Trade Americas Conference

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Costa Rica Nicaragua Headlines, Prospects and
Challenges
Trade Americas Conference Denver, CO May 4, 200
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Overview

• Basics of Costa Rica
• The Costa Rican Economy
• Costa Rica Positives/Challenges
• Best Prospects
• Recent Elections
• Costa Rica and CAFTA-DR
• Nicaragua Economy and Best Prospects
• Upcoming Events Costa Rica Nicaragua

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COSTA RICA The Basics

• 4.2 million people
• 19,652 square miles (size of West
  Virginia)
  
• 95 literacy rate
• Spanish Language (English Widely Spoken)
• Democratic Republic
• Life Expectancy 76 years

Source Countrywatch.com and La Nación Newspaper
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Costa Rica The Basics

• Government Monopolies
• Telephony/Internet
• Energy
• Electricity
• Insurance
• Sugar cane alcohol production

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ECON DATA GDP per capita
2005
2004
2003
2002

• Source Central Bank of Costa Rica y
  Latinchronicle

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ECON DATA Average Annual Growth 94-04

• Source http//devdata.worldbank.org/AAG/cri_aag.p
  df
  
• WORLDBANK

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ECON DATA Inflation

• Source http//www.bccr.fi.cr/documentos/publicaci
  ones/archivos/Comunicado20de20prensa20PM202006
  -2007.pdf
  
• CENTRAL BANK OF COSTA RICA

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ECON DATA Trade Balance - 2005
TRADE SURPLUS 176 MILLION

• Source http//www.census.gov/foreign-trade/balanc
  e/c2230.html2005
  
• US CENSUS BUREAU

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More Econ Data

• U.S. Major Trade/Business Partner
• 50 of Costa Rican Exports
• 70 of Foreign Direct Investment
• Regional Hub for U.S./Foreign Firms
• Competition from China
• Forecast for Steady Econ Growth
• Retirement, not Remittances

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Why Costa Rica?

• Highly skilled labor force
• Diversified economy
• Political and social stability
• Friendly business
• environment
• Attractive FTZ Tax Incentives
• (until 2007)

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Why Costa Rica?

• Wide use of English
• Approx. 30,000 Americans in Costa Rica
• Sophisticated consumers,
• early adopters
• Network of distributors
• Close proximity to the U.S.

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Challenges

• Bureaucracy/Red Tape
• Inefficient Monopolies
• Broken Tax System
• Poor Enforcement of IPR
• Sluggish Judicial System
• Deteriorating Infrastructure
• (Ports, Roads)
• High Social Benefit Expenditures

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Best Business Prospects

• RANK INDUSTRY IMPORTS FROM U.S.-
  2005 (Proj -US millions)
  
• 01 PAPER PAPERBOARD 172
• 02 COMPUTERS PERIPHERALS 138
• 03 PLASTIC MATERIALS AND RESINS 158
• 04 TELECOMMUNICATIONS EQ. 60
• 05 AGRICULTURAL CHEMICALS 60
• 06 AUTOMOTIVE PARTS 47
• 07 MEDICAL EQUIPMENT 20
• 08 CONSTRUCTION EQ. 18
• Source CCG 2006

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CRECEX Survey of Importers

• Consumer Goods
• Food Processing and Packaging
• Construction Materials
• Auto Parts
• I.T.
• Consumer Electronics
• Dental Equipment
• Hotel and Restaurant Equipment

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CAFTA-DR Status Report

• El Salvador March 1
• Nicaragua, Honduras April 1
• Guatemala May 1 ?
• Dominican Republic Summer ?
• Costa Rica Late 2006???

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CAFTA-DRand Costa Rica

• Submitted to Asamblea (October 19, 2005)
• Hearings by International Commission
• Approval by Asamblea Later in 2006 (?)
• President-elect Arias May 8
• Narrow Victory/Pro-CAFTA
• New Asamblea Fragmented
• (PLN 25 PAC 18 ML 6 PUSC 4)

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NICARAGUA
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BASICS

• 129,494 square km. (slightly smaller than NY)
• 5.5 Million pop.
• 67.5 Literacy Rate
• Democratic Republic
• Life Expectancy 73 years

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ECONOMIC DATA
Source Central Bank of Nicaragua
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ECONOMIC DATA
Source Central Bank of Nicaragua
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INFLATION
Source Central Bank of Nicaragua
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U.S.-NICARAGUATRADE BALANCE
Source Central Bank of Nicaragua
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BEST BUSINESS PROSPECTS
Source CCG 2006
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WHY NICARAGUA?

• CAFTA-DR entry into force on April 1st
• Participant in the MCC
• Open to foreign investment attractive tax
  incentives for tourism, free trade zones
  
• Lowest crime rate in Central America
• High quality, low-cost labor
• 70 of the population is under 30 years of age
• Estimated 10 of the economically active
  population speaks English
  
• Close proximity to the US

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MARKET CHALLENGES

• Maintain macroeconomic stability
• Resolve Sandinista-era property confiscation
  cases
  
• Land security title protection

• Corrupt judiciary
• Reduce oil dependency
• Political instability
• Improve IPR enforcement

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Upcoming Events in CR Nicaragua

• June 5-7 Apparel Conference of the
• Americas - Nicaragua
• Sept. 12-13 CRECEX Enlace Event - Costa Rica
  
  

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Regional Gold Key Individual Company

• A CS First only for the five CAFTA countries
• First country first-day fee (765)
• Second and following second-day fee (385)

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Contact Information

• James McCarthy
• Senior Commercial Officer
• Costa Rica
• Email James.McCarthy_at_mail.doc.gov
• Mark Cullinane
• Commercial Officer
• Nicaragua
• Email cullinanemw_at_state.gov