The Struggle for Foreign Investment in 2021

Because of the economic crisis, Foreign Direct Investment flows have practically vanished, and in order to attract the few investments that are projected for next year, countries are expected to compete by offering incentives and aid programs for businesses.

Friday, October 2, 2020

The covid-19 outbreak dissipated the investment intentions of companies globally. At the beginning of the fourth quarter of the year, there are signs that business confidence has begun to recover; however, pessimism among investors is expected to continue next year.

Panama has already anticipated this scenario of competition that is developing and to try to attract the few investments that would be executed, at the end of August President Cortizo sanctioned the law that creates the Special Regime for the Establishment and Operation of Multinational Companies for the Provision of Services related to Manufacturing.

This law intends to promote the establishment of multinational companies for manufacturing, light manufacturing and assembly, requiring the direct hiring of labor.

Check out the "System for monitoring markets and economic situation in Central American countries", developed by CentralAmericaData.

Costa Rican authorities also predict strong competition. Eric Shaf, president of the Costa Rican Coalition of Development Initiatives (Cinde), told that a fierce fight for FDI is expected to take place next year "... especially because investment flows are drying up as a result of the same pandemic, which forces companies to rethink the development of their projects in the midst of the parallel world economic crisis."

The article adds that "... the arsenal required by Costa Rica to be a winner in the race to attract more FDI is related to the package of incentives it can offer companies to set up operations in the country."

Mexico, Colombia and Chile, which in some aspects could be competitors of Central America, are countries that in this context of crisis have implemented ambitious aid plans for companies affected by the health and economic crisis.

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More on this topic

Law on Multinational Companies Sanctioned

September 2020

Panamanian President Laurentino Cortizo, sanctioned the law that creates the Special Regime for the Establishment and Operation of Multinational Companies for the Provision of Services related to Manufacturing.

After the deputies of the Panamanian Assembly approved in the third debate last month the bill that aims to promote investments in this context of economic crisis that derives from the outbreak of covid-19, the President of the Executive sanctioned the regulation on August 31, 2020.

Costa Rica: FDI Falls 28%

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Foreign Direct Investment decreased from $1.658 million to $1.199 million between the first half of 2017 and the same period in 2018.

According to data from the Central Bank of Costa Rica reported a decrease in the flow of the Foreign Direct Investment (FDI) during the first half of 2018, contrasts with the increase of 52% recorded in the same period last year, given that between the first six months of 2016 and the same period in 2017, the flow went from $1.088 million to $1.658 million.

CINDE: Investment Promoter in Costa Rica

September 2014

In light of questions raised about a private organization receiving state funding, the CINDE wishes to demonstrate its position and the concrete results of its stewardship in attracting foreign investment.

From a statement issued by the Costa Rican Coalition for Development Initiatives (CINDE):

Costa Rica Seeks Investment in Manufacturing and Agribusiness

September 2014

The country will promote foreign investment in these sectors, especially in areas with less development further away from the Greater Metropolitan Area.

The Costa Rican Coalition for Development Initiatives (Cinde) will focus on promoting investment in these sectors, diversifying its strategy of attracting investment and giving greater emphasis to the development of areas further away from the capital, where there is a stronger link with the productive sectors and agribusiness.