The high energy tariffs paid in Costa Rica compared to other countries in the region and the effects of the monopoly that exists in electricity generation are threats to the local economy and future investments.
A bill proposing to charge $5 for each passenger in transit was presented, whose funds, which would reach $65 million, would be given to airlines as incentives to attract more tourists to the country.
Bill 150, called "Airline Incentive Law", was presented to the National Assembly on August 26. See full initiative.
In a competitive scenario for lower costs and higher productivity, devaluation against the Lempira Dollar in Honduras and the Cordoba Dollar in Nicaragua is a factor that could help these economies stay competitive.
In the last five years, the exchange rate in Honduras increased by 17%, from 21.06 Lempiras per U.S. dollar in June 2014 to 24.67 in the same month in 2019.
Charges, taxes, high fuel prices and other costs at airport terminals can represent close to 30% of the value of air tickets in countries in the region.
Airlines that operate in the Latin American region face an uncompetitive market, since in 2018 these companies are projected to earn $2.95 per passenger, a figure much lower than the $15.67 estimated in North America or $7.58 in Europe, according to representatives of the International Air Transport Association (IATA).
Employers say the 18% decline in exports in February 2015 compared to the same month in 2014 is not due to temporary factors, but to a continued loss of competitiveness.
Excessive bureaucracy and the high cost of energy and other factors related to production are part of the problems affecting the private sector and are causing a reduction of exports, according to the president of the National Chamber of Agriculture and Agribusiness, Juan Rafael Lizano.
The construction union of Guatemala states that construction costs have increased by about 6% since the entry into force in January of a tax on the distribution of cement.
Since the start of the charging of a $0.66 tax per bag of cement distributed, representatives from cement companies have reported a drop in sales.
Pelayo Llarena, president of the Chamber of Construction, told Elperiodico.com.gt that "...
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.
Entrepreneurs in the Chiriqui province have to travel to Panama City to request a sanitation certificate, a process which often takes up to a year.
In addition, employers in the region have to "... pay $300 for each procedure in respect to the sanitation certificate and ultimately obtains another permit certifying the processing plant." These problems have intensified since the Food Protection Division of the Ministry of Health stopped issuing these permits in Chiriqui, four years ago.
There is growing confidence by businesses to delegate to specialized companies the storage, management and distribution of their inventory.
Another service offered by companies that focus on managing inventories for third parties is the labeling of products to help companies promote their products in the market. This trend of outsourcing inventory management is on the rise in Costa Rica, allowing companies to "...
The private sector is asking the government to repeal the new tariff schedule in the ports of Quetzal and Santo Tomas de Castilla, saying it there is no justification for it and the competitiveness of ports is deteriorating.
According to employers, the increase is not only unwarranted, but also directly impacts the cost structure of firms, which end up passing on the prices increases to end consumers.
While in 2012 a company had to pay about $50 for the export formalities, up to September this year, that amount was $125.
Export procedures include certificates of origin, phytosanitary certificates, commercial invoices, fumigation, cargo insurance, among other things, according to the Foreign Trade Promotion Office (Procomer).
Lander Roman, an export logistics analyst at Procomer told Nacion.com that "...
In the view of entrepreneurs it is not enough to change the energy mix towards the renewable sources and they are proposing a long term strategy in order to compete in the region.
A proposal to create a long-term policy between business and government "..." where the private sector makes a commitment to invest in renewable energy and this energy somehow, goes to those great industries that generate employment in the country, such as the free zone ', said César Zamora, country manager of the energy company IC Power .
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.
Businessmen in Costa Rica attribute the outflow of $31 million in the first quarter of the year to the close down of operations of businesses in the sector who have decided to move to neighboring countries.
The outflow of capital from the manufacturing industry during the first three months of this year is $7 million more than left the country in the same period in 2009, during the economic crisis in the United States, according to detailed figures from the Central Bank of Costa Rica.
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