COSTA RICA
Investors Outlook for 1997

The Third Annual Survey of Foreign Investment Climate has been published (May 1996) by the Association of American Chambers of Commerce in Latin America, in collaboration with the Chase Manhattan Bank. Concerning Costa Rica, the following results are mentioned:

• · Its economic growth through 1997 will be moderate; that is, less than 5%, but more than 1%. It is similar to what is expected in eleven other countries of the region.
• · Costa Rica does not have a specific foreign investment law in the books, not as a regular law or as a constitutional provision. Sixteen other nations of the area do have one, either as a regular law or in their Constitutions. Equal treatment of foreigners as nationals is guaranteed by the Costarican Constitution.
• · There are no registration requirements for foreign capital in Costa Rica, compared with twelve other countries in Latin America, that do so.
• · It is pointed out that Costa Rica requires "some" local or joint venture participation by foreign investments, probably because of certain public domain areas, but not on private activities. The study points out that Costa Rica does not discriminate against foreigners in tax regime, ownership of land, access to domestic bank credit, participation in some sectors and in privatizations.
• · Costa Rica, as most Latin American countries, does not place limits on repatriation of profits and of original investment. Costa Rica has a tax of a 15% on dividend remittances. This does not apply to companies established in Free Zone areas.
• · There are limits on the number of foreign hired staff, specifically regarding direct labor, but not managerial. There is a clear set of rules to obtain visas and an efficient, but slow, process to obtain them.
• · There are no limitations on holdings of foreign exchange and it is available through legitimate markets.
• · There are no restrictions on licensing and royalty arrangements as well as in technology transfers and payment of fees. Also, in the percentage of sales and percentage of capital for foreign firms.
• · There are import taxes in equipment, raw materials, packaging and supplies that are imported. However, there is special legislation that exempts such taxes, as is the case of imports to be incorporated into exports, free zones and drawback activities.
• · It is mentioned that Costa Rica's import duties are below standard ones in the World Trade Organization, and that is has implemented the necessary legislation to assume its obligations with the WTO, as well as the implementation of Trade Related Intellectual Property (TRIPs) according to GATT.
• · Concerning labor environment, in a scale of 1 (worst) to 10 (best), Costa Rica is graded 8 in severance provisions (best of all included); 8 in unions (also the highest); 9 in fringe benefits (first place). It is also the country (grade 9) where strikes are a not a problem and ranked the maximum 10 (for a second consecutive year), for having the best trained and productive labor force and with increasing productivity.
• · Costa Rica is rated average (along with eight other nations) referring to customs ability to process imports or exports quickly and efficiently.
• · Costa Rica has the highest rating (10) on the justice system ability to render impartial decisions, while there are concerns with the security situation (5), but not on foreigner's access to medical facilities (graded with a 9). It is also mentioned that there are no terrorist threats to foreigners.
• · Costa Rica's rating is 5 (although in a Latin American environment of rather poor rules) in the quality and enforcement of intellectual property protection of patents, copyrights and trademarks, and it is mentioned that in some sectors the lack of enforcement is a barrier to invest. The country is in the process of reforming the legislation of intellectual property rights, according to WTO standards.