Procomer in Houston provides valuable services to foreign direct investors
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 firstname.lastname@example.org
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.