Overview of the Market

• population - 4 million

• GDP 31 billion dollars in 2008

• Exports in 2008- 10 billion $ and Imports in 2008- 15 bn $

• Politically the most stable country in Central america. Has abolished armed forces.

• Economically dynamic. Compared with its Central American neighbours, has achieved a high standard of living.

• highest literacy rate in Central America with 96 percent. Infant mortality lowest and life expectancy highest in centarl america.

• 99 percent of electricity is generated from renewable sources, including 14 % from geothermal source of volcanoes.

• coffee is the most important crop. The country grows only Arabica highland variety, which commands premium prices.

• Second biggest exporter of bananas.

• sugar cane, coco and cut flowers are other major crops.

• Tourism is an important foreign exchange earner. Over one million tourists visit every year.

• Intel chip factory in San Jose accounts for 25 percent of the GDP of Costa rica. Electronic circuitry accounts for 40 % of the total exports.

• The presence of Intel and the high literacy rate is stimulating the growth of IT sector making Costa Rica as the “ the Silicon Valley of Latin America”.

 

Here is an article ( 27 July 2007 in Business 2.0 magazine ) on the growing Outsourcing business in Costa Rica

 

With its beaches, golf courses, cuba libres, and rock-solid social-security system, it's no wonder that Costa Rica is luring American executives who want an alternative to Indian outsourcing. After sending thousands of technology and call-center jobs to India and the Philippines, major U.S. companies including Dell (DELL) and Procter & Gamble (PG) are now looking to Latin America to meet their outsourcing -- or rather, "nearsourcing" -- needs. Like India before them, Brazil, Nicaragua, Panama, and especially Costa Rica are embracing the trend with business-friendly policies and aggressive marketing. "Costa Rica is moving up very fast," says Ram Mohan, IT manager for P&G, which operates a 1,000-employee center in San José, Costa Rica, to handle financial and infrastructure systems support.

Currently, 24,500 Costa Ricans work in call-center and IT jobs, doing everything from fielding complaints about shampoo to answering questions about insurance. The number of call-center positions alone is expected to double in the next two years, says Federico Cartín, executive director of the nonprofit Costa Rican Chamber of Information and Communication Technology. In Latin America as a whole, the number of call-center workstations will hit 730,000 in 2008, up from 336,000 in 2004, according to market-research firm Datamonitor. Brazil is expected to get a big slice of that business, thanks to some of the lowest labor costs in South America. Business promotion agency ProNicaragua expects its homeland to create 3,000 new jobs in the next few years, while Dell already employs 2,000 workers at its Panama call center.

It helps that the scenic shores of Central America are just a five-hour flight from the East Coast, but that's not the only appeal. The region also shares two time zones with the United States -- the better for handling phone calls -- and Costa Rica, in particular, is full of well-educated workers, having abolished its army more than 50 years ago and rechanneled the funds into education, including mandatory English training. Though its progressive labor codes translate into relatively high wages, the "Switzerland of Central America" also boasts an extensive social-security system that makes it easy to perform background checks.

COSTA RICA

SELLING POINTS Stable, neutral government; social-security system that enables preemployment background checks.

NICARAGUA

SELLING POINTS Very low overhead; influx of foreign investment.

PANAMA

SELLING POINTS Excellent telecommunications infrastructure; political and economic stability.

Sources: Costa Rican Chamber of Information and Communication Technology; ProNicaragua; listed companies

To counter Costa Rica's image as an underdeveloped banana republic, the Chamber of Information and Communication Technology has a new campaign promoting the country as "green and smart." Intel, which has been manufacturing microchips in Costa Rica since 1998, recently launched a software division there, while call-center operator Sykes Latin America employs Costa Ricans to help its corporate clients do everything from answer tech-support questions to serve customers who've lost their credit cards.

Other burgeoning hubs are also making a concerted effort to attract IT business. Nicaragua, where an influx of foreign investment is helping to pull the country out of its war-torn past, has created an online database to track the bilingual employee pool. When ProNicaragua launched Nicasearch.com last year, more than 4,200 applicants registered online. Medical-services provider Almori is currently the largest bilingual call-center employer, but ProNicaragua expects business to increase rapidly. Meanwhile, Brazil is moving to attract business by suspending export taxes on IT hardware and software for the next five years. Citibank and IBM (IBM) are among the companies already sending work there. And who can blame them? With all due respect to Mumbai, we're betting most American execs would rather spend their time on the road in Rio.

Business with India

Bilateral Trade (US $ million)   2008 2007 2006 2005   Exports from India   50 40 28 29   Imports by India   25 28 11 8     Principal items of India ’s exports comprise mainly of textiles, tubes, pharmaceuticals, two-wheelers and agro-chemicals .   Principal items of India ’s imports are mainly printed circuits, wood and wood products, leather and hides and oil seeds

Indian elctric car Reva introduced in Costa Rica in march 2009

The Costa Rican government is expected to allow duty free import of this car

 

Costa Rica allows visa -free entry of Indian business visitors again

The new regulation in effect from 23 May 2007. Last year they tried this experiment but closed it. Now the new rule is going to stay. The bz visitors need to have US or Schengen visas. Visitors can stay for 30 days during each visit.

Mittal Buys Costa Rican steel companies

ArcelorMittal had taken control ( february 2008 ) of two Costa Rican steelmakers by buying the half of the companies it did not already own. It had bought a 50 percent stake in Laminadora Costarricense SA, which makes rolled steel, and wiremaker Trefileria Colima SA from Clarion del Norte, part of the Pujol Group. Both serve the construction market in Central America and the Caribbean region. One of the companies that formed ArcelorMittal last year, Arcelor SA, first bought into the companies in 200.

Havells, the Indian lighting and fixtures firm has acquired the assets and business of Sylavania of US in Latin Amwrica worth 200 million dollars. They have three plants in Brasil, Colombia and Costa Rica. The chief of operations of the Americas region Mr Kapil Gulati manages the regional business from Costa Rica.

Indo- Guatemalan Chamber of Commerce

President Mr Guha guamol@intelnett.com