Chapter 161: That Time I Created an Economic Bloc in South America (5)

TL: Skye

Yu-jin's... no, San Marcos's economic invasion of El Salvador proceeded swiftly and steadily.

There was, however, one unexpected fact.

The vanguard of the invasion was not the government, but the private sector.

The Korean textile companies were the first to move.

Since entering San Marcos, Korean textile companies led by Taeyang Apparel had enjoyed a veritable golden age.

San Marcos's low labor and energy costs,

combined with the government's full support, had enabled them to slash production costs. As a result, the combined annual net profits of roughly one hundred companies had surpassed one billion dollars.

Of course, their operating profits varied according to their size and clients, but on average, each company had earned around ten billion won.

And most of that was thanks to Latin America's cheap labor.

The Korean textile companies came to want more factories. More orders. More profits.

But San Marcos had two problems.

First, it was short on people.

With unemployment at 1.2 percent and the country effectively at full employment, finding additional workers in San Marcos was nearly impossible. Even if they wanted to build more factories, there was no one to work in them.

The second problem was San Marcos's rapid economic growth.

As an economy grows, wages naturally rise.

That had happened in Korea, and it was the same in every country in the world.

Had labor costs not been the reason Korea's textile factories went bankrupt one after another?

Having witnessed that entire process, they had always regarded San Marcos's rapid economic growth with trepidation.

Under the circumstances, it was only natural that they would begin looking abroad.

Then came news of economic cooperation between San Marcos and Venezuela.

Judging by the atmosphere and the terms of the agreement, there appeared to be no major obstacle to textile companies entering Venezuela.

But there was a problem.

The Korean textile companies' main clients were major American brands such as Naigi, Cap, H@M, and Ralph Dren.

Although US sanctions against Venezuela had been lifted, supplying the United States with clothing made in Venezuela still carried considerable risk for the time being.

Even if there was no problem now, no one knew when the situation might change.

Their clients had even expressed concern that business could be cut off overnight if the political winds shifted in the United States.

The Korean companies had no intention of taking that risk.

El Salvador, however, was entirely different.

It was one of the most pro-American countries in Latin America and a member of CAFTA-DR.

Most goods exported to the United States were exempt from tariffs.

When the companies mentioned expanding into El Salvador, the American brands welcomed the idea.

On top of that, labor was even cheaper in El Salvador than in San Marcos.

While the average monthly wage in San Marcos had risen above six hundred dollars, El Salvador's was still around three hundred. The potential reduction in labor costs was twice as great.

The CEO of Taeyang Apparel clenched his fist as he spoke at an executive meeting.

“We intend to take the same formula that succeeded in San Marcos and build a factory in El Salvador.”

“But sir, won't conditions there be unstable?”

“San Marcos and El Salvador are currently the two countries with the most stable security conditions in Latin America. What's more, the San Marcos government has promised to back us if we enter the market.”

The very fact that the San Marcos government was investing in El Salvador was as good as the finest guarantee a private company could ask for.

Once Taeyang Apparel made the move, the rest followed one after another.

Three textile companies that supplied fabric to Taeyang Apparel in San Marcos followed suit.

Their strategy was to complete a vertically integrated supply chain in El Salvador, from fabric production to sewing.

And it was not only the textile industry.

Tortilla Cement opened a logistics warehouse in El Salvador to supply building materials for construction of the farm and other infrastructure projects.

International Steel began exporting construction steel.

Caribbean Travel developed El Salvador tour packages.

Marcos Tech manufactured servers and exported them to San Salvador to provide technical support for Tortilla Pay.

Even small business owners who ran bakeries in San Marcos began looking into opening bakeries in El Salvador.

When the San Marcos Chamber of Commerce held a briefing on expanding into El Salvador, its three-hundred-seat auditorium was filled to capacity.

They even had to hold two additional briefings.

It was a veritable gold rush.

Yu-jin was astonished when he received the report on this trend.

“We totaled San Marcos's investment in El Salvador and found that roughly 4.3 billion dollars has been invested so far. Of that, only eight hundred million dollars was government funding disbursed through the UJ Fund.”

“Eight hundred million... Does that mean the remaining 3.5 billion all came from the private sector?”

“That's correct.”

“It sounds like far less of the UJ Fund's capital has been disbursed than expected. Is that not a problem?”

“Investment itself is extremely active. The only difference is that the private sector, rather than the government, is driving it.”

Ricardo spread out the documents and explained, his face flushed with excitement.

“That includes the factory construction costs of Taeyang Apparel and the other textile companies, the logistics investments by Tortilla Cement and International Steel, and Caribbean Travel's investment in its tourism business. They are covering any funding shortfalls with loans from Tortilla Bank.”

“The private sector invested more than four times as much as the government?”

“Yes, that's correct.”

Yu-jin leaned back in his chair in admiration.

“Our economy has come this far.”

Only six years ago, San Marcos had almost nothing that could be called a private enterprise.

Everything had to be built from scratch, one piece at a time.

Tortilla Farm, Tortilla Construction, Tortilla Energy, and all the rest were proof of that. Every one of them had been established under government leadership.

But things were different now.

The private sector was finding opportunities, investing, and making money on its own.

An economy that moved without government orders.

It was exactly what Yu-jin had wanted from the beginning.

The government could not coordinate and execute everything forever.

The government should merely build the road. Driving on it should be left to the private sector.

The principle Yu-jin had established for his retirement was now spreading into El Salvador.

‘Retirement is getting closer and closer...!’

*

Meanwhile, if the surge of private companies into El Salvador was explosive, the growth of Tortilla Pay was nothing short of nuclear.

Benjamin Smith's masterstroke proved decisive.

USDT loans.

USDT, also known as Tether, was a type of stablecoin whose value was always fixed at one dollar per USDT.

Unlike Bitcoin, its price did not fluctuate, giving it the advantage of being usable in everyday life in place of dollars, though that same stability made it unsuitable as an investment.

But Benjamin had deftly exploited only Tether's advantages to create a microloan system.

The structure was simple.

Regular members could borrow up to 50 USDT and repay 52 USDT one month later.

VIP members could borrow up to 100 USDT and repay 104 USDT one month later.

On an annual basis, the interest rate came to roughly twenty-four to forty-eight percent, which was by no means low.

But there were reasons the service became explosively popular.

First, its interest rates were extremely low compared to those in El Salvador's existing private loan market.

El Salvador had long been a world ruled by gangs.

President Bukele had ruthlessly rounded up gang members, but only those who had actually committed crimes.

He had been unable to arrest the loan sharks who operated along the border between legality and illegality with backing from Colombian gangs.

Under those circumstances, the twenty-four-percent annual interest rate on Tortilla Pay's microloans was practically free.

Second, its remittance fees were also cheap.

For example, sending one thousand dollars from the United States to El Salvador through existing services cost at least around four dollars in fees and an average of sixteen dollars.

Using Tortilla Pay to remit Tether, however, cost no more than two dollars.

Third, El Salvador was an extremely crypto-friendly country.

Almost everyone with a smartphone had a crypto wallet, so there was little resistance to borrowing and repaying cryptocurrency.

Thanks to Bukele making Bitcoin legal tender, Tether posed no legal problems either.

The results were astonishing.

Within a month of Tortilla Pay's launch, it surpassed one million users in El Salvador.

Considering that El Salvador's entire population was 6.5 million, that meant one in every four adults was using Tortilla Pay.

Even more surprising was its success in the United States.

Word spread among Salvadoran immigrants living in the United States that Tortilla Pay charged lower remittance fees than existing services, and its American user base reached five hundred thousand.

El Salvador received roughly seven billion dollars in overseas remittances each year.

A substantial portion of that money had begun flowing through Tortilla Pay.

Benjamin's calculations had been precise.

Remittances meant Tortilla Pay.

Loans meant Tortilla Pay.

Even deposits disguised as funds in a crypto wallet meant Tortilla Pay.

Tortilla Bank had successfully entered El Salvador's financial industry.

And El Salvador's dining tables were steadily being conquered as well.

It had been only a month since Tortilla Foods began flooding El Salvador with agricultural products from San Marcos.

But that single month had completely transformed El Salvador's food market.

It had begun modestly.

All Tortilla Foods did was sign supply contracts with four distributors in San Salvador and provide them with basic staples such as rice, flour, corn, and beans.

The problem was the price.

The wholesale prices offered by Tortilla Foods were less than half the prevailing prices in El Salvador.

Rice cost 0.8 dollars per kilogram, corn 0.3 dollars per kilogram, and chicken 1.2 dollars per kilogram.

The distributors had no reason to refuse.

They could buy at half price, sell at seventy to eighty percent of the market rate, and still turn a profit.

Consumers could buy more food with the same amount of money.

Naturally, food from San Marcos flew off the shelves.

“Where did this come from?”

“They say it was imported from San Marcos. It tastes fine, and the price is insane.”

“How much is it?”

“Corn is fifty cents a kilo. It used to be a dollar twenty.”

“What? It's that cheap?”

The response from consumers was explosive.

Not only had their monthly food bills been cut in half, but they could now feed their children meat.

There were structural reasons Tortilla Foods could supply food at such low prices.

The agricultural products mass-produced by Tortilla Farm had extremely low production costs to begin with.

San Marcos's fertile soil and tropical climate allowed year-round harvests, while the farm's economies of scale drove per-unit production costs to rock bottom.

On top of that, cheap energy from the Northern Oilfield reduced processing and transportation costs.

With trucks and ships running on refined fuel from Tortilla Energy, logistics costs were roughly half those of other countries.

In other words, it was the power of vertical integration, with energy, agriculture, and distribution linked into a single system.

Food from San Marcos began occupying more than half the shelf space in urban shops and supermarkets, while rice and corn from San Marcos were pushing aside local produce even in traditional markets.

The El Salvador government could not help but feel enormous pressure under these circumstances.

What would happen if Tortilla Foods stopped supplying them one day?

Food prices would double overnight. Local farms had already lost their competitiveness, so they could not replace the supply immediately.

But the people did not think about that.

Their tables were fuller right now, and that was enough.

And the result of all these changes appeared in a single number.

“M-Mr. President. Your approval rating... has shot up to seventy-four percent.”

“N-No...”

Bukele could not decide whether to laugh or cry.

*****

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