Costa Rica surpasses foreign investment goals
Costa Rica’s foreign direct investment (FDI) reached $1.56 billion during the first nine months of 2011, following a major boost from technology and telecommunications companies, according to the Costa Rican Foreign Trade Ministry (COMEX) and the Costa Rican Investment Board (CINDE).
The figure represents a 52 percent increase over the same period in 2010, and likely will mean that Costa Rica will surpass its goal of drawing $1.85 billion in FDI for the year. Those results will be made available in March.
Costa Rican Foreign Trade Minister Anabel González said that 27 percent of the country’s foreign direct investment is derived from companies established in free zones. That percentage placed 256 companies in free zones as the top foreign direct investors in the country.
“The main three export products in 2011 [were] integrated circuits, transfusion equipment and medical prostheses; all are produced by companies in free zones. In addition, service exports in free zones generated $1.6 million, [or] 33 percent of the total service exports in the country,” González said.
Costa Rica now ranks second in Latin America for medical-device exports, after Mexico, and fourth in the world. In 2011, seven new companies invested in the sector, creating 2,000 new jobs.
Telecommunications was the sector with the second-largest investment last year. The opening of the telecommunications market after 48 years of a state-controlled monopoly helped boost the industry, which accounted for 24.8 percent of the total FDI between January and September. The sector registered a total foreign direct investment of $384 million during the period.
Mexico’s America Móvil, through its brand Claro, and Spain’s Telefónica, through the brand Movistar, paid $170 million for use of mobile phone frequencies in Costa Rica during the next 15 years.
Technology accounted for the highest FDI figure, registering a total of $470 million. According to the Foreign Trade Promotion Office, for every $10 invested in free zones, $9 is invested in technology companies.
“Through our efforts to attract more technology companies to the country, we were hoping to bring 6,000 new jobs to the technology sector. It was a record year since we were able to exceed our goal and generate 7,728 new jobs,” said CINDE Director Gabriela Llobet.
Free-zone service companies also generated 5,302 new jobs in 2011. According to CINDE, 30 percent of new private-sector jobs were generated from FDI. In 2011, 21 service businesses began operating in the country.
According to Llobet, CINDE maximized its presence in the sector by creating a stronger alliance with the Foreign Trade Ministry. The agency attended 22 investment trade fairs in the United States, Canada, Germany, China, Canada and Mexico, among others. In 2012, CINDE will seek to establish stronger business relations with India and China.
According to both CINDE and COMEX, with the arrival of new companies, the country has important challenges to face. Costa Rica needs to train more engineers and technicians in order to meet the needs of technology companies looking to hire more personnel. Both Llobet and González said that free zones should not be included in tax reform to ensure a healthy investment climate. A reform proposal would tax new free-zone companies 15 percent on revenue.
“We also need to maintain a good investment environment and simplify the process that countries follow in order to be able to invest here. We have been able to push forward in these areas, but we still have a lot of work to do,” Llobet said.
“Last year, we insisted on the need to maintain a good investment environment for countries to consider Costa Rica,” González said. “We will continue with that effort in 2012.”
You may be interested
5 questions for US painter Suzahn KingElizabeth Lang - May 20, 2018
Suzahn King's paintings, known for their intricate details, are currently focused on her surroundings in Costa Rica, a country she…
Jean Marc Calvet, part III: Leaving Marco behindElizabeth Lang - May 18, 2018
This is the story of Nicaraguan-based French artist Jean Marc Calvet: a man whose complex life, obscurities and misfortunes overwhelmed…