Beginner’s guide to doing business in Costa Rica
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Costa Rica presents a compelling case for enterprises considering growth opportunities in Latin America (LATAM).
Costa Rica is known for its high literacy rate, quality educational system, and low-cost healthcare. The Costa Rican government actively seeks to attract investors and fully embraces an entrepreneurial mindset, which has already significantly contributed to the country’s economic development.
Read this article to discover reasons why international businesses invest in Costa Rica and learn the key steps to opening a successful company in this country.
Why do multinational companies invest in Costa Rica?
The entire region of Central America is widely considered one of the best options for global companies seeking specialised expertise, organisational growth, and investment opportunities. Its strategic location, stable economy, and business-friendly regulations make Costa Rica a good gateway into other countries in the LATAM region.
Costa Rica possesses an internationally recognised education system that produces a growing pool of skilled workforce. Local specialists are typically proficient in multiple languages, making it easy for global businesses to communicate with candidates and employees.
The country offers many incentives for companies looking into investment opportunities in Costa Rica, such as free trade zones, tax incentives, and relatively uncomplicated corporate law.
6 reasons you should do business in Costa Rica
According to PROCOMER, Costa Rica is placed third globally and first among Latin American nations in terms of attracting new foreign direct investment (FDI) projects.
Additionally, the 2024 Global Startup Ecosystem Index placed Costa Rica as the 8th best country for startups in Latin America and 75th place worldwide.
Besides being in high places in many relevant rankings, other various factors compel multinational companies to consider doing business in Costa Rica - below are the top six.
1. Free trade agreements encourage economic activity from abroad
Costa Rica has an established Free Trade Regime for companies doing business in Costa Rica. Locating your business in one of the many Free Trade Zones (FTZ) gives you access to attractive business benefits.
For example, the FTZ enables tax-free operations for 8 years. You don’t pay income tax, value-added tax, or duty on imported assets. Moreover, the FTZ status can be extended beyond the initial period with continued benefits.
2. Favourable business climate and political stability draw foreign investment
The country is known for its stable political environment and business-friendly regulations. This stability, combined with Costa Rica’s commitment to sustainability and social responsibility, creates a welcoming atmosphere for multinational companies.
Doing business in Costa Rica will positively impact your corporate profile relative to ESG, supporting your ability to position and attract socially-minded employees.
3. Skilled workers in Costa Rica are well-educated and ambitious
Costa Rica’s commitment to education, particularly in STEM fields, produces a talent pool that can meet the needs of various industries. However, the workforce in Costa Rica is not only well-educated but also recognised for possessing a strong work ethic, showing great initiative, and being socially conscious.
Additionally, many Costa Ricans are bilingual, with English proficiency further strengthening the overall competitiveness of the local workforce in the eyes of global investors.
4. Average monthly salary in Costa Rica is very competitive
In comparison to many other countries, especially in North America and Europe, the average salary in Costa Rica remains competitive.
This affordability allows businesses to hire top-quality talent without the financial strain of hiring entire teams in their primary locations while still ensuring local employees receive fair compensation.
5. Costa Rica’s strategic location makes it an attractive destination for businesses
Nestled almost in between of North and South America, Costa Rica is a prime location for businesses looking to tap into LATAM markets and companies seeking to hire skilled professionals in Central America. Its proximity to the Pacific and Caribbean coasts results in easy access to international shipping routes, making it an ideal hub for logistics and distribution across the Americas.
Costa Rica’s mix of beautiful outdoors and sprawling urban centres, such as the country’s capital city, San José, makes it outstandingly attractive for expats and their families.
6. The Costa Rican economy continues to perform well
Costa Rica’s economy has demonstrated a strong resilience in recent years. Driven by a diverse range of industries, including technology, engineering, agriculture, and tourism, the country is well-positioned for continued economic growth.
The consistent GDP growth rates indicate that Costa Rica remains a healthy market for investment opportunities.
Importance of strategic planning
Regardless of how appealing Costa Rica is as a business destination, it is essential to develop a detailed location strategy before making any long-term decisions. Make sure your plans for Costa Rica align with your organisation’s holistic vision and the specific goals you want to achieve.
Working with local partners can be highly beneficial in navigating regulations and understanding cultural nuances. Such collaboration will help you ensure compliance with legal requirements for starting a business, including all necessary registrations and permits.
Additionally, a local expert can make sure your organisation is taking advantage of all relevant incentives provided by the Costa Rican government to attract foreign investments.
9 steps to establishing successful operations in Costa Rica for global enterprises
There are several key steps to consider before venturing into any new market. Read the section below for detailed guidance on how to be successful in doing business in Costa Rica.
1. Develop a tailored business strategy
Begin by crafting an exhaustive expansion strategy that aligns with your company’s unique vision, business goals, and operational requirements. This foundational step is essential for navigating the Costa Rican market effectively.
2. Investigate local talent pools
Conduct thorough research to identify the opportunities and understand the state of local talent pools that are relevant to your industry. This step includes assessing the education, skills, experience, and availability of skilled professionals who can join your business’s local branch and contribute to its success.
3. Identify the ideal location for your office
Take the time to explore various regions in Costa Rica to find the most suitable location for your office. Consider factors such as the possibility of leveraging free trade zones, proximity to your other offices and to your clients, building accessibility, local infrastructure, and accessibility for local staff.
4. Explore governmental incentives for foreign investors
Familiarise yourself with the incentives offered by the Costa Rican government to attract investments. This can include benefits like tax breaks, grants, and other support programs. A good place to start is your country’s International Trade Association and Costa Rica’s International Trade Promoter PROCOMER.
5. Find specialised partners with local experience
Partners with specialised services provide extensive local knowledge and experience in your industry. Such a partnership will provide you with invaluable insights into the Costa Rican market, business regulations, recruitment trends, and cultural nuances that are critical for success.
Desirable partners include, but are not limited to, trade associations, facilities providers, business support specialists, human resources companies, and legal counsel.
6. Fulfil legal requirements for establishing a business
Ensure that you understand and comply with all legal obligations associated with establishing legal entities in Costa Rica. This includes registering a company, obtaining the necessary permits, and adhering to regulatory, labour codes, and other relevant laws.
Dependable local partners will greatly improve the speed of completing this step and minimise the risk of any failures along the way.
7. Recruit your core team
Next, it’s time to start assembling a small team that understands your company’s values and goals. A skilled core team that embodies your company’s vision will help you maintain a cultural fit within your remote office and ensure mutual understanding for the years to come.
Strive to recruit individuals who not only have the right skill sets but are also committed to driving the success of your enterprise in Costa Rica.
8. Maintain open and frequent communication
From the start, establish a culture of communication that highlights transparency and regular updates. Keeping your local and remote teams mutually informed fosters collaboration and ensures new joiners are aligned with the company’s global objectives and strategies.
Partnering with a services provider with lots of local experience makes cultivating a culture of open dialogue, feedback, and teamwork much easier.
9. Conduct periodic evaluations and make adjustments
Regularly evaluating operations and staying adaptable to market changes promotes ongoing improvement and helps maintain a competitive edge wherever you are. Conducting periodic assessments of your operations to gather insights will enable you to draw important conclusions and identify areas for improvement.
Proactively making necessary adjustments will help you optimise your business performance in Costa Rica, maximise the value obtained from the investment, and be altogether more resilient to changing market conditions.
Build-Operate-Transfer: A sound strategy for opening a business in Costa Rica
Build-operate-transfer (BOT) is a business partnership model where a company hires a BOT service provider to create and manage a remote office. An essential point of a BOT model is that after a set period, the ownership of the office is handed over to the client.
The BOT approach is a practical solution particularly suited to industries facing challenges in accessing skilled talent or looking to venture into an unfamiliar territory. It allows companies to hire experienced professionals while maintaining more control over such operations. By collaborating with an experienced BOT provider, organisations also minimise risks linked to the investment.
Maxima Consulting specialises in establishing operations in new countries, recruiting and managing top-tier specialists who not only possess the necessary skills but also align with the culture of the client’s organisation. Our extensive experience with the BOT model in Costa Rica positions us as a uniquely qualified partner in this process.
Contact us today for proven BOT strategies that will enhance your competitiveness and optimise the added value of your global resources.
