Investing in Costa Rica

A recent study by the Miami Herald rated Costa Rica the 27th safest country for investment of 140 countries surveyed. If you are not impressed by Costa Rica’s ranking, consider that the U.S. was ranked only 22nd! Another recent study found Costa Rica to be the least corrupt country in Latin America.

In addition, U.S. business magazine, Fortune ranked San José Latin America’s fifth best city to do business and placed it within the 25 best cities in the world. According to the report, Fortune considered the city’s ability to create opportunity for its residents, its business climate and how well it can satisfy the business needs of companies that invest there. San José ranked tops in the quality of its labor force, its business environment and the lifestyle it offers resident executives and investors.

Let’s review a few of the reasons Costa Rica has such magnetism for qualified foreign investors. First, and perhaps most important is the enduring political stability. As you already know, Costa Rica has had a strong, democratic government without interruption since the 1940s and an excellent centralized banking system. The trend towards an open economy and possible trade pacts with such nations as the U.S. and Mexico are conducive to investment in Costa Rica. Privatization of many state-run institutions will undoubtedly help economic growth in the future. There are also no government expropriations or interference as in many Latin American countries.

Costa Rica is easily accessible from all parts of the world by land, sea or air. Outstanding phone, telex and telegraph systems link Costa Rica internationally to other parts of the world. Also, let’s remember that investors in Costa Rica have equal rights and laws to protect them. The regulations for conducting business in Costa Rica are the same for both local and foreign corporations, which can fully own and control local corporations, as well as real estate without any access limitations or restrictions. Furthermore, many opportunities await foreigners who start new businesses previously nonexistent in Costa Rica. As you know the cost of labor is low. Additional reasons for investing in Costa Rica are: asset protection (creditors, judgments, liens, bankruptcy and divorce), privacy from individuals and governments and fewer taxes ( income tax, inheritance tax, estate taxes and probate fees).

Many attractive incentives are available to foreigners investing in Costa Rica. Investments of $50,000 or more in an approved project qualify the investor for legal residency. However, it is not necessary to become a resident to own or manage a business. Anyone who owns a business can import some items used to operate it and get a tax break on some of the usual duties. Contact the incentive section of the Costa Rican Tourist Institute (I.C.T.) for more information about incentive programs.

Tourism is now the leading industry in Costa Rica. Numerous opportunities exist in this field but even more bureaucracy and competition. Small hotels and bread-and-breakfasts were good investments a few years ago, but there may be a surplus of them now. We have a good friend who refurbished an old building and turned it into a small hotel in 1990. He has done very well only because he has been in the country for a while, knows all the ropes and was a pioneer in the field.

Foreigners can invest with Costa Rica’s nationalized banking system, private banks or finance companies. Interest rates are higher than in the United States (22 percent or even higher in colones and up to 8.75 in dollars) and there are many attractive savings accounts and time deposit programs to choose from. Presently, there is no tax on interest from bank accounts. However, when investing in Costa Rican currency you have to figure in yearly inflation to see if you are really getting a good deal. There are some degrees of bank secrecy, liberal money transfer regulations and favorable tax laws for foreigners (see the section in this chapter titled “Taxes”).

Foreigners can also invest in the local Stock Exchange (Bolsa Nacional de Valores) to get better returns than from traditional financial systems. The stock market presents a safe investment alternative with great opportunities for the investment to grow through stock appreciation, dividends, stock splits, mergers and acquisitions.
v Costa Rica has the largest stock exchange in Central America. Around twenty-nine firms or Puestos de Bolsa are registered with the National Stock Exchange. Costa Rican stockbrokers can study economic trends and give you advice on investing in government bonds, real estate, time deposits and other investments. The Costa Rican Stock Exchange is regulated by the National Securities Commission or Superintendencia Nacional de Valores de Costa Rica (SUGEVAL), which is the counterpart of the U.S. Securities and Exchange Commission. They can give you information about the reliability of firms and brokers. There exists a strong possibility the local exchange will be linked with other Latin American trade blocks in the very near future. For more information about the Costa Rican stock market, contact Grupo Busátil Aldesa at 1-888-5-ALDESA (U.S. only) or 223-1022 or E-mail: grupo@aldesa.com. Investors can find additional information about the local stock market at:www.capitales.com.

You may also invest profitably in blue chip offshore mutual funds. Most people do this to protect their assets from creditors, judgments, liens, bankruptcy, malpractice claims, divorce and separation claims, liability claims not covered by insurance and seizure by the U.S. government. We suggest you read A Beginner’s Guide to Investing Safely, Privately and profitably in “Blue Chip” Offshore Mutual Funds by Scott Oliver. Please see www.offshorecostarica.com for details.

AmCham’s Guide to Investing and Doing Business in Costa Rica is another source of information for the potential investor. It is available through the Costa Rican-American Chamber of Commerce or AMCHAM. The Chamber of commerce also publishes a monthly magazine titled, Business in Costa Rica that has advice on how to invest in Costa Rica. You may also want to attend a meeting of the Investors Club of Costa Rica. For information call 240-2240 or 222 -5601. This is a good way to meet people with common interests.

RELOCATION, INVESTMENT and RETIREMENT CONSULTANTS is a firm we highly recommend to any newcomer or potential investor. They have many years of experience, will steer you in the right direction and save you a lot of headaches and money. Their expertise, network of reliable contacts and insider information have already helped hundreds of people find success, prosperity and happiness in Costa Rica.



Before investing or starting a business, you should take the time to do your homework. Under no circumstances should you invest right off the plane, that is to say, on your first trip to Costa Rica. Unscrupulous individuals and scamsters will always prey on impulsive buyers anywhere in the world. Be wary of any salesmen who try to pressure you into investing. Remember it’s hard to start a business in your own home country; don’t imagine it will be any easier in Costa Rica, where both language and customs are different. The Better Business Bureau of Costa Rica will help you find reliable businesses and services. Global Security Services will do background checks, criminal history, bankruptcy and lien history if you so desire.

We also suggest you ask a lot of questions and get information and assistance from any of the organizations listed below in order to thoroughly understand the business climate of the country. However, don’t solely depend on the help of these organizations. You’ll have to garner a lot of information and learn on your own by some trial and error. This way you can find out what works best for your particular situation.

American Chamber of Commerce of Costa Rica:
AMCHAM
P.O. Box 4946
San José, Costa Rica
Tel: 011-(506) 220-2200;
Fax:011-(506) 220-233-0969
E-mail; chamber@amcham.co.cr

Coalition for Investment Initiatives-CINDE
P.O. Box 7170
San José, Costa Rica
Tel: 011-(506) 220-0036; Fax: 011-(506) 220-4750
E-mail: aheilbron@cinde.or.cr

Export Promotion Center - CENPRO
P.O. Box 5418
San José, Costa Rica
Tel: 0i1-(506) 220-0066; Fax: 011-(506) 223-5722

Procomer
P.O. Box 1278-1007
San José, Costa Rica
Tel: 011-(506)256-7111; Fax: 011-(506) 233-5755
E-mail: info@procomer.com
www.procomer.com

The Costa Rican Stock Exchange
Bolsa Nacional de Valores
P.O. Box 1756
San José, Costa Rica
Tel: 011-(506) 222-8011; Fax: 011-(506) 255-0531

National Securities Commission
P.O. Box 10058
San José, Costa Rica
Tel: 011-(506) 233-2840; Fax: 011-(506) 233-0969

Canada Costa Rica Chamber of Commerce
Tel: 011-(506) 257-4466