Knowing how to laugh at yourself is a virtue that every entrepreneur in Costa Rica should have, even though it might all end in tears.
This is what Alfonso Carro does in his article on Crhoy.com: laugh at himself, at the same time bringing to light the helplessness felt in light of the deteriorating conditions for investment in an economy such as Costa Rica, which was once number one in Central America.
Companies have to allocate up to 15% of expenses to security services, as a result of the growing violence in the country.
A company wishing to operate in Guatemala has to allocate between 8 to 15% of its expenses to security in order to keep operating. The figure was provided by Victor Guillen, manager of purchases, imports and exports at Dagas, and published by Elperiodico.com.gt, who revealed that his company earmarked Q250 thousand ($32,000) per month for the security of its plants, trucks and workers.
The average time for the region is 28 days and the average cost is 48% of GDP per capita, a far cry from OECD average time and costs which are 9 days and 3.4% of GDP per capita.
Using data from the Regional Economic Report 2015, an article on Prensa.com outlines that "... Of all the countries in Central America Panama is the place where starting a business requires the least paperwork, time and cost. "Setting up a company in Panama it takes six days, through five different procedures, with a cost equivalent to 6.4% of gross domestic product (GDP) per capita (about $764).
The country which used to stand out in the region because of its good relative level of economic, social and educational development, is accelerating its march downhill in terms of productive competitiveness, income distribution and training.
A World Bank study has evaluated regulations which exist in 22 cities in the region for starting new business, registration, construction, and border trade.
From a statement issued by the World Bank:
Doing Business in Central America and the Dominican Republic 2015 compares business regulations in 6 Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) and the Dominican Republic. In addition to the capitals, the study collects data related to 15 subnational locations regarding regulations that affect 3 stages in the life of a small to medium-size domestic firm: starting a business, dealing with construction permits and registering property. The study also analyzes the indicator of trading across borders, considering 7 main ports and 3 secondary ports. Moreover, it includes a gender perspective based on the study of laws and regulations that impose differential treatment for women.
Product distribution companies in the North of Central America are paying monthly installments of $100 per truck to organized criminal groups.
Far from declining, the cost and problems caused by extortion for companies in Central America, continue to rise and is harming regional trade. In Honduras alone, Eleconomista.net reported, "... between 2012 and 2013 some 18,000 businesses closed because of pressures from gang members and consequently some 72,000 direct jobs were lost."
Investments by Costa Rican companies in their neighboring country went from $2.43 million in 2010 to $67.7 million in 2013.
Installation of production facilities, maquila subcontracts or transfer of part of the production process are part of the investment models that Costa Rican businessmen are utilizing in order to minimize the negative effects of the high production costs prevalent in Costa Rica and to stay competitive at the level international.
A company producing polyethylene products has closed part of its operation in Costa Rica due to the high cost of production in the country and transferred its factory which is now operating in Nicaragua.
The high costs that firms have to incur to produce competitively in the country is the main reason behind the partial closure of the Yanber company's operations in Costa Rica and its transfer to Nicaragua.
Just on the hiring of private security services companies spend $243 million per year, on top of the payments made to those extortingtransport carriers on the roads.
These unpunished crimes are not just affecting freight companies operating in the country, but are also increasingly reducing the possibility Guatemala has to attract more and better foreign investment which would contribute to its socioeconomic development.
The future Minister of Economy, Trade and Industry proposes the creation of a court that will be responsible for dealing with complaints from citizens who feel affected by bureaucratic excesses of the state.
If this nonsense is a sign of what the work will be of the next head of the MEIC, the Costa Rican productive sector should not put too much hope in his management. The proposal by the Minister means transferring a specific and direct responsibility of his department, to a court whose actions are in essence slow.
Harassment and a business climate of animosity in the country has forced 25 Honduran companies migrate to Mexico and Nicaragua.
Latribuna.hn reports that "15 of them moved to Nicaragua and the rest to Mexico to the Yucatan area, because they have found better conditions to invest and grow, therefore, the National Association of Industrialists (ANDI), is anlaysing setting up branches in these places in order to continue serving its members. "
Latin America is barely ahead of Africa in quality standards and conditions affecting local businesses.
As a region, Central America, is located in the second half of the list entitled ‘Doing Business 2012’.
Doing Business 2012, a report by the World Bank this year added a new area of analysis, which is the ease of obtaining an electrical connection, along with the traditional items which include: ease of starting a business, management of construction permits, registering property , getting credit, protecting investors, paying taxes, cross border trade, enforcing contracts, and insolvency resolution.
Position in 2010 Rankings: Panama 72 (62 in 2009), El Salvador 86 (80), Guatemala 101 (100), Nicaragua 117 (119), Costa Rica 125 (121), Honduras 131 (128).
With the exception of Nicaragua, which rose two places, the Doing Business 2011 ranking shows that easiness of doing business in the Central American countries has deteriorated, at least in relation to other countries.
Ferris & Associates is a boutique law firm specialized in Business Law, Litigation and Conflict Resolution and Foreign Investmente, as well as, providing personalized services.
Operates in Costa Rica and Costa Rica
Phone: (506) 2588 2505 - (506) 2288 2245
We service our customers by helping them in all aspects of the process of establishing businesses in CA also we provide them with business opportunities in the Financial, Comercial and Real estate sectors.
Operates in Costa Rica
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PRONicaragua, is the Nicaraguan Investment Promotion Agency, established in 2002. We are a non-profit, public-private institution whose mission is to generate economic growth and job creation in Nicaragua by attracting high-quality foreign direct investment. The Agency provides complimentary support services to qualified investors seeking investment opportunities in our country.
Operates in Nicaragua
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Operates in Honduras
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To create greater prosperity in emerging markets by harnessing the power of private enterprise solutions to poverty.
Operates in Costa Rica, Guatemala, Honduras, Nicaragua and Panama
Phone: (1-617) 209-7506