Doing Business in Central America Podcast: Recent Episodes
Doing Business in Central America Podcast
1. Investment Outside of the Greater Metropolitan Area in Costa Rica
Contact the Central American Group if you want to establish a manufacturing facility in Costa Rica. Maria Paz Araya
Coordinator for investment outside of the Greater Metropolitan Area of Costa Rica
Procomer
maraya@procomer.com
The Central American Group: We’re pleased to have a knowledgeable individual with us today. Her name is Maria Paz-Araya, and I’m sorry if I butchered that pronunciation, Maria. Excuse me. Was it even close to being correct?
Maria Paz Araya: I think you nailed it.
The Central American Group: In any event, Maria is the Coordinator for foreign direct investment outside of the Greater Metropolitan area in Costa Rica. She will explain exactly what that term means in a few minutes. But before she does, I want to say that she is a member of Procomer. Procomer is the National Agency for Investment and Export Promotion for Costa Rica. Maria, welcome. Can you give us a little bit more information about your background?
The Central American Group: Sure. Thank you, Steve. It is a pleasure to participate in your podcast today. Thank you for the opportunity. As you said, my name is Maria Paz Araya. For the past eight months, I have served as the coordinator of foreign direct investment outside of the Greater Metropolitan Areas in Costa Rica. I have 10 years of experience working in foreign trade and around the free trade zone regime in Costa Rica. This experience was gained precisely outside the Greater Metropolitan area in Costa Rica. I’m thrilled to discuss the opportunities and challenges these regions of the country present.
The Central American Group: I’d like to have you first before we get into further questions, explain the terms in Costa Rica: there’s the Greater Metropolitan Area, and then there’s outside of the Greater Metropolitan Area. Can you tell me what the latter means in the context of Costa Rica and name some communities that are a part of that area?
Maria Paz Araya: Okay, well, I’m going to start by saying what the greater Metropolitan area, or GMA, is from now on in Costa Rica. The primary urban concentration includes the major provinces of San Jose, Heredia, Alajuela, and Cartago, located in the country’s central area. This delineation was established in the 1980s as a fundamental tool for urban planning and fostering economic development within the region. Therefore, areas outside the GMA lie beyond this area and are mainly situated in the northern part of the country. This includes the Pacific and Caribbean coastlines and the Southern regions of Costa Rica’s territory. Some examples of well-known communities outside the Greater Metropolitan area are Limón, Liberia in Guanacaste, San Carlos, San Ramón, Punta Arenas, and Turrialba, to name a few.
The Central American Group: Why is it important for Procomer to promote investment outside the Greater Metropolitan Area in Costa Rica at this time, specifically?
Maria Paz Araya: Promoting investment outside the Greater Metropolitan Area in Costa Rica is vital for Procomer. It’s important because it opens up new opportunities for businesses and investors in various regions. This directly translates to creating new job opportunities, which is our absolute main goal right now. It is important because it helps distribute economic growth evenly throughout the country.
The Central American Group: What specific advantages do locations for investment outside the Greater Metropolitan Area in Costa Rica offer foreign investors looking to establish manufacturing operations, particularly in terms of cost-effectiveness and resource availability?
Maria Paz Araya: Sure. There are many advantages for investors to establish investment outside of the Greater Metropolitan Area in Costa Rica. First of all, I could say government incentives. Costa Rica provides tax incentives offered through the free trade zone regime law to companies established outside the greater Metropolitan area. I can go into more detail if you like. Also, there is access to skilled labor. Many regions outside the GMA have access to a skilled labor force, particularly in specialized industries such as agriculture, agro-industry, light manufacturing, and services. With training programs and vocational schools, these areas can provide a pool of skilled workers for manufacturing operations. Another advantage for companies that execute and investment outside of the Greater Metropolitan Area in Costa Rica is the access to natural resources. Many regions outside the GMA have fertile land for agriculture and forestry. It can be advantageous for manufacturing operations that require specific environmental conditions.
Now that I have mentioned the environment, we love investors who prioritize environmental sustainability in their operations. Non-metropolitan areas often offer more opportunities for eco-friendly manufacturing practices, such as access to sustainable raw materials. And so, well, in 2022, work was done to reform and improve incentives for investment outside of the Greater Metropolitan Area in Costa Rica, and law 10,234 was launched, which I would love to tell you about.
The Central American Group: Oh, please do.
Maria Paz Araya: Okay. The tax treatment outlined in the Costa Rica Free Trade Zone Regime Law significantly differs for companies established within the urban area compared to those that make an investment outside of the Greater Metropolitan Area in Costa Rica. Outside the GMA, established companies have greater exemptions, like 0% corporate income tax. Also, they enjoy a temporary reduction of Social Security payments for their employees. Additionally, the law I mentioned before, Law 10,234, enabled three new categories for attracting FDI outside the GMA. And these are sustainable adventure parks. These should be places for recreational and commercial activities, promoting conservation and research in a natural environment. Also, it applies to strategic suppliers. This refers to goods made in Costa Rica and used to produce final goods, excluding machinery. But this includes material for agriculture, fishing, manufacturing, and other operations, et cetera. The third category is healthcare-centered services. By this, we mean specialized centers offering medical services like ophthalmology, orthodontics, cosmetic surgery, et cetera. So yes, these incentives significantly enhance the appeal for companies to make an investment outside of the Greater Metropolitan Area in Costa Rica by lowering operation costs and improving profit in the end. This, in turn, attracts more foreign investment, simulates economic growth in regional areas, and creates job opportunities, fostering sustainable development beyond urban centers.
The Central American Group: Well, it’s a really good thing that Costa Rica is paying attention with greater focus to balance out investment throughout the country because most people that are in the know about Costa Rica and foreign direct investment have been able to note that over the last 30 years, Costa Rica has been very, very successful attracting medical device companies that are globally known. Most of that investment, however, is centered in the Greater Metropolitan Area. Now that you’re working with investment outside of the Greater Metropolitan Area in Costa Rica and trying to balance out investment in the country, can you give some examples of recent investments that have been made outside of the Greater Metropolitan Area, whether they’re medical devices or other types of investments?
Maria Paz Araya: Sure. Last year, we managed to attract 13 companies to locations outside of the Greater Metropolitan Area. This is nearly twice the average of six companies in previous years. So, yes, 13 new companies have placed their trust in Costa Rica in its regions outside of the GMA. The diversity of locations where they will be establishing investment outside of the Greater Metropolitan Area in Costa Rica is worth noting. We have projects in all of the provinces outside of the GMA. These companies are engaged in various activities, including food production, aeronautical services, distribution, light manufacturing, logistics, and, of course, medical devices, We also have companies involved in metalworking, and information and communication technologies.
The Central American Group: When you look at the workforce, and you compare the Greater Metropolitan Area with that outside the Greater Metropolitan Area, what are the differences, if there are any, regarding skill levels, labor costs, and availability?
The Central American Group: Sure. I think the most particularly positive aspect is that, unlike the current workforce inside of the GMA, where employees may easily switch between companies, which leads to increased labor costs, those outside that make investment outside of the Greater Metropolitan Area in Costa Rica tend to display a greater commitment to companies that offer meaningful opportunities for growth and development. Over the past eight months, along with my outstanding team, in my position as the Coordinator of FDI Attraction outside of the GMA, we have traveled to many parts of the country, visiting numerous companies, various organizational groups, and academia. Suppose there’s one thing I can tell you from first-hand experience. In that case, workers outside of the GMA are available and eagerly awaiting promising job opportunities. While we are aware of the challenges in terms of upskilling needs, we are actively engaged in overcoming them, understanding their significance in attracting foreign direct investment, and trying to articulate the needs of the private sector with what academia offers.
The Central American Group: It’s wonderful to hear that Costa Rica is trying to bring foreign direct investment to all regions and corners of the country. In a short period here, we’ve discussed several issues related to investment outside of the Greater Metropolitan Area in Costa Rica. Typically, we’ve experienced with these podcasts that our listeners, once they take in the information included in these recordings, often have follow-up questions they’d like to ask. We want to facilitate that communication between our listeners and our interviewees by providing contact information so that there can be a direct discussion between you and anybody who might have a question to ask about anything that you’ve said today. If somebody wants to get in contact with you, how do they go about doing that?
Maria Paz Araya: Listeners seeking more information about investment outside of the Greater Metropolitan Area in Costa Rica, please feel free to contact me via email at maraya@procomer.com. I will be more than happy to provide them with the information they may need.
The Central American Group: Maria Paz, if it’s okay with you, we include key information at the top of the transcript section on the page where the podcast is hosted. We’ll put your name. We’ll make it a link to your LinkedIn profile so people can get to you directly. We’ll include a link to Procomer’s website. We will also add your email address. If that’s okay with you, we’ll also do those things to facilitate discussions between you and anybody interested in this topic.
Maria Paz Araya: Sure, Steve. Thank you. Please go ahead.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Investment outside of the Greater Metropolitan Area in Costa Rica Copy appeared first on The Central American Group.
1. Investment Outside of the Greater Metropolitan Area in Costa Rica
Contact the Central American Group if you want to establish a manufacturing facility in Costa Rica. Maria Paz Araya
Coordinator for investment outside of the Greater Metropolitan Area of Costa Rica
Procomer
maraya@procomer.com
The Central American Group: We’re pleased to have a knowledgeable individual with us today. Her name is Maria Paz-Araya, and I’m sorry if I butchered that pronunciation, Maria. Excuse me. Was it even close to being correct?
Maria Paz Araya: I think you nailed it.
The Central American Group: In any event, Maria is the Coordinator for foreign direct investment outside of the Greater Metropolitan area in Costa Rica. She will explain exactly what that term means in a few minutes. But before she does, I want to say that she is a member of Procomer. Procomer is the National Agency for Investment and Export Promotion for Costa Rica. Maria, welcome. Can you give us a little bit more information about your background?
The Central American Group: Sure. Thank you, Steve. It is a pleasure to participate in your podcast today. Thank you for the opportunity. As you said, my name is Maria Paz Araya. For the past eight months, I have served as the coordinator of foreign direct investment outside of the Greater Metropolitan Areas in Costa Rica. I have 10 years of experience working in foreign trade and around the free trade zone regime in Costa Rica. This experience was gained precisely outside the Greater Metropolitan area in Costa Rica. I’m thrilled to discuss the opportunities and challenges these regions of the country present.
The Central American Group: I’d like to have you first before we get into further questions, explain the terms in Costa Rica: there’s the Greater Metropolitan Area, and then there’s outside of the Greater Metropolitan Area. Can you tell me what the latter means in the context of Costa Rica and name some communities that are a part of that area?
Maria Paz Araya: Okay, well, I’m going to start by saying what the greater Metropolitan area, or GMA, is from now on in Costa Rica. The primary urban concentration includes the major provinces of San Jose, Heredia, Alajuela, and Cartago, located in the country’s central area. This delineation was established in the 1980s as a fundamental tool for urban planning and fostering economic development within the region. Therefore, areas outside the GMA lie beyond this area and are mainly situated in the northern part of the country. This includes the Pacific and Caribbean coastlines and the Southern regions of Costa Rica’s territory. Some examples of well-known communities outside the Greater Metropolitan area are Limón, Liberia in Guanacaste, San Carlos, San Ramón, Punta Arenas, and Turrialba, to name a few.
The Central American Group: Why is it important for Procomer to promote investment outside the Greater Metropolitan Area in Costa Rica at this time, specifically?
Maria Paz Araya: Promoting investment outside the Greater Metropolitan Area in Costa Rica is vital for Procomer. It’s important because it opens up new opportunities for businesses and investors in various regions. This directly translates to creating new job opportunities, which is our absolute main goal right now. It is important because it helps distribute economic growth evenly throughout the country.
The Central American Group: What specific advantages do locations for investment outside the Greater Metropolitan Area in Costa Rica offer foreign investors looking to establish manufacturing operations, particularly in terms of cost-effectiveness and resource availability?
Maria Paz Araya: Sure. There are many advantages for investors to establish investment outside of the Greater Metropolitan Area in Costa Rica. First of all, I could say government incentives. Costa Rica provides tax incentives offered through the free trade zone regime law to companies established outside the greater Metropolitan area. I can go into more detail if you like. Also, there is access to skilled labor. Many regions outside the GMA have access to a skilled labor force, particularly in specialized industries such as agriculture, agro-industry, light manufacturing, and services. With training programs and vocational schools, these areas can provide a pool of skilled workers for manufacturing operations. Another advantage for companies that execute and investment outside of the Greater Metropolitan Area in Costa Rica is the access to natural resources. Many regions outside the GMA have fertile land for agriculture and forestry. It can be advantageous for manufacturing operations that require specific environmental conditions.
Now that I have mentioned the environment, we love investors who prioritize environmental sustainability in their operations. Non-metropolitan areas often offer more opportunities for eco-friendly manufacturing practices, such as access to sustainable raw materials. And so, well, in 2022, work was done to reform and improve incentives for investment outside of the Greater Metropolitan Area in Costa Rica, and law 10,234 was launched, which I would love to tell you about.
The Central American Group: Oh, please do.
Maria Paz Araya: Okay. The tax treatment outlined in the Costa Rica Free Trade Zone Regime Law significantly differs for companies established within the urban area compared to those that make an investment outside of the Greater Metropolitan Area in Costa Rica. Outside the GMA, established companies have greater exemptions, like 0% corporate income tax. Also, they enjoy a temporary reduction of Social Security payments for their employees. Additionally, the law I mentioned before, Law 10,234, enabled three new categories for attracting FDI outside the GMA. And these are sustainable adventure parks. These should be places for recreational and commercial activities, promoting conservation and research in a natural environment. Also, it applies to strategic suppliers. This refers to goods made in Costa Rica and used to produce final goods, excluding machinery. But this includes material for agriculture, fishing, manufacturing, and other operations, et cetera. The third category is healthcare-centered services. By this, we mean specialized centers offering medical services like ophthalmology, orthodontics, cosmetic surgery, et cetera. So yes, these incentives significantly enhance the appeal for companies to make an investment outside of the Greater Metropolitan Area in Costa Rica by lowering operation costs and improving profit in the end. This, in turn, attracts more foreign investment, simulates economic growth in regional areas, and creates job opportunities, fostering sustainable development beyond urban centers.
The Central American Group: Well, it’s a really good thing that Costa Rica is paying attention with greater focus to balance out investment throughout the country because most people that are in the know about Costa Rica and foreign direct investment have been able to note that over the last 30 years, Costa Rica has been very, very successful attracting medical device companies that are globally known. Most of that investment, however, is centered in the Greater Metropolitan Area. Now that you’re working with investment outside of the Greater Metropolitan Area in Costa Rica and trying to balance out investment in the country, can you give some examples of recent investments that have been made outside of the Greater Metropolitan Area, whether they’re medical devices or other types of investments?
Maria Paz Araya: Sure. Last year, we managed to attract 13 companies to locations outside of the Greater Metropolitan Area. This is nearly twice the average of six companies in previous years. So, yes, 13 new companies have placed their trust in Costa Rica in its regions outside of the GMA. The diversity of locations where they will be establishing investment outside of the Greater Metropolitan Area in Costa Rica is worth noting. We have projects in all of the provinces outside of the GMA. These companies are engaged in various activities, including food production, aeronautical services, distribution, light manufacturing, logistics, and, of course, medical devices, We also have companies involved in metalworking, and information and communication technologies.
The Central American Group: When you look at the workforce, and you compare the Greater Metropolitan Area with that outside the Greater Metropolitan Area, what are the differences, if there are any, regarding skill levels, labor costs, and availability?
The Central American Group: Sure. I think the most particularly positive aspect is that, unlike the current workforce inside of the GMA, where employees may easily switch between companies, which leads to increased labor costs, those outside that make investment outside of the Greater Metropolitan Area in Costa Rica tend to display a greater commitment to companies that offer meaningful opportunities for growth and development. Over the past eight months, along with my outstanding team, in my position as the Coordinator of FDI Attraction outside of the GMA, we have traveled to many parts of the country, visiting numerous companies, various organizational groups, and academia. Suppose there’s one thing I can tell you from first-hand experience. In that case, workers outside of the GMA are available and eagerly awaiting promising job opportunities. While we are aware of the challenges in terms of upskilling needs, we are actively engaged in overcoming them, understanding their significance in attracting foreign direct investment, and trying to articulate the needs of the private sector with what academia offers.
The Central American Group: It’s wonderful to hear that Costa Rica is trying to bring foreign direct investment to all regions and corners of the country. In a short period here, we’ve discussed several issues related to investment outside of the Greater Metropolitan Area in Costa Rica. Typically, we’ve experienced with these podcasts that our listeners, once they take in the information included in these recordings, often have follow-up questions they’d like to ask. We want to facilitate that communication between our listeners and our interviewees by providing contact information so that there can be a direct discussion between you and anybody who might have a question to ask about anything that you’ve said today. If somebody wants to get in contact with you, how do they go about doing that?
Maria Paz Araya: Listeners seeking more information about investment outside of the Greater Metropolitan Area in Costa Rica, please feel free to contact me via email at maraya@procomer.com. I will be more than happy to provide them with the information they may need.
The Central American Group: Maria Paz, if it’s okay with you, we include key information at the top of the transcript section on the page where the podcast is hosted. We’ll put your name. We’ll make it a link to your LinkedIn profile so people can get to you directly. We’ll include a link to Procomer’s website. We will also add your email address. If that’s okay with you, we’ll also do those things to facilitate discussions between you and anybody interested in this topic.
Maria Paz Araya: Sure, Steve. Thank you. Please go ahead.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Investment outside of the Greater Metropolitan Area in Costa Rica appeared first on The Central American Group.
We have been the number one trade promotion agency in the world according to the International Trade Center, and we have more than 25 years of experience in the administration of the free zone regime in Costa Rica.
The post Investing in Costa Rica with Procomer’s Monica Umaña appeared first on The Central American Group.
He's the Manufacturing Project Manager for a company called Brisk Heat, and he just went through the process of starting up a manufacturing facility in Costa Rica,
The post Starting up a manufacturing facility in Costa Rica Copy appeared first on The Central American Group.
1. Starting a manufacturing facility in Costa Rica
Contact the Central American Group to begin starting up a manufacturing facility in Costa Rica in the Green Park Free Zone. David Hard
Manufacturing Project Manager
Brisk Heat
Columbus, Ohio
dhard@briskheat.com
**The Central American Group**: Hello. Welcome to everybody that’s listening to this podcast. Today we have David Hard with us. David is with a company called Brisk Heat that is out of Columbus, Ohio. David has an interesting story to tell us this morning. He went through the process of starting up a manufacturing facility in Costa Rica. He’s the manufacturing project manager for a company called Brisk Heat, and he just went through the process of starting up a manufacturing facility in Costa Rica. But without saying more, I’ll let David introduce himself and tell us about Brisk Heat.
David Hard: Yes, thank you so much. I’m David Hard. I’ve been with Brisk Heat for about six years now. I’ve been tasked with the excellent opportunity to be involved in starting up a manufacturing facility in Costa Rica. So, one thing that’s unique about Brisk Heat is that we’ve been around for about 75 years and make a unique product. We make industrial heating solutions for various industries, but a lot for semiconductor applications. It was an exciting opportunity for us to take this production down to Costa Rica.
The Central American Group: Well, David, just to give the audience an idea of what we’re going to do, we’re going to talk about the process of starting up a manufacturing facility in Costa Rica because you’ve just gone through that. What we hope that you’ll be able to do is provide some information that’ll be instructive for people that are considering doing the same thing. But first of all, what factors led Brisk Heat to choose Costa Rica over other existing options before we get into the actual process?
David Hard: So, when we were looking at new production facilities, we returned to the fact that we have our facility here in Columbus, and then we have our manufacturing facilities in Vietnam that we started about ten years ago. One of the things that really drove us to look at the possibility of starting up a manufacturing facility in Costa Rica was our new parent company, the NIBE Group, which actually guided us to improve our business continuity. And by doing that, we wanted to find a location somewhere in North America or Latin America to supply our North American market better. We looked at starting up a manufacturing facility in Costa Rica and several other Latin American countries. We landed in Costa Rica because getting to North and South America was easy. But they had an excellent, readily available skilled labor force, which was very promising for us as we moved into a new country.
The Central American Group: Well, another thing that I wonder if you looked at as far as Costa Rica is concerned, there are a lot of free trade agreements with which you can export your goods to a number of different countries. Costa Rica, obviously, has got its political stability. But in addition to those things, what led your company to choose the Green Park Free Zone out of all the other options that are available to you in Costa Rica?
David Hard: When Green Park originally contacted us as a free trade zone to go into, they were one of the few parks that actually provided us an opportunity not just to take an existing building and retrofit it to our needs. They were actually able to be cost-competitive and build an entire facility for us and move into that fitted up exactly how we needed it. But an extra bonus was because that would take about nine months. We could move into one of the buildings they had on-site and start production earlier, which is critical for us because our training process can take up to a year to execute fully.
The Central American Group: Well, what has been the experience regarding starting up? Was it smooth? Did you hit any snags? Maybe you could elaborate on that.
David Hard: Yes, every company probably will go through this. You can plan all you want, but you’ll always hit a snag. So Green Park has made everything extremely easy from a building and an outfit standpoint. But then, some of the unexpected things we had occur was going through the environmental permit process and determining exactly how imports and exports work for Costa Rica through the US. And then, with a free trade zone, we were new to, we were working with Procomer. But in order for us to kind of really get through a lot of those unexpected surprises, we were able to partner with excellent organizations such as CINDE, Seal and Seal, and a bunch of other companies to really fine-tune what we needed to do when starting a manufacturing facility in Costa Rica and get answers very quickly.
The Central American Group: Now, what was it like going through the process of environmental permitting and dealing with import and export issues with Procomer? How were those organizations as far as addressing your needs?
David Hard: Yes, definitely, that was something new for us. So, since we didn’t have any boots on the ground, everything was still running through the US. We partnered with some local organizations like Cinde, which is excellent at bringing companies into Costa Rica. We also partnered with Seal and Seal, who knows a lot about environmental permitting. And then, we worked directly with Procomer to do virtual training. And all of that was extremely helpful for us to work through many of our bumps and snags as we went through the process.
The Central American Group: Tell us about the readily available labor force. Can you tell us your hiring process for starting up a manufacturing facility in Costa Rica?
David Hard: Yes, so Brisk Heat has a very rigorous training program. For us, finding excellent candidates is very crucial. We were able to partner with many local municipalities and networks like the INA Institution, which is the National Institute for Training, to place job applications everywhere. Then we were able to get very talented, very skilled employees right out of the gate. We’re able to pick up our training very quickly, and now we’re producing our product.
The Central American Group: Well, how was the training process? Was it something that was formulated in the home office, and then you transferred it down to your Costa Rican facility? Can you tell us a little bit about that?
David Hard: Yes, so we’ve had a training process that we use as our template when we moved into Vietnam. During that time frame, from about ten years ago to now, we’ve been able to fine-tune that, and then we actually had some of our US representatives go down and do onsite training in Costa Rica. So here at Brisket in the US. We have multiple nationalities covered all across our building. So, we were fortunate enough to have a Spanish-speaking manufacturing manager who could go down and support them and teach our Costa Rican workforce everything quickly in their native language.
The Central American Group: Just out of curiosity, I know this is not one of the things we discussed up front, but how much time did you spend starting up a manufacturing facility in Costa Rica personally?
David Hard: So right now, I come and go. I go down about once a month, once every six weeks for about a week at a time. The big benefit that we have is we like to let the local representatives actually run and manage everything. We just provide them with the tools they need, so we don’t spend tons of time down there unless they really need us to help support something.
The Central American Group: I know listeners will be very interested in this. What advice would you give others contemplating starting up a manufacturing facility in Costa Rica?
David Hard: Costa Rica is excellent, as every company knows you’re going to have up and downs, so partnering with the right people is definitely one of the best things you can do. I recommend working with CINDE to review all the paperwork and documentation to enter the country. And then, from there, they can help you connect to the right legal teams and review free trade zones, get you in contact with Procomer, and set up those training classes so you can learn a lot ahead of time. So that way, you’re not really surprised later. So definitely utilize the resources that Costa Rica provides. There is no charge for CINDE’s resources, so I would definitely say utilize everything you can from them.
The Central American Group: What about a legal team? Did you have legal support?
David Hard: Yes, we actually partner with BLP Legal, and they’ve been excellent. Every day I keep giving them more and more stuff to do, and so far, they still respond and say that everything’s going great.
The Central American Group: And then advice. In choosing a free trade zone partner, what would you say is important to look at when starting up a manufacturing facility in Costa Rica?
David Hard: For us, the partnership we’ve developed with Green Park and all the staff is very critical. We’ve been able to work very closely with them, and we’ve noticed that they want us to succeed just as much as we want to succeed. By doing that, we know that a good partnership has been formed. So definitely find a free trade zone that you feel confident with, and you know that they want your success just as much as you do.
The Central American Group: And what else would you recommend in terms of training classes that might be available to people in the position of starting up manufacturing operations in Costa Rica?
David Hard: Definitely look through Procomer’s website. They have lots of resources if you’re looking for anything about free trade zones. Talk to the free trade zone you’re looking into because they probably have different people they can connect you with. This includes contractors, vendors, and anything like that. Utilize any resource that you can get from Procomer, your free trade zone, and CINDE.
The Central American Group: I would add to that the Central American Group’s blog. We have lots of information about business in Costa Rica that people can take advantage of. When do you fully open up your operations in Costa Rica?
David Hard: So that’s a fun question. We actually hired our first employee back on September 22. As I mentioned earlier, our training process is approximately a year to get any of our cloth assembly associates trained to produce high-scale jackets. So, we hired our first production associates in December. We streamlined their training process and produced and shipped our first product in May of this year. So that’s been excellent for us.
The Central American Group: Wow. My understanding is in January when the operations are at full capacity, you will inaugurate the facility. Is that true?
David Hard: Yes. We plan to do our Grand Opening ceremony towards the end of January next year. We’ll be at approximately a third of our planned staff capacity because we can only bring on so much so quickly. But we’re planning to get to full capacity by the end of 2026 and provide around seven hundred jobs to the local area.
The Central American Group: Well, I’m sure that that’ll go very well with the locals as far as this is another thing that people ask us quite often, was your experience in finding the people that you need to be bilingual? Were they available to you?
David Hard: We actually partnered with an employment agency, Doris Peters and Associates. They were excellent at going out and seeking candidates for us, for our high-level positions, and for our senior staff. And then, from there, we were able to go through a couple of candidates, and we found excellent bilingual individuals. A lot of our other positions don’t require bilinguals, but we’re seeing that a lot of people can speak both Spanish and English. I’m in the process of learning Spanish. That way, I can help them a little more while I’m there. It’s been excellent to have a vast pool of bilingual candidates all over the place in our experience in starting up a manufacturing facility in Costa Rica.
The Central American Group: Well, David, this has been an interesting discussion, and it’s a topic that I’m sure is going to be of interest to a lot of our listeners. Typically, when we speak with somebody with your expertise, we like to ask them if they would be available, perhaps to answer questions from any of our listeners. Would that be something you’d be willing to do?
David Hard: I’d be open to emails, obviously. I travel often, so phones don’t always work for me. But for emails, I tend to respond pretty quickly.
The Central American Group: Okay. David, if you could tell us your email, and I’ll ensure that it’s in the transcript portion of the podcast, I’d appreciate it.
David Hard: Yes, so my email is dhard@briskheat.com.
The Central American Group: Well, David, it’s been a pleasure talking with you, and hopefully, we’ll meet each other in person this coming January in Costa Rica.
David Hard: Sounds excellent. I’m looking forward to it.
The Central American Group: Thank you again for joining us.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Starting up a manufacturing facility in Costa Rica appeared first on The Central American Group.
Contact the Central American Group **to establish nearshore manufacturing operations in the Green Park Free Zone.** Middle East trade ties with be strengthened through new Costa Rican free trade agreements with the United Arab Emirates and Israel.
During the last week of March 2023, Costa Rica became the third country in Latin America to launch a negotiation process to sign a free trade agreement with the United Arab Emirates (UAE). Colombia and Chile are the other two countries in the region to strike an accord with the UAE. In addition to this trade pact, Costa Rica also announced, during the same week, that it would begin negotiations on a free trade agreement with Israel. Costa Rican free trade agreements with the UAE and Israel will strengthen the Central American nation’s economic position in the Middle East.
The signing of the “Comprehensive Economic Partnership Agreement,” a process similar to a free trade agreement, took place in Dubai between the Minister of Foreign Trade, Mr. Manuel Tovar Rivera, and the Emirati Minister of State for Foreign Trade, Dr. Thani Al – Zeyoudi.
The movement towards greater commercial ties between Costa Rica and the UAE began in DavosThe diplomatic process that allowed the two countries to reach this milestone began with the bilateral meeting between the President of Costa Rica, Dr. Rodrigo Chaves Robles, and the CEO of the sovereign wealth fund of the Emirate of Abu Dhabi (ADQ), Mr. Mohammed Al- Suwaidi, which took place in Davos, Switzerland in the framework of the World Economic Forum meeting, last January.
Subsequently, Foreign Minister Arnoldo André’s official tour to the United Arab Emirates in February consolidated the agreement to move the process forward during a meeting with the diplomatic adviser to the Emirati president and Emir of Abu Dhabi, Dr. Anwar Gargash. This step culminated in another meeting among the foreign trade ministers of both countries in February.
“Bilateral relations today with the United Arab Emirates have gained a significant degree of confidence for both countries, and this step that we have taken proves that the Middle East is an important country committed to foreign trade and commerce, which we will further strengthen in the coming months, “ Foreign Minister André said.
Costa Rica and the United Arab Emirates exchanged resident embassies in 2017. Since then, more than twenty-five cooperative agreements of various kinds have been signed. The Costa Rican Ambassador Francisco J. Chacón, and the Emirati ambassador, Rawdha Al- Otaiba, are the heads of the missions in Abu Dhabi and San José, respectively.
Emirati data from the Ministry of Economy indicate that from 2021 to 2022, total trade between the UAE and Costa Rica grew by 19.3%, reaching 58.7 million dollars annually. Costa Rican exports reached 43.8 million dollars last year, an increase of 21.3% compared to 2021.
Costa Rica and Israel will negotiate a free trade agreementCosta Rica and Israel agreed on Wednesday, March 29, 2023, to negotiate a Free Trade Agreement (FTA), with which the Central American country reinforces its commitment to new markets and deepens its relations with the Middle East.
“The Middle East is a region of the world with which there is a lot of space to strengthen our commercial exchange and investment, and this FTA that Costa Rica and Israel have decided to negotiate is framed precisely within that logic,” the Costa Rican minister of Foreign Trade, Manuel Tovar, said in a statement.
The official is in Israel was in Israel on March 29, when he signed a memorandum of understanding on trade with the Israeli Minister of Economy and Industry, Nir Barkat. The two diplomats announced the decision to negotiate an FTA.
The Government of Costa Rica affirmed the long-standing friendship between the two countries. Due to this relationship, both parties agree that there is an excellent outlook for deepening trade and investment ties. In addition to this, there are also opportunities to take advantage of global value chains for advanced manufacturing and highly sophisticated services.
“Both countries have a lot to offer each other. On the one hand, Israel is a leader in innovative industries such as high technology, cybersecurity, agrotechnology, and clean technologies; on the other, Costa Rica is an important supplier of high-quality agricultural products, as well as advanced manufacturing products and sophisticated business services and information technology,” said Tovar.
The benefits of Costa Rican free trade agreements with the the UAE and IsraelThere are several potential benefits of free trade agreements (FTAs) between Costa Rica and the United Arab Emirates (UAE), and Israel, including:
- Increased trade: FTAs can eliminate tariffs and other trade barriers between countries, making it easier and cheaper for businesses to trade goods and services. This can increase trade volume between Costa Rica, the UAE, and Israel, leading to more economic activity and potentially higher business profits.
- Diversification of trade: By establishing FTAs with countries in different regions, Costa Rica can diversify its trade portfolio and reduce its dependence on one market. This can help mitigate the risk of economic disruption due to changes in global market conditions or political instability in any region.
- Access to new markets: FTAs can open up new markets for Costa Rican businesses, allowing them to sell their goods and services to consumers in the UAE and Israel. This can help expand Costa Rican companies’ customer base and increase their revenues.
- Enhanced competitiveness: By eliminating trade barriers, FTAs can increase competition between businesses in different countries. This can incentivize companies in all three countries to improve their products and services, reduce costs, and become more efficient. This will ultimately make them more competitive in the global marketplace.
- Improved investment opportunities: Costa Rican free trade agreements with the UAE and Israel can provide a framework for increased investment between the countries, creating new opportunities for businesses to expand into new markets and invest in new projects. This can lead to increased job creation, economic growth, and improved living standards for people in Costa Rica, the UAE, and Israel.
Contact UsPlease use this form to contact us and we will respond as soon as possible: The post Costa Rican free trade agreements with the UAE and Israel will be negotiated appeared first on The Central American Group.
1. Specialized Engineering Services in Cost Rica
Contact the Central American Group if you require engineering services in to establish a manufacturing facility under the Free Zone Regime. Luis Chinchilla
Owner
OPIA Advanced Engineering Services
San Jose, Costa Rica
lchinchilla@opiacr.com
The Central American Group: Welcome to another episode of the Central American Group’s podcast. These recordings aim to have conversations with people with various expertise in doing business in Central America. In this episode, we have the pleasure of speaking with Luis Chinchilla. Luis is the head of a Costa Rican company called OPIA. The acronym in Spanish means Advance Advanced Engineering Operations. OPIA is a company that offers specialized engineering services in Costa Rica First, we’d like to learn a little bit about you, Luis. Could you tell us about yourself and then maybe about your organization?
Luis Chinchilla: Absolutely; thank you very much for having us today. It’s a great opportunity to interact with you and with the rest of the people who can hear this podcast. I’m a chemical engineer by degree. I’ve been in the industry for close to 40 years, working in different areas ranging from facilities to start-up facilities operation, clean room certification, commissioning, and advanced engineering studies. It just happened that my professional career has been hand in hand with the development of advanced industries in Costa Rica, such as medical device manufacturing, pharma manufacturing, semiconductor manufacturing, and optical manufacturing. But I also had the opportunity to interact with other business segments, such as the banking industry, software development, and engineering services in Costa Rica and their applications. The organization we’ve developed originated with the arrival of certain companies in Costa Rica. I happened to be on the customer side for a few years of my professional career. Being on that side, it was just something that caught our attention: there wasn’t a supplier of advanced engineering services in Costa Rica that could fulfill certain needs we were experiencing. We couldn’t identify a quick and easy solution to those engineering needs.
And that’s when OPIA, a provider of advanced engineering services in Costa Rica, was born and delivered to the market. We started with two disciplines, and now we offer ten different services to the market in Costa Rica, Central America, as you mentioned, and beyond throughout Central America. We have provided advanced engineering services in 15 different countries. So we try to bring that engineering hub concept to the market and to our customers. We’re an organization with seven departments right now.
The Central American Group: I’ve had a little opportunity to look at your website, and I’m impressed by your company’s wide range of services. But given the makeup of the manufacturing industry in Costa Rica, what are the most utilized services your company provides to people in Costa Rica doing manufacturing?
Luis Chinchilla: Okay. It varies, Steven. It varies depending on the nature of the customer’s business. For highly advanced manufacturing, meaning medical devices and or pharmaceuticals, I would say the engineering services in Costa Rica center around clean room peripheral equipment such as film hoods, biosafety cabinetry, laminar hoods, compressed air, and certain advanced engineering such as computational fluid dynamics are the most demanded services. Whereas other business segments, such as software development and the banking industry, are commissioning services related to the primary demand that we experience. So, it varies depending on the business segment and the nature of the business. Some engineering services in Costa Rica are not the same services required for a startup as for an operation that is already ongoing operation. Or even if you’re ramping down and you’re transitioning your production line to a different set of lines, you might need to decommission your facility to ensure it is safe to turn the equipment down and make it safe for the upcoming line of equipment. So it will depend upon the nature and the business segment.
The Central American Group: This is a quick question that is a little bit peripheral to what you just spoke about over the course of time that you’ve been in business. What changes have you seen in the industry in Costa Rica, and what engineering services in Costa Rica are in demand?
Luis Chinchilla: I will categorize the changes in three areas: The first has to do with paradigm changes and the perfect example, and this has been widely used by us and, in general, by the industry. There are certain companies that have marked a milestone in the country’s history. And the first analogy on paradigm change is before Intel and after Intel. Before Intel, it was fairly common to see construction workers wearing sleeveless shirts, boots, shorts, and just a hat. Now you can see all the construction workers with all the proper PPE, which means a hard hat, steel toe shoes, safety vests, and protective lenses. They have dressed adequately for the function they are performing. If it is a welder, he will be fully protected. If a person is doing elevated work, he will wear his harness. So, the first change has been paradigm change. The second has been the proliferation of engineering services in Costa Rica. There are several elements from engineering practices that can range from data analysis, structured problem solving, analytical data processing, and inductive thinking. Inductive thinking is you have several pieces that you put together for whole deductive thinking.
You have a whole that you have to segregate in pieces. Okay? And it takes different approaches and different ways of thinking. So I would say the proliferation of engineering services in Costa Rica has been the second one. And the third area is technology adoption. Technology came to not only revolutionize our world but to, in good theory, make our world and life easier and sometimes make it more complex. And technology adoption across several business segments is taking place. It’s the third change I’ve seen over the years in which we’ve been involved in offering advanced engineering services in Costa Rica.
The Central American Group: Now, companies that are scouting locations for another facility, what would you advise them to pay particular attention to when looking at Costa Rica?
Luis Chinchilla: Okay, I would say, and I will build upon my answer on the three areas I just shared with you. It is a business ecosystem that contains different elements, okay? It contains the customer. It contains a robust base of suppliers. It contains a good business environment. It contains very good practices. I would also say that Costa Rica has developed itself within the segment niche of medical devices and high-tech advanced industry throughout the many years. The country has learned and has managed to develop a robust, stable, and good ecosystem for industries to come to the country. That’s what I would say. It’s one of our key advantages, and many companies continue to look at it.
The Central American Group: What role do you see OPIA playing in the ecosystem that you just referred to?
Luis Chinchilla: We have established our vision to be a vertically integrated supplier of advanced engineering services in Costa Rica. Being a vertically integrated supplier takes a good, solid quality system. Because of this, we’re certified ISO 9001 2015. We also carry a certification that is issued in the US. But it’s a worldwide recognized certification in three different disciplines. So that will bring a robust quality system for a supplier. But we have also evolved to be a solutions supplier to the customer. Sometimes we come to measure the data, and the data is telling me that what we did was correct, yet the customer’s problem hasn’t been solved. So, we got one step beyond. We interact with customers to provide engineering services in Costa Rica. We see the impact that the customer experienced, and then we work with them on fishbone analysis, additional data, and trending reviews. It is fairly common, for example, on this vertical integration that I’m speaking about, that when customers contact us for a particular issue they’re experiencing, we ask them if they can share their building management system data for the past three months. And then, we do trend analysis, and then we got back to the customer. There could be something that could be happening.
Not now, but it could have happened two weeks ago that is causing a particular issue. So that’s the added value that we have tried to bring to the table when offering our engineering services in Costa Rica. Not just a robust, quality, qualified supplier but someone that can look into the customer’s operation and become a technical ally of the customer in the problem-solving process.
The Central American Group: So, what do you see in the future for Costa Rica, and what do you see your company’s role in its continued development?
Luis Chinchilla: Regarding the future of Costa Rica, I always like to be positive. I see it bright, but I also see it as challenging. I see it as challenging because of the demand for good labor. Skilled people are something that is required at all levels. No matter your company, you are in a pool to compete for those skilled and well-talented people. So, on the positive side, it’s good that we have such a demand on the challenging side, on the opportunities we need to fulfill that demand. So as the country, that’s what I see. How do we see our role as a supplier of engineering services in Costa Rica? We have to continue to add further certifications to our portfolio. The more that customers add, for example, biological safety devices and biological safety equipment, there are additional certifications. So we’re adding an additional certification so that we can bring those services with a certification that is worldwide recognized on the local level. So we’ve continued to look where the world is. Where are the trends of the standards, and where is this particular requirement going? And we’ve been trying to anticipate those needs so that we’re already prepared by the time those new requirements hit the Costa Rican market. We have conducted the analysis and we know what it takes to bring that requirement to our customers.
The Central American Group: With regard to what you just mentioned, obviously, that requires a lot of forward-thinking and innovation. How do you foster innovation in your company?
Luis Chinchilla: We have two mechanisms to foster innovation. We’ve done a certain effort every single year. In it, we have two to three graduate engineering students from the University of Costa Rica, the Institute of Technological of Costa Rica, or any other of the largest, either private or public universities, doing research for their graduation projects at OPIA. We have done research on static pressure control of buildings and temperature certification in a clean room. We’re currently having one student by whom we’re doing a feasibility analysis of an artificial intelligence algorithm for testing and balancing. So we’ve tried to foster people that are coming from the academic world to start developing their professional experiences in the workplace. They view what we do in offering engineering services in Costa Rica. We challenge them to come up with new ways of doing things. That’s perhaps the best way that we have found to motivate innovation. And the second way we try to be on top of things and foster creativity and professionalism is to keep our engagement with recognized organizations. We’re part of the NEVV, which is the entity that certifies us in the US. We’re part of Astray. We’re part of the IST, which is the Institute of Environmental Sciences and Technology of the US.
We’re part of the ISP, which is the International Society of Pharmaceutical Engineering. We have established contacts with the Particle Technology Institute in Zurich. So whenever we found an issue in which we might not have a good answer or we don’t have an answer at all, we knock the different doors. We find someone who will hint at an issue or an answer. So those are the two ways that we have implemented our office to foster thinking and innovation when offering our engineering services in Costa Rica.
The Central American Group: Because our discussions are wide-ranging but limited in time, we have many visitors to our website, www.centralamericangroup.com, that when listening to podcasts, realize questions that they have that go beyond the scope of the discussions that we have with folks like you. Could you tell our listeners how they can engage with you with their questions on available engineering services in Costa Rica? Is there an email address? Is there a phone number they can call? Can they fill out a form on your website? How can they get in touch with you?
Luis Chinchilla: All of them. They can fill out a form on our website. There is an email on our website which is info@opiacr.com they can touch with Betsy Ballesteros, who is our commercial supervisor. And we still, because we’re a multi-generation company, still pick up the phone if people call us. We still pick up the phone.
The Central American Group: That’s nice to hear. The personal touch is always good. Well, listen, I want to thank you for taking the time to join me in this discussion. It was very interesting, very interesting to hear information about your company as well as your perspectives on future development in Costa Rica. Maybe we can have another discussion in the future to have an update on what your company and its programs are doing. That would be very nice.
Luis Chinchilla: Steven, you’re always welcome, and we do appreciate the opportunity you have given us to speak about the technical world and our advanced engineering services in Costa Rica.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Specialized Engineering Services in Cost Rica: A discussion with Luis Chinchilla. appeared first on The Central American Group.
1. Manufacturing Under the Free Trade Regime in Costa Rica
Contact the Central American Group if you want to establish a manufacturing facility under the Free Zone Regime in Costa Rica. Jose Ignacio Gonzalez
Director, Market Research & Consulting
Cushman & Wakefield
jose.gonzalez@ab-latam.com
The Central American Group: Welcome to another episode of the Central American Group’s podcasts. In these recordings, we speak to people that are in Central America to lend us some perspective on what is happening in terms of the economy and the businesses in that part of the world. Today we’ll have a discussion on industrial properties in Costa Rica. We have with us, Jose Ignacio Gonzalez. Jose, please introduce yourself and your company and give us some background.
Jose Ignacio Gonzalez: Thank you, Steve. First of all, thank you very much for the opportunity to be here. It is always a pleasure to share this kind of space with you. To introduce myself, my name is Jose Gonzalez. I am the market intelligence and consulting regional director of Cushion Wakefield Advisory. From our offices in the country, we cover industrial properties in Costa Rica and all of the Central American region. I’m like the person who collects and centralizes the information for all of the region. This specifically covers the region’s most active markets, including Costa Rica. I cover Guatemala, Panama, and recently the Dominican Republic too. But we have a regional scope in our business. My division has two great areas of expertise, specifically the market Intelligence part. We analyze all the data trends and pure research that you can imagine related to industrial properties in Costa Rica and the region. At the same time, the second big part of my job specifically deals with the consulting team. We provide consulting services for a wide variety of clients such as real estate funds, developers, users, banks, and all in that area. I have been in the role for over six years. I have traveled to the different countries in the region, which has given me good visibility of what is happening throughout Central America.
The Central American Group: Okay, but today we’re going to concentrate on some questions that are specifically on Costa Rica, and I’ll start with those. Can you tell us how the market for industrial properties in Costa Rica has developed over the last few decades?
Jose Ignacio Gonzalez: Of course, Costa Rica and the industrial and logistics market have experienced really good performance through the last, maybe specifically, a decade in two big segments or types of business. First, we have the market for industrial properties in Costa Rica, which has been developing hand in hand with foreign direct investment-related companies. These companies worldwide have come to Costa Rica to establish and develop their manufacturing operations in areas such as life sciences, digital technologies, advanced manufacturing, and all that.
The second big part of the market has been the logistics market, which has developed hand in hand with more local and regional companies for all that has to do with warehousing, distribution centers, and all that which has to do with moving merchandise throughout the region. So, these are like the two big branches of the industrial properties in Costa Rica and the country’s logistics market. Both have experienced continuous sophistication of offer and the kind of developments that are built here in Costa Rica. This is total with the continuously sophisticated requirements that companies put on the table. So all these companies, big companies, regional companies, coming here to Costa Rica have put on the table specific and each time more elevated and sophisticated requirements that have led the market to continue to become elevated.
The Central American Group: You mentioned that foreign direct investment has played a role in the development of industrial properties in Costa Rica. Can you expand on that?
Jose Ignacio Gonzalez: Yeah, of course. Costa Rica is a small market. We have a population of 5 million people. So we are very small, even smaller than many states in the United States. So we don’t really have a local market that is very huge. Right. We do, however, have a population and demographics that is highly technical and academically proficient. This has attracted many foreign direct investment-related companies and multinational companies that have seen Costa Rica as a great market to establish themselves and continuously reinvest in four different stages or other manufacturing operations. These companies have seen really good qualities that Costa Rica offers, such as political and economic, cultural affinity with the US, proximity to the US, and lots of direct flights to the main cities in the United States. Costs are lower in Costa Rica are lower than in many US cities. Lots of these issues have positioned Costa Rica as a reference in the world, attracting these kinds of companies and letting the development of industrial real estate properties in Costa Rica that companies require. These things have positioned Costa Rica not only as a reference country in Central America and Latin America but also in the world. We are attracting lots of Fortune 500 companies to the country. As time passes, we are elevating the kind of manufacturing done here in industrial properties in Costa Rica.
Some years ago, we started with low added value operations, and today we do high-value-added operations that each time differentiate Costa Rica from peer competitors in the region. We are in a privileged position to attract these companies continually.
The Central American Group: This is something that I was thinking about, and I’ll throw this question in just because you’re obviously an expert on industrial real estate in Costa Rica. What it cost to lease industrial properties in Costa Rica. What does space in a Class A building generally cost companies?
Jose Ignacio Gonzalez: Excuse me?
The Central American Group: What does a square meter of industrial real estate in a class A building cost in Costa Rica?
Jose Ignacio Gonzalez: Okay, the cost of renting industrial properties in Costa Rica currently stands at between $7 per square meter to $9 per square meter, depending on aspects such as the location and the kind of park you wish to establish operations in.
What is particularly true is that it has been more and more common for companies to establish themselves with build-to-suit solutions. They do this because the requirements of these companies are very specific to their manufacturing facilities. So specifically for the industrial market, Costa Rica hasn’t developed a lot of speculative inventory, but it has built to suit the inventory for the specific requirements of these companies. So the final price is much more referential because it depends on the company’s depth and specific requirements for their facility.
The Central American Group: What are the main opportunities and challenges that the country faces to continue attracting foreign direct investment in high-value-added operations to occupy industrial properties in Costa Rica?
Jose Ignacio Gonzalez: Sure. I would say that one of our main challenges is talent. It’s related to the demographics, even though Costa Rica has positioned itself well for this aspect. As I mentioned, Costa Rica is small. Costa Rica is a small country with a limited population. I would say that the main challenge is that public and private groups, specifically the government authorities, continue to promote the education of the population in the technical and academic areas that companies are currently requiring. Government and educational entities should act so that Costa Rica doesn’t experience in the next year a shortage in talent and continues to attract these companies with cost-efficient operations. The presence of a talented workforce is necessary for this. So I would say that’s number one.
Number two, as a Latin American country, I would say that bureaucracy is in second place. Costa Rica has done a good job in promoting a good business climate in the country, but we have lots of work to do in reducing requirements for companies to open their operations. I would say bureaucracy is number two, and I would say number three is infrastructure.
Also, Costa Rica has been investing at a slow pace in infrastructure regarding vehicle traffic and in infrastructure regarding energy. So we have a lot of work to do in promoting competitive infrastructure for companies to have efficient operations in the country. I would say that those are the three main challenges.
The Central American Group: What typically happens when we post our podcasts to our website and circulate them on social media is that people will come back with questions. We like to refer those with questions to the experts we talk to in our sessions. So if somebody wants to get in touch with you to ask more detailed questions about industrial properties in Costa Rica, how would they go about doing that?
Jose Ignacio Gonzalez: I would say two ways on my mobile phone, no problem. You can give them my phone that’s in my email here, or by email, any of those two ways. I will be glad to answer any questions that people have.
The Central American Group: Well, what we’ll do is we’ll post your email and your cell phone number, if that’s okay with you, in the transcript.
Jose Ignacio Gonzalez: Yeah, no problem.
The Central American Group: Well, I want to thank you for joining us today. It’s been very educational. We wish you good luck and we hope that you have a great rest of the year.
Jose Ignacio Gonzalez: Thank you. Thank you very much, Steven, and looking forward to anything else you need from us. I’m always open.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Industrial properties in Costa Rica: A conversation with Cushman Wakefield appeared first on The Central American Group.
1. Manufacturing Under the Free Trade Regime in Costa Rica
Contact the Central American Group if you want to establish a manufacturing facility under the Free Zone Regime in Costa Rica. Arias Law Firm provides valuable services for coordinating a free zone project in Costa RicaLaura Perez
Government and International Affairs Manager
Arias Law Firm
laura.perez@arislaw.com
The Central American Group: Hello, and welcome to another episode of the podcasts that the Central American Group produces. We make recordings with professionals from Central America in various disciplines in which we talk about the region’s economy. Today, we will discuss coordinating a free zone project in Costa Rica. Today we have a very knowledgeable individual from the Arias Law Firm in that country. Her name is Laura Perez. Laura, how are you today? Could you introduce yourself and tell us a little bit about the organization that you represent?
Laura Perez: Sure. Thank you very much, Steve, for having me. It’s great to be here. So, yes, I have been working at Arias for a long time. I coordinate activity in two law firm areas: government affairs and special tax regimes. The most famous and popular one of them is Free Trade Zone program. It’s a law firm that has been operating in Central America for more than 80 years. We have a lot of experience supporting companies in the foreign direct investment world, setting up operations here.
I began my professional career at Cinde, the Costa Rican investment promotion agency, and then at Amcham, the American Chamber of Commerce. I now have more than 15 years of experience supporting companies establishing manufacturing facilities under the Costa Rican free zone regime. So, it’s a pleasure to be talking to you today.
The Central American Group: Thank you very much for joining us. I know you will impart a lot of helpful information to our listeners. So let’s start with a few questions. First of all, if a company wants to begin coordinating a free zone project in Costa Rica, how long does it take from when they get the idea till they’re up and running?
Laura Perez: Sure, Steve. This is a ubiquitous question that we get. So, a reasonable estimate would be between four to six months. I will explain shortly what is included between those four to six months. And specifically, manufacturing operations, which is the focus today, could take more than a year and a half. And that’s because of the construction part of it.
Let’s go back to the four to six months of establishing your legal entity, Free Zone Application, and main permits. During those first six months, we worked with the company to understand what they wanted to do in Costa Rica and how the project looked. For instance, is it a service or a manufacturing operation, and what will it do? You need to determine that and establish a clear view of what you want to do. Then we incorporate the legal entity, which is a reasonably straightforward process. It’s straightforward. Then the next step in coordinating a free zone project in Costa Rica is engaging in the Free Zone approval process, which entails getting the main permits. It consists of the municipal license, commercial license, and keys that have to do with Social Security, which is very important here in Costa Rica.
The Central American Group: But again, for manufacturing operations, that could go up to a year and a half because of construction. Something significant to know for the free trade zone. It’s the set of incentives the Costa Rican government offers for certain operations. And it’s a regime that is attached to a specific space. To apply to the free trade zone, the company has to know where its operations will be and where it will operate. That’s something that is very, very important.
Additionally, I would say that that takes four to six months to establish, let’s say, the legal entity and obtain Free Trade Zone main permits. And again, we need to take into consideration construction for manufacturing operations. So when coordinating a free zone project in Costa Rica, these things must be kept in mind.
The Central American Group: That would lead me to believe, given what you said, that one of the services that the Arias law firm offers to people looking to do this is that it leads them through the actual Free Zone application process. Would that be correct?
Laura Perez: Exactly. That is correct. In the first month, we sit down with the client and discuss the project and how to design it. We determine what it is going to look like. Then we incorporate the legal entity. We understand if we need environmental permits, and we register the company before the tax authority after that. Once the company has already chosen the space where they’re going to be, we go into the approval process of the Free Trade Zone application, which has different stages. The first stage is a stage that is done before Procomer, which is the Free Trade Zone authority. And basically, they grant the status. What a company gets is an executive agreement that gives it benefits. And then the second stage is an approval process that a company goes through with Customs. This is where they grant the applicant its free trade zone, H code, or Customs Auxiliary. That allows the company to manage its inputs and use the free trade zone benefits. A company needs both of those approvals to operate. Getting them is integral to coordinating a free zone project in Costa Rica.
And once these things are obtained, the company is ready from a regulatory perspective to have its Free Zone Regime benefits. Then, after that, we get the regular permits, and that’s where those, let’s say, four to six months come into play. And in parallel, if you’re a manufacturing company, we help you. We support you with everything that has to do with supporting you during construction alongside key advisors like the staff of the industrial park that you choose and the environmental consultant.
The Central American Group: I think that it’s essential to mention that the Free Trade Zone regime in Costa Rica is made for manufacturers. But Costa Rica has targeted specific types of manufacturers eligible for the program. So it’s not just any manufacturing firm. Would that be correct?
Laura Perez: That is partially correct, Steve because the country is divided into two regions when you enter the Free Zone Regime. If you want to be in the Greater Metro Area (GMA), you want to operate inside the greater San Jose area, which most companies use. You need to be part of specific sectors that the country has defined. And I’m going to tell you the two most popular are medical devices, which we have a massive cluster of. The other one is advanced manufacturing. So, anything that fits into both categories can operate inside the Greater Metro Area. If you want to do something else under the Free Zone Regime, you can do it, but you need to go outside the Greater Metro Area. And like I always tell everyone when I talk about this, most companies operate inside the Greater Metro Area. That’s where we have the vast majority of companies because of the access to the talent pool, the services, and the proximity to the airport. So, most companies, services, and manufacturing operate inside the greater metro area.
I agree with you that if you want to do that, you need to belong to strategic sectors that the government has defined. Choosing whether to be inside or outside the Greater Metro Area is integral to coordinating a free zone project in Costa Rica.
The Central American Group: So, on the one hand, you’re helping companies, taking them through the application process. But also, regarding construction, you mentioned that understanding the timeline is very important and key to the project. What do you mean specifically by that?
Laura Perez: Yeah, sure, Steve. What happens is that if you’re going to be, for example, the operation of a service, it’s pretty straightforward. You go into a space that is already fitted out and is already a Free Zone space. You only worry basically about your free trade zone application. But if you’re manufacturing, it’s different because what happens is that you need to go through the entire process of construction. The project is divided into design, permitting, construction, and fit-out. And depending on where you’re going to go, this can take more or less time. So, for example, The Green Park operates inside the Greater Metro Area. The park, therefore, has already gone through some stages of this process with some of its existing buildings. So, in this case, for example, design and permitting is something that they have already done. So, when coordinating a free zone project in Costa Rica, companies can save time depending on the park they choose if they choose a park that has already invested. But basically, what happens is that the design process, in general, can take up to two months. Permitting can take around four months, construction takes approximately six months, and fit-out takes four months. So, if you add all those months, it’s like a year and a half.
But again, if you choose a key ally when coordinating a free zone project in Costa Rica, you can save around six months. So, as you can see, the free trade zone process runs parallel to all these construction matters. So that’s why it becomes key to understand and correctly time construction because the process will be driven by it and not by the Free Zone application approval per se. So that’s something that’s going to happen in parallel.
The Central American Group: When you get into a situation where a company uses a clean room, does that change the process or the time frame? Where does this fit when you coordinate a free zone project in Costa Rica?
Laura Perez: Yes, it’s prevalent for medical device companies to have clean rooms. And in Costa Rica, we have a lot of companies that use clean rooms, and we have a lot of unique companies with the knowledge required to build clean rooms. And usually, we tell our clients that if they’re going to have a clean room, you need to add one more month to fit out. So instead of four months, you need to add one, which will be five months. And it’s something to take into consideration. So, yes, it makes a difference.
The Central American Group: Now, for companies that are in a hurry, what, in your estimation or what from your experience, can speed up the process?
Laura Perez: Okay, so many things can speed up the process. Number one is to choose excellent advisors who handle Free Zone applications. That’s key to do that and to be sure you’re dealing with people who know what they’re doing. So that’s the number one thing. The second thing is that if you choose a park, for example, The Green Park, again. I’m using them as an example. If it’s a park that has already invested in its own infrastructure, you can save a lot of time, a minimum of six months, in the case I explained. And so that’s also something significant. And the other thing that saves time is knowing what you want. How do you want your operation in Costa Rica to look?
You go through a process in which you understand what you can do, et cetera. But once you decide, at some point, you need to determine how the operation will look. So, it would be best if you were very clear about employment and investment, what it is that you’re going to do, how many people you will employ, and how much money you’re going to commit, and, again, know what exactly you are going to do. These considerations are crucial when coordinating a free zone project in Costa Rica.
If you have that clear and straightforward vision, that will make the process much easier.
The Central American Group: Do you see potential roadblocks, and how can you avoid them?
Laura Perez: Okay, so the first roadblock that we see, and it’s not a roadblock, it’s like a stopper, is choosing the space. Companies sometimes struggle to choose a space, taking a lot of time with this consideration. This can stall the process. And the problem with that is that you cannot present your Free Zone application if you haven’t chosen the space in which you’re going to operate. So, I would tell people, if you’re going to take your time, go ahead, take your time, but you cannot rush the process later on. That is key to continuing everything else. So, choosing the space is definitely one thing. The second thing is understanding that you need to have an excellent advisor and that you need to have a good person assigned from the company to the project. Because the review process is before the Free Zone Authority, especially the technical approval by Procomer, it’s a back-and-forth of questions regarding what the company will do, what the activity will be, and how you will manufacture using a process. And if you have someone from the corporate side who can quickly answer the questions and is a decision-maker, the process can run much faster.
I would say those are the things that can help.
The Central American Group: Okay, well, I think that in a relatively short amount of time, we’ve covered some pretty important points. Our experience with our podcasts is that after listening to them, people often have questions that arise from what they’ve heard. So if somebody has a question and wants to ask you, how can they get in touch?
Laura Perez: Absolutely, Steve. We will be delighted to answer any questions. They can reach out to my email, which is laura.perez@ariaslaw.com. Please feel free to email me, and I will be more than glad to answer any questions anyone listening can have.
The Central American Group: In addition to that, if it’s okay with you in the podcast transcript, we will include a link to your LinkedIn page if you have one. Would that be okay?
Laura Perez: That’s okay. I have one, and please go ahead and do that, Steve.
The Central American Group: Thank you very much for joining us today. This discussion has been very informative. We hope and wish you success throughout the next year and the ones after that.
Laura Perez: Thank you very much, Steve. We wish you precisely the same thing, and we hope to have a lot of companies operating under the Free Zone Regime here in Costa Rica.
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Coordinating a Free Zone Project in Costa Rica appeared first on The Central American Group.
Welcome to another episode of the Central American Group podcasts. We record these on topics that have to do with economic issues in Costa Rica and El Salvador, and the rest of the Central American region as a whole. Today we're lucky and fortunate to have Patricia Figueroa with us. She is the executive director of the Textile, Apparel, and Free Trade Zone Association of El Salvador. Among other things, we will discuss the synthetic textile cluster in El Salvador.
The post Procomer in Houston: A Conversation with Andrew Crawford appeared first on The Central American Group.
Today we have with us Federico Rivera. And Federico is the head of an organization that has to do with the promotion medical device cluster in Costa Rica. But I'll let Federico introduce himself and tell us about his organization.
The post Synthetic Textile Cluster in El Salvador appeared first on The Central American Group.
Today we have with us Federico Rivera. And Federico is the head of an organization that has to do with the promotion medical device cluster in Costa Rica. But I'll let Federico introduce himself and tell us about his organization.
The post The Medical Device Cluster in Costa Rica: A Conversation with Federico Rivera appeared first on The Central American Group.
Hello and welcome to another installation of the Central American Group’s series of podcasts about doing business in Costa Rica, El Salvador and the rest of the region. Today we are lucky to have with us a gentleman by the name of Jorge Muñoz. Jorge is with a company that's located in Costa Rica. It's called Ingenya and specializes in clean room design in Costa Rica. He's going to tell us a little bit about himself and about his company. Hello Jorge. How are you doing today?
The post Clean Room Design in Costa Rica with Ingenya’s Jorge Munoz appeared first on The Central American Group.
Today we have a gentleman with us from an organization called Think HUGE. His name is Greg Huger. Greg, maybe you can tell us what the acronym means and a little bit about yourself and the organization that you represent?
The post HUGE job creation in the Northern Triangle appeared first on The Central American Group.
Welcome to another installment of Central American groups. In these discussions with professionals from various realms, we talk about issues in Costa Rica, El Salvador, and the rest of the region. Today. We're very fortunate to have with us Karin Lachner.
The post Learn about the Free Trade Zone Regime in Costa Rica with Carlos Camacho of Arias Law appeared first on The Central American Group.
Good afternoon and thank you for the invitation to speak. I'm Juan Carlos Corrales. I'm partner and project manager for a construction company here in Costa Rica named Clean Construction. We been doing business in Costa Rica for about 11 years.
The post Project development and industrial site selection in Costa Rica appeared first on The Central American Group.
Hello and welcome to another installation in a series of podcasts by the Central American group. In these discussions. We talk with individuals that have expertise in various aspects of doing business in Central America. Today, we are speaking with and welcoming to the podcast Luis Martinez. Luis is the head of the El Salvador
The post Meet the El Salvador Aerospace Institute appeared first on The Central American Group.
The Central American Group: Hello. Welcome to another episode of Central American group podcasts. In these sessions, we speak with experts that address topics having to do with Central America that are of interest to visitors to the Central American Group’s website. Today we have Alfredo Escalon with us. He is the CEO of Fisherman Wealth Management, which is a firm in in San Salvador, El Salvador.
The post The medical device manufacturing industry in Costa Rica: A conversation appeared first on The Central American Group.
The Central American Group: Hello. Welcome to another episode of Central American group podcasts. In these sessions, we speak with experts that address topics having to do with Central America that are of interest to visitors to the Central American Group’s website. Today we have Alfredo Escalon with us. He is the CEO of Fisherman Wealth Management, which is a firm in in San Salvador, El Salvador.
The post Bitcoin in El Salvador appeared first on The Central American Group.
Hello, welcome to another installment of the Central American group’s podcast series in which experts discuss topics related to doing business in Costa Rica, El Salvador and the rest of the region. We have conversations with very knowledgeable people that are both internal and external to the organization. Today we have wonderful young lady joining us. She's from the Association of Free Zones of the Americas. She's the director, and her name is Camilla Moreno. How are you today, Camilla?
The post Free Zones of the Americas appeared first on The Central American Group.
The impact of the Covid-19 pandemic on nations’ economies has, thus far, been unprecedented in scope. We have witnessed that throughout Latin America entrepreneurs continue to do their best to survive by modifying their business models and by changing their value propositions. However, these isolated efforts require a strategy focused on the promotion and growth of advanced industry in Latin America.
The post Invest in El Salvador: A conversation with the Minister of the Economy appeared first on The Central American Group.
The impact of the Covid-19 pandemic on nations’ economies has, thus far, been unprecedented in scope. We have witnessed that throughout Latin America entrepreneurs continue to do their best to survive by modifying their business models and by changing their value propositions. However, these isolated efforts require a strategy focused on the promotion and growth of advanced industry in Latin America.
The post Establishing a Manufacturing Facility in Costa Rica appeared first on The Central American Group.
The impact of the Covid-19 pandemic on nations’ economies has, thus far, been unprecedented in scope. We have witnessed that throughout Latin America entrepreneurs continue to do their best to survive by modifying their business models and by changing their value propositions. However, these isolated efforts require a strategy focused on the promotion and growth of advanced industry in Latin America.
The post Shared Service Centers in Latin America appeared first on The Central American Group.
Over the course of the last twenty years, there has been a significant amount of foreign direct investment (FDI) in Central America. Much of this increase in capital inflows can be viewed as a response to the policies of economic liberalization that were widely enacted by the countries of the isthmus that began to be implemented during the late 1980s.
The post Grupo Maritimo is a member of Multiport appeared first on The Central American Group.
Do you represent an Indian company that is thinking about establishing operations in Central America? Contact us.
- Trade Relations between India and Central America
Download
The Central American Group: Hello. Welcome to another episode in our continuing series of discussions with individuals that are experts in various aspects of doing business in Central America. Today we’re fortunate to have Ariel Andrade with us. Ariel is a former ambassador from El Salvador to India. He going to speak a little bit about trade relations between India and Central Ameri. Welcome to our podcast. And how are you today?
Ariel Andrade: I’m fine, Thank you. I’m happy to be here with you today to talk about trade relations between India and Central America. I am not very experienced in doing podcasts, so I hope that all goes well.
The Central American Group: Since you’re someone who has vast experience in Indian – Central American relations, perhaps you can tell us why, in recent times, India has become relevant on the world stage.
Ariel Andrade: Okay. I’m passionate about India and the reason why India has become especially important in the world now is for several reasons. I would like to focus on the issue of doing business with the country.
First of all, I would mention that size and location are important. India is the seven largest country in the world and has almost three million square kilometers of area. Of that land, 25% is occupied by biological reserves. In addition to those reserves, India has 300 square kilometers of exclusive economic zones with access to the Indian Ocean, which happens to be one of the most important oceans in terms of trade.
In addition to physically being one of the largest countries in the world in area, India is now the second most populated country in the world. The nation has about 1.4 billion inhabitants and is growing each year by an additional 16.6 million people. This contrasts with the population of Central America of roughly 50 million. Every three years, a population of the size of the entirety of Central America will be added to the country. By 2021 or 2022, the population of India will be greater than that of China. This will have significant implications for trade relations between India and Central America.
Another important thing to consider is the rise of the middle class in India. Its numbers increased from less than 30 million in 2010 to around 300 million at present. This means that India is a growing market and very important in terms of global consumption. It is projected that, by 2030, the Indian middle class will reach 650 million. Taking this into account, I think also that is important to keep India’s size in mind.
Additionally, India is the fifth-largest economy in the world, behind countries such as the US, China, and Germany. It is important to note that India’s GDP has been growing steadily and fast in recent times. For example, last year the economy grew at a rate of almost 7 percent. These days India is competing with China to be the fastest-growing economy in the world. It is expected that India will, by 2030 be the third-largest economy in the world as measured by the size of its gross domestic product. This development will definitely have consequences for trade relations between India and Central America.
As you can see Indian business leaders are becoming important leaders of global businesses. For instance, Google’s CEO is from India, as is the CEO of Microsoft. You can find many executives of Indian origin in important positions in large companies. I think that this contributes to the relevance of India in the world economy.
The Central American Group: That was a pretty comprehensive overview of the economy and the significance of India in the world. What are trade relations between India and Central America like today?
Ariel Andrade: I must say that trade relations between India and Central America have been growing. They have not been that important in the past, but in the last year, things began to change. In 2019, the total exchange of goods between India and Central America reached almost US $1.9 billion. It is important to recognize that India is becoming a very relevant partner of the region in terms of exports, mostly as a supplier. India exported US $1.24 billion last year, while Central American countries only exported a total of US $642 million worth of goods to India.
Although India is in the process of developing deeper relations with the U. S., China, and Europe, trade relations between India and Central America are growing steadily.
In terms of diplomatic relations, it is important to see that five of the eight countries that I mean included in the Central American Integration System (CICA) have embassies in India. Interaction between Indian chambers of commerce and the region is also increasing. Many of them are conducting commercial missions to the region.
Also, I must point out that a lot of Indian business promoters are now living in the region. I know that this may not seem important, but it is because in terms of culture there is some significance. Big companies from India are now in the region, especially in Costa Rica
The Central American Group: What are the untapped opportunities that you see for people that want to do business between Central America and India?
Ariel Andrade: India is committed to benefiting from free trade agreements with several countries all over the world. So, in that spirit we Central American countries have created a large network for export possibilities from the region. Enhanced trade relations between India and Central America will enable greater imports for local consumption. Indian companies with a presence in Central America can export their products to countries with whom Central American countries have free trade relationships. This includes countries such as the United States.
For the rest of the content of this discussion, please listen to the audio recording.
Those wishing to contact Ariel Andrade can contact him through his direct email: arielandrade@108ca.com.
LinkedIn: https://www.linkedin.com/in/arieljandradegalindo/
World Wide Web: www.108ca.com
Contact UsPlease use this form to contact us and we will respond as soon as possible:
The post Trade Relations between India and Central America appeared first on The Central American Group.