Costa Rica 2017 | ECONOMY | INTERVIEW

TBY talks to Alonso Elizondo Bolaños, Executive Director of the Chamber of Commerce, on the strongest performing sectors, the challenges in attracting FDI, and the prospect of the Pacific Alliance.

 Alonso Elizondo Bolaños
Alonso Elizondo Bolaños is the director of the Costa Rica Commerce Chamber. He holds a MSc in economics from the University of Costa Rica. He is the director of Central American Chamber of Commerce Federation.

The IMF predicted a 4.2% growth for Costa Rica's GDP in 2016. Which sectors do you think will drive this growth?

Costa Rica initiated a process of economic openness back in the 1980s with the objective of opening the country to the global economy and reaching different foreign markets. Before this strategic move, the country's economy was based on the agricultural sector, especially coffee and bananas. In the 1980s, Costa Rica began diversifying its economy and focused on high technologies and generating added value. With the arrival of Intel in the 1990s, we developed an industrial park focused on microprocessors and high technology. On top of that, Costa Rica based the diversification of its economy on its educated and highly qualified workforce. Today, we export more than 5,000 products, none of which represent more than 3-4% of Costa Rica's current volume of total exports. We have certainly seen a slowdown in FDI compared to growth rates in the past. This, however, does not mean that we do not attract FDI. We have become an economy based on services, which represents 40% of our GDP. Additionally, the financial industry, especially in terms of back office services, is one of the sectors experiencing the most promising developments in recent years. The multimedia design and software engineering industry has rapidly developed lately, and we also see interesting opportunities there.

What actions does the Chamber of Commerce implement in order to attract foreign investment?

In many cases, we are the initial contact point for investors arriving in the country. At the same time, the country has its own agency that promotes the arrival of investment into the country: CINDE. We also offer follow-up processes to foreign companies that arrive in the country to understand if everything goes well or if they need assistance. The country needs to work on energy tariffs in order to become even more competitive on the international stage. We have taken positive steps in the generation of energy through renewables, and we now need to take the next step forward in order to make tariffs more competitive and eliminate possible monopolies.

What do you think will be the impact of the FTA signed with Colombia?

That was the only FTA we missed to complete the agreements with the Pacific Alliance founding members. We ratified this FTA with Colombia in 2016 after three years of negotiations. It is too early to estimate the impact of this FTA; however, it will open doors to better market our products and services throughout South America. We should strengthen and consolidate the network of commercial offices in those countries in order to have better commercial position there as a country. The next natural step would be integration into the Pacific Alliance, and this FTA will help us further align in the commercial and economic area with those countries.

What are the opportunities offered by the Pacific Alliance to countries like Costa Rica?

President Luis Guillermo Solís does not believe in free trade and has already said that the Pacific Alliance project is something that we should put on hold. I believe the Pacific Alliance is a brilliant idea; however, it will not move forward under Solís' presidency. This again brings up the public expenditure problem; the president said that as long as there are no more taxes, there will not be a Pacific Alliance. However, the true problem has to do with the excessive public expenditures. We need to move forward as a country the same way that we have been doing throughout the last three decades by opening our economy to the world. The Pacific Alliance can bring positive changes to our economy such as adjustments in the way that we do business by implementing a model that better facilitates business, as well as the way local and transnational companies operate.