The Top 10 Challenges Of Doing Business In Costa Rica

• Published date: 09 February 2023
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Inward/ Foreign Investment, Corporate and Company Law
• Law Firm: TMF Group BV
• Author: TMF Group

Costa Rica is a promising country to do business in with high economic growth but it is not without its challenges.

Costa Rica continues to be one of the most attractive Latin American countries in which to do business, with a relatively stable economy and political situation. It is ranked 45th out of 77 jurisdictions assessed in TMF Group's 2022 'Global Business Complexity Index', making it one of the lower complexity Latin American markets in which to do business.

Three world rankings, led by experts in attracting foreign direct investment (FDI), have identified the Coyol Free Zone as the leading free zone in the region and a pioneer in issues of sustainability, environment and innovation. The renowned international magazine, fDi Intelligence, which for the fifth consecutive year highlights the business park's work by placing it in the 'Top 10 Free Zones in the World' and recognising it as the best free zone in the Americas.

Eight cities in Costa Rica appear in the most recent ranking and in the sixth edition of 'Cities of the Future of the Americas 2021/22'. According to fDi Intelligence, the creator of the study, the country has key geographical areas for FDI, human capital and profitability, among other categories.

Multinational companies are encouraged to start up operations under the 'Free Zone Regime' (FZR). This regime is the mainstay of Costa Rica's export and investment promotion strategy. The FZR is a set of incentives and benefits granted by the Costa Rican government to companies making new investments in the country, for example, exemption from taxes on exports. These feature under laws and particular regulations coordinated by PROCROMER and other entities.

Ranked by the World Economic Forum (WEF) in the Social Mobility Index 2020 edition as in 44th place out of the 82 economies assessed, Costa Rica is bettered only by Uruguay in Latin America; it is also recognised by the WEF as having the best educational system in the region.

According to the OECD's economic forecast for Costa Rica, issued in June 2022, GDP will grow by 3.2% in 2022 and 2.6% in 2023. Domestic demand will strengthen moderately in 2022 and exports will benefit from the reactivation of the tourism sector in the last quarter of 2022 and early 2023.

Costa Rica's investment climate has been generally favourable for many years. Consequently, FDI is high and has been a significant contributor to Costa Rica's economic growth. FDI into Costa Rica is expected to be US$490 million...