Costa Rica: Investing

FDI in Figures

According to UNCTAD’s World Investment Report 2021, FDI inflows to Costa Rica fell by 38% to USD 1.7 billion in 2020, due to lower external demand and the collapse of tourism following the COVID-19 pandemic. The stock of FDI was estimated at USD 45.8 billion in 2020. The recession exacerbated fiscal imbalances and the government had to secure a multi-year USD 1.8 billion assistance from the IMF, an arrangement that caused civil unrest. In 2020, FDI in SEZs, which account for most inflows into the country, fell by 41% to about USD 1.1 billion. Tourism activities also attracted much lower foreign investment (-70% to USD 18 million), as did factories outside SEZs (-40% to USD 313 million). Recently, though, investment in high-skilled sectors, such as high-tech medical equipment, has been considerable, making the industry Costa Rica's leading exporter. Other important sectors for FDI are manufacturing and infrastructure sectors, despite the departure of the American company Intel. Furthermore, Colombian and Chinese investments have been growing steadily. The tourism sector has increased in investment by three times. The main investing countries are the United States, Canada and Mexico. On the future side, Costa Rica's admission to the Organisation for Economic Co-operation and Development (OECD) and the approval of PPP regulations should strengthen FDI.

Costa Rica ranked 74^th out of 190 economies on the World Bank's last Doing Business report, which was published in 2020, indicating a seven-spot decrease from the previous year. Costa Rica made getting electricity faster and improved the reliability of electricity supply by repairing the El Porvenir substation, installing new poles, and implementing a mapping program for transformers and meters throughout San José. The government also made enforcing contracts easier by adopting a new code of civil procedure that introduced pretrial conferences as part of the case management techniques in court. Costa Rica is an outward-oriented country and continues to strengthen its relations with its different partners. Alongside its immediate neighbours and the United States, the country continues to foster trade links with China. In addition to exports, the country's development depends largely on its ability to attract foreign investment. The new sector of eco-tourism, in particular, has been attracting increasing amounts of investment, thanks to the Government's responsible environmental policy. And while Costa Rica has no major new laws or judicial decisions regarding FDI, authorities updated the regulations for Free Trade Zones, where most FDI is invested. There are four investment incentive programs in the country: the free trade zone system, an inward-processing regime, a duty drawback procedure, and the tourism development incentives regime. Costa Rica’s tax incentives, exemplary political and economic stability, a skilled labour force, and commercial promotion efforts, have made the country a leader in the region for international business. Additionally, the country's location in the heart of the American continent, as well as ports on the Pacific and Caribbean coasts make it an attractive destination for FDI. However, permanent government interference in controlling certain sectors of the economy, poor infrastructure, high energy costs, bureaucracy, corruption, weak investor protection and legal uncertainty due to the difficulty of enforcing contracts all represent impediments to greater competitiveness. On the other hand, the Investment Promotion Agency (CINDE) is recognised as one of the most effective agencies in Latin America in terms of investment promotion. According to the agency, Costa Rica saw numerous investment projects in recent years, including new multinational companies arriving in the country, in addition to the already established companies that reported growth in service, digital technology, life sciences and advanced and light manufacturing sectors. Among the new companies is Denmark's Coloplast, which has installed a medical device manufacturing plant (the first of its kind in the Americas). Additionally, the Belgium company Primoris invested USD 1 million to establish an advanced laboratory in Costa Rica for the chemical and physical analysis of food integrity.

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Latest Update: February 2023