Report Shows Growth In Foreign Investment

Costa Rica last year attracted $861 million in foreign direct investment, an 8.4% increase over the $793 million invested in 2004, according to the results of the World Investment Report published by the U.N. Development Programme (UNDP).

According to the recent report, Costa Rica ranks third among Latin American countries in terms of foreign investment per capita. Chile and Panama hold the first and second spots.

The Costa Rican Investment Promotion Agency (CINDE) estimates that 70% of Costa Rica s foreign direct investment in 2005 came from the United States, 5% from Europe, 2.8% from Central America and the rest from other parts of the world.

Of the total $861 million foreign direct investment, 41% was generated by businesses in free-trade zones, 26% from the real estate sector, 21% from other foreign businesses, 6.2% from tourism and 4.8% from financial institutions.

Despite this growth, CINDE president Alberto Trejos recently expressed concern that in the past few years, Costa Rica has decreased its potential to attract investment.

According to Trejos, the main problems foreign companies face when setting up shop here are a lack of infrastructure, an out-of-date telecommunications system and a shortage of qualified workers. He pointed to a lack of training opportunities in English and technology skills.

In terms of infrastructure, the country lacks adequate highways, ports and airports, and companies that wish to operate here must go through numerous unnecessary bureaucratic processes, Trejos said.

He added that Costa Rica s failure to ratify the Central American Free-Trade Agreement with the United States (CAFTA) threatens the growth of foreign investment.

The agreement would open up a profitable export market with the United States, he said.

Costa Rica s Legislative Assembly is still studying CAFTA.