Is Costa Rica a paradise or a nightmare to invest?

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    The exit of at least 14 companies of the local market in 2015 left more than 1,700 people unemployed and thousands of questions that Costa Ricans hope that someone answers. Why did they leave? Does the Costa Rican market discourage foreign investment? Will this continue to happen? Is the country a paradise or a nightmare to invest?

    Versions of the Costa Rican authorities and information from the data point out a contrasting picture.

    On the one hand, the Costa Rican Investment Promotion Agency (CINDE) highlighted that in 2015 the country managed to attract 39 new foreign investment projects, which generated about 12,000 jobs.

    From this information, CINDE says that the balance between the jobs lost after the exit of companies such as Burger King and Bagelmen’s and new jobs in 2015, result in a net employment of 6,456 jobs generated by companies.

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    “The installation of 39 investment projects shows the good performance of Costa Rica to its competitors. Every year the competition to attract new investment projects is fierce; however, we are committed to work on continuous improvement of local competitiveness conditions to remain a strategic destination for this type of investment,” said the Minister of Foreign Trade, Alexander Mora.

    In addition, since 2010, the country has moved from position 121 to 58 among 189 countries in the index of Doing Business of the World Bank that measures the ease of doing business. In 2015, Costa Rica appeared in the first position of Central America, followed by Panamá, Honduras, Nicaragua, Guatemala and El Salvador.

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    However, the breakdown of the qualifying items for this indicator, our economy holds a negative position on the ease of opening new businesses (taking the 121 spot), protection of minority investors (166) and compliance of contracts (124).

    Meanwhile, in an analysis of the business environment in the cities of Central America and the Dominican Republic, conducted by the World Bank, it was determined that the Top 3 cities where it is easier to do business are Panamá (Panamá), San José (in Costa Rica) and Guatemala City (in Guatemala).

    Fernando Calderón, Communications Manager of Procter and Gamble, which opened one of its Global Service Centers in Costa Rica over 15 years ago, the competitive advantages of the country are the high quality of human resources, political, economic and social stability as well as investment friendliness.

    Investment continues and the challenges too…

    The field of foreign investment in our country is in constant motion. Currently, there are over 200 transnational companies operating here according to the Embassy of Costa Rica in the United States, which has led the Costa Rican market towards consolidation as a producer of high technology, advanced manufacturing, medical devices, services and tourism.

    Just starting the year, the US company Ingram Micro Inc. opened its second operation in the country to serve high value corporate services; the company NTT Data opened a new service center to support its North American market as well.

    This explains why our country ranked at position 52 in the latest Global Competitiveness Index 2015-2016, which means that Costa Rica is the second best Central American country located in the ranking, surpassed only by Panama at position 50 and followed by Guatemala (78), Honduras (88), El Salvador (95) and Nicaragua (108).

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    Nonetheless, as the investment continues the challenges remain. This index places the country in less flattering positions on issues such as infrastructure, macroeconomic environment, efficient markets for goods and labor, regulations, financial market development, market size and investor protection, which if not solved can impact the national competitiveness.

    In this sense, the bureaucracy is one of the main obstacles for investment in our country. Costa Rica got the last position in the context of time required to start a business and the penultimate spot among the countries with the highest number of procedures to install a business in Central America, only behind Honduras.

    Another of the worst positions of the country in the ranking is related to the public administration requirements for companies to operate here, an issue in which Costa Rica holds the 118 position among 140 of the world.

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    Finally, another great challenge for investors is the transportat infrastructure, roads and road connections, which negatively stands out as one of the worst in the isthmus, only surpassed by Nicaragua. Countries throughout Latin America such as Panamá (ranked 30), México (36), Ecuador (42), Chile (45), Dominican Republic (60), El Salvador (63), Honduras (71) and Guatemala (82) excelled our country in this regard.

    For his part, Calderón added to these challenges, that the country needs to continue investing in the development of human talent, with a focus on the management and understanding of the English language, which added to the problems of competitiveness related to the fact that costs of services like gasoline and electricity are among the highest in Latin America.

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