Investing

Costa Rica is quickly becoming an international hot spot. As more and more people begin to discover the beauty and temptation of the “Pura Vida” lifestyle, the more they want to become a part of it.
“When choosing a country to invest in, we find Costa Rica is greatly attractive to investors and their families.” says Ricardo Monge, director of the Costa Rican Investment and Trade Development Coalition (CINDE), a private, nonprofit organization. And the proof is in the numbers as several international companies have already chosen this country as a prime investment location.
U.S. based giant, Intel Corporation, recently invested $700 million into an assembly factory and testing plant, which began operations in 1998. Acer America opened a new customer service facility as a base to branch out to the rest of Latin America and Firestone is currently doubling the capacity of its tire factory for export to the United States and other Central America nations. In addition, Lucent Technologies has opened a corporate office in San José with plans for expansion. Other companies such as Baxter Healthcare, Conaire Corporation and Bali Company are just a few of the many new businesses to join this growing list.
” Costa Rica is at a historic turning point; if we do things right we will grow very rapidly,” says Monge. “We are trying to apply logistics to gain private sector expansion in order to better our infrastructure. This is crucial to the development of our nation.” Costa Rica, the most politically stable country in Central America, has proven attractive to investors for its relatively open investment and trade policies. Laws governing private investments are the same for nationals and foreigners. In addition, there are virtually no controls on foreign exchange transactions conducted by commercial banks. The exchange rate is determined by the Banco Central of Costa Rica through open market operations, and has disposable funds guaranteed by the export-import Bank of the United States and other major international banking organizations.Ranking number one as far as investments are concerned, tourism remains in a dynamic role as Costa Rica’s number one industry. A remarkable improvement in tourism has been noted in the past five years – nearly a 58 percent increase. The visitor count last year of 792,287, as reported by the Costa Rican Tourist institute’s (ICT) statistical department, consisted namely of U.S. citizens, followed by Canadians, Germans, Mexicans, Italians, Colombians, Guatemalans, British, Spanish, French and Chinese.As a result, there has been a tremendous surge in development within Costa Rica’s hotel sector mostly in the regions of Guanacaste and Puntarenas with a reported $711 million in investments to date. The total for tourism investment reported last year amounted to $759 million. Some of the major developments included the Allegro Resorts’ Caribbean Village and the $33 million new Marriott Hotel in Jaco. At present there are numerous other hotel, resort and golf developments in the planning stages or under construction in the northwest Guanacaste region, where the ICT continues to promote development of the area.
To benefit the investment climate, the government supports free trade and international competition. Clearly, the most enticing factor for foreign investors has been the country’s income tax laws, which allow complete exoneration of taxes on an average of 8 to 10 years, and 50 percent exoneration for 4 more years depending on the investment. There is virtually no screening of foreign investment in most areas. The ICT recently signed a $10 million, 12-step program for tourism development. Last year, they launched a very aggressive international advertising campaign with the tag line ” Costa Rica, No Artificial Ingredients,” which focuses on the country’s unsurpassed beauty, adventure and natural environment, of which one quarter is dedicated to national forests, parks and reserves, and which the country continues to protect. The ICT and a number of private organizations, such CINDE, have placed considerable emphasis on facilitating investments and streamlining government services. CINDE’s U.S. office in New York aggressively promotes Costa Rica as an investment destination.
A big attraction for tourism-type investments is the current incentive law, which offers a 12-year income tax exemption on non-distributed profits, land tax exemption, and offers duty-free entry to yachts, sailboats and certain motor vehicles for use in tourist transportation. Additionally, Costa Rica has one of the strongest U.S. dollar reserves in Central America (nearly $1 billion). It also has advanced electric and technological industries and Free Zones continue to be one of the backbones of Costa Rica ‘s export and investment promotion strategies, contributing significantly to local economic growth. Investment in the
Free Zones totaled close to $500 million, mainly from U.S. businesses. Companies currently under the Free Zone Corporation have close to 100 percentexemption on raw materials for export on most products. Most of Costa Rica ‘s export incentives have been undergoing reforms to serve the international tendencies, and are on a par with tourism development.
Costa Rica remains a member of the World Trade Organization and the Central America Common Market, and has investment treaties with Switzerland, Great Britain, France, Germany, the Netherlands and the Czech Republic. Another incentive for investors has been the free-trade agreement under the U.S. Caribbean Basin Initiative, which guarantees access to the U.S. markets for many products. Under its Free Market treaty with Mexico, over 8,000 products became tariff-free in 1995. It also has a free-trade agreement with Panama, and similar agreements are being negotiated with Colombia and Venezuela. Primary trade discussions have been held with Chile, the market they are currently strongly targeting. “Bringing in key players such as Intel gives Costa Rica a letter of recommendation. Soon, other electronic industry firms will follow.” It is a prediction that already seems to be becoming a certainty. So come to our little corner of paradise and let us help you make your dreams a reality!