states the bill, approved and signed on September 5, 2023.

¡Aprobación legislativa, en tiempo récord, de alianza entre @Google y El Salvador!

Congress approved our alliance with @Google in record time! pic.twitter.com/NeD5hvzI9k

— Nayib Bukele (@nayibbukele) September 6, 2023

The Salvadoran government reportedly agreed to use Google’s Distributed Cloud (GDC), a combination of hardware and software solutions designed for digital transformation. GDC will allow Google to process data locally, which is important in a region where data breaches are a growing concern.

Salvadoran president Nayib Bukele said that an alliance with Google would open up new avenues for innovation and economic growth, as well as improve public services. Bukele’s administration hopes that Google will help it digitize government processes and launch new initiatives such as electronic invoicing.

Just a few months ago, the Salvadoran government announced an attractive package of tax breaks for tech companies.

There has also been an increased adoption and acceptance of Google’s platforms and services in the country. Google Workspace is already the dominant collaboration platform in El Salvador, with 83 government agencies and more than 1.5 million students and teachers using it.

No Talks of Investment

Aside of the opening of a Google Cloud office, neither Google nor the Salvadoran government provided details on if the tech giant will actually put any money into El Salvador or hire locals for its Cloud operations.

Several Salvadoran officials portrayed the seven-year deal as an investment announcement, but local press reports have questioned if the agreement could be regarded as such.

The bill approved by the Salvadoran Assembly does specify that the treasury will guarantee the availability of “at least US$ 500 million” from the federal budget for public entities who wish to acquire Google Cloud’s services.

Under such light, the agreement can be understood more as a public government contract in which Google is the service provider.

As of the moment of this publication, the agreement has yet to be made public, and there’s little hope of the document coming to light any time soon. The Salvadoran Ministry of Foreign Relations has designated the contract as confidential for a period of seven years, citing potential harms to “international relations” as the main reason for keeping it under wraps.

Google portrayed its expansion to El Salvador as part of a US$1.2 billion investment plan announced for Latin America in 2022.