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.
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.
The health and economic crisis will result in a reordering of foreign investment at the global level, and countries like Central America will have the opportunity to take advantage of their geographical position to attract fresh capital.
The outbreak of covid-19 worldwide will cause a drop in production in 2020, however, by 2021 and 2022 the forecasts of international organizations anticipate that economic activity could rebound, a rise that would be coupled with new investments in various markets and sectors.
Panama and Honduras were the only two Central American countries to report increases in foreign direct investment in 2018 over the previous year, with year-on-year changes of 36% and 3%, respectively.
The growth of investments directed to Panama, which concentrated 51% of the sub-regional total, explained the increase that was reached in 2018 in Central America (9.4%), since except Panama and Honduras, the Central American countries received less Foreign Direct Investment (FDI) than in 2017, explains the report "Foreign Direct Investment in Latin America and the Caribbean 2019", produced by the Economic Commission for Latin America and the Caribbean (ECLAC).
The stagnation of the refinery project could be the reason for China's loss of interest in Costa Rica, after having stopped the disbursement of a $24 million "freebie", the purchase of $1 billion worth of Costa Rican bonds, the development of an industrial pole, and the extension of a road.
EDITORIAL
The diplomatic shift from Costa Rica which privileged mainland China over Taiwan - in contrast to all of its Central American neighbors- held the promise of an injection of Chinese investment and development in the country, in public infrastructure, energy, and manufacturing centers.
Approval of the investment protection agreement between the two countries would facilitate installation in the country of 18 Chinese companies who have shown interest in setting up here.
The delay in approving the law approving the agreement for the promotion and protection of investments between China and Costa Rica was the main reason for the non-realization of the plans of six companies that intended to invest in the country, according to Minister of Foreign Trade Alexander Mora. These companies are part of an initial list of eighteen Chinese companies who have been in negotiations for more than a year.
Following a visit by the President of Costa Rica to China, an announcement has been made that priority will be given in the Legislature to the Bill on Protection of Investments between the two countries.
This bill seeks the promotion and protection of investments between China and Costa Rica, through a legal framework governing any disputes which may arise between the two nations.
In the absence of concrete actions by the state, companies in the province of Limón have announced that they will promote economic development in the area using foreign investment.
In order to generate more projects to develop economic activity in the province of Limón, employers in the area are calling for foreign investors who have an affinity with the region.