Doing Business in Central America Podcast

Adrian Owen
Managing Director-Mid Americas
TMF Group
[email protected]


The Central American Group: Hello. Welcome to the most recent episode of the Central American Group podcast. In these recordings, we speak with individuals who have expertise in Central America and, often, the Latin American region as a whole. Today, we have with us Adrian Owen. Adrian is affiliated with the TMF Group, which publishes the Global Business Complexity Index (GBCI) annually. Welcome, Adrian. Would you please tell us a bit about yourself and the organization that you represent?

Adrian Owen: Yes. Good morning, Steve. Thanks very much for the opportunity today to talk about Central America. So, my name is Adrian Owen. I’m the managing director of a region we internally refer to as Mid-America, which encompasses Central America, the Dominican Republic, and Jamaica. The company I work for, TMF Group, is a leading provider of critical administrative services. We publish the Global Business Complexity Index each year and help clients invest and operate safely around the world. We have more than 12,000 colleagues in over 125 offices worldwide, and our locations span 92% of the world’s GDP and 95% of foreign direct investment inflows. We position ourselves, Steve, as a key part of our clients’ governance, providing the accounting, tax, payroll, fund administration, and legal entity management services essential to their success, particularly when they enter new jurisdictions.

We ensure rules are followed, reputation is protected, and operational compliance is maintained. We work with most Fortune Global 500, FTSE 100, and top 300 private equity firms. Concretely, in Mid-America, I’m based in Costa Rica and oversee operations in the eight countries I mentioned.

The Central American Group: Well, that’s very interesting, and it must be quite a challenge for you. One thing I’ve noticed appearing on the Internet, along with some related stories, is the TMF Global Business Complexity Index. First of all, could you tell us what it is, how it’s compiled, and what its ultimate purpose and importance are?

Adrian Owen: Yeah, sure, Steve. The Global Business Complexity Index (GBCI) is a key piece of research that helps those navigating rules and regulations cut through layers of complexity, enabling them to conduct business effectively and successfully across borders. It’s TMF Group’s flagship annual report. It provides a detailed analysis of the complexities associated with establishing, operating, and expanding businesses across multiple world regions. It includes a global ranking of 79 jurisdictions based on the complexity of their business environments. The GBCI is built, Steve, from over 290 data points that analyze complexity across three key areas, including rules, regulations, and penalties around business operations, accounting and tax, human resources, and payroll. The index ranks jurisdictions from most to least complex, identifying the root causes of complexity, including bureaucracy, frequent regulatory changes, and a lack of digital infrastructure. Beyond the rankings, the report offers valuable insights to customers on global trends affecting international business operations, including rising digitalization, shifts in tax policy, and changes in compliance obligations. For companies looking to expand into new markets, it’s an essential guide for assessing operational risk and planning effectively.

The Central American Group: Well, given that you look most specifically at your role in Central American countries, in recent years, what has been the trend in levels of complexity in that region compared to competitors that are located in Latin America as a whole?

Adrian Owen: Yes. I would say that Central American countries, Steve, have made remarkable progress in reducing business complexity, especially when compared to some of their Latin American neighbors. In the most recent edition of the Global Business Complexity Index 2024, countries such as Costa Rica, El Salvador, Honduras, and Nicaragua have emerged as some of the least complex jurisdictions in Latin America. Indeed, most Central American nations now fall into what I would say is medium to low complexity globally. One reason for this, I would say, is that they’re relatively straightforward human resource and payroll processes, which are easier to manage than in many other countries. Meanwhile, accounting, tax, and global entity management remain more intricate but are improving thanks to digitalization and regulatory reforms. Compared to other Latin American countries, some of which I see continue to struggle with bureaucratic inefficiencies and frequent legislative changes, Central America tends to stand out for its growing stability and business-friendly reforms. Even compared to some more developed markets, which tend to be less complex overall, these countries are proving competitive by offering simpler, faster administrative procedures in key areas.

The Central American Group: According to the Global Business Complexity Index, what factors have made Central American countries less complex over time?

Adrian Owen: I see several structural and policy-driven factors contributing to reducing complexity across the region, Steve. For example, the government has introduced targeted financial support in El Salvador, including tax incentives and infrastructure investments to support logistics and trade. The National Trade Facilitation Strategy aims to modernize and streamline customer procedures, demonstrating a clear commitment to easing international trade and responding to the demands of the global supply chain. Panama, for example, has eliminated the requirement for a municipal taxpayer number, simplifying tax returns for corporate income tax. This is an example of how small reforms can have a significant impact. In Guatemala, digital advancements in invoicing and the registration of employment contracts help simplify operations for foreign businesses seeking to establish a presence in the country. This significantly reduces complexity for all parties involved. Let’s not forget Nicaragua. Nicaragua’s free trade zones are another positive factor, particularly for manufacturing and mining companies, which helps attract investment. Overall, I would say that these efforts, combined, demonstrate a regional commitment to reducing administrative burdens and increasing transparency. These factors are crucial for enhancing investor confidence, streamlining operations, attracting new investment, and achieving a more competitive position on the Global Business Complexity Index.

The Central American Group: As you are aware, the Central American Group has operations in Costa Rica and El Salvador, where the company’s free zones are situated. What can you tell us about the ranking of both countries in the most recent complexity analysis? Can you provide us with some insight into the factors that influenced their scores?

Adrian Owen: Sure. First of all, it’s a privilege to collaborate with the Central American group. In 2024, the Global Business Complexity Index ranked Costa Rica 29th and El Salvador 30th among the 79 least complex jurisdictions. El Salvador’s lower and continually improving complexity score, I would say, reflects advancements in its human resources and payroll systems, a more stable regulatory environment, and a wave of digital innovation. The country has introduced online platforms for identity documents and commercial registration within 24 hours, as well as tools like MITui and Digigob to manage official processes. It also benefits from enhanced security and political cohesion, which have improved investor sentiment in the country. Costa Rica, similarly, stands out for its robust free trade zone regime, which has been attracting diverse financial and foreign investment for many years. As a member of the OECD, Costa Rica adheres to high standards of transparency and governance, which can be demanding to comply with but reassuring for international investors. Global entity management, the constitution, and annual legal compliance of companies is a bit of a mixed bag, to be honest, Steve. El Salvador has simplified many procedures.

It’s the centralization of authority, but potential geopolitical risk can create uncertainty. Costa Rica, on the other hand, is more decentralized and predictable in its processes.

The Central American Group: Some people find it surprising that, according to the Global Business Complexity Index, Central American countries are not more complex for new entrants than other destinations, such as those in Europe or Asia. What are some of the most complicated countries to deal with, and why are they ranked that way?

Adrian Owen: Well, it’s funny. It’s a common misconception that smaller or developing countries are automatically more complex. Some of the most complex jurisdictions in the Global Business Complexity Index are developed economies such as Mexico, China, and Greece. What drives complexity in these cases is usually a combination of frequent regulatory change and high levels of bureaucracy. In Greece, for example, localized processes and a heavy reliance on paper-based systems increased operational complexity. In Mexico, federal and state-level regulations can conflict or change quickly, creating what every business dislikes: uncertainty. China faces similar issues, especially regarding foreign investment approvals and constantly evolving data regulations. I would say that these examples, and I’d also include France in that, show that complexity is not always about infrastructure or wealth. It’s often about how regulations are updated, enforced, and how easily businesses can access the information and systems that need to stay compliant.

The Central American Group: When will the next TMF Global Business Complexity Index be released? And why does TMMF do this every year?

Adrian Owen: The 12th edition of the Global Business Complexity Index is set for release in the last week of May, early June this year. So, in a few weeks. We publish the report annually because global regulatory environments are constantly evolving. What was simple last year may become complex this year due to new tax laws, political shifts, or technological advancements. By closely tracking these changes annually through our experts in each country, we can provide businesses with a consistent, up-to-date resource they can rely on for international planning and risk assessment. But let’s also be clear here, it’s not just about the rankings. It’s also about helping organizations understand how and why jurisdictions are changing so they can prepare, adapt, and make informed strategic decisions.

The Central American Group: Once this comes out, how can listeners get access to it?

Adrian Owen: Sure. The full report will be available on our website, www.tmf-group.com. From there, the listeners can download complete GBI reports, explore interactive data visualizations, and find detailed country profiles.

The Central American Group: What can we expect from the perspective of the region’s business landscape in the coming years? What do you see happening?

Adrian Owen: So, what we’ve seen and continue to see, I’d say, is continued positive momentum in Central America. Despite the potential for regulatory changes, the business community remains optimistic about future investment. We anticipate further digitalization, streamlined registration processes, and enhanced clarity in tax and HR compliance. Countries in the region, I would say, are also likely to define their approaches to planning timelines, penalties, and technology use to enhance administrative efficiency. Challenges remain, of course, Steve, such as labor market volatility, geopolitical risk, and tariffs. Central America’s trajectory indicates a shift towards greater international competitiveness, enhanced investor confidence, and a supportive environment for foreign businesses, particularly in the technology, tourism, and manufacturing sectors.

The Central American Group: It’s been an interesting discussion about your company and the TMF Global Complexity Index. One frequent occurrence is that after listening to these podcasts, individuals have questions. We aim to provide a means by which individuals with questions can directly contact our guests. Adrian, is there a way that listeners with questions can get in contact with you?

Adrian Owen: Absolutely. And I would love the opportunity to engage with your listeners, Steve. I’ll make my email and phone number available. My email is [email protected], and my telephone number is +506 6026-4124.

We’ll have all that information in the transcript section of the podcast page. Additionally, Adrian, do you have a LinkedIn profile that we can share with you? Yes, of course.

Adrian Owen: Yes, feel free. I can provide that to you after this recording, Steve.

 The Central American Group: This has been a very educational half hour or so. Thank you for making yourself available to speak on these issues. I wish you great luck, both personally and for TMF Global, in the years to come.

Adrian Owen: Thanks very much, Steve, it’s been a privilege.

The Central American Group: Thank you. Have a great day.

Adrian Owen: Thank you. Goodbye.

Please use this form to contact us and we will respond as soon as possible:

The post A discussion on the TMF Group’s Global Business Complexity Index with Adrian Owen appeared first on The Central American Group.

Sergio Vargas
General Manager
Ascential Medical and Life Sciences
[email protected]

The Central American Group: Hello. Welcome to this episode of the Central American Group podcast. Because of our operations in Central America, mainly in Costa Rica and El Salvador, we can talk to some very interesting people. Today, our guest is Sergio Vargas. Sergio is the general manager of Ascential Medical and Life Sciences. Sergio, how are you today?

Sergio Vargas: Hi, Steven. Good morning. I’m doing well. Thank you for having me.

The Central American Group: Can you tell us a little bit about yourself and your company?

Sergio Vargas: My name is Sergio Vargas, and I’m the general manager of Ascential Medical and Life Sciences. I’ve been with the company for almost 10 years. I moved to Costa Rica a year ago to help the company with essential Latin America.

The Central American Group: Where were you before that, Sergio?

Sergio Vargas: I’ve been in a different place. I started in California almost 10 years ago. I stayed in California for eight years, then moved to our main facility in Minnesota.

The Central American Group: How many years have you been with Ascential?

Sergio Vargas: Almost ten. It will be 10 years this year.

The Central American Group: Okay. Well, let’s ask the first question then. What are the products that Ascential Medical and Life Sciences manufactures?

Sergio Vargas: We build custom automation solutions for diverse industries but focus mainly on the medical industry.

The Central American Group: You focus mainly on the medical industry, but do your products serve any other industries as well?

Sergio Vargas: Yes. They can help almost every industry that needs automation, such as electronics, auto space, and food and beverage.

The Central American Group: Is Ascential Medical and Life Sciences a manufacturer of dedicated products, or do you work as a subcontract manufacturer for other companies?

Sergio Vargas: Right now, we don’t have our product. We specialize in helping our customers develop their automation solutions. So, if a customer has a, we help them improve their processes, quality, and production.

The Central American Group: Besides manufacturing products for these companies, does your company provide engineering services to help them design products that fit their needs?

Sergio Vargas: Correct. That being said, we have engineering services. If a customer has a production line that needs automation, our engineering team helps them select the right solution to automate their process.

The Central American Group: Okay. Given that you have many facilities, and again, you can mention where the facilities are that Ascential Medical and Life Sciences has.

Sergio Vargas: Again, for automation, our central location is in Minnesota, but we also have locations in Ireland, Singapore, and San Diego, California

The Central American Group: Besides those locations, what led your company to set up in Costa Rica?

Sergio Vargas: As you know, Costa Rica has a prominent medical device hub. It was a no-brainer for us to be here next to our partners to help them with their needs.

The Central American Group: In addition to your other manufacturing locations, what do you see as being the primary advantageous reasons for being in Costa Rica?

Sergio Vargas: One of the main reasons for being in Costa Rica is the high-skill workforce. Being here in Costa Rica, I was surprised by the highly skilled talent, and the young team I have here, my engineering team, has stepped up. They are talented. Also, the tax advantages have been, for example, in the Green Park free zone, where the tax incentive that the government provides is a huge advantage for companies like Ascential Medical and Life Sciences.

The Central American Group: Yes, and if you’re a listener, we have podcasts on a free zone regime in Costa Rica, and you can learn about that by listening to some of our other podcasts. But let’s go to the next question. What challenges do you face in Costa Rica manufacturing, and how do you address them?

Sergio Vargas: As a high-tech company, sometimes we are not able to find the right components locally. We work with international and local suppliers to try to accommodate our needs. We have an ERP system that allows us to work with our different facilities to try to find the right components at the right time.

The Central American Group: It’s always a challenge to find individuals in the labor force who can fill companies’ skill requirements. So, what I’d like to know is, does Green Park provide any assistance to you in finding persons to fill the jobs that you need to have filled?

Sergio Vargas: Yes. Once we identify a position that we need to fill and have a job description, we usually send an email to the Green Park Free Zone. Green Park helps us by publishing job descriptions on its website or on its social media. Green Park also helps us receive applications, and that’s been working really, really well for us.

The Central American Group: Now, one of the concerns that many companies have everywhere is workforce availability. Do you find that when you request these positions, you get the number of candidates that allow you to make a choice that is beneficial for your business?

Sergio Vargas: We do. Costa Rica has a really great technical workforce, so we have not had any issues finding the right talent.

The Central American Group: When you find talent, what’s your approach to developing it and training it? I know this is probably of great importance to you because of the technology you use and the rapid changes in that technology these days.

Sergio Vargas: We are constantly looking for the best training for our engineers. One of our advantages is that being a global company, our engineers work together with other partners around the world. The knowledge transfer is really beneficial for our locals. So, in addition to the workforce, another thing that’s very important is managing the supply chain.

The Central American Group: What factors influence Ascential’s choice of suppliers in Costa Rica or internationally?

Sergio Vargas: We follow ISO 9001 standards. We go through a qualification process to select a provider, which is the main reason we choose them. Unfortunately, if they don’t qualify, we cannot use them.

The Central American Group: One of the things that happens when folks listen to our podcast is specific questions they have. Sometimes, they direct those questions to me. But what I like to do is create a way in which they can communicate directly with the people that we host on these podcasts. So, if somebody has a question about Ascential, how can they contact you?

Sergio Vargas: They can email me at [email protected] or follow me on my social media or LinkedIn.

The Central American Group: Okay, so we’ll put a link to your LinkedIn page and your company in the transcript section of the podcast on the web page. We’ll also include your email address so that people with questions can contact you directly. Is that okay?

Sergio Vargas: That’s perfect. Thank you so much for that.

The Central American Group: We want to thank you for joining us today. We wish you luck in Costa Rica and in all your other endeavors. Thank you very much for being with us this morning. We appreciate your presence.

Sergio Vargas: Thank you.

The Central American Group: Hello. Welcome to this episode of the Central American Group podcast. Because of our operations in Central America, mainly in Costa Rica and El Salvador, we have the ability to talk to some very interesting people. Today, our guest is Sergio Vargas. Sergio is the general manager of Ascential Medical and Life Sciences. Sergio, how are you today?

Sergio Vargas: Hi, Steven. Good morning. I’m doing well. Thank you for having me.

The Central American Group: Can you tell us a little bit about yourself and your company?

Sergio Vargas: My name is Sergio Vargas, and I’m the general manager of Ascential Medical and Life Sciences. I’ve been with the company for almost 10 years. I moved to Costa Rica a year ago to help the company with essential Latin America.

The Central American Group: Where were you before that, Sergio?

Sergio Vargas: I’ve been in a different place. I started in California almost 10 years ago. I stayed in California for eight years, then moved to our main facility in Minnesota.

The Central American Group: How many years have you been with Acsential?

Sergio Vargas: Almost ten. It will be 10 years this year.

The Central American Group: Okay. Well, let’s ask the first question then. What are the products that Ascential Medical and Life Sciences manufactures?

Sergio Vargas: We build custom automation solutions for diverse industries but focus mainly on the medical industry.

The Central American Group: You focus mainly on the medical industry, but do your products serve any other industries as well?

Sergio Vargas: Yes. They can help almost every industry that needs automation, such as electronics, automotive, and food and beverage.

The Central American Group: Is Ascential Medical and Life Sciences a manufacturer of dedicated products, or do you work as a subcontract manufacturer for other companies?

Sergio Vargas: Right now, we don’t have our own product. We specialize in helping our customers develop their own automation solutions. So, if a customer has a, we help them improve their processes, quality, and production.

The Central American Group: In addition to manufacturing products for these companies, does your company provide engineering services to help them design products that fit their needs?

Sergio Vargas: Correct. That being said, we have engineering services. If a customer has a production line that needs automation, our engineering team helps them select the right solution to automate their process.

The Central American Group: Okay. Given that you have many facilities, and again, you can mention where the facilities are that Ascential Medical and Life Sciences has.

Sergio Vargas: Again, for automation, our central location is in Minnesota, but we also have locations in Ireland, Singapore, and San Diego, California

The Central American Group: Besides those locations, what led your company to choose to set up in Costa Rica?

Sergio Vargas: As you know, Costa Rica has a prominent medical device hub. It was a no-brainer for us to be here next to our partners to help them with their needs.

The Central American Group: In addition, or in comparison to your other manufacturing locations, what do you see as being the primary advantageous reasons for being in Costa Rica?

Sergio Vargas: One of the main reasons for being in Costa Rica is the highly skilled workforce. I was surprised by the talent here, and the young team I have here, my engineering team, has stepped up. They are talented. Also, the tax advantages have been, for example, in the Green Park Free Zone, where the tax incentive that the government provides is a huge advantage for companies like Ascential Medical and Life Sciences.

The Central American Group: Yes, and if you’re a listener, we have podcasts on a free zone regime in Costa Rica, and you can learn about that by listening to some of our other podcasts. But let’s go to the next question. What challenges do you face in Costa Rica manufacturing, and how do you address them

Sergio Vargas: As a high-tech company, sometimes we are not able to find the right components locally. We work with international and local suppliers to try to accommodate our needs. We have an ERP system that allows us to work with our different facilities to try to find the right components at the right time.

The Central American Group: It’s always a challenge to find individuals in the labor force who can fill companies’ skill requirements. So, what I’d like to know is, does Green Park provide any assistance to you in finding persons to fill the jobs that you need to have filled?

Sergio Vargas: Yes. Once we identify a position that we need to fill and have a job description, we usually send an email to the Green Park Free Zone. Green Park helps us by publishing job descriptions on its website or on its social media. Green Park also helps us receive applications, and that’s been working really, really well for us.

The Central American Group: Now, one of the concerns that many companies have everywhere is workforce availability. Do you find that when you request these positions, you get the number of candidates that allow you to make a choice that is beneficial for your business?

Sergio Vargas: We do. Costa Rica has a really great technical workforce, so we have not had any issues finding the right talent.

The Central American Group: When you find talent, what’s your approach to developing it and training it? I know this is probably of great importance to you because of the technology you use and the rapid changes in that technology these days.

Sergio Vargas: We are constantly looking for the best training for our engineers. One of our advantages is that being a global company, our engineers work together with other partners around the world. The knowledge transfer is really beneficial for our locals. So, in addition to the workforce, another thing that’s very important is managing the supply chain.

The Central American Group: What factors influence Ascential’s choice of suppliers in Costa Rica or internationally?

Sergio Vargas: We follow ISO 9001 standards. We go through a qualification process to select a provider, so that’s the main reason we choose a provider. Unfortunately, if they don’t qualify, we cannot use that provider.

The Central American Group: One of the things that happens when folks listen to our podcast is that specific questions come up that they have. Sometimes, they direct those questions to me. But what I like to do is create a way in which they can communicate directly with the people that we host on these podcasts. So, if somebody has a question about Ascential, how can they contact you?

Sergio Vargas: They can email me at [email protected] or follow me on my social media or LinkedIn.

The Central American Group: Okay, so we’ll put a link to your LinkedIn page and your company in the transcript section of the podcast on the web page. We’ll also include your email address so that people with questions can contact you directly. Is that okay?
Sergio Vargas: That’s perfect. Thank you so much for that

The Central American Group: We want to thank you for joining us today. We wish you luck in Costa Rica and in all your other Thank you very much for being with us this morning. We very much appreciate your presence.

Sergio Vargas: Thank you.

Please use this form to contact us and we will respond as soon as possible:

The post Manufacturing in Costa Rica with Ascential Medical and Life Sciences appeared first on The Central American Group.

Pilar Madrigal
Director of Investment Advisory
CINDE
[email protected]

The Central American Group: Hello. Today, Pilar Madrigal is with us. She is the Director of Investment Advisory at CINDE, a Costa Rica foreign direct investment promotion agency based in San Jose. Pilar, could you please share information about CINDE, investment in Costa Rica, and your role there? How are you today?

Thank you so very much. It’s an honor to be here with you. You are also well-known and recognized, and I’ve followed your trajectory in foreign direct investment. So, I’m pleased to be here with you. I’ve been in various roles with CINDE, a private nonprofit organization with a 40-year history of promoting Costa Rica foreign direct investment for the past 26 years, always focused on promotion, strategy, etc. CINDE in Costa Rica, as you know, has been a key player in attracting foreign direct investment, helping many companies set up operations and invest in Costa Rica through the years.

The Central American Group: Costa Rica’s journey in attracting FDI has been fascinating, marked by significant changes in its economic model. Pilar, could you shed some light on the evolution of Costa Rica foreign direct investment promotion over the years?

Pilar Madrigal: Yes. I see this in three periods. The beginning was between the ’60s and the ’80s. Costa Rica adopted an import substitution industrialization model like many other Latin American countries. It was aimed to reduce dependency on foreign goods and promote domestic production. The idea was to foster industrial growth for the country’s local companies and attract foreign companies exporting from Costa Rica. By the early ’80s, we faced an economic crisis in Costa Rica foreign direct investment promotion for different reasons. One of the sectors that was heavily affected was agricultural goods like coffee and bananas. At that point, we started implementing some economic reforms and considering positioning Costa Rica in global markets. That was created in the early ’80s, and we started focusing on exports for Costa Rica foreign direct investment promotion. It was then that a critical law was made. It’s called the Free Trade Zone law. The idea was to begin promoting exports by creating policies for domestic companies to export with incentives and to attract foreign-based companies and have them export. That was in between the ’80s and the ’90s. It combined local and new companies to promote exports and Costa Rica foreign direct investment.

Now, as of the ’90s, from the ’90s to today, there has been a complete focus on, and it was a significant leap in positioning ourselves as a destination for Cost Rica foreign direct investment. We clearly defined some sectors at that time. The biggest and most well-known case is Intel. I think everybody knows that story. However, we started focusing on attracting high-tech companies in manufacturing and companies in the services industry, primarily in high-value services. Again, we went from an import substitution program to an export promotion of local and foreign companies. Then, in the last decades, we have been solely attracted by foreign direct investment.

The Central American Group: You’ve gone through a period where you were trying to substitute imports. Many Latin American countries have tried that and gone through a period of doing that, and that isn’t the optimal way of engendering economic development. Recently, you’ve successfully attracted one industry to Costa Rica foreign direct investment. Can you tell us what that is?

Pilar Madrigal: Yes. This is just for the definition of everybody who listens, and I’m sure everybody knows, but just for clarification. We see three main pillars of Costa Rica foreign direct investment or three types of FDI. One is resource-seeking FDI, which is when a company seeks to invest in a location because of its natural resources. That’s typically prevalent in the energy and mining or sometimes in the agri-food industry. That’s resource-seeking. They’re looking at what resources are available in that country. The second one is market seeking. That is a company seeking to invest due to the market size and the growth potential within that market size. There is a high correlation between FDI and the growth of GDP within a country and the size of the country. The third one is efficiency-seeking. That’s when a company is looking to invest in a location because of better production processes, efficiencies, lower costs, etc. We are at CINDE in Costa Rica, and that’s where we are focusing on efficiency-seeking. Why? We’re a small market. Market-seeking, it’s not something that companies are looking for. We don’t support mining, and there are not necessarily a lot of incentives for resources in this area of Costa Rica foreign direct investment promotion.

We focused on efficiency-seeking, and that’s been how we attract. We help companies be more efficient, and then they can, in the end, expand their bottom line to be more productive and efficient and have lower-cost options.

The Central American Group: One of the sectors that Costa Rica foreign direct investment is famous for is the medical device cluster developed over the last 30 years. Can you tell us, number one, how was that achieved? Number two, why do you think Costa Rica has become such a popular place for companies involved in these activities?

Pilar Madrigal: Yes. I’ll tell you: It did not start with the med tech industry. As I mentioned, at the very beginning, we started with electronics. There were a couple of entirely pioneering companies. They were pioneers in setting up operations in the electronics industry, even before the free trade zone incentive system was implemented. We piggybacked on that to focus on electronics, and that’s where Intel came from. Now, you know that electronics are correlated to the economy, right? You buy a TV Only if you have the extra income to do that. It is a highly volatile industry. Because we had started to be so successful, we could not let off that growth tendency or that growth trait of attracting Costa Rica foreign direct investment. We said, Well, what sector is one that we know has been stable and sustained growth? After analysis, of course, the med tech industry in general, unfortunately, everyone is getting older. Everybody needs medical tech at some point or another. We started then focusing on that industry. That didn’t mean that we let go of the high-tech. It was, Okay, what other? How can we diversify Costa Rica foreign direct investment to ensure we continue growing?

And so, we started. There was a company already in Costa Rica called Baxter. Everybody knows about Baxter. After that, we started working on bringing other OEMs into the country through more Costa Rica foreign direct investment. So today, we’ve done several OEMs and people from Boston Scientific, like Johnson & Johnson, Abbott, and Edwards Lifesciences. We knew that because it’s such a highly regulated industry, there was an ecosystem of suppliers that were potential candidates to set up operations in the country through Costa Rica foreign direct investment. Then, we did a gap analysis of what we had and didn’t have. Next, we started focusing on creating that ecosystem of the medtech industry. So, the successful story is about how we made that ecosystem through Costa Rica foreign direct investment. That has led to the possibility of these companies, not only more companies coming but also diversification of the products that they are making. So today, we do devices in Costa Rica, from neurovascular to orthopedics, cardio, and endo. We have pharmaceuticals as well, you name it. So, it has been a diversification of the OEMs, suppliers, and contract manufacturers, but also that they were a situation of the type of product they’re exporting.

That has been the secret of our success in Costa Rica foreign direct investment.

The Central American Group: Considering all this activity and the success you’ve had in implementing plans, conducting gap analyses, and working to reduce those gaps, what has been the country’s economic growth result as it relates to Costa Rica foreign direct investment promotion?

Pilar Madrigal: Well, it’s been pretty significant. We’re very proud to say that we have attracted over 420 multinationals to Costa Rica, and they have generated about 190,000 jobs. Again, in terms of Costa Rica foreign direct investment flow has grown at an average annual rate of about 7.8% since 2000. It is a real impact. We’re talking about not only the attraction of these companies and employment but also all the linkages and support this gives to the economy. We’re very proud to showcase those numbers, and we’re continuing to hope this trend moves in a positive direction in the future as well.

The Central American Group: Beyond those considerations, how do you know if your efforts have been efficient? Do you have certain KPIs that you establish and achieve to track Costa Rica foreign direct investment? Could you tell us about that?

Pilar Madrigal: Absolutely. The good thing about CINDE is that we have a business-oriented mentality from the beginning. In any business, you must have KPIs, monitor them, and establish them very clearly from the start. We have a very, I would say, solid and transparent KPI monitoring system that has enabled us to understand how to use our budget better to attract Costa Rica foreign direct investment and be more efficient. It ensures that our budget is invested where it has to be invested. I’ll give you an example. We know, for instance, that in 2022, for every CINDE collaborator, there were 178 new jobs created for Costa Rica. That is almost… It’s 2.75 more than Ireland, which is another great success story. Then we know that each generated job has cost us $155. We track everything within the organization. We have a very sophisticated CRM, and it gives us exactly what strategies have been the best. We use that as a strategy to move into the next year for attracting Costa Rica foreign direct investment; that way, we know where our money needs to be spent. Now, I think that the most significant result for us is that, according to the IADB and the University of Colorado, seeing this involvement in supporting investors increases the probability of that project being completed by 12 percentage points.

That is the impact of having a very efficient, lean, business-oriented organization that talks that language.

The Central America Group: Another thing that’s been tossed about recently is the term nearshoring. When COVID kicked in, it was stripped bare of the possibilities of specific supply chain problems appearing due to having a supply chain that was far-flung and distant began to show themselves very clearly. So, the term nearshoring has become ubiquitous over the last few years. Taking that into account, what types of opportunities exist for companies in the realm of nearshoring in Costa Rica?

Pilar Madrigal: I do. I must tell you, I think the term nearshoring, or how we’ve seen it, has always existed. The companies go to a region because they know they will be near where they need to supply their products. I think it’s just now a new way of phrasing it because of the changes in geopolitics and so on. But it has always been the case of why a lot of these companies set up in a country near to another one. I like that we are getting a lot of attention recently, and that’s good for the entire region, not only for Costa Rica foreign direct investment promotion. To take advantage of that, we have an obvious definition of quick wins, midterm opportunities, and long-term opportunities. The quick wins we see are products that Costa Rica already exports to the US. The reason is that companies already have the know-how, the network, and the competitiveness to increase the participation of that global flow. That’s something we consider; a company does this, so why not another?

That’s a quick win. It’s a good and mature sector. The medium term is more products that the US imports from other regions, and Costa Rica does not yet export significantly to the US, but it does export to different areas. A company in Costa Rica, and we export to Europe, okay, why don’t we now talk to that company and say, clearly, there’s an opportunity for this region and nearshoring? Then, the long term is products that the US imports from other areas, and Costa Rica does not export, but we are close enough in terms of Costa Rica foreign direct investment to be within that possibility. So again, quick wins, we’ve done it. We know we can do it well. The US imports from other regions, but Costa Rica doesn’t export significantly to the US so that we can create more awareness. Then, in the long term, what do we not do that is needed in a country like the US or Mexico? What are those industries? How are they growing, and how can we then move? When we say long-term, it typically takes a little time. In the semiconductor industry, for example, there are a lot of booms about it, and things will happen.

It’s just where everybody, the US and everybody, is starting to accommodate that industry. There will be opportunities, but probably not right now.

The Central American Group: Yes, it seems like it’ll take a decade or so, in my opinion. There’s so much involved in that supply chain for Costa Rica foreign direct investment that has to be implemented, but it isn’t there today. So, that’s not going to be a short-term win.

Pilar Madrigal: Yes, I agree.

The Central American Group: CINDE in Costa Rica is recognized globally as a quality and successful economic development agency. Given that, what would you advise other investment promotion agencies looking to rise to the same level of success?

Pilar Madrigal: IPAs and countries must know that attracting foreign direct investment is about creating long-term relationships. Having the same mindset and participation of multiple government, private, and academic institution stakeholders is essential. Making a country brand that resonates with everybody and knowing this has to be a crucial long-term strategy is critical. We see a lot of changes in many countries, including changes in governments. That’s not the way businesses think. They think long-term. When they invest, they’re going to put a lot of money into a project, and they want to know that they can stay there for a long time and that they’re going to reap benefits. Don’t limit yourself to what will happen next year or what you must do within the following year. Try to do this from the beginning, thinking about where you want to be in 10 years, 20 years. It’s okay. It has taken us 20 years to build a medical device cluster through Costa Rica foreign direct investment, but we never gave up. It’s a work in progress, and it will be a work in progress. It is essential to know that the competition for FDI is fierce and that you must continuously adapt to global economic shifts and rethink sectors.

Internally, in Cinde, we do this every few years, like every four or five years, in which we analyze 23 criteria or drivers. Then we do our competitor analysis, and then we literally do a customized approach according to sector and country, but we do that constantly. So, rethinking sectors, subsectors, and geographies with a specific frequency is critical. To me, those are the most important things. Just think long term, revisit, revisit, revisit. Don’t lose the focus, but find new opportunities, geographies, and subsectors to ensure that you maintain that relevance within the global value chains.

The Central American Group: One thing that I’ve learned throughout the years is that, very simply, if you’re looking to get into an activity that will provide you with instantaneous gratification, this is not the activity for you. It takes time.

Pilar Madrigal: It does. Time and perseverance. I have a story about working from the day I met a company to the day they set up operations in the country. It took them 20 years to do so.

The Central American Group: That’s what I call patience.

Pilar Madrigal: Yes. You must have that and perseverance and know that things will evolve if you do them correctly, well-analyzed, and clearly with excellence.

The Central American Group: We’ve covered quite a bit of ground in a short period discussing Costa Rica foreign direct investment. One of the things evident from having done many of these podcasts over the years is that listeners come away with information that sparks questions. I like to try to create a mechanism for the listeners with questions to communicate directly with experts like yourself. That being the case, how would an individual with questions contact you?

Pilar Madrigal: Steve, I am more than happy to have them reach me by email. I’ll share it with you. Please feel free to attach it. It’s [email protected]. I love to have conversations. You can also look at my LinkedIn profile and connect there. But I am happy you will post my email, and I’ll gladly talk. I love learning, also. This is not only about me talking about me or Costa Rica foreign direct investment promotion. The beauty of this is that there’s so much to share and learn, which I love. So, feel free to post my email there.

The Central American Group: Okay, we’ll post your email in the transcript section below the audio player and include a link to your LinkedIn profile so people can contact you directly if that’s okay with you.

Pilar Madrigal: Absolutely. Absolutely. I look forward to many conversations about Costa Rica foreign direct investment promotion.

The Central American Group: Thank you very much for joining me today and for telling us about your experience in foreign direct investment in Costa Rica. We wish you continued luck, good health, and happiness.

Pilar Madrigal: Thank you, Steve. The same goes for you.  

Please use this form to contact us and we will respond as soon as possible:

The post Costa Rica Foreign Direct Investment Promotion: A Conversation with Pilar Madrigal of CINDE. appeared first on The Central American Group.

Maria Paz Araya
Coordinator for investment outside of the Greater Metropolitan Area of Costa Rica
Procomer
[email protected]

The Central American Group: We’re pleased to have a knowledgeable individual with us today. Her name is Maria Paz-Araya, and I’m sorry if I butchered that pronunciation, Maria. Excuse me. Was it even close to being correct?

Maria Paz Araya: I think you nailed it.

The Central American Group: In any event, Maria is the Coordinator for foreign direct investment outside of the Greater Metropolitan area in Costa Rica. She will explain exactly what that term means in a few minutes. But before she does, I want to say that she is a member of Procomer. Procomer is the National Agency for Investment and Export Promotion for Costa Rica. Maria, welcome. Can you give us a little bit more information about your background?

The Central American Group: Sure. Thank you, Steve. It is a pleasure to participate in your podcast today. Thank you for the opportunity. As you said, my name is Maria Paz Araya. For the past eight months, I have served as the coordinator of foreign direct investment outside of the Greater Metropolitan Areas in Costa Rica. I have 10 years of experience working in foreign trade and around the free trade zone regime in Costa Rica. This experience was gained precisely outside the Greater Metropolitan area in Costa Rica. I’m thrilled to discuss the opportunities and challenges these regions of the country present.

The Central American Group: I’d like to have you first before we get into further questions, explain the terms in Costa Rica: there’s the Greater Metropolitan Area, and then there’s outside of the Greater Metropolitan Area. Can you tell me what the latter means in the context of Costa Rica and name some communities that are a part of that area?

Maria Paz Araya: Okay, well, I’m going to start by saying what the greater Metropolitan area, or GMA, is from now on in Costa Rica. The primary urban concentration includes the major provinces of San Jose, Heredia, Alajuela, and Cartago, located in the country’s central area. This delineation was established in the 1980s as a fundamental tool for urban planning and fostering economic development within the region. Therefore, areas outside the GMA lie beyond this area and are mainly situated in the northern part of the country. This includes the Pacific and Caribbean coastlines and the Southern regions of Costa Rica’s territory. Some examples of well-known communities outside the Greater Metropolitan area are Limón, Liberia in Guanacaste, San Carlos, San Ramón, Punta Arenas, and Turrialba, to name a few.

The Central American Group: Why is it important for Procomer to promote investment outside the Greater Metropolitan Area in Costa Rica at this time, specifically?

Maria Paz Araya: Promoting investment outside the Greater Metropolitan Area in Costa Rica is vital for Procomer. It’s important because it opens up new opportunities for businesses and investors in various regions. This directly translates to creating new job opportunities, which is our absolute main goal right now. It is important because it helps distribute economic growth evenly throughout the country.

The Central American Group: What specific advantages do locations for investment outside the Greater Metropolitan Area in Costa Rica offer foreign investors looking to establish manufacturing operations, particularly in terms of cost-effectiveness and resource availability?

Maria Paz Araya: Sure. There are many advantages for investors to establish investment outside of the Greater Metropolitan Area in Costa Rica. First of all, I could say government incentives. Costa Rica provides tax incentives offered through the free trade zone regime law to companies established outside the greater Metropolitan area. I can go into more detail if you like. Also, there is access to skilled labor. Many regions outside the GMA have access to a skilled labor force, particularly in specialized industries such as agriculture, agro-industry, light manufacturing, and services. With training programs and vocational schools, these areas can provide a pool of skilled workers for manufacturing operations. Another advantage for companies that execute and investment outside of the Greater Metropolitan Area in Costa Rica is the access to natural resources. Many regions outside the GMA have fertile land for agriculture and forestry. It can be advantageous for manufacturing operations that require specific environmental conditions.

Now that I have mentioned the environment, we love investors who prioritize environmental sustainability in their operations. Non-metropolitan areas often offer more opportunities for eco-friendly manufacturing practices, such as access to sustainable raw materials. And so, well, in 2022, work was done to reform and improve incentives for investment outside of the Greater Metropolitan Area in Costa Rica, and law 10,234 was launched, which I would love to tell you about.

The Central American Group: Oh, please do.

Maria Paz Araya: Okay. The tax treatment outlined in the Costa Rica Free Trade Zone Regime Law significantly differs for companies established within the urban area compared to those that make an investment outside of the Greater Metropolitan Area in Costa Rica. Outside the GMA, established companies have greater exemptions, like 0% corporate income tax. Also, they enjoy a temporary reduction of Social Security payments for their employees. Additionally, the law I mentioned before, Law 10,234, enabled three new categories for attracting FDI outside the GMA. And these are sustainable adventure parks. These should be places for recreational and commercial activities, promoting conservation and research in a natural environment. Also, it applies to strategic suppliers. This refers to goods made in Costa Rica and used to produce final goods, excluding machinery. But this includes material for agriculture, fishing, manufacturing, and other operations, et cetera. The third category is healthcare-centered services. By this, we mean specialized centers offering medical services like ophthalmology, orthodontics, cosmetic surgery, et cetera. So yes, these incentives significantly enhance the appeal for companies to make an investment outside of the Greater Metropolitan Area in Costa Rica by lowering operation costs and improving profit in the end. This, in turn, attracts more foreign investment, simulates economic growth in regional areas, and creates job opportunities, fostering sustainable development beyond urban centers.

The Central American Group: Well, it’s a really good thing that Costa Rica is paying attention with greater focus to balance out investment throughout the country because most people that are in the know about Costa Rica and foreign direct investment have been able to note that over the last 30 years, Costa Rica has been very, very successful attracting medical device companies that are globally known. Most of that investment, however, is centered in the Greater Metropolitan Area. Now that you’re working with investment outside of the Greater Metropolitan Area in Costa Rica and trying to balance out investment in the country, can you give some examples of recent investments that have been made outside of the Greater Metropolitan Area, whether they’re medical devices or other types of investments?

Maria Paz Araya: Sure. Last year, we managed to attract 13 companies to locations outside of the Greater Metropolitan Area. This is nearly twice the average of six companies in previous years. So, yes, 13 new companies have placed their trust in Costa Rica in its regions outside of the GMA. The diversity of locations where they will be establishing investment outside of the Greater Metropolitan Area in Costa Rica is worth noting. We have projects in all of the provinces outside of the GMA. These companies are engaged in various activities, including food production, aeronautical services, distribution, light manufacturing, logistics,  and, of course, medical devices, We also have companies involved in metalworking, and information and communication technologies.

The Central American Group: When you look at the workforce, and you compare the Greater Metropolitan Area with that outside the Greater Metropolitan Area, what are the differences, if there are any, regarding skill levels, labor costs, and availability?

The Central American Group: Sure. I think the most particularly positive aspect is that, unlike the current workforce inside of the GMA, where employees may easily switch between companies, which leads to increased labor costs, those outside that make investment outside of the Greater Metropolitan Area in Costa Rica tend to display a greater commitment to companies that offer meaningful opportunities for growth and development. Over the past eight months, along with my outstanding team, in my position as the Coordinator of FDI Attraction outside of the GMA, we have traveled to many parts of the country, visiting numerous companies, various organizational groups, and academia. Suppose there’s one thing I can tell you from first-hand experience. In that case, workers outside of the GMA are available and eagerly awaiting promising job opportunities. While we are aware of the challenges in terms of upskilling needs, we are actively engaged in overcoming them, understanding their significance in attracting foreign direct investment, and trying to articulate the needs of the private sector with what academia offers.

The Central American Group: It’s wonderful to hear that Costa Rica is trying to bring foreign direct investment to all regions and corners of the country. In a short period here, we’ve discussed several issues related to investment outside of the Greater Metropolitan Area in Costa Rica. Typically, we’ve experienced with these podcasts that our listeners, once they take in the information included in these recordings, often have follow-up questions they’d like to ask. We want to facilitate that communication between our listeners and our interviewees by providing contact information so that there can be a direct discussion between you and anybody who might have a question to ask about anything that you’ve said today. If somebody wants to get in contact with you, how do they go about doing that?

Maria Paz Araya: Listeners seeking more information about investment outside of the Greater Metropolitan Area in Costa Rica, please feel free to contact me via email at [email protected]. I will be more than happy to provide them with the information they may need.

The Central American Group: Maria Paz, if it’s okay with you, we include key information at the top of the transcript section on the page where the podcast is hosted. We’ll put your name. We’ll make it a link to your LinkedIn profile so people can get to you directly. We’ll include a link to Procomer’s website. We will also add your email address. If that’s okay with you, we’ll also do those things to facilitate discussions between you and anybody interested in this topic.

Maria Paz Araya: Sure, Steve. Thank you. Please go ahead.

Please use this form to contact us and we will respond as soon as possible:

The post Investment outside of the Greater Metropolitan Area in Costa Rica appeared first on The Central American Group.

Andrew Crawford
Trade Commissioner
Procomer
[email protected]

The Central American Group: Today, we have Andrew Crawford with us. Andrew is the Trade Commissioner and Director for Texas and the Pacific region of the US for the Costa Rican Trade Promotion Agency called Procomer. Today, we will have a conversation touching upon the Costa Rica and the US supply chain. Andrew, welcome. Could you tell us a bit about yourself, your background, and your organization?

Andrew Crawford: Steve, thank you for having me. I’m excited to have this conversation with you. I’ve been representing Costa Rica’s interests in trade and investment for the last 20 years in different capacities and countries. Our main focus is to ensure that we can develop capabilities in the export ecosystem and, at the same time, ensure that we create adequate policies to bring foreign direct investments to Costa Rica. So currently, I’m based in the United based in Houston, Texas, and like you said, also taking care of the Pacific region of the United States. In my position, I do significant work on how the Costa Rica and US supply chain interact.

The Central American Group: Okay, to start things off, let’s talk a little about trade and geopolitics because that’s on many business people’s minds these days. What can you tell us about Costa Rica and how the Costa Rica and the US supply chain are intertwined?

Andrew Crawford: Let me try to elaborate a little on that one, Steven, because I read a fascinating article a few days ago from Shannon K. O’Neill. She’s the Vice President and a Senior Fellow for Latin America Studies at the Council of Foreign Relations. She came up with great insights in that article, Steven. What fascinated me the most is that China currently processes 85 % of the critical minerals that go into high-tech devices worldwide. Also,  it has 77 % of the world’s battery manufacturing capacity. That is going to be linked to electric vehicles. The other interesting thing from that article is that the United States authorities started assessing the Costa Rica and US supply chain in vital areas. And critical minerals, which is one that I just mentioned, large capacity batteries, semiconductors, and pharmaceuticals are not in the very best position right now in terms of the Costa Rica and the US supply chain. That tells us what we’ve seen after the pandemic in terms of certain levels of political instability in different regions of the world, a good number of societies and countries not feeling comfortable with what they’re seeing. The chip crisis we had a couple of years ago skyrocketed the prices of many consumer goods.

All of these things together brought the idea to the United States it needs to rethink its supply chains. That is a great takeaway from the article, as we see Costa Rican authorities jumping into a different mode for foreign relations from what they saw in the past. Right now, I think everybody pulls the brakes and says it’s time to rethink the idea of heading to Asia in terms of foreign trade as the central core of our trade development in the future and put on the breaks and say that it’s time to get back into a very good position with the United States in terms of critical industries and a relationship that we can build on of the capacities that Costa Rica has.

The Central American Group: One of the things that I want to bring up because it’s very important is related to what you were saying about rare earth minerals and how they relate to Costa Rica and the US supply chain. A couple of weeks ago, I happened to read an article in the, believe it or not, the Cowboy State Daily, which is the Wyoming newspaper. According to this publication, there’s been a discovery of rare earth minerals in Wyoming, near a place called Wheatland, that could make the United States the world’s largest producer. So maybe that problem can be solved domestically. According to what I read, the discovery is 2.34 billion metric tons. So, just to put that in there as something we should keep in mind regarding rare earth minerals and our access to them. We may have greater access to them in the future because of this particular find.

Andrew Crawford: That is a great thing to address. And that China complements the role closer locations can play for the US. We know this process for transforming minerals into useful middle to intermediate goods takes some time. And the combination of efforts that the United States can make from their local capacities and closer allies can be a game changer in the long run, Steven.

The Central American Group: You mentioned a little bit about Costa Rica and the US supply chain. In a broader perspective, what opportunities do you see for Latin America as a whole?

Andrew Crawford: Well, I have the idea that in the past, the United States saw Latin America as a place in which they could have a lot of business going on, but it did not worry about critical industries from the perspective of having a region that could be a place for working along with this type of approach of economies of scale. Right now, I think the conversation is going in this direction. Let’s say Latin America is not extremely close to the United States, but it’s not that far either. And that limits our problems with long-distance logistics, which is part of our situation with Asia. So right now, you have, in most countries, political stability. Right now, you have economic growth in most of them. I was checking the economic growth of Latin America yesterday, by the way. Most economies have grown at least 1%, Steven. Even Venezuela, with all its constraints, grew 3% last year. Only Argentina, and I think it was Haiti, let’s say the whole region itself, did not have positive figures for growth. So that means you have a place where there’s economic growth, a middle class of consumers, and a middle class of travelers and workers open to developing projects.

And in contrast to what you get to see in Asia, the limitations for, let’s say, policies on labor protection and aspects like that are already being revised here in the region. The United States felt even a lot better during the last few years about doing business with Latin America, as in many of these cases, countries try to stick to much more comprehensive policies for labor, much more comprehensive policies for having an open book in terms of regulations and provisions and legislation that can apply for investors. And that allows rethinking in those countries. Let’s not just think of the US as a partner for trade. Let’s think about the US as a partner for developing critical and very strategic industries in between or serving both areas, the United States and Latin America.

The Central American Group: You mentioned when we were chatting before we started to record that the US State Department is actively working and speaking to Costa Rica about how the two countries can collaborate economically. Could you tell us a bit about that?

Andrew Crawford: Yes. And that comes together with the openness of Costa Rica to, like I said, pull the break a little back of what we were thinking in the future for doing business and developing strategies with Asia and go back to the core of relationships that have built most of the economic development of Costa Rica, which is our main ally in terms of trade and economic cooperation. So right now, after one year of lots of conversations and given goals in terms of how to put this down, Costa Rica has become one of those countries, one of the few allies around the world that are entitled to utilize funds for something that we’re going to discuss in a few minutes, which is the Chips Act. The Department of State said, yes, Costa Rica, Panama, yes, Mexico, you are reliable countries. And we are determined to start creating the path to understand in which capacities you can play a role in the semiconductor industry. So, by creating this openness from the United States government to consider Costa Rica an ally, we feel the responsibility to move forward. Also, Steven, for sure, imitates or replicates this successful model that Costa Rica has used for the medical device and life sciences sector, which is now operating plus 120 companies combining local and international companies.

A linkage model for success in which small businesses in Costa Rica connect with the OEMs and act in a manner for developing exports, a talent strategy, and national policy for developing and connecting talent to all these needs. So, there are a lot of interesting tools that we put down through the life science case study that Costa Rica has been doing for the last few years. We can replicate this into a semiconductor plan. The idea here is not to reinvent the wheel but to use many of the good things that we already made and adjust to the realities of the semiconductor industry. This collaboration that is putting down, Steve, right now is given. To give you an idea. The Chips Act bill is starting with a $50 billion, let’s say, package that is coming from US authorities right now. Out of those $50 billion, approximately $500 million can be utilized by US companies or US organizations or institutions related to the semiconductor industry in Latin America. And of those $5 million already, to give you an example, one university in Arizona last week received the great news that $14 million out of those $50 million have already been assigned to be utilized for semiconductor policies in Latin America, including Costa Rica, as of this year.

To give you an idea, the bill is already up and running, and it will start creating a lot of leverage for the next few years.

The Central American Group: You mentioned earlier, too, when we were chatting before recording, some very It’s very interesting information in terms of what Intel has done since it began to manufacture again in Costa Rica, which happened, as you told me, just a few years ago. Please give a little background about where Intel went, what they’ve done within the last four years, and how that’s important.

Andrew Crawford: Absolutely. I think it’s a great insight. Intel has been in Costa Rica for more than two decades. That’s an important thing to address. And those two decades have seen a lot of transformations in the Intel operation in Costa Rica. It went from lots of manufacturing at one point to lots of services at another to lots of research and development and testing, to a present, not so far from the post-pandemic, let’s say, times, to a reconsideration of manufacturing, again, in Costa Rica on a high level. Why? 60 % of microchips and 90 % of the most advanced semiconductor chips vital to the United States on daily communications to defense to manufacturing rely on Taiwan. From Intel’s perspective and operations, 75 % of the advanced semiconductors were manufactured in Taiwan two or three years ago. That 75 % has decreased to 50 % because the operation is 50 % Costa Rica and 50 % Taiwan. So that means that in a matter of two or three years, Intel has been able to bring 25 % of their chip production from Taiwan to Costa Rica to, let’s say, decrease the level of risk for the Costa Rica and US supply chain.

The other interesting fact is that this is not only the effort that they put down for this particular thing, but also the next two years are going to be pretty active for Intel in Costa Rica. The country will invest $1.2 billion in different capacities for their facility down there to create many more labs, many more spaces for developing innovation, and many more areas for addressing critical IP and developments for the betterment of the United States security. With this in mind, we can say that this is a great case to understand how an industry and a corporation like this are betting big time in Costa Rica.

The Central American Group: You mentioned before talking about semiconductors that Costa Rica has a very well-developed life science and medical device sector. So, it’s safe to say that Costa Rica, in general terms, has a very advanced manufacturing ecosystem for technologically advanced things. Given that this is the case, could you tell us what you mentioned earlier about the Greenfield FDI Performance Index? First of all, what is that index? And secondly, what does it tell us about Costa Rica and its level of development?

Andrew Crawford: Yes, I think this is a great question, and it’s a great insight, Steven, because it gives us a perspective of how reliable the country has become globally for greenfield investments. This Greenfield FDI Performance Index tries to explain the size of an economy and the amount of investments they receive in terms of the GDP. So, in the case of Costa Rica, during the assessment of 2022 and ’23,  it received 12.7 times more investment than the expected size of its economy. And let me give you a perspective on this to give you an idea. Singapore is one of the countries that is admired the most worldwide for its development policies. And Singapore ranked 10 in this index with 4.9 times. Costa Rica received 12.7 more influx of investment in terms of the size of its economy. So that means that there’s an acceleration in general terms of the investments that the country is receiving as they rank number one in this index if you compare it to other countries in terms of the size of the economy, which is important to highlight. I’m not talking about huge economies.

I’m talking about economies that are receiving a lot of investments in terms of the size of their economy. And that’s where you see that we are performing pretty well. And we see, and maybe, Steven, the daily or weekly announcement of investments in the pharmaceutical and medical device industry. Let me take quick cases: Bayer, $200 million. Johnson & Johnson announced a few weeks ago an investment of plus $300 million for the next five years. Swedish companies, Danish companies, 20 million here, 15 million there. Those are the announcements you get mostly every week of investments made in Costa Rica. And that’s why we are tying up this with the component of talent, Steve, which is very important. We created a national public policy to ensure that the talent can meet all these future and midterm demands for qualified human resources. My agency, Procomer, operates a department that is also tied up to talent development and breach with the different investors and companies interested in settling down to make sure that they understand the role and the level of involvement that we get into whenever there’s a decision for investing in Costa Rica and how we’re going to support the talent development process as well for these companies that establish a greenfield operation.

The Central American Group: Regarding Costa Rica, it’s a place that has been very successful, especially considering its size in attracting foreign direct investment. Again, you’ve got an impressive sector in the medical device and life science industry. Things will develop further than Intel in terms of semiconductors. Regarding incentives, does Costa Rica offer to companies that work in these realms? What can companies take advantage of to situate themselves in your country?

Andrew Crawford: Yes, that’s something that we can combine, Steve. Let’s say it’s not going to apply to everyone, but since we’re talking about semiconductors, let’s create a scenario where a company can apply for funds at the Chips Act bill to try for operations in Costa Rica, which is very important to highlight, too, Steven. It’s not only manufacturing. If you are related to the semiconductor industry in any of the 25 subsectors of the industry, including software development or a company of semiconductors that would like to move out from a location overseas, their GIS centers or their supply chain offices or their shared services offices, that can be applied to the Chips Act bill as well. So, it’s not only manufacturing itself, it’s a lot of different ways in which you can take advantage of the Chips Act bill. So, let’s say you can apply for that purpose, and in the meantime, you can apply to join the free zone model in Costa Rica. The free zone is a model that complies with the World Trade Organization in terms of the incentives that you’re entitled to receive. And we have broken it down into two different regions.

One is the metro area region, and the other one is, let’s say, out of the metro area region. And you will have some variations of the incentives regarding where you settle down your operation. But in general aspects and general levels of, let’s say, percentages in quantity units, you will enjoy no income tax for several years. You will get rid of any withholding tax for several years whenever you transfer your income to your headquarters, for example. There will not be any local government tax applied to any of your activities for a certain period. All the value-added tax that has to be paid, a 13% value-added tax that has to be paid for buying goods locally or importing assets or goods internationally, and the cost of taxes involved in any of those operations will be exempt. If you buy property, you won’t pay the transfer tax for that property with some provisions that we have for the purpose itself, depending on certain levels of investment in that particular property. And you can also, let’s say, get some provisions on the social security rates.

For example, if you get to operate out of the Metropolitan area, incentives are a bit different. So instead of paying a certain amount of social security for the employees, the less developed areas will entitle you to pay a lot less to the social security as a way to incentivize the possibility of doing business there. And when I say out of the Metro area, Costa Rica is a small country. You call the Metro area a place, let’s say, the ground zero zone, and you drive for one hour, and then you are out of the Metro area already, Steven. So is it a very convenient scenario for those who would like to combine the incentives that we already apply to the Chips Act bill, for example. On the other hand, the free zone model also applies to goods and services. So, you get medical devices and semiconductor companies, but you also get delivery centers, IT, software development, AI, and architectural engineering services. So, a lot of stuff can be combined and can be entitled to incentives by applying to the free zone. We call it in Spanish zona franca.

The Central American Group: One of the things that I want to point out to people, and this is all second nature to you, obviously, but when Andrew refers to the Metropolitan area and the non-metropolitan area, the Metro area, in terms of what Costa Rica is, is the area around San Jose and its environs.

Andrew Crawford: San Jose and its vicinity, which is three more provinces, Heredia, Alajuela, and Cartagena. Those are the four provinces encompass the Metro area, and the other three, coastal provinces encompass the out of the Metro area. But there are some other areas, Steven, that are close by and in proximity to Alajuela and the vicinity that are also considered out of the Metro area. So, the concept of a metro area has to be asked by the case-by-case interest of a company. So, we can lay it out on a map how that looks like regarding distances and connections. But the interesting fact is that most of the critical components, medical devices, or advanced manufacturing components are flowing now. And most of the time, they use night cargo transportation to arrive in the United States the following day. In terms of logistics, that facilitates a lot because they don’t have to deal with any, let’s say, constraints on traffic on a day, or they don’t have to deal with any potential difficulties, which is very limited in Costa Rica, a strike or a stop on the street. That’s a very limited condition in Costa Rica.

So, logistics is usually a very easygoing component of your decision-making in Costa Rica from the perspective and experiences we have seen for many companies. Another interesting thing before I pass it back to you, Steven, is the free zone model. You can set the clock back to zero before your incentives expire within a period of years, several years. If you are determined to keep up with the structure you already have established, you only have to reconsider a new reinvestment. Then, the clock will go back to zero, and then you keep up with your incentives that are already going on. So that’s a very friendly model as well, and you don’t have to consider that once these number of years are gone, I will be paying full taxes on everything. No. You can return to those incentives if you commit to another investment within a period. Also, the incentives are not right away to be paid upfront for being entitled to that. You can make a promise of investment for an estimated time of three years. And during those three years, you will be able to comply with your promise of investment. Then everything will be going with a great flow with our authorities in the government and the private company that is entitled to have this in some things going on.

The Central American Group: Before we wrap this up, there is one thing I want to circle back to, and we’ve mentioned it a couple of times during this podcast, and that is the Chips Act. For the benefit of those who may not be aware of what exactly that is, could you explain to those individuals who need a background and a little explanation of what the Chips Act is?

Andrew Crawford: The Chips Act is part of a package that the United States authorities decided to find a bipartisan deal right after the pandemic to relaunch the US economy in many different aspects. So, if I’m not wrong, the Chips Act is one of the components related to that huge package that was bipartisan legislation that came a couple of years ago. The Chips Act is a rethink of the US supply chain model for critical industries in which United States companies will have better control of those, let’s say, different assets that have given them leadership for many years and will allow them to have better control of those assets for the future and the of the United States security. We live in a world in which… Let me mention something very quickly here, Steve. Just think about this. We think about machines, robots, weapons, automobiles, airplanes, phones, servers, telecommunication antennas. To give you several things. Household goods, refrigerators, TVs, cameras, phones. Everything has semiconductors. Our life is based on semiconductors and critical minerals to create those semiconductors. If you don’t have control of that supply chain at a level that will assure that you will not suffer constraints during your development plans in the future, as a country in futuristic and innovative projects that you have on board.

So, the best way is to ensure that you bring those critical components of your supply chain as closely as possible. You cannot put every single thing in one basket. You cannot bring everything to the United States. It will be a lot of risk for lots of different stakeholders and players in the industry. You don’t see any industry having everything in one basket in any industry. But bringing those intermediate components and raw materials closer to friend-shoring locations. This will shore up Costa Rica and the US supply chain. We can call it that that will give you a better perspective to ensure that your IP, your knowledge, and the transfer of that knowledge to these industries will be well-kept or better-kept. And that’s something that the Chips Act brings behind doors, which is not only to think about industries to get them closer, but it’s also a futuristic mindset that has taken part of the United States. The interesting fact here, Steven, is that it is clear from both main parties in the United States, political parties of the United States, that the semiconductor industry is critical for the assurance and development of the United States as it should be for the next 25, 50, 70 years.

So that’s a great thing that in the political view is the correct approach and answer to a different world that we’re facing right now after the pandemic.

The Central American Group: Well, we’ve covered a lot of ground in the last, I believe it’s 20 minutes or so. How would people that have listened to this podcast who have questions about the content of it or questions about how they can do business in Costa Rica how would they go about contacting you?

Andrew Crawford: Pretty easy. I’m open to direct communication for questions about Costa Rica and the US supply chain. They can even call me. I’m based in Houston, Texas. My phone number is 832-940-8587. Let me repeat that one. 832-940-8587. And also, they can email me. They can email me at my email, [email protected].  I’m more than happy to have an extended conversation, Steven.

The Central American Group: Okay, thank you for the information. We’ll make that accessible by a click for people through a link to your website. We’ll have a link to your profile on LinkedIn if that’s okay with you.

Andrew Crawford: Absolutely.

The Central American Group: We’ll have the telephone number right in the transcript section of the podcast so that people can contact you with their questions.

Andrew Crawford: Absolutely.

The Central American Group: I want to thank you for speaking with me today. You’re always instructive and lend information that’s useful and relevant. Thank you very much.

Andrew Crawford: Thank you for the time, Steven.

Please use this form to contact us and we will respond as soon as possible:

The post Costa Rica and the US Supply Chain: A Discussion with Andrew Crawford of Procomer appeared first on The Central American Group.

<img width="716" height="444" data-tf-not-load src="https://www.thecentralamericangroup.com/wp-content/uploads/2024/01/industrial-real-estate-in-el-salvador.jpg" class="attachment-full size-full wp-post-image" alt="industrial real estate in el salvador" decoding="async" srcset="https://www.thecentralamericangroup.com/wp-content/uploads/2024/01/industrial-real-estate-in-el-salvador.jpg 716w, https://www.thecentralamericangroup.com/wp-content/uploads/2024/01/industrial-real-estate-in-el-salvador-300x186.jpg 300w, https://www.thecentralamericangroup.com/wp-content/uploads/2024/01/industrial-real-estate-in-el-salvador-610x378.jpg 610w, https://www.thecentralamericangroup.com/wp-content/uploads/2024/01/industrial-real-estate-in-el-salvador-322x200.jpg 322w" sizes="(max-width: 716px) 100vw, 716px" />

Daniel Milla
Senior Real Estate Consultant
Colliers
San Salvador, El Salvador
[email protected]

+503 7756-0282

The Central American Group: Today, Daniel Milla is with us. Daniel is a commercial broker for Colliers in El Salvador. Today, we will talk about trends in industrial real estate in El Salvador, America. Good morning, Daniel. How are you today?

Daniel Milla: Hey Steve, how are you? Glad to be here with you and ready to start.

The Central American Group: Well, listen, before we start, could you tell us a little bit about yourself and Colliers’ operation in El Salvador?

Daniel Milla: Sure. I’ve been in industrial real estate in El Salvador for almost eight years now. Colliers started here in the country last year and is consolidating operations in the Central American region, adding to the almost sixty-five countries it already has under its umbrella. It’s opening offices in all of Central America to consolidate in the region and explore opening opportunities. We’re very happy about that. The expansion mentality of Colliers and the enterprising mentality have drawn me to it. It was one of the reasons that drew me to join the network, and here I am. I have experience in residential real estate and also commercial. So, since Colliers is a major corporate real estate company. It is one of the big four: JLL, Cushman, CBRE, and Colliers. These companies are noticing that many opportunities are opening up here in El Salvador and the region as a whole.

The Central American Group: That’s interesting that you talk about opportunities in industrial real estate in El Salvador. There have been many changes under the current president, and I’m sure you know, given the much-improved security situation in El Salvador, that trends are positive for you there. Can you tell us a little bit about some of those trends?

Daniel Milla: Yes, sure. In the market for industrial real estate in El Salvador, we’re looking at an increase in Build-to-Suit (BTS) projects because we are finding that we currently have a low supply of industrial properties over three thousand meters of roofed space. So, this is a great opportunity to meet demand. We have the full capacity within Colliers to generate these projects and get facilities up and running in six to twelve months in strategic locations nationwide. One of the reasons for that low supply is related to your point about the security increase in El Salvador. A lot of land locations have opened up due to that security increase. This has allowed all of these new locations to open up. They have enormous potential in terms of the logistics corridor that’s being built in the country.

The Central American Group: Have you seen positive changes in El Salvador due to the improving situation? Do you see greater interest in international manufacturers looking for industrial real estate in El Salvador?

Daniel Milla: One of the greatest potentials of El Salvador is not only the geographic location. Because you can get a 2.5-hour flight to major markets in the US and Latin America. And five days by sea, which is a great connection. Our location is great because the times are excellent for connecting to major markets. That’s really important because the security improvement is opening up many locations for industrial real estate in El Salvador. That’s one of the major tools. Also, in El Salvador, the US dollar is a legal tender. This grants monetary stability. Also, there are a lot of tax incentives that can benefit major multinational companies. Like the Investments Law, the Industrial and Commercial Free Zones Law adds a lot of income tax exemptions and value-added exemptions. Also, there is no property tax in El Salvador. And there’s also an exemption on real estate transfer fees for new major multinational companies operating here in El Salvador. We also have Export Reactivation Laws, the International Services Law, and free trade agreements for Central America, the US, the European Union, Mexico, Colombia, Chile, Panama, and Taiwan. The country is ready to receive all these multinational firms, and it’s open for business.

The Central American Group: What kind of manufacturing companies? Could you give us a few examples of manufacturing companies that have looked at industrial real estate in El Salvador and are in the process of looking at El Salvador during this period of improved security?

Daniel Milla: To name a few. For example, Haynes Brands is a multinational manufacturing firm with operations here in El Salvador. Also, Fruit of the Loom and Youngone, which is Korean, are here. All of these are already established here in the country. Some of them are looking to expand their operations. We also have a lot of multinational firms that are within the beverage industry or bottling industry. We also have food industries, plastic, metalworking, paper, cardboard, graphic arts, furniture, and pharmaceutical companies worldwide. We definitely can harbor all these firms and provide them with industrial real estate in El Salvador. This is due to the geographic location of the country and the manual labor and skilled labor available in the country. Companies can work within free trade zones and IPWs, which are inward processing warehouses.

The Central American Group: In terms of companies looking for guidance, what can Colliers do for investors looking to make capital investments and look for industrial real estate in El Salvador?

Daniel Milla: That’s a great question. Because Colliers is a one-stop shop and a multinational firm, we have all the expertise from the Colliers network and the sixty-five countries we’re in. We get assistance from top experts from all over the world. And we can do everything from appraisals to market research, high and better use, and land studies to grant the best and highest use for the best site selection for industrial real estate in El Salvador. Colliers can also provide services in the areas of project management, construction, design, supervision, and site selection. Also, we execute projects from A to Z. That’s from the site selection of the land to the final design of the office, industrial space, or hotel. And we can do that. We’re interested in everything that has to do with real estate, and we’re enthusiastic about it.

The Central American Group: Is there a part of El Salvador or a geographic area in which you see the most activity related to industrial real estate in El Salvador? And if that’s the case, what areas are most active regarding possible new business installation?

Daniel Milla: Regarding industrial real estate in El Salvador, I’d say one of the hotspots right now is Nejapa, which is north of San Salvador and in the central part of the country. The municipality of Ateos constitutes a very important logistics corridor because of its proximity to the Port of Acajutla. The Port of Acajutla is under expansion right now. It will be expanded from 310,000 Teus, which is a twelve-foot equivalent unit, to 910,000 TEUs. That increases the capacity to process more products, which is great news. There are also government incentives and projects to reactivate Puerto La Union, which is on the other end of the country, which will greatly increase the capacity of the import-export situation in the country.

The Central American Group: Can you tell us if there are other investment opportunities we haven’t mentioned thus far that people should consider when looking into El Salvador?

Daniela Milla: Yes, on that point, I’d like to add there’s high investment interest in the country due to government actions from legal and economic standpoints. Also, it’s important to mention that major multinational companies like Google are looking to set up shop here in the country. Additionally, there’s a lot of opportunity for hotel developments on the beautiful Salvadoran beaches and residential and vacation developments. There’s also a terrific opportunity for solar energy projects. El Salvador has one of the highest radiation levels in Latin America. Because of new opportunities, we will add considerable industrial real estate in El Salvador in the coming years. So, everything is looking up.

The Central American Group: Well, it’s wonderful to hear that because El Salvador has had a lot of challenges over the years, and it’s nice to see that things are moving forward in your country. I want to thank you for joining me today. I want to wish you the best of luck and a wonderful rest of 2024.

Daniel Milla: Thank you, Steve. Also, to you. Thank you for the invite. I’m grateful for the time and space.

The Central American Group: All right, well, thank you, and have an enjoyable day.

Daniel Milla: All right, Steve. Nice talking to you.

Please use this form to contact us and we will respond as soon as possible:

The post Industrial Real Estate in El Salvador appeared first on The Central American Group.

<img width="1200" height="762" data-tf-not-load src="https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR.png" class="attachment-full size-full wp-post-image" alt="investment opportunities in El Salvador" decoding="async" srcset="https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR.png 1200w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-300x191.png 300w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-1024x650.png 1024w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-768x488.png 768w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-610x387.png 610w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-1024x650-380x240.png 380w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/10/EL-SALVADOR-1024x650-315x200.png 315w" sizes="(max-width: 1200px) 100vw, 1200px" />

Christian Navas
Investment Attraction Specialist
Invest in El Salvador
San Salvador, El Salvador
[email protected]

The Central American Group: Hello, welcome to our podcast. Today, we have Christian Navas with us. Christian is with a group that has recently been formed in El Salvador called Invest El Salvador. I’ll let Christian introduce himself and tell us a little bit about his organization and investment opportunities in El Salvador.

Christian Navas: Thank you, Stephen. I appreciate your having me here on your podcast. I’m really happy to share all the good news that is happening right now in El Salvador.  I know that it will be interesting to potential investors and companies that are seeking to invest in new opportunities in the region and, in particular, investment opportunities in El Salvador.

Well, my name is Christian Navas. I am a specialist in the investment attraction, specifically in agribusiness. I came from the capital raising banks. That is my experience. But recently, I learned about this opportunity to attract potential investments to El Salvador and decided to join it. This is thanks to the government of El Salvador, of course. Invest in El Salvador is the name of the agency that is seeking to promote the investment attraction of foreign companies that might be interested in investing in El Salvador. We want to create opportunities to achieve the soft landing of companies interested in investing in El Salvador.

The Central American Group: Okay, well, maybe you can expand upon what you see as being the sectors that hold promise for investors.

Christian Navas: For example, here in El Salvador, we have a lot of opportunities for different types of companies that might be interested in coming here. We have some focuses, objectives, and sectors that we are interested in attracting these opportunities. One is tourism. We also have manufacturing. Other investment opportunities in El Salvador exist in textile manufacturing, pharmaceuticals, energy, and services. Inside services include everything related to blockchain, bitcoin, BPOs, technological services, and agribusiness, which is my sector. All these sectors are being promoted by Invest in El Salvador.

We are also looking to promote logistics in the coming months because we believe the country has a lot of benefits and advantages on that front. Basically, those are the sectors. Now, regarding agribusiness, we are looking to promote everything related to food safety, cold change, logistics, food logistics, agriculture that will be vertical farming, and all this large extension agriculture.

The Central American Group: I understand that the law governing free zones in your country has recently changed, allowing companies engaged in food processing activities to locate and derive the benefits from free zones. Is that true? And if so, can you tell us a bit about that?

Christian Navas: Well, the free zone law has changed on many fronts, including financial fronts and economic fronts, but also in law. The President has mandated a review of all the laws regarding doing business in the country. One of the recent changes was regarding International Service Law and to the free trade zones that we have in the country. The free trade zone law has changed and now includes food processing, aquaculture, and other services and products that can be manufactured inside these zones. This will enable the country to be more competitive and create more investment opportunities in El Salvador with companies that work in this industry to actually do the manufacturing here. Free zones in El Salvador are free of taxes for importing raw materials. They are free of taxes in the export of their finished products that are now manufactured. They have a lot of tax benefits regarding their profits and the investment of new machinery and all that. So yes, it’s a really great opportunity for companies in industry that are interested in the manufacturing sector.

The Central American Group: Another sector I read about is technology. Your president and your legislature, I believe, have implemented some laws that incentivize investment in technology in your country. Is that true as well?

Christian Navas: Yeah. El Salvador is actively promoting innovation in all sectors. We want to be an innovation and technological hub for the region. We want to be considered by other countries as a destination for research institutions, technology transfer programs, research, and labs engaged in innovation and technology programming software. We are making a lot of changes not only in the law to attract these companies to come here because they actually, in that way, have a lot of tax benefits.

The country has zero taxes for the companies installing their headquarters, doing business in El Salvador, and providing services internationally. But also, the country is focusing on its educational system. In that way, we can promote skills in technology to all the young people in schools, both public and private, and universities. There are a lot of efforts occurring regarding technology and innovations that can benefit companies regarding taxes and also benefit the population.

The Central American Group: What would the investment climate be like if you were to look into the future in the coming years? And what factors make El Salvador a good choice for people who are looking at investment through a long-term telescope, let’s say?

Christian Navas: I believe in El Salvador, and that’s one of the reasons I joined this project. I believe El Salvador is changing dramatically for the better and that there are many investment opportunities in El Salvador. For example, in recent years, the criminals and all this killing that El Salvador was famous globally has been reduced to almost zero. The good thing about it is that it allows people to do more. We now have parks and venues with people walking at different times during the night in safety. We are having a lot of safety, actually. We feel it in the street, and we feel it in the quality of life that also has helped to focus all the effort to open to new opportunities regarding technology and to promote and take advantage of our strategic location in Central America.

We want to be a service provider to the world. We want to be the innovation and technological hope in all the sectors that we mentioned before. We want to be considered by other countries as an opportunity to actually do all the innovation the world needs. Suppose we actually achieve that positioning and actually complete this project. In that case, I know that we will be a country that can add high value to products and services and, in the same way, be a sustainable country.

The Central American Group: You mentioned earlier when we were talking offline about this is that one of the things that you mentioned was El Salvador in terms of travel for people in the US. Between major cities in the US. To El Salvador. What is the time it takes to get to and from El Salvador? Could you tell us about major cities and their approximate times of travel?

Christian Nava: El Salvador is looking to be a strategic logistic hub for companies in the United States and for companies in South America. For example, we are only 2 hours away from Miami by airplane. We are only four hours and a half to Los Angeles and almost 5 hours to New York. So, if you see, we are really closer to the major cities of the United States than some cities in the United States. For example, if you go from Los Angeles to Miami, it’s almost 6 hours. We are 2 hours away from Miami. So, there are opportunities for companies to actually do business here in Los Angeles, to have, for example, their e-commerce where they can do their storage. They can have all these services that they provide right now in the United States. They can take advantage of investment opportunities in El Salvador. We also have some companies from South America that are seeking to install their plants here in El Salvador to export to the United States to different cities. In that way, instead of sending one ship or airplane to Miami and distributing to the whole country, which is more expensive, they can send everything from El Salvador.

We do the manufacturing, labeling, and logistics to distribute all these cities faster, more efficiently, and economically.

The Central American Group: Well, it seems like there’s a lot going on in El Salvador that’s good. These days, after people listen to our podcasts, questions come up. If somebody who hears the information has questions that go beyond the scope of what we’ve spoken about, how can they contact you with their questions?

Christian Navas: They can contact to my personal email, my professional email, which is [email protected]. The GOB is not like we write it in English. It’s like in Spanish gob at the end. They can also go to the website www.investinelsalvador.gob.sv, and they can go to my LinkedIn page, which is Christian Navas, as it sounds. And I appear as a specialist investment attraction for Invest in El Salvador. They can write direct questions to me from there.

The Central American Group: We’ll put links to all these things in the transcript section of the webpage on which this will be published. Thank you very much today for filling us in on what’s going on in El Salvador. We wish you and the rest of your colleagues at Invest in El Salvador lots of luck going forward.

Christian Navas: Thank you. I appreciate the time to speak about El Salvador, and I invite investors to contact me or contact one of my colleagues who are also listed on the website. I know that we can provide a lot of help, a lot of connections, a lot of networking, and a lot of opportunities for companies to make their investments. That way, they can have a soft landing here in El Salvador.

The Central American Group: Thank you, and have a great rest of the day.

Christian Navas: Excellent. Take care. Bye.

Please use this form to contact us and we will respond as soon as possible:

The post Investment Opportunities in El Salvador appeared first on The Central American Group.

<img width="2560" height="1709" data-tf-not-load src="https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-scaled.jpeg" class="attachment-full size-full wp-post-image" alt="investing in Costa Rica" decoding="async" srcset="https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-scaled.jpeg 2560w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-300x200.jpeg 300w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-1024x683.jpeg 1024w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-768x513.jpeg 768w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-1536x1025.jpeg 1536w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-2048x1367.jpeg 2048w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-610x407.jpeg 610w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/09/AdobeStock_226747131-1024x683-299x200.jpeg 299w" sizes="(max-width: 2560px) 100vw, 2560px" />

Monica Umaña
Manager of Foreign Direct Investment
Procomer
San Jose, Costa Rica
[email protected]

The Central American Group: Today, we have Monica Umaña with us. She’s the general manager for Foreign Investment at Procomer, which is in Costa Rica, and it’s the government export and foreign investment promotion organization. Today, our conversation is about investing in Costa Rica. Monica, how are you today?

Monica Umaña: Good, Steve. Very good. Nice to speak with you again.

The Central American Group: Could you tell our audience a little about yourself and the organization you’re working for?

Monica Umaña: Sure, absolutely. Thank you, Steve, for this opportunity. As you said before, my name is Monica Umaña. I am the manager for Foreign Direct Investment at Procomer. Procomer is an entity that was created in 1996. We are responsible for the export promotion and the foreign direct investment attraction to Costa Rica.

The Central American Group: So, you must be excited. This is a new position for you. How are you acclimating to your new role?

Monica Umaña: It is new, and you know me. I have been working with foreign direct investment for the past eleven years, so I’m thrilled. It’s a big challenge, but I’m pleased because I think we have a very nice team inside Procomer, so we are creating a new unit to promote investing in Costa Rica, and we have the rest of the team working with us. So, it’s amazing.

Central American Group: I’m glad to hear that. We have a few questions to ask so you can give us more detailed information about your organization and investing in Cosa Rica. What is the main objective of the new foreign investment agency launched by Procomer?

Monica Umaña: Yes, absolutely. The main objective is to generate jobs, opportunities, and well-being for all the people. We are trying to create a sense of economic well-being in all the country’s regions. That’s really important for Procomer with very clear objectives that promote, attract, and retain investment that boost employment and exports with a solid and particular value proposition consistent with Costa Rica’s needs.

Central American Group: Given global trends, what are Procomer’s priorities with this new strategy as it applies to investing in Costa Rica?

Monica Umaña: That’s important, Steve, because, as I said before, we are trying to attract new foreign direct investment to Costa Rica, but, of course, that is linked with the generation of new employment and linkages economic growth throughout the country. We look to develop new strategic sectors to attract foreign direct investment towards the free trade regime. That’s also important— the new models for attracting foreign direct investment. We are trying to diversify the countries and projects that we are looking at opportunities for investing in Costa Rica. We are improving the investment climate to boost competitiveness and generate employment and linkages beyond the Greater Metropolitan Area (GMA). I think we are also trying to contribute to the development of human talent and to encourage a  better social and environmental return through foreign direct investment.

Central American Group: You just mentioned the Greater Metropolitan Area. One of the priorities of the current administration that is in place in Costa Rica is to get a diversity of investments throughout the country geographically, and these would be things in the more rural areas. Please address that a little bit.

Monica Umaña: Absolutely. You know, we have been very successful in terms of sectors such as advanced manufacturing, medical devices, services in general, not only services, corporate services, but also digital technology. We’re trying to focus on looking for agricultural projects and production value added outside the Greater Metropolitan Area. We have a new legislation to promote investment outside of the GMA. So that’s something that we are working hard on. But I think it’s essential that we also are, as I said before, creating a new team that is going to have not only people that are going to work with the investment outside the great metropolitan area, but we’re going to keep our eyes with the sectors, the strategic sectors like the medical devices and manufacturing and services. So, we’re trying to balance this since we are looking for projects in the rural areas and working with the strategic sectors that are important to investing in Costa Rica.

Central American Group: What kind of resources does Procomer have at its disposal to execute the strategies you will put into place?

Monica Umaña: We have been the number one trade promotion agency in the world according to the International Trade Center, and we have more than 25 years of experience in the administration of the free zone regime in Costa Rica. That is one of the main incentives for the companies when they choose Costa Rica because we offer fiscal incentives. But we also have more than 26 trade promotion and investment offices worldwide with extensive knowledge and international experience, which will be implemented in new markets. We also have experience with several regional offices outside the Greater Metropolitan Area, with firsthand knowledge of the needs of the different areas outside the GMA. And we are adding new colleagues to the team in those regions. So, we’re trying to improve what we already have had in the past to facilitate investing in Costa Rica.

Central American Group: Why would a company want to go to Costa Rica? What are the advantages of being there? What does the country have to offer investors? Please give us some information about that.

Monica Umaña: Yes, absolutely. I think that’s one of the greatest parts of my job, talking about Costa Rica and why a company should visit and invest in the country. I believe concerning investment attraction, Costa Rica has transformed itself to become a global hub for foreign direct investment. The country consistently outperforms competitors due to its unique brand, strategic geographical location, and strong value proposition. We are the number one performer in the global foreign direct investment landscape. The country is one of the strongest and oldest democracies in the Western Hemisphere. We stand out as a beacon in the region due to our political and economic stability. We uphold and respect the rule of law and enforce elevated standards of protecting the environment and defense of human rights. We also understand well how these characteristics weigh on consumer market demands, which are growing. Consumers care more about how and where things are produced. Costa Rica has an excellent track record as a suitable and competitive destination for FDI, with more than 400 multinational companies with a presence in the country with dynamic and productive operations. The fact of these companies demonstrates the viability of investing in Costa Rica.

They are continuously and successfully evolving and reinvesting in Costa Rica, which targets the attraction of specific sectors. As we were talking now, one of the efforts being worked on now is semiconductors with the announcement from the US. According to the Chip Act, Costa Rica will receive funds soon. This involves activities that help enhance and accelerate our country’s technological transformation and consolidation in the value chain in MedTech, pharma, and biomedical research in the health sector we discussed previously. In addition, there are intensive corporate and digital services in the services sector. Important, as I said before, semiconductors, but electronic components, technology, enhanced agribusiness in manufacturing. These sectors are also vital.

As the newest member of the OECD, Costa Rica is a reliable and trustworthy partner for parties seeking to pursue investing in Costa Rica. Again, we have a new legislation to attract new business outside the Greater Metropolitan Area. But Costa Rica offers the free trade zone regime to national and foreign companies that wish to develop their operations in the country to encourage FDI, commercial exchange, and job creation. Last but not least, the talent of the Costa Rican people is one of the greatest attractions for investors due to its high specialization in many sectors.

Central American Group: One of the things that I’ve always found interesting is that Costa Rica disbanded its military at the end of the 1940s and has been putting the percentage of money that the GDP would have dedicated to the military to education and health. Could you mention a little bit about that?

Monica Umaña: Yes, absolutely. Since 1948, we haven’t had an army. That made us one of the most stable countries in Latin America. As I said before, we are the oldest democracy in the region. And as you mentioned, we dedicate 7% of our GDP to education, which makes investing in Costa Rica a good option. Many companies choose Costa Rica because we are not the cheapest country in the region, but we know the high quality of our labor pool and why the companies analyze and choose Costa Rica. Education is free and mandatory, and we have a robust system with technical high schools and national training institutes. Of course, universities are another significant resource regarding education, labor pool, and healthcare. That is a universal system. We dedicate 8% of our GDP to the system. Thanks to what you mentioned before, it’s a national coverage and ranked one of the best in Latin America.

Central American Group: Many of the companies that we speak to as a Central American Group are impressed when they go to Costa Rica by the amount of bilingual talent that can be found there. Can you tell us about the education process for languages in Costa Rica?

Monica Umaña: Yes, absolutely. We have been making considerable efforts to include English in the curricula. There are high schools and many technical high schools dedicated to bilingual careers, for instance, preparing people for the services sector. They have outstanding performance records. When I take potential investors to technical high schools, and they listen to the students’ presentations, I mean they are very well prepared and have excellent standards. The National Training Institute also has specific courses for bilingual people. So that’s one of the main challenges and also one of the main goals in terms of education, to prepare the people for the request of the companies, the new companies that are investing in Costa Rica

Central American Group: Well, thank you for answering our questions. One of the things that’s consistent about these podcasts is that people who listen to them have further questions arising from the information they hear. How can people listening to this podcast contact you with additional questions about investing in Costa Rica?

Monica Umaña: Absolutely, absolutely. I can give you my direct email. You can write to me at [email protected], and I’ll be more than happy to answer any other questions. And, of course, to promote Costa Rica as a foreign direct investment destination.

Central American Group: OK, thank you again. We’re going to put all your contact information in the transcript section on our webpage, and we’re also going to put a link to your LinkedIn profile if it’s OK with you. Is that fine?

Monica Umaña: That’s fine, and I appreciate that, Steve.

Central American Group: OK, well, thank you for joining us. Have a great day, and lots of luck in your new position.

Monica Umaña: Thank you, Steve.

Please use this form to contact us and we will respond as soon as possible:

The post Investing in Costa Rica with Procomer’s Monica Umaña appeared first on The Central American Group.

<img width="2560" height="1706" data-tf-not-load src="https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-scaled.jpeg" class="attachment-full size-full wp-post-image" alt="project management services in Costa Rica" decoding="async" srcset="https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-scaled.jpeg 2560w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-300x200.jpeg 300w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-1024x683.jpeg 1024w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-768x512.jpeg 768w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-1536x1024.jpeg 1536w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-2048x1365.jpeg 2048w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-610x407.jpeg 610w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/08/AdobeStock_32026495-1-1024x683-299x200.jpeg 299w" sizes="(max-width: 2560px) 100vw, 2560px" />

Cristian Fernandez
General Director
Lean Consulting
San Jose, Costa Rica
[email protected]

The Central American Group: We’re fortunate to have Cristian Fernandez with us today. He’s the general director of a company called Lean Consulting. They’re located. And Christian, correct me if I’m mistaken, but I’m going to say San Jose, Costa Rica. The topic of our discussion today is project management in Costa Rica.

Christian, thanks for being with us today. Can you give us a little bit of background information on yourself and your company?

Cristian Fernandez: Sure. Okay, well, I’m a civil engineer by profession. I am the general director and founder of Lean Consulting, a Costa Rica firm that does project management. I’ve been working in project management for the last 16 or 17 years. That has been the background of my career path. I mostly specialize in life sciences and medical device facilities. Since I got started with project management in Costa Rica, I’ve been focused on those types of building construction, from the development of their planning phases to the construction phase.

The Central American Group: That’s very important because, as our listeners may or may not know, Costa Rica is the second largest exporter of medical devices in Latin America after Mexico. That being said, can you tell us some of your clients and some of the projects that you’ve done for them in the life sciences sector in Costa Rica?

Cristian Fernandez: Yes. Well, maybe I can give you the two types of clients. First, under the auspices of Lean Consulting, we have been working in the market for five years. We have worked for very important firms or companies such as Bayer, the pharmaceutical division, and a very large German group called Freudenburg Medical. We have also been working with Boston Scientific, Baxter Edwards, Life Sciences, and Creganna Medical. Currently, we’re working for a very large medical device corporation which is still confidential. We cannot mention their name yet, but it is one of the top ten major companies. So, it’s a significant client and investment going into Costa Rica. The other hat on my background experience before I founded Lean Consulting. As I mentioned in the beginning, I have a career path of around 16 or 17 years working in this type of industry. I was the project manager in Costa Rica for companies such as Abbott, Vascular, Medtronic, Phillips, Smith and Nephew.

The Central American Group: Well, that’s a very impressive slate of clients that you just communicated to us above and beyond project management in Costa Rica. Do you offer other services to your customers, and how do you add value to your efforts beyond project management?

Cristian Fernandez: Yes. Okay. This type of industry is very sophisticated, and clients require very complex services. We have understood this for many years, and we tried to apply some custom or tailor-made services for each client. We don’t limit ourselves only to project management in Costa Rica. We also try to figure out what are the true necessities of each client. For example, we provide services for design management, which is very common in the early phases of each project. It’s like some project management but more focused on the design phase, developing all the drawings. Also, there are other technical services, such as contracts and claim management. This is a fusion between the legal component of the contract and the agreement. It entails how they are structured and how they are applied during the process of construction. We also do claims management, which is more from the perspective of the changes in the agreement. Project management in Costa Rica is very dynamic. Because of this, we need to address a very specific service focused on the control and documentation of all the changes associated with the project. So those are very specific services that some clients have been requesting in the last few years.

We have been making a significant effort to promote those services because we believe they truly benefit the investors. This is the case because they come to Costa Rica looking for some serious support for their projects. Sometimes the services that other companies offer are more standardized. They limit themselves to project management in Costa Rica. We like to understand what the client truly needs in terms of their support and address those needs.

The Central American Group: Cristian, you’ve told us that you’ve been in this activity with respect to the life sciences sector for the last 16 or 17 years. Well, that creates an environment, obviously, where you’re not only able to hopefully explain to us the evolution of the life sciences sector in Costa Rica but also explain to us what you see going forward.

Cristian Fernandez: Okay, yes, it’s a very interesting question. In my humble opinion, what we have seen over these last two decades of the industry and the market around the life sciences sector is that it’s very interesting for our country. A lot of firms have been interested in starting their operations or expanding operations here in Costa Rica because of the very good conditions of the governmental tax incentives, very good labor, and the very technical and developed manpower that is found here. We have seen that this is also a very resilient and stable sector. We have seen that in the last 20 years, two major economic crises have happened. One of these was in 2008, and the second one was in 2020 due to the pandemic issue that had a worldwide impact. From our perspective, we witnessed that this sector was very stable because it was not significantly affected by those crises. The investment remained the same even in 2020. It was a surprise for us that we even saw growth in our company because of major companies’ trust in the country. That comes from several factors. It’s not only tax incentives, as I mentioned.

It’s also because of the professionalism that these companies find here. This is not only because of our stable market and the conditions the government has created. It is also reflected in the labor force. The professionals that you can find in Costa Rica are very capable from the perspective of engineering labor in all its forms. We also have all the required administrative personnel and all the different components different firms need.  These include construction companies, designers, and everything around project management in Costa Rica. The country offers a very high-end or very capable type of professional. That gives a lot of trust to these big companies that come here looking to take on big challenges and looking for sophisticated services. And I think that’s the reason why it has been so stable in the last two decades.

The Central American Group: Given the panorama of the life sciences sector you just described, what is your company’s and project management’s vision in Costa Rica for the medium to longer term?

Cristian Fernandez: Well, we have seen that the forecast appears to continue with some growth each year. The country is still looking to develop more and better conditions for investment. Regarding our perspective, we are a small firm, and we want to remain that way. Our company has just ten engineers, and we don’t expect it to become a very large firm. We are more focused on becoming great instead of big. What I mean about that is we always have in our vision to develop long-term relationships with our clients. For example, in the case of Bayer, we have been working with them for the last four years. In the case of Freudenberg Medical, we have been working with them for three years and with Boston Scientific for another four years. We truly understand their needs. We want to gain trust and develop long-term relationships. So that’s our vision for project management in Costa Rica. We like to give a very good service and rely on stability more than becoming big and focusing on our clients and not purely on sales and revenues.

The Central American Group: So, you’re describing that you like to offer boutique services to your customers. Are there any other differences that are very marked between you and the companies against which you compete?

Cristian Fernandez: Yes, I will mention a couple of them. The most significant one for us is that we specialize in this sector, in the life sciences sector. Several good or very good companies in the market provide project management services in Costa Rica. However, they are more diversified. They attend to residential, commercial, governmental buildings or facilities, or whatever. But since the beginning, the vision of Lean Consulting was to focus on a more specific sector: life sciences and industrial buildings. That’s our background. With our team and our engineers, we are all aligned with that mindset. So that’s our focus. That’s what we really understand, and we really know how to do it. So that’s why we decided to become specialists in providing project management services in Costa Rica in the life sciences market. As you know, when you become a specialist in something, you typically do better than the ones that try to do many things simultaneously. Our company is called Lean Consulting, and that is the reason. I am a true believer in the lean philosophy, including lean construction, lean manufacturing, et cetera. We truly believe in focusing on value and avoiding any waste.

We like to give the best possible service to our clients. So that’s what we try to do. We can adapt easily. We are very flexible. As you mentioned, we are a kind of boutique firm because we like to provide very specific services according to tailor-made solutions that our clients require. Those are the main differentiators of our company.

The Central American Group: You mentioned several international companies. I would imagine that in addition to that, you service the domestic market as well because most of the listeners that we get are international listeners. What value add is there for them through your company’s project management services in Costa Rica?

Cristian Fernandez: We have been working on this type of process for several years. I understand the complete cycle of when a company wants to start doing business in Costa Rica. We understand what needs to happen in each of the phases. We can take the company’s hands, guide them, and advise them on what they must do in each phase. That’s what I have been doing in the past, in my former job, before starting Lean Consulting. That’s something that I am trying to also offer to our clients. All of the advisory processes along the cycle of project management services in Costa Rica because we understand that they are coming to our country with a limited vision of what’s happening here. They don’t understand the regulations, the laws, the market, the prices, and what’s common. They need to know where good vendors are, et cetera. We understand how that works, and that’s why we like to be the partner of those clients through the entire process of project management services in Costa Rica.

The Central American Group: That’s a good overview that you’ve given us. Typically, when folks listen to these podcasts, the information that they get leads them to formulate further questions. That being the case, we like to ask the companies that we talk to number one to tell us if they have a website and what the address is. And number two, let the audience know how to reach our guests with their questions.

Cristian Fernandez: Sure. For instant responses, I would recommend sending us an email. It’s the easier way to communicate. We have an email address for that purpose it’s [email protected]. In that case, any questions, and I truly say this, any questions with no commitment, we can answer regarding what you need. That’s something that I always like to say to our potential clients for project management services in Costa Rica. There’s no commitment, and you just let me know where I can help you. I truly want to help you. If there’s something we can support you with our services in the future, that will be awesome. But now, if you have concerns about whom you can contact for something or if you are looking for some business park or something, just let us know. We can be your first point of contact if you require. We’re very transparent with the information that we can give you. So send us an email to the address that I mentioned

The Central American Group: I’m going to guess, given what your email address is, your website is www.leanlcr.com. Is that correct?

Cristian Fernandez: Yes, it is.

The Central American Group: Okay, thank you for speaking with us today about project management services in Costa Rica. It’s been informative and interesting.

Cristian Fernandez: Thank you for your time. It was a very big pleasure for us to have this conversation.

Please use this form to contact us and we will respond as soon as possible:

The post Project Management Services in Costa Rica appeared first on The Central American Group.

<img width="720" height="405" data-tf-not-load src="https://www.thecentralamericangroup.com/wp-content/uploads/2023/05/starting-up-a-manufacturing-facility-in-Costa-Rica.jpg" class="attachment-full size-full wp-post-image" alt="starting up a manufacturing facility in Costa Rica" decoding="async" srcset="https://www.thecentralamericangroup.com/wp-content/uploads/2023/05/starting-up-a-manufacturing-facility-in-Costa-Rica.jpg 720w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/05/starting-up-a-manufacturing-facility-in-Costa-Rica-300x169.jpg 300w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/05/starting-up-a-manufacturing-facility-in-Costa-Rica-610x343.jpg 610w, https://www.thecentralamericangroup.com/wp-content/uploads/2023/05/starting-up-a-manufacturing-facility-in-Costa-Rica-355x200.jpg 355w" sizes="(max-width: 720px) 100vw, 720px" />

David Hard
Manufacturing Project Manager
Brisk Heat
Columbus, Ohio
[email protected]

The Central American Group: Hello. Welcome to everybody that’s listening to this podcast. Today we have David Hard with us. David is with a company called Brisk Heat that is out of Columbus, Ohio. David has an interesting story to tell us this morning. He went through the process of starting up a manufacturing facility in Costa Rica. He’s the manufacturing project manager for a company called Brisk Heat, and he just went through the process of starting up a manufacturing facility in Costa Rica. But without saying more, I’ll let David introduce himself and tell us about Brisk Heat.

David Hard: Yes, thank you so much. I’m David Hard. I’ve been with Brisk Heat for about six years now. I’ve been tasked with the excellent opportunity to be involved in starting up a manufacturing facility in Costa Rica. So, one thing that’s unique about Brisk Heat is that we’ve been around for about 75 years and make a unique product. We make industrial heating solutions for various industries, but a lot for semiconductor applications. It was an exciting opportunity for us to take this production down to Costa Rica.

The Central American Group: Well, David, just to give the audience an idea of what we’re going to do, we’re going to talk about the process of starting up a manufacturing facility in Costa Rica because you’ve just gone through that. What we hope that you’ll be able to do is provide some information that’ll be instructive for people that are considering doing the same thing. But first of all, what factors led Brisk Heat to choose Costa Rica over other existing options before we get into the actual process?

David Hard: So, when we were looking at new production facilities, we returned to the fact that we have our facility here in Columbus, and then we have our manufacturing facilities in Vietnam that we started about ten years ago. One of the things that really drove us to look at the possibility of starting up a manufacturing facility in Costa Rica was our new parent company, the NIBE Group, which actually guided us to improve our business continuity. And by doing that, we wanted to find a location somewhere in North America or Latin America to supply our North American market better. We looked at starting up a manufacturing facility in Costa Rica and several other Latin American countries. We landed in Costa Rica because getting to North and South America was easy. But they had an excellent, readily available skilled labor force, which was very promising for us as we moved into a new country.

The Central American Group: Well, another thing that I wonder if you looked at as far as Costa Rica is concerned, there are a lot of free trade agreements with which you can export your goods to a number of different countries. Costa Rica, obviously, has got its political stability. But in addition to those things, what led your company to choose the Green Park Free Zone out of all the other options that are available to you in Costa Rica?

David Hard: When Green Park originally contacted us as a free trade zone to go into, they were one of the few parks that actually provided us an opportunity not just to take an existing building and retrofit it to our needs. They were actually able to be cost-competitive and build an entire facility for us and move into that fitted up exactly how we needed it. But an extra bonus was because that would take about nine months.  We could move into one of the buildings they had on-site and start production earlier, which is critical for us because our training process can take up to a year to execute fully.

The Central American Group: Well, what has been the experience regarding starting up? Was it smooth? Did you hit any snags? Maybe you could elaborate on that.

David Hard: Yes, every company probably will go through this. You can plan all you want, but you’ll always hit a snag. So Green Park has made everything extremely easy from a building and an outfit standpoint. But then, some of the unexpected things we had occur was going through the environmental permit process and determining exactly how imports and exports work for Costa Rica through the US. And then, with a free trade zone, we were new to, we were working with Procomer. But in order for us to kind of really get through a lot of those unexpected surprises, we were able to partner with excellent organizations such as CINDE, Seal and Seal, and a bunch of other companies to really fine-tune what we needed to do when starting a manufacturing facility in Costa Rica and get answers very quickly.

The Central American Group: Now, what was it like going through the process of environmental permitting and dealing with import and export issues with Procomer? How were those organizations as far as addressing your needs?

David Hard: Yes, definitely, that was something new for us. So, since we didn’t have any boots on the ground, everything was still running through the US. We partnered with some local organizations like Cinde, which is excellent at bringing companies into Costa Rica. We also partnered with Seal and Seal, who knows a lot about environmental permitting. And then, we worked directly with Procomer to do virtual training. And all of that was extremely helpful for us to work through many of our bumps and snags as we went through the process.

The Central American Group: Tell us about the readily available labor force. Can you tell us your hiring process for starting up a manufacturing facility in Costa Rica?

David Hard: Yes, so Brisk Heat has a very rigorous training program. For us, finding excellent candidates is very crucial. We were able to partner with many local municipalities and networks like the INA Institution, which is the National Institute for Training, to place job applications everywhere. Then we were able to get very talented, very skilled employees right out of the gate. We’re able to pick up our training very quickly, and now we’re producing our product.

The Central American Group: Well, how was the training process? Was it something that was formulated in the home office, and then you transferred it down to your Costa Rican facility? Can you tell us a little bit about that?

David Hard: Yes, so we’ve had a training process that we use as our template when we moved into Vietnam. During that time frame, from about ten years ago to now, we’ve been able to fine-tune that, and then we actually had some of our US representatives go down and do onsite training in Costa Rica. So here at Brisket in the US. We have multiple nationalities covered all across our building. So, we were fortunate enough to have a Spanish-speaking manufacturing manager who could go down and support them and teach our Costa Rican workforce everything quickly in their native language.

The Central American Group: Just out of curiosity, I know this is not one of the things we discussed up front, but how much time did you spend starting up a manufacturing facility in Costa Rica personally?

David Hard: So right now, I come and go. I go down about once a month, once every six weeks for about a week at a time. The big benefit that we have is we like to let the local representatives actually run and manage everything. We just provide them with the tools they need, so we don’t spend tons of time down there unless they really need us to help support something.

The Central American Group: I know listeners will be very interested in this. What advice would you give others contemplating starting up a manufacturing facility in Costa Rica?

David Hard: Costa Rica is excellent, as every company knows you’re going to have up and downs, so partnering with the right people is definitely one of the best things you can do. I recommend working with CINDE to review all the paperwork and documentation to enter the country. And then, from there, they can help you connect to the right legal teams and review free trade zones, get you in contact with Procomer, and set up those training classes so you can learn a lot ahead of time. So that way, you’re not really surprised later. So definitely utilize the resources that Costa Rica provides. There is no charge for CINDE’s resources, so I would definitely say utilize everything you can from them.

The Central American Group: What about a legal team? Did you have legal support?

David Hard: Yes, we actually partner with BLP Legal, and they’ve been excellent. Every day I keep giving them more and more stuff to do, and so far, they still respond and say that everything’s going great.

The Central American Group: And then advice. In choosing a free trade zone partner, what would you say is important to look at when starting up a manufacturing facility in Costa Rica?

David Hard: For us, the partnership we’ve developed with Green Park and all the staff is very critical. We’ve been able to work very closely with them, and we’ve noticed that they want us to succeed just as much as we want to succeed. By doing that, we know that a good partnership has been formed. So definitely find a free trade zone that you feel confident with, and you know that they want your success just as much as you do.

The Central American Group: And what else would you recommend in terms of training classes that might be available to people in the position of starting up manufacturing operations in Costa Rica?

David Hard: Definitely look through Procomer’s website. They have lots of resources if you’re looking for anything about free trade zones. Talk to the free trade zone you’re looking into because they probably have different people they can connect you with.  This includes contractors, vendors, and anything like that. Utilize any resource that you can get from Procomer, your free trade zone, and CINDE.

The Central American Group: I would add to that the Central American Group’s blog. We have lots of information about business in Costa Rica that people can take advantage of. When do you fully open up your operations in Costa Rica?

David Hard: So that’s a fun question. We actually hired our first employee back on September 22. As I mentioned earlier, our training process is approximately a year to get any of our cloth assembly associates trained to produce high-scale jackets. So, we hired our first production associates in December. We streamlined their training process and produced and shipped our first product in May of this year. So that’s been excellent for us.

The Central American Group: Wow. My understanding is in January when the operations are at full capacity, you will inaugurate the facility. Is that true?

David Hard: Yes. We plan to do our Grand Opening ceremony towards the end of January next year. We’ll be at approximately a third of our planned staff capacity because we can only bring on so much so quickly. But we’re planning to get to full capacity by the end of 2026 and provide around seven hundred jobs to the local area.

The Central American Group: Well, I’m sure that that’ll go very well with the locals as far as this is another thing that people ask us quite often, was your experience in finding the people that you need to be bilingual? Were they available to you?

David Hard: We actually partnered with an employment agency, Doris Peters and Associates. They were excellent at going out and seeking candidates for us, for our high-level positions, and for our senior staff. And then, from there, we were able to go through a couple of candidates, and we found excellent bilingual individuals. A lot of our other positions don’t require bilinguals, but we’re seeing that a lot of people can speak both Spanish and English. I’m in the process of learning Spanish. That way, I can help them a little more while I’m there. It’s been excellent to have a vast pool of bilingual candidates all over the place in our experience in starting up a manufacturing facility in Costa Rica.

The Central American Group: Well, David, this has been an interesting discussion, and it’s a topic that I’m sure is going to be of interest to a lot of our listeners. Typically, when we speak with somebody with your expertise, we like to ask them if they would be available, perhaps to answer questions from any of our listeners. Would that be something you’d be willing to do?

David Hard: I’d be open to emails, obviously. I travel often, so phones don’t always work for me. But for emails, I tend to respond pretty quickly.

The Central American Group: Okay. David, if you could tell us your email, and I’ll ensure that it’s in the transcript portion of the podcast, I’d appreciate it.

David Hard: Yes, so my email is [email protected].

The Central American Group: Well, David, it’s been a pleasure talking with you, and hopefully, we’ll meet each other in person this coming January in Costa Rica.

David Hard: Sounds excellent. I’m looking forward to it.

The Central American Group: Thank you again for joining us.

Please use this form to contact us and we will respond as soon as possible:

The post Starting up a manufacturing facility in Costa Rica appeared first on The Central American Group.