San José, Costa Rica, since 1956
Business closures

El Gallito stores close after 106 years in business; more than 200 employees dismissed

The iconic Costa Rican store Almacén El Gallito, which in recent years sold mostly party supplies and furniture, last Friday closed its seven locations in Costa Rica citing financial problems.

Managing director Carlos Vega said the closure of all locations was ordered last week and that staff over the weekend was packing all remaining merchandise.

The closure means the dismissal of over 200 employees from El Gallito stores located in the provinces of San José, Heredia and Alajuela.

Vega said there are several reasons for the closure but it mainly was prompted by a legal conflict with a supplier. The company was found guilty and ordered to pay a high compensation that prompted bank repossessions and also damaged the company’s image, Vega said.

The situation also affected payments to the Social Security System, the Tax Administration and several suppliers.

The El Gallito building, a landmark on the capital’s Second Avenue, was sold to pay the debt with the Tax Administration and the company is currently in negotiations with suppliers.

Vega told the Costa Rican weekly El Financiero on Friday that the country’s financial situation has been particularly bad for them in recent years. As an example he said in 2008 the company had some 200 distributors of their products, and by 2013 the number was 30.

He also said online stores offering similar products, street vendors and stores selling smuggled merchandise seriously damaged their business.

“We asked for help at both public and private banks, but they all said they do not have credits for our type of business,” Vega said.

Francisco Llobet, president of the Costa Rica Chamber of Commerce, said the news is evidence of the difficult situation businesses in Costa Rica are facing.

“The situation in the country is not the best, but we are hoping for a change,” he said.

The closure of El Gallito adds to those of local restaurant chain Bagelmen’s, kitchen and bath fixtures company Incesa Standard and four restaurants of the local franchisee of Burger King, which also closed operations this year. Tico food company Alimentos Jack’s in February announced plans to move 50 percent of its operation to the United States, El Salvador and Nicaragua.

According to the Union of Private-Sector Chambers and Associations, an organization that represents 50 businesses and major sectors of the economy, the wave of layoffs across several sectors of the economy last year culminated in more than 228,000 unemployed Costa Ricans at the end of the third quarter of 2014.

Contact L. Arias at larias@ticotimes.net

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Gerry Adams

Costa Rica homicides increase by 50 percent, reach “epidemic” levels
The number of recorded homicides in Costa Rica during the first half of this year grew an alarming 50% compared to the first half of 2014, according to the latest data released by the Judicial Investigative Police (OIJ).

The OIJ recorded 269 homicides between January and June this year, compared to the 179 recorded during the same period in 2014. That figure is a new record for the country.

Using data for the past 12 months – from June 2014 to June of this year – Costa Rica’s homicide rate now stands at 12.4 per 100,000 inhabitants. The World Health Organization (WHO) describes a homicide rate of 10 per 100,000 inhabitants or greater as an “epidemic.”

However, officials say, the spike in homicides is mostly attributable to an increase in gang warfare between narco groups competing for turf, especially in the areas south of the capital San Jose such as Desamparados and Alajuelita, and does not necessarily reflect an increase in violence against common citizens.

Of the 269 homicides recorded during the first six months of the year, 126 were in the province of San Jose, followed by the province of Limon with 56. The most violent month so far this year was March, with 51 murders in total.

Attorney General Jorge Chavarria said that violence in the country was “approaching a point of no return,” after a triple murder in Desamparados over the weekend.

For his part, Public Security Minister Gustavo Mata told reporters that unlike past years, criminals are “killing fewer citizens for their cell phones or to rob their homes” and are instead killing each other in turf wars.

“People are being killed, people are dying who are involved in drug trafficking. Both the victims and the perpetrators have criminal records. They are fighting over territory to sell drugs,” Mata said

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Ken Morris

I find it difficult to take a company that is going out of business because–by its own admission–it was found legally liable for screwing another company as an instance of a poor business climate, and shame on the Chamber of Commerce for saying this.

The best business climate is one in which companies are fair in their dealings with their customers, employees, and suppliers, and the businesses that aren’t fair go out of business.

Sometimes this whining about how hard it is to do business in Costa Rica comes perilously close to condoning unscrupulous business practices, and this would appear to be an example.

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Rick Drigo

Yes, we need to fervently pray for him. He is doing many things which he well knows are contrary to our values, traditions and religious beliefs. Catering to pressure groups is not going to help the nation, it is just passing the buck. He needs to be very brave and decide to go against the “perceived flow” which is just an illusion. Most people want a firm but just hand, without it – disaster is around the corner.

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dht

I’m deeply worried for Costa Rica on this subject, and I expect the situation to get much worse.

I like and respect President Solis and what I believe he’s trying to accomplish against almost insurmountable odds, but he’s only one man trying to bring a bureaucracy under control that has been anything but well managed and under control for eons.

I understand Costa Rica’s finances are in dismal disarray, and that the government is proposing more taxes to help stem the flow of red, but this type of thinking will only worsen the business climate. People and companies are leaving Costa Rica in droves because they have no idea what to how to plan for financial success here – it’s virtually impossible. There is NO PREDICTABILITY, except that everything here is getting more and more unpredictable.

If we want our country to survive, we need to attract businesses and people rather than create more frustration for that promotes their failing or leaving us. To that end, fix the massive internal waste inside the government institutions (something I know President Solis was trying to do – with little encouragement or help). Develop ways to collect the just taxes that are already on the books, rather than permit tax evasion to continue to be a sport. Remove the stupid and unjust taxes that ate stifling growth and confidence (like has already done with the Corporation Tax – nothing more than a money grab – and should be done with the “Solidarity Tax” which is so badly mismanaged its nothing less than a travesty for those caught up in it, and a joke for the greater majority who simply decided not to register).

This is a GREAT COUNTRY with AWESOME PEOPLE. We have a lot to be thankful for, but it’s slipping away, and if we’re not careful, one day will be gone.

I’m for the President and wish him well. We all should pray for his guidance and health, and support him every chance we get. He deserves it.

Cheers

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