Costa Rica toasts Bacardi

Bacardi backs Costa Rica in expansion of global services.

Last week Bacardi announced an expansion of its global shared services centre in Costa Rica in a strong statement of support for the Central American country. The centre already provides services to Spain, Russia, Mexico and other neighbouring markets.

According to an executive at the Costa Rican Investment Promotion Agency (CINDE), “Over 325 other multi-national companies have operations here, including Amazon, Walmart, P&G, DHL, Bridgestone, Emerson and Intel.”

“Over 325 other multi-national companies have operations here, including Amazon, Walmart, P&G, DHL, Bridgestone, Emerson and Intel.”

Executive, CINDE, Costa Rica

What is driving this? What can other Latin America countries learn from Costa Rica’s success? Bluntly, strong trade agreements, high-quality education and well-designed tax incentives.

Since the 1960’s, Costa Rica has worked hard to make the country attractive to foreign investors. Importantly, in the 1980’s, Free Trade Zones were established to house companies outside the national customs territory with a number of tax exemptions.

Companies engaged in the exploration and extraction of minerals or hydrocarbons, the production of electrical energy, and the sales of arms and/or ammunition are not eligible for the free trade zones but services, advanced manufacturing, light manufacturing, life sciences and food businesses are encouraged.

To complement this, the country has 15 free trade agreements that give preferential access to 2.8 billion people and 75% of the world’s GDP.

Finally, you need an educated workforce, which doesn’t happen overnight. Well, the Costa Rican national government abolished its army in 1949. This has enabled policymakers to invest consistently in the education of the nation’s citizens. As a result, Costa Rica today has one of the highest literacy rates in all of Latin America.

A trade representative in Costa Rica explains, “Human talent is our main competitive advantage in attracting foreign investment. We have high quality professionals and technical graduates capable of delivering complex processes and services.”

“Human talent is our main competitive advantage in attracting foreign investment.”

Trade representative, Costa Rica

While education, trade agreements and tax incentives have proven crucial to Costa Rica’s success, there are a number of other initiatives drawing talent and investment. Not least the country’s sustainability credentials, for example, the energy mix is 99% clean. The country also continues to develop and adapt it’s immigration policy to attract global talent.

The business environment is favourable but there are some concerns. Most notably, given its strategic location and limited security forces, the country is a transit route for narcotics but associated violence is uncommon relative to neighbouring countries.

It is easy to see why Bacardi, and many others, have chosen Costa Rica as one of their regional hubs.

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