Menu

Editor

About Editor

Posts by :

health equipment industry in Costa Rica

The Health Equipment Industry in Costa Rica Prospers

, 0

Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

Costa Rica’s medical technology exports are proliferating, attracting new investments from companies seeking to enter the health equipment industry. The medical equipment and supplies industry in Costa Rica continues to shine in terms of exports and attracting foreign direct investment. However, these companies face the challenge of constantly reinventing themselves, thanks to the global transformation, where the Internet of Things, health, automation, and new materials will set the trend in the coming years.

 

Impressive Export Growth

According to a recent report by the Costa Rican Investment Promotion Agency (CINDE), 2023 closed with a growth of 15.5% in exports of goods from the health equipment industry in Costa Rica, that is, US$2.5 billion more than in 2022, reaching US$18.2 billion. The precision and medical equipment sector continues to lead Costa Rica’s exports with a 42% share (US$7.6 billion) and a growth of 28% compared to the previous year, and the pharmaceutical chemical sector with a 13% annual increase.

Ecosystem for Life Sciences and the Health Equipment Industry in Costa Rica

Costa Rica hosts an ecosystem for the next stage of life sciences, with more than 70 multinationals in the technology and medical devices industry. “Costa Rica has proven experience in the life sciences sector. “This leads us to continue strengthening the sector and welcome companies, which will put Costa Rica on the world map of medical device manufacturing and thereby meet the growing demand for these products, hand in hand with Costa Rican talent,” says Marianela Urgellés, general director of the Costa Rican Coalition of Development Initiatives (CINDE).

New Investments and Expansions

The health equipment industry in Costa Rica is experiencing a wave of new investments and expansions. In recent months, Inari Medical arrived in the country with an initial investment of US$15 million; Linde invested more than US$15 million in the expansion of its plant in the Propark Industrial Park; Freudenberg Medical began the construction of its second operations center with an investment of US$25 million and aims to expand its workforce to 900 employees, among other cases.

Strategic Tax Incentives

Costa Rica has established itself as a prominent hub for the health equipment industry, attracting numerous international companies through a combination of strategic tax incentives and other benefits. One of the central pillars of this strategy is the country’s Free Trade Zone (FTZ) regime, which offers significant tax advantages to qualifying companies. Under the FTZ regime, companies benefit from a 100% exemption on income taxes for the first eight years of operation, followed by a 50% exemption for the subsequent four years. Additionally, firms are exempt from import duties on raw materials, components, and capital goods, significantly reducing the cost of setting up and maintaining operations.

Additional Fiscal Benefits

Furthermore, the FTZ regime provides exemptions from the Value Added Tax (VAT) and municipal taxes, creating a highly favorable fiscal environment. These tax incentives are designed to reduce operational costs and enhance company profitability, making Costa Rica an attractive destination for investment in the health equipment sector.

Skilled Workforce and Strong IP Protection

Beyond tax incentives, Costa Rica offers other substantial benefits that support the health equipment industry. The country boasts a highly educated and skilled workforce, particularly in fields relevant to medical device manufacturing and healthcare services. This is bolstered by strong government, academia, and industry collaboration, ensuring the workforce has the necessary skills and knowledge. Costa Rica also has a robust intellectual property protection regime, which is critical for companies in the health equipment industry that rely heavily on innovation and proprietary technologies.

Logistical Advantages and Infrastructure

The country’s strategic location in Central America provides logistical advantages, with easy access to North and South American markets. Costa Rica has invested significantly in developing its infrastructure, including modern airports, ports, and road networks, to facilitate efficient transport and distribution. Additionally, the government offers various grants and funding opportunities for research and development, encouraging innovation and technological advancement within the industry.

Support from CINDE

Moreover, the Costa Rican Investment Promotion Agency (CINDE) supports foreign companies by providing comprehensive assistance throughout the investment process. CINDE offers site selection, regulatory guidance, and connections with local suppliers and service providers. This level of support helps companies to navigate the local business environment effectively and maximizes their chances of success.

The health equipment industry in Costa Rica is thriving, with rapid growth in medical technology exports and substantial foreign direct investment. In 2023, the industry saw a 15.5% increase in exports, totaling $18.2 billion, driven by the precision and medical equipment sector. Costa Rica’s success is underpinned by strategic tax incentives, mainly through its Free Trade Zone (FTZ) regime, which offers significant exemptions on income taxes, import duties, VAT, and municipal taxes. These incentives reduce operational costs and enhance profitability, making the country an attractive investment destination. Additionally, Costa Rica benefits from a skilled workforce, robust intellectual property protections, and a strategic location with well-developed infrastructure. Through agencies like CINDE, Costa Rica provides extensive support to foreign companies, including site selection and regulatory guidance, fostering a conducive environment for business growth. As a result, more than 70 multinational companies operate in Costa Rica, with recent investments and expansions from firms like Inari Medical, Linde, and Freudenberg Medical. Costa Rica’s ecosystem continues to attract new ventures, positioning it as a global leader in medical device manufacturing and meeting the growing demand for health equipment.

Contact Us

Please use this form to contact us and we will respond as soon as possible:


semiconductor hub in Costa Rica

An emerging semiconductor hub in Costa Rica

, 0

Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

In August 2023, a notable development unfolded for Costa Rica: President Joe Biden of the United States signed the CHIPS Act of 2022. This significant legislative action marked a crucial milestone, propelling an alliance between the United States and Costa Rican governments to position Costa Rica as a pivotal player in the global semiconductor market. The initiative underscores the potential for diversification and expansion within the global semiconductor ecosystem. It instills a sense of optimism, with Costa Rica emerging as a focal point for foreign direct investors, solidifying its reputation as a semiconductor hub in Costa Rica.

 

Strategic Partnership and Supply Chain Security

Costa Rica is strategically important in securing the semiconductor supply chain for the United States. The country’s proximity and highly qualified labor market make it an advantageous partner. This collaboration opens substantial opportunities for Costa Rica, which is being approached with a comprehensive analysis of current developments and an assessment of the immense growth potential within the semiconductor industry. With its evolving role as a semiconductor hub in Costa Rica, the country is poised for significant advancements.

The funds allocated by the United States are targeted towards several critical areas:

Acquisition of Critical Materials: Ensuring the availability of essential materials within Costa Rica to support semiconductor production.

Coordination of International Policies: Strengthening and implementing semiconductor production and trade policies.

Expansion of Production Capacity: Diversifying and expanding production capabilities in the Indo-Pacific region and the Americas, positioning Costa Rica as a regional leader in the semiconductor industry.

Costa Rica’s Competitive Advantages

Costa Rica’s government has launched a campaign highlighting the country’s advantages in technology and semiconductors. The Free Trade Zone Regime, a cornerstone of Costa Rica’s strategy to attract foreign investment, offers significant tax benefits to companies in the semiconductor industry. These benefits include zero or reduced income tax, exemption from importation taxes on equipment and raw materials, and no local VAT tax, making it an attractive destination for semiconductor companies, further establishing it as a semiconductor hub in Costa Rica.

Workforce and Education

Costa Rica is renowned for the quality of its talent pool and academic environment, which are aligned with market trends and corporate needs. The country’s focus on education has resulted in a skilled workforce proficient in STEM fields. According to the World Bank, Costa Rica’s literacy rate is above 97%, and the country has a robust tertiary education system that produces graduates in engineering and technical disciplines crucial for the semiconductor industry.

Geographical and Trade Advantages

Costa Rica’s geographical position offers distinct advantages for nearshoring and friendshoring, especially in the context of the CHIPS Act. The country is strategically located, providing easy access to North and South American markets. Costa Rica has established itself as a preferred destination for companies looking to diversify their supply chains and reduce dependency on distant markets. This geographic advantage significantly enhances its role as a semiconductor hub in Costa Rica.

Moreover, Costa Rica has over 16 free trade agreements with key countries, facilitating access to relevant markets. These agreements include partnerships with the United States, the European Union, and China, enhancing Costa Rica’s attractiveness as an investment destination.

Infrastructure and Investment

The country’s infrastructure is well-suited for semiconductor manufacturing. Costa Rica has invested in modern industrial parks, high-quality transportation networks, and reliable utilities. The country’s commitment to renewable energy also provides a sustainable energy source for high-tech industries. In 2020, Costa Rica generated 99.78% of its electricity from renewable sources, a significant advantage for companies prioritizing sustainability.

Case Studies and Success Stories

The presence of leading technology companies exemplifies Costa Rica’s track record in attracting high-tech investment. Intel, for example, has a long-standing presence in Costa Rica, having established a significant manufacturing and R&D facility. This presence has contributed to local economic growth and demonstrated Costa Rica’s capability to support complex semiconductor manufacturing processes.

Government Policies and Incentives

The Costa Rican government has implemented policies and incentives to attract foreign investment in high-tech industries. These include streamlined regulatory processes, support for research and development, and collaboration with international partners. The government’s proactive approach to creating a favorable business environment is reflected in Costa Rica’s ranking as the second most competitive country in Latin America, according to the World Economic Forum’s Global Competitiveness Report 2019.

Challenges and Considerations

While the opportunities are significant, some challenges need to be addressed. These include continuous investment in infrastructure, maintaining political and economic stability, and ensuring that the regulatory environment remains conducive to business. Additionally, the global semiconductor industry is highly competitive, and Costa Rica will need to innovate and improve its value proposition to stay ahead continuously.

Strategic partnerships, a skilled workforce, favorable geographic location, and robust trade agreements underpin Costa Rica’s emergence as a semiconductor hub. The country’s comprehensive approach to education, infrastructure, and government policy creates a conducive environment for the semiconductor industry. As Costa Rica continues to leverage these strengths, it is well-positioned to become a significant player in the global semiconductor market, offering substantial opportunities for foreign direct investment and contributing to the stability of the worldwide supply chain.

Costa Rica presents a compelling case for semiconductor companies seeking new markets and strategic investment opportunities. Understanding the regulatory environment and leveraging the country’s advantages will be vital to capitalizing on this promising opportunity as a semiconductor hub in Costa Rica.

Guest Author: Carlos F. Camacho


Contact Us

Please use this form to contact us and we will respond as soon as possible:


chip hub in central america

Costa Rica and Panama take steps to create the first chip hub in Central America

, 3

Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

After the advent of the shortage of semiconductors in the world generated by the COVID-19 pandemic, the chip industry is experiencing an improvement. This circumstance is thanks to the different investments and alliances between countries since 2022 and so far in 2023.  Two countries have been particularly active in taking measures to create a chip hub in Central America.

The United States supports the creation of a chip hub in Central America

Central America is not immune to this recovery. The United States announced a series of agreements with Costa Rica and Panama to promote chip manufacturing in this region. Although it will benefit the northern nation by diversifying its supply chain and contributing to the supply of chips for its critical manufacturing sectors, it is also positive for the entire region. This is because, in addition to generating more significant investment, it will create jobs,  facilitate the exchange of technology and knowledge, and incentivize universities to develop careers focused on this industry.

The United States thinks that Costa Rica and Panama will help increase and diversify the global semiconductor ecosystem, which is why it allocated $1 billion to develop chips in both nations to create a chip hub in Central America. The US government has said that the two countries of the isthmus will contribute to creating a global semiconductor value chain that is more resilient, secure, and sustainable.

This may raise the idea of positioning these two countries as a ‘ semiconductor hub ‘ worldwide and not only in Latin America, thanks to the International Fund for Innovation and Technological Security (ITSI Fund), created by the United States Chip law.

The United States presented the Chips and Science Law Act, which is a $ 280 billion program over the next few years. Fifty-two billion dollars of this total amount will go toward improving semiconductor manufacturing.

The alliances announced in July 2023 with Costa Rica and Panama show that Central America will be a crucial player in the manufacturing of semiconductors, thus positioning the isthmus region as a nascent global chip concentrator.

The United States was able to take into account various factors to allocate 500 million dollars to both Panama and Costa Rica. These two countries’ transportation connectivity, economic growth, business climate, and trained human capital make the nations a potential chip hub in Central America.

From the perspective of PROPANAMA, the canal country has favorable conditions to attract global investments since it has a stable political, social, and economic environment and excellent digital and transportation connectivity with the continent’s main markets: the United States, Canada, Brazil, Mexico, and Colombia.

The Ministry of Foreign Affairs of Panama highlights the geographical position of the country in the center of the American continent as one of the most important logistics centers in the Western Hemisphere for the transshipment of goods. It has the special regime of Multinational Company Headquarters (SEM).

In the case of Costa Rica, an investment guide issued by the country’s central government refers to a business climate based on a recognized tradition of democracy and economic and political stability. It also points out that more than 90% of the energy utilized in Costa Rica is renewable. The country does not impose limitations on transfers of capital funds associated with an investment, regardless of currency.

The president of the Chamber of Information and Communication Technologies of Costa Rica (CAMTIC), Paul Fervoy, considers that one of the reasons the United States decided to make this alliance to create a chip hub in Central America is that the nation already has experience in the semiconductor industry. In November 1996, Intel established a factory in Costa Rica to assemble and test microprocessors.

“Costa Rica was introduced to the world of processors in the non-sale years when Intel decided to install one of its microprocessor plants there,” says Fervoy.

Both Central American nations have great economic indicators for attracting foreign investment and GDP growth. Panama is expected to be the growth engine of the region, with an estimated 4.6% at the end of 2023, while Costa Rica will have a GDP of 2.7%.

The two countries are the largest recipients of foreign direct investment (FDI). Costa Rica is in first place in 2022 with 3.7 billion dollars. Panama registered an FDI of 2.5 billion dollars that year.

In the case of Costa Rica, FDI is essential to its global positioning. The Greenfield FDI Performance Index, produced by fDi Intelligence, reveals that Costa Rica has the largest foreign direct investment in the world compared to its Gross Domestic Product (GDP).

In addition, Panama is positioned as the most favorable country to establish multinationals in Latin America, according to a review by the regulatory expert company Mercator in its LATAM Entity Portfolio Management.

A chip hub in Central America with a multiplier effect

Semiconductor industry experts believe that both countries will benefit from the alliance with the United States because there will be greater foreign investment and job creation, but, above all, because it will position the nations as a chip hub in Central America.

Regarding investment, PROPANAMA anticipates that the semiconductor industry will generate 5 billion dollars as a result of the semiconductor plants and the entire value chain: “The projected investment would not only contribute to the sustainable economic growth of Panama but would also reinforce its profile on the international scene as an attractive destination for technological investment and semiconductor manufacturing,” opines Carmen Gisela Vergara, general administrator of the organization.

The entity focused on attracting investment in Panama estimates that around 10,000 jobs can also be generated, both direct and indirect, which would transform the workforce and quality of life in the country.

“Direct jobs would be concentrated in semiconductor factories and cover various specialized areas such as design, engineering, manufacturing, and management. On the other hand, indirect jobs would be created in related sectors, such as distribution, construction, and services,” highlights Vergara.

In that same sense, the director of Investment Climate of the Costa Rican Investment Promotion Agency (CINDE), Vanessa Gibson, estimates that “there will be a positive impact in that country, not only because of the investments that may arrive,” because it is expected that there will also be growth in the operations of companies already established in the country.

A success story

November 13, 1996, is a milestone for attracting foreign investment in Costa Rica. On that date, the technology company Intel announced its decision to establish a factory in the country to assemble and test microprocessors. At that time, it was established as the foreign company with the largest investment registered in Costa Rica, with an initial amount of capital totaling  115 million dollars.

By 1999, Intel had already invested $390 million and had hired more than 2,200 workers with salaries higher than the national average in the manufacturing sector, reveals the study Moving Up the Global Value Chain: The Case of Intel Costa Rica, prepared by the International Labor Organization (ILO).

“For an economy (Costa Rica) with a production of 13 billion dollars in 1997 and a workforce slightly greater than one million people, without a doubt, Intel ‘s investment was an extraordinary investment,” the document highlights.

However, in 2014, the global firm announced that it would stop manufacturing semiconductors in Costa Rica. This occurred after 17 years and an investment of 900 million dollars.

Brian Krzanich, who served as CEO of Intel at the time, maintained that this decision was not part of the plans to reduce the company’s global workforce “but rather had more to do with the cost of that operation.”

But in August 2022, Intel officially inaugurated the Assembly and Test Plant at its facilities in San Antonio de Belén, Costa Rica, as part of the company’s 25th-year celebration in the country.

“Costa Rica is an appropriate location for this important expansion of our assembly and testing operations. The work we do here is critical to rebalancing the global semiconductor supply chain and supplying the industry with much-needed chips,” said Intel CEO Pat Gelsinger during the complex’s inauguration. Since 2020, the company’s investment in Costa Rica reached nearly $ 1 billion.

“Today, Intel Costa Rica has the largest and most complex operation in the last 26 years: more than 3,300 employees, nearly 5,000 contractors, 26,000 m2 of plant, and 1,000 m2 of laboratories for multiple software, hardware, and platform engineering operations. In addition, it has “the most specialized corporate services center to date,” explains Ileana Rojas, Global Vice President of Design Engineering and General Manager of the firm.

Ileana Rojas considers Costa Rica critical for producing semiconductors worldwide. It is a part of the chip hub in Central America because a more geographically balanced, resilient, and secure supply chain is needed. The American firm indicates that it is working so that the global semiconductor supply chain is balanced, with 50% in the Americas and Europe and another 50% in Asia.

The president of CAMTIC, Paul Fervoy, highlights the role of Intel in Costa Rica because although it left the manufacturing of semiconductors for a time, it opted for research and development, as well as design.

Has the crisis come to an end?

Global semiconductor sales exceeded $600 billion in 2022, and the sector is expected to expand again in 2023. In terms of segments, memory and analog chips continue to lead market growth, according to an analysis conducted by Statista.

The semiconductor industry is one of the most important in the world, and its growth has been constant in recent years. Installing a chip hub in Central America will do much to ensure its growth and stability.

In 2022, the global share of these components generated a value of 550 billion dollars. This figure is expected to grow at a compound annual rate (CAGR) of 8.6% between 2022 and 2030, data from PROPANAMA show.

Despite these projections, data from the World Semiconductor Trade Organization Statistics (WSTS) show that semiconductor companies invoiced $119.5 billion in the first quarter of 2023, which is 8.7% less than between October and December 2022.

“This is due to the cyclical nature and macroeconomic difficulties,” explains the Semiconductor Industry Association.

Different consulting firms such as IDC and Gartner consider that short-term supply has begun to exceed demand. Deloitte points out that the global chip industry is experiencing shortages and excess supply simultaneously. This is because while most of the supply chain for chips for cell phones, personal computers, and data centers is recovering, there are other sectors, such as automotive, that continue to suffer.

In that sense, IDC predicts that the industry will contract by 5.3% in 2023, while Gartner estimates a drop of 3.6%, and WSTS predicts it will be 4.1%.

But both digitalization and the energy transition that are both in full swing will boost demand, so the arrival of investment in Costa Rica and Panama will bring benefits in many ways and, above all, it is the starting point for Central America to emerge as a hub for the production of semiconductors in the world.

Source: Forbes Latin America

 

Contact Us

Please use this form to contact us and we will respond as soon as possible:


investing in Costa Rica

Investing in Costa Rica with Procomer’s Monica Umaña

, , 0

Contact the Central American Group to begin starting up a manufacturing facility in Costa Rica in the Green Park Free Zone. 


Monica Umaña
Manager of Foreign Direct Investment
Procomer
San Jose, Costa Rica
mumana@procomer.com

 

The Central American Group: Today, we have Monica Umaña with us. She’s the general manager for Foreign Investment at Procomer, which is in Costa Rica, and it’s the government export and foreign investment promotion organization. Today, our conversation is about investing in Costa Rica. Monica, how are you today?

Monica Umaña: Good, Steve. Very good. Nice to speak with you again.

The Central American Group: Could you tell our audience a little about yourself and the organization you’re working for?

Monica Umaña: Sure, absolutely. Thank you, Steve, for this opportunity. As you said before, my name is Monica Umaña. I am the manager for Foreign Direct Investment at Procomer. Procomer is an entity that was created in 1996. We are responsible for the export promotion and the foreign direct investment attraction to Costa Rica.

The Central American Group: So, you must be excited. This is a new position for you. How are you acclimating to your new role?

Monica Umaña: It is new, and you know me. I have been working with foreign direct investment for the past eleven years, so I’m thrilled. It’s a big challenge, but I’m pleased because I think we have a very nice team inside Procomer, so we are creating a new unit to promote investing in Costa Rica, and we have the rest of the team working with us. So, it’s amazing.

Central American Group: I’m glad to hear that. We have a few questions to ask so you can give us more detailed information about your organization and investing in Cosa Rica. What is the main objective of the new foreign investment agency launched by Procomer?

Monica Umaña: Yes, absolutely. The main objective is to generate jobs, opportunities, and well-being for all the people. We are trying to create a sense of economic well-being in all the country’s regions. That’s really important for Procomer with very clear objectives that promote, attract, and retain investment that boost employment and exports with a solid and particular value proposition consistent with Costa Rica’s needs.

Central American Group: Given global trends, what are Procomer’s priorities with this new strategy as it applies to investing in Costa Rica?

Monica Umaña: That’s important, Steve, because, as I said before, we are trying to attract new foreign direct investment to Costa Rica, but, of course, that is linked with the generation of new employment and linkages economic growth throughout the country. We look to develop new strategic sectors to attract foreign direct investment towards the free trade regime. That’s also important— the new models for attracting foreign direct investment. We are trying to diversify the countries and projects that we are looking at opportunities for investing in Costa Rica. We are improving the investment climate to boost competitiveness and generate employment and linkages beyond the Greater Metropolitan Area (GMA). I think we are also trying to contribute to the development of human talent and to encourage a  better social and environmental return through foreign direct investment.

Central American Group: You just mentioned the Greater Metropolitan Area. One of the priorities of the current administration that is in place in Costa Rica is to get a diversity of investments throughout the country geographically, and these would be things in the more rural areas. Please address that a little bit.

Monica Umaña: Absolutely. You know, we have been very successful in terms of sectors such as advanced manufacturing, medical devices, services in general, not only services, corporate services, but also digital technology. We’re trying to focus on looking for agricultural projects and production value added outside the Greater Metropolitan Area. We have a new legislation to promote investment outside of the GMA. So that’s something that we are working hard on. But I think it’s essential that we also are, as I said before, creating a new team that is going to have not only people that are going to work with the investment outside the great metropolitan area, but we’re going to keep our eyes with the sectors, the strategic sectors like the medical devices and manufacturing and services. So, we’re trying to balance this since we are looking for projects in the rural areas and working with the strategic sectors that are important to investing in Costa Rica.

Central American Group: What kind of resources does Procomer have at its disposal to execute the strategies you will put into place?

Monica Umaña: 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. That is one of the main incentives for the companies when they choose Costa Rica because we offer fiscal incentives. But we also have more than 26 trade promotion and investment offices worldwide with extensive knowledge and international experience, which will be implemented in new markets. We also have experience with several regional offices outside the Greater Metropolitan Area, with firsthand knowledge of the needs of the different areas outside the GMA. And we are adding new colleagues to the team in those regions. So, we’re trying to improve what we already have had in the past to facilitate investing in Costa Rica.

Central American Group: Why would a company want to go to Costa Rica? What are the advantages of being there? What does the country have to offer investors? Please give us some information about that.

Monica Umaña: Yes, absolutely. I think that’s one of the greatest parts of my job, talking about Costa Rica and why a company should visit and invest in the country. I believe concerning investment attraction, Costa Rica has transformed itself to become a global hub for foreign direct investment. The country consistently outperforms competitors due to its unique brand, strategic geographical location, and strong value proposition. We are the number one performer in the global foreign direct investment landscape. The country is one of the strongest and oldest democracies in the Western Hemisphere. We stand out as a beacon in the region due to our political and economic stability. We uphold and respect the rule of law and enforce elevated standards of protecting the environment and defense of human rights. We also understand well how these characteristics weigh on consumer market demands, which are growing. Consumers care more about how and where things are produced. Costa Rica has an excellent track record as a suitable and competitive destination for FDI, with more than 400 multinational companies with a presence in the country with dynamic and productive operations. The fact of these companies demonstrates the viability of investing in Costa Rica.

They are continuously and successfully evolving and reinvesting in Costa Rica, which targets the attraction of specific sectors. As we were talking now, one of the efforts being worked on now is semiconductors with the announcement from the US. According to the Chip Act, Costa Rica will receive funds soon. This involves activities that help enhance and accelerate our country’s technological transformation and consolidation in the value chain in MedTech, pharma, and biomedical research in the health sector we discussed previously. In addition, there are intensive corporate and digital services in the services sector. Important, as I said before, semiconductors, but electronic components, technology, enhanced agribusiness in manufacturing. These sectors are also vital.

As the newest member of the OECD, Costa Rica is a reliable and trustworthy partner for parties seeking to pursue investing in Costa Rica. Again, we have a new legislation to attract new business outside the Greater Metropolitan Area. But Costa Rica offers the free trade zone regime to national and foreign companies that wish to develop their operations in the country to encourage FDI, commercial exchange, and job creation. Last but not least, the talent of the Costa Rican people is one of the greatest attractions for investors due to its high specialization in many sectors.

Central American Group: One of the things that I’ve always found interesting is that Costa Rica disbanded its military at the end of the 1940s and has been putting the percentage of money that the GDP would have dedicated to the military to education and health. Could you mention a little bit about that?

Monica Umaña: Yes, absolutely. Since 1948, we haven’t had an army. That made us one of the most stable countries in Latin America. As I said before, we are the oldest democracy in the region. And as you mentioned, we dedicate 7% of our GDP to education, which makes investing in Costa Rica a good option. Many companies choose Costa Rica because we are not the cheapest country in the region, but we know the high quality of our labor pool and why the companies analyze and choose Costa Rica. Education is free and mandatory, and we have a robust system with technical high schools and national training institutes. Of course, universities are another significant resource regarding education, labor pool, and healthcare. That is a universal system. We dedicate 8% of our GDP to the system. Thanks to what you mentioned before, it’s a national coverage and ranked one of the best in Latin America.

Central American Group: Many of the companies that we speak to as a Central American Group are impressed when they go to Costa Rica by the amount of bilingual talent that can be found there. Can you tell us about the education process for languages in Costa Rica?

Monica Umaña: Yes, absolutely. We have been making considerable efforts to include English in the curricula. There are high schools and many technical high schools dedicated to bilingual careers, for instance, preparing people for the services sector. They have outstanding performance records. When I take potential investors to technical high schools, and they listen to the students’ presentations, I mean they are very well prepared and have excellent standards. The National Training Institute also has specific courses for bilingual people. So that’s one of the main challenges and also one of the main goals in terms of education, to prepare the people for the request of the companies, the new companies that are investing in Costa Rica

Central American Group: Well, thank you for answering our questions. One of the things that’s consistent about these podcasts is that people who listen to them have further questions arising from the information they hear. How can people listening to this podcast contact you with additional questions about investing in Costa Rica?

Monica Umaña: Absolutely, absolutely. I can give you my direct email. You can write to me at mumana@procomer.com, and I’ll be more than happy to answer any other questions. And, of course, to promote Costa Rica as a foreign direct investment destination.

Central American Group: OK, thank you again. We’re going to put all your contact information in the transcript section on our webpage, and we’re also going to put a link to your LinkedIn profile if it’s OK with you. Is that fine?

Monica Umaña: That’s fine, and I appreciate that, Steve.

Central American Group: OK, well, thank you for joining us. Have a great day, and lots of luck in your new position.

Monica Umaña: Thank you, Steve.

Contact Us

Please use this form to contact us and we will respond as soon as possible:


starting up a manufacturing facility in Costa Rica

Starting up a manufacturing facility in Costa Rica

, , 0

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 Us

Please use this form to contact us and we will respond as soon as possible:


engineering services in costa rica

Specialized Engineering Services in Costa Rica: A discussion with Luis Chinchilla.

, , 0

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 Us

Please use this form to contact us and we will respond as soon as possible:


foreign companies in costa rica

Foreign companies in Costa Rica increased by forty in 2022

, 1

Contact the Central American Group to establish a nearshore manufacturing operation in the Green Park Free Zone in Costa Rica

Added to these foreign companies in Costa Rica are a host of reinvestments and expansions of existing facilities.

The Costa Rican Coalition of Development Initiatives (Cinde) registered the attraction of projects for forty new foreign companies in Costa Rica in 2022. The investment promotion agency describes this number as a “record.”

Twenty-seven companies that have set up operations in Costa Rica originate from Latin America and Europe, reported Cinde and Costa Rica’s Ministry of Foreign Trade (Comex).

According to the FDI Performance Index of new projects 2022 from the Greenfield firm, Costa Rica “attracts 15.4 times more FDI projects than the size of its economy would suggest.”

Why foreign companies invest in Costa Rica

For several important reasons, foreign companies in Costa Rica choose the Central American nation for their investments. Among these are:

  • The country’s political and economic stability

Costa Rica is Central America’s leading democracy. It offers foreign direct investors an environment that provides tax incentives for those businesses that locate facilities in one of the country’s dozen free zones. Some free zones in the country are the Green Park, La Lima Free Zone, Coyol Free Zone, Zona Franca America, Zona Franca Ultra Park, and Zona Franca Metro, as well as others.

  • A healthy and educated workforce

Costa Rica disbanded its military in 1949. Since then, the country has invested savings from this action in the health and education of the country’s citizens. As a result, according to the World Bank, the literacy rate for both genders is 98%. In addition, many of Costa Rica’s citizens are fluent in Spanish and English. 

  • A strategic location that provides access to major international markets

Costa Rica is located between the continents of North and South America, positioning it to serve both markets efficiently. In addition, its thirteen free trade agreements provide products manufactured in Costa Rica with duty-free entry into many countries. Among countries with which Costa Rica has free trade agreements are the United States, Canada, the EU, China, Mexico, South Korea, Chile, Colombia, and several others.

  • Quality of Life

Costa Rica is widely recognized as one of the premier tourist destinations in the Western Hemisphere. Its beautiful landscapes and friendly people are an attractive draw that makes locating foreign companies in Costa Rica attractive.

  • Eco-sustainability

Costa Rica is known for its environmental sustainability due to its biodiversity. The country has over 500,000 different species of plants and animals and ecosystems, including rainforests and cloud forests characterized by a consistent low-level cover.

Of the new investments of foreign companies in Costa Rica, 11 correspond to non-traditional market representative companies in the areas of services (5), manufacturing (3), tourism infrastructure (2), and life sciences (1).

Costa Rica received 101 FDI projects in 2022, of which 61 responded to reinvestments or expansions.

FDI numbers for foreign companies in Costa Rica

Costa Rica currently has 402 multinational companies that employ 182,200 Costa Ricans in the service, manufacturing, and life sciences sectors.

From 2017 to 2022, the number of new projects entering the country for the first time doubled, from twenty to forty.

On the other hand, there was a reduction of 10 reinvestments in 2022 compared to the numbers in 2021. So it went from 71 to 61.

“We had fewer reinvestment projects than in 2021 since that year was post-pandemic, and there was a rebound effect of many projects that had been paralyzed and, through this effect, they were completed in 2022,” explained Jorge Sequeira, CEO of Cinde.

Outside the San Jose Greater Metropolitan Area (GAM), ten new companies that are active in tourism infrastructure (4), manufacturing (3), services (2), and life sciences (1) sectors were established. Liberia, Santa Cruz, San Carlos, Orotina, Grecia, Cóbano, and Pérez Zeledón are the areas that received these investments outside the GAM.

“We have to seek immediate employment solutions that these populations, including thinking about agriculture and other efforts that have already been made and investment projects outside the GAM zone,” said Manuel Tovar, Costa Rica’s Minister of Foreign Trade.

According to Cinde’s employment estimates, the 101 FDI projects generated 22,000 jobs, of which 900 are outside the GAM.

“Foreign direct investment is a development engine for Costa Rica that generates many jobs and a wealth of benefits for the country,” said Eric Scharf, president of Cinde.

Source: El Financiero

Contact Us

Please use this form to contact us and we will respond as soon as possible:


chip manufacturing in costa rica

Chip manufacturing in Costa Rica will benefit from the ‘war of the chips’ between the US and China

, 0

Contact the Central American Group to establish a nearshore manufacturing operation in the Green Park Free Zone in Costa Rica

  1. Download

The Central American country hosts the region’s only Intel assembly and test plant. Chip manufacturing in Costa Rica will benefit from Washington’s commitment to sourcing this critical product closer to home.

Intel CEO Pat Gelsinger’s August 9, 2022, agenda indicated that he would be in Costa Rica. The purpose of his trip was to preside over the inauguration of the only semiconductor or chip assembly and testing plant that the world’s leading company owns in the West. The factory for chip manufacturing in Costa Rica was reactivated in 2020. At that time, however, operations were initiated without the participation of the top executive. He had a more critical issue to attend to. That was the Washington signing of the CHIPS Act that the Biden Administration launched to inject 52 billion dollars into developing the chip industry in the United States.

Geographical proximity may benefit chip manufacturing in Costa Rica

The coincidence of agendas was not entirely a fluke. The American company has spent its last years trying to balance the weight of its operations in Asia with that of its other facilities. In addition, the Biden government is promoting the local production of semiconductors as a critical product for the US economy and the nation’s security in the context of tensions with China. Due to the rivalry between the two global economic powers, the Costa Rican economy, located just three hours by plane from Miami, is in a position of potential gain.

The stars have recently aligned for Costa Rica. In 2015 Intel moved manufacturing operations to Asia. This affected 20% of Costa Rican exports. In 2020 the plant in the Central American nation was reactivated with an announced investment of $350 million that ended up tripling to $1 billion. This resulted in a growth in the company’s payroll of 60 % (almost 4,000 workers in 2022). Given the US initiative to source this strategic product closer to home, the capacity projection at the plant will be for whatever future needs may be.

What is coming seems equally advantageous for the country’s economy, which benefited from  Intel’s installation in 1997.  Although (the law signed by Biden ) is focused directly on the United States, due to its geographical proximity, this could be a significant gain for chip manufacturing in Costa Rica.

The manufacturing tasks of assembly and testing of semiconductors in Costa Rica correspond in the production chain to a stage after the manufacture of silicon wafers developed by Intel in Ohio. This activity could increase with new investments that have been recently announced in other US states before the so-called ‘Chips Law” was enacted.

The US to increase wafer production capacity

If the capacity to produce wafers increases in the United States, the assembly capacity must also increase. Costa Rica has the closest installed capacity to the US for this activity. In addition to Costa Rica, other Intel manufacturing plants are in Malaysia, Vietnam, and the southwestern Chinese city of Chengdu. Pandemic restrictions and global logistics disruptions have given rise to the need to prioritize shorter-distance supply chains.

That is where Costa Rica becomes significant, as President Rodrigo Chaves and the Assistant Undersecretary of State for Economic Growth, Energy and Environment, José Fernández, pointed out in a meeting in September in San José. “We have talked about how Costa Rica could benefit from the Chips legislation,” the US emissary told the press without giving further details or comments on the geopolitical disputes between his government and China.

Now it is known that the battle for tiny silicon components will not cease. Washington recently announced a ban on companies supplying Chinese customers with specific categories of semiconductors made with US technology. This move has dealt a severe blow to China’s industry and its production of weapons and supercomputers. This action is the most recent step in the fight between the two countries. This was further accelerated on August 2 by the surprise visit of Nancy Pelosi, speaker of the US House of Representatives, to Taiwan, the world’s leading producer of semiconductors. China considered this trip to be a serious and overt provocation.

Chips and medical devices are important Costa Rican exports

The Central American nation views the current state of affairs cautiously and optimistically for Costa Rica chip manufacturing. This point is acknowledged by the Minister of Science and Technology, Carlos Enrique Alvarado. The view is the same in the Ministry of Foreign Trade, whose figures indicate that in 2021 integrated circuits generated $518 million of the country’s exports. This figure s represented one out of every $20 of the value of total exports. Current chip production in Costa Rica is reported to be lower than in the 2005-2015 decade. However, it is enjoying a rapid recovery in times of favorable winds for Costa Rica’s economy. The renewed industry for chip manufacturing in Costa Rica is combined hand in hand with the dynamism of other sectors, such as medical devices, which is a leader in foreign sales.

Source: El Pais

Contact Us

Please use this form to contact us and we will respond as soon as possible:


free trade agreement between El Salvador and China

A possible free trade agreement between El Salvador and China

, 0

  1. Download

Contact the Central American Group to invest in manufacturing in El Salvador. 

A free trade agreement between El Salvador and China could benefit the former economically. Although it could, however, carry some risks as well.

“Uncertainty” is the word that could best define the scenario in which El Salvador currently finds itself.

The bankruptcy of one of the world’s most significant cryptocurrency buying and selling platforms, FTX, was recently announced. This event resulted in a collapse in the value of Bitcoin.

Furthermore, the event focused the eyes of the world on the Central American country, given that President Nayib Bukele decided to make Bitcoin legal tender in the nation in 2021. In addition, El Salvador’s chief executive invested a large part of the money from his nation’s tax coffers in that asset.

“Unfortunately, when one requests information on how many resources have been invested in Bitcoin, what one gets as an answer is that this information does not exist or is confidential,” Ricardo Castaneda, coordinator for El Salvador of the Central American Institute of Fiscal Studies (ICEFI).

The economist explains that in his country, the calculations of what is invested in Bitcoin are made only by considering the president’s tweets. According to what has been expressed by the president, the investment could be in the order of 120 million dollars.

If so, El Salvador could be facing challenging economic times. One of the actions the Bukele administration is pondering to ease the country’s challenging fiscal circumstances is a possible free trade agreement between El Salvador and China.

A new economic partnership between China and El Salvador

The statements that the Salvadoran government authority made this past November did not go unnoticed, although the Xi Jinping regime never confirmed this. What was ratified on November 10, 2022, was a letter of intent expressing the interest of China and El Salvador to start negotiations for a Free Trade Agreement (FTA) between the two countries. President Nayib Bukele and Ambassador Ou Jianhong met in San Salvador to mark this event.

In 2018, El Salvador had already shown signs of rapprochement with the second-largest economy in the world after it ended its direct diplomatic relations with Taiwan. This strategic move brought a series of tangible benefits to the country. For example, China has given three donations to El Salvador:  The construction of an amusement park on its coast, a stadium that has not yet been built, and a library. The government of Xi Jinping made these investments to improve his nation’s image among El Salvador’s citizens.

Desiree Reder, a researcher at the German Institute for Global and Regional Studies (GIGA), based in Hamburg, adds that the current conditions of democracy in El Salvador also deprive him of an ability to approach other countries that criticize Bukele’s style of government, such as the USA.

“In that sense, China does not apply sanctions to countries based on human rights, which is why strengthened ties with China, including a possible free trade agreement, can be a solution. The big question is whether the benefits outweigh the costs in this relationship,” expressed Reder.

A free trade agreement between El Salvador and China carries risks

Although an eventual alliance with China could mean a much-needed “lifeline” for the Salvadoran economy, experts agree that such an agreement could also bring a series of risks. “Nothing is free,” Reder said.

“El Salvador could see some benefits in infrastructure, which are already being observed, but China expects something in return. It could be exclusivity in commercial benefits or to demand certain projects in areas that may be protected or that may affect some communities,” added the  academic

Similarly, the economist Castaneda doubts whether a free trade agreement between El Salvador and China is good for the former nation. On the contrary, he believes that El Salvador would be negatively affected.

In addition, he expressed that it is a clearly political move. “Let’s remember that President Bukele wants to be re-elected and, practically, has few staunch allies at the international level.  This is in addition to the fact that tensions with the United States are considerable. So what Bukele is looking for is that his decisions are supported, and China does not stand out, precisely, for its defense of democracy,” he stated.

The experts also have questions regarding China’s real interest in El Salvador. This is mainly because the Central American nation is different from Brazil or Panama, for instance, on a strategic level. However, they also point out that China has been strengthening and increasing its relations with Latin America in recent years to, little by little, break the dependency that the region has had for decades on the United States. That would be one of the primary motivations for the actions of the Xi Jinping regime in El Salvador and the rest of the Americas.

SOURCE

Contact Us

Please use this form to contact us and we will respond as soon as possible:


Contact Us

Please use this form to contact us and we will respond as soon as possible:


Contact Us

Please use this form to contact us and we will respond as soon as possible:


Contact Us

Please use this form to contact us and we will respond as soon as possible:


procomer-in-houston

Procomer in Houston: A Conversation with Andrew Crawford

, , 0

Contact the Central American Group if you want to establish a  manufacturing facility in Costa Rica. 

Procomer in Houston provides valuable services to foreign direct investors

Andrew Crawford
Trade Commissioner
Procomer
acrawford@procomer.com

The Central American Group: Welcome to another installation of the Central American Group’s podcast. In this episode, we have the pleasure of speaking with Andrew Crawford. Andrew is with a Costa Rican governmental group called Procomer.  Let him tell us a little about himself and his organization, Procomer in Houston. How are you doing today, Andrew?

Andrew Crawford: Hello, Steven. Thank you for having me. As you said. I’m Andrew Crawford, Trade Commissioner and Director of the Export Promotion Agency of Costa Rica. I’m based out of Houston, Texas. I cover the Southwest region of the United States, including some Mountain states as well. I’ve been involved in the field of foreign direct investment promotion for the last 18 years, and I’ve been representing Costa Rica in different countries and in different avenues for trade development. Right now, the focus of Procomer in Houston is basically the Central US. Our organization’s mission is to showcase and represent Costa Rica to better understand what opportunities we have going on in the industry of advanced manufacturing\.  This is in addition to others that are available in our country and show great potential for investors in the United States.

The Central American Group: We had the good fortune of meeting at a conference in Austin, Texas last week. One of the things that were pretty impressive is when one of the speakers asked the attendees how many of them had had the opportunity to visit Costa Rica, it looked as though 90% of the audience’s hands were raised. And after that, it was determined that most of the folks that identified themselves had been to visit Costa Rica for tourism purposes. But as the program progressed that day, we spoke a little bit about Costa Rica’s capacities beyond tourism. In addition to that, in addition to agribusiness and some real estate investment, there are other sectors that play an important role in the Costa Rican economy and its development. Can you tell us about that?

Andrew Crawford: Yes. And it made me laugh last week as well when I saw so many hands raised by the time they asked about being in Costa Rica. I was so happy about this because it reflects the level of connection that US people have with my country, and I felt proud of it. But there’s a secret, I would say, Steven, that many people are not aware of. Costa Rica’s GDP from tourism is just about 5% of the economy’s total production, whereas nonrelated tourism exports represent more than 30% of the GDP. So, from the perspective of Procomer in Houston, Costa Rica is an export-based country, and only 5% of that export base is tourism related. The other 30% is just general exports in many other sectors. That is something that people, most of the time, just don’t know. The main product of our economy in terms of exports is medical devices and equipment related to the life sciences industry. Many people are unaware of the country’s place in the global medical device value chain. We have more than 30 years of experience and extensive knowledge in advanced manufacturing in this area.

So, we could say the country has become a key contributor within the industry worldwide. Just after Mexico, Costa Rica is the second largest exporter of medical devices to the United States. Basically, that is because we have been able to develop a robust supply chain and a country that really focuses on offering reduction programs in terms of cost. We really try to make sure that our talent is totally evolving. Its problem-solving capacity. We really like to do this when we compare ourselves to other countries. Particularly those that are more focused on highly intensive production but not much From the perspective of Procomer in Houston, our talent is really focused on activities such as designing, prototyping, and doing research and development. So, we could say the country has become a sophisticated destination for advanced manufacturing

The Central American Group: One thing that’s pretty impressive that I learned over the last few years of having contact with a free zone with whom I work in Costa Rica is the fact that Costa Rica disbanded its army in the late 1940s. At that time, I believe that at that time they were putting about 7% of GDP into the armed forces. However, since the late forties, funding has been put into health and education. As a result, in Costa Rica, you’re getting a highly trained workforce that’s quality, and from my understanding, English is taught from a very young age. So, you’re getting bilingual, well-trained, well-educated workers.

Andrew Crawford: Absolutely. And maybe that is one of the reasons that we have been seeing how a proven track record has been consolidated in the country for attracting these types of investments and projects to Costa Rica. Steven, some of those tangibles you mentioned are hard to find in Latin America. I’m not just bragging about it, it’s just a reality. If you go to OECD statistics, if you go to World Bank statistics, if you go to World Economic Forum statistics, you’re going to always see Costa Rica at the very top list of those organization’s country rankings. That is part of the decision-making process that companies evaluate when they are just trying to make an investment or find new partners in the region.  Procomer in Houston helps companies to do these things. For example, in Costa Rica, you could say more than 380 high-tech companies have a presence in the country. Out of that number, 40 are Fortune 500 companies. And the most interesting thing is that 14 of the top 30 Medtech OEMs of the world are also operating in Costa Rica. When considering aerospace exports, it is important to note that 38% of Costa Rican production finds its way to the high-tech global value chain.

When we talk about aerospace and when we talk about medical devices, you’re going to find that we go from class one to class three products that are basically being developed in the country. Another asset that is very interesting is that 99% of the energy of Costa Rica is clean energy. It’s from hydro, solar, wind, and geothermal. So, you become a manufacturer supported by a clean energy grid in Costa Rica once you decide to do business there. This is great for those who are really focusing on and understanding the impact that industry can have on the environment. Again, from the perspective of Procomer in Houston, one interesting thing that I would like to also highlight is when you mentioned the quality of the investments that we have in education. We have created an ecosystem of qualified, savvy, stem-oriented talent questioning processes. They question the processes, projects, and how basic things should be run. And that is a key highlight. Multinational stakeholders and decision-makers always mention this when we ask how they feel about Costa Rica. So, if you put that into the equation along with the tax incentives that we offer, which are basically part of the Zona Franca, or free zone model, the possibility of generating a positive ROI in the short to midterm is a great possibility.

The Central American Group: And that’s basically why we try to present this information when we present the case of Costa Rica.

Andrew Crawford: Steven, yes. One of the things that you brought up is the free zone regime in Costa Rica. We at Procomer in Houston have seen that although some countries may have lower-line worker wages when you factor in Costa Rica’s tax breaks that they give the companies that locate there, Costa Rica performs favorably in terms of the total cost of doing business. So, I think that that’s important for listeners to know.

The Central American Group: When companies come to Costa Rica, what do you see mainly in terms of business structures? Do they look to establish contract manufacturing facilities? Do they look to make greenfield investments from the ground up? How does that work?

Andrew Crawford: Well, I think it’s a combination of both, Stephen, from my perspective at Procomer in Houston. When you want to do an assessment of the project, sometimes companies say, I want to do contract manufacturing in the first case. If things basically go well, I’m just going to jump into foreign investment. That’s basically how they like to start the process, and we have the platform available for that.

The free zone regime is not only applicable to huge investors and investments. An investment of $150,000 in assets is the minimum investment you’ll need in a specific period to be completed to qualify for the Free Zone Regime incentives. Companies use those incentives that we have had available for several years. That’s basically another conversation with more technical in terms of all the aspects. But anyways, it’s just a matter of understanding that the level of investment you’ll need in Costa Rica to receive those incentives is only $150,000. That’s something that really gets the attention of many people. Also, from the perspective of Procomer in Houston, we always present government stability as another great positive factor in terms of making a decision.

So those are the type of things that we try to put together. And in the meantime, another interesting secret that we have in Costa Rica is that there are no unions in the country’s private sector. We decided to develop a model that creates a fund between employers and employees to properly address needs such as money lending with attractive interest rates. Also, people need seasonal savings to support different moments of the year in terms of spending, for example, the back-to-school season of the year, which is something that really becomes a burden for families. And that fund can even provide economic relief from COVID if there is severance from work. The name of this fund is Workers Association or Association Solidarista, and it’s a free and non-mandatory model that basically works. We at Procomer in Houston present it to investors as a great way to keep up with a relationship with their employees.  It serves to keep them motivated and, in the meantime, deal with the realities of the legislation in Costa Rica in terms of supporting their employees’ economic and social development.

The Central American Group: Well, that’s a lot of good information. One thing that I think we’d be remiss if we didn’t touch upon in our conversation is the whole concept of nearshoring activities. From the viewpoint of Procomer in Houston, could you tell us how those activities may have accelerated, especially in times of supply chain difficulties with companies that are far-flung and geographically distant from North America?

Andrew Crawford: Yes, that’s a great question, Steven. And I think I don’t only want to relate this case to Costa Rica. Still, we’ve seen the Americas itself experiencing the realities of having a lot of western companies come into the conversation of what I can do in your country and what benefits I get if I do something in your country. But if you do the assessment of the different countries that are in the conversation, for some reason, Costa Rica and I don’t want to disregard any others at all. Still, Mexico and Costa Rica are in a very competitive conversation with their characteristics, features, and specifics. At the end of the day, you cannot compare them at the very same level. But for one purpose, one country works well, and for other purposes, the other might work well. But both countries are in an interesting conversation right now regarding how we see a great number or greater number of companies trying to see at what level they can relocate or bring their contract manufacturing processes to the Americas. So, we want to say that that has given us the leverage of calling ourselves a near-shoring destination and a friend-shoring destination in a global context like the one we are facing right now.

And this destination that we call ourselves because of the great level of relationship we have with the US. Proximity to the  United States also comes along with our free zone regime incentives. The two countries are very friendly and are very, you know, in a path expected to basically solve many of the financial problems and global value chain problems companies have during this time. So, the work that we have seen has increased about 30% from year to year and is totally related to companies questioning, what can I do? How can I do it? We’ve been signing a good number of NDA’s this year because there are some interesting projects that we cannot disclose clearly in their direction. And in the meantime, when you mentioned to these companies, this is a safe destination, we don’t have an army since 1948, you’re going to find extremely good literacy rates, people who speak more than two languages, three, four languages. You’ll have daily flights to and from main cities in the United States, coast to coast. You’re not going to have a language barrier. Most of the people in business in Costa Rica speak fluent English.

You’re not going to have issues with time zones. In the meantime, you’re going to find high-quality candidates for employment at different levels in terms of the different programs you will have. And one of the key elements is that you also want to find certainty in terms of free trade agreements. Procomer in Houston points out that we have 15 free trade agreements implemented with the United States, Europe, Canada, and even China. We have a free trade agreement that helped us to bring down raw materials and intermediate goods to transform them in a free zone and then export them to third-party markets, including the US. So this gives access to two-thirds of the world’s GDP. We have access to more than 50% of the global population living in those countries with free trade with Costa Rica. And we are pretty much feeling that the country is an international solution for those companies that are trying to reduce processes and that have issues with rework production costs. There is no barrier of language and any other aspects that, you know, we find when we try to go to the Far East and when we go to Asia.

The Central American Group: Andrew, one of the podcasts aims is to present people with useful and relevant information. But beyond that, we like to offer folks like yourself at Pro as sources of information and assistance to listeners interested in Costa Rica, in Central America as a whole. That being said, can you do two things to close it out? Number one, tell us the services that Procomer in Houston can offer to people that are potential investors. And number two, tell our audience, please, how they can get in contact with you at your office so that you can be of service to them.

Andrew Crawford: Absolutely. Steven. Maybe the most important thing that you got to keep in mind the audience is that since we’re a government entity, our services are 100% free of any charges or fees. Our services are totally free, which is something that is very important in terms of the quality of information that we generate. This includes due diligence information that you might need to understand the process for doing business with Costa Rica. Everything is basically free now. Stuff that we usually do. We offer the possibility of traveling to Costa Rica any time of the year and will provide assistance. We can funnel down a specific profile of companies requiring a specific type of spec for a project. So, we can present those companies and do the homework of finding those companies that are part of our expert platform. We can identify potential suppliers for a specific client in the United States. If those capabilities are well, we can do or organize a visit to Costa Rica or do a remote set of calls with this supplier.

If representatives of a company want to go down to Costa Rica and do facility visits, we can also prepare for that. We can drive you down around the country. We can present you with stakeholders down there. We can connect you with the different stakeholders related to the different, let’s say, responsibilities that the country has constructed in the foreign trade infrastructure that we have available. So, every player in the field will get to facilitate the information and services they need. And in the meantime, if they need logistics, let’s say, connections. If they need legal connections, if they need any type of stakeholder connections in the process of understanding what will be the best way to manage a project with Costa Rica, we at Procomer in Houston can also do that. We are the very first entry, creating the platform for that purpose. We have given this service for many years. We have satisfied customers worldwide and nationwide, from the East Coast to the West Coast to the Central US.

Everything will be dependent on a case-by-case basis. That’s something that we can create and build. We also have an annual event, which is our contract manufacturing tour. We do it every September, gathering a list of manufacturers in different regions in the United States, and organizing site tours where we include transportation. We even provide accommodation and meals during that week in September so companies can have a catering service from our government for one week. We take them to the different facilities and develop the agenda during that specific week. We also have some others. Those interested in investing in Costa Rica can use my email to reach me.  It is acrawford@procomer.com

The Central American Group: This is very useful information. I’m sure those who listen to it will put it to good use. Thank you for joining us today; hopefully, we’ll have a lot of interaction in the future.

Andrew Crawford: Appreciate it, Steven. Wish you a great afternoon and the very best for the rest of your week.


Contact Us

Please use this form to contact us and we will respond as soon as possible:


Load More

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!