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20 years

21 percent drop in foreign investment has “nothing to do with government policy” – President Solis

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June 2nd, 2015 (InsideCostaRica.com) President Luis Guillermo Solis told reporters on Monday that the 21% drop in foreign direct investment (FDI) in Costa Rica recorded in 2014 has “nothing to do” with policies of his administration but is instead part of a “general contraction in investment in Latin America.”

 

But while data released by the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) would support the president’s statement in regards to Latin America as a whole (the report states that FDI in Latin America fell by 16% during the same period), the same report notes that Costa Rica was the only country in Central America to witness a slowdown in FDI.

 

President Solis recently concluded a 10-day U.S. mission to attract fresh investment in May, and departs for Europe on Wednesday with the same goal.

 

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  • Yeims

    Of course not. Business enterprises coming here want to pay as much as possible and wade through as much chickenshit as possible too. Instead of feeling any pressure from the government, they appreciate most of the policies mandated by the government, especially those that make workers more unproductive. And after becoming well established here, they also appreciate the stability of government, knowing that at no time will some deputy will present some other insane law or modify the present laws they must follow.

  • disgsted

    Really nothing to do with government policy.. Remember David Cement Company, Mabe Company in Heredia, and Jack’s company how the higher cost of doing things here drove them out. Not to mention Intel and HP relocating to Vietnam and various call center in Global park. Small business get visits from government officials looking for a bribe or finding some fault with the business and threaten to shut it down. GEEZ!

    Pres. Solis I am not buying this report one bit. Now I see your taking another 10 day trip costing millions of Costarricense people hard earned money for this junket. Just like Lady Laura did and Oscar and Jose’ former Presidents. All cut from the same cloth.

    Meantime back here businesses are closing your bonds are rated as junk bonds. Heaven knows why the Colon still 525 to the US dollar. Something going to give soon I suspect.

    • prdatki

      Very well written and correct !

      • Ben

        Well written

    • http://paradisesocial.wordpress.com/ Mike Poynton

      You hit the nail on the head!

  • prdatki

    Mr Solis are you as dumb and crooked as Donna Chiwawa?The Government employees are corrupt expect bribes, close business down if they do not get it, the Caja is junk,but you are required to belong, the Electricity is too expensive and it Heads are paid way too much. If you need to know more ,we can have lunch,that is if your not traveling at the countries expense!

    • Ben

      Solis is not dum he is lazy and blind and scared to piss off lazy public sector workers.

  • Ginger Morris

    Going back to a recent post. The whole Government should be up for indictment. Corruption is keeping business out of Costa Rica… ..Duh..

  • danny

    it is all got to do with the goverment policy

    the conditions in costa rica is no longer favorable for invesments

    they are making it very difficult to do business

    maney closing they can not make it

    maney leaving they are done with stories

    Pres. Solisthe answer is in costa rica by your government

    help the people grow stop giving all employers and company’s hard time
    and new taxs

    reduce ice bills make incentives for business

  • richard schlinder

    I am not defending C.R. and all it’s corruption. Everyone is aware of it but ,being an international investor,there are many international companies that are ,in fact, shutting down operations in foreign countries.Banks especially.CAFTA and NAFTA have disrupted international laws and operations.The other thing that really gets my goat is , there are central and south american countries that have promoted foreign ExPats radically .Lower residence regulations,lower tax costs,giving huge investment incentives to people that relocate.Even So.Africa is giving incentives to move there. Costa Rica is totally oblivious to these promotions and in fact have gone the other way with their immigration laws.Now ,the tourism dept.wants $15 million subsidy to keep it’s doors open. How much of that is graph.???????

  • Ken Morris

    I see the usual comments to the effect that CR is a bad place for foreigners to do business and somehow Solís is to blame for this, but as usual I see only one specific reason mentioned for why CR is a lousy place for foreigners to do business: High electricity rates. Oh brother, is the solution then for the taxpayers to subsidize the electricity rates for foreign businesses? Gee, I’m sure they’d like that–along with their tax-free zones that are already subsidized by Tico taxpayers.

    Indirectly, I see from disgusted that the solution is for CR to lower its wage rates to those in Vietnam. Now this is a splendid idea. Why pay workers $100 a week when the global labor market can only justify $50 a week? This is what we want: Lower paid Ticos (taxed more to subsidize industries’ lower electricity rates) in the name of economic development!

    Of course, there are the usual complaints about government waste (including, strangely, the waste of the president’s trips to drum up foreign investments). So Jacks is moving its operations to lower-wage Nicaragua and Intel to lower-wage Vietnam because Solís is spending too much on airfare?

    Oh, and while he comes on strong, Richard Schlinder seems to end up arguing that CR ought to compete with Africa to attract the glorious expats who pump their SS checks into the bars and restaurants. Honestly, is this really the best way for CR to proceed?

    Then there are the rumored bribes (evidence?) that small businesses supposedly have to pay to government officials. Hasn’t anyone noticed (or do you just not believe it) that the cornerstone of the Solís administration is to nix corruption?

    Come on folks. If CR has to compete with Nicaragua, Vietnam, and Africa–plus subsidize electricity rates–it ain’t going to win anything worth winning. I don’t think you’re diagnosing the problems correctly, or therefore offering any kind of solution.

    • prdatki

      Jacks is also moving to Florida,I would believe they will pay more then what is paid to Vietnam.

      • Ken Morris

        Jacks is moving to Nicaragua, El Salvador, and the US.

        We would have to ask the management (and believe its answer) but generally the trade-off is between labor costs and mechanization that replaces labor. Since there’s no way Jacks can run a labor-intensive manufacturing operation in the US more cheaply than it can in CR, we have to assume that it is planning to invest in more mechanization there.

        Also, companies like to be close to their customers, saves costs. Odds are Jacks sees a market niche to exploit in the US.

        Of course, the electricity rates to run the machinery are surely cheaper in Florida. The US fights lots of wars to ensure that.

        Sorry, but it’s ridiculous to argue that all else being equal it’s cheaper to manufacture in the US.

    • mhogan

      Ease of Doing Business studies need to be ignored then, according to you? Costa Rica subsidizes with its Free Trade Zones, established to draw in foreign investment to provide employment to TICOS, which I think is a nutty idea anyway but only shows that giving away goodies to international interests is a main way Costa Rica is able to attract almost any business. Pretty lame and desperate.

      • Ken Morris

        No, I don’t think ease of doing business studies ought to be ignored. But as I understand them, they highlight the red tape businesses have to go through. This is different from tax subsidies and cutting labor costs.

        Ideally, the government should cut the red tape (which Solís is at least attempting to do with his one-stop-shopping government storefront for businesses–although we’ll have to wait and see how effective this is).

        Besides plunder, which has been used quite successfully historically, the absolute only way for a country to develop economically is to make things that people in other countries want to buy. This Costa Rica does not do. Even its machetes are made elsewhere.

        Agriculture exports (coffee, bananas, and pineapples) won’t do it, because Ticos then have to import finished goods, and will take a loss. Tourism won’t do it, since all the tourists are doing is buying land and low-level services. The Ticos never get ahead this way. And FDI won’t do it, since the only reason the multinationals arrive is the low-paid workforce, and then they take the profits home.

        Costa Rica needs to make something that it can sell, and something different than potato chips. Too many others already make these. It needs to make something new, something it can patent. Strangely, the population is reasonably well educated and the universities are the best in Central America outside of Mexico, yet nobody thinks about doing anything besides working an office job in a foreign-owned firm or opening another hotel.

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