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Outsourcing services to Mexico with Arturo Rodriguez

Outsourcing services to Mexico with Arturo Rodriguez

Arturo Rodriguez
Co-Founder and Vice President of Business Development
Intugo
arturo.rodriguez@intugo.co

LATAM FDI: Today. We’re pleased to have Arturo Rodriguez with us. Arturo is the founder or one of the founders of a company that is based in Hermosillo, Mexico, called Intugo. And today, we will have a conversation on outsourcing services to Mexico. Arturo. How are you today?

Arturo Rodriguez: I’m very good. I’m very happy to be here with you. Steve.

LATAM FDI: Can you tell us a little bit about yourself and your organization?

Arturo Rodriguez: Sure. As you said, I’m Arturo Rodriguez, Vice President of Business Development for Intugo and a co-founder. Intugo is a company that, for more than 15 years, has been helping international companies set up, run, and grow operations in Mexico. We specialize in particular in helping operations related to service-oriented activities. And as I said, we’ve been helping companies that are outsourcing services to Mexico for more than 15 years.

LATAM FDI: Many people are familiar with the power and breadth of Mexico’s manufacturing sector. But you deal with other kinds of businesses. What kind of operations can a company have in Mexico from the perspective of your clientele?

Arturo Rodriguez: Yeah, it’s a good question. Manufacturing is huge in Mexico, and the type of services we offer at Intugo are a spin-off. They are an expansion of services that have already been offered to manufacturing companies for more than 30 or 40 years. We expanded the concept and tweaked it a bit for people looking at the possibility of outsourcing services to Mexico.  This relates to BPO operations, call center operations, software development, accounting, and anything you can do from a computer or maybe on a remote basis, if you will. That’s the kind of operation that we host. At Intugo, we have more than 90 different positions in different operations for our clients who are outsourcing services to Mexico. This means one position would be maybe software development. Another position would be a call center agent, for instance. Furthermore, another position would be accounts receivable agent or accountant. You can see that there’s a broad number of types of operations and positions that you can do when outsourcing services to Mexico. This aligns with what every company has as a goal to do here.

LATAM FDI: I’m familiar with your company and know you have a unique business model. But before we specify what the characteristics of your particular business model are at Intugo, what types of models, other than what you’ll explain to us about your company, are available for businesses that want to set up the kind of operations that you mentioned in Mexico?

Arturo Rodriguez: Yes, there are many models or value propositions in the marketplace, but I’ll summarize it in two big solutions, if you will. First, you want a company to help you with a particular need. Let’s say that you needed someone to help you with your accounting and do your general ledger and do your returns and do your, I don’t know, tax strategies, et cetera, et cetera. You want to outsource that to someone, maybe in Mexico, a Mexican firm, for whatever reasons. Then, you find what we call a regular outsourcing firm. A regular accounting outsourcing firm. Same thing. You can tell. Let’s say you want to do a sales campaign to sell something through a call center. You may go and find a call center outsourcing company in Mexico that does sales. You don’t want to get very much involved in the operation. You want someone to do it for you completely in your desire to outsource services to Mexico. That’s one type of company or a big number of value propositions around that concept. Our concept is totally the opposite. Our concept is all about helping you be able to control the operation for yourself using the same examples.

You don’t want someone doing the accounting for you; you want to do it yourself. You want to control it. You want to know who’s doing the work. You want to help with the productivity of the people doing the tax returns or the general ledger activities. In another example, in call center operations, you want to be involved in and control sales. Maybe that’s your core business. Maybe that’s what you do as a business, and you want to expand your operation and control the people. You want to be able to say who gets to be part of your team. Our model for outsourcing services to Mexico is all around helping, making sure that you can control productivity while we take care of the rest.

LATAM FDI: So, when you talk about “the rest,” obviously, I’m familiar with your business. I know that part of that, quote-unquote, “the rest” has to do with physical infrastructure. But in addition to physical infrastructure, what other things do you do to take off the plate for your clients so that they can on their core competencies and concentrate on what they do?

Arturo Rodriguez: Yes, we call it. We offer a bundle for outsourcing services to Mexico. Let me start by giving a view of this concept. When you have an operation or a company, you have to take care of everything that the company needs. Not only the productivity aspect, but you have to take care of the people, pay payroll, and take care of the facilities, insurance, and everything else that is needed. Our services for outsourcing services to Mexico enable you to concentrate on what you’re there to do. Our job is to try to make sure that you don’t have to deal with the complexities, particularly the complexities of doing business in Mexico, and that you don’t necessarily have to get too deep into that because we help you with that. As you said, we go from everything regarding the infrastructure and the facilities to the recruiting of the people who will be part of your team. All the human resources activities that are needed for the people not only to be recruited and hired but also for them to stay there. We provide services for outsourcing to Mexico regarding legal contracts, payroll, benefits administration, and maybe some additional benefits that you want to provide or that you’re already providing to your people back home.

We also help you with any procurement needs that you may have for your operations, including the basic things that someone in your team may need or something more related to your operation. Computers, bandwidth, more office space, et cetera, et cetera. So, in a nutshell, all the labor or law or country-related activities to be able to operate, we help you with those once again, for you to be able to concentrate on what you’re here to do, your core business in Mexico.

LATAM FDI: Just so I am clear on this, my understanding is that under your business model, the people who work for your clients are not legally, at least on the side of Mexican labor law, employees of your client. Would it be correct to assume that with regard to human resources, your company acts somewhat akin to a PEO in the United States?

Arturo Rodriguez: We could say that we call that we are the employer of record for outsourcing in Mexico. So yes, legally speaking, people are under our umbrella, and technically speaking, our clients don’t have any labor law-related liability in Mexico. Our clients don’t need to have any entity or bank account in Mexico to operate through our model. We take care of that, including what you say regarding the employer of record situation. Nevertheless, operationally speaking, the people assigned to your operation, our client’s operation, report to our client and our client’s managers and work alongside our clients’ strategies.

LATAM FDI: In other words, they have control over what they do. This means they have a complete focus on their activities, which they’re in business to do. At the same time, you take care of things in a way that enables them to plug into Mexico and be up and running, outsourcing services to Mexico in a reasonable period of time. Is that correct?

Arturo Rodriguez: That’s correct. Very correct.

LATAM FDI: So, given this model, how big of an operation can you contemplate setting up under that model in order to be able to gain some of the benefits that you’re able to gain by outsourcing services to Mexico?

Arturo Rodriguez: Yeah, we have operations that have started with one person, and we have operations that have started bigger. But most importantly, we have operations with more than 200 or 300 people. So, we host small operations or small clients and bigger ones. Maybe a common thing, a common trend amongst all our clients, is that usually, they start small by their standards. Small for someone, maybe 20 people, small for someone else can be one.  Usually, they start with that and eventually grow. That has been the trend for most of our clients.

LATAM FDI: What kind of savings would a company expect to see by setting up operations in Mexico?

Arturo Rodriguez: It depends on what kind of talent pool you’re looking for. The more experience, and particularly worldly experience, the less savings you may have. Maybe. But in general, on average, you will be able to have between 25% and 50% lower costs compared to your operation in the US. In general, that’s what you find when outsourcing services to Mexico under the Intugo business model.

LATAM FDI: With respect to your company, I understand that you have several locations. Can you tell us a little bit about each location and maybe a little bit about the labor force that people can expect to find in those locations?

Arturo Rodriguez: It’s an interesting question, not only from the perspective of facilities that we have but also from the market conditions as they are right now. Because as we know, before COVID, 98% of the people working for our clients worked in one of our facilities. Just a few of them were working remotely or maybe on a work-from-home basis. Once COVID hit and everyone, including us, had to go home and work there for a while, the work-from-home, or the remote option, if you will, became a reality. Today, we have maybe 40% of the people working from home, and the rest are working on a hybrid model or an on-site model in one of our facilities. We have facilities in Hermosillo, Sonora, which is where we started. We also have facilities in Obregon, Sonora, and have facilities in Guadalajara and in Mexico City. We also have a very small operation in Monterrey. Having said that, we have recruited people for outsourcing services to Mexico from practically all over the country. A lot of the people that are working today for us and for our clients are working from different states in Mexico.

The important part regarding these concepts is that we help you decide what’s the best strategy for you. This strategy is particularly based on what kind of talent you’re looking for in order to engage in outsourcing services in Mexico. If you have an operation that needs a lot of security and maybe it’s an IT-related operation, we might suggest Guadalajara, for example. There’s a big talent pool for IT people there. But if your operation does not necessarily have that need and needs different kinds of people, different kinds of experiences, and positions, we may suggest a hybrid mode. This could maybe be with a foot in one of our facilities in one of the cities, but also with people working remotely because of the experience you’re looking for. Every operation is different, and we usually work with our clients involved in outsourcing services to Mexico to decide what strategy will be best for them to have the best talent available.

LATAM FDI: It seems this is an all-inclusive model for outsourcing services to Mexico that makes it easy to set up operations.

Arturo Rodriguez: I would like to say that with us, it’s very easy to start and very easy to start up operations through outsourcing services to Mexico.

LATAM FDI: Typically, when people listen to the podcasts we do, they have questions arising from the information they’ve listened to. That being the case, if somebody with further questions would like to contact you, how would they do that?

Arturo Rodriguez: I invite them to send me an email. I’ll give you my email: arturo.rodriguez@intugo.co. That’s my email. They can contact me through that or go to our website, www.intugo.co, and look at our business proposition there. There, they will find different ways of contacting us, including my email, but also through a form, and we’ll answer them really quickly.

LATAM FDI: Okay. What we’ll do is, in the transcript section on the page that hosts this podcast, we’ll have that information. We’ll have your URL and your email address. Another thing that we would like to include if it’s available, is a link to people’s LinkedIn pages. Do you have a LinkedIn page that we can include in our information about outsourcing services to Mexico?

Arturo Rodriguez: That will be okay, definitely.

LATAM FDI: All right, we’ll do it. Thank you very much for speaking with us today. It’s been very interesting and informative, and we hope you have good luck going forward.

Arturo Rodriguez: Thank you for inviting me, Steve.

Invest in Colombia with Henry Arias

Invest in Colombia with Henry Arias

Henry Arias
General Manager
Zonamerica
harias@zonamerica.com

LATAM FDI: Hello. Today, we have Henry Arias with us. Henry is with a company called Zonamerica, which is located in Cali, Colombia. Welcome, Henry. Could you tell us a little bit about yourself and your organization?

Henry Arias: Hello. Thanks for the invitation to be part of your program to discuss why to invest in Colombia. Well, I’m the general manager of Zonamerica, Colombia, which is a free trade zone located in Cali. We are owned by Zonamerica Uruguay, a free trade zone in Montevideo that has been operating for 30 years. Zonamerica came to Colombia looking for a second location for their clients in Uruguay. They already have about five hundred companies installed in their free trade zone. Still, most of their clients wanted a second location with tax incentives, plenty of talent, and cheap labor costs for some nearshoring operations looking to attend the American market. They came to Colombia; it was back in 2012 or 2013. They looked around different cities and found a local partner in Cali, El Grupo Carbajal. Grupo Carbajal is one of the largest enterprise conglomerates in Colombia and probably the largest in Cali. They had a piece of land. I still don’t know how to convert square meters to feet, but it’s very big, it’s about 400,000 square meters. They started doing all the construction for this free trade zone. We are focused on having world-class infrastructure, buildings, technology, internet connection, cloud connectivity, and everything ready for companies from other countries to come and establish their operations in Colombia and Latin America. They can benefit from the talent that we have here and the advantages of the cost of labor and the cost of living, using them for their own benefit for reaching new clients. I’m very happy to be here talking to you about Colombia, Cali, and South America and why our value proposition makes sense for companies looking to relocate and looking for labor arbitrage.

LATAM FDI: So that our listeners are informed, what can you tell us in general terms about Colombia that would be of interest to site selection people, for instance?

Henry Arias: Of course, Colombia, I think, is the fourth largest economy in Latin America, probably approaching the third place after Brazil and Mexico. We have about fifty million inhabitants in our country, and we’ve been ranking very high in offshore operations due to the availability of talent and the market size. Companies are coming in increasing numbers to invest in Colombia.

LATAM FDI: Okay, for an examination of the town that Zonamerica is in, can you tell us something about Cali

Henry Arias: Yes. Cali is located in, you guys in the United States have states, we have departments. Cali is located in the Valle del Cauca department, and this department accounts for 10% of Colombian GDP, which makes it interesting. It concentrates around 18% or 20% of the national number of companies in the industry. Sectors that are present are varied. Sectors that are located in Cali range from agro to services and industry. The Valle del Cauca, where Cali is the capital and is the main city. The department has approximately seven cities with populations ranging from 100,000 to 400,000, which makes them medium-sized cities by Colombian standards. I think it’s the only department in Colombia with so many cities with this number of people. And among all of them, Cali is the capital. We have approximately three million people living in Cali, which makes us a market of interesting size. We have many universities located in Cali. There are about thirty institutions for higher education with more than forty undergraduate programs. Of these thirty institutions, about twenty have programs related to information technology and software, which is interesting. Approximately 1500 graduates come every year in software and IT-related majors, which is, I think, for Colombian standards, a good measure.

So, the IT and software industry in Cali is really important. And I read that 10% of the companies investing in Colombia in this sector are in Cali. We could say that this is after Bogota, which is the main city and a center of technology operations and services. We are the top after Bogota, which is the capital. What other data will be interesting about Cali? Approximately eight hundred companies are dedicated to the Digital Economy Cluster, which includes companies in telecommunication, BPO, digital transformation, software, information technology, outsourcing, and things related to IT, which is what companies typically try to outsource in cheaper labor countries. There are also industries of other sectors in Colombia, from pharma to agro to food processing. We are very diverse in terms of international investment.

LATAM FDI: Many companies go to invest in Colombia to establish BPO-type operations. Is there an availability of bilingual talent?

Henry Arias: I can say it from experience because here in Zonamerica, we have two companies that are BPOs. Both have the United States as their main or principal market, and all the talent they hire are bilingual. One has approximately three hundred agents, and the other has approximately eighty agents. They are not the only two cases; there are approximately another five to six bilingual or English-speaking BPOs in Cali. Universities are very aware of the need to have bilingual talent. It’s one of the priorities of the educational system. And I would say that Cali is in the top three or four in the number of bilingual inhabitants or people living here. Our population is quite young. And Steve, I want to mention this because we see that the population in different countries and cities is aging fast. But Cali had a census recently, and we found out that approximately 700,000 people of the total population are between the ages of 20 to 35, which accounts for the majority of the labor in the city available in the city.

LATAM FDI: So beyond obviously, you got the workforce and the bilingual capability. What kind of fiscal incentives does the government of Colombia offer for companies that want to come and set up operations and invest in Colombia?

Henry Arias: Well, the government of Colombia created the free trade zones regime, which has two incentives. Not all the office space available in Colombia has the free trade zone regime. So, you have to qualify. Zonamerica, the company I represent, is qualified as a free zone by the Colombian government. As a result, any company that creates their subsidiary inside Zonamerica and places their people in our infrastructure can import any goods from other countries with no value-added tax or duties, depending on the country where they import the goods. The items can range from computers to any other good or product that they need to perform their operations. So, this is one of the incentives companies get when creating a corporation inside Zonamerica. But the other incentive that they enjoy is related to taxation. The general income tax in Colombia is 35%. But companies inside a free trade zone can pay only 20% as income tax on every single sale they make to countries outside Colombia. This means on their exports. If you have a company, let’s say a BPO, a call center, or anything related to a software development company located in Zonamerica. You have clients in Venezuela, Ecuador, Panama, the United States, or anywhere else; all the sales that you do, all the software that you program from here, all the calls that you attend from here, and the services you provide from here will only pay 20% tax as income tax. This is one of the benefits companies enjoy when deciding to invest in Colombia.

The tax that you will pay at the end of the year for your earnings compared to other cities in Colombia or other, sorry, territories in Colombia which are not a free zone, a free trade zone, and have to pay 35%, I don’t have the numbers to determine whether 20% is competitive or not compared to other countries in Latin America. Still, it seems to be a fair tax, as we have spoken to many companies installed in South America and other free trade zones.

LATAM FDI: To give people a general, very general idea of labor costs in Cali, what would they look like for those companies that want to invest in Colombia?

Henry Arias: Well, it depends on what level of education the workers have. But we have numbers showing that Cali is approximately 15% cheaper in terms of labor than Bogota, the main city in Colombia. This is also related to the cost of living, which all capitals have as a problem. All major cities have the problem that the cost of living is higher than second-tier cities.

Cali has approximately a 15% advantage compared to Bogota, which is our capital. But then it depends on the company that is coming to Colombia. Where are they having their people located? But I can say approximate numbers. Our minimum salary per month in Cali is about $700. This number includes vacation pay, Social Security, health, and everything. It’s about $700 per month. A Chief of Technology, such as a boss with a higher education, can be hired for approximately $1,700 monthly. Our information is mainly in the IT or technology sectors, but this range can give an idea of where salaries are in Colombia and Cali at this point.

LATAM FDI: Yeah, I think it gives people who want to invest in Colombia a general idea of the situation in terms of salary in Colombia. You mentioned a little bit about Zonamerica. Can you tell me how many companies are located in your free zone at this time and what they do?

Henry Arias: Yes. Zoneamerica currently has 10,000 square meters of space. Again, I don’t know how to translate square meters into feet, but we have 10,000 of space built with 10% availability right now. We have plans to start a new building in January, which will add 50% more capacity ready by the end of 2024. We currently are hosting one thousand people employed by twenty companies. And they range from pure software development to fashion design. One of the major fashion designers in Colombia has their offices here. This is because her main market is outside of the country. Everything, including the fabrics she imports, comes into Colombia without duties. She can transform them and then re-export them to other countries, which makes a lot of sense. We have a drone manufacturer that assembles all the parts here, and they do it also based on the free trade zone benefit. We have, as I mentioned, a couple of call centers. We have an Oracle database manager located here. We have a video surveillance company that outsources Colombian watchmen to take care of facilities in the United States. So, they pay cheaper labor costs for clients that are in the United States, and they service them from here, which is quite interesting.

We have a data center, a very big data center with more than 450 racks available for servers. We have a telecommunication company that has a satellite Internet connection from here. And they have their teleporter antennas located in South America. From here, they transmit information to their satellites and broadcast it to other countries in Latin America. We have lawyers that have their offices here. We have advertising companies that have their offices here. So, it’s a very interesting mix of companies. They are all thinking about serving external markets through services, transformation, or another related service. They can do this when they invest in Colombia.

LATAM FDI: Now, we’ve spoken briefly here and have covered quite a bit of ground. Our experience has been that people who listen to our podcasts often have questions after absorbing what we’ve been saying for the last 20 minutes or so. What I would like to do, if it’s okay with you, is ask you how somebody could contact you directly with any further questions that they might have about Colombia, Cali, or Zonamerica.

Henry Arias: Thank you. Thank you, Steven, for your generosity. Everybody’s on LinkedIn right now, so LinkedIn is a platform. We have a site, Zonamerica Colombia. And my name is Henry Arias. I am available there, but also, we also have our web page, which is www.zonamerica.com. You can look it up on Google and find both sites. The Zonamerica Uruguay and the Zonamerica Colombia web pages are both under the same IP address. There, you can find videos, information, our office locations, pictures, and our contact information as well. Finally, my email. I can give you my email. It is harias@zonamerica.com. I’m available to answer any further inquiries that people may have about Colombia, Cali, or South America.

LATAM FDI: Okay, Henry. One thing we do is, on each of our podcasts, the people we talk to in the transcript section, we put links to all those things. We’ll link to your company’s LinkedIn page, personal LinkedIn page, email, and website. I want to thank you very much for speaking with me today. It’s been very interesting, and I’m sure the people who listen to this will also find it interesting. Some may even be motivated to invest in Colombia.

Henry Arias: Thank you. Steven. Thank you for your time. You’re more than invited to come to visit.

 

Invest in Guatemala: A Conversation with Wendy Mena

Invest in Guatemala: A Conversation with Wendy Mena

Wendy Mena
Investment Advisor
Invest Guatemala
wendy.mena@investguatemala.org

LATAM FDI: We’re pleased to have Wendy Mena with us today. She’s the investment promotion advisor for the Guatemalan Investment Agency. I’ll let her tell you about her organization. We’re going to talk today about opportunities for investment in Guatemala. Hello Wendy, could you introduce yourself and tell us about your organization?

Wendy Mena: Hi, yes, good morning, good evening, or good night to anyone. My name is Wendy MENA. I am an investment promotion advisor at Invest Guatemala. Invest Guatemala working in Guatemala in all processes, from finding local partners, finding opportunities, or installing their new operations in our country. So, I’m very happy to be here to share with you what’s been going on in Guatemala and all the great things we’re doing to attract and have more investment in Guatemala.

LATAM FDI: Based on your experience Wendy, what are the main attracting factors that bring foreign direct investment to Guatemala, and why are companies choosing to start operations there?

Wendy Mena: So, let me start by sharing with you a bit of what we’ve been doing in the last couple of years. After the Pandemic, Guatemala, mainly Guatemala’s private sector, started thinking about how we could develop a plan that will help us recover our economy. And by this time, we were talking about all of the disruptions in the value chains due to the high cost of transport. We started talking in the country about how we could take advantage of the nearshoring tendency related to all companies that wanted to relocate their operations. And so, we made an alliance between the private sector, the public sector, the government in particular, that was starting by then their new electoral period. With the help of academia, developed a plan called Guatemala Moving Forward. In Spanish, its name is Guatemala No Se Detiene. And this basically has been a holistic strategy working towards bringing more foreign direct investment to our country based on strengthening four main areas: human capital, infrastructure, competitiveness, and legal certainty. So since then, we’ve been seeing how working together with the different sectors.

And why are countries or companies choosing to invest in Guatemala? Well, one of the main things is our strategic location. Guatemala is located in Central America, as you know, right next to Mexico. We share a border with Mexico and are the closest of the Central American countries to the North American market, to the US. We have access to both oceans, making transportation more efficient and less costly. Plus, we are the most stable economy in the region, and we have different regulations that favor new investments to come. So, through that and all the preferential access that we have through our free trade agreements, our young and skilled labor force, and the competitive costs in main factors of the operations of the companies, like energy, telecommunications, and real estate, have made companies choose to invest in Guatemala.

LATAM FDI: What laws does Guatemala have in place that specifically benefit the attraction of foreign direct investment, and what kind of benefits do they offer to companies that seek to locate in your country?

Wendy Mena: Guatemala is a bit different than our neighboring countries when it comes to laws that benefit the attraction of investment. Because we don’t have just one special regime. We have three different special regimes that new companies that come to invest in Guatemala and want to export from Guatemala can benefit from. For 30 years, we’ve had one decree that is called the Law of Promotion and Development of Export Activity and Maquila. This is perhaps the main instrument foreign companies have been taking advantage of when they invest in Guatemala. And what happens is that the difference between this promotion law with what we know about neighboring countries that are the free zones, the free trade zones, is that it is not required to be within a specific zone to have special incentives, mainly tax incentives to operate when you’re exporting your product. What you do is qualify the building where you’re operating or where your factory is going to be. And that area, without being an enclosed area, can benefit from a series of different incentives, which include, for example, the exemption of the fiscal taxes for ten years and also suspension of duties when importing machinery, when importing raw material, when importing everything that you need to transform your product.

So, this has been an instrument that, for the past few years, has been developing different industries, and in fact, it perhaps transformed the whole export structure of Guatemala. Guatemala is usually known for exporting coffee or bananas, sugar, and cardamom, which are some of our main products. But the truth is that most of our exports are not those products. Because through this agreement, through this decree that benefited companies for so many years, we were able to develop a very solid industry. This is mainly in the apparel and textile industry, manufacturers of all kinds. We make plastics. We make paperboard. We make toys. We do all kinds of manufactured items. We make a lot of wood products, furniture, food, and beverages, which is a very strong sector.  Pharmaceuticals are also big. We have a large agro-industry sector where we grow many vegetables, fruits, flowers, foliage, and all kinds other of items. We have a service sector that has also grown a lot in the past few years because service companies have come to invest in Guatemala in recent years. And aside from that, we also have the usual type of regulations, which are the free zones and the free economic development zones, two of the other models we have established by decree.

There are different incentives for new investors that are thinking about exporting from Guatemala that include exemptions on income taxes for ten years, suspension of all the value-added tax, and import duty taxes for all of the raw materials and anything that you’re going to need in terms of machinery and equipment. After a company comes to invest in Guatemala, it can export from our country to anywhere it wants by taking advantage of our free trade agreements with over 40 countries.

LATAM FDI: I didn’t realize you had that many countries covered. I would assume the Cafta is one of the main trade treaties. Does the country have an infrastructure including industrial parks and real estate developments with office areas for BPO industry companies? Where can new investors start operations in Guatemala?

Wendy Mena: Yes, each year, I will say about 3.5 million m² are authorized for construction in our country. Of course, this includes both residential construction and commercial use construction. Perhaps the relationship is mostly about 50% to 60% residential, and 40% is an investment in Guatemala for commercial use. But yes, we have a very dynamic construction sector and real estate sector that is constantly renewing itself to offer investors tailor-made options for offices of commercial warehouses and anything that companies need to start operations. But also, aside from this because we have different regulations that are looking for more development in industrial parks like the Special Economic Free Zones. We are in the process of developing a lot of these zones. There are actually two in operation currently that have a nice offer for companies that are installing or looking to install and are ready for new projects to start. Over twelve of them are being developed in the next couple of years to facilitate investment in Guatemala. So, we’re talking about projects close to our ports in the Pacific, Puerto Quetzal, our main port in the Pacific. There is a very large project there that is currently receiving new investors.

They have built over 40 already. They have over 12 million square feet available for anyone who would like to invest in Guatemala. And then there’s another large project that is close to our border with Mexico because we share a border with Mexico.  This project is also a very interesting offer for companies that are looking to install there, and they also have a nice offer of space ready for anyone who wants to set up new industries. And then we also have the free trade zones. Over seven free trade zones are currently operating, and they receive new projects all the time. But there is development taking place all over the country in new areas where people can invest in Guatemala. I think there’s an interesting offer of new developments for companies looking for something already built and ready to start operations. Additionally, build-to-suits can be done quickly.

LATAM FDI: What kind of industries and sectors are showing interest in the opportunities to invest in Guatemala?

Wendy Mena: In the past couple of years, I will say the sector that has attracted the most greenfield projects because Guatemala has a lot of reinvestments. But talking about new investments and new greenfield projects have been in the manufacturing sector. For example, we have a good cluster in the apparel and textile industry in Guatemala. But for many years, this industry was focused perhaps more on the final products. Now we have a more integrated cluster where you will find more investments coming not only in the area of sourcing, which is what Guatemala used to do, like apparel and finishing products but there are new investments coming in activities like spinning mills and textile mills that are trying to integrate into the cluster that we have. On the manufacturing side, we are seeing new investments, new greenfield projects, and industries that Guatemala didn’t traditionally have. For example, we first invested in the auto parts industry. A huge Japanese company installed operations in Guatemala and is doing electric harnesses. And they are looking into other auto parts of low complexity that they can develop in Guatemala to provide for the Mexican and the United States’ large automobile industries.

Then we have other products that are developing a lot, which include food and beverages. This is happening because of all of our natural resources and the fact that we have a lot of vegetables and fruits grown all year round. Many companies are coming and interested in providing value added to our agro-industrial sector offer by developing plant-based and ready-to-eat products, organic and natural food products, or private label manufacturing of all types of baked goods, snacks, and beverages. And then we also have a lot of companies interested in private labels for cosmetics, for pharmaceuticals. Another interesting new company that will be up in Guatemala is will a natural fiber packaging company. They are developing a project in Guatemala to take advantage of the sugar bagasse and transform it into biodegradable packaging. They’re going to build the largest site in the world for this kind of product. So, we are seeing a lot of dynamism in industries related to textiles and industries related to manufacturers in agro-industry.

LATAM FDI: What strategies did you use to make this activity occur in terms of the promotion of investment in Guatemala?

Wendy Mena: So, before I was telling you a bit about what we’ve been doing as an investment promotion agency in Guatemala and how this organization was born. When we started following a country strategy by implementing the Guatemala Moving Forward plan. So, through the Guatemala Moving Forward plan, we analyzed where the opportunities were happening and the capabilities that Guatemala had in order to attract investment in Guatemala in two areas. One is the traditional products that already Guatemala has, but they can jump into more value-added products. And then new sectors that are having investments all over the world where Guatemala has a big potential, and we can do a leapfrogging into more sophisticated industries. We developed strategies for three specific sectors. One was pharmaceuticals and medical devices, the other was electronic manufacturing services, and the third was all the services like business process outsourcing and information technology outsourcing. We have developed strategies for each of them, specifically where we’ve been trying to reach out to more companies that perhaps have never heard about Guatemala as an investment destination. One of the things that we identify is that Guatemala is a great country to come and invest in, but we have not been very good at letting people know all the advantages of investment.

Unlike our neighboring countries, we haven’t marketed ourselves as well as we should because we have the same good things to offer as our neighbors, attracting many projects. For example, Costa Rica, in particular, is the country that generates the most investment in proportion to its GDP. And Guatemala has a very similar offer that we could promote because we have similar conditions to Costa Rica and additional things because we are a larger country, we have a larger market, we have a border with Mexico, and we have more skilled force because we have the largest population in Central America. So, there are many things that we need to do. We started doing a lot more work of having a presence in international events and making more national events to invite investors to know more about our country and the advantages of investment in Guatemala. We’re implementing a more proactive strategy and not a reactive one, where we are not only now helping people who come and are interested, but we’re also reaching out to them and saying hey, learn about Guatemala and all of the advantages. And we have had success stories by doing that, reaching out to whomever we think might benefit from a near-shoring strategy and investment in Guatemala being the destination.

LATAM FDI: Wendy, when we post these podcasts, we often find that listeners receive the information and, after doing so, they have follow-up questions. This information generates questions in the minds of the listeners. What we like to do is provide them with information on how they can contact you to ask you questions and find out more about how to invest in Guatemala. How could somebody get in contact with you to be able to find out more?

Wendy Mena: So yes, well, first of all, we invite the listeners to visit our website. We do have a website; it’s www.investguatemala.org. You are welcome to visit and know more about all of the advantages that Guatemala offers. It contains success stories about companies that have recently been installed in the different sectors that Guatemala is attracting. Listeners can send any questions through our website, but they may also contact us directly. And by that, let me share with you my email, which is wendy.mena@investguatamala.org. Or I’ll be happy to share with you a QR code so that they can access my contact information and my team’s contact information for specific questions about different industries with opportunities to invest in Guatemala.

LATAM FDI: In addition to that, what we do with the podcast when we process them is we put a transcript of our conversation on our website.  Above the text, we will put a link to your LinkedIn page.  Is that OK?

Wendy Mena: Yes, yes, please do so. We’ll be happy to share that. Okay?

LATAM FDI: Wendy, I want to thank you for speaking with us today. And it’s it sounds like you have a lot of exciting things happening in Guatemala, and we wish you a lot of you.

Wendy Mena: Thank you.

Investing in Uruguay with Juan Carlos Rodriguez

Investing in Uruguay with Juan Carlos Rodriguez

Juan Carlos Rodríguez
Commercial and Marketing Director
Aguada Park
jcrodriguez@aguadapark.com

LATAM FDI: Welcome to the LATAM FDI podcast. Today we are very fortunate to have a gentleman from Uruguay with us. His name is Juan Carlos Rodriguez, and Juan Carlos is the commercial and marketing director of the Aguada Park Free Zone in Montevideo. Today we will talk about investing in  Uruguay and its attraction for foreign capital. How are you doing today, Juan Carlos?

Juan Carlos Rodríguez: Good morning. Very good, fine. Thank you very much for inviting me to talk about my country, what we can do, and the investments made in the last few years.

LATAM FDI: Juan Carlos, could you please tell us first about yourself and the organization that you represent?

Juan Carlos Rodriguez: I represent a services free trade zone in Montevideo. Geographically, it is between two giant countries. Uruguay is a very small country of 3.5 million people between Brazil and Argentina. Since the times that it was a Spanish colony, it has been a country for services. Uruguay gained its independence in the 19th century and is focused mostly on providing global services.  We are also a very touristic country.  We are one of the most politically stable countries in all of the Americas. We have a great middle class. All our public schools and university are free of cost. Every child at school has a laptop. This was instituted over 15 years ago, and we are working for the world.

We are recognized for three or four main things. We are a logistic hub for the region. So many multinational companies are working from here, as is the case with places like Hong Kong, Hamburg, Miami, and Long Beach. Montevideo Freeport is a very stable place, and we are developing business from here to the rest of the region. The second thing is we are a free trade zone country. We have a very stable country and a 100-year-old legal frame framework that makes investing in Uruguay secure.

Countries that establish themselves in Uruguayan free zones do not have any kind of taxes from the day they initiate their operations until the future. That means they do not have to pay corporate tax and asset taxes. These incentives give multinational companies the impetus to establish themselves in the region and the state. And the third thing that makes investing in Uruguay a great option is our people. That’s real value. Imagine that all our children are learning English from the very first day of primary school. Additionally, we work during the same hours and occupy the same time zones. We are in the middle, between east and western US states, which gives companies investing in Uruguay a great advantage. The location is the fourth point we can discuss, as we are half an hour from Buenos Aires. We are 2 hours from Sao Paulo. We are 2 hours from Asuncion, Paraguay, and Santa Cruz, Bolivia. Additionally, we are 4 hours from Lima, Peru. So, when we are talking about location, location, and location, that is a huge advantage for companies investing in Uruguay that are seeking to do business throughout South America. Finally, technology is important. We are developing a real technological hub for companies that are investing in Uruguay. Many billionaire companies have invested in Uruguay in the last ten years.

That idea gives you an overview of how our country has developed recently.

LATAM FDI: Most people have a tendency to think of manufacturing when they think of free zones. Your free zone is different. Can you tell our audience what the Aguada Park Free Zone is involved in?

Juan Carlos Rodriguez: We can say two or three things when discussing free trade zones. The first thing is yes, manufacturing was a huge investment in free trade zones in the country. But two or three companies have done this.  That is all. They have come from Europe, from places like Sweden and Spain. Pepsi has a huge factory in a free trade zone. But real development or the increasing free trade zone activity in Uruguay has occurred for the last 40 years. It started with logistics because the taxes were why they came to distribute goods from Europe, the States, and Asia. They were in a hub and investing in Uruguay in the free trade.

So that has increased real value to our population because there are some careers in the university that began providing professional people directly to businesses for this new job. For example, the  German company BASF has 60 locations in different places around the world and decided some years ago to have three locations Kuala Lumpur, Asia, Berlin for Europe, and Montevideo for the Americas. So today, the Uruguayan people are looking for factories and providing services to those in the United States. So, the people of Uruguay have a high level of education. I think that companies investing in Uruguay will find that the country is rich with a good population. For its size of 3.5 million people, Uruguay is tailor-made to provide global services. When we say it, we are a boutique country. We are not a place for car assembly. We are not a huge population consuming million and millions of dollars worth of goods in our supermarkets. Those investing in Uruguay will find that we are global service providers. And in another way, we are a tourism-driven country. We receive more than three or four million visitors per year. This is more than the population of the country. Why? Because we are secure.  During the pandemic and over the last four years of the pandemic, the experience of Uruguay can serve as a case study.

Freedom, responsibility. I don’t know if it is exactly in a way, say in English, but what does it mean when the worst part of the pandemic of COVID came? The president said please stay at home, but you will not be obliged; we ask you. We got the first vaccine in Uruguay before Brazil, before Argentina. Our leadership dealt with the people of Pfizer in a really marvelous way. We had almost no death in Uruguay

This made billionaires and the richest businessman in Brazil and Argentina come to stay in Uruguay. So today, it is incredible that we have more than 60,000 families of the richest families in the region with us.  This is because they are safe to go bicycling. They are safe at the beach. They can be secure and do not have to have bodyguards. We do not have arms. You can see we are first in all the social variable rankings.

Something that we are proud of is that there is no corruption in our politics, and we do our best.  Corrupt individuals go to jail.

Those investing in Uruguay will note that the country has political unity. Perhaps you can see four or five presidents of different parties in the same reception. All join in together. This gives the country a culture of maturity, stability, transparency, and the acceptance of the political ideas of one president by another.  Differences do not matter. They must be unified because they must defend the democracy of our country. So, I imagine these different small things are important when you are in the middle of two giant countries like Argentina, which has almost 50 million people, and Brazil, which has more than 200 million people. Well, there’s business. These two large countries have a significant volume of business. Investing in Uruguay is a marvelous platform to develop from here to the South Cone and Latin America in its totality. Perhaps not for a manufacturing factory, but perhaps for shared service centers and corporate headquarters.

LATAM FDI: When I listen to you, I think of companies that have facilities in places far from the United States. They have them in places like the Philippines and India. And other locations that don’t share the same time zones, that share different cultures. When I look at Uruguay, Uruguay is in the same time zone as the United States. It is a place that, in my estimation, companies that do business in these very faraway locations should look at. Companies may be listening to this podcast and have an interest in Uruguay. After hearing your description of the country and investing in Uruguay, what do they have to know about the free zone program in the country? What are some of the incentives that are part of that program?

Juan Carlos Rodriguez: First of all, that’s very easy to work inside free trade zones in Uruguay. Why? Government has a defined program, and under it, companies receive incentives. What are they? You will not have any kind of taxes to pay. Tata from India has almost 2000 people in Latin America, and they do not pay taxes in Uruguay.  Free zone status guarantees fiscal benefits for the contract period that has been agreed upon. I can say you that investing in Uruguay is very easy on the one hand. Other points are the good quality of people and location. This is in addition to good infrastructure. It is the same kind and quality of infrastructure you are accustomed to in the States, the same kind of quality.

LATAM FDI: Well, you’ve given us a really good overview of what people can expect to find in Uruguay. When people listen to these conversations, I’m sure further questions come to mind. Would people with further questions on Uruguay be able to contact you and communicate with you to learn more about investing in Uruguay?

Juan Carlos Rodriguez: Sure, I will gladly receive questions. Your listeners can contact me by email or by the Aguada Park website. It’s very easy. It’s in Spanish and in English. I can be contacted directly or through my team. Also, we usually travel to the States and visit companies and places because we have some customers there.

LATAM FDI: Well, what we’ll do to make all this information visible to people is in the section with the podcast transcript. We usually include the contact information of the person that is speaking with us. We’ll put your email address and your website, and if it’s okay with you, maybe a link to your LinkedIn page as well.

Juan Carlos Rodriguez: Perfect. My name is Juan Carlos Rodríguez. My email is jcrodriguez@aguadapark.com.

LATAM FDI: Well, thank you for joining us today. This discussion about investing in Uruguay has been very interesting. It is a country that maybe a lot of people don’t know much about, but hopefully you have fed their curiosity, and they’ll have reason to contact you with more questions.

Juan Carlos Rodriguez: Thank you very much. Steve, you’re always helping to develop Latin American countries. Thank you really very much. And for everyone that comes to Uruguay, you will find a very friendly country. It has very good meat, and marvelous weather where you can pass your time and visit different beautiful places. And thank you very much.

LATAM FDI: Thanks, have a great day.

Juan Carlos Rodríguez: Thank you.

 

Doing Business in Chile with Veronica Medina

Doing Business in Chile with Veronica Medina

    Veronica Medina
    Founder and CEO
    Business Hub Consultants
    vmedina@businesshubconsultants.com

     

    LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we speak to experts in business and economic issues throughout Latin America. Today we have Veronica Medina with us. We feel very fortunate to speak with her. She’s the founder and CEO of Business Hub Consultants. She’s located in Santiago, Chile. And I’ll just let her introduce herself and her company to you, and then we’ll have a discussion about doing business in Chile.

    Veronica Medina: So, hello, everyone. Thank you so much for having me here with you today. I’m back in Santiago after doing a full month of traveling to see our clients. We hadn’t seen some of them in four years due to the coronavirus pandemic. As I said, I am the founder and CEO of Business Hub Consultants. We are a consulting firm based out of Santiago, Chile. We also have offices in Lima, Peru, covering mainly Spanish-speaking South American countries. I would say about 85% of our work is helping foreign companies that are interested in doing business in Chile and other countries in the region. We do a large proportion of work with American companies. We help them do business in South America by connecting them to service distributors and end clients. We help them in several ways. What are their strategies for doing business in our countries? We help them with regulations and do all of the research and assistance that companies require to do business in this exciting environment in South America. We think we could be a good conduit, specifically after the pandemic for the United States and bringing its logistics and suppliers closer to home.

    LATAM FDI: Well, it’s interesting that you have activities throughout the region, but today we will focus on doing business in Chile. Maybe you could tell our listeners about the investment trend that’s been occurring during the past year in Chile. How have things been there?

    Veronica Medina: Yes, we just had some reports from our Central Bank with very positive results. I don’t know if some of us were quite surprised by our good results, but, for example, the FDI inflow up to February of 2023 was higher by close to 50% than in the same period last year. And also, FDI in the full year of 2022 increased by 31% to close to $21 billion over the previous year. Additionally, that figure is 50% above the average for the last five years. So, I think very good results have been achieved.  This is evidence that doing business in Chile is still very attractive in terms of bringing investment into the country. We currently have about 500 investment projects in Chile in the pipeline in different stages of development. The top three sectors are energy and global technology services. The third is mining and mining suppliers. And the top investors in Chile are actually the USA, which solidifies the trade and investment relationship that we’ve had with the USA for decades. China follows this, and then in third place is Canada. So, we’re very excited by those results. Doing business in Chile is still an attractive option for investors.

    LATAM FDI: That sounds very positive. It seems to me that there was some trepidation with respect to political changes that have occurred in Chile recently. But given what you just said, it seems like we can assume that there’s still a lot of confidence in the country’s economy and doing business in Chile.

    Veronica Medina: Absolutely. We’ve also just got in numbers for import-export trade. Those numbers are also breaking records. So, again, we’re coming out of the coronavirus pandemic, and as you say, rightly. I don’t want to dismiss Chile’s political challenges over the past years; your listeners might be up to speed. We just had our referendum this Sunday regarding the new constitution that will be written. We had to go vote for the constituents that would be writing that constitution. And I must say that yesterday, Monday, May 8, 2023, the stock exchange opened positively by 2%. So, the market seemed to be reacting quite favorably to an issue that is obviously important to many businesspeople. Experts have mentioned that our rewriting of the constitution might cause investment projects to be put on standby. Right, because you’re rewriting the Constitution. But I also think that with the results on Sunday and obviously with some of the numbers I’ve just given, thankfully, it seems that we’re proving all of those things wrong.

    LATAM FDI: It’s great to hear that. You mentioned a few minutes ago in passing some of the economic sectors that stand out for doing business in Chile. If people are looking at the country in terms of potential investment, what should they look at in the short term, and also, what should they look at in the long term?

    Veronica Medina: Yeah, well, I think, as I mentioned, the top investment portfolio where the projects are, is in the energy sector. The tech services sector here has grown not just in terms of investment, but we’re also looking at a kind of commerce. Right. It’s not just the investment. So, companies are looking to sell their products or their technologies in the market. We are seeing these trends in energy, in tech, and in mining. Just a few weeks ago, here in Santiago, we had Expo Min, which is one of the largest trade shows in LATAM for mining. It was really the first one that had been done since the end of the coronavirus pandemic. And we had a lot of international pavilions. American companies were represented well in the US pavilion at that show. I would tend to say that those are the industries that will continue to be a focus. Agtech as well. If you’re looking for investment in Chile, Agtech is also key. But regarding the development future, we have great potential because of our lithium reserves for use in electric vehicles. The government has very strong environmental and climate change regulations and is net zero. I think all those industries related also to clean technologies as such will continue to grow.

    LATAM FDI: The market appears to be active in these particular industries. What advice would you offer investors looking at doing business in Chile, and what can you as a company do to help them?

    Veronica Medina: Yeah, well, I think obviously you have to do due diligence. You can’t go into a market blind and must assess the risk in your particular industry.  You must also be connected with someone local on the ground, right? Someone with the networks in the industry or industries you’re trying to engage in doing business in Chile. Even though Chile is a very open economy, it is important to remember that we have the most free trade agreement signed in the world. And as we mentioned before, the relationship with the United States and with American-made products and technology is very well known here in Chile.  I still think that they are highly regarded. We, as a company, always tell our clients that they should have somebody on the ground when considering doing business in Chile. And that’s where we can help with those connections. Getting you connected to the right people in the right industry, in the right position within, whether it’s large companies, SMEs, or even at a government level. We’re here to also help you with doing due diligence in the market and looking at the opportunities for you. Is Chile the right place for you to be, right?

    LATAM FDI: Considering juridical factors and concerns, how does Chilean legislation favor investors?

    Veronica Medina: I mean, Chile has, again, with what I mentioned regarding the openness of its economy for decades now. We welcome investors, and foreign investors are treated just the same as local investors in the country. Investment is pretty much permitted in all sectors of the economy. There are some tax benefits in certain regions of the country if the investment is done in those zones. There are some tax incentives if you are doing high-tech projects or R and D, and obviously, kind of the economic zones in the north and in the south of the country that also have very good favorable regulations and tax incentives for companies to go into those special trading zones aimed at doing business at Chile.

    LATAM FDI: Speaking of incentives, can you give some specifics?

    Veronica Medina: For example, if you’re doing R and D in your company, you can get tax credits for 30% of the R and D investment that your organization is doing. So again, Chile is a highly technological-based society. We are actually ranked number one in LATAM for innovation. So, there are tax incentives for anything that has to do with R and D, with technology development. Also, working with Corfo, the Chilean economic development agency, there might be some subsidies for companies to tap into there.

    LATAM FDI: Well, given all of the information that you’ve shared with us now, my experience has been that when individuals listen to these podcasts, the information that the speaker has offered obviously leads to other questions. That being the case, and you being the go-to person for South America and doing business in Chile, how can people contact you to get more information that they may need to proceed with their business plans?

    Veronica Medina: Well, absolutely. We have our website, which actually has some great also insights into doing business in Chile. We have country fact sheets there. We have industry fact sheets as well for the region. And the website is businesshubconsultants.com. My email is vmedina@businesshubconsultants.com. And obviously, through you, Steve, people can get in touch with me through you since now we are also working together and trying to promote this great region.

    LATAM FDI: Well, thank you very much. Another thing we’ll put up on our transcript portion on our website of this particular conversation is your LinkedIn page, a link to that if that’s okay.

    Veronica Medina: Perfect. Okay, absolutely. Anyway, you can reach out to me. I know I’m based in Chile. I’m also Chilean by birth. But I must say it’s a great country to do business in. We continue to have the highest GDP per capita in the region. We’re the number one country for ease of doing business in the region. You were talking about clean tech and energy. We’re the number one country and renewable energy investment in LATAM. And number two in the world. So, I think there are really some exciting things here, such as lithium and green hydrogen. There’s a lot to be done here in Chile now.

    LATAM FDI: Well, thank you for joining me. This has been a very interesting conversation. I’m sure that the listeners will find it to be interesting as well.

    Veronica Medina: Perfect. Thank you so much. Thank you, everyone, for listening.

     

    Doing Business in Costa Rica: A Procomer Overview

    Doing Business in Costa Rica: A Procomer Overview

    Andrew Crawford
    Trade Commissioner US Southwest & Mexico – Commercial Director
    Promotora del Comercio Exterior de Costa Rica (PROCOMER)
    acrawford@procomer.com

    LATAM FDI: Welcome to another episode of the Latin FDI podcasts. In these recordings, we speak to experts from Latin America on issues that have to do with business in the region, foreign trade, manufacturing, and other pertinent things. Today we have Andrew Crawford with us. Andrew is the Trade Commissioner in Houston for Costa Rica. He represents an organization that is called Procomer. I’ll let him introduce himself, explain what his organization does, and expand on the subject of doing business in Costa Rica. Andrew, welcome.

    Andrew Crawford: Thank you for having. It is a great pleasure for me to join this conversation. As you said, my name is Andrew Crawford. Currently,  I am a director of the trade promotion agency of Costa Rica named Procomer. I’ve been doing this for a while, but now I’ve been doing it for the US. Southwest and Mexico for the last two years. I am based out of Houston, Texas, and have over 20 years of experience in different areas of trade development, including industrial engineering, supply chain project management, trading services, and logistics in general. I love this, and I feel great about representing and talking about doing business in Costa Rica around the world and promoting our country’s capabilities and capacities.

    LATAM FDI: Costa Rica is very popular amongst people for the tourism aspect of its economy. I was at a conference lately, and they asked the audience how many people have been to Costa Rica, and three-quarters of the people raised their hands. So, we know that it’s a lovely place. But what people may need to learn is that Costa Rica has significant export industries. Some of those are in manufacturing. Some are primary products. Can you give us an overview of what Costa Rica exports worldwide?

    Andrew Crawford: Yes, that’s a great question. Regarding Costa Rica as a business destination, we are a hidden diamond. Many people do not relate to our country as an advanced manufacturing destination when they consider doing business in Costa Rica. When they come over, sit down with Procomer, and have constructive conversations, their whole view of Costa Rica changes. So, they moved from the concept of tourism and leisure to an industrially advanced manufacturing country where they could do business. And it is accurate to say that 30% of our GDP is related to non-tourism exports. Our main exports at this very moment are medical devices and medical instruments. All of this didn’t happen overnight. It has taken a few years, and I will explain it further and more clearly during our conversation. Also, our main exports go to the United States. 42% of our exports go to the United States, then the European Union and Central America respectively.

    We are currently exporting more than 4200 products to more than 150 countries. That reflects the level of maturity our export basket is having right now. And going back into tourism, let’s say, a narrative you mentioned when you started your question. Yes, we receive millions of tourists yearly, and tourism represents 5% of the GDP, but Costa Rican manufactured exports represent 35% of the GDP. So, there’s a dramatic difference between the composition of the tourism GDP and the composition of manufactured exports GDP. Regarding the changing aspect of doing business in Costa Rica, everything started back in 1987. If I go back to manufacturing, this is when Baxter decided to open up a facility in the country. Everybody asked Baxter’s management, why are you going down there? Why is it that you decided to get into a location that is related to tourism? Well, they started to discover that there was an opportunity to develop advanced manufacturing out of the country and that doing business in Costa Rica was a good option. That’s how everything started. And I can give you more details by the time we keep moving forward with the conversation.

    I can mention companies like Baxter, Boston Scientific, Edwards, Cooper, Hologic, Phillips, Smith and Nephew, Coloplast, IQ Medical, Abbott, Terumo, Heraeus, and Cardinal Health. And the last two will mention that Bayer and DDS Lab are building new Costa Rica facilities. That explains how deep things are getting into the country. And this is the level of maturity of the company we see in there is connected to the policies we bring to the table. So even though the concept has become more relevant during the last few months, Costa Rica has always been a friend-sharing destination for the United States. So, we know what an eco-friendly vision is. Our nature and sustainability may be Costa Rica’s best-known assets, but sustainable productivity has made the country a thriving destination for foreign direct investments. Mentioning these types of companies, which we are discussing and putting on the table right now, is related to our talent pool. Doing business in Costa Rica is attractive because the country decided in the late 1940s to abolish the army and invest in talent. This is what these companies find in Costa Rica.

    So,  an educated workforce, a bilingual workforce,  a great cultural connection with the United States in general, and a commitment to sustainability are our selling points as a stable democracy. But suppose you put it into the conversation that investments starting at $150,000 include incentives such as no income tax for several years and no taxes on assets to be paid off. In that case, that makes doing business in Costa Rica very attractive. For your project, there are no fees, taxes, or withholdings in repatriating your income once this facility produces financials in black numbers like that, along with the perks I mentioned in the first part of my explanation. It brings a perfect combination of perks for companies to say yes. Moving forward with Costa Rica as allied to do business here in Latin America makes a lot of sense.

    LATAM FDI: One of the things I’ve been seeing from the business that I do in Costa Rica is that Costa Rica, as well as much of Latin America, is benefiting from the near-shoring phenomenon occurring during the COVID crisis as it has accelerated. So, as a result, companies saw that bringing supply chains from places like Asia closer to home would be a better strategic decision. Do you see that playing out with companies that are considering doing business in Costa Rica?

    Andrew Crawford: Our demand for exploring and analyzing the feasibility of Costa Rica becoming a site for greenfield operations has grown by 40% from year to year, starting in 2020. So, dealing with a more significant number of imbalances in the world in terms of financial markets, cybersecurity concerns, supply chain constraints, limitations in the protection of IP, and the rule of law in some areas of the world. So, it gives an excellent opportunity to Costa Rica, where we can solidify our friend-shoring advantage and ensure policies and capabilities based on our proven history. We are already the home of more than 380 high-tech companies and 40 Fortune 500 companies. Thirty of the world’s top med tech companies are also doing business in Costa Rica. And the numbers are still growing. I can only disclose more upcoming projects once they start digging and installing the brick-and-mortar, but things look positive. So, Costa Rica has emerged as a leading global destination for investment for companies in the life science sector. And we have become a benchmark as an exporter in this area of the world. And that motivates our policymakers to keep improving and striving for better services in allocating more capabilities in favor of these investments to make it more interesting for companies that are considering doing business in Costa Rica.

    LATAM FDI: Now, we talked about the medical device industry in Costa Rica. It would be interesting for the listeners if you could give an overview of the products manufactured in Costa Rica.

    Andrew Crawford: Yes, and let me just put that in another context. Costa Rica is currently the second largest exporter of medical devices in Latin America. Only Mexico is ahead. But we have to add context here. Mexico is 135,000,000 people. We are just 5.2 million citizens. This country acts like a boutique regarding medical devices, and we must keep improving. But we are doing something well if we say that a small country with only 5.2 million attracts many projects and companies interested in doing business in Costa Rica. We have a lot of specialties in the industry. We can name cardiology. We can do medical aesthetics. We can produce for dentistry, neurology, orthopedics, ophthalmology, and gastroenterology. And a lot is happening in some other industries that are making their feasibility process for bringing more categories into the market segment. So that is a great thing to say. And on the other hand, it’s not just inviting the company and getting them interested in doing business in Costa Rica. We have created an ecosystem in this industry where an outstanding level of linkages also participates in the market.

    Procomer leads a program in which we provide aftercare to international companies to facilitate the growth of the supply chain. We have developed projects where a multinational, for example, only source one part from Costa Rica upon arrival. Some outsource hundreds or even thousands of parts and components to local suppliers. So, with this in mind, that means that we work not only on identifying potential companies to come down to Costa Rica, but we also worry about the other part of the story, which is fostering capacities, standards, and certifications on those contract manufacturers so they can better deal with the demands and needs of these OEMs that are engaged in doing business in Costa Rica.

    LATAM FDI: Another exciting development I’ve noticed recently is that Costa Rica is developing another advanced industry, aerospace. What’s going on in your country in that sector?

    Andrew Crawford: Yes, that’s an exciting topic that has been happening. First, it is good to know that a former NASA astronaut is a Costa Rican guy. His name is Franklin Chang. He’s developing an engine out of plasma, the fourth state of matter. And he’s basically at a stage where he has received sufficient funds to ensure the plasma runs correctly for many hours. And this engine reduces the cost of launching rockets and artifacts into space in an amazing way. So, we might see the Ad Astra project, the name of this engine, being heard of in much more vocal and different avenues pretty soon regarding what’s been going on with this plasma. With this engine, Chang is seeking to take care of debris around the orbits of the earth, which is the mission he’s planning. This can be done since it’s a very cost-efficient engine. It’s going to be pretty cheap to go out there to the orbits of the world and start picking up debris from satellites and other types of materials that are orbiting the Earth.

    So that’s one thing. The other thing is the aerospace companies that are doing business in Costa Rica. This is a cluster of a group of companies, 30 plus companies with technological capabilities that complement each other to enable the development of aerospace solutions. So, we collaborate with them to centralize the needs and opportunities we tackle in international markets. And their focus is on critical and noncritical electromechanical systems, the development and testing of software embedded to the high standards in terms of the industry. In addition, we experienced the incorporation of a great deal of our MRO with Boeing. Our MRO is a US Federal Aviation Administration and a European Aviation Agency-certified maintenance and repair and overhaul facility in our airport. And these guys have been doing a great conversion of Boeings for many years, as Boeing has received an increasing number of conversions from commercial 737 800 to 737 800 converted freighters. So, this MRO is doing a great job in the area. So, we’re doing electromechanical, we’re doing software, we’re doing MRO, we’re doing stuff in the space that pretty much says how we’re doing, Steven, which is an interesting world that people may not know that it’s been taking place in Costa Rica as well.

    LATAM FDI: Beyond aerospace and medical devices, what other opportunities exist for advanced manufacturers that are interested in doing business in Costa Rica?

    Andrew Crawford: Well, you know that everything is on a concept of sustainability right now. So particularly parts and components that hold any IP. And that may require certain levels of hardware and equipment that can impact the future of energy consumption in our daily lives is becoming an excellent opportunity to be hardwired manufacturing in Costa Rica. We must remember that Costa Rica produces 99% of its energy from alternative or clean energies. So, there is already a country brand and thus a great image a foreign company can use as an endorsement in their projects and operations that they can say we produce sustainable products in advanced manufacturing in Costa Rica. This country produces 99% of its energy from alternative or clean energy. Broadcast manufacturing is a growing industry because of the growth of the entertainment world and everything. We already have experience in this industry. So, there’s an opportunity to keep growing in the area.

    IoT AI needs machines and devices, where the electronics and the houses of those devices can be manufactured by companies doing business in Costa Rica. Those are some of the ideas that I can tell you and things that we’ve seen according to the capabilities of our talent and what we’ve seen in terms of experiences that we can extract from what we are already doing. Those are additions that we could have soon.

    LATAM FDI: Well, can you tell me and our listening audience how people can contact you and your agency to discuss further hooking up with a contract manufacturer or starting a new project there? And also, do you have any upcoming events that people could attend?

    Andrew Crawford: Sure, I’m totally and completely available on my mobile. It’s a Texas phone. The number is 832-940-8587. As I said, 832-940-8587. My email is acrawford@procomer.com. Please bear in mind to the audience that in our role as a government agency, our services are entirely free of any charges. We don’t charge anything for our services. We work as great facilitators as public policymakers. We are time savers for those seeking the right contract manufacturers in Costa Rica or who would like to understand better how to settle down and make a greenfield investment in Costa Rica. We usually ask the US company to fill out a profile form under a band model B-A-N-T which is the buying. They understand who is the buyer, the buyer, what authority this person will have during the process, what specific needs this person has, and the timeline to put a project in place.

    After we gather this information and do an internal assessment, we jump into the capabilities we have with our companies to analyze the data and narrow down the potential contract manufacturers that can connect adequately with the specific need of doing business in Costa Rica. We suggest different avenues to get connected. It can be as simple as an email connection. We can set up a remote call between the parties. We organize the remote call so we can do introductions properly. We can suggest site visits on both ends. Either the Costa Rican company with great potential to come by and understand what the needs in the facility in the United States are that have to be tackled down in Costa Rica or vice versa. Have the US company go to a facility in Costa Rica as well. That can take place at any time of the year. And in the meantime, we can offer sourcing events. There’s a sourcing event that we do every year. It’s our annual event known as BTM Buyers Trade Mission. This event will be held in the last week of September 2023. The interesting thing here is that we cover accommodation for up to four nights.

    Additionally, we cover meals. We cover facility tours during the first two days of the event. So, we schedule many site tours for companies according to their needs in the United States. And then the very last day, the third day, we do like a one-on-one business agenda, so it’s also adding up companies that you might not visit the site tours but might be interested in having conversations about doing business in Costa Rica. Too. So, we add up a third day in our National Convention Center to have one-on-one meetings with companies you didn’t meet during the first two days. And in the same spot, there will be some other chapters of different things going on during that week because it’s a pretty busy week, and we account for 400 buyers from about 50 countries every year that visit our buyer’s trade mission. Last year, our Advanced Manufacturing tour chapter was a great success, mainly with companies from Canada and the US. Mexico and Europe. They were focused on visiting facilities and learning more about how they’re doing things, companies are doing things, and how Procomer supports these companies to scale up in terms of capabilities.

    LATAM FDI: That sounds like an incredible opportunity for companies interested in doing business in Costa Rica. And thank you. We thank you for speaking with us today and providing good contact information so that people who want to take advantage of Procomer services can contact you directly. So, thank you for that, Andrew.

    Andrew Crawford: We appreciate it. There are a significant number of incentives that we have available for people to establish a greenfield operation in Costa Rica. It’s just a matter of giving me a call or sending me an email, and we can further discuss how Costa Rica has become an excellent platform for doing business oriented to the United States and with a great group of incentives together to make it profitable and feasible in the long run.

    LATAM FDI: Well, thanks again, and have a great day. Listeners to this podcast can also contact LATAM FDI for further information about doing business in Costa Rica.