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.
The reported drop in investment in the tourism sector explains part of the 22% drop recorded in Foreign Direct Investment between 2017 and 2018 in Costa Rica.
Figures from the Central Bank of Costa Rica (BCCR) detail that between 2017 and 2018 the flow that reached the country fell by $608 million, from $2,742 million to $2,134 million, equivalent to a decrease of 22%.
The German company, Amoena, reported that it will close its operations in the country, arguing that its main textile suppliers moved their operations to Asia and need to get closer to that market.
The company is a producer of bras, bathing suits and other products for women who have suffered from breast cancer and underwent mastectomies.
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.
With 19% endemic poverty, 10% open unemployment and 40% informal employment, and some of the highest electricity rates in the region, Costa Rica is opposed to $1 billion in clean energy investments.
EDITORIAL
By Jorge Cobas González
Meanwhile, the bureaucracy of state-owned companies continues to prescribe first-world remuneration, and continues to protect its privileges following ECLAC development concepts from the middle of the last century, which are utterly out of place today.Because Costa Rica does not have the investment capacity or know-how necessary for the development of latest generation renewable energy projects, even though it has all of the necessary primary conditions: sun, wind, thermal energy.
The U.S firm Communications System has announced the closure of its plant manufacturing Suttle telecommunications equipment in Alajuela, so as to move the operation to Minnesota.
The company has operated the plant manufacturing traditional telephony and telecommunications since 1989.The decision to close the operation, for which it employed 113 people, is due to a reduction in the revenues from the line produced in the country.
A fall in investment flows to the agro-industrial sector accounts for most of the 4.6% decline in foreign investment in the first half of the year, compared to the same period in 2015.
The reduction in investment in the agribusiness sector is the main reason behind the fall of nearly 5% in foreign direct investment in the first six months of the year compared to the same period in 2015.
An invitation has been extended for industrial companies in the country to attend the Industrial Trade IN 16 to be held from 28th to 29th July at the Convention Center Hotel Wyndham Herradura.
From a statement issued by the Chamber of Industries of Costa Rica:
Thursday February 18, 2016. The Chamber of Industries of Costa Rica will today present its new industrial trade fair called Industrial Trade In .16. Thanks to this activity, industrial enterprises in the country, both domestic and foreign, will be able to access, in one place, the most important supply of raw materiales (goods and services) for industrial activities. The activity will be held on 28th and 29th of July at the Convention Center Hotel Wyndham Herradura.
Cities far away from the capital which have free zone regimes, labor and are close to ports, are becoming attractive places for businesses.
The characteristics of the so-called "emerging cities" outside of the greater metropolitan area, are mainly being exploited by multinational companies who want to operate under free zone schemes and near port terminals and areas with good road access. Turrialba, Cartago, and Orotina, Alajuela, are two of the locations identified as potential spots for foreign investment, according to the CINDE.
The Korean textile SAE-A Spinning SRL has started producing yarns and fabrics in the manufacturing plant built in the industrial area of Coris, in Cartago.
Although construction of the new textile plant, which required an investment of $35 million was announced in June 2014, it is just now starting operations.
There has been an increase and there are now 122 international companies which have invested in the operation of 140 shared services in different categories.
Currently the export of computer services, management and other business functions make up 5.8% of Costa Rica's Gross Domestic Product (GDP). In the last 15 years, exports of value-added services increased from 12.1% of total exports to 47.5%, as estimated by the Costa Rican Coalition for Development Initiatives (CINDE).
38% of the colombian companies who have invested in the country are dedicated to services, 28% to industry, 11% to construction and 23% to tourism, commerce or agriculture.
The service, food and manufacturing sectors are generating the most interest among Colombian investors, who in the last ten years have invested about $750 million in Costa Rica. Data from Procolombia added that in the same period, the Central American country has invested just $269 million in Colombia.
It has been reported that 63 foreign companies operate facilities for manufacturing medical supplies and devices in areas such as neuromodulation, dentistry, cardiovascular, orthopedics and endoscopy.
At the end of 2014 exports of medical devices totaled $1.9 billion, ie 19% more than reported in 2013.
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