Improved Strategies for FDI
Legal guide for foreign investors
Costa Rica, the ideal country to invest in Central America
Since the 1980s, Costa Rica has defined an improved strategy for attracting foreign investment, using its natural competitive advantages as a key element in the development of this strategy, namely its centuries-old stability tradition; its political institutions; the high standards obtained from public investments in the health and education of its inhabitants; the size of its territory and its strategic location in the heart of the continent; the legislation for the protection of the environment; and the proximity of its port platforms in the Caribbean Sea and in the Pacific Ocean. All this added to the guarantees of a consolidated Rule of Law that does not discriminate between rights and obligations between nationals and foreigners, governed by the constitutional principle of equality before the law.
Along with these advantages, Costa Rica established specialized government agencies such as the Ministry of Foreign Trade and the Promotora de Comercio Exterior (PROCOMER) and favored the development of private initiatives such as the Costa Rican Coalition of Development Initiatives (CINDE), whose commitment is to provide the best service and assistance to investment companies. These integrated elements, together with the tourism boom, have created a unique environment for hundreds of foreign companies with investments ranging from developments in Costa Rica’s coastal areas and national parks to hi-tech parks in the different free zones across seven provinces. Spanish is Costa Rica’s official language; however, a high percentage of the population speaks English.
Protecting foreign investment
The political constitution of the Republic marks the axes in which the legality of Costa Rican society in the fields of civility and business is upheld.
Government system and organization
According to the constitution, the government of Costa Rica is popular, representative, participatory, alternate, and responsible. It is exercised by three distinct and independent branches: legislative, executive, and judicial. A supreme electoral tribunal, with the rank and independence of the government branches, has exclusive and independent responsibility for the organization, management, and supervision of suffrage-related acts, as well as for any other functions vested in it by the constitution and the laws (Article 9). Public officials are mere custodians of authority. They must carry out the duties entrusted to them by law and cannot usurp powers not conferred upon them. They must take an oath to observe and uphold the constitution and the laws. The action to establish their criminal liability for their acts is public. The public administration, in its broadest sense, shall be subject to a procedure of evaluation of results and accountability, with public officials having personal responsibility for the fulfillment of their duties (Article 11).
A peaceful country
Costa Rica is a peaceful country, with the army as a permanent institution abolished by the constitution (Article 12). There shall be the necessary police forces for surveillance and the preservation of public order. Military forces may only be organized under a continental agreement or for national defense; in either case, they shall always be subordinate to the civil power and they may not deliberate or make statements or representations individually or collectively.
Foreigners’ rights and duties for business
In Costa Rica, the constitutional principle says that foreigners have the same individual and social rights and duties as Costa Ricans, with few exceptions and limitations (Article 19). All persons are equal before the law and no discrimination contrary to human dignity shall be practiced (Article 33).
Protecting Foreign investment
According to constitutional articles 42, 45, 47, and 49, the law shall protect, at very least, the personal rights and legitimate interests of those governed. Everyone shall be entitled to receive reparation for injury or damage caused to themselves or to their property or moral interests, through recourse to the law. Justice shall be prompt, effective, not denied, and in strict accordance with the law. Property is inviolable; no person may be deprived of his property except for a legally proven public interest, and upon prior compensation in accordance with the law. In the event of war or civil unrest, such compensation need not be made in advance. Every author, inventor, producer, or merchant shall temporarily enjoy exclusive ownership of his work, invention, trademark, or trade name, in accordance with the law. A contentious-administrative jurisdiction is a function of the judicial branch to guarantee the legality of the administrative function of the government, its institutions, and any other entity of public law. The misuse of power shall constitute grounds for challenging administrative acts.
Labor constitutional principles
The constitution guarantees the following rights to workers: Work is a right of the individual and an obligation to society. The state shall seek to ensure that everyone has lawful, useful, and properly remunerated employment, and to prevent the establishment of conditions that in any way curtail human freedom or dignity or degrade labor to the status of mere merchandise. The state guarantees the right to free choice of work. Every worker is entitled to a minimum wage, to be fixed periodically, for a normal working day, which will provide for their welfare and a decent living. Wages shall always be equal for equal work performed under identical conditions of efficiency. A regular working day for daytime work may not exceed eight hours a day or 48 hours a week. A regular working day for night work may not exceed six hours a day or 36 hours a week. Overtime work shall be paid at a rate of 50% above the stipulated wages or salaries.
However, these provisions shall not apply in well-defined exceptional cases, to be determined by law. All workers shall be entitled to one day of rest after six consecutive workdays and to annual paid leave, the duration and time of which shall be regulated by law, but which shall not, in any case, be less than two weeks for every 50 weeks of continuous service, all without prejudice to the well-defined exceptions established by law. Both employers and workers may organize freely, for the exclusive purpose of obtaining and preserving economic, social, or professional benefits. Foreigners are prohibited from exercising leadership or authority in unions. The right of employers to lockout and of workers to strike is recognized, except in public services, as determined by law and in accordance with the legal regulations on this subject, which shall prohibit all acts of coercion or violence.
Collective labor agreements shall have the force of law, if entered into by and between employers or employers’ unions and legally organized trade unions, in accordance with the law. Workers dismissed without just cause shall be entitled to compensation unless they are covered by unemployment insurance. Employers shall adopt any measures necessary for the health and safety of their workers in their corporations. The government shall ensure the technical and cultural training of workers by means of the public educational system.
There shall be no discrimination with regard to wages, benefits, or working conditions between Costa Ricans and foreigners, or with respect to any group of workers. Under equal conditions, Costa Rican workers shall receive preference. Rural sharecropper contracts shall be regulated to ensure a rational exploitation of the land and the equitable distribution of its products between landowners and tenants. Labor courts are established under the Judicial Branch. Costa Rican laws provide special protection to women and minors in their work.
Public health and pension system
Social security is established for the benefit of manual and intellectual workers, regulated by a system of compulsory contributions by the state, employers, and workers, to protect them against the risks of illness, disability, maternity, old age, death, and other contingencies as determined by law. The social security system is administered and governed by an autonomous institution known as the Caja Costarricense de Seguro Social (Costa Rican Social Security Administration). Social security funds and reserves may not be transferred or used for purposes other than those for which they were created. Occupational risk insurance shall be exclusively at the expense of employers, being governed by special provisions. The rights and benefits to workers may not be waived. Their enumeration does not exclude others that may be derived from the Christian principle of social justice or established by law. They shall be applied equally to all.
Starting a business
Costa Rica places no restrictions on foreign investors either to open a corporation nor to acquire real estate property to start a business. The main banks and credit unions in Costa Rica are duly connected with international banks across the world. Given the conditions on ground and the potential of Costa Rica’s economy, it is the right time to exchange a glance with this unique country, a real paradise for living and a great hub for doing business. MAGNALEX ABOGADOS is ready to assist you throughout the entire process.
Welcome to Costa Rica.