THE NEED TO GROW

Costa Rica 2017 | INDUSTRY | VIP INTERVIEW

TBY talks to Enrique J. Egloff, President of the Chamber of Industries, on the outlook for the industrial sector and the economy of Costa Rica over 2016.

What is your outlook for the industrial sector and the economy of Costa Rica for 2016?

The IMF's 4.2% projected growth rate is not enough. Obviously, Costa Rica's growth is above the average in Latin America; however, if we want to become a developed nation then we need to grow at a higher rate. In the industrial sector, a significant portion of the growth that we are projecting for 2016 is based on the growth of companies established in the free trade zone regime, mainly high technology medical device manufacturers. In order for Costa Rica to become a developed nation and to invest and generate the important level of employment, it needs to grow at 7-8%. An important effort needs to be undertaken in the area of competitiveness. If we improve our competitiveness and solve all of our problems in traumatology procedures and improve infrastructure through means such as investing in our 28 terminals and moving the containers that will be coming to Limon, we will drive not only important development in the region, but also help to enhance the competitiveness of different sectors of the economy, as exports are key to our success. The expansion of the Panama Canal will also help generate employment and other activities in the Province of Limon, which is very much in need of activities that generate employment. The best way to develop a country and to shift away from crime and other problems is to generate employment. We need to make sure that we create the conditions so that the Province of Limon can generate employment and new activities outside of the new container port. Not only will it have a positive effect on Limon, but also on the country, as developing competitiveness is definitely important for Costa Rica. We will have two new terminals, and the widening of the Moin Terminal and APM Terminals is providing freight services for imports and exports. On the other hand, we also need to work on the development of other important regions, like Guanacaste. Tourism is good along the coastal areas of the province; however, we need to consider that there are other regions within that province that need to be developed.

What initiatives are underway to encourage investment in other areas beyond the capital?

The recently renovated airport in Liberia, Guanacaste will play an important role; hence, we need to work on the cargo terminal there in order to generate trade activity in and out of the country. That will also provide conditions for the development of other economic activities, such as agroindustry. We need to move forward and through innovation try to generate or transform our agricultural industry into value added processes whereby Costa Rica, its people, and the agricultural undertakings take advantage of the activities that are being developed by the multinational corporations active in the country.

What do you think the country needs to do to increase its competitiveness?

We need to create better conditions, and energy is an important area. Costa Rica has been successful, and the Chamber of Industries has played an important role in the establishment of a sustainable long-term energy plan. We are in full agreement with the government that the country is moving in the right direction in that sense. We need to be less dependent on fossil fuels for generation, and on non-sustainable resources in general. Costa Rica has for many years been developing hydroelectric energy; however, we need to focus on improving rates and generating significant levels in an effort to reduce costs. That has to do with efficiency and focusing a lot of our matrix into lower cost, sustainable energy generation. It is also related to efficiency and opening up energy generation and distribution to competition. Competition drives efficiency and leads to a reductions in costs and rates. We also need to ensure that we make processes easier for companies to come here and invest. This is something that we have been discussing seriously with the President. One of the most important things that we need to focus on is strengthening our security. We all understand that we live in democratic countries and that the people of Costa Rica are prone to corruption and illegal activities; therefore, we need to ensure that we provide jobs and a sense of wellbeing to the population so that they do not feel the temptation of such activities.

How do you foresee Costa Rica's economic structure evolving in the short to medium term?

Services are going to continue to grow. We need to make sure that we maintain the diversification of our economy, which has proven to be successful for the country. Diversification means that we have the possibility to continue to move forward as sectors are affected in the future. A diverse economy reduces risks that may occur when a specific sector suffers a downturn. The fact that Costa Rica was diversified when we faced the 2008 real estate crisis allowed the country to better handle the crisis and survive. While other countries were significantly affected because their economies were not as diversified as Costa Rica's, we were able to emerge faster and stronger.

What is the Chamber of Industries doing to contribute to the growth of the industrial sector?

We need to understand that what we are producing and selling today is not what is going to be sold in the future; I do not know what sort of industry we will have in the country in five years. The role of the Chamber of Industries is to ensure that we help in the development of new activities and in the development of the future industry of Costa Rica. The Chamber of Industry is playing an important role as a facilitator by organizing activities and bringing in key worldwide players in innovation to come share their successes and experience with local industry and different players in the country such as universities and institutions involved in R&D as well as governmental divisions and industry so that we can generate actions to get them involved in innovation. Innovation can happen when industry, academia, and research institutions all work together.

What are Costa Rica's competitive advantages as a destination for FDI?

Costa Rica is still a good location for manufacturing where high technology is a factor and skilled human resources are needed. The country will continue to generate highly trained, skilled, and prepared human resources. What we need to do as a country is ensure that we are more effective in generating the type of human resources needed to meet future demand. We need to be flexible, with a focus on enhancing education in technical areas such as engineering and software development, and we need to continue training people in those areas where there will be significant demand. The English language will remain an important skill that we can provide to investors. Now what we need to ensure is that we not only teach them English, but also learn to identify and develop additional skills. One of the important capabilities that companies have found in the human resources of Costa Rica is the ability to create, as have a legacy of creativity. This is very much appreciated by the companies that have established in the country and continue to grow.