Costa Rica’s Modernization Efforts Aim to Boost New Business

Costa Rica seeks economic efficiency by reducing paperwork and implementing digital platforms.

Recently the Government of Costa Rica declared that, as part of its agenda to celebrate the Bicentennial anniversary, it would enforce a moratorium on regulations until May 2022. The Presidency and the Ministry of Economy, Industry and Commerce seek to continue to activate the Costa Rican economy by incentivizing entrepreneurs to start their operations in the Central American country with much less formality.

This move feeds into the country’s ambitious digitalization and modernization agenda, that has so far seen incredible progress in areas of power, distribution of land and industry growth.

Boost for New Business in Costa Rica – Reducing bureaucracy to make way for booms

Many countries of Latin America carry a reputation for high levels of bureaucracy in the area of business. To some foreign investors, procedures and permits can be daunting enough to deter market entry strategies. Costa Rica recognizes this, and is undertaking a course towards efficiency, speed, digitalization and, one day, automation.

For the Minister of Science, Technology and Telecommunications, Luis Adrián Salazar, “simplification is a subject of high priority and a fundamental element to achieve the objectives that we have proposed with the Digitalization Plan”.

Costa Rica is one of the region’s fastest-growing economies. In 2017, GDP peaked at US$57.06 billion. Riding the wave of economic growth, Costa Rica is future-proofing further development by facilitating a positive commercial environment. Already, the country is experiencing booms in sectors such as renewable energy, electricity, tourism and agriculture.

Digitalization in Costa Rica

The rulers of Costa Rica in recent years have put their focus on digitalization as a driver of economic growth. Successive governments have been implementing measures and creating different platforms under the ‘Digital Government’ slogan to drive digital transformation of business.

One example is the implementation of digital signatures, which allow citizens, professionals and entities such as lawyers and public notaries to enter and facilitate transactions with businesses and individual clients. This enables smoother processes for creating new companies, registering new products, registering marriages digitally, and extending numerous types of certifications.

People may also now register before the different national authorities such as finance, health, social security through online processes using digital signatures.

This avoids unnecessary physical engagements and manual transfers of forms and applications to different offices, reducing the use of physical resources and demands on time. This innovation use notifications and prevent unauthorized access by digital means, and save time in registration processing. Access to digital information is immediate.

Digitization has been so successful that government office recruitment services are all now completed through a streamlined Integrated System of Public Procurement.

Doing Business – Law reform for modernization

The Ministry of Economy, Industry and Trade recently implemented the “Immediate actions for the simplification of procedures in the Government of the bicentennial” Guideline 20-MP-MEIC. This guideline triggered an evaluation of the country’s national catalogue of procedures, to further simplify regulatory frameworks.

Although the guideline does not eliminate or suspend current procedures, it enabled a significant reduction in the number of registered procedures – from 1609 to only 1232, for all the institutions of the state and their respective activities. Costa Rica seeks to further improve the business landscape and diverse needs of its actors by prohibiting the creation of new requirements that are not validly supported by any legal norm.

Additionally, the government has implemented an executive decree No. 41795-MP-MEICl entitled “On the Streamlining of Procedures in Public Entities through the Use of the Sworn Statement.” This decree reduces the number of procedures required for business owners to start operations. In some cases, this decree allows entrepreneurs to pass the pre-control steps of company formation to verification mechanisms after the permit has been delivered. More simply, this facility means that the business can operate while the verification is still underway.

Under this decree, the different institutions of the state are given a maximum period of three months starting on June 25, 2019, the date on which the decree was published to verify the procedures to which the affidavit can be applied. In doing this, the government demonstrates a motivation to simplify waiting times.

One great benefit to come out of this is regarding sanitary permits. Every business in the country that needs a physical space to operate must have a sanitary permit to do so. Application times for this permit have effectively been reduced from 91 days to 7 business days or less.

Invest in and modernize Costa Rica

There is no doubt that Costa Rica aims high and works hard to excel in the region and reach the international standards of developed countries. The product of this ambition is seen in the relative ease in opening a business.

As pointed out by the Minister of Economy, Industry and Trade, Victoria Hernández, processing times to open a company only depend on the type of company and their corresponding risk. Registering your business can now take between 1-7 working days.

“We must not only cut out requirements but also lift certain processes. We will improve the times, lower the deadlines to a reasonable extent and thus increase the Government’s ability to offer a fluid process”.

Diverse skills and business opportunities

Costa Rica, with these entrepreneurship-friendly policies, is definitely complementing its diverse and skilled workforce.

Costa Rica has a highly educated, friendly population, with high proficiency in English, Portuguese, French, German and other languages. The population possesses soft skills, great customer service, natural wealth and undoubtedly an invaluable cultural heritage, making it a strong contender for your investments in the region.

Contact us to get started in Costa Rica

Costa Rica has a range of strong and emerging business opportunities in different sectors. Voted one of the most innovative countries in Latin America in 2017, the Central American country offers increasing incentives for foreign entrepreneurs and investors.

However there is always a system of legal processes and visa registration to navigate that can be complicated to understand for foreign companies.

If you’re considering expanding to Costa Rica, reach out to Biz Latin Hub for visa guidance, commercial representation, and back-office service needs. Our team offers personalized support to ensure your success in whatever market you’re entering.

Contact us here at Biz Latin Hub for help today.