Costa Rica - Market OverviewCosta Rica - Market Overview
Costa Rica’s stable government, democratic traditions, and commercial promotion efforts have made it a leader in the region for international business and tourism. Costa Rica boasts ports on the Pacific and Caribbean coasts and two international airports, one in the Central Valley serving San Jose metropolitan area and one in Liberia, close to major tourist developments along the Guanacaste coast. Dutch-based APM Terminals is expected to open a port on the Caribbean coast in mid-2018. A major new hydroelectric project “RevenCosta Rica is the oldest continuous democracy in Latin America with moderate economic growth rates (3.2 percent in 2017). The country’s relatively well-educated labor force, focus on English-language instruction, relatively low levels of corruption, geographic proximity, living conditions, and attractive free trade zone incentives also offer strong appeal to exporters and investors. In recent decades, the Costa Rican government has focused on attracting investment from relatively high-tech manufacturers, such as electronics and medical devices, as well as continued development of the dynamic tourism sector.
The current administration of Carlos Alvarado, which began its four-year term on May 8, 2018, belongs to the same political party as the previous administration of Luis Guillermo Solis. The Solis administration’s contributions to Costa Rica’s already-strong business climate included government support for Costa Rica’s continuing export and investment promotion efforts, sustained and concerted effort in furthering Costa Rica’s aspiration to become an OECD member, near-completion of Costa Rica’s major new Atlantic Coast container terminal (due to open in mid-2019), implementation of significant financial-sector laws and regulations against money laundering, and avoidance of major labor unrest.
Current domestic issues include Costa Rica’s persistent fiscal deficit, internal bureaucracy, the high cost of energy, and the state of basic infrastructure. Over the next several years, plans are in place for major upgrades involving rail, ports, airports, highways and water systems. The World Bank’s “Doing Business 2018” ranked Costa Rica 61 out of 190 countries world-wide.
Costa Rica ratified the Central American Free Trade Agreement (CAFTA-DR) with the United States in 2009. This free trade agreement eliminated most of the tariffs for non-agricultural imports and has made both trade and investment in the region more attractive to U.S. companies. The remaining tariffs on virtually all U.S. agricultural products will be eliminated by 2020. CAFTA-DR member countries have further promised increased transparency in customs dealings, anti-corruption measures in government contracting and procurement, and strong legal protections for U.S. investors.
The United States is Costa Rica’s largest trade and investment partner. Approximately 53% of all Foreign Direct Investment, and 40% of all imports are of U.S. origin. There are no restrictions on capital flows in or out of Costa Rica nor on portfolio investment in publicly traded companies, but companies are subject to local taxes. Foreigners can own property with no title restrictions, although special care must be taken to comply with laws governing coastal areas. tazon” opened in 2016. Costa Rica has a network of free trade zones throughout the country, and the number of international companies investing in Costa Rica continues to increase.
The United States remains Costa Rica’s largest trading partner and Costa Rica’s largest foreign direct investor. In 2016, the U.S. had a US$1.6 billion trade surplus with Costa RicaForeign direct investment in Costa Rica reached US$2.85 billion in 2015. Nearly 53% of that investment came from the United States. Costa Rica ratified the Central American Free Trade Agreement (CAFTA-DR) with the U.S. in 2009. This free trade agreement eliminated most of the tariffs for non-agricultural imports immediately and has made both trade and investment in the region more attractive to U.S. companies. The Costa Rican labor force is relatively well-educated compared to other countries in Central America. The country claims a literacy rate of 97-98 percent, and English is widely spoken particularly among the young and in Costa Rica’s tourism industry.
In recent years due to rising government debt, the major credit rating agencies – Standard & Poor’s, Moody’s and Fitch - have downgraded Costa Rica’s risk ratings. The country is currently debating major fiscal reform legislation to cut the large budget deficits that cause the burgeoning debt. Costa Rica announced its intention to become an OECD member in 2013 and since then has been actively working with the OECD toward accession. In 2015, Costa Rica released its roadmap to accession and is currently working with over 20 OECD committees to adopt policy changes that will bring Costa Rica’s practices and laws into compliance with the OECD. Costa Rica has taken an important step on the road to OECD membership by completing the process to become a member of the OECD Anti-Bribery Convention. Costa Rica will become the 43rd Party to the OECD Anti-Bribery Convention on July 2017, 60 days after the deposit of its instrument of accession.Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Costa Rica Trade Development and Promotion