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INVESTING IN COSTA RICA

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Technical High Schools (81) University Foundations. INA: Free on-site technical training ... Existing industrial fashion designing capabilities. ... – PowerPoint PPT presentation

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Title: INVESTING IN COSTA RICA


1
(No Transcript)
2
Why Costa Rica?
  • Strategic Location
  • Political and Social stability
  • Economic Stability
  • Human Resources
  • Incentives
  • Infrastructure
  • Legal Security
  • Quality of Life
  • Great Potential
  • Business Sectors
  • Professional Assistance from CINDE

3
Strategic Location
  • In the center of the Americas
  • Central Standard Time Zone
  • 250 hours flying time to
  • Miami
  • Duty free access to the U.S.
  • through CBI

4
Political and social stability
  • Tradition of peace and stability
  • Army abolished in 1948
  • Government
  • More than 100 years of democracy
  • 3 independent powers
  • 4 year term with reelection
  • Presidential System

5
Political and social stability
  • No financial crisis for more than 20 years
  • Yearly output growth of 4.2
  • 4,361 per capita income in 2004
  • As a result, Costa Rica benefits from good access
    to the worlds capital markets and moderate risk
    premium
  • Costa Rican Long Term Bond Ratings
  • Moodys Ba1 (non investment grade)
  • FITCH Ratings BB (speculative)
  • Standard Poors BB (speculative)

6
Economic Stability
Macroeconomic Stability in spite of world
economic crisis periods
Source CINDE
7
Foreign Direct Investment
Annual Growth of FDI
8
Open Economy
Goods trade as porcentage of the GDP,
1980-2003 China 2002. Source WTO y IMF, 2004
9
Strategic market access
  • Tax free access to
  • USA through the CBI
  • Mexico
  • Canada
  • Central America
  • Chile
  • Dominican Republic
  • Panama
  • CARICOM
  • Preferential access through the GPS to
  • Europe and Asia
  • Free Trade Agreements negotiations
  • USA (signed)
  • Investment Promotion and Protection agreements
    with several countries

10
Human Resources
  • Population to October, 2005
  • 4.3 million
  • 34.2 of population is 15 to 35 years old
  • Labor force 2004 1.8 million
  • Unemployment, July 2005 6.6
  • Underemployment, July 2005 8.4
  • Universal Health Care and Education System
  • Pillars for the national stability
  • 6.5 of the GDPs destiny is for education

Age Structure by Gender
11
Literacy Rate
Source United Nations, Human Development Index,
2004
12
Education
  • Universal, free and compulsory education since
    1870 (the first in Latin America)
  • Computer labs in 50 of the primary schools and
    100 of high schools
  • English teaching in 50 of public schools and
    100 of private schools
  • 92 of high school students will present graduate
    English test ()

Source Ministry of Public Education
13
Education
  • Training centers
  • Technical High Schools (81)
  • University Foundations
  • INA Free on-site technical training
  • CEFOF Center for training trainers
  • CENFOTEC Software training
  • Universities, 56 (52 private, 4 state)
  • Including HBS/INCAE.

14
Education
Source Estado de la Nación
15
Labor Force
  • Costa Ricans are healthy and motivated learners
  • High observed productivity and learning speed by
    Free Zone Companies
  • Favorable labor environment non-union worker
    organization (Solidarismo)
  • Low Turnover

16
Low Turnover
17
Minimum wages
In US
Category C o s t T o t a
l per hour per year
(thousands) Non qualified
1.81 4.52 Semi
qualified 1.96 4.89
Qualified 2.11 5.26
Specialized 2.43 6.06 NOTES All costs
include all labor charges paid by the company,
Christmas bonus and reserves for vacations,
holidays and severance (47.98 in total). Minimum
salaries effective from July 1st to December 31st
of 2005. Exchange rate used 495 colons per US
(expected and the year end). Normal week of 48
hours and 8 hours per day
18
Average Salaries
Occupation
Annual Cost
(Thousands of US) General Manager 122.1
210.1 Operations Manager 42.0
67.6 Customers Service Manager Production
Supervisor 10.4 15.7 Assistants
9.4 12.5 Bilingual Secretary
10.5
13. Specialized Worker
5.9 7.5 Non
Specialized Worker
4.6 5.4 NOTES The total cost
includes all the work charges paid by the
company, the Christmas bonus an reserves for
vacations, holidays and severance. Source
Consulting Companies, Survey for the second
semester of 2004.
19
Investment Incentives
  • FREE TRADE ZONE REGIME
  • 100 exemption on
  • Import rights for raw materials, equipment and
    components.
  • Export taxes, local sales tax, excise taxes, etc
  • Profits repatriation taxes.
  • Those incentives dependents on the exporters
    performance must follow the WTO Guidelines
    starting from December 2007.

20
Investment Incentives
  • Minimum Investment
  • US 150,000 inside free trade industrial parks
  • US 2,000,000 outside free trade industrial parks
  • With possibility of sale to other exporters in
    the country and up to 25 of the production in
    the local market.

21
Investment Incentives
  • ACTIVE FINISHING REGIME
  • Suspension of 100 of the import taxes over
  • Raw materials
  • Components
  • Packing
  • Machinery and equipment
  • It does not apply a minimum amount of investment
  • Proportional payment of sales taxes for the
    Central American markets

22
Infrastructure
  • Industrial Parks
  • Designated areas for Free Trade Zone companies
  • Privately owned and managed
  • Variety of services
  • On site expedited customs
  • Health
  • Security
  • Maintenance
  • Day care
  • Garbage disposal, etc
  • Located 7 km away from the Juan Santamaria Intl.
    Airport

23
Industrial Parks
24
Infrastructure
  • Water and Electricity
  • Abundant water availability
  • Enough and trustable electric power supply
  • Hydroelectric, geothermic and other sources
  • Electric service coverage 97
  • Installed capacity of 1.962 MW
  • Approximated cost of 0,07 - 0,12 per KW/Hour,
    industrial rate
  • Clean energy 97.5 of the energy sources are
    renewable.

25
Infrastructure
  • Transportation
  • Ports on both shores
  • 24 maritime cargo lines service
  • Main airport located 15 km away from San Jose
  • 2º better airport of Latin-American
  • 3º better airport of the world (5 million
    passengers per year category)
  • Competitive maritime rates to the USA, Europe and
    Asia

26
Infrastructure
  • Telecommunications
  • Direct dialing worldwide
  • Tone dialing, call waiting, call forwarding, etc.
  • Redundant fiber optics network
  • Point to point connections
  • Direct world wide fiber optic access through Maya
    1 Arcos cables

27
Submarine Cables
28
Legal Security
  • Foreigners have no limits of property handling
    and they can drive business activities freely.
  • Foreigners have constitutional equality of rights
    and obligations.
  • Free capital movement
  • Intellectual property laws in accordance with WTO
    Guidelines.

29
Quality of life
  • Life expectancy 78.7 years
  • Health-Care Public Services Coverage 98.3
  • Infant Mortality very similar to those of
    developed countries 9.75 death per each 1.000
    born alive

30
Quality of life
  • San Jose is among the cities with the best
    quality of life in Latin America
  • The Economist Intelligence Unit, Liveability
    Rankings 2005
  • Costa Rica is the 35 country of the world in
    Quality of life.
  • The World in 2005, The Economist
  • The surveys highlight Costa Rica as the country
    with the most solid and uninterrupted democracy

31
Great Potential
  • Central American Country of the Future
  • FDI Magazine, 2005
  • 5th High-Tech exporter of the world
  • United Nations Human Development Report 2005
  • 35th in the Trade and Development Index
  • UNCTAD, 2005
  • One of the most successful FDI attraction
    advantage countries
  • UNCTAD World Investment Report, 2002 and CEPAL
    FDI in Latin America 2003

32
Success Story
William Abraham, General Manager, INTEL Costa
Rica
33
Electronics
  • US 1,514 million exported in 2004
  • 12,000 direct employees
  • US 172.5 million in FDI (2004)
  • Product Lines
  • RF Microwave
  • Autotronics
  • Semiconductors
  • Other subsectors
  • Intel, Sawtek, Remec, EMC Technology, Bourns,
    Teradyne, Suttle, Merrimac, Narda Microwave/ L3,
    Aetec, Conair/Babyliss, Panasonic, Current
    Controls, ITT Industries, Panduit, Pharos, Micro
    Technologies, Pycon, IDI International, Cuttler
    Hammer, Schneider/Square D Wai Semicon and
    others...

34
Medical Devices
  • US 521 million exported in 2004
  • 4,800 direct employees through 2004
  • US 152 million in FDI in 2004
  • Product Lines
  • Cardiovascular
  • Orthopedic
  • Image diagnostics
  • It is one of the most dynamic and productive
    sectors in Costa Rica.
  • Exports increased by 5 during 2003.
  • Baxter Healthcare and Hospira, leaders of the
    industry, have operations in Costa Rica.
  • Industry growth has created the need to attract
    new company suppliers to provide the industry
    with molding, filters, packaging, resins and
    other supplies.

35
Services
  • US 37.3 million in FDI in 2003
  • 6873 direct jobs through 2003
  • Costa Rica offers the right conditions to
    companies for added value to their production
    with cost effective infrastructure, its labor
    forces characteristics, and world wide services,
    such as
  • Shared service Centers
  • Back Offices
  • Software Development
  • Call Centers
  • Engineering, Architecture Design

36
Others Sectors
  • Special Projects
  • Existing industrial fashion designing
    capabilities.
  • Back office services (offshoring /outsourcing) in
    marketing, logistics, sourcing, quality assurance
    and others.
  • Assembly of medical other specialized products.
  • Tourism
  • The national tourism market maintains a 7.1
    annual growth.
  • Rooms have been expanding at an annual 4.5.
  • More than one million tourists visit Costa Rica
    every year.
  • 48 of all tourists come from the USA, 16 from
    Europe and 36 from other countries.
  • Great tourist real estate development presence,
    golf courses and marinas

37
Support Industry
  • Plastic injection, extrusion, blow molding
  • (Electroplast, Plásticos Modernos, Plásticos
    Star, PPC)
  • Sheet metal
  • (DIMMSA, Leogar, Perfiles Ranurados)
  • Precision Machining
  • (RR, Prolex, Oberg Industeries, FEMA, Weststar,
    Techshop, Microtechnologies, Olympic Machining,
    MOTROSA)
  • Tools and Dies, Stamping Plating
  • Quality and manufacturing systems
  • ISO 9000, ISO 14000, QS9000, TL9000, 5S, TQM, Six
    Sigma.

38
Assistance from CINDE
  • CINDE, the Costa Rican Investment Promotion
    Agency, is a private non-profit nonpolitical
    organization, founded in 1982.
  • Providing assistance to investors through the New
    York and Costa Rica offices
  • Active promotion of foreign investment, local
    support, and post establishment services.
  • Support for new projects and reinvestment

39
Solidarista Associations
  • Employer-sponsored workers associations
  • Each company has an organization, in which white
    and blue collar workers participate
  • The organization operates as a credit union which
    provides multiple benefits to workers
  • It is funded by employers, with part of the
    severance provisions, and by employees
  • Solidarista organizations ARE NOT sector-wide
    bargaining instances, as American unions
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