Private, nonprofit, apolitical organization, established in 1982

1
(No Transcript)
2
CINDECosta Rican Investment Promotion Agency

• Private, non-profit, apolitical organization,
  established in 1982
• Active promotion of foreign investment, local
  support, and post- establishment services
• Declared of public interest by the Costa Rican
  government in 1984
• Currently holds a seat in the steering committee
  of the World Association of Investment Promotion
  Agencies.

3
Why Costa Rica?

• Strategic Location
• Political and Social stability
• Legal Security
• Economic Stability
• Human Resources
• Incentives
• Infrastructure
• Quality of Life
• Great Potential
• Electronics Sector

4
Strategic Location

• In the middle of the Americas
• Central Standard Time Zone
• More than 20 daily direct flights to the USA
• 250 hours flying time to Miami
• 2-3 days delivery time by major express services
• Daily world-wide air cargo through 14 daily
  flights
• Over 24 world cargo shipping lines with regular
  departures on Pacific and Caribbean Oceans

5
Political and Social Stability

• Tradition of peace and stability
• Army abolished in 1948
• Highest ranked in Political Stability and Absence
  of Violence index in Latin America (World Bank,
  2006)
• Government
• More than 100 years of democracy
• 3 independent powers
• 4 year-term with reelection
• Presidential system

6
Political and Social Stability
Source World Bank, 2007.
7
Legal Security

• Foreigners have no limits of property handling
  and they can drive business activities freely.
• Foreigners have constitutional equality of rights
  and obligations.
• Free capital movement, no foreign exchange
  control.
• Intellectual property laws in accordance with WTO
  Guidelines.

8
Economic Stability
Over 20 years of economic stability
Source CINDE, based on Costa Rican Central Bank
9
Economic Stability

• As a result, Costa Rica benefits from good access
  to the worlds capital markets and moderate risk
  premium.
• Costa Rican Long Term Bond Ratings
• Moodys Ba1 (stable)
• Fitch Ratings BB (stable)
• Standard Poors BB (stable)

Source Central Bank of Costa Rica.
10
Foreign Direct Investment
FDI Inflows
Source CINDE, based on the Central Bank of Costa
Rica.
11
Foreign Direct Investment
Reinvestment in Free Trade Zone Regime
Total Investment from 2000 to 2006 2 Billion
Source CINDE based on the Central Bank of Costa
Rica.
12
Open Economy
Source Central Bank of Costa Rica.
13
Strategic Market Access

• Duty free access to
• USA through the CBI
• Mexico
• Canada
• Central America
• Chile
• Dominican Republic
• CARICOM
• Preferential access through the GSP to
• Europe and Asia
• Free Trade Agreements negotiations
• USA (signed)
• Panama (signed)
• EU (negotiations started Oct. 2007)
• China (to be confirmed)
• Investment Promotion and Protection agreements
  with several countries

14
Human Resources

• Population to July, 2007
• 4.44 million
• 34.2 of population is 15 to 35 years old
• Labor force 2007 2.01 million
• Unemployment, July 2007 4.6
• Underemployment, July 2007 7.4
• Universal Health Care and Education System
• Pillars for the national stability
• 6 of the GDP is allocated to education

Age structure by gender
15
Human Resources
Source National Institute of Statistics and
Census.
16
Educational System

• Education is universal, free and compulsory since
  1870 (the first in Latin America)
• Academic Schools
• Computer labs in 18 of the public elementary
  schools and 82 of public high schools
• English teaching in 38 of public schools and
  almost all of private schools
• Technical Education
• Technical High Schools 89
• National Training Institute (INA)
• Universities
• Total of 59 4 public, 55 private
• Technological Institute of Costa Rica
• University of Costa Rica
• INCAE (Harvard University)

Source Ministry of Public Education.
17
World Class Standards
Source The Global Competitiveness Report
2006-2007
Source Human Development Report 2006
18
World Class Standards
Source The Global Competitiveness Report
2006-2007
Source The Global Competitiveness Report
2006-2007
19
World Class Standards
Source The Global Competitiveness Report
2006-2007
Source The Global Competitiveness Report
2006-2007
20
Technical High Schools

• 4 year program includes academic and technical
  education
• Computer repair, microelectronics, precision
  mechanics, industrial electronics, industrial
  maintenance and electro-mechanics in 18 schools
• Service Center Executive new area of
  specialization
• Informatics and IT review and adjustments to
  academic curricula.

21
University of Costa Rica

• Public university founded in 1940
• 22 research centers, including
• CELEQ (Chemistry Electricity), since 1978
• Corrosion, lubricants, and fuels among others.
• CICIMA (Material Science), since 1990
• Metals and ceramics, biocompatible coatings,
  semiconductor optical properties, thin film
  properties, superconductors.
• INII (Engineering), since 1979
• Quality control, equipment calibration, etc.

22
Costa Rica Institute of Technology

• Public university founded in 1977
• 13 research centers, including
• CIC (Computer Applications), founded in 1992
• Research artificial intelligence and the creation
  and adaptation of computer applications to user
  needs
• CETMA (Electro mechanics), founded in 1991
• Training, consulting services, and fabrication of
  medium scale parts using PLC, CNC mills and
  lathes, Auto CAD, Edge CAM, etc.
• Electronics, founded in 1978
• Research services in microelectronics and
  electronics, semiconductor technology, and
  microelectronic applications
• Material Science, founded in 1982
• Research on corrosion, magnetic sands, thermal
  treatments, extractive metallurgy and non
  destructive testing.

23
Human Resources Availability
Costa Rica Technical High School Graduates
Source Ministry of Education of Costa Rica.
24
Human Resources Availability
Costa Rica Total Diplomas on Engineering Careers
Source Ministry of Education of Costa Rica.
25
Human Resources Availability
Graduates on Computer Sciences by degree year
Source Ministry of Education of Costa Rica,
CONESUP
26
Human ResourcesA Qualitative Approach

• Costa Ricans are healthy and motivated learners
• High productivity and fast learning curve in Free
  Zone Companies
• Low turnover
• Favorable labor environment non-existent unions
  in private sector (Solidarismo)

27
Minimum Wages
In US
Category C o s t Annual
costs per hour
Non qualified 2.31 5,756 Semi
qualified 2.50 6,246
Qualified 2.69 6,710
Specialized 3.11 7,745 NOTES All
costs include all labor charges paid by the
company, Christmas bonus and reserves for
vacations, holidays and severance (47.98 in
total). Minimum salaries effective from January
to July 2008. Exchange rate used 500 colones per
US. Normal week of 48 hours and 8 hours per day.
28
Average Wages
Occupation Annual Cost (US)
1 Manufacturing Manager 139.0 Production
Manager 72.3 Plant Manager
59.1 Plant and Process Engineer Sr.
26.1 Quality Engineer 23.1 Production /
Process Supervisor 17.3 Milling Machine
Operator 11.0 Specialized Technician
10.7 Specialized Plant Operator
8.1 Non-Specialized Plant Operator 5.9
1 Thousands of dollars. Cost includes all the
social charges paid by the company, Christmas
bonus and reserves for vacations, holidays and
severance. Source Consulting companies, survey
for the second semester 2007.
29
Fringes Benefits Breakdown
30
Investment Incentives

• FREE TRADE ZONE REGIME
• 100 exemption on
• Import duties on equipment, components,
  computers, furniture, software licenses, etc.,
  necessary for the production process
• Export taxes, local sales tax, excise taxes, etc.
• Profit repatriation tax
• Income tax (All export based subsidies must
  comply with WTO Guidelines by December 31st, 2015
  for manufacturing companies)
• Services companies have 8 year income tax
  exemption, 50 exemption for the following 4
  years

31
Investment Incentives

• Minimum investment requirement
• US 150,000 inside an Industrial Park
• US2 million stand-alone free zone
• Service companies can sell up to 50 to the local
  market and processing companies up to 25
• There is a 0.3 fee on sales or a minimum fee of
  200 a month. If the company doesnt generate the
  invoicing in CR, the fee will be calculated based
  on the operations total expenses. Processing
  companies are charged by productive space (0.25
  or 0.5 per sq.mt.)
• Guaranty deposit.

32
Infrastructure

• Free Zone Industrial Office Parks

• Business Centers

• Designated areas for Free Trade Zone companies
• Privately owned and managed
• Other services customs services expedited on
  site, security etc.

• Several private construction projects in the
  Great Metropolitan Area
• With access to main labor pool concentration

33
Infrastructure

• Telecommunications redundant fiber optic
  submarine cables (Maya Arcos), satellite and
  terrestrial microwave network in place to meet
  demand in fixed, mobile and Internet services
• Redundant electricity 97.5 is generated from
  renewable sources (hydroelectric, geothermic and
  wind)
• Abundant water supply

34
Infrastructure
__ Maya I .... Arcos
35
Infrastructure

• On-line customs (FTZ Companies)
• On-site customs at free zone parks to expedite
  the import/export process
• Costa Rica Provee office (rcalvo_at_procomer.com)
• Local manufacturing capabilities
• Electronics assembly
• Machine and tooling shops (CNC lathe, mill, EMD
  and conventional)
• Grinding, stamping
• Mold (maintenance, repair, limited manufacturing)
• Limited heat treatment and plating
• Local machinery
• Plastic injection molding
• Packaging (cardboard, thermoformed, flexible)

36
Quality of Life
San José ranks third among the cities in Latin
America with the best quality of life. The
countrys capital maintains a leadership over
its competitors, such as China, Malaysia,
Mexico, India, and others.
Source The Economist Intelligence Unit, 2006
37
Great Potential

• Central American Country of the Future
• 2007-2008 FDI Magazine,
• 2nd Most Globalized country in Latin America
• The Globalization Index 2007, A.T. Kearney and
  Foreign Policy
• 5th High-Tech exporter of the world
• World Development Indicators 2007, World Bank

38
Electronics in Costa Rica

• More than 20 years of experience
• US 162 million in FDI in 2007
• 12,500 skilled workers employed
• Over 50 companies
• Main Export Products (by US)
• circuits and semiconductors
• electrical apparatus
• high frequency and sound amplifiers
• parts for motors and generators

Compliance with world wide quality standards
ISO, QS, TS, TL, UL Boeing and FAA
certification Clean rooms class
100/10,000/100,000
39
Electronic Cluster
40
Main Processes

• PC Board Assembly and Test
• SMT, TH, BGA
• Thick thin film substrates
• Printed wire bonding and others
• Harness, cable and connector assembly
• Semiconductor packaging and testing
• Subassemblies (microwave, RF, electrical,
  electromechanical, electronics)
• RF Tuning

41
Intel in Costa Rica
Costa Rica continues to be a strategic site for
us and now our best products are manufactured
here. I believe this speaks for itself Paul
Otellini, President and CEO, Intel Corporation
42
Micro Technologies in Costa Rica
Over the past 5 years, our activities in Costa
Rica have gone from a small satellite facility to
the primary manufacturing center for our global
operations Michael Tucci, President, The Micro
Group, Inc.
43
Bourns / Trimpot in Costa Rica
Bourns is extremely proud of our presence in
Costa Rica based upon the eagerness from all our
manufacturing team to apply to lean tools and
commitment to continue becoming stronger and
sustain our World Class Manufacturing
position Mario Zuchovicki, Vice President and
General Manager, Bourns Inc, Resistive Products
Division
44
Medical Devices

• 6,500 direct employees through 2007
• US 156 million in FDI in 2007
• Product Lines
• Cardiovascular
• Orthopedic
• It is one of the most dynamic and productive
  sectors in Costa Rica.
• Exports increased by 12 during 2006
• Baxter Healthcare and Hospira, leaders of the
  industry, have operations in Costa Rica
• Industry growth has created the need to attract
  new company suppliers to provide the industry
  with molding, filters, packaging, resins and
  other supplies

45
Medical Devices
Medical Devices
46
Services

• US 64 million in FDI in 2007
• 20,000 direct jobs through 2007
• Costa Rica offers the right conditions to
  companies for added value to their production
  with cost effective infrastructure, its labor
  forces characteristics, and world wide services,
  such as
• Shared service Centers
• Back Offices
• Software Development
• Call Centers
• Engineering, Architecture Design

47
Services
48
Thank you for considering Costa Rica!
Alvaro Cedeno Deputy Director, Costa Rican Trade
Promotions Agency Commercial Counselor, Embassy
of the Republic of Costa Rica Beijing, China Tel.
(10) 6532.7115 acedenom_at_procomer.com
49
Solidarista Associations

• Employer-sponsored workers associations
• Each company has an organization, in which white
  and blue collar workers participate
• The organization operates as a credit union which
  provides multiple benefits to workers
• It is funded by employers, with part of the
  severance provisions, and by employees
• Solidarista organizations ARE NOT sector-wide
  bargaining instances, as American unions