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Experts: Concessions key to Costa Rica growth

March 8, 2012

From the print edition

It is widely agreed upon that in coming years investment in Costa Rica’s infrastructure will be a vital part of maintaining a high quality of life for residents as well as achieving positive social and economic growth. The only problem is paying for it.

As part of its national transportation plan, the Public Works and Transport Ministry estimates that from 2011 to 2018, $8.5 billion is needed to fund investments in the country’s transportation infrastructure. The Costa Rican Water and Sewer Institute calculates that $1.8 billion is needed over the next five years for investment in water and sewer infrastructure. National and local governments have also talked about new and updated highways, trains, trolleys, airports and seaports. The list goes on, but funding is scarce.

Which is why, at a recent conference sponsored by the U.S. Embassy and the Costa Rican-American Chamber of Commerce, Ambassador Anne Slaughter Andrew and a panel of experts in the area of public concessions made the pitch that a viable solution would be handing over some of the projects on the government wish list to private entities. Andrew said public-private concessions could relieve the burden on taxpayers and allow infrastructure development to take place in the country at a time when public funding is limited.

Several projects in Costa Rica have either used or are in the process of using this model, including the Caldera Highway, renovation of the Daniel Oduber International Airport in Liberia, in the northwestern Guanacaste province, and renovation of the Moín port on the Caribbean coast. 

John Buttarazzi, former director of New York’s Empire State Development Corp., said that concession partnerships are mutually beneficial. When the options of increasing debt or raising taxes to fund projects are off the table, a third alternative is to allow private companies to take over the reins. He said people shouldn’t fear a company’s profit motive. 

Another aspect of the forum focused on the process for creating contracts in Costa Rica between private companies and the government. Flemming Falkentoft, legal manager of APM Terminals, the company carrying out the $948 million Moín port renovation, said Costa Rica should make some changes to its national concession process and move toward standardization. 

Mónica Araya, president of the Chamber of Exporters, displayed 2011 statistics from a global competitiveness survey that listed government bureaucracy and lack of adequate infrastructure as the No. 1 and No. 2 impediments, respectively, to doing business in the country.

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