AZOFRAS Defines Five Priorities for the Next Costa Rican Government

The next administration will need to address investment, cost, and labor regulation challenges

The Free Trade Zone (FTZ) Regime supports a large portion of Costa Rica’s exports. In 2024 alone, it accounted for 66.5% of the country’s total export volume.

During that year, its contribution to the economy was equivalent to 15% of the country’s Gross Domestic Product (GDP), according to data from the Foreign Trade Promoter (Procomer). However, attention is now focused on the outcomes expected at the end of 2025, as the National University predicts that exports will be affected by the gradual closure of Intel’s microprocessor assembly and testing plant and by Qorvo’s relocation of operations to Asia.

While awaiting these results, in September the regime reported 22.8% year-on-year growth in exports, though this was slower than in the previous two months. The contrasts are clear: foreign direct investment (FDI) generated by the free trade zones during the first half of the year reached $1.099 billion, the lowest level recorded for this period in the last three years. This dichotomy in competitiveness has not gone unnoticed by the Association of Free Trade Zone Companies (Azofras).  

The next government should pursue the following priorities as communicated by AZOFRAS to maintain positive results and attract more investment.

4×3 Work Schedules

The free trade zones support the Bill on Exceptional Work Schedules for Specific and Highly Qualified Cases (24290), known as “4×3 Work Schedules.” The initiative proposes 12-hour workdays for four consecutive days, with three days off, in certain industries and private companies.

Azofras considers its approval crucial to guarantee the country’s competitiveness, ensure the attraction and retention of FDI, provide legal certainty for companies and workers operating under continuous production processes, and establish a legal framework adapted to the labor environment.

Ronald Lachner, Chairman of Azofras’ Board of Directors, clarified that the bill does not modify established work schedules but “addresses exceptional situations by creating a new work schedule modality that expands options to respond to the different production realities of both companies and individuals, 24 hours a day, seven days a week.”

For the sector, these schedules would improve competitiveness in a context where national goods face a 15% tariff in their main export market, the United States. Additionally, the U.S. is researching the impact of medical device imports on national security, which could result in additional tariffs on these products, which represent 48% of the country’s exports.

Exchange Rate

The appreciation of the Costa Rican colón forces free trade zone companies to allocate more dollars to meet their local currency commitments, increasing operational costs by up to 30%, according to Azofras.

In 2025, the exchange rate remained stable around ₡500, a relatively low level compared to the last decade and far from its all-time high of ₡700 in June 2022.

“From an operational competitiveness perspective, this significant additional cost affects companies’ growth plans, limits their capacity to expand, and hinders the execution of projects that would generate more employment in Costa Rica,” said Lachner.

Azofras emphasizes that rising operational costs—in a sector where revenues are in dollars—make it difficult to compete internationally for new FDI projects compared to Mexico, Colombia, and the Dominican Republic, “where production costs are substantially lower.”

Social Security Contributions

The OECD Economic Studies: Costa Rica 2025 report states that employer payroll contributions in the country are high compared to international levels.

The OECD notes that employer contributions to social security account for 20% of salary costs, while the average among its member countries is 13%. Overall, payroll charges represent 37% of salary costs, with employers covering 72% of these costs.

In response, free trade zone companies argue that a more balanced system would reduce business costs, strengthen formal employment creation, and consolidate Costa Rica as an attractive destination for investment and economic development.

The study indicates that approximately 35% of employer contributions do not go to social security but instead finance institutions such as the National Learning Institute (INA), the Social Development and Family Allowances Fund (Fodesaf), and the Popular Bank. This system is considered inefficient and regressive; it is suggested that contributions to the bank be eliminated, and that INA and Fodesaf be progressively financed through the national budget. Changes to payroll contributions would reduce employer costs by 7.25 percentage points without compromising social security funding, according to the OECD.

Electricity Costs

Lachner noted that the current average electricity cost for the industrial sector in Costa Rica is 13.8 cents per kilowatt-hour (kWh), double the U.S. rate of 7.95 cents per kWh. Because of this disparity, the sector is requesting approval of the Bill on Harmonization of the National Electric System (23.424) to modernize energy infrastructure and ensure a more efficient, sustainable, and affordable energy supply.

“We consider it urgent to advance a transformation of the electricity sector that diversifies the energy matrix, expands supply, and offers more competitive rates,” Lachner emphasized.

Infrastructure Improvement

The transport of goods produced in free trade zones, as well as imported materials, relies primarily on maritime and air transport services. However, the outdated infrastructure of Puerto Caldera, which has already reached 100% of its capacity, slows the unloading process and reduces the country’s competitiveness.

Road congestion also acts as a deterrent to investors, according to Azofras. For example, the trip from Belén, where a free trade zone is located, to Puerto Moín (about 150 km) takes 3 hours and 20 minutes, while travel to Juan Santamaría Airport (6–8 km depending on the route) takes 22 minutes; these calculations were based on the national competitiveness index.

“For years, many strategic projects have faced delays due to complex administrative procedures, overly rigid regulatory frameworks, and red tape that discourages investment and slows decision-making,” Lachner noted.