Costa Rica Places 35th Of Top 100 Countries
By Newsweek August 29, 2010 Inside Costa Rica

Costa Rica placed 35th in Newsweek's top 100 nations ranked by economy, education, politics, health and quality of life and second in the Latin American and Caribbean group.

Costa Rica scored well in the areas of health and education, getting a grade of 83.10% and 80.38%, respectively, with an overall score of 69.91%.

For the ministra de Salud, María Luisa Ávila, the high score is a result of Costa Rica's investment in health. "It has not been a directive of one government, but rather a state policy", the ministra said.
In the ranking, Costa Rica got a low score in the area of variable dynamic economy, scoring only 38.8%, mainly due to difficulties in doing business in Costa Rica.Those difficulties are explained by economists partly due to excessive regulations and "formalismo".  

Taking top spots in the Newsweek ranking are Finland, Switzerland and Sweden and Burkina Faso placing last; Canada came in fifth, and the U.S. was ranked eleventh.
In Latin America, Chile (30) topped the list while countries like Panama (41), Argentina (46), Colombia (62), Venezuela (71) and Nicaragua (75), among others, followed behind Costa Rica.

 

From Newsweek.com

In NEWSWEEK’s first-ever Best Countries special issue, we set out to answer a question that is at once simple and incredibly complex—if you were born today, which country would provide you the very best opportunity to live a healthy, safe, reasonably prosperous, and upwardly mobile life?
Many organizations measure various aspects of national competitiveness. But none attempt to put them all together. For this special survey, then, NEWSWEEK chose five categories of national well-being—education, health, quality of life, economic competitiveness, and political environment—and compiled metrics within these categories across 100 nations. A weighted formula yielded an overall list of the world’s top 100 countries (for a look at the exact data points we used and how we weighted them, as well as how each country did across the various categories, check out newsweek.com).   

 

Costa Rica Top Destination For the "Single Traveller"

Aug 26, 2010 Inside Costa Rica
The magazine "Travel + Leisure" places Costa Rica at the top as the best country in the world for single travel.

In its latest publication, the magazine takes a look at the top 15 vacation spots for singles travel, taking into account several factors, among them basics for a foreigner to enjoy their stay in a country and security.

The Ministro de Turismo (Toursim minister), Carlos Ricardo Benavides, said he is proud of the ranking by the magazine, a publication that specializes in international travel.

Costa Rica has grown increasingly in the world, has a good name and well positioned", said the minister.

 

Following Costa Rica in the Travel + Leisure ranking is Vietnam and Laos in third place.

In addition, the 2010 Global Peace Index (GPI) places 26th of 149 countries ranked by their peacefulness (http://www.visionofhumanity.org/gpi-data/#/2010/scor).

The Global Peace Index (GPI) is an attempt to measure the relative position of nations’ and regions’ peacefulness. It is the product of Institute for Economics and Peace and developed in consultation with an international panel of peace experts from peace institutes and think tanks with data collected and collated by the Economist Intelligence Unit.

The list was launched first in May 2007 and then in May 2008 and on 2 June 2009 and recently 10 June 2010 and is claimed to be the first study to rank countries around the world according to their peacefulness. It ranks 149 countries (up from 121 in 2007).

Costa Rica's neighbors, Nicaragua placed 64th and Panama 61st. At the top of the GPI is New Zealand and the last place goes to Iraq.

 

Tránsitos Ask For Cameras In Patrol Cars

Aug 26, 2010  Inside Costa Rica

Following the detention of seven traffic officials in Cartago on Tuesday, being investigated for corruption, Tránsitos are asking for the installation of cameras in their patrol cars.

Traffic official believe that having cameras record their every move would provide transparency and curb corruption.

The cameras would cost some $3.000 each and transportation officials are looking to China for a donation.

 

Transport Officials Submit Today Their Latest Attempts At Reforms To The Traffic Law

Aug 26, 2010  Inside Costa Rica

The reforms to the Ley de Tránsito, although slowly, takes another step forward today when the Ministerio de Obras Públicas y Transportes (MOPT) is expected to submit to legislators their version of the traffic law that could end the roller coaster of the last four years.

The MOPT minister, Francisco Jiménez, will be presenting the complete text elaborated by the MOPT, to the legislative commission reviewing the law with the objective of presenting to the Legislative Assembly a working text.   

The MOPT produced the document at the request of the legislators of the commission which is on a two month mandate.

The reason for the commission and the changes is that legislators, the government and traffic court judges all agree that the current traffic law is flawed.

Legislators finally passed the new Ley de Tránsito in December 2008, when only the drunk driving provisions of the law went into force, with the balance postponed to September 2009 and then pushed further back, taking effect on March 1, 2010.

 

Even before the law took effect legislators discussed changes to the law they had passed.  Running out of time before their May 1, 2010 mandate, the reforms to the law was handed over to the current bunch of legislators.

The MOPT proposals include changes to the points system in the traffic law, the amount of fines, the issuing of drivers licenses to minors and motorcycle licensing.

As to minors, the MOPT considers this group a high risk with the greatest number of traffic accidents, especially when mixed with alcohol abuse.   Jimenéz considers the document complete, however, it will be up to the legislators to use it in full or take it apart, picking at this and that, choosing to include in the reforms only items pertinent to them, for their recommendations to the legislature.

 

  

Presidenta Chinchilla restates her goals at 100-day mark

 August 17, 2010  A.M. Costa Rica staff

Laura Chinchilla presented the goals of her administration Monday night in a public session at the Museo de los Niños in an effort to change the public opinion that her government is drifting.

There were no new revelations but a summary of what has been accomplished the first 100 days of her administration and what she plans to accomplish.

She is counting on new taxes to support most of these efforts.

She restated her hope to make Costa Rica the first developed country in Latin America with 100 percent renewable energy and carbon dioxide neutral. She also said she expects:

• an economic growth rate of from 5 to 6 percent a year and improvements in the indexes of competitivity;

• a reduction in the unemployment figure to 5 percent by 2014;

• a reduction in the rate of increase in violent crime;

* some 95 percent of the electrical energy from renewal sources and advances toward carbon neutrality by 2014.

 

The obstacles she said she sees are low productivity, an increase in economic inequality, a difficulty in making prompt decisions, and fiscal restrictions.

Among the 2014 goals are help for some 20,000 families in extreme poverty, help from some 40 vulnerable communities and a 75 percent increase in coverage for some 15,000 children and a 50 percent increase in coverage of some 2,500 adults in the national care network. There is some $90 million earmarked for this in a trust.

 

She also wants to enforce the minimum salaries and have 85 percent of the schools connected to the Internet in 2014, up from 50 percent now.
She also seeks 150 new local clinics and 700 more specialists. And the 20,000 very poor families will get housing.

 

She also restated her goal of hiring 4,000 more police and supporting citizen security with a casino tax and a tax on corporations or sociedades anónimas. She also is counting on an integrated security policy developed through the U.N. development program and its survey of citizens.

She also wants to create 3,000 new prison cells via an international development bank loan and bring law and order to some 40 areas that now are considered high risk.

She also said she will continue the effort to make Costa Rica a bilingual or multilingual country.

Economically Ms. Chinchilla said she hopes to boost exports to $17 billion a year and to win approval of the trade treaties with the People's Republic and Singapore as well as the accord with the European Union. There also is the $1 billion investment in the Limón-Moín ports. A meeting of possible concession bidders is this month.

Paragon again in the news over land sales
Aug. 16, 2010   A.M. Costa Rica staff
Costa Rican (bullsxxx) real estate is taking another hit as a Florida newspaper expounds on the Paragon Properties case. A lawyer there filed a class action suit earlier this year.
Now the Sun-Sentinel newspaper is exploring the human side with interviews of people who lost money with the firm here.

Paragon was the company that used extensive e-mail and telephone pitches to get mostly U.S. residents to visit Costa Rica. In order to get a free trip, the individuals had to post $25,000 or more into a lawyer escrow account.
As A.M. Costa Rica pointed out as long ago as 2004, the company's contract did not protect would-be purchasers.

Paragon is facing a number of legal suits in Florida where it is based. One lawyer, Matthew Sarelson in Miami, has filed a case in U.S. district court there against a number of firms and individuals involved in the land sales.
Paragon at least owned the land that it was selling. That is in contrast to some now-defunct land sales operations where promoters at best had an option.
Sarelson is trying to show that Paragon was a ponzi scheme in that persons who demanded their money back obtained funds that others had invested. Even if he wins, company chairman William Gale says he has no money.

At issue is the fact that Gale and others did not develop the properties as promised.
In early 2009, Gale reported that his firms had sold 2,509 lots in some 17 projects along the Pacific coast. Many of those purchasers put down an initial deposit, perhaps 40 percent.
According to a typical purchase agreement, the buyers said they would pay the balance and build a home, perhaps in as little as two years. Paragon agreed to put in roads, water systems in some projects and other infrastructure.

As the court cases progress, Florida newspapers will write about the cases, and the still struggling real estate market here will have to cope with the negative publicity. 
(Jeff says proudly, we warned our clients about Developers' that shun the local real estate community. Beware any project where the Developers control your visit to Costa Rica, from the moment you leave the airport!)

Smart Shoppers: Learn the Right Places to Buy! 
 Aug. 13, 2010 By the A.M. Costa Rica staff
A new consumer sweep in anticipation of el Día de la Madre Sunday shows gigantic variations in prices of similar and identical home appliances. The study also revealed deficiencies in giving consumers correct credit information.

The study was by the Dirección de Apoyo al Consumidor of the Ministerio de Economía, Industría y Comercio. 

The study surveyed 20 retail outlets and showed variations as much as 291 percent in prices of appliances like coffee makers.

 

Some may argue that similar products should not be compared, so the survey also studied identical appliances. A Proctor Silex coffee maker was 9,968 colons in El Gollo #4 in Alajuela but 21,300 colones in Hogar Feliz in San José. The consumer agency said this was a difference of 114 percent. The models were identical.

 

Identical Sony digital cameras were 76,500 colons in Importadora Monge in San Miguel de  Desamparados and 118,500 colons at Hogar Feliz in San José. That is a difference surveyors computed to be 55 percent.

 

In fact, Hogar Feliz at Avenida 4 between calles 4 and 6 in San José was listed 14 times as having the highest price of the articles in the survey. The next highest was Hogar Feliz in Alajuela with 12 notations of having the highest price. In third place was Hogar Feliz in Escazú with 11 mentions, said the survey report. (no Hogar Feliz in Jaco!)

 

El Verdugo on Avenida 3 in downtown San José was cited as having the lowest price 50 times in the survey.
El Gallo más Gallo in San Rafael de Alajuela was cited 43 times, as were branches of the same store in Heredia (42 times), and Alajuela (38 times). (one in Jaco!)

 

In big ticket items, the survey found a difference of 120,000 colons between a flat screen Sony television in Gallo más Gallo in Alajuela where it sold for 369,900 colons and Hogar Feliz in San José where the price was 489,000 colons. That's about $237 at the current rate of exchange.

 

The survey also said that three companies were cited for not providing credit information that is required legally. They were El Gollo in Ciudad Colón, San Sebastián, Heredia and Alajuela, Casa Blanca in San José and Camarasa in Cartago. Some 26 stores got lesser warnings.

The main problems were that companies did not provide interest rates, required down payments or listed the cash price, the survey said.

The consumer agency routinely makes surveys before days of heavy gift giving. For example, it surveys toy prices just before Christmas.

 

 

Maintenance And Repair Of Roads Begins Tomorrow

August 9, 2010 Inside Costa Rica

Monday, August 9, could be see as a good day or the day that driver frustration mounts, as the Ministerio de Obras Públicas y Transportes (MOPT) begins repair and maintenance work on 21 national roads.

The Contraloría General de la República (Comptroller's office) approved the contracts that allows the resurfacing of many roads and the repair and maintenance of guard rails, cutting of grass and picking up of resufe along the side of roads.

 

Particular attention will be give to Ruta 32 (San José - Guapiles), Ruta 1 (the Interamericana North and South), the Bernardo Soto (San José airport to Grecia) and ruta 27, Próspero Fernández (San José - Caldera).

 

The maintenance and repair contracts are only for three months, pending the outcome of appeals to 11 other contracts awarded.The ministro de Obras Públicas y Transportes, Francisco Jiménez, said he is hopeful that by mid September the rest of the contracts will in place. The work is to be carried out by private contractors and on Friday the "Unidades de Inspección" (inspection units) were formed to oversee the inspection of the work.

 

 

Costa Rica Working Towards Carbon Neutrality

August 7, 2010 Inside Costa Rica By Daniel Zueras, IPS 

With the elimination of certain taxes and the implementation of several green initiatives, Costa Rica is pressing forward in its aim to promote sustainable energy generation with a view to achieving "carbon neutrality" by 2021, the year this country will celebrate two centuries of independence.

Following in the footsteps of countries like Finland, Norway and New Zealand, Costa Rica plans to fully offset its carbon dioxide and other greenhouse gas (GHGs) emissions that cause global warming by planting forests and introducing improved mitigation technologies, among other initiatives.

Companies and individuals will be able to apply to the Costa Rican Certification Body to certify their emission reduction efforts.

While this Central American nation's best bet in reducing GHGs is the expansion of its forested area, clean technologies will also be necessary if the country wants to become carbon neutral, said Orlando Chinchilla, director of the National University's Forest Research and Services Institute, who added, however, that it will be no easy feat.

 

A Jun. 30 amendment to a tax exemption act (Law No. 7400) promotes the use of renewable energies by eliminating 13 percent of the tax burden previously levied on solar panels and solar-powered kitchens, refrigerators and heaters, as well as on devices that run on wind and hydroelectric power.

Complementing these efforts, and as part of the same Energy Plan implemented by the social democrat administration of Laura Chinchilla, the governmental Costa Rican Institute of Electricity (ICE) will provide incentives for companies and homes that install solar panels and biomass (organic waste) generation systems.

 

Users of such technology will be able to recover their investment in an estimated three to six years, through savings in their power bills calculated at about 200 dollars a year for an average family of four.

Household and company power systems will be connected to the ICE grid, enabling individual users to assign their excess power in exchange for discounts on their electricity bill.  This will be done through the installation of a two-way meter that will determine whether there is a surplus of power that can be sold or if generation capacity is insufficient to cover the user's consumption and the ICE grid needs to supply additional power.

This will not only make homes more sustainable and self-sufficient in terms of their power needs, but will also reduce the country's fossil fuel dependency, as the ICE will collect the excess energy and use it to cover the needs of other consumers.

According to government figures, 64 percent of all commercial users are supplied by energy from fossil fuels. The transportation sector accounts for a large part of that percentage.

But hydropower dams are the leading source of electricity in the country, accounting for 78 percent of electric power, and making Costa Rica the region's leading producer of clean energy.

Geothermal power -- obtained by tapping into underground steam from volcanic areas -- is the country's second most important renewable source of electricity, with thermal, wind and biomass lagging far behind.

The use of solar energy is still negligible, but the aim is for alternative power sources to expand significantly over the next decade.

"The final price of equipment and materials will drop 20 percent, not just 13 percent," Rodrigo Salazar, general manager of Energy Solutions, a company that sells solar heaters, told IPS. This additional cut in costs will come from the elimination of the import tax on renewable energy equipment purchased by the sector's companies.

 

Salazar believes the initiative will boost alternative energy equipment sales, which have been stagnant since the onset of the global financial crisis in 2008.

In the government's plans there is also room for another alternative source: bio-digesters. These are small plants that generate gas from cattle manure fermentation, and in addition to eliminating animal waste and generating energy, they produce bio-manure for use on crops.

Rural and low-income communities have benefited the most from certain pilot programmes that have been underway for a number of years. An estimated 1,400 bio-digesters have been installed in Costa Rica. Their low cost and the fact that they are easy to install and maintain make them an attractive alternative.

The village of Santa Fe, in Guatuso district, near the Nicaraguan border, has 10 bio-digesters, which were built four years ago at a cost of about 200 dollars each.

With that investment, users save 15 dollars a month in gas for cooking and heating water. "It's innovative and environmentally-friendly," because it curbs pollution, deforestation, and "gets rid of animal dung," Xinia Montero, head of the Santa Fe Women's Group, told IPS.

And it can also be considered a tourist attraction, as people "come from different countries to see how they work," Montero said.

 

Reforms To Traffic Law Moving At A Simmering Pace

August 4, 2010 Inside Costa Rica

The reforms to the Ley de Tránsito is moving at a simmering pace in the Legislative Assembly and moreso the work by the previous legislators may be scrapped to make way for a new law.

The head of the PASE party, Víctor Emilio Granados, explains that the 147 legislative sessions by the previous legislative group that formed the Ley de Tránsito that went into effect on March 1, 2010, and the reforms that were never approved, will be for not, as talk now centres around forging a new law.

 

The current law began discussion in the legislature in January 2007 and passed in December 2008. However, only the drinking and driving provisions went into effect that month, the rest of the law going into effect more than a year later.

The law brought to Costa Rican drivers high fines and a point system that leads to the suspension and revocation of a drivers license for repeat offenders, drunk and reckless drivers.

Even before the law went into effect in March, reforms were being discussed, which included reducing the fines and eliminating the point system.

Controversy surrounding the law hampered legislators from reaching an agreement on the reforms, leaving it behind for the new legislators that took over on May 1, 2010.

Currently those reforms are before a legislative commission that meets every Monday for the next six weeks.

For the ministro de Transportes, Francisco Jiménez and other transportation authorities, the point system is important and are looking to put the system in place.

The point system was put on hold even though the law calls for such.

"We are working on the base of the work of the previous legislators and when we talk about new new projects, we mean a complete overhaul", said Jiménez.

The minister explained the removal of the point system is like taking the liver out of the system. Jiménez is proposing a new project that replaces the legacy of the point system.

 

In only a few months many Costa Ricans will face economic hardship when renewing their 2011 Marchamo, the annual circulation permit, this due to the uncertainty of the reforms and the reduction in fines.  If nothing is done before December, the fines issued to drivers have to be paid in full before Marchamo can be paid.

 

"ICE Needs To Focus On The Needs Of The Customers", Says New ICE Boss August 4, 2010 Inside Costa Rica

Eduardo Doryan is the new "boss" at the Instituto Costarricense de Electricidad (ICE).

Graduating from the Universidad de Costa Rica (UCR) as an electrical engineer, he also holds a post-graduate degree in Electric Power Systems in Scotland, a Master Degree in Public Administration and a Doctorate in Political Economy and Government from Harvard and along with heading government institutions like ICE and the former Caja Costarricense de Seguro Social (CCSS), he has also been a professor at the UCR and the INCAE.

 

With all that behind him, he could be the man who will bring a "human aspect" to ICE, saying this week that "we want an ICE where the customers are king".

Doryan who took over the high post at ICE on May 8, 2010, after running the CCSS for the last four years, said he took the job to get back to his roots.

For Doryan, he is taking over ICE at a time when the state institution will be facing competition for the first time in more than 60 years of exclusive telecommunications in Costa Rica.

In addition to telecommunications, ICE is allow facing challenges in providing electrical services to an ever demanding population.  To achieve his objectives, Doryan says the institution needs to change its way of thinking. "ICE, as a monopoly, was an introverted company, focused on platforms and equipment. Today, ICE needs to focus on the needs of the customer", said Doryan.

 

Opening Of Cellular Competition Must Be Ready In 3 Months, Constitutional Court Orders August 9, 2010 Inside C.R.
The Sala Constitucional (Constitutional Court) has ordered the opening process of cellular service competition must be completed and adjuticated within a period not exceeding three months from today.
The court warned that failure to comply would expose those involved to the crime of disobedience as called for in article 71 of the Ley de Jurisdicción Constitucional (Law of Constitutional Jurisdiction).
The decision and order follows a "recurso amparo" (appeal) by Juan Manuel Campos, Andrés Oviedo and Fabio Masís of the Cyber Regulación company against the government for delay the opening of the telecommunications sector to competition.
Campos explained that the appeal was made last September, mainly to the delays in the granting of concessions for the frequency bands for cellular telecommunications which did not follow the provision to implement within three months of the creation of the Superintendencia de Telecomunicaciones (Sutel).
The Sutel was created at the beginning of 2009 and today is still working on the completion of the tender and awarding concessions process.
Carolina Mora, spokesperson for the Sutel, said on Tuesday that the Sutel had not formally received the court decision and that it will take the regulator at least four to six months to complete the process, after the presentation of the tenders.
The ministro de la Presidencia, Marco Vargas, would not comment on the court decision.

So far the companies interested in investing in Costa Rica's cellular market is América Móvil (Claro), Cable & Wireless, Digicel, Telefónica (Movistar) and Milicom (Tigo).
Only three licenses will be granted by the Sutel to compete with the state owned ICE.

 

Current Traffic Fines Are Here To Stay?
July 27, 2010 Inside Costa Rica

Come December many drivers will get a surprise, they won't be able to purchase their Marchamo - circulation permit - for 2011 for outstanding traffic tickets.

 

The ministerio de Obras Públicas y Transportes (MOPT) says that more than ¢6 billion colones in traffic fines goes unpaid and the lines at the CONAVI have disappeared since the Legislative Assembly announced a proposal to reduce the traffic fines that went into effect on March 1, 2010. 

Many drivers who have received fines are banking the money waiting for the legislative proposal to be approved and in the hope that the reduction will be retroactive.

 

The MOPT minister, Francisco Jiménez, notes the behaviour of drivers who, before the new Ley de Tránsito took effect, lined up to renew their licenses to avoid a ticket that went from few thousand colones to tens of thousdands. As well driving habits quickly changed, according to the Policía de Tránsito. 

However, that attitude quickly dissipated when legislators announced changes to reduce fines and remove the point system, among other items.

 

According to Jiménez, the high fines and the hard work of the Policía de Tránsito has resulted in more traffic tickets and less accidents. 

"More than one driver believes that their fines will be reduced or forgiven. They are wrong", said minister Jiménez, emphasizing that the current law is in effect even though the legislature is proposing changes. 

The comments by the minister were made before the legislative commission analyzing the changes, meeting every Monday for the next two months.

 

Jiménez was the first at 8:30am Monday to speak to the commission, followed by Juez de Tránsito (traffic court judge), Franz Corte, who suggested that the commission scrap the current proposal left behind by the previous legislators and start fresh. 

Whatever the case, if the reforms to the law are not passed before December, all outstanding traffic fines, plus costs, have to be paid before the Marchamo 2011 can be issued to the owner of a vehicle.

 

Concession prohibition against foreigners upheld

July 27, 2010 A.M. Costa Rica

The Sala IV constitutional court has upheld a prohibition against awarding maritime concessions to foreigners.

Under Costa Rican law, a maritime concession is granted by the municipality in the area that is from 50 feet to 150 from the coastline. The law says that a concession must be held by a Costa Rican or a company containing more than 50 percent Costa Rican capital. Concessions can be for various reasons, including building a home or a tourist resort.

 

That law is dodged regularly, but the concept of discrimination against foreigners became a constitutional case. The appeal argued that the concession was only for a fixed period and that circumstances do not vary regardless of whether the concession holder is a Costa Rican or a foreigner.

Many expats live on concession land and sometimes the actual ownership is in the name of a lawyer or some other person the occupants trust.

 

Periodically the government enforces this rule.

The Costa Rican Constitution prohibits discrimination against foreigners, but the article also provides a legislative loophole. The article, No. 19, says in part: Foreigners have the same individual and social rights and duties that Costa Ricans do, with the exceptions and limitations established by this Constitution and the laws.

The Sala IV appeal specifically was against sections of the Ley sobre la Zona Marítimo Terrestre, No. 6043. There was no explanation of the reasoning behind the vote by the magistrates in the short summary issued by the Poder Judicial.

ICE Opens Up
 July 20, 2010 Inside Costa Rica

Costa Rica’s Instituto Costarricense de Electricidad (ICE) has interfaced its network with Ticom and CallMyWay, two telecom companies offering VOIP services.

The state-owned electricity and telecommunications will provide service the two companies after presenting their requests to the Costa Rica's Telecommunications Regulator (SUTEL).

Elfinancierocr.com reports that ICE stated that, “the linking of the networks has been carried out under protest in order to comply with the SUTEL instruction. ICE considers that the regulator has resorted to procedural illegalities in order to force the interfacing of these two companies”.

At the beginning of last week, Intertel Worldwide, Dodona SRL (Ament) and BBG Global AG, all signed deals to connect to ICE's network, to provide new internet and VOiP servies to its customers, who now have to wait SUTEL approval.

 

A "New Era" In Costa Rica's Insurance Industry
July 20, 2010 Inside Costa Rica

A new era in insurance is occurring in Costa Ricans as consumers will have to start wading through the claims, as the state insurer, the Instituto Nacional de seguros (INS), and its competitors all claim to be "the best option".

Costa Ricans have been used to one insurance company for as long they can remember and have had to learn to deal with the frustrations and sometimes incompetence of the state insurer.

But that is all changing. And fast.

One of the first private insurance operators to start selling and competing directly with the INS in vehicle insurance is Mapfre.

Mapfre in Costa Rica is under the control of Mapfre-Mundial Latin America will be selling policies through its own sales force of some 50 insurance agents and insurance brokers.

Like the INS, Mapfre claims to be the best option as well.

 

Assa Insurer is another player in Costa Rica's insurance market, being recently authorised by the Costa Rican Insurance Superintendence. The Panamanian insurer, Assa Compañía de Seguros, is the fith insurer to enter the market, planning to sell general insurance in the country.

Competing with ASSA and INS for the general insurance pie are Aseguradora Mundial, Alico and Magisterio.

 

San José streets, buildings to be numbered

 July 20, 2010 Tico Times   

The antiquated custom of numberless buildings in Costa Rica's capital – which has always been half-charming and half-headache – may soon be a thing of the past.

On Monday, San José's mayor Johnny Araya announced a $1.2 million initiative to place street numbers on the long-empty facades of homes and office spaces. “In the 21st century, it is not acceptable that Costa Ricans give directions the way they do,” Araya told the daily La Nación.

As members of a traditionally rural society, Costa Ricans have always identified addresses based on reference to landmarks.

The street address for the Mercedes-Benz in Escazú? Eight-hundred meters south of the Mulitplaza roundabout. The Scotia Bank in San José ? Behind the National Theater. The Belgian Embassy? Twenty-five meters south of the Subaru in Los Yoses.

 

The new initiative might bring greater organization to private entities and government services, municipal leaders said.

“Sectors such as tourism, health care, public transportation, business transport, citizen security, statistics and the private sector will find an immediate benefit in the reduction of costs in finding addresses,” read a press release from the municipality.

The project is expected to begin in December and will be funded in part by the Banco Nacional and in part by the Banco de Costa Rica. In return for their financial commitment, each bank will be able to place its logo beside the street name and number.

 

Costa Rica vows to boost small businesses

 July 20, 2010 Tico Times  

In two separate announcements over the past five days, President Laura Chinchilla and Vice President Luis Liberman each put forth plans to improve the prospects for Costa Rica's small and mid-sized businesses. In order to accomplish this, Chinchilla and Liberman said the administration will work with banks to offer small companies easier access to credit, simplify the bureaucratic processes used in regulation and lessen government control to provide more autonomy.

 

Overseeing these improvements will by the Economy Ministry (MEIC), which in early June announced the creation of the National Strategy for Better Regulation and Simplification of Bureaucratic Processes, designed to reduce the stumbling blocks created by trámites, the bureaucratic processes used to obtain licenses, permits and documents (TT, June 4). According to Liberman, the simplification of processes “is necessary to reduce unnecessary stresses for business owners.”

 

In addition to the reducing of trámites, the administration said that it is in discussions with Banco Nacional and Banco Popular to modify the existing laws to allow banks to offer more funding for small companies.

“Micro, small and medium-sized businesses are large providers of employment in our country and are a necessary motor for social and economic integration,” Liberman said. “I am sure that the more we work with them, the more that will translate into prosperity.”

 

In response to this announcement, Fundecooperación, a cooperative that offers funding to environmentally sustainable companies, announced plans to provide financial support for small businesses that demonstrate sustainable development, as well as assist them in marketing their products.“We will support and promote sustainable projects of companies with a vision,” said Marianella Feoli, general manager of Fundecooperación.

Fundecooperación backs more than 50 small and mid-sized businesses, including agricultural companies, artisans, sustainable tourism operators and clean technology producers.

 

Costa Rica To Slash Greenhouse Gas Emissions

July 20, 2010 Inside Costa Rica

Colombo, Sri Lanka - Six countries seen as most threatened by rising sea levels have vowed to cut their carbon emissions as a gesture of their commitment to fight global warming, the Maldivian government said Monday. "Antigua and Barbuda, Costa Rica, Ethiopia, the Maldives, the Marshall Islands and Samoa all pledged to slash greenhouse gas emissions and pursue green growth and development," the government said in a statement.

The countries, mostly low-lying nations, met over the weekend in the Maldives ahead of a UN climate change meeting in Mexico and pledged to drastically cut their emissions while pressing others to follow suit.  Costa Rica plans to go carbon neutral by 2021.

Being carbon neutral means offsetting emissions against other measures that help to reduce greenhouse gases in the atmosphere.

"When those with the least start doing the most, it shows that everyone's ambitions can be raised," Maldivian President Mohamed Nasheed said in the statement after the weekend meeting.  Smaller nations are trying to hammer out a common position before the UN climate meeting in Mexico scheduled to open on November 29.

The 10-day meeting is set to revisit the issues of global warming after talks at December's Copenhagen summit fell short of a binding international treaty.

 

Tourism In Costa Rica Grew 3.96% In First Half Of 2010

July 23, 2010 Inside Costa Rica

Instituto Costarricense de Turismo (ICT) - Costa Rica's Tourism Board - has an optimistic outlook for this year, expecting to reach two million visitors for 2010. The optimism is based on the 3.96% increase in tourism the first half of this year as compared to the same period in 2009.

According to date by the Dirección General de Migración y Extranjería (Costa Rica's immigration service) the number of tourist arrivals from January to June 2010 was 1.124.044. In contrast, during the first half of 2009, 1.025.460 tourist arrivals were recorded.

Given these figures, the executive director of the Cámara Costarricense de Hoteles (CCH), Pablo Solano, despite the increase in tourist arrivals, the average occupancy rate reported by his membership has risen slightly over last year, averaging 60%.

Solano added that the hotel operators are positive that increase will continue due to the ongoing efforts by the Chinchilla government to attract more visitors to Costa Rica.

 

Tourist arrivals from the United States is still the most important market for Costa Rica, showing a 10% increase for this year, for a total of 468.172 visitors, 43.218 more than the first six months in 2009.

 

 

 

  

Reeling from Oil Spill, Businesses Eye Costa Rica

 July 18, 2010 Tico Times   

Dean Blanchard's shrimping company used to account for about 10 percent of the U.S. shrimp supply. Now, due to the oil spill in the Gulf of Mexico, that number's down to zero. The Grand Isle, Louisianan-based Dean Blanchard Seafood can no longer operate due to oil mucking up and polluting the places his boats used to trawl. Since the oil spill forced him to shut down operations, Blanchard estimated he's lost about $50 million.

In a few weeks, Blanchard will be boarding a plane headed to Costa Rica. He hopes that's where he can start rebuilding his shrimping enterprise.

"I like it (in Louisiana )," Blanchard said. "If I can't live here then I got to find a place. I got no choice." 

The Deepwater Horizon oil spill has displaced numerous businesses around the gulf. The accident spilled an estimated 150 million gallons of oil in the ocean. Some of those displaced look to relocate in Costa Rica, with the country's abundance of shorelines and sea life.

Barry Chudwick, co-founder of luxury vacation rental company Del Pacifico in Esterillos, on Costa Rica's central Pacific coast, said he's talked to dozens of investors from sportfishers in the southeast United States, who are looking to buy lots or condos in Costa Rica. 

"There will be long-term damage done to the ecosystem and sportfishing is a major driver in the high-end luxury market," Chudwick said. "And as we say, 'big fish bring big boats, which bring big bucks.'"

Sam Merkin, who co-runs a company that sets up sportfishing trips called Quepos Sailfishing, said he's noticed an increase in fishermen from affected areas like Mississippi and Louisiana taking the fishing expeditions.

The company has received 20 to 25 calls over the last two-and-a-half months from fishermen in areas along the U.S. gulf coast.

"We have people that are anglers that probably weren't planning on coming," Merkin said.

Blanchard, the former shrimp baron, said he's always wanted to travel down to Costa Rica. The oil spill has given him a monumental excuse to finally make the trip.  "We pretty much done here," Blanchard said. "It looks like they've given us the death penalty."

 

Chinchilla signs waste management law 

July 16, 2010 Tico Times  

Costa Rican President Laura Chinchilla and Health Minister María Luisa Avila signed the new Integral Waste Management Law Thursday.

“We now have clear rules for how to manage the solid waste problem,” Chinchilla said. “We also have something that is very important in public politics – a clear rector en the hands of the Health Ministry.”

The law passed unanimously in the Legislative Assembly on May 25 and its regulations will be put into place over the next 10 years.

The new law establishes a national recycling program to be under the supervision of the Health Ministry. The ministry will be in charge of assuring that municipalities begin to “guarantee selective waste collection services” and that the townships keep public spaces and waterways trash free.

The ministry will also help enforce a series of rules and sanctions for the improper disposal of waste.

“We are going to continue to work to eradicate many of the waste problems that, today, still affect us,” Chinchilla said.

 

San José - Caldera Re-Opens With No Major Congestion
July 11, 2010 Inside Costa Rica

It was on June 12 when the 11 kilometres of Ruta 27, known as the San José - Caldera closed. And it was on July 10 when it re-opened, but only few drivers decided to make the drive on the re-opened route and the expected congestion never occurred.

Perhaps it was the heavy afternoon rain that kept many at home. However, the highway re-opened at the stroke of midning on Saturday and for most of the morning, until the afternoon rain, the weather a sunny and dry.
The 11 kilometres between Orotina and Atenas is the section that has been prone to rock falls and mud slides from the start of the rainy season in May.

The ministerio de Obras Públicas y Transportes (MOPT) closed the section following as series of accidents and one death directly related to the road conditions, allowing the concessionaire, Autopistas del Sol, to make changes and reducing the risk to drivers.

 

 There three major sections on the highway that are still being worked on and traffic along those sections is being monitored and controlled by officials of Autopista and the Policía de Tránsito (traffic police).

In one section, the entire westbound lanes have been closed off and traffic, in both directions, have to use the eastbound lanes.

In its first day of re-opening and amid a torrential downpour in the later afternoon and fog at night, no incidents were reported.

The Policía de Tránsito reported that traffic flow was good all day long, no major congestions at any points along the highway.

Tránsito authorities say that many people still don't know that the highway is re-opened, despite the media blits since Friday announcing Saturday's re=opening and the media attention for the past week as MOPT officials considered the decision to re-open.

 

Costa Rica's Tourist Arrivals Up 90.000 For 2010

July 3, 2010 Inside Costa Rica

The tourism industry is beginning to smile again, following a tough 2009, with a forecast of some 90.000 more tourist arrivals in the first five months of 2010 over the same period last year.

The forecast for the rest of the year is that tourist arrival will reach the numbers of 2008, which was the best year to date.

The reason for the increase is due two factors: many are seeing their economic situation improving and are beginning to spend on vacations and second Costa Rica is well positioned, marketing wise, as a tourist destination.

The numbers of tourist arrivals for the first five months of 2010 reached 954.314, up from last years 866.488 for the same period. The months with the biggest tourist arrival increase were February, March and May, according to figures by the Instituto Costarricense de Turismo (ICT) - Costa Rica's tourism board.

In 2008, a total of 965.571 tourist arrivals were recorded between January and May.

"We believe that (tourism) will continue to grow as people feel confidence in the recovery of the economy and with this in travel," said Juan Carlos Ramos, president of Cámara Nacional de Turismo (Canatur).

 

Costa Rica Tourism Report Q3 2010: New research report available at Fast Market Research   2010-07-03 02:53:45 - New Consumer Goods research report from Business Monitor International available from Fast Market Research:

Costa Rica currently receives the majority of their tourist arrivals from the Americas, with the top three nationalities visiting the country being from the US, Nicaragua and Canada. Tourism arrivals, after increasing from 1.72mn in 2006 to 2.15mn in 2008, dipped to 1.93mn in 2009. Arrival numbers are forecast by BMI to pick up in 2010 and grow at an average rate of 8% until the end of our forecast period in 2014.

 

Health tourism also brings visitors to the country and it is an area where Costa Rica can continue to develop its infrastructure to tap further into this growing market. Already known as a destination for medical tourists, Costa Rica is now competing with newer destinations, such as Puerto Rico, for the millions of Americans, and other nationalities, who travel abroad for medical care.

In the same vein as health tourism, Costa Rica is making retirement communities a priority to keep visitor numbers up. The country is targeting North American pensioners and is doing away with the red tape of residence permits, especially for those in good health.

Tax exemptions on real estate and vehicles are also being offered. The campaign is being run by the Costa Rican Institute of Tourism. Meanwhile, the competitiveness ministry has already identified eight locations for retirement communities, focussing on areas with natural beauty, tourist attractions and in proximity to hospitals.

Another tourism draw to Costa Rica is spa and well-being vacations.

Costa Rica has been recognised by TripAdvisor users as one of the best places in Central and South America to enjoy spa getaways.

Some areas that well-being tourists are targeting are the hot springs near the Arenal Volcano, the beaches of the Nicoya Peninsula (home of yoga retreats) and the back to nature setting of the Central Valley region. The planned regeneration of the province of Limon, on the less frequently visited Caribbean coast, has the potential to put upward pressure on inbound tourism numbers. Puerto Limon was once the town of the United Fruit Company and the province has two national parks. The parks have the potential to be a large tourism driver, with a tour by one company, Wildland Adventures, having recently been named one of the '25 Best New Trips for 2010' by National Geographic Adventure magazine. In our view, developing the tourism infrastructure in the region will likely unlock great potential.

In early 2010, the Inter-American Development Bank (IDB) approved grants of US$1.1mn and US$1.5mn to support two parts of the Mesoamerica Pacific Corridor Project. The corridor runs through seven countries from Mexico to Panama. The Optimization of Border Crossings Pacific Corridor grant will be used to improve passage over borders and the Adjustment, Maintenance and Operation of the Pacific Corridor grant will improve road infrastructure over 2015-2030. The project aims to develop a quicker route between Mexico and Panama. BMI believes that as well as fostering trade in the region, the development of infrastructure has the potential to increase tourism as travel will be much more feasible. For more information or to purchase this report, go to:- www.fastmr.com/prod/71536_costa_rica_tourism_report_q3_2010.aspx

 

 

U.S. expats celebrate 4th of July in style

July 5, 2010 Tico Times

About the only thing missing from the U.S. Independence Day celebration in Costa Rica on Sunday were the fireworks.

Aside from the firecrackers and skyrockets that highlight most Fourth of July celebrations in the United States, the celebration had all the other ingredients to make the day feel like home, including hot dogs, popcorn, a children's parade, classic cars and live music.

The fairgrounds of the Cervecería Costa Rica in Alajuela, northwest of San José, were packed with U.S. flags, children playing summertime games and family picnickers.

 

“It was better than ever,” said Susan Tessem, president of the American Colony Committee, who along with a team of volunteers put the event together. “It was the American spirit that made it so great.” Tessem wasn't the only one taken aback by the success of the day. As the partygoers climbed out of their cars and watched the stream of flag-carrying, red-white-and-blue-clad compatriots, many jaws dropped in surprise. “I had no idea it was this big,” one woman said.

And this wasn't just any Fourth of July celebration in Costa Rica. On the occasion of its 50th celebration of U.S. Independence Day in Costa Rica, the American Colony Committee broke from tradition and gained permission to host the event during the weekend. Typically, it has been held on a weekday because of the Cervecería's in-demand weekend schedule.

“It made a great difference to have the celebration on a weekend,” Tessem said. “There were people here who hadn't been to a July 4th in years.”

For those who didn't make it to the event, Tessem had a message for next year: “Don't miss out!”  

 

North American Anglers Contribute $599 Million Annually to Costa Rican Economy

July 6, 2010 Inside Costa Rica,

Tourism is Costa Rica’s top industry and new research shows North Americans traveling there in 2008 to fish generated $599 million - or about two percent of Costa Rica’s gross domestic product.

The study, conducted in 2009 by The Billfish Foundation, Southwick Associates and the Universidad de Costa Rica (UCR), revealed 283,790 anglers visited Costa Rica and their economic impact even overshadowed commercial fishing. It was estimated 22 percent of those tourists visited the country for the exclusive purpose of fishing.

 

From that $599 million the study also showed sportfishing generated almost $78 million in tax revenues for Costa Rica and 63,000 jobs. In comparison, the effect of commercial fishing for the same species sought by anglers generated approximately $528 million to Costa Rica’s gross domestic product. Commercial fishing contributed $68.6 million in tax revenue and created 57,000 jobs.

“We have already had the opportunity to present the results of this study to the incoming vice president and minister of tourism,” said Ellen Peel, president of The Billfish Foundation. “And we will be making a formal presentation to a wider cross sector of government and business leaders this summer. The leadership in Costa Rica had no idea that their country receives more benefits from a sustainable recreational harvest than from the subsidized excessive effort in the commercial fishery.”

The comprehensive study included interviewing tourists at Costa Rica’s major airports to estimate the percentage who fished while visiting. The research focused on the expenditures and economic impacts of marlin, sailfish, yellowfin tuna, wahoo and dorado; species that are the most frequent targets of commercial fisherman and recreational anglers.

 

It was estimated the 283,790 North Americans visiting Costa Rica in 2008 spent a total of $467 million. The survey revealed $329 million was spent on travel including lodging ($119 million), restaurants ($15.6 million), flights and fishing guides ($88 million) and land transportation ($6 million). These dollars then change hands multiple times in Costa Rica, creating significant benefits for the nation’s gross domestic product. In addition, visitors spent approximately $105 million outside of Costa Rica prior to arrival for airfare or other travel expenses, though these dollars are not included in the economic analyses.

About 3,700 of those visiting Costa Rica have their own boats in the country, whether permanently or temporarily, and they spent approximately $138 million for items such as fuel ($45.6 million), maintenance and repairs ($25 million), furniture and accessories for their vessels ($48 million), staff and crews ($2.8 million), marina fees ($16.6 million), and taxes and insurance ($1.8 million).

“TBF believes that only when decision makers understand the economic importance of good fishing opportunities for tourist anglers will billfish conservation get on the radar screen of government leaders charged with economic development as well as fisheries management,“ said Dr. Russell Nelson chief scientist for TBF. “And now thanks to the dedication of TBF members and generous donors who have supported our socio-economic research, we are making the point.”

Additional work conducted in the U.S. by Southwick Associates, Inc. estimated 7.5 million Americans fished outside of their country in 2009 with 3.6 percent of them traveling to Costa Rica. Among anglers vacationing in Costa Rica, 40 percent said they would not have visited the country if they could not fish. Those anglers, who represent 116,000 visitors per year and about $135 million in tourism income for Costa Rica, said the main factor in determining their satisfaction is “quality of fishing” followed by “relative peace and quiet,” and “fishing services, boat and crew quality.” The majority of anglers reported they visited Costa Rica to catch billfish including sailfish, marlin along with dorado. Inshore species such as snook and tarpon were less frequent targets.

 

“This was the first study done in Central America that compares the economic contributions of recreational and commercial fishing for the same species,” said Rob Southwick, president of Southwick Associates, who coordinated design and methodology, management and monitoring of this research and generated information regarding U.S. anglers’ international travel activities. “We’ve completed similar work for Los Cabos, Mexico, and the results produced almost immediate benefits to fisheries management and conservation.” That study found the Los Cabos area benefited by $1.1 billion to the economy.

Based on the success of socio-economic research in Mexico and Costa Rica, TBF already has entered into discussions with the new administration in Panama to conduct similar studies in that country. Complete reports are available at: www.billfish.org

 

 Autopistas: Loss Of Tolls- Repair Work San José – Caldera July 3, 2010 Inside Costa Rica

The Autopistas del Sol may be regretting the deal with made with the government of Oscar Arias when it signed on the dotted line to build and manage the San José - Caldera under a concession contract.

The former administration was under pressure to open the highway as soon as possible, and as such former president Oscar Arias cut the ribbon on January 27, 2010, some six months ahead of the July 2010 schedule and the original December 2010 completion date.

However, since the first days the highway became known as the "autopista de la muerte" (death highway) following a number of accidents being blamed on the road design and construction and though not accused directly, of the poor management by Autopistas.

With the start of the rainy season in May the situation got worse for Autopistas, as heavy rain caused land slides and rock falls, mainly between kilometres 37 and 48 that runs from Atenas to Orotina, causing the ministerio de Obras Publicas y Transportes (MOPT) to completely close off on June 12 the 11 kilometres strecth of road.

The question is, who is to pay for the modifications necessary to make the highway safe and lessen the risk of mudslides and rock falls? and what about the loss of daily revenue by Autopistas?

The answer is simple, the concessionaire.

The MOPT minister, Francisco Jiménez, explains that all one has to do is to look at the concession contract.Jiménez said in no uncertain terms the government will not indemnify the company (Autopistas).

The road was to have been completely re-opened this past week following two reports by experts. However, minister Jiménez preferred to side with caution, maintaining his order of closure until at least this coming week when a third report is due.

The cost to Autopistas is estimated at ¢18 million colones (us$33.000) daily from the loss of the toll charges at Atenas, the only toll booth affected by the road closure, for a total of us$693.000 for the last 21 days.

In addition, Autopistas has invested much more in the work and materials to shore up the wall faces causing the rock falls and earth moving to change the slopes at the areas of the landslides.

Since the closure, experts hired by the government and Autopistas have come to the same conclusion, there are sections of high risk on the highway. "Our job is to apply the law and if they file for indemnity, it won't happen", said minister Jiménez.

 

 

Traffic Law Reforms Go To Commission

June 23, 2010 Inside Costa Rica

The fate of the reforms to the Ley de Tránsito (Traffic Law) will now be up to a commission made up of nine legislators, which are expected to report in the coming two months of changes to be made to the bill that was drafted by former legislators and left behind for the current session.

At the head of the list of the analysis are changes to the drunk driving provisions, the high fines and the points system. It is hoped that following the revision by the legislators, the bill will be passed into law.

On Monday 43 legislators voted in favour of forming a commission. The head of the Partido Liberación Nacional (PLN) - ruling party - Viviana Martín said that the bill needs a complete review before legislators can vote on it. Martín was the vice-ministra de Obras Públicas y Transportes (MOPT) during the drafting the Ley de Tránsito that was approved by the previous legislature on December 2008 and went into force on March 1, 2010.

Juan Carlos Mendoza, head of the Partido Acción Cuidadana (PAC), said "we need a more coherent law". Walter Céspedes of the Partido Unidad Social Cristiana (PUSC) also supported the motion for the creation of the commission.The commision is to be made up of the three legislators of the PLN, two of the PAC, two of the Movimiento Libertario (ML), one from the PUSC and one from the PASE.

The reforms proposes to reduce the current fines by as much as two thirds of the current, eliminate completely the point system and drop the blood alcohol limit from the current 0.75 to 0.50.

 

 

Foreign Exchange Market Costa Rica may step up currency ‘interventions,’ June 18, 2010 Bloomberg News

Costa Rica’s Central Bank may intervene more frequently in the foreign-exchange market to reduce swings in the currency, said bank President Rodrigo Bolanos. “We’re looking at the possibility of interventions,” Bolanos, 59, said in a phone interview from San Jose. “We would want to smooth fluctuations from one day to the next.”

 

 Costa Rica’s colon has surged 6.9 percent this year against the U.S. dollar, the second-best performance in the world after the Colombian peso, according to data compiled by Bloomberg. It was unchanged at 528.75 today. The colon floats within a “crawling band” set by the central bank to maintain a stable currency and help keep inflation in check. The bank hasn’t bought or sold dollars to intervene since August 2009.

 

Bolanos, who has a doctorate in economics from the University of Chicago, said he wants to transition the colon from its “crawling band” to a “dirty float” by the end of his four-year term. In the meantime, he’s evaluating whether to buy and sell dollars more frequently to ease currency fluctuations fueled by global market swings.

The band ranged from 500 to 634.25 yesterday, according to the central bank’s website. The upper end of the band increases 0.2 colon each day.

Vice President Luis Liberman, the former head of the Bank of Nova Scotia in Costa Rica, said May 5 the central bank should “intervene” in the currency market to curtail volatility that has cut profits for exporters.

Carry Trade

The currency is benefiting from the so-called carry trade, in which investors borrow in nations with low interest rates to buy higher-yielding assets, Liberman said. The central bank is seeking to introduce a forwards market by next month that would allow exporters to lock in exchange rates, Bolanos said.

Costa Rica may need to “tighten” monetary policy to slow inflation that may exceed the central bank’s target range of 4 percent to 6 percent for 2010, the International Monetary Fund said June 1 in a review of the country’s performance under a 15- month, $735 million emergency credit line.

Bolanos said he has no immediate plans to revise the inflation target.

The central bank may increase its 2010 growth forecast to more than 4 percent next month, up from 3.2 percent, he said.

Costa Rica’s $29.4 billion economy will grow 3.8 percent this year, the second-fastest in Central America after Panama’s estimated 5 percent expansion, the IMF said in a statement June 9. Gross domestic product shrank 1.1 percent in 2009.

Bolanos replaced Francisco de Paula Gutierrez, who during his two terms changed the exchange-rate regime from a 23-year- old system of “mini-devaluations” in 2006.

 

 New Free Zone Law Approved

June 18, 2010 Tico Times

The Foreign Trade Ministry (COMEX) and Foreign Trade Promotion Office (Procomer) on Wednesday presented 17 new regulations to implement the Free Zone Law, which was approved by the Legislative Assembly in December. 

For many, the most important of these regulations is one that will provide financial incentives to companies that elect to operate in free zones outside the Central Valley. Currently, most of the 247 companies in Costa Rica's international free zones – known as zonas francas in Spanish – are in the Central Valley, in or near the cities of San José, Cartago, Heredia and Alajuela. 

“In Costa Rica, the free-trade zone system has been an essential way for international markets to reach the country,” said Francisco Gamboa, business intelligence director of Procomer. “The businesses that operate under the system have had an important impact on the well-being of Costa Ricans, generating employment in key sectors such as high tech and manufacturing.” 

In a free zone, businesses can import and export goods without barriers such as quotas or tariffs. According to COMEX, companies in the nation's free zones employed more than 53,000 workers and accounted for $4.98 billion in exports in 2008, which was more than 54 percent of the total export revenue in Costa Rica that year. 

Included in the 17 regulations is one that provides incentives to boost credit payments of small and medium-sized businesses, another that authorizes financial benefits to “megaprojects” that generate more than $10 million in exports and employ more than 100 people, and another that will aim to simplify bureaucratic processes for foreign businesses. “The Free Zone Law allows us to maintain and support foreign direct investment in the country and attract new capital,” said Foreign Trade Minister Anabel González.

In 2009, the Costa Rican Investment Board (CINDE) reported that 29 foreign companies initiated or expanded operations in the country, accounting for more than $304 million in investment and the creation of more than 5,700 jobs.

 

 

“The Brothers” Villalobos Complaint Dismissed

June 18, 2010 Tico Times

A six-year-old arbitration case in an international tribunal has ended with a ruling in favor of the Costa Rican government.

The tribunal tossed out a lawsuit filed by a group of investors who lost millions of dollars when an unregulated financial operation widely known as "The Brothers" collapsed in 2002.

The investors accused the Costa Rican government of ignoring the operation – run by Costa Rican brothers Luis Enrique and Osvaldo Villalobos – for more than a decade while government officials and even family members of an ex-president were collecting interest on investments in the scheme.

The government then closed the businesses in an illegal raid three years ago, the plaintiffs said. After the raid, Luis Enrique Villalobos fled the country with approximately $800 million and remains at large (TT, Feb. 1, 2003). His brother was sentenced to an 18-year prison term in 2007 (TT, May 18, 2007).

 

The complaint was presented to the World Bank's International Centre for Settlement of Investment Disputes in May 2004. The Costa Rican Foreign Trade Ministry (COMEX) announced Wednesday that the case had been dismissed on May 19, 2010.

The suit was rejected on all counts by the tribunal, which stated that the plaintiffs did not exercise the due diligence a reasonable investor would have used to ensure compliance of their investment with the law, according to a COMEX press release.

An estimated 6,300 investors lost money in the scheme, many of whom went bankrupt when the operation folded.

For approximately 20 years, The Brothers paid monthly interest payments of 2.8 to 3 percent on investments, which in later years were accepted only in sums of $10,000 or more. Investors included Costa Ricans and U.S. and Canadian citizens. A large number of foreigners residing in Costa Rica returned home after being bankrupted by the scheme.

The accounts were frozen after police raids on the Villalobos' San José offices and private residences that were prompted by a Royal Canadian Mounted Police investigation into $350,000 allegedly deposited with the Villalobos group by six Canadians suspected of running a drug-smuggling operation in Canada (TT, July 12, 2002). The Brothers continued to operate for several months after the raid, and accepted more deposits until October 2002, when Luis Enrique Villalobos vanished, along with millions of dollars in investors' money (TT, Sept. 24, 2004).

 

Costa Rica becomes Marine Mammal Sanctuary

Posted on June 19, 2010 by Bob Berwyn By Summit Voice

Costa Rica has declared its coastal waters as a sanctuary for marine mammals, according to the Eco Preservation Society. The executive order issued by President Oscar Arias bans all hunting, catching, hurting, or in any other way harassing or trading cetaceans in all territorial waters, including those in the Pacific Ocean and the Caribbean Sea.

Costa Rican waters serve as migration routes for whales, and marine scientists have confirmed that whales use some of the countries harbors and sheltered coastal waters to mate and give birth, including endangered humpbacks.

Costa Rica was also ratified as the headquarters for the West Pacific Conservation Marine Corridor, which takes in the area of the Galapagos Islands (Ecuador), CocosIsland (Costa Rica), CoibaIsland (Panama) and the Colombian islands Malpelo and Gorgona. Costa Rican Ricardo Meneses was confirmed at the top executive of the organization during the 16th Forum of Latin American and Caribbean Environment Ministers, held in the Dominican Republic.

 

More Foreign Companies to Open in Costa Rica

June 15, 2010 Tico Times

As the economy recovers, more multinational companies are looking to invest in Costa Rica.

The latest was medical device manufacturing company Nitinol Devices & Components (NDC), whose decision to begin operations in the country was announced this week. Gabriela Llobet, the director general of the Costa Rican Investment Promotion Agency (CINDE), estimated that approximately six more companies will break ground for or inaugurate new operations in the upcoming months. NDC manufactures medical guide wires used for non-invasive surgery. The company is negotiating to set up a facility in one of San José's free trade zones, which allow businesses to import materials and export goods without barriers such as quotas or tariffs (TT, Jan. 29). Llobet said the Fremont, Calif.-based NDC was a good fit for the country because of Costa Rica's close to its primary market, the United States.

In addition, other medical device manufacturers are already having success in Costa Rica. “It's a strategic location,” Llobet said. “Just for the fact of already having all these companies operating here in this sector – it's a great indication for them that they can find the required human capital to not only to get established here, but continue growing (pursuant to) a long term strategy in Costa Rica.”   NDC will invest $3.5 million in operations in the country, and plans to hire 30 employees by the end of the year. The long-term goal is to employ 200 people, Llobet said.

She added that CINDE hopes to help bring in 29 multinational businesses this year and that an early estimate is that around 5,000 jobs could be created in the services, medical devices and advanced manufacturing sectors. 21 new operations moved to Costa Rica in 2009.

The Central Bank estimates $1.3 billion of foreign direct investment for this year, while two sectors in particular appear to be leading Costa Rica's foreign investment landscape.

  

     
 

Traffic Conditions On Alternates Good

June 13, 2010 Inside Costa Rica

The Ministerio de Obras Publicas y Transportes (MOPT) reports no major congestion on the alternates to the Pacific coast from the San José with the closure of the San José - Caldera between Orotina and Atenas, that went into effect Saturday morning.

 

The Montes de Aguacate, as well as the Cambronero were reported moving well all day, though it had to be a re-learned experience for many who had abandoned those roads over the San José - Caldera since January.

Missing along most of the two routes are well painted lines, the "cat's eyes" reflectors that are wonder at night and in the rain and proper signage indicated hazards, turns off and other vital information for drivers.

Many, notwithstanding the electronic sign west of the Escazú tolls warning of the road closure, got caught up and had to find their way from the Atenas exit to Orotina and onto Ruta 27 again.In addition, there was more than the usual number of police patrols along the route from the Sabana and Santa Ana.

 

Costa Rica creates committee to simplify paperwork

 June10, 2010 Tico Times  

The bureaucratic hoops, or trámites, that those attempting to do business in the country must leap through can present an arduous and frustrating challenge to investors. Companies looking to build are usually bogged down in excessive paperwork and permit applications, while potential Costa Rican residents can wait years to have their application granted.

During her campaign, President Laura Chinchilla listed improving these bureaucratic processes as one of her highest priorities. Chinchilla commented on the inefficiency of the process and promised that her government would look into creating a more efficient digital trámite process.

 

This week, the Economy Ministry (MEIC) announced the creation of the National Strategy for Better Regulation and Simplification of Bureaucratic Processes. The strategy will be implemented by a committee, which will be comprised of Chinchilla, the economy minister, the vice minister of every other governmental ministry, and the managers or assistant managers of public institutions. The group will have until Sept. 30 to complete a digital catalog of the trámites required by all public agencies. And on Dec. 17, each agency will present its individual plan for improving the trámite process to Chinchilla. Said Mayi Antillón, the Economy Minister. “President Chinchilla has identified this as one of her priorities to improve our competitive standing as a nation.”

Costa Rica Second Most Productive In Latin America 

June 9, 2010 Inside Costa Rica

According to a report by the Banco Interamericano de Desarrollo (BID) Costa Rica is the second most productive country in Latin America. Chile is in first place. 

The report takes into account efficiency and other factors in the production process.

According to the report, the average productivity score in Latin America is 51.8%, if compared to US production efficiency.

 

High Cost of Phones Cools Off Costa Ricans On 3G

June 9, 2010 Inside Costa ;Rica

The sale of 3G cellular lines in Costa Rica has not gone the same way as in the past, where within weeks the majority and months the total of all new lines issued were bought like the proverbial pancakes.

No, the 3G lines, although are selling, the Instituto Costarricense de Electricidad (ICE) has had to start promoting to warm consumers to the new lines. The major reason for this is the high cost of 3G phones, which generally run into the hundreds of dollars for a basic unit with a decent browser to take advantage of the 3G mobile internet.

In fact, one of the least expensive 3G phones is the Nokia 2730 that sells in Costa Rica for ¢90.000 colones. While a similar GSM phone, the Nokia 1208, runs only $30.000 or less.

Although there is no difference in the cost of the services, the favourite today in Costa Rica is the GSM and that is due to the cost of the units.Both the 3G and GSM basic services runs under ¢4.000 monthly. The cost of text messaging and voicemail use is the same. The difference is in the mobile internet.

While GSM only offers basic internet connection with connectivity up to 128 Kbps, the 3G allows connection up to 1 Mbps. But for that one needs a 3G phone and decent browser to surf the interent and to receive and send emails. And they are not cheap.

 40% of all Costa Ricans have a cellular phone.

Last year, the Instituto Costarricense de Electricidad (ICE), launched 950.000 3G cellular lines, seeking to increase the coverage to 60% of the population.

Currently, ICE operates three cellular networks, the 3G that was introduced last December, the GSM that has been around since the 2002 and the TDMA, which is being phased out by the end of 2010.

 

Arenal Volcano Erupts
May 25, 2010 Inside Costa Rica
Costa Rica's most famous and visited volcano, the Arenal, put on show for the thousands of visitors to the arrea and locals, as it erupted, spewing geysers of lava, ash and toxic gases from its crater and forcing the evacuation of the national park where it is located. One visitor told the television news cameras, "it was spectacular at first, but then become concerning". 

The 1633-metre-tall cone-shaped mountain in northern Costa Rica shuddered into activity at shortly after noon on Monday issuing eight successive rivers of lava that flowed down its steep slopes, the Observatorio Vulcanológico y Sismológico de Costa Rica (OVISCORI) reported. 

Nobody was at risk from the eruptions but authorities as a precaution evacuated the national park that surrounds the colossus, located, two hours north-east of San José. 

The Arenal is one of Costa Rica's major tourist attractions and the park has scores of hotels, restaurants, nightclubs and shopping centres.

No estimates were given of how many people were inside the park when the eruption began.  Arenal's last major eruption in July 1968 killed 89 people. Smaller eruptions have occurred at least six times over the past 35 years.

Confusion Over High Traffic Fines And Points 
May 21, 2010 Inside Costa Rica  
The ministro de Obras Públicas y Transportes, Francisco Jiménez, explains that many are under the impression that since the Sala Constitucional is reviewing the proposed reforms, the fines and points do not apply. But that is not the case. 

Jiménez assures that the high fines and point system is being applied until such a time if and when legislators pass the reforms.

The previous legislature proposed a reduction of fines of up to 66% and the elimination of points in the Ley de Tránsito that went into effect on March 1, 2010.

However, the reforms could not pass the vote before the April 30, 2010, deadline and left the work to the new group of legislators and it is not known if and when the reforms will make it to the legislative floor. 

The fines range from ¢40.000 colones for violating to vehicular restrictions of San José to ¢293.000 for speeding, children not in a booster or child seat, for example.

All fines are net. To each ticket an amount equal to 30% in favour of the PANI (child welfare services) and court costs are added. Thus, a ¢293.000 colones fine can easily end up being over ¢390.000 colones or us$740 at today's dollar exchange rate. 

Each driver started with 50 points on March 1, 2010.

Points are deducted with each infraction leading to a suspension of a drivers license from two years for the first time to a lifetime suspension for repeat offenders. 

For drunk drivers - driving with an alcohol blood limit of 0.75 or higher, driving over 150 km/h or participating in street racing, for example, means the confiscation of the vehicle and the case is hander over to the Fiscalía for criminal charges. 

Although some, like the former head of the Policía de Tránsito, Germán Marín, assured that the reforms would pass, the new traffic police chief, Cesar Quirós, and the MOPT minister are refusing to speculate.

The delay in the reforms stems from the Constitutional Court

, in review of the reforms, finding errors in the text.

Now, legislators have three options: correct the text; approve the reforms, with errors and all; and send it to the Comisión de Asuntos Jurídicos (Legal Affairs Committe).

Viviana Martín, head of the PLN legislators and former vice-minister of the MOPT, said she prefers the third option, which allows the reforms to be reviewed in full. 

Tourism and export sectors show strong first quarter    April 26, 2010 Tico Times

An overall strong showing by the Costa Rican economy during the first quarter of 2010 was underscored by figures showing significant growth in the export and tourism sectors. Furthermore, a representative of the International Monetary Fund (IMF) stated during a visit to the country that “economic recovery in Costa Rica is firmly underway”.

 

Marco Piñon, the IMF mission chief for Costa Rica, visited the country during the second week of April to conduct the third and final review of the IMF's $ 735 million Stand-By Arrangement with the Costa Rican government, a line of credit approved by the agency in April 2009 to “support the country's strategy to cope with the adverse global economic environment.” During his weeklong visit, Piñon said that thanks to strong financial and business resurgence in the first few months of the year, the Costa Rican economy stands in good shape for 2010. 

“Economic growth rose in the second half of 2009 and remained strong in the first quarter of 2010,” Piñon said. “Consumer and business sentiment have firmed up and financial conditions have continued to improve. … The government's strategy to shield the economy from external shocks with (IMF) funds, which in the event were not used, helped preserve confidence, maintain stability, and protect the most vulnerable groups. A supportive fiscal policy has provided a boost to the recovery and a cautious monetary policy has allowed inflation to move to low levels.” 

On Wednesday, the positive outlook was reinforced by an announcement by the Costa Rican Tourism Board (ICT) that 65,800 more tourists visited the country during the first three months of 2010 than during the same period in 2009, an 11.5 percent improvement over last year. The ICT estimates that over 636,000 tourists visited the country in the first three months of 2010. 

Further evidence of the recovery was provided by the Foreign Trade Promotion Office (PROCOMER), which reported on Wednesday that national exports during the first three months of 2010 increased 16.8 % in comparison with the first quarter of 2009. Through the first three months of the year, the country raked in over $2.4 billion in exports, $352 million more than during the first quarter of 2009. A 463 percent improvement in sugar sales was the biggest highlight of the export sector. Sugar exports accounted for $29 million more during the first three months of 2010 than during the same period last year.

Costa Rica's Sala IV returns traffic law

 May 20, 2010 TicoTimes

The task of revising the traffic law lands back on the desks of legislators after Costa Rica's high court issued its ruling regarding the law on Wednesday. 

Judges from the Sala IV found no problem with the law, except for a phrase about traffic penalties that they called too open.

They were concerned about the phrase “according to the circumstances” in Article 133 of the bill, which they say infringes on the rules of due process in criminal matters contained in Article 39 of the Constitution by allow judges too much leeway in imposing penalties. 

The full article of the bill reads, “The respective judicial authority can increase the fines established in this law, according to the circumstances, by up to 100 percent of the corresponding amount.”

The traffic law has been in and out of discussion in the Legislative Assembly for more than 15 months, as many legislators considered to the fines contained in the original law to be too high. The law contains fines as high as $ 323 for talking on a cell phone while driving and $431 for operating a vehicle without a valid license.

Despite an intensive effort to revise the law after it went into effect, the old 57-member Legislative Assembly left office without success.

At this point, any effort to revise the traffic law must begin the process from the beginning: a legislative commission.

 
Exchange Rate Jumpy; Colón’s Future Unclear

May 14, 2010 Tico Times  

Fluctuations in the Costa Rican colón's exchange rate vis-à-vis the U.S. dollar appear to have neither rhyme nor reason. After hitting its highest value in two years Tuesday, May 4 when ¢ 503 would buy a dollar, the colón experienced three consecutive days of dramatic drops, finishing the week with a value of ¢ 532 on the dollar.

 

 Last week's fluctuations sharply contradicted the prevailing exchange rate trends over the first four months of the year. Since Jan.1, the colón has steadily appreciated, driving the exchange rate from a buy value of ¢ 558 at the beginning of the year to ¢ 503 last Tuesday.

In recent months, financial analysts and economists have attempted to make sense of the colón's sustained appreciation, floating theories about reduced imports, a slow recovery from the global economic recession and an increased demand in Costa Rica for the colón.

But the unforeseen jumps last week defy these explanations. While theories about the colón's appreciation abound, few reasons were given for the abrupt decline in the currency's value. Murmurs circulated about possible political manipulation during the final days of the Arias administration, while others contended that insiders were playing the national currency market and turning large profits by swapping currencies before the exchange rate spikes or falls. Few analysts, however, have given credence to these rumors.

“We haven't seen any evidence of manipulation of the market,” said Jorge Baltodano, manager of investment strategy at Aldesa, a Costa Rican economic analysis firm. “The market is quite transparent. It's a small market and it's not a perfect one. (But) even in the U.S. there is no such thing as a perfect market, as was seen by the trading error last Thursday that brought the Dow Jones down. However, as far as manipulation, we haven't seen any.” On Thursday, May 6, a sharp drop in U.S. markets was attributed in part to a glitch in an electronic trading program.  

On Monday, the exchange again finished the day at a ¢ 532 buy value rate, which was taken as a sign that fluctuations had stabilized over the weekend. However, when the National Currency Exchange (MONEX) closed on Wednesday, the colón had once appreciated to a ¢ 514 buy value again.  

Where the colón will go next is anyone's guess. History seems to indicate that the colón will lose value versus the dollar as the year goes on. In the last decade, the only year in which the colón appreciated was 2007, when it gained ¢ 20 on the dollar. The average annual depreciation rate since 2000 has been ¢ 27, with the exception of 2009, when it depreciated only ¢ 8. This year's exchange rate trends have defied that history; to date, the colón has appreciated ¢ 33.  

Some attribute last week's exchange rate jumps to international market factors. The debt crisis in Greece has sent the Euro's value spiraling downward over the past weeks. As of today, € 1 was worth $1.25, and has shown an almost daily depreciation against the U.S. dollar. On Dec. 3, 2009, the Euro was worth $1.51.  

“There has been continual movement in the international market, especially in Europe with the financial troubles of Greece and the depreciation of the Euro,” said Oscar Ugalde, economics professor at the National University (UNA) and the Latin American University of Science and Technology (ULACIT). “As the Euro depreciates, there is more interest in investing in the U.S. dollar. As demand for U.S. dollars grows, the Costa Rican exchange rate will continue to be affected.”

Not all analysts agree that the Euro's depreciation is connected to the colón's decline. However, as the Euro falls against the U.S. dollar and causes the dollar to strengthen against other currencies, in theory, the dollar should gain value against the colón as well.

“There are fluctuations within all exchange rate markets, and many, such as the Euro, are experiencing more significant movement in the exchange rate than Costa Rica,” Francisco de Paula Gutiérrez, former president of Costa Rica's Central Bank told The Tico Times last week. “We cannot forecast what the exchange rate will be or when it will change. People are complaining about the volatile exchange rate and that the Central Bank is manipulating it. But the reality is other countries have currencies that are much more volatile than ours.”

While the exchange rate has been a hot topic for the Costa Rican business community in 2010, last week's wild movements will only result in greater efforts to solve the riddle of the country's exchange rate. However, this may prove impossible. “Welcome to the era of volatility,” Baltodano said. “People have to get used to it. It's a matter of market forces. We are in a country where the dollar and colón are both legal tender and people have the right to invest in any money they decide to at any time.”

Constitutional Court Orders San José - Caldera Highway Must Be Safe And Secure For Pedestrians
May 13, 2010 Inside Costa Rica
The Ministerio de Obras Publicas y Transportes (MOPT) has been ordered to make the San José - Caldera highway safer for pedestrians and has three months to better conditions.
The Sala Constitucional (Sala IV) - Constitutional Court

- says that the highway should have sidewalks, ramps and street signs in the section of near Barrio Los Ángeles de Brasil de Santa Ana and sections of Orotina and Piedades.
The magistrates said in their ruling that the new road has caused a number of problems for neighbours of Barrio Los Angeles de Brasil de Santa Ana.
The ruling follows a complaint filed by a resident of the area on behalf of his neighbours.
The complaint said that there is a paved road but it has no sidewalks, ramps or a pedestrian crossing, traffic lights and bridge, forcing neighbours who walk by the site to cross the three lane road to get to and from a bus, risking their lives daily.
The Sala orders Pedro Luis Castro Fernández, the vice-minister of the MOPT, or whomever is in charge at the time, three months to comply with the order, ensuring the security and safety of pedestrians.

Banks are Back in the Home Finance Game
April 23, 2010 By Tico Times Staff    

The Construction and Housing Expo, or Expo Construcción, brought together sellers and would-be buyers of home appliances, construction materials and building-related services from Wednesday through Sunday in San Antonio de Belén in Heredia. Under one roof, visitors to the fair could find doorknobs, showerheads, solar water heaters, refrigerators, floor tiles, plumbing materials and even luxury items such as hot tubs.  

 But at the center of the sprawl of displays sat the most essential stands for realizing homeownership and remodeling dreams: those of the banks. Several public and private banks, including Banco Nacional, Banco de Costa Rica (BCR), HSBC, Banco Popular and BAC, were promoting their limited-time-only housing and construction financing deals. Of the five banks interviewed by The Tico Times, each claimed to offer home construction financing for at least 80 percent of the cost of the project for terms of up to 30 years. Both BCR and Banco Nacional offer 100 percent financing.  

“We want to offer premiums to people who are looking to buy or build a home,” said Olman Fallas, the sales and customer service manager at BCR. “We are coming out of a recession year and a lot of people are just starting to regain their financial footing. What we aim to do is offer a plan that will help them reestablish stability over the long term.”  

The financing offers are accompanied by discounted interest rates in both dollars and colones. The offerings vary among the banks, but in general include very low interest rates over the first one to three years of a mortgage, with incremental growth beginning in year four or five.
The initial interest rates on financing range between 2 and 7 percent in colones and 3.5 to 8 percent in dollars. All banks offered financing for terms of up to 20 or 30 years.  

In addition to generous financing, some banks are also promising to pay percentages commissions, legal expenses and closing costs to entice interested home-owners. 
 

The recent push by national banks to generate attractive financing packages for home purchases and construction is a result of the reopening of credit lines, which were extremely limited in the recession year of 2009.
Since the economy began showing signs of improvement, all banks operating in Costa Rica have been granted significant increases in the credit that they can offer customers in 2010.

 

Mortgage and Financing Offerings at National Banks:  

BAC    

Up to 80 percent financing of appraised value

Down payment ranging between $10,000 to $400,000

Financing offered in periods of 15, 20, 25 and 30 years

Initial interest rates between 6.15 and 7.75 percent, depending on plan

 

Banco Costa Rica (BCR)  

Up to 100 percent financing offered

Financing for up to 25 years (in dollars)

Initial interest rates between 3.75 percent and 7 percent

 

Banco Popular  

Up to 80 percent financing based on appraised value

Financing for up to 20 years

Initial interest rate of 8 percent

Offer ends May 31

 

Banco Nacional  

Up to 100 percent financing based on appraised value

Financing for up to 25 years

Initial interest rates between 7 and 8 percent

 

HSBC  

HSBC mortgage and financing plans are determined by salary. All rates and terms are determined according to the applicant's income. “At the beginning of this year, a credit line of 40 billion colones (over $75 million) was approved by our regional director,” said Cristian Vega, the coordinator of area sales and production for Banco Popular. “This is significantly more credit than we had to work with in 2009.”

The expanded credit is also anticipated to revitalize home purchases and construction. In 2009, construction fell by over 30 percent, making it the hardest-hit sector during the economic crisis.

“Definitively, the construction sector is going to grow slowly over the year,” said Arnoldo André Tinoco, second vice president of the Costa Rican Chamber of Commerce. “The recovery of the commerce sector depends on construction, which drives producti on and consump tion. Construction requires a lot of investment and, because credit was closed in 2009, people couldn't invest. This year there will be much more credit available from the banks.”

 

Judging by the endless lines at the bank stands at Expo Construcción, it would appear the bank offerings are indeed attractive to prospective homeowners. There were seven bank and credit agencies present at the expo, each with large displays reading “We finance 100 percent” or “Do you want your own home?” or signs with families smiling in front of a “Sold” sign in their yard or home. It also seems clear that the packages offered by the banks will generate significant competition among them. 

Regardless of which bank attracts the most prospective buyers, it appears the housing market and the improving economy are feeding off of each other.  

“We've had people coming in search of all sorts of financing,” said Víctor Falcón, a mortgage executive at Banco Nacional. “Some want to buy lots, some have lots and want to build, some want to buy lots and build in order to sell them. A lot of people have different objectives, but it seems that as the economy recovers, we are seeing much more interest in the purchase or construction of housing than last year.”

 

Dollar Near The Floor
April 17, 2010 InsideCostarica.com
For those of you keeping an eye on the dollar you will not that it has almost hit the floor of the exchange rate band.The Banco Central de Costa Rica (BCCR) pegged the buy rate at ¢508 and the sell at ¢518.24. The floor of the band is ¢500. This means 1000 colones equals $1.968!   You have to remember that not long ago the dollar was trading around the ¢580 mark. So what happened? And what is happening? These are questions with no easy answers. We have heard all sorts of stories about why the dollar has dropped so much, some even made sense at the time, but not much any more. We, as the experts, have no clue.

 

 

Search for in-country visa renewal is a real chore

 April 16, 2010 By Saray Ramírez Vindas & the A.M. Costa Rica staff 

Tourists are best advised to avoid the immigration offices if they seek to renew their 90-day visas.  A reporter accompanied a Swiss citizen there Wednesday and the best immigration officials could suggest was that the man marry the newswoman so he could have his visa renewed via a relationship with a Costa Rican.  

That's because the procedures for renewal are not clear and not even workers in the Dirección General de Migración y Extranjería know what to do, until at least May 15
The new law clearly says that the foreign holder of a tourist visa can renew it without leaving the country by visiting an immigration office, by showing proof of financial stability and by paying $100. Implementing the policy would be a relief to the legion of perpetual North American tourists in Costa Rica who have been making foreign runs for visa renewal every 90 days.
 Now, he said, approval of the regulations will be left to whoever takes over his job in immigration.
 Delays in publishing regulations are not new. The previous immigration law that expired March 1 was in force for almost four years without regulations being established.
One situation that the regulations will clarify is the number of times a perpetual tourist can renew a visa for $100. When the law took effect Zamora told a reporter that tourists will be able to stay in Costa Rica for a full year without having to leave the country. Instead, they will be able to renew their tourist visa three times here for additional 90-day stays, he said. However, none of this is in the law.
Feb. 18 Zamora said that a tourist will not be able to go to the same country twice and that after two trips to renew a visa a tourist will have to stay out of Costa Rica for a minimum of 15 days. He later said that this information was incorrect.
"Due process will be established in the regulations, however, these will not be ready before the 15th of May," said Zamora. "This job will remain with the new director of immigration and the new minister of security when they are in power and are able to approve the regulations. Eight days after their approval the regulations will be published in La Gaceta." Ms. Chinchilla takes office May 8.
 And what about the tourist visa holders who come to immigration seeking the $100 renewal?
Zamora said that the agency has opened a special window on the second floor to handle these problems. When necessary, foreigners can go directly to the legal department for information in regards to the process, he added.
Some problems developed because persons with expired visas came to the agency seeking a renewal, Zamora said. Expired visas cannot be renewed that way, he said, and the individuals would have to leave the country, he added. 
 

Tax agency suspends law for quarterly income filings

 April 16, 2010   By the A.M. Costa Rica staff

The nation's tax collecting agency has suspended a new law that required residents and businesses to report their major expenses and incomes four times a year instead of annually. 

The tax agency, the Dirección General de Tributación, was not very communicative about the change, and some business people only heard about the change as they were preparing tax reports Thursday. Some learned of the change when they appeared at the Tributación office to file the report.
Francisco Fonseca Montero, the director general of the agency, signed a decree Feb. 15 suspending the reporting requirement. That decree was supposed to have been published in the La Gaceta sometime in early March. 

Each year people doing business here have to file a report listing payments to professionals and various suppliers. In a two-part form business people must list all sales they have made in the year to a single customer that total more than 2.5 million colons, about $4,900. They must also list their expenses for purchases or services for more than 2.5 million colons. 

Rents, professional fees, commissions and interest are special cases. The form filler must report any transactions to a company or individual that total more than 50,000 colons during the fiscal year. So visits to a dentist for which the amount paid totals more than 50,000 must be reported. That's about $97.50. 

The quarterly reporting rule reduced the threshold amount to 25 percent. 

The decree said the new law was suspended temporarily, in part, because the agency's computer updating is behind schedule. Unofficial reports say that the agency just could not handle the expected flood of paperwork. Tributación representatives were known to have met with lawmakers, but there were no announcements to the public. In fact, the last press release issued by the agency was last June. There was no explanation why the Asamblea Legislativa passed the law without considering these factors.  The agency did, however, notify the Colegio de Contedores Públicos de Costa Rica, which carries the decree on its Web site. But even accountant members of the trade organization were confused Thursday.

 

 

 The Dollar Is Now Unpredictable
 April 7, 2010 Inside Costa Rica  On Tuesday the dollar exchange rate against the Costa Rican colon touched a low that has not been seen in years, leaving financial experts saying that the trend is unpredictable.The low dollar is bad news for those who earn or have savings in dollars and spend in colones.The Banco Central de Costa Rica (BCCR) - Central Bank - set the reference rate this morning at ¢512.48 for the buy and ¢522.46 for the sell. Click here for an historical look at the exchange from 1983 to present. The rate is the lowest in several years and is close to the bottom of the bands set by the Central Bank which has maintained at ¢500 colones per one US dollar. The high of the band is ¢623.This now means ¢1000 equals $1.95 To buy dollars with colones.

Costa Rica Tourism Report
March 27, 2010 Inside Costa Rica: Based on recently published research from Business Monitor International, "Costa Rica Tourism Report Q2 2010"  
After increasing from 2.06 million in 2006 to 2.52 million in 2008, the number of tourism arrivals dipped to an estimated 2.27 million in 2009. Arrival numbers are forecast to increase in 2010 and to grow at an average rate of 8% until the end of our forecast period in 2014. The majority of tourists visit Costa Rica during the peak season (January-May) and come from the Americas.  

Arrivals from the country's three most important source markets - the US, Nicaragua and Canada - increased steadily during 2004 to 2007. However, looking at the inbound tourism data by region, although 2008 continued to trend upwards for North America and Latin America, we are forecasting arrivals numbers from both regions to decrease by 9.45% and 9.81%, respectively, in 2009, before climbing again in 2010.  The next most important source markets in terms of arrivals are, in order, Panama, Mexico and Spain. 
The main growth drivers for the industry are ecotourism and health tourism. Costa Rica has 32 national parks, eight biological reserves, 13 forest reserves and 51 wildlife refuges.  

The industry suffered slightly in 2009 due to the global recession, particularly in relation to the US, and the H1N1 virus (swine flu), however it is forecast to achieve a relatively quick turnaround in 2010. 

The continued expansion of the Daniel Oduber International Airport in Liberia and the growing amount of chartered flights from Europe all have the potential to drive growth in the market.  Costa Rica's tourism industry is a major contributor to the economy, accounting for 7.8% of GDP in 2008 and nearly 3% of total employment in 2006, or 49,000 individuals, according to data from the World Tourism Organization (UNWTO).  However, the industry's contribution to GDP is forecast to steadily decline, from 7.2% in 2009 to 4.7% by 2014.  

Collective government expenditure on tourism was an estimated US$28.4 million in 2009, a slight dip from the previous year. Collective government expenditure is forecast to bounce back to US$28.5 million by 2011. Expenditure is then forecast to rise to US$32.8 million by the end of the forecast period in 2014. 
The government has added a tax on inbound airfares. The legislation places an additional fee of $15 on all airfares, replacing the 3% hotel tax.  Part of the revenue from the tax, which is expected to be more than $80 million per year, will fund some activities of Instituto Costarricense de Turismo (ICT), including marketing, promotion and planning.  The change in taxation came about due to the increasing amount of condominium and other private rentals that were not included under the umbrella of the hotel tax.  New hotel developments are ongoing in the country, with major international companies such as the InterContinental Hotels Group, Marriott and Barceló Hotels & Resorts constructing hotels near the beaches and in urban centres.

Welcome Mat Is Out for Medical Companies
March 28, 2010 Tico Times  
Boston Scientific, a United States-based global medical devices production company, inaugurated its second production plant in Costa Rica at the Propark Free-Trade Zone in Coyol, Alajuela, in 2009.  “The main reason we decided to come here was because we have existing customers in Costa Rica and we wanted to continue to have their business,” said Daurice Schriener, vice president of sales and marketing at Bentec. “The more we looked into moving here, the more we saw that we could find great employees with a good skill set and a high education level. Everything matched what we were looking for.”  Bentec's decision to expand operations to Costa Rica is one that has been shared by many others in the same field. Since Baxter Health Care opened its first plant in Cartago, east of San José, in 1988, an additional 30 foreign medical companies have created or expanded operations in Costa Rica, a trend that shows no signs of slowing down. 
“In 2010, we expect that the medical sector will continue to be dynamic,” said Gabriela Llobet, director general of the Costa Rican Investment Board (CINDE). “It will continue to develop into one of the fastest growing industries in the country.” At least through the first two months of 2010, Llobet's words have rung true. According to the Foreign Trade Promotion Office (PROCOMER), January and February exports of medical supplies and devices raked in more than $191 million, representing nearly 13 percent of the country's overall exports. In 2009, the export of medical products generated more than $1.34 billion for the economy and accounted for 15.5 percent the nation's total exports. The export of medical products makes up the second largest share of the national export market, following only microprocessors and electronic components, which account for more than 20 percent of exports.
“The medical sector is almost recession-proof,” said Andrea Centeno, communications manager at CINDE. “Despite a slow economy and lowered (overall) demand for exports, there is always demand for health products. There is always a need for forceps. There is always a need for medications. There is always a need for medical products, no matter the economic situation.” When Baxter Health Care arrived in Costa Rica 22 years ago, the decision of the large multinational corporation that makes intravenous sets and products to treat hemophilia and kidney disease piqued the interest of other members of the medical devices and products industry. Though Baxter has locations in several other countries, the company chose Costa Rica to house its lone Central American plant.
Other giants of the medical sector have since followed Baxter's lead.The pharmaceutical and medical devices producer Hospira Inc., based in Chicago in the U.S. state of Illinois, arrived in Costa Rica in 1999. Heart and cancer product specialist Boston Scientific arrived in 2004 (and announced an expansion in 2009). In 2008, St. Jude's Medical, headquartered in St. Paul in the U.S. state of Minnesota, announced plans to construct three plants in the Central Valley. 
So why is Costa Rica a hotbed for the medical industry? The answer appears to have three parts. “We picked Costa Rica to build this plant because this country offers a skilled, well-educated population,” said Gary Hicks, vice president for Boston Scientific's operations based outside the U.S. “And that is very important for us. We view it as much as an investment in people as in facilities.” The frequent references by managers to a well-educated and highly bilingual populace show that these are two of the pillars that have supported decisions to establish operations in Costa Rica. The other pillar, and typically the most important factor in the decision to locate in Costa Rica, is the benefits offered by the zonas francas, or free-trade zones. “The incentives set forth by the government are very attractive, and they are very lucrative,” Schriener said. “The first 15 years you are here are tax free.” 
There are currently 247 companies in Costa Rica's free-trade zones, most of which are in the Central Valley. In a free-trade zone, businesses can import and export goods without barriers, such as quotas or tariffs. For companies that export most of their finished products, such as medical device companies, the waived tariffs represent a huge opportunity for financial gain. 
A reform of the law regulating free-trade zones was approved in December 2009. Of the many facets of the reform, the primary addition extends tax breaks to companies that establish operations outside of the greater metropolitan area. The aim of the reform was to provide incentives for companies to establish plants in other regions of the country and, thus, increase investment and employment opportunities in areas such as Limón on the Caribbean coast, Puntarenas in the Central Pacific and Guanacaste in the north Pacific region.
According to the Foreign Trade Ministry (COMEX), businesses in the free-trade zones nationwide employ more than 53,000 workers and account for approximately $5 billion in annual exports. There are currently more than 9,000 people employed by the medical sector alone (TT, Dec. 24, 2009).
“The changes in the free-trade zone legislation were necessary, not only to maintain investment, but also to promote local investment and attract new capital,” said Jorge Brenes, president of the Costa Rican Association of Free Zone Businesses at the time of the reforms. “The reform of this law is a great boost to the development of Costa Rica.”

With the three pillars – including an educated population with the capacity to speak English, and strong financial incentives to invest in Costa Rica – in place, the continued growth of an export-oriented medical industry seems assured.

Medical tourism expected to increase  
March 23, 2010 Tico Times By Chrissie Long  
Even as the $940 billion health reform in the United States will expand medical care coverage to 30 million previously uninsured citizens, there will still be a market for medical tourism, said Renee-Marie Stephano, president of the U.S. - based nonprofit Medical Tourism Association.

 “We anticipate medical tourism to increase,” Stephano said in an interview with The Tico Times on Monday. “More people will have access to health insurance (in the United States ), but you are going to see an increase in the underinsured.” It's these underinsured that have traditionally provided a large client base for medical tourism, Stephano said, as people look abroad for services that United States insurance companies deem “not necessary” including hip replacements, dental care or cosmetic surgery.
“Outside of the United States, medical care is less expensive – in some areas, five or six times so,” he said. “Insurance companies and employers recognize the price differential and will encourage patients to seek attention abroad.” I think the health reform is 100 percent positive for the medical tourism industry,” Quiros said.
The reform, which the U.S. Congress passed on Sunday night, will require every American to have health insurance by 2014 and expand Medicaid to cover people who cannot afford to pay for insurance themselves. It will also prohibit insurance companies from discriminating against patients based on their medical history and will lower prescription medicine costs for seniors. Stephano said the United States system may start to resemble the system in Canada and Europe, where greater demand for health care has increased wait-times and pushed individuals to seek alternatives.

According to a study done by DeloitteCenter for Health Solutions, an estimated 750,000 Americans traveled abroad for medical care in 2007. This number is expected to increase to six million in 2010.
Costa Rica, with its three internationally-accredited hospitals and proximity to the United States, is in a unique position to take advantage of the emerging market, according to health industry experts. In recent years, the country's private hospitals and clinics have buffed up their marketing materials, hoping to capitalize on U.S. clientele.  

 

 

Patients are able to find such non-essential services of similar quality but at a fraction of the cost in countries like Costa Rica, India and Brazil, said Michael Quirós, who oversees Latin American operations for the Medical Tourism Association.
However, it's not just the underinsured who will be looking abroad for medical care. With increased strain placed on medical services in the U.S. – because of greater demand – insurance companies will start offering incentives for their clients to receive medical treatment abroad.

COSTA RICA: Headhunting First-World Seniors
By Daniel Zueras SAN JOSÉ, Mar 8 (IPS) -
The Costa Rican government has declared retirement communities, aimed at attracting U.S. pensioners, to be "of national interest." Plans to create "retirement clusters" providing complete health services for older adults are seen as a profitable prospect for this Central American country. Old people as a business: this is the bottom line of the government and private sector's new project.  

Noting the rapid development of the "health cities" in Mexico and Panama, Costa Rican officials and entrepreneurs are poised to tap into the perceived gold mine among middle and upper-middle class senior citizens of industrialised countries. The concept is simple, and includes slashing red tape to the minimum by providing one-stop residence permits at the Migration Directorate, so that foreigners, especially the well-heeled, can come to live in the country.

Tax exemptions on real estate and vehicles are on offer, and a promotional campaign aimed at older adults abroad will be run by the Costa Rican Institute of Tourism (ICT). The government will also boost training of human resources such as health personnel through the Costa Rican Social Security system, and seek to attract investment.  

The Competitiveness Ministry has already identified eight locations for retirement clusters in Costa Rica, in areas of natural beauty with plenty of tourist attractions, and close to large hospital complexes.
Promoting Costa Rica as a retirement haven includes much more than boosting real estate sales or medical tourism. "It includes the hotel sector, travel, hospitals and research. Costa Rica will benefit from it," Competitiveness Minister Jorge Woodbridge told IPS. Patients and their relatives are likely to travel all over the country, staying at hotels and engaging tour operators and so on. 
Every 10,000 retirees are expected to generate employment for 40,000 people a year, 10,000 of them in direct jobs and 30,000 indirectly. The average income of the target population (middle and upper-middle class U.S., Canadian and Spanish citizens) is 3,500 dollars a month. 
"They pay for accommodation and medical care, and a family visit from home once a month, and it costs less than paying for medical services back home," he said. His customers pay 1,600 dollars a month, whereas in the United States they would have to pay 4,500 dollars a month for comparable services.
"We want to attract 10,000 pensioners a year," Woodbridge said. Estimated annual foreign exchange earnings per 10,000 retirees are 340 million dollars, "so in five years, the total would be 1.7 billion dollars," he calculated.
In any case, the plan will take at least five years to take off as a national strategy, Foreign Trade Minister Marco Vinicio Ruiz told IPS.
Other Latin American countries have a head start on Costa Rica. Mexico, which has been developing its policy for over 20 years, is now home to 700,000 pensioners from the United States who are living in Mexican retirement communities.
But the government authorities are optimistic. The climate, enormous biodiversity, security, stability, and polls describing Costa Rica as "the happiest country in the world," are factors that will work in its favour, according to Woodbridge. Costa Rica's reputation as "the Switzerland of Central America" will also help.  
Every day, some 6,000 people reach the age of 65 in the United States. The baby boomer generation, born between 1945 and 1964, controls 77 percent of the available financial resources of that country.

 

Costa Rica Sees Increase In Tourists 
March 19, 2010 Inside Costa Rica
The Instituto Costarricense de Turismo (ICE) says that 426.000 visitors came to Costa Rica during the first two months of the year, 37.000 more than the same period last year. The announcement was made by ICT minister Allan Flores based on immigration records of entries into Costa Rica.
"The numbers are a good sign of a recovery", said Flores. According to the immigration service records, the San José airport, the Juan Santamaría, continues to be the main door into Costa Rica, with a total of 227.000 visitors entering through the airport during January and February. Last year the number of visitors through the Santamaría was 208.000.
The Daniel Oduber airport in Liberia also saw an increase in visitor arrivals, recording a total of 50.427 visitors during January and February, 9.000 more than the same period last year. The number of visitors entering by land at the various border posts with Nicaragua to the north and Panama to the south increased to 149.000, 7.000 more for the same period in January and February 2009.

Costa Rican exports continue upward trend
March 22, 2010 Tico Times
The first two months of the year have been good to the Costa Rican export industry, as the Foreign Trade Promotion Office (PROCOMER) announced Friday that exports have increased 13.8 percent in comparison to the first two months of 2009. Through January and February, Costa Rica has exported nearly $1.5 billion in goods and services, including $766 million in February.The leading export sectors for 2010 so far have been electric products and electronics, which have accounted for 29 percent of total exports, the agricultural sector (23 percent) and food industry products (13 percent).
According to PROCOMER, the biggest increases in exports have been seen in juices and fruit concentrates, salsas, computer parts and electric cables. Costa Rica has also seen strengthened demand for banana and pineapple, two of the country's chief agricultural exports. The export of bananas is up 28 percent over last year, while the demand for pineapple has jumped 14 percent. PROCOMER also reports that the export of medical prosthetic devices has also risen 28 percent.
Of Costa Rica's exports this year, 39 percent have made their way to North America, while exports to the European Union and within Central America each account for 18 percent of the market. Exports to China and Singapore have also grown substantially in 2010. Goods and services sent to Singapore have risen 78 percent since a year ago, while exports to China are up 26 percent. Costa Rica is in the process of establishing free-trade agreements with both Asian nations.

Indications Are That Economic Crisis In Costa Rica Is Almost Over 
March 19, 2010 Inside Costa Rica
All indicators point out that the economic crisis is slowly coming to an end and the country is recuparating. Supporting that is the fact that there have been 35.995 new jobs created between August 2009 and January 2010. The figures were releaed by the Caja Costarricense del Seguro Social (CCSS).A poll by Manpower shows that Costa Rica is the number two in job expectations in Latin America, with a 23% net gain in jobs. 
Other indicators that the economic crisis is almost done and over with is the fact that 40.000 people attended the 10 days of the Expomóvil, the annual car show, that is really one big open ten saleathon for new and used vehicles. 
Add to that is the report by the Camára Nacional de Turimso (Canatur) that hotels and tour operators report an 80% occupancy rate for this Semana Santa.
And the Cámara de la Construcción is predicting a 13% increase in new hiring that translates into 15.000 new jobs in the sector. Of course those who lost their jobs in the past year see it totally different.
The price of consumer goods, clothing, groceries, appliances, etc. is still the same, while their income took a drastic drop. The economic crisis affected greatly the lower middle class to the lower class, which are still reeling from the effects and don't see the positive side like the other classes. 
However, experts in economy say the country is coming out of the crisis and there will a strong increase in hiring in the coming two years.According to the Univesidad Nacional (UNA) economist, Roxana Morales, in October 2008 there were 1.391.129 employed, in January 2010 the number of employed rose to 1.405.299 or 14.170 more people employed. 
Also, the monthly economic index produced by the Banco Central shows that the economic activity in January 2010 was 6% higher than in January 2009.
Economic experts suggest that the use of credit cards be reasonable and keeping financial order is important, as well as not speculate on the future movements of the dollar/colon exchange rate.  
 

Tortuous Path for Transit Law   March 19, 2010 Tico Times  
There's no telling what will become of the downtrodden Transit Law reforms that lawmakers approved last week.   This week, a review committee found errors and constitutional violations in the text for the reforms that could stall the expected modifications until after Semana Santa, or Easter week. Many of the changes seek to soften penalties and lower fines as outlined in the law that took effect this month (TT, March 12).  However, one section of the proposed reforms obligates universities and other independent institutions to offer driving instruction, a demand the review team said would be “unconstitutional” because it would infringe on the autonomy of the institutions.
Following the review committee's recommendation, the Legislative Assembly on Tuesday initiated an eight-day consultation process with the institutions in question. That step freezes the reforms process until the end of the consultation period, which could be delayed until April 5 because of the Semana Santa recess. Bills must pass two votes on the floor of the Legislative Assembly and a presidential signature before they become law.

 The review team also spotted in the text inconsistencies its members said need to be corrected. One problem team members pointed to is in the numbering of articles, which appears to have become jumbled when legislators voted on the more than 200 modifications that were proposed.  The review team found that some sections of the text refer to other sections that no longer exist because lawmakers had voted to remove them. For example, while legislators had agreed to eliminate the drivers' point system, some sections of the law still refer to the number of points a motorist could lose should he or she break the law. Reforms in Reverse
Meanwhile, some opposition lawmakers this week withdrew their support for the modifications. The opposition said the proposed reforms go too far in weakening the penalties against drunken driving. Alberto Salom, head of the Citizen Action Party (PAC) in the Legislative Assembly, has called for zero tolerance in the law, which he said should set the maximum blood-alcohol level at 0.5 grams per liter as opposed to 0.75 as the National Liberation Party had proposed. Members of the Libertarian Movement Party (ML) also object to the move to weaken the law's get-tough measures on driving under the influence. Other naysayers have chimed in, too. The statement also criticized the move to scrap the points system.
Travelers' Loophole
One population could remain unscathed by the tough new rules of the road: tourists. Representatives from the tourism sector and car rental companies took their turn this week in criticizing the Transit Law, claiming that it includes an unfair loophole that allows tourist violators to avoid paying fines. Car owners in Costa Rica customarily settle their traffic tickets at the end of each year, when they pay their annual vehicle circulation permit fee, known as the marchamo. In a statement, the National Tourism Chamber (CANATUR) said there's no way to prevent tourists from leaving the country without paying their fines. Car rental operators fear that this will leave them, as owners of the vehicles, responsible for paying the fines.
Restriction on Entering City?
President Oscar Arias issued a decree in June 2008 to restrict traffic in San José . The rule prohibits motorists from driving in the city on certain days of the week, depending on the last digit of their license plate. This decree could expire as soon as March 31, although representatives of the Legislative Assembly consulted for this article said the president is expected to renew the restriction.
While the decree is an independent piece of legislation, the Transit Law makes reference to it and provides penalty guidelines. Thus, an expiration of the restriction could provide another inconsistency in the Transit Law, which would then provide a penalty for a non-existent violation. 

Dollar Drops ¢14 in One Day To ¢523   March 16, 2010 Inside Costa Rica
The price of the dollar fell ¢14 colones yesterday, dropping to a low that not been seen in over a year, hitting a low of ¢521 for buy and ¢531 for the sell, at some banks. The Banco Central de Costa Rica (BCCR) posted this morning, Tuesday, an exchange rate of ¢523.05 for the buy and ¢532.59 for the sell, ¢13.67 and ¢13.9 less, respectively. According to economist Alberto Franco, speaking to Al Día, the reason for the sharp drop is the difference between the short term interest rate for savings in colones and that for dollars.This difference, says Franco, has led to the "colonización" of investments. With the lower demand for the dollar, the exchange rate drops. If we look back to the exchange rate in the last six months, the dollar was trading at ¢585.90 for the buy and ¢595.37 for the sell on September 17, 2009. Since then the drop and rise has been sharp and gradual, with a net drop of ¢62.85 for the buy and ¢62.78 for the sell. On March 16, 2009, the exchange rate was ¢561.18 for the buy and ¢570.76 for the sell, a year earlier, on March 16, 2008, the exchange rate as ¢492.19 and ¢498.15.

 Limbaugh: I’m Moving to Costa Rica If . . .
March 10, 2010 Inside Costa Rica
Radio host Rush Limbaugh said Tuesday that he would leave the United States for medical care if President Barack Obama’s healthcare plan is passed and implemented – a comment that was erroneously reported as meaning he’d permanently move to Costa Rica.
Liberals who don’t like the conservative Limbaugh’s vociferous criticism of President Obama’s policies seized on the comment to tout Costa Rica’s socialized medical system, Limbaugh responded on this own Web site that they had misunderstood him once again.
“And I said, ‘Well, if doctors are not permitted to opt out of the government insurance pool and so forth, Medicare, Medicaid, whatever it is, and if they're not allowed to establish a private practice with private sector patients paying their own way, then I'll go to Costa Rica.’"
Limbaugh explained that many insurance companies are making contingency plans to move to Costa Rica if Obamacare passes. Costa Rica is increasingly becoming a destination spot for many Baby Boomer retirees.
“I said, ‘Look, there are insurance companies who don't want to be put out of business.’ We've talked to them on the program. I've talked to them privately.
They are establishing healthcare clinics with quality doctors in places like Costa Rica. They're going to continue to sell policies to people who have the ability to fly down there and get treatment.
“If I have to get thrown into this massive government health care insurance business and end up going to the driver's license office every day when I need to go to the doctor, yeah, I'll go to Costa Rica for treatment, not move there.

 

Legislators Approve Drop In Traffic Fines, With Exceptions
March 10, 2010
The country's legislators approved to reduce the fines in the new Ley de Tránsito that went into effect on March 1, 2010. However, the reduction in fines apply only those traffic violations that do not involve highly dangerous behaviour like drinking and driving and reckless driving. The amendment was proposed by legislators of the Partido Acción Ciudadana (PAC) and approved unanimously. The reduction in fines is in addition to amendments that removed the point system and the increase of the maximum amount of intoxication limits of drivers. 

With the changes the new Ley de Tránsito does not have the same bite as when it was introduced for drinking and driving and reckless driving in December 2008 and the remainder of the law on March 1, 2010. Legislators, the same ones who first approved the law in December 2008, have been busy at work in the last 10 days to modify the law, bowing to public pressure of fines and other sanctions being too harsh.The motion passed on Tuesday does not affect fines and sanctions for drivers going in excess of 120 km/h or are found with more than a 0.75 blood alcohol content.  
With the changes the fine, some of the reduced fines include: 
- driving over 120kp/h, driving under the influence of alcohol, not buckling in children in a booster of child seat, will cost ¢255.551 from ¢381.420 - driving over 20 kp/h of the limit, talking on a cell phone while driving, not respecting traffic signals, not using a seat belt, crossing a red light or not havein the marchamo (circulation permit) will cost ¢190.710 from ¢2860.65 - not having the Riteve inspection, passing on the right, obstructing intersections, not having a license plate on the vehicle and modifying an engine will cost ¢52.907 instead of ¢190.710 - driving with an expired license, driving in reverse on a highway, not having the right license plates on a vehicles will cost ¢38.142, down from ¢114.426 - not carrying a drivers license while driving (different than driving without a license) will cost ¢26.699 and not ¢76.284 - violating the vehicular restrictions of San José will now cost ¢11.442 instead of ¢38.142 A complete list of all the reduced fines will be available in the coming days as legislators release the full text of the amendments. Many cheered the changes. saying that the fines are now more reasonable, as the fines contained in the original text were over exaggerated, forcing economic hardship for many for minor infractions. These changes, as well as the other changes approved in the last 9 nine days will all go into effect once they are published in La Gaceta.  (everything will be reviewed and published shortly)

New Costa Rica Marina Set to Open
March 5, 2010 Inside Costa Rica
A new marina near Quepos is set to open in April, adding oft-requested boating facilities to Costa Rica’s Pacific coastline.
The 55-acre Marina Pez Vela project will eventually include more than 300 slips, ranging from 35 to 200 feet; dry storage facilities and a full-service boatyard, as well as 200 residential units. The first phase opening next month features 100 slips.

For a tropical country with a spectacular coastline known for its fishing, Costa Rica offers relatively few options for the boating world (and the population of boating second home owners). Last year, the ultra-lux Penninsula Papagayo in Guanacaste in north Costa Rica opened its own marina, the country’s first catering to super-yachts.
Strict environmental regulations make it difficult to build anything along the Costa Rica coastline, nevertheless a marina. The Quepos project, which is only a few miles from ManualAntonioNational Park, was the first project launched under guidelines of a law approved by the government to speed up marina development. That law was passed in 1998.
In the case of Marina Pez Vela, which has been in development for more than 10 years, demand for slips is driving the project more than the residential component.
“It’s a marina development that will ultimately have residential, versus a residential development that threw in some docks,” Phil Bronstien, a partner in the project, said in an interview a few months ago.

 

Point System Eliminated From New Traffic Law
March 4, 2010 Inside Costa Rica
Citing the inability of the Cosevi and the MOPT to administer correctly the points system in the new Ley de Tránsito, a majority of the legislators on Tuesday afternoon approved removing of the points from the sanctions of the new law.
By a vote of 25 in favour to 21 Against of the 46 legislators present, at 6:11pm Tuesday, the point system was dropped from the Ley de Tránsito, leaving only the economic sanctions for traffic violations, with the exception of drunk driving and reckless driving, where violators are subject to criminal prosecution and prison.
The approval goes against the arguments of the MOPT minister, Marco Vargas, who considers the elimination of the point system a weakening of the traffic law that has only been in full effect for two full days.
The absence of four Partido Liberación Nacional (PLN) legislators meant that the legislators of the Partido Acción Ciudadana (PAC), PUSC, Movimiento Libertario, Restauración Nacional and one independent, who were opposed to the inclusion of the points system, obtained a majority of the votes.  The objections came from PLN legislators, who opposed the proposal by PUSC legislator, Lorena Vásquez. And with four legislators missing from the voting, they could not hold their ground at the time of the vote.The Movimiento Libertatio party whip, Carlos Gutiérrez, said "this is the most sensible thing that has been done so far. The corrections to the traffic law is on track. Fortunately common sense is emerging".
Although the point system is dead in the water today, it could make a come back in the near future. Legislators commented that the point system could be re-introduced once the MOPT has had time to fully evaluate and reconsider the system and up to the new legislative body takes over their work on May 8.

 Tourists can stay for one year without leaving

 March 2, 2010   A.M. Costa Rica

Under the new immigration law, tourists will be able to stay in Costa Rica for a full year without having to leave the country. Instead, they will be able to renew their tourist visa three times here for additional 90-day stays, according to Mario Zamora, the immigration director.

Each renewal will cost $100, he noted. After three renewals, the tourist will have to leave Costa Rica, although they could quickly return with a new tourism visa, he said.

Zamora also said that he was in error when he told a reporter that rules would be changing for the so-called perpetual tourists. A.M. Costa Rica reported the incorrect information Feb. 19 and attributed it to Zamora.

Friday Zamora blamed himself for saying that tourists would not be able to go to the same country twice to renew their visa and that after two trips to renew a visa a tourist

will have to stay out of Costa Rica for a minimum of 15 days. He gave no explanation for why he made the error, but suggested that he may not be totally familiar with the new immigration law.

The news report generates some concern among Costa Rica's perpetual tourist population.

Zamora also said in an interview Friday that the regulations for the new immigration law should be ready to publish in 15 days. However, he said the law, which went into effect Monday, was written in detail and that the regulations are not extensive.

He noted that the prior immigration law operated for nearly four years without regulations being published. The new immigration law only says that tourists can renew their visas by paying $100. Not in the law is the limit on renewing the visa just three times. Presumably that will be contained in the regulations, but Zamora did not say this.

 
 Costa Rica Wakes Up To Two New Impacting Laws
March 1, 2010 Inside Costa Rica
Today, March 1, 2010, Costa Rica wakes to two impacting laws, the new Ley de Tránsito - traffic law - that will change driving habits in Costa Rica and the Ley de Migración y Extranjería - immigration law - that tightens immigration controls.

 The new traffic law that was approved in December 2008, goes into full effect today, raising the maximum fines from yesterday's ¢20.000 to almost ¢300.000 and introduces a point system that could end up in a temporary or permanent suspension of a drivers license.

 

The new traffic law will force drivers to change their driving habits or pay the consequences. Although traffic officials will go easy on drivers for the first 60 days, issuing warnings for minor offences, major offences come with heavy fines and points.

 

Every driver begins today with 50 points posted on their drivers license. Driving over 120 Km/h, for example, means a total loss of points and a suspension the drivers license for two years. Repeat offenders could lose their license permanently.

 

The new immigration law that took effect at the stroke of midnight also seeks to change the immigration problems of the past decades. 

Some of the changes contained in the new immigration law is the requirement of foreign residents working in Costa Rica to contribute to the Caja Costarricense del Seguro Social (CCSS) - social security. Foreign residents who do not contribute will no longer be able to obtain free medical services. 

Also, foreigners are required to pay an annual  $25 fee that will go to the Fondo Social Migratorio that will raise some us$12 million dollars annual from the 486.000 foreign residents. 

The new legislation also calls for a fine of $100 per month to any foreigner who overstays his or her "legal" stay. North Americans and Europeans have a legal stay of up to 90 days, while only 30 days for most other countries. 

The new law also requires hotels and others providing lodging to maintain a public register fo all foreigners, which can be reviewed by immigration officials at any time. 

In addition, the Policía Técnica de Migración (immigration police force) will expand from the current 35 officials to 285.

 

 

 

What you should know about the NEW immigration law 

 Feb. 26, 2010  By Chrissie Long Tico Times

 A new immigration law will enter into effect on Monday, March 1, which will bring information relevant to every foreigner residing in Costa Rica. According to Immigration Administration Director Mario Zamora, the intent of the law is to move the approximately 600,000 foreigners living in Costa Rica into a status that reflects their situation. 

We've compiled a short list of “Things You Should Know,” which follows. We are in the process of updating this list to answer more questions in greater depth that our readers might have. 

Please keep in mind we can only offer general information; we cannot provide advice regarding individual situations.

 

Q: Regarding the “perpetual tourist,” who enters on a tourist visa and leaves the country every 90 days, I heard that after two times renewing tourist status by remaining outside of the country for 72 hours, you must remain out of the country for 15 days. Is that true?

 

A: No. It's not true. The situation of the perpetual tourist will remain as it has been. Under current rules, tourists are allowed to stay 90 days in Costa Rica, at which point they must leave for 72 hours. If they don't leave, they are here illegally.

 

I also heard you must go to a different country to renew visa status. If you went to Nicaragua for 72 hours the first time, you must go to a different country the next time. Did I get that right?

 

No. As long as you remain outside the country for 72 hours, it doesn't matter where you spend it.

 

What if I don't want to leave Costa Rica ?

 

Under the new immigration law, there is an option for you. Beginning March 1, you can submit a petition at the Immigration Administration in La Uruca, which is to the west of San José, pay $100 and you can remain another 90 days.

 

Is this a complicated process?

 

According to the director of the Immigration Administration, it is not. You must submit a copy of your passport, a letter addressed to the head of the Immigration Administration explaining your situation and proof that you have financial solvency. You must also pay $100.

 

Is the immigration administration the only place I can renew my tourist status?

 

For the moment, the immigration administration is the only place you can renew your tourist status. In six weeks, the Immigration Administration hopes to make the process available in post offices throughout the country. Renewing status at the Immigration Administration is permitted only two times, at which point you must leave Costa Rica.

 

What if I miss this 90 day deadline?

 

If you miss the 90 day deadline, you have two options. You can pay $100 for every month you've remained in Costa Rica “irregularly” or you can leave the country. If you decide to leave Costa Rica without paying, immigrations officials can refuse re-admission to the country, or you will be allowed to return only after a period outside the country three times longer than the time you were illegal in Costa Rica.

 

I would like to upgrade my tourist status and become a resident. What do I need to know about this process?

 

Thanks to the new immigration law, you can initiate the process without leaving the country. Before, paperwork had to be submitted to consulate offices in the home country of the foreigner. Today, paperwork (such as the necessary birth certificate and police record) can be submitted and approved at the Costa Rican Immigration Administration. One of Immigration Director Mario Zamora's objectives is to make the process possible without the need to hire a lawyer. Unfortunately, it will require a good command of the Spanish language, but Zamora is hoping that he'll have all immigration material translated into English in the coming months. Lastly, you need to qualify for resident status as a retiree, investor, family member of a Costa Rican, or an employer-sponsored worker.

 

Is it possible to get residency as a homeowner?

 

Yes. You must demonstrate your home is valued at more than $200,000 in order to get investor status on your home.

 

I heard that I will need to show proof that I contribute to the Costa Rican Social Security system (Caja) in order to renew my residency. How do I contribute?

 

Under the new immigration law, foreigners must show evidence that they contribute to the social security system (public health care system) in order to renew his or her residency. You can do this at any of the Caja offices throughout the country, who will present you with a menu of options on how you can begin contributions. According to the immigration director Zamora, the Caja is prepared to receive foreigners in order to meet this requirement.

Check the March 5 Tico Times for more information about the immigration law.

 

 

Microsoft increases investment in Costa Rica

 Feb. 27, 2010 Tico Times    

Computer software giant Microsoft is the latest high technology company to increase investment in Costa Rica. The local branch of the international company announced this week that it plans to invest an estimated $6.5 million in operations in Costa Rica this year. This represents an increase of 8 percent over its 2009 investment.

This announcement was paired with the presentation of a new general manager for the company, Juan Pablo Consuegra, who will head operations for Microsoft Costa Rica. Microsoft has been operating in Costa Rica for 15 years.

“During these years of work in the country, Microsoft has identified in Costa Ricans a high potential for their technological capacities and in innovation to develop their abilities,” Consuegra said on Wednesday. “The results seen over the course of the past 15 years has encouraged Microsoft to contribute more energy into developing their technologies in the country.”   Currently, Microsoft provides services to 6,000, or 17 percent, of small and medium sized businesses in the country.

 More Flights, Lower Fares  Costa Rica      
 Jeanne Leblanc| February 26th, 2010 

American Airlines will add flights in April between New York and three destinations: San Jose, Costa Rica; Madrid; and Manchester, England.

I see some pretty good fares this spring on all three of those routes, which is probably not a coincidence. Any increase in supply can push prices down in the ultra-competitive airline business.

So fares are running at $339 between JFK and San Jose on American, round-trip, all taxes and fees included, through March and April.
Delta has the same fare between Newark and San Jose on Delta.
Mexicana and TACA are even lower, at $313 and $276, respectively, both out of JFK. And they’re all undercutting ultra-no-frills Spirit Airlines, which flies to San Jose out of LaGuardia, at this point with a bottom fare of $367.
 

Construction On The Rebound Feb. 17, 2010 Inside Costa Rica 

The Colegio Federado de Ingenieros y Arquitectos reports a surge in construction in the first month of the year. The Colegio said that the in January 2010 some 631.000 square metres of construction was approved, 220.000 more than in January 2009.

The majority of the construction is for commercial and residential projects.

Olman Vargas sais that his is the third consecutive month of increases in terms of square metres. In 2009, the construction industry decreased by 40%.

The Colegio indicates that the Puntarenas-Central Pacific-Jaco area is the province with the single largest increase in the first month of this year.

75% Of Luxury Home Owners Haven't Paid Their "Luxury Tax" Feb.11, 2010 Inside Costa Rica 
The Banco Hipotecario de la Vivienda (BANHVI) says it can only build 350 "social assistance" homes, a number far less than expected, because the majority of owners of luxury homes have not paid their "luxury tax". 

The luxury tax that applies to all homes evaluated at ¢100 million colones ($180,000) or more. 

Clara Zomer, the ministra de Vivienda (Housing Minister) said that only ¢3 billion colones has been so far paid by owners of luxury homes, out of an expected revenue of ¢12 billion colones. 

Owners of luxury homes had until January 15 to pay up their 2010 tax before incurring penalties and interest. The tax is payable for the next ten years. 

The purpose of the luxury tax is to build socially assisted homes for some 235.000 people. 
 

Costa Rica Elects First Female President Feb. 8, 2010    InsideCostaRica.com 

Laura Chinchilla was on Sunday elected as the first female president in Costa Rica's history, winning the popular vote with a 46.8% support with 94.2% of the ballots counted. 

Chinchilla's win was apparent within a few hours of the closing of the voting, as rivals Ottón Solís and Otto Guevara declared defeat, not even waiting for the vote count to reach the half way mark. 

Solís was the first to accept the Chinchilla win, congratulating Laura and promising that this would be his last campaign, moving on to others things, paving the way for the others. 

Guevara, moments later announced defeat but with a triumphant voice, claiming victory for a party that won more than 20% of the vote, a big win over the 9% support of 2006 and vowed the party to the presidency in 2014.

"With a lot of respect, we accept the reality," said Solis, who was just 1 percent of votes away from a victory in 2006 elections.

Chinchilla told her supporters gathered at the Crowne Plaza Corobici as the country's next president, whe would keep all she promised during the campaign.

"We don't receive a bounced check from the people. To the contrary, we have shouldered solemn obligations to hold dialogues with all parties and social sectors," she said. 

Chinchilla's campaign platform included improvement of the country's infrastructure, creation of a progressive income tax and new jobs with "green jobs" initiative. She also has promised to create more job opportunities, better living conditions for children and senior citizens, as well as to combat crimes and drug trafficking. 

Laura became the first female minister de Seguridad from 1996 to 1998 and held the post of first vice-president in the Arias administration from 2006 to 2009, resigning to run for the presidency. 

Voting began at 6am sharp, as all the 6.000 voting centres were in synchronized time with the Tribunal Supremo de Elecciones (TSE) and closed promptly at 6pm. At 8:15pm, Luis Antonio Sobrado, president of the TSE, announced the first voting results, showing Chinchilla with a firm lead, with more votes than her two main rivals combined. 

Costa Rica is the only Latin American country which in 60 years has enjoyed democratic elections without interruption, said Emma Maria Mejia, chief of an observer mission from the Organization of American States.
 

Tax evasion estimated at more than 70 percent but declining
Feb. 5, 2010  AMCostarica.com    
The Contraloría de la República estimated that the country lost out on the bulk of the taxes residents were supposed to pay from 1991 to 2007. A study released Thursday said that the rate of tax evasion was estimated at from 72 to 73 percent in the period from 1991 to 1993 and spiked to 79 percent in 1995.
The Contraloría estimated the amount of taxes that should have been paid by estimating the gross national product and then comparing the taxes that should have been generated with the taxes actually paid. 

However, the Contraloría, the national's financial watchdog, said that evasion declined to 70 percent in 2006 and to 64.3 percent in 2007.  

The study credited tighter controls and methods like the fiscal lottery. In the lottery citizens were asked to submit facturas or invoices from various companies, and winners of prizes were selected among the submitters by chance. But then the Tributación General would study the submitted facturas and go after those merchants who were not reporting their sales or other economic activity.

 Costa Rica has an extensive system of reporting in which both those paying for goods and services as well as those selling goods and services have to submit reports. The reports used to be annual, but this year Tributación has said it will require quarterly reports.  

So a taxpayer who goes to the dentist is supposed to file a report on the money paid for treatment. Tributación will match that against the income statements submitted by the dentist.

The Contraloría said that evasion cannot be reduced to zero, but in Costa Rica the amount withheld by taxpayers is high compared to the national economy. 

The study also showed that the average gross profit of businesses ranged from 21 percent to 17 percent from 2004 to 2007.

Tributación has been working with the U.S. Internal Revenue Service to increase the efficiency of collection.

The study did not address evasion of sales tax, which also is rampant. 

 Costa Rica rises to third on Yale's green list Jan 30, 2010 By Tico Times  Costa Rica ranked number three out of 163 nations in the 2010 Environmental Performance Index (EPI), a biannual ranking system that is produced by Yale University and Columbia University. The index, released Thursday, gauges a country's “environmental health” and “ecosystem viability,” and scored nations in 10 policy categories that are divided into 25 environmental indicators.The aggregate categories include analysis of each nation's performance in limiting greenhouse gas emissions, water management, forestry and biodiversity, to name a few, and build on information gathered before 2009 from international organizations, universities and the United Nations. Costa Rica scored 86.4 percent overall and ranked behind Switzerland, at 89.1 percent, and Iceland, at 93.5 percent.In a press release, analysts indicated that the 2010 rankings suggest that income is a major determinant of environmental success. 
By comparison, Nicaragua and Panama, Costa Rica's two neighboring nations, ranked 93rd and 24th, respectively. The United States came in 61st place.

Experts acknowledged, however, that data gaps existed in the information they used for the index. Many of the statistics came from questionable government reporting, which in some cases “are not subject to any external review.” 

Costa Rica climbed from number five in 2008 and number 15 in 2006, the first year the indicator was published.

 

 

JACO TO CALDERA! NEW HIGHWAY OPENS!
Jan 28, 2010 By the A.M. Costa Rica staff  

San José. The most crucial was the 40 kms (25 miles) of new construction between Ciudad Colón and Orotina. 

The highway is a case study in stalled public works, which Arias vowed would never happen again. He also said that shortly the Costanera Sur will be inaugurated. This is the Pacific coast road that replaced the gravel section between Dominical and Quepos. 

The opening of the new highway Wednesday was not without protest. Santa Ana residents continue to block the highway. They want a pedestrian bridge, sidewalks and a relocation of a bus stop. Arias was one of those delayed by the protest. The bus with the president and some ministers aboard had to make a detour. 

The Concorcio Autopista del Sol got a concession to complete the highway. The government put up $36 million, mostly to purchase right-of-way. The consortium put up $82.7 million, and the Banco Centroamericano de Integración Económica provided a $160 million loan. The rest, $82.5, came from the Caja de Madrid, the Spanish bank. 

Arias said that a similar concession would help finish the highway from San José to San Ramón and San Carlos. The concession holder makes a profit by tolls.  He also took credit for other transportation advances, like the reinitiation of work at Juan Santamaría airport, a concession at Daniel Oduber airport and the extension of the urban train system to Curridabat that will take place soon, Arias said. 

 

 
  San José - Caldera Road Open, Finally
Jan 28, 2010 Inside Costa Rica
Finally, after more than three decades of planning, promises, starts, stops and delays, the San José - Caldera highway, though some prefer to call it a road, is a reality and travel between the interior of Costa Rica and the Pacific coast is at least 45 minutes faster.
However, Ruta 27 is not cheap. A round trip between the Sabana, San José and Puerto Caldera, Puntarenas, costs ¢3.860 in tolls (¢1.930 in each direction), for the 77 kilometre trip that takes less than an hour.
On Wednesday, Costa Rican president, Oscar Arias, officially inaugurated the road wich for some moments was open to the public from Orotina to San José.
The road officially was opened to traffic Wednesday night and the toll stations began collecting at midnight.

Even though the road is now open and the tolls are being charged, parts of the road are still missing signaling, bus stop bays, lighting and rail guards.
What the road means to many is a savings in time, fuel and wear and tear on their vehicle.
Some prefer to call the highway a road, since it is for the most part a two lane road that weaves between the mountains, not much different than the other roads that lead to and from the Pacific, but with tolls.

 The new San José - Caldera road now means the trip takes less than an hour and no mountains to climb or descend.  Also, the new road offers passing lanes at points where there some gentle climbs, allowing slow moving traffic to the right.
Whatever you call it, a road or a highway, to paraphrase president Arias during the inauguration ceremony on Wednesday, the new highway will be a boost to tourism.
  The event took place in Orotina where a ceremony marked the opening of the highway. The $360 million project cuts about 50 minutes off trips between the Pacific coast area and Cuidad Colon. 

The government uses concessions because it does not have the cash or borrowing capacity to take on large projects. The government also wants to modernize the ports of Limón by turning the operation over to a concession holder. That was done in a prior administration with the port in Caldera on the Pacific. 

 

   Tourism Decline In 2009 Was Lower Than Forecasted
Jan 8, 2010 Inside Costa Rica
The numbers are in and show that Costa Rica had 180.000 less tourists during 2009 over 2008. Despite this decline, the agency forecasted of a drop from 12%, but in reality was just under 10%, a decline lower than anticipated.

The figures were released by the Cámara Nacional de Turismo (CANATUR).

However, what the figures do not show is that the type of tourist coming to Costa Rica has changed, they are spending less time in the country and spending less.

Hotel, resort and tour operators all agree that, even though they are still getting a fair number of tourists, revenues are lower than expected.
CANATUR estimates an increase of 5% for 2010.

An estimated 7,000 homeowners have not paid the tax on their homes valued at ₡ 100 million (nearly $179,000) or more in Costa Rica. With the Jan. 15 deadline for paying the tax having passed, those homeowners are responsible for fines that amount to 10 times the original tax.

The Tax Administration is not backing down on their requirement that every luxury home owner file and has pledged to confront delinquents in the coming months with “an order to pay.”

Jenny Phillips, finance minister, said the low number of filers is evidence “that tax payers in this country are not educated in paying taxes.” She added, “We have been announcing this everywhere. Nobody in this country can argue that they didn't know about the law.”

 

Legislators approved the law in October 2008 as a means to raise money for housing for the poor. Known as the “impuesto de solidaridad” (solidarity tax), financial experts expect the tax to raise as much as ₡ 12.5 billion (almost $22.4 million) a year.

The original deadline for the first payment was Dec. 31, but flaws in the system led officials to extend the deadline to Jan. 15. Responding to claims the tax was complicated to file, Phillips said, “This ministry administers taxes. (They are) taxes that are complicated. We would be lying if we didn't say the following: The majority of taxpayers have to look for specialists.” Alluding to the supposition that such taxpayers have money to hire help, she said, “This tax is directed at people who have homes valued at more than ₡ 100 million.” There's no excuse, she added, “Those that haven't presented their declaration, have not done so simply because they don't want to.”

 
 

 Tighter Security Controls At Costa Rica's Airports For US Bound Flights Jan 7, 2010 Inside Costa Rica
At the request of the United States the Dirección General de Aviación Civil (DGAC) has tightened its security protocols at the Juan Santamaría (San José) and Daniel Oduber (Libera) international airports on flights to the US. The measure follows the attempted terrorist attack on Christmas day on a flight from Amsterdam to Detroit, Michigan.

Among the changes are that passengers will not be able to carry on their carry on any powdered substance. Items like coffee, sugar, salt, cacao or powdered milk are a no on, unless they are purchased within the terminal's retail stores.

Jorge Fernández, director of Aviación Civil, is emphatic that passengers travelling to the US should buy items like coffee only from stores in the airport terminal - these are the stores beyond the security checks, near the boarding gates.

The only exception to the rule, according to Fernández are prescribed medical items and infant formula and milk. However, these items will be closely inspected by the Policía Aeroportuaria (airport police) before boarding.
The restrictions on liquids, like gels, creams, toothpaste, etc, continues if they are in packaging over 100ml.
Also xray machines and metal detectors will continue to inspect carry on luggage.

Fernández said that in addition to all of this, passengers on US bound flights will have to submit to a final boarding inspection, this being done by the airlines, independent of the security checks and controsl of the DGAC.

Although the tightened security measures are geared towards US bound flights, Copa airlines,  Continental airlines, said it would be adhering to the US security measures though Copa has no direct flights to the US from Costa Rica.

The director of the Policía de Vigilancia Aérea stationed at the Santamaría and Oduber airports, Glen Pacheco, said that passengers can expect more exhaustive checks to impede passengers from boarding with any dangerous substance or material.

Easier Now To Obtain Cellular Service In Costa Rica
Jan. 6, 2010 Inside Costa Rica
In an effort to become more consumer friendly in the face of competition, the Instituto Costarricense de Electricidad (ICE) - the state owned telecom - is making it easier for individuals and businesses to connect to mobile telecommunications services such as cellular telephone service and mobile internet.

Unlike in the past were in addition to personal documents, ICE required a recent utility bill - an oxymoron there because ICE is the sole utility providing fixed line telephones, but it required a printed telephone bill, not accepting an internal check - that states clearly the address of the subscriber.
In addition, ICE required that the customer provide an original and a copy of the proof of purchase of the cellular phone unit to be connected to its network.
That is no longer the case.

ICE only requires that the customer have their cedula, in the case of an individual) and the "personería" in the case of a corporate entity like an S.A.
The customer is then asked to sign a service contract, provide the deposit (¢12.500 colones in the case of cellular service) and the actual cellular telephone, is all that is now required to connect to the ICE network.
Another major change in ICE policies is the ability to transfer service to another party. ICE calls this "traspaso de derechos por mutuo acuerdo" (transfer of rights by mutual agreement).
The state institution also requires that the person to acquire the right must not have any existing debt and accepts all outstanding and future charges to the service.

Unfortunately, however, ICE still has yet to drop the "residency" provisions,  that is foreigners who are neither have a cedula by way of naturalization or legal residency, cannot obtain cellular telephone services in Costa Rica. Not yet, anyways.

Ways of getting around that provision has seen foreigners enter into arrangements with nationals or residents to obtain the service. The precaution is that the user, the person who is paying for the service, is at the whim of the other and not being able to deal directly with ICE if there is a problem with the service and/or billing.

In some cases, foreigners have reported being scammed, contracting to acquire cellular service, paying an upfront cost for the right and use, in addition to the usage charges, and then find in months or less to have the service cut and losing any upfront payments. In the old days, the days prior to GSM and few cellular telephone lines, that upfront cost reached at one point more than us$1.000.

For customers who meet the conditions of subscription have to also be cautioned that not all cellular telephones are accepted for connection to the ICE network.
ICE has a list of "homolgaldos" - approved cellular telephones - that can be connected. If the cellular telephone presented for connection is not within the approved list, an ICE agent may or may not, depending on the circumstances, accept it, having the customer sign a waiver of any responsibility on the part of ICE if the unit does not work properly. In such cases, ICE agents also refuse to configure any part of the phone.
The other consideration to the type of cellular phone unit is dependent on the type of service.
ICE now offers TDMA (which is being phased out by 2011), GSM and 3G. The customer has to have the right type of technology for the specific service. For example, ICE will not connect a GSM phone to the 3G network, though a GSM phone will work with a 3G SIM chip. However, a 3G phone can be used to connect to the GSM network, for a 3G phone is a GSM phone, but with the added capacity for High Speed Downlink Packet Access (HSDPA) and WCDMA protocols, for instance.

Too technical?  Don't worry, the cellular phones today are smart enough to know all that, even if we cannot even spell it out, and will automatically find their way around the network.
For more information on the new ICE policies go to: http://portal.grupoice.com/wps/wcm/connect/79343f004ff5bd51b80eff2a526ccfc9/info+link.pdf?MOD=AJPERES&CACHEID=79343f004ff5bd51b80eff2a526ccfc9

 

Costa Rica With Lowest Inflation Rate In The Region

Jan 6, 2010 Inside Costa Rica

The accumulate inflation rate for 2009 was 4.05%, the lowest in the last 37 years, according to the Instituto Nacional de Estadística y Censos (INEC).

 

The rate is also 9.85 points below the inflation rate of 13.9% for 2008 and was within the forecast range of 4% to 6% by the Banco Central de Costa Rica (Central Bank).

According to the INEC, December was the month in the year with the highest inflation rate, a rate of 1.02%.

 

What the 4.05% means in real terms is that Costa Ricans need an addition ¢4 per ¢100 colones at the end of the 2009 than at the begining of the year. For example, an item that cost ¢100 colones last January, costs today ¢104 colones.

 

In Latin America, at least 18 countries saw a reduction in the inflation rate, although the final numbers are not all in.

According to the Consejo Monetario Centroamericano, in addition to Costa Rica, only Colombia (2%) and Uruguay (5.9%) published their numbers.

Once all the countries publish their numbers, Costa Rica is expected to have the highest reduction in the inflation rate in Central America.

 

 Costa Rica Fared Well During Economic Crisis, Says Central Bank President  Dec. 16, 2009 Inside Costa Rica

Although the president of the Banco Central de Costa Rica (BCCR) - Central Bank, Francisco de Paula Gutiérrez, assures that this year has been a difficult year for the Costa Rican economy, he feels that the country has handled the crisis a lot better than most had thought.

Gutiérrez said that the economy should see a growth of 2.5% in 2010, following a drop of 1.5% this year due to the economic crisis.

The Central Bank president added that he expects inflation in 2010 4.7%, a goal that can be achieved thanks to reduced expectations and pressures on spending.

However, Gutiérrez cautioned that there are several factors that will affect those predictions: the cost of oil, flows of short-term capital and a further deterioration in the fiscal deficit.    Overall the Central Bank president was positive and optimistic.

 

New Consumer Protection for Real Estate  
Dec. 16, 2009 By the A.M. Costa Rica staff 
Real estate developers who offer proposed projects or projects in development must now comply with strict rules for the protection of consumers. The rules, which went into effect Oct. 27, requires those offering real estate for sale with delivery at a future date to register with the Ministerio de Economía, Industria y Comercio and show they have the financial capability to carry out the project.
The executive decree was signed by President Óscar Arias Sánchez last Aug. 6, but there was hardly any public mention of the new rules. 

The decree also covers other broad types of sales to consumers. The decree specifically mentions homes and apartments as well as subdivisions and a host of other commercial and industrial projects.

 

Costa Rica's recent real estate history is filled with cases where developers promised certain amenities or improvements and never followed through even though some purchasers paid substantial sums. In some cases, all the developer did was erect a gateway or a welcome center or bulldoze a few roadways.

 

The new rules also require that purchasers pay for the real estate or services in a proportional way rather than with all the money up front. There also are restrictions on what may be in a sales contract. For example a purchaser cannot surrender his or her rights. Some current contracts required arbitration or require the buyer to hold the seller harmless in case of problems.

 

Purchasers also have eight working days to back out of the deal. Previously the rule was eight calendar days to rescind.

 

The ministry said it has received a number of complaints about abusive practices and contract specifics being unmet. The ministry, in an explanation of the decree, mentions time shares, vacation plans and funeral services, among others.

 

The decree is No. 35548, which appeared in the Oct. 27 La Gaceta official newspaper.

 

During the Costa Rican real estate boom some developers set up shop, obtained an option on land and began selling lots, houses, apartments or other real estate that they did not really own and which had not yet been built. Some tried to zero finance

their projects by accepting substantial sums from purchasers and using the money for development instead of putting the money into escrow. Would-be expats lost millions on such deals, according to complaints directed to A.M. Costa Rica.

 

The decree also requires a seller to provide his or her exact home address and to assume the obligation to notify purchasers of any changes allowing them to exercise an escape clause.

 

The rules specify mathematical calculations of the solvency of sellers and what appears to be a complex application process. If ministry employees do not think that the seller has the funds to met the obligations, they are empowered to require additional financial guarantees, according to the decree. The decree also said that the ministry will review contracts.

 

The ministry also has the right to file complaints against vendors who are not registered.

 

Developers of projects already in the works have six months to comply with the new regulations, the decree said. The new rules are updates and additions to existing laws and rules which mostly covered just time shares, said the ministry.

 

The question still remains as to how far the ministry will expand the scope of the law. Many commercial activities anticipate delivery in the future, such as hotel rooms that are reserved some period in advance. Newspaper advertising also is an advance purchase as are new cars.

 

Since one of the stated purposes of the decree is to reduce fraud, the ministry probably will concentrate on activities where consumers have to put up substantial sums of money.

 

Region's recovery could be faster than expected,
 U.N. says    Dec. 11, 2009 Tico Times

Latin America and Caribbean countries could show 4.1 percent economic growth next year, in a faster-than-expected recovery from the global economic crisis, the United Nations' regional economic agency said Thursday. 

“The worst of the crisis is behind us,” Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), said in a statement. “The motors of growth have been turned on again, but we don't know how long the fuel will last.” Bárcena's remarks came at the presentation of ECLAC's Preliminary Overview of the Economies of Latin America and the Caribbean 2009. 

Costa Rica's economy could contract by 1.2 percent this year 2009 and expand in 2010 by 3.5 percent, slightly above the 3 percent increase estimated for next year in Central America overall, the report says. Although industry leaders are hopeful for whatever gains they can get, that rate is a far cry from this country's 7.8 percent growth registered in 2007. 

Costa Rica expects to finalize a free trade agreement with China by the end of February that trade officials hope will open further commercial prospects in that country and draw further investment here.

 

 

Is a Real Estate Revival Underway?

Dec. 11, 2009 By Adam Williams Tico Times Staff
As light begins to peek through the dark clouds of the worldwide economic crisis, members of the Costa Rican real estate community are growing more optimistic at the tail end of what has been, for many, one of the worst years they can remember in the housing market.

 

Rising Above: The Costa Rican real estate market appears to be reviving after taking a major hit during the recent worldwide recession. “In 2009, there was very little movement in the sale of homes,” said Charles Wanger of Bienes Raíces Talamanca Real Estate, in the southern Caribbean region. “In the 12 years I have done real estate in Costa Rica, 2009 was the first year I was unable to fulfill all of my own financial obligations.”

 

Wanger is not alone. Many real estate agents and firms throughout the country experienced substantial drops in real estate sales during the first half to three quarters of the year. The difficulties experienced in the real estate market stemmed from the worldwide economic crisis, as well as from the fear engendered by the cataclysmic rupture of the housing bubble in the United States.

 

“People interested in buying property here became more cautious than they'd ever had to be before,” said Christopher Howard, author of “Guide to Real Estate in Costa Rica.”  A lot of property owners here are from the U.S. and Canada, and they lost some of the funds they'd saved in hopes of buying property,” he said. “The crisis changed their plans and left a lot of people holding off on buying a second home or a vacation home in a foreign country.”

 

In some cases the crisis forced buyers who had taken the initial steps in property ownership, such as putting down a deposit or paying construction fees, to swallow their losses when their sources of capital were suddenly disrupted. Wanger said that seven of his clients had contracted architects and builders but were suddenly forced to pull the plug on their projects when the economy tumbled. To date, only three of those seven clients have paid the hundreds of dollars in preliminary construction fees owed. The other four claim they will pay when their finances recover in 2010.  

A similar plunge in investment in the real estate market also occurred on the N. Pacific side of the country. According to Les Nunez, of First Realty in Playa Hermosa in the northern province of Guanacaste, many prospective buyers who arrived before the crisis struck in 2008 made deposits of up to $100,000 on home purchases. However, when their expected financing was restricted, a number of them, unable to pay the remaining cost of their homes, lost deposits of up to six figures.

“When things went underwater, people were forced to walk on their deposits,” Nunez said. “Many of the developments and homes were frozen and never built.”

 

Lower Prices Boost Demand

 This year, most property owners looking to sell have had to lower their asking prices in order to generate any interest in the market. These price cuts have reinvigorated the diminished demand that plagued the market for the first nine to 10 months of the year.

 

“The lowering of property values has been a blessing and a curse for the market,” said Brian Friedman of Century 21 Jacó Beach. “It is a blessing in that we have seen a huge increase in traffic and we are showing property daily, as people know there are killer deals out there. However, the bad news is that it is a bad time for sellers. I have talked to many people who are in bad shape and must drop prices significantly to make a sale. Buyers are beating up on sellers right now.”  

Friedman, like Wanger, indicated that after the sluggish start to sales in 2009, buyers have shown increased interest over the past two months. Much of the revived demand has stemmed from significant drops in prices. Friedman mentioned a home that once was valued at $300,000 is now selling for $210,000. (Jeff Fisher of CR Beach says, "the buyers are back, but mostly in the $100k to $250k range.")

 

Others in the real estate community also said they expect that lower-priced properties – often referred to as “value properties” – will re-energize the market. Most agreed that once the real estate market begins to thrive again, prices will adjust accordingly and again rise to what they believe is the actual value of the home or property. But some property owners are standing pat. “Some who aren't pressed to sell or don't have to move property are expecting the market to bounce back and are staying right where they are on price,” said Nunez. “Usually these are owners who have already paid off their homes and can afford to wait for the market to come back.” 

Guarded Optimism for 2010

Like many sectors of the Costa Rican economy, the real estate market heads into 2010 with guarded optimism. Though buyer interest has shown a slight resurgence and the worst of the economic crisis seems to be dissipating, members of the real estate market remain unsure of what will come in the next 12 months.  “There is a semi-wary understanding of where the market is going to go,” Nunez said. “I don't want to give a peaches-and-cream forecast, but I'd say it looks hopeful. Are people coming here? Yes. Are people still interested in property here? Yes. If anything, we know people are out there and are looking. We just need to make it affordable enough for them to buy.”

 

Road to Jaco-Caldera and Costanera Sur To be Completed Ahead of Schedule   Dec. 5, 2009 Inside Costa Rica  
Guillermo Matamoros, viceministro de Concesiones for the MOPT, the new road to Caldera and the last 40 kilometres of the Costanera Sur, said on Friday that the two roads should be ready earlier than expected, in the first months of 2010, as the projects are about 90% complete. According to Hadda Muñoz, manager of the new road to Caldera, said that only 3.6 kilometers (2.1 miles) of the 77 kilometers (47 miles) are left unfinished in the San José - Caldera highway, and if the work continues at the same pace, the road should be ready ahead of anticipation.Both Muños and Matamoros assure that the new road will be operation by March 2010 and not July 2010 as had been scheduled. 

Costa Rican Tourism ONLY Down 10% in 2009

   Dec. 8, 2009 Inside Costa Rica  

The impact of the world economic crisis on Costa Rica will be 200.000 or 10% less tourists for 2009 over 2008, according to projections by the Cámara Nacional de Turismo (Canatur). 

For the 2008 tourist season, Costa Rica was host to 2 million visitors, while in 2009 it is expected than only 1.8 million tourists will have visited. 

According to Gonzalo Vargas, vice-president of Canatur, this will be the first decrease in tourism since 2002, when the tourism industry saw a growth of 1.6% over the previous year and continued to rise each subsequent year. 

Juan Carlos Ramos, president of Canatur, is optimistic that 2010 will be a better year for the tourism industry, as the financial condition improves in North America as consumers regain confidence.

 

Intel Costa Rica Sees Q3 Exports Increase 18%

Dec. 8, 2009 Inside Costa Rica

US chip manufacturer Intel saw third quarter exports from its Costa Rica facility increase 18% year-over-year, reaching US$595 million. Intel corporate relations manager Karla Blanco said main product destinations include Asia, the US and Europe, all of which have recovered faster than expected from the global economic slowdown.

 Intel's Costa Rica plant has had to increase production due to the closing of three company factories in Asia, the executive added.  Intel saw second quarter exports from its Costa Rica plant increase 7.6% to US$449mn, according to previous reports. The company expects year-long exports from Costa Rica to reach US$1.9bn, up 5.5% from the US$1.8bn exported in 2008.

Government Announces Public Workers Holiday Period 
Dec. 8, 2009 Inside Costa Rica
 Note on your calendar the dates December 19, 2009 to January 4, 2010, as the date the public sector employees are off on their Christmas/Year End vacation.The ministro de la Presidencia, Rodrigo Arias, made the announcement yesterday, in effect giving the order to all heads of government institutions and agencies to shut down for the holidays.Public sector employees will actually have eight days off: December 21, 22, 23, 24, 28, 29, 30 and 31. All the other days are Saturdays, Sundays and legal holidays (December 25 and January 1). Arias added that instructions are being sent to those institutions and agencies that provide "emergency" services, to adjust their schedules and staff rotations to guarantee services to the public.

20% More Job Opportunities Expected In 2010
Dec.9, Inside Costa Rica
If the expectations and projections for 2010 are realized, the year could start off with more job opportunities and growth in the economy. A recent study by Manpower of 620 Costa Rican businesses reveals that 26% will be looking to hire more staff in the new year. The hiring boom in the first quarter of the new year is expected to pick up the decrease between October and December of this year.
Of the interviewed, Manpower says that only 6% said they would be laying off staff, that would leave a positive job situation of 20%. The study also revealed that 67% of the businesses will be maintaining a hold on their hiring. The areas of job opportunities is expected in agriculture, fishing, mining, commerce, services and transport, while construction and manufacturing may see a drop or lower expectations for job opportunities.

 

 Boston Scientific to send 1,400 jobs to Costa Rica
Nov. 24, 2009 By Scott Andron, McClatchy Newspapers
Medical-products manufacturer Boston Scientific will close its plant in Doral, Fla., eliminating 1,400 jobs by 2012, Miami-Dade economic development officials said Friday.The company is transferring the plant's work to a vacant facility in Costa Rica, where labor costs are much lower, said Frank Nero, president of the Beacon Council, Miami-Dade County's economic development agency.   Based in Natick, Mass., the company makes medical devices used by doctors in fields ranging from gynecology to urology to oncology. Last year's sales exceeded US$8 billion.

 

 

Two Costa Rican Hospitals Ranked In Top 20 In Latin America  

Nov. 24, 2009 Inside Costa Rica

Costa Rica's Hospital Clínica Bíblica and Hospital de Alajuela are among the top 20 medical centres in Latin America, according to América Economía.

The Clínica Bíblica is listed as number five, while the Alajuela lists at number 20, representing the only hospitals in Central America to be ranked.

The magazine América Economía evaluated hospitals in nine Latin countries, including Argentina, Brazil, Colombia, Costa Rica, Cuba, Chile, Mexico, Peru and Venezuela.

The top five hospitals in Latin America are the Hospital Albert Einstein in Sao Paulo, Brazil; Clínica Alemana, in Santiago, Chile; Hospital das Clínicas, Sao Paulo, Brazil; Hospital Universitario Austral, Buenos Aires, Argentina; and Hospital Clínica Bíblica in San José.

América Economía is a Latin American magazine founded in 1986 by Chilean Elías Selman and Swedish Nils Strandberg.

 

 

 Nature Air Wins National Geographic Geotourism Challenge 2009   
Nov. 23, 2009 Inside Costa Rica

The global online community has chosen Costa Rica’s national airline, Nature Air as one of its top leaders for sustainable tourism in the second annual Geotourism Challenge, sponsored by the National Geographic Society and Ashoka’s Changemakers. 

Nature Air was selected by the public from 10 finalists out of 611 original entries from 81 countries.

“At Nature Air our mission is to conserve resources, protect our environment and keep the air our families breathe cleaner and healthier,“ said Alex Khajavi, Nature Air founder and CEO. “It is an honour to be recognized by the public for our 100% carbon neutral efforts.” As a winner of the National Geographic’s Geotrourism Challenge Nature Air received a $5,000 prize, and was invited to the Power of Place: Geotrouism Summit 2010 inWashington, DC in February. The airline plans to reinvest its winnings in its carbon neutral program and non-profit educational organization NatureKids.  NatureAir, based in San José, Costa Rica, is internationally recognized as the only airline in the world to voluntarily compensate for 100% of its carbon emissions through flight operations. Its commitment to saving energy extends with the use of bio-diesel (recycled cooking oils) in its entire fleet of ground equipment and diesel vans.  

 

 

 

 

Costa Rica's Answers To Fight Climate Change

Nov. 22, 2009 Inside Costa Rica By Yoav Cerralbo

The tiny country of Costa Rica has giant plans to help change the world for the better, but for that to happen, serious issues need to be looked at closely. Next month, the world will converge in Copenhagen for the United Nation Climate Change Conference and Costa Rica is proposing a similar carbon capture program to the one that was originally brought up in Kyoto 12 years ago.

"Costa Rica was the first country to propose a mechanism to capture CO2 produced in developed nations through forests and national parks," said Costa Rican Minister of Economy, Industry and Commerce Eduardo Sibaja.

The mechanism proposed was not only to exchange CO2 emissions for cleaner air produced by trees in other countries, but also a way to measure those chemicals versus clean air either filtered or produced by mother nature.

 Basically, the idea is similar to a carbon trading system.

"This works for Costa Rica because we don't produce much and it helps the industrialized countries who produce a lot," Sibaja pointed out.

   For Costa Rica, those challenges can become opportunities, especially in the fast growing green growth sector.

 Costa Rica abolished their military 50 years ago and uses that money towards social development programs such as education and health services.  Another classification would be how a country treats the environment. "We are not emitting CO2, instead we are absorbing CO2 for others, so instead of penalizing us we should have benefits for that," he said. Sibaja is looking to change the typical economic measures to add other parameters like peace and environmental protection.

Under Sibaja's plan, the middle-income countries like Costa Rica, Uruguay and Panama, which has also abolished their army recently, can receive benefits from international aid.

  The Costa Rican National Institute for Biodiversity now receives money from Korea to help expand their research in exchange for research conducted by Korean scientists for the purpose of developing new pharmaceutical medication and materials.The Institute uses the jungles and forests of Costa Rica as a giant lab.

 

 

Owner-Broker Jeff Fisher hopes to help your understanding of this new law by posting a mixture of facts and opinions.  Laws generally do not take effect in Costa Rica, until they are ruled upon after a challenge has been made to the Sala Cuarta (Costa Rica's version of the Supreme Court). We feel this will soon take place, prior to the required payments being due! 
UPDATE DEC. 15, 2009 12:30P.M.    I just had a conversation with Federico Mata of Stewart Title Jaco and yes, he also expressed disbelief at this new law.
However the official position they are taking (for the reduced price of $250) is that everybody needs to file prior to 5:00 pm Dec. 31, 2009 OOPS -NOW ITS CHANGED-SEE BELOW
for the quarterly taxes due for the period Oct. 1-Dec. 31, 2009. 
Of course keep in mind from December 19, 2009 to January 4, 2010,  ALL public sector employees are off on their Christmas/Year End vacation.
Thus no information will be available from the municipalities nor the Registro Nacional until Monday Jan.4, 2010, and the government office where you are supposed to email your forms to will be closed! And the government will take the money from an account provided to them (and I like Stewart's idea that they would provide the account number for their clients.  How many other attorneys-accounts will do the same.
 The payments for future years will be due every Jan 15th, but not this years supposedly. Unbelievable!
 Mata said they were working with Deloitte & Touche, but are no longer taking new applications.  
Thus my professional opinion remains- to contact your personal attorney for legal advice, and maybe a recommendation for an english speaking accountant. I will continue to provide further relevant data here with information and options as they become available.
Be prepared, but don't send in anything until the last possible second, or  or or........
Read the Bob Klenz letter below. Waiting is the key.
Thank-you,  Jeff  

Luxury Homeowners Evade Solidarity Tax Feb. 4, IPS   by Daniel Zueras SAN JOSÉ, Feb 4 (IPS) - The first attempt to collect a new tax on luxury homes in Costa Rica has ended in failure, in spite of the fact that it is a solidarity tax entirely devoted to building social housing for slum-dwellers.

 

The Finance Ministry in this Central American country admitted that only one-quarter of the expected revenue was collected after extending the deadline for paying the tax from Dec. 31 to Jan. 15.  

The tax is levied on homes valued above 180,000 dollars, according to Finance Ministry valuation methods that real estate experts regard as setting figures well below market prices.  

After the deadline was up, the Finance Ministry announced it had only collected 5.5 million dollars, instead of the expected 22 million dollars. The Ministry announced that there are 10,000 luxury homes in Costa Rica, but only 3,000 owners paid the tax. "We will go after those who haven't paid," said Finance Minister Jenny Phillips.  

The levy known as the solidarity tax was formulated in a special law and approved unanimously by the Costa Rican parliament. All revenue will be used to finance the Ministry of Housing and Human Settlements' slum eradication programme.  

The solidarity tax is to be levied for a period of 10 years on owners of luxury homes, at annual rates that vary in six steps from 0.25 to 0.55 percent of the value of the house, rising according to its price. The rate to be paid will be based on appraisals of the houses updated every three years.  

Housing Minister Clara Zomer told IPS that the tax would be in place for 10 years, in order to eliminate slums and shanty towns in the country. It was conceived as a solidarity measure to provide decent housing for people living in extreme poverty.  

But the driving force behind the tax, lawmaker Federico Tinoco of President Oscar Arias' National Liberation Party, says the tax should be reformed to last more than a decade, because "the slums cannot be eradicated in 10 years."  

The tax authorities have up to three years to oblige the home owners to pay up, but the Finance Ministry believes it can do this within one year because it can identify the houses involved, and even has aerial photographs of each of them.

 

Taxpayers have the space of that year to appeal the payment before the Administrative Tax Court, challenge their tax rating, or bring a lawsuit arguing that they are not eligible for the tax. In the view of real estate and tax experts, another reason for the failure to pay the first tax payment is that the Finance Ministry has established mechanisms that are unfamiliar to taxpayers, such as making declarations online, and the overall procedure is cumbersome.

"The trouble is that the amount collected has been much less than expected," said Minister Zomer.

However, the Housing Mortgage Bank, which is under the Housing Ministry, has already received the revenue collected, which will be immediately allocated to the "bono comunal" (community grant) programme to cover the cost of paving, sanitation services, parks and playgrounds and other improvements in shanty town areas.

Zomer said there are 400 shanty towns in Costa Rica at present, housing 40,000 families. She added that the revenue from the tax collected so far will only pay for the "improvement of one precarious neighbourhood."

But she said her ministry has other funds, totalling 125 million dollars, for its programme to eradicate shanty towns. The luxury home tax is "complementary," she said.

 

This country of 4.5 million people has a poverty rate of 18.5 percent, according to figures from 2009. But local authorities and social agencies are concerned because the overall poverty rate grew by nearly one percentage point compared to 2008, while the proportion of those living in extreme poverty increased from 3.5 to 4.2 percent.

Although Costa Rica's poverty rates are among the lowest in Latin America, the latest figures show that poverty has risen as a result of the global economic crisis, after a 2007 poverty rate of 16.7 percent, the lowest in the country's history.

Previously an average of 20 percent of Costa Rica's population were living below the poverty line, although in the early 1980s the rate shot up to 40 percent, said César Zúñiga, a professor of political science at the University of Costa Rica.

"Poverty in this country is different from that in the rest of the region, because Costa Rican social services have relatively universal coverage," unlike in most of Latin America, he said.

The National Housing System was created in the 1980s as part of a policy of social protection for the lowest-income population. "This is how the growth of poverty has been curbed," Zúñiga said.

 

He remarked that the social protection plan has contributed to the paradox that the country's middle classes have the greatest difficulty in achieving home ownership, as they have access neither to credits nor to the social assistance available to low-income groups. "The (social housing) policy has been effective," although administrative and political disorder have undermined the efficiency of the system, he said.

In Zúñiga's view, the reluctance of the richest strata of the population to pay the solidarity tax indicates "a lack of solidarity, which is cultural and moral in character," although he also blamed the ministry's inefficient tax collecting. (END/2010)

 

Luxury Tax Deadline Extended to Jan 15

Dec. 18, 2009 Tico Times    

Owners of luxury homes in Costa Rica will have until mid-January 2010 to pay the “solidarity tax,” thanks to a determination by tax officials that the process is “extremely complicated.”

 

 Numbers released this week show that, to date, the owners of only 600 of the estimated 10,000 luxury homes in the country had paid the tax. In addition, meeting the fast-approaching Dec. 31 deadline was complicated by the fact many offices are closing for the holidays. “We recognize the process is complex. We accept that,” said Finance Minister Jenny Phillips, explaining the decision to delay the deadline. “And we want to be respectful of the rights of the taxpayer, as this is the first time (this tax will be paid).”

 

Even with the new deadline of Jan. 15, fines will be levied on delinquents, Phillips said. Those who miss the January deadline could face fines of up to 10 times the original tax (upwards of $5,375), plus interest on the days gone unpaid.  

The solidarity tax went into effect on Oct. 1 of this year as a way to raise money for slum eradication. According to the legislators who drafted the law, the tax will put an estimated ¢10 billion (around $17.5 million) toward housing projects under the National Housing Mortgage Bank (BANHVI).  

Every homeowner with a residence valued at $172,000 ?? or more, must pay the tax at a rate commensurate with what their home is worth (see box).  

Though they call the process “complicated” and “confusing,” top officials at the Finance Ministry stopped short of saying there are any errors in the system.  

But people like Bob Klenz know better.  

He and dozens of other foreigners had tried for months to pay the tax but, despite multiple trips to the banks and the Finance Ministry, their taxes remained unpaid.  

“I am not against the tax. It's just that they make it impossible to comply with it,” said Klenz. The 16-year resident of Playa Dominical, on the southern Pacific coast, has been a point-person in the expat community in trying to understand the process.  

“What they make you go through is absolutely ridiculous,” he insisted in a telephone conversation with The Tico Times this week.  

Chris Cobb, who lives south of Quepos, on the central Pacific coast, said he also has faced roadblocks. Though he's collected a wealth of information about the new tax (which can be found on his Web site www.ccobb.net/hacienda ), he hasn't been able to meet the guidelines of the Finance Ministry.  

“I have been trying to understand the process, the requirements and how to comply. I've realized it won't be possible,” Cobb said. “Maybe it is as of today (Wednesday), with the possibility of wiring money, but before it wasn't.”  

In the end, Klenz also threw up his hands in frustration and said he would sit tight.

 

“I am going to wait. I am not going to file,” he said. Asked whether he was concerned about the looming fine, he said, “No. There is going to be too much noncompliance. Too many foreigners cannot complete the process.”  

On Wednesday of this week things changed. The Finance Ministry published a small note in the government newspaper La Gaceta to announce it will extend the deadline for payment. It also changed the payment process so that foreigners may wire money into a local account. 

“It definitely helps,” said Klenz on Thursday. “I'm still not sure if it will work, but I'll try it later (today).”  

The process remains extremely complex, Klenz said. And the immense fines still hang in the air for those who miss the mark on Jan. 15.  

The first challenge for a homeowner is assessing the value of the person's own home. It is an in-depth process that entails strict measurements of everything from wall heights to lawn space. And it's further complicated by technical language that is difficult for even a person fluent in Spanish to understand, according to Klenz.  

“For a foreigner who cannot read Spanish, it's virtually impossible to do it on your own,” he said.  

If you undervalue your home by more than 10 percent, the new law threatens a fine of up to five times the original tax.  

And Tax Administration Director Francisco Fonseca said he will enforce the fine against undervalued homes.  

“First we will look at what the home-owner declared,” he said. “We will consult with the municipality and, if we still have questions, we will send someone to look at the home.”

 

According to the original rules, the home-owner must have a local bank account in colones linked (or domiciled) with the Finance Ministry. Many people undertaking the process met obstacles in Costa Rica because most banks had not been instructed in how to domicile an account with the Finance Ministry. “The bank manager learned alongside me,” said Jacques Bergeron, a foreigner with a home in the Central Valley, who – after much patience – was able to domicile an account.  

Cobb, who said this step made him uncomfortable, said that he would “never allow a government to transfer out of (my) account.”

 As of this past Wednesday, however, foreigners have the option of wiring money into an account at the Banco de Costa Rica (BCR) (see sidebox). This eliminates the need to domicile an account.

 

Even so, there's one more hurdle, and it's the one that has put the most foreigners in limbo.

 In order to access the online portal to pay the tax, a homeowner needed a cédula (official Costa Rica personal identification) number. Foreigners like Klenz and Bergeron were rejected each time they tried to enter a passport number or some other combination.

 

Now, however, with the ability to wire funds to a BCR account, this step has been eliminated, finance officials say.  

Homeowners cringing at the prospect of spending you're the holiday season trying to figure out this tax can look to law firms like San José-based Facio Cañas for help. But that help will come at a price.  

According to a document posted online, such tax lawyers charge between $500 and $1,400 for everything from home valuation to filing paperwork.  

Asked what the Finance Ministry is doing to inform foreigners of the new tax (many of whom live outside the country the better part of the year), Fonseca said, “Most foreigners have people here to look after the home, renters, maintenance people. …We expect them to know about the tax.”

 

 

 NEW LUXURY TAX NOW IN EFFECT!  originally published Dec. 11, 2008
We would like to inform you that the Law 8683 was published today.    This law is creating a new tax over the luxury residential houses or condos, based on its fiscal value, according to the following values (values are in colones, use 582 to convert to US$ which means 100,000 colones equals $171 U.S. ). 

VALUE Based on 582 colones per $	RATE
a)    100.000.000,00  to  ¢250.000.000,00  ($171.000--$429,500)	0,25%
b)    Over the excess of ¢250.000.000,00 up to ¢500.000.000,00                                            ($429,000-$859,000)	0,30%
c)     Over the excess of ¢500.000.000,00 up to  ¢750.000.000,00	0,35%
d)     Over the excess of ¢750.000.000,00 up to ¢1.000.000.000,00	0,40%
e)    Over the excess of ¢1.000.000.000,00 up to ¢1.250.000.000,00	0,45%
f)    Over the excess of ¢1.250.000.000,00  up to ¢1.500.000.000,00	0,50%
g)   Over the excess of ¢1.500.000.000,00  will apply	0,55%

 

 No taxes will apply to houses under ¢100.000.000,00, but recreational houses or houses with occasional use are taxed over the indicated values.

Therefore, a house with a value of  ¢125.000.000 ($214,000 U.S.),
will pay annual taxes of ¢312.000, ( $536 ) and
a house of ¢240.000.000 ($412,371)  will pay ¢720.000  ($1223)   per year.
(based on 582 colones per dollar for the above numbers.
Today its 564 per dollar,  thus 100 million colones equals $177,300)

This tax is in addition to the property tax all ready established at .25% or $250 for every $100,000 of declared value. 
The new tax will be calculated every year based on the declarations that everyone will have to present by January 15 of every year. The new law has a few clauses on fines for those not declaring or for those declaring a value under the real one.  If you declared a value below 10% of the real value, the new law establishes a fine that equals 5 times of the unpaid tax, if you don’t declare the value, the fine equals 10 times the unpaid tax.

The first declaration will have to be made 3 months after approval of the law, which will be one month after the publication of its rules.This new tax is not tax deductible, for Income Tax purposes.This law will be valid and mandatory for 10 years from today.   
thanks to Lic. Manrique Rodriguez F, CPA Pres. of  Pac. Business Accounting Group

The Highly Questionable, Possibly Illegal, Possibly Unconstitutional Costa Rica Luxury Tax Dec. 9, 2009 Inside Costa Rica: Open letter by: Bob Klenz, Dominical, Costa Rica.   

At every gathering the only topic of conversation is this problem tax and the inability of all of us to figure out how to comply with it. Many people are very upset with it and even though they may want to comply, do not know how or cannot do so legally. The high degree of frustration is evident with everyone we speak to about this tax. The Costa Rican Government should only know the amount of pain they have caused so many people who want to do their part but can’t. As to the problems of this tax. 

 

Even a blind person can see the inequities that are so blaring in this law:

 

1) Pay on line via computer! Although in this day and age, many people are computer literate, I find it highly questionable as to the legality of requiring people to own or use a computer to file a hard to understand tax form. Is it part of the Costa Rica Constitution to own a computer?

 

2) As a foreign resident, WITH OR WITHOUT A RESIDENT CEDULA, you cannot access the DIRECT TRIBU NET site. The only access can be by a Costa Rican using their cedula and its expiration date. Try it and if you can get online, please correct me and explain how you did it. In my years of experience with laws in general, I find it quite difficult to believe that you can be found guilty of not filing when you cannot access the site to do so. The Ministry of Hacienda knows about this problem but refuses to rectify it.

 

3) The law requires a person to submit to Tributacion, a Costa Rica Bank Account number with which the Government can automatically withdraw this tax from. I don’t know how many of you out there trust the Costa Rica Government, or any Government, with the ability to freely withdraw funds from your bank account. If you do, you may want to seek some psychiatric help! It should be up to the Government to give you their account to deposit funds to, not the way it is unconstitutionally proposed.

 

4) Many people are talking about hiring an Attorney, an Appraiser or a Title Company to assist them in this process. The law should not and does not require you to do this but suggests it and most people feel compelled to do so because they just don’t understand what to do. Most of the firms advertising their services do not understand the law and how to complete the forms. They are just looking for business, a business that will help them out for the next 10 years or more. I have seen several letters from various firms that show, by their own description of services, that they will most likely do a very poor job for you and should not be hired. When a law is so complicated that it almost forces people to spend between $400 and $1000 just to complete an appraisal and a form, this leads me to think the law is unconstitutional once again.

 

5) The initial tax and filing of forms is due on Dec. 31, 2009 with a 2nd tax due on January 15th. For those of you who live in Costa Rica, you understand what happens on holiday periods such as Christmas and Easter. In the case of Christmas this year, the Government offices will shut down on December 18th and reopen on January 4th 2010. When the Government shuts down, so do most Attorneys’, Accountant’s and Appraiser’s. So, in reality you don’t have until Dec. 31st to complete your filing, you have until Dec. 18th which by the way is a little over 1 week away. Also, once the Government offices reopen on the 4th, they will need at least one week to get up to speed and back to work again, especially on a reduced work force as usually is the case after long holiday periods. Once again, GOOD LUCK!!!!!

 

6) Are you an Appraiser? Have you gone through your years of schooling to be one? Do you understand how to measure your structures, the walls of your house, your outbuildings, fences, driveways and swimming pools? Can you determine the value of your land, determine slopes and grades? If you are very good at all of this you should have fewer problems than most people in completing this process. I have been involved in the real estate business for well over 30 years and I am having problems completing these forms. Once again, good luck to all of you that have the overwhelming experience you will need for this process.

 

7) Fines of 5 and 10 times the unpaid tax!  When penalties are usurious and unreasonable, they cannot be legal. Do you really believe they have the power to fine you 5 times the unpaid tax if you underestimate your property value by 10%? They can say this but enforcing it will be almost impossible. Again, are you an appraiser? Are you a computer expert? Can you comply with this law in the short time span given? The Government itself doesn’t even know how to collect taxes efficiently but they want to charge you a high penalty for you not being in compliance. How about the foreigner property owners who live out of the country and can’t comply for many of the above reasons. Are you going to tell me that they must pay a penalty of 10 times the unpaid tax? This is so ridiculous it is hard to believe.

 

8) What does the Government think this type of law is going to do to foreign investment? How many foreigners are going to invest knowing that they will have at least 10 years of double taxation? How many hotel and cabina owners will not be able to pay these excessive taxes due to lack of business and tourism? With this type of law, it will be difficult to sell any upper end condos, apartments or homes. Is this really what the Government is looking for?

 

In closing, I would suggest that the Costa Rica Government revisit this law and make it something that can be used simply by all taxpayers and or homeowners. Perhaps a simple flat tax on all Corporations or some other method could be a friendlier way of implementing this. The end result and the amount of money obtained could be the same or possibly better. I know and truly believe the Costa Rican Government will wake up to the fact that they passed a bad law and in the end will revise it to make it legal, constitutional and in the best interests of the people.

 

 

Opinion from Another Long-Time Resident Realtor, Ivo from american-european.net  Dec. 16, 2009

The Ministry of the Treasury has  compiled land valuation maps for most of Costa Rica.  Most of these maps were completed in 2008 and the Ministry of the Treasury expects the local Municipal governments to incorporate them into their valuation standards.

The Legislature has placed into the law sanctions for not complying with the law.   Specifically Article 12 of the law establishes fines and penalties for either failing to file the required declaration form or filing the form but under reporting the value of the property.

The law imposes sanctions for failing to file IF the tax is due or UNDER REPORTING the value of the property, however the law does not mention any sanction or penalty for NOT FILING if you don't owe anything.
As such, if the value of your property is under the ¢100,000,000) you should probably not file anything. 
If you are borderline it would be good to have some sort of appraisal on file in case you are audited in the future. Owners of properties in condominium should contact their condominium administrator or board of owners. Especially those who own property in large and expensive gated communities are bound to be checked on first.
 

 

Those who have more than 300 m2 construction should get an appraisal

We have been interviewing many people willing to do your appraisal for a fee. Fees run all over the map. I have found 5 companies that do appraisals for banks and other institutions, who have years of experience and will take responsibility if the government does not accept their appraisal.
They will charge depending on the location of your property and the size of your property.

• Up to 250 m2                     ¢127.000
• From 251 to 350 m2          ¢157.000
• From 351 to 450 m2          ¢187.000
• From 451 to 550 m2          ¢207.000
• From 551 to 650 m2          ¢237.000
• From 651 and more           ¢282.000

The appraisers included in this the cost of pulling a study of your property in the National Register and pulling a survey, so you don’t have to worry about this.
Also, they will calculate the common areas if you live in a gated community or condominium.

Properties with construction of a lower value than ¢100,000,000 (about $175,000) are exempt of paying the fee of 0.25% over your appraised value. There is no obligation to file if you’re under that value. If your property is borderline, we recommend filing. You have to file before the 1st of January 2010. If you don’t file and they catch you, you will be charged 10 times the tax you should have paid and if you file the wrong values, they will charge you 5 times the tax.

 

ARTICLE 1.- Purpose of the Law

To create a direct tax in favor of the central Government, whose product will be destined, exclusively, to finance public programs addressed to the provision of decent living, to persons and families who are considered poor or extremely poor. This tax will fall over the value of the real estate properties that are of residential use, that are used usually, occasionally, or for recreation, including fixed and permanent premises.

For more information, feel free to purchase an  E-book Luxury Tax by Attorney at Law Roger Petersen through the link www.costaricalaw.com     Thanks Ivo.

.

  

 

Costa Rica has a new luxury tax on homes, with the payment due January 2010. 

Every owner must put a value on residential construction and improvements. If it is more than 100 million Colones, about $180,000, it has to be reported before the end of 2009.

The tax is due in the first 15 days of 2010. Professionals and homeowners alike have been baffled by the forms and instructions.

We have put together a bilingual, multi-faceted team to deal with this: an architect, a local journalist, and an accountant. We'll provide you a full package from appraisal to filling out forms at a much lower price than has been thrown around on other English-language web sites.

Most small houses will not reach the threshold for the tax unless they have a pool, fancy ceramics, etc. But if your house is over 300 square meters, send us an email.

cinclus@ice.co.cr  &n