¿WHY COSTA RICA? 

Intel, P&G, McDonalds and DHL invest here, why don’t you? 
Did you know there are huge Intel installations at Costa Rica? and 50 McDonalds restaurants?, and the main office of DHL in Central America ? That enterprises and a lot more invest in Costa Rica, why don’t you?

 Costa Rica, the Small Swiss of America
Costa Rica has certain conditions that give tranquillity to live or to invest:
- Exceptional Political Neutrality in Central America
- Demonstrated with facts: the army abolished from 1948
- Few racial tensions
- Low level of violence and criminality in the Latin American context
- The climate, the standard of life, the language (by the tourism), good sanitary system

Chris Howard, North American resident here, summarize thus why he creates who their compatriots reside in Costa Rica: as warm as Mexico but without anti-Americanism of that, as beautiful as Guatemala but without the great military presence, sophisticated as Brazil, but without as much poverty, so sunny that Hawaii and Florida but with less people.

The foreigners can be welcomed in "law 48-12" or "Law of Pensioners”, it facilitates the residence in the country to foreigners with income generated outside Costa Rica, in three categories: pensioned resident, pensioner renter, and investor, allowing a long term residence with such right of the Costa Ricans, except for the vote, but maintaining the other nationality.

Why Costa Rica?

Business Environment:

Many internationally recognized companies have been operating in Costa Rica since 1980. A great number of factors have contributed so that Costa Rica can be an attractive and productive destination for their offshore operations.

Costa Rica provides:

• A highly educated and productive workforce.
• A strategic location in the center of the Americas.
• A reknowned history of political, social and economic stability.
• Preferential access to strategic markets.
• Foreign investment incentive regimes.
• International standard of business infrastructure.
• High quality of life.

Other important factors.
In retribution, multinationals established in Costa Rica provide high-value employment opportunities, and a new revitalized work culture.

Quality of life

A relaxing place to stay

Costa Rica's weather is enjoyable year round. The average temperature range in San Jose goes from 57º-75ºF in December, and 63º - 81ºF in May. The Caribbean coast averages 70°F at night and over 86°F during the day. The Pacific coast is hotter than the Caribbean, but is less humid.
With over 360 hotels located throughout the country, Costa Rica provides a wide spectrum of possibilities for resting and relaxing.
The combination of rest places and adventure activities (such as playing golf, fishing, surfing, rafting, etc) make this country an ideal place to stay.

Easy Access

With over 1.4 million visitors in 2004, Costa Rica has been an excellent choice for international tourists. Tourist activities for this same year generated foreign currency of more than 1.4 billion dollars.
An increasing offer of international flights has positioned the Daniel Oduber Airport (Liberia) a new entry port, which is close to the Pacific coast and the main tourism attractions of the country. Meanwhile, new resources are being destined for the improvement of the country’s main airport infrastructure (Juan Santamaria), as well as many other secondary airports.

Costa Rica: country of natural beauty

Costa Rica currently stands as the first ecological tourism in the world.
Costa Rica represents 1% of the planet's surface, but contains 5% of the world's biodiversity.
25% of the country's territory is being protected as national parks or biological reserves. A total of 34 national parks are distributed throughout the country.
Over 1,000 and 845 orchid and bird varieties (respectively) can be found.
Fauna includes jaguars, pumas, agouties, green turtles, several species of monkeys, crocodiles and sloths.

Real Estate

There are little real estate restrictions for foreigners, and domestic law ensures the same rights to foreigners as for local citizens.
According to the US State Department, more than 20,000 US expatriates currently reside in Costa Rica, many of them as retirees.
To perform a real estate transaction in Costa Rica, the following steps are basically required:
- Identification document
- Cadastre Property Print
- Public registry
- Powers of attorney

The high appreciation of the properties in Costa Rica, makes to invest in this beautiful country with all the legal security and excellent profits.

Real estate developments have been seen rising from $500,000 to $3 billion in value, including golf courses and marinas, while hotel infrastructure investment for 2003 tallied over $130 billion. Among the biggest hotel chains that have established important tourism operations in Costa Rica are Four Seasons, Intercontinental, Marriot, Holiday Inn, Best Western, Barceló and Sol Meliá. Employment levels for the industry as a whole are currently estimated at 86,000 people.

Health indicators of a developed Country

After Costa Rica decided to abolish its army in 1949, resources that were used for military purposes were redirected towards education and health. This has allowed the country to achieve the best health indicators of Latin America, comparable only to those of developed countries.
Besides the public health system, the country has a strong private health network that counts on many hospitals and clinics of great prestige and reputation.
In 2005, Costa Rica registers an infant death rate almost as low as the one for the United States (9.75 deaths for every 1,000 born alive in Costa Rica, against the 6.5 rate in the US). This is particularly relevant when considering that the United States has a per-capita income 8.7 times larger than that of Costa Rica.
According to the World Bank, Costa Rica has the highest life expectancy at birth within Latin America. With 78.7 years of life expectancy at birth, Costa Rica’s rate equals that of Canada and beats the US’s life expectancy by one year.
95% of Costa Rica’s population has adequate potable water access (at least 20 litters/person/day). In addition, 93% of all Costa Rican have access to improved sanitary facilities.

Source: World Bank, World Development Indicators 2004.

According to the United Nations, between 95 and 100 percent of Costa Rican have possibilities of obtaining basic medication at accessible prices.

Cost of Living

According to The Economist Intelligence Unit, Costa Rica ranks as one of the best combinations of high quality of life and cost of living.
According to the 2005 surveys related to its Hardship Rating and World Cost of Living, San José is among the cities with the best quality of life in Latin America, and one of the most inexpensive countries in the samples.
The Economist Intelligence Unit's Liveability rankings, which is part of the Worldwide Cost of Living survey, assesses conditions for expatriates in 130 cities around the world by looking at 12 factors grouped in three categories: health and safety, culture and environment, and infrastructure.
The Worldwide Cost of Living Survey compares the cost of a representative basket of goods and services in dollar terms from over 130 cities worldwide, in order to provide guidance for the calculation of executive allowances. Using New York as a base index of 100, Costa Rica’s cost of living is 54, ranking 117th among 133 countries, which implies that the cost of buying the same goods basket in Costa Rica is almost the half the cost it has in New York. Only 3 other Latin-American cities are indicated as cheaper than San Jose.

Private Education

Costa Rica has a wide array of private institutions that base their schedules according to the US scholar calendar (from August until the end of June).  These institutions typically offer at least two languages (English, German, French) besides Spanish.  In addition, almost all of these institutions allow students to obtain a diploma from the International Bachelor Organization (based in Geneva) and from the Southern Association of Colleges and Schools (SACS – based in Atlanta) as well as the Costa Rican Public Education Ministry (MEP).

Foreign investments in the manufacturing industry have set the standard since the early nineties, followed by other sectors among which food products; financial services and tourism stand out.  The change in the structure of foreign investments replicates the progress in the economic development of the country where the secondary and third sectors acquire greater importance as an economy grows; in fact, the services sector has increased its participation within the GDP to an astounding 50%.   This is also reflected in the structure of exports, where after being comprised of primary and textile products, they now include an important portion of products with a high technological component.  In fact, currently traditional export products such as bananas and coffee have continued their growth in volume and value; however, their relative weight has shifted from 60% of exports to less than 20%. On the other hand, high-tech exports represent one fourth of the total, while tourism is now the main source of foreign exchange.

Types of Incentive Regimes

Since the 90's, Costa Rica has actively sought promoting exports of its manufactured goods through the creation of special incentive regimes.  To this respect, the establishment of the free trade zone regime led to the creation of the first free trade zones in 1982, in which the companies established were mainly of the textile industry.

The current regimes are managed by PROCOMER and are an important compliment to other key site selection factors; existing small, medium and large firms that use the regimes now exceed 400 small, the majority of which are manufacturing operations located within the free trade zones.  Nevertheless, there are a large number of international service operations enabled by info-communication technologies, such as data entry and contact centers, as well as business processing outsourcing units and engineering and design processing centers.  In addition, the tourism sector has a specific regime which is granted through the Tourism Interest Declaratory.

The main export regimes related to the free trade zones and the active finishing (drawback) regime.  Free trade zones consist of primary extraterritorial customs and fiscal areas that allow for the establishment of companies whose main purpose is to use Costa Rica as an exporting platform.  Free trade zones also confer  other incentives, such as tariff exemptions for raw materials and capital goods, income tax payment, added value, asset, and municipal tax exemptions, and the possibility of selling up to 25% of the product in the local market (50% for service companies).  Currently, there are nine different private free trade zones (AZOFRAS), the majority of which are located near San Jose, as well as to the two important main ports of entry, the Juan Santamaria Airport, the key highways and container terminals.  Most of the parks provide fiber optics that allows high-level broadband and dedicated services for voice, data and video transmission.

The Active Finishing regime introducing raw materials, inputs and capital goods into national customs territory in order to be subsequently transformed with the suspension of all kinds of taxes.  To enjoy the benefits of this regime, it is not necessary to operate within a specific industrial park.

Free Trade Zones as well as Active Finishing Zones are also designed to facilitate the development of relations with suppliers established in Costa Rica through subcontracting.

Economic Impact

The free trade zones regime is currently the main export generation regime, amounting to 52% of the total export value of Costa Rica.  Also, almost 90% of the direct foreign investment companies that invest in Costa Rica invest through this regime, while only 0.2% establish under the Active Finishing regime, which generated $373 million in exports in 2004.

Incentive Regimes Exports and Imports

The Opportunity

Skilled, well-educated, innovative, creative, fast-learning and highly productive labour force
Competitive telecommunications infrastructure, offering wide connectivity with the rest of the world
Streamlined start-up process
Strategic Location
Stable political, economic and social environment
Attractive investment incentives
Excellent quality of life
General aspects
Choosing the right location for a service operation requires considering many critical factors, such as: proximity to market, availability of a highly ethical and skilled labor force, a good technological infrastructure and a stable political and economic environment.

In a recent A.T. Kearney survey, Costa Rica was classified among the best 25 countries in the world to establish offshore operations, based on an index that considers people skills and availability, as well as the business environment and its financial structure. Costa Rica, which ranks as the 16th ideal location in this study, is cited as a country that "offers competitive costs, the best English-language proficiency among the Latin American countries surveyed, and a relatively friendly business environment - for example, the government has set up free trade zones that offer tax and other benefits" (A.T. Kearney; 2004; Offshore Location Attractiveness Index).

Costa Rica has an excellent location right in the middle of the Americas. To this respect, Costa Rica's time zone is the same as CST in the United States. In addition, a direct flight from Miami lasts only 2:30 hours.

Costa Rica offers the opportunity to develop a solid business structure that will guarantee a competitive advantage in the marketplace, with operations ranging from shared services (back offices), contact centers (call centers), data centers, software development to design and engineering.

Human resources

With a literacy rate of 95.8% and some of the highest rankings in the several indexes of human development in the hemisphere, as stated in the Human Development Report 2005, Costa Rica offers an ideal location for high tech and services companies.

Moreover, the 2001 Global Competitiveness Report ranked Costa Rica as the number one Latin American country according to its Technology Index based on the quality of its environment for innovation, the capability to receive international technology and export goods with technological content, and the degree of absorption of new information and telecommunications technologies. The same report placed Costa Rica as the second most competitive country in Latin America.

Likewise, the Human Development Report 2005 placed Costa Rica within the highest quarter of countries surveyed (a total of 177) as regards to investment in technology creation, a variable that considers years of schooling, R&D expenditures, as well as the number of scientists and engineers in R&D.

Education in Costa Rica is universal, free and compulsory since 1870. Elementary schools promote a new approach to education that goes beyond teaching how to read and write, and have established programs intended to guarantee world-class literacy in computer sciences and English as a second language. In fact, 82.5% of all Secondary Education students, and 50% of all elementary students have computer-based education. English as a second language is nearly universal in Secondary Education. The Government has put special interest in providing increased resources to enhance existing English programs and create additional ones nationwide. As a result, a unique, free and widespread education system allows firms to find a wide array of human resources at various levels, from technical schools to university degrees.

At a technical level, free training programs have been developed in order to address appropriately the requirements of both local and international corporations in specific sectors, therefore allowing Costa Rican technicians not only to work on the cutting edge of technology but to maintain at the same time a productivity rate which is 20% higher than that of workers of other countries in the Americas. The leading educational centers offering this type of training, as well as the main universities are:

Training centers

 81 Technical High Schools that graduate technicians in electronics, precision metal work, computer, microelectronics, and also administrative areas.
 
National Training Institute (INA)
 Offers on-site technical training that leverage on its centers for electronics (with the most modern equipment and laboratories), precision metal-mechanics and plastics, among others.
 
Training Center for trainers (CEFOF)
 Emphasis in quality culture and norms such as ISO, QS, 5S, best practices and lean practices.
 
Universities
 4 public and 52 private. There are two state universities particularly linked with the MDM industry: University of Costa Rica and Technological Institute of Costa Rica, which offer Associate, Bachelor, Licentiate, Master and Doctorate (PhD) degrees.
 Costa Rican engineers and technicians guarantee high productivity, low turnover, and cost competitiveness to highly demanding high-technology operations.

The Opportunity

The local tourism market is growing at a 7.1% annual growth rate.
Rooms have been expanding at an annual rate of 4.5%.
More than 1.5 million tourists visit Costa Rica per year.
48% of all tourists come from the USA, 16% from Europe and 36% from other countries.
Great tourist real estate development, including golf courses and marinas

Industry Overview

Costa Rica started developing its tourist activity since 1930, a fact that has significantly marked its direction for several decades. Furthermore, the fact that it possesses an outstanding 6% of world’s total biodiversity, the existence of great areas of tropical forests and volcanoes, as well as an affinity to tourists and the ability to quickly travel from coast to coast, has favoured it to be one of the preferred ecological and nature hotspots. This magical combination, along with its large sun beach extensions, are earning for the country over $1.2 billion in foreign exchange reserves annually.

Workforce

The Costa Rican tourism industry workforce has the following strategic characteristics:
Highly qualified human resource availability.
Bilingual administrative personnel.
A wide range of architectural, engineering and environmental consultants specialized in hotel development.
Universities and technical colleges annually graduate personnel in the different areas required by hotel companies, and offer specialized training in reservations, accounting, countering, maintenance and culinary skills, among many others skills.
Tourism operation infrastructure

97.04% national electricity coverage.
99% urban potable water coverage (92% rural).
34.3 fixed telephone line per 100 inhabitants.
933.63 internet user per 10,000 inhabitants.
Ports and airports

English Skills

Education is compulsory up to 9th grade and places a strong emphasis on computer skills and English skills since the early grades.  To this respect, an official nationwide survey showed that more than 200,000 Costa Ricans could speak English well.

Tourism Incentives

Testimonials

…They chose Costa Rica because they consider that it is an upcoming destination for luxury travel, family and honeymoon markets. “It is also a safe country, a land perfect for our business. Costa Rica has a great education system and awareness off ecology. It is without a doubt a very diverse experience...

Jeffrey French
Director of Marketing
Four Seasons

…Since we opened, we have been living opportunities to employees and improve the economy, and our company is doing well too, our business is very successful. The market is exciting and new. Four Seasons has found a great potential in Costa Rica, with its people’s hospitality, multilingual education and cultural background. The infrastructure will develop and investors should take advantage with a country that’s easy to do business with and has an excellent attitude...

Meredith Tyrell
Travel Industry Sales Manager
Four Seasons

 Historic Overview of Foreign Direct Investments in Costa Rica

Foreign direct investment in Costa Rica has grown considerably during the past 20 years. After the economic crisis that affected the majority of Latin American countries, including Costa Rica, in the early 80s the structural policies that were implemented locally accomplished a swift economic recovery.  This fact, along with the establishment of new trade regimes such as the Free Trade Zones, served to attract a new wave of transnational companies, which then and now use the country as an export platform of goods and services to the world.

Foreign Direct Investment in Costa Rica during the last 20 years

Source: CINDE, based on Central Bank statistics. 

These companies, the majority of which were related to basic manufacturing (textile and electronics), created greater dynamics in employment and exports, which at that time provided the economy with the vital foreign exchange reserves it needed to recover from the external imbalances that were created as a result of the debt crisis.

Source: CINDE, based on Central Bank statistics.

Infrastructure

Telecommunications

Costa Rica enjoys direct worldwide fibber optic access through Maya 1 and Arcos 1 underwater cables, which allows for a redundant fibber optics network.

The initial capacity of the Maya 1 cable connection is 7.5 Mbps with full capacity of 20 Mbps. In the case of Arcos, initial capacity amounts to 15 Mbps and were capable to expand to 1044 Mbps in 2005. In addition, starting in October 2006, a new Global Crossing 2,4 Gbps submarine cable will be available for companies interested in networking or receiving redundancy through the Pacific.

International communication services are provided through a wide variety of set-ups to match specific customer needs. Some of these are:

Dedicated Internet Access
Digital point-to-point links
Transportation Networks with fibber and wireless digital technology (Frame Relay, TDMA)
Leased Channels using satellite facilities (RACSASAT)
VSAT networks
X.25 networks
Throughout the last five years, telecom infrastructure has positively expanded not only as regards to its scope of coverage but in terms of the variety of services it offers. As stated in the following chart, major developments have taken place, particularly regarding cellular phones, installed capacity of underwater cable and new Internet connections.

An ICE project known as "Advanced Internet", geared at transforming Costa Rica into one of the five best-connected countries in the world, has been already launched. It has the following features:

DSL network
High capacity
Dedicated wide band connections
Low connection costs
Compatible with current platforms
Designed for migration capabilities towards future technologies
In addition, starting in October 2005, RACSA began offering across-the-board broadband access (512/128) through cable modem to residential and small businesses, and plans to deliver Wi-Max wireless, DSL and PLC connectivity in 2006 to customers located in San Jose’s metropolitan area.

Detailed information about specific telecommunication services can be found in this same site through the following link Infrastructure/telecommunications.

Electric Power

Abundant and reliable power, available throughout the country, is generated through hydroelectric (80.54%), geothermal (15.45%), wind power (1.37%) and other sources (2.64%).

Costa Rica generates sufficient electricity to not only fulfil its own domestic needs, but also to export electrical power to other neighbouring Central American countries. According to the National Electric Company (ICE), the total installed energy capacity as of June, 2004 was approximately 1,962 MW, with a maximum demand of 1,265 MW and a surplus availability of almost 700 MW.

Detailed information about specific energy services can be found in this same site through the following link Infrastructure/Electric Energy

Call Centers

This has been the most dynamic segment in the services sector in Costa Rica during the last few years. The call centers established in Costa Rica can be categorized into two main areas: customer service and technical support. Customer service call centers require from its workforce the ability to speak English fluently. All of these companies find in Costa Rica's labor force the quality and the language skills that enable them to provide world-class services worldwide.

Shared Services & Back Offices

Corporate strategies worldwide oriented towards reducing operational costs have been the driving force behind most of the big companies' decisions to establish shared services off-shore operations. Finding a location with the right combination of skilled bilingual labor force, telecommunications infrastructure and adequate proximity to main offices, are the key factors for these type of projects. Specifically, the skill set demanded by these enterprises vary in a wide range of specialized areas that typically include finance, accounting, information technology, legal and human resources, in most of the cases. That, of course, comes in addition to the English language proficiency requirement, and even other languages such as Portuguese.

The Global Business Services operation that Procter & Gamble opened in year 2000 in Costa Rica showcases the possibilities and opportunities that this country has to offer. Today, from San Jose, Costa Rica, the GBS provides services to P&G operations and their business relations throughout the Americas, as part of the global strategy of the corporation. Other Shared Services operations include Chiquita Brands, GTC, Baxter Americas Services and British American Tobacco SSC. There are many other outsourcing operations of companies such as Hewlett Packard and IBM that have created a platform to serve their clients from their centers. Costa Rica also hosts regional offices and headquarters for several Fortune 1000 companies such as Motorola, Pfizer, Roche, 3M, Kimberly Clark, Cisco, Microsoft and Oracle, among others. Lastly, the availability of a very productive work force enables the operation of data processing centers in Costa Rica, such as the ones operated by Equifax and Maersk Americas.

Design and Engineering Centers

One of the most advanced operations in this area is Align Technology, which has developed a Designing Center for their product that requires cutting-edge 3-D computer graphics technology to design and manufacture customized orthodontic appliances. Align has decided to consolidate its entire design operation in Costa Rica, having recently announced the closing of its operations in Pakistan and the United Arab Emirates. The high productivity of the Costa Rican dental technicians will allow the corporation to slash its workforce by 35% without cutting production.

Software Development

In recent years, Costa Rica's software industry has emerged as one of the most dynamic industries in Latin America, enjoying explosive growth. There are now more than 300 companies in Costa Rica ranging from small to large- developing software companies that serve both the local and international markets, offering high quality products. Big names in the local industry are ArtinSoft, Sysde, Lidersoft, Codisa, Exactus, TecApro, along with many more local successful experiences.

Costa Rica also hosts important global players in this industry, such as Intel, Microsoft, Unisys and Oracle, which (and they) have designed and developed strong strategic alliances with local software producers. Intel, which currently stands as the largest multinational with operations in Costa Rica, has started developing software through its Latin American Engineering Services Group (LAES) based in the country. It has also invested in Artinsoft, while Microsoft has established a strategic alliance with this same company, which has developed the most advanced software in the world for migrating software from different languages. Likewise, Procter & Gamble has reached an agreement with Exactus, another local firm that addresses its software needs and requirements worldwide. It is also worth noting that CISCO Systems -which specializes in internet networks-, opened a $2million technological solution center to provide technical support to its customers in Central America, the Caribbean, Venezuela, Colombia and Ecuador. Even though the target markets are larger than Costa Rica, the performance of their operation has been so successful that the corporation decided to coordinate its regional operations from Costa Rica.

In recent years, as part of a private effort, the Training Center in Information Technologies (CENFOTEC) was created to provide supplementary training solutions in the software industry. This center has been very successful and has also become a special-purpose educational institution, offering a flexible infrastructure that provides a quick response to market needs.

Companies Established

Testimonials

…From our perspective Costa Rica is the best option for investment because of its quality people, affordable cost, high productivity, superior education, strategic geographic location and political stability…

Flora Solera
General Manager
Sykes CR

…The quality of education we found in C.R. is impressive. We have confirmed that the talent and training of the people is one of the best we have seen worldwide...

Alfonso Cos
Vice President for GBS North America
Procter & Gamble

…After evaluating results from the first week of operations in Costa Rica, the corporate office decided to transfer here all contact center operations....

Huber Matos
General Manage
PC Call Center