Costa Rica will reach a record figure in terms of foreign direct investment this year, going from $3.788 billion in 2023 to $4.5 billion by the end of this year, according to data from the Central Bank.This will position it as the best in Latin America in this section, as in 2023; it would also be third in the world.
The recovery after the pandemic, the fact that the United States is looking for more manufacturing companies in the region due to geopolitical problems, as well as the structure of foreign investment dedicated more to manufacturing, medical devices and innovation, benefit the country as a niche market.
Another of the strengths is the quality of human talent and the business climate
“Costa Rica, Panama and the Dominican Republic are the countries that have the most opportunities to attract investment, because many companies learned after the pandemic that there is a logistical risk associated with putting all their eggs in one basket, physically very far away. It was learned that trade wars and geopolitical tensions have a cost in concentrating operations in autocratic countries,” said Alberto Trejos, former Minister of Foreign Trade.
The number of projects grew eight times last year compared to production growth, according to the fDi Intelligence magazine of the Greenfield FDI Performance Index, closing with $3.788 billion in FDI flows.
This is an increase of 20% compared to 2022, and this occurred despite the fact that the government of Rodrigo Chaves decided to change its investment strategy, removing the Coalition of Development Initiatives (Cinde) from the equation and transferring all resources and actions to the Foreign Trade Promoter.
“Costa Rica’s value proposition makes it an attractive destination for investors, standing out for factors such as specialized human talent, competitive incentives, legal security, sustainability and successful trade agreements,” said Manuel Tovar, Minister of Foreign Trade.
This good international news has led businessmen, academics and economists to call for the benefits of investment to be transferred to less developed areas and for the investment policy that has been consolidated for 20 years to be strengthened.
Threat
However, not everything is rosy.The collection of the global minimum tax for all multinational companies with revenues of at least 750 million euros poses a threat scenario,major challenges and unfair competition for Costa Rica’s efforts to attract and retain foreign investment, and with it, thousands of well-paid jobs.
This is a 15% tax obligation that all companies with investments in OECD and G-20 countries that exceed this threshold in at least two of the last four fiscal periods will have to pay.
For the calculation, income is accounted for in various jurisdictions and not only in the country where they are operating.In the case of Costa Rica, the impact would not be extensive, since the large foreign business park located in free zones generates much smaller profits.
However, it does pose a scenario in which the country will have to compete with other jurisdictions where the tax will not be charged, which generates a kind of unfair competition, said Marco Vinicio Ruiz, former Minister of Commerce.
A booming activity
Maintaining the status quo will depend on the policies implemented in less developed areas and on how the playing field between free zone companies and the definitive regime is leveled.
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