Juni 2008: Nieuwsflits Costa Rica
From Handelswijzer Midden-Amerika van de Koninklijke Nederlandse Ambassade te Costa Rica
Dutch development bank FMO provides long term loan to Grupo M
CITI and Dutch development bank FMO closed a joint led syndicated deal with Central America based Grupo Monge (Grupo M), a leading retailer of consumer electronics, home furniture, home appliances and telephone and consumer equipment. FMO provides Grupo M and its subsidiaries with a senior 35million USD loan as part of a 100 million USD syndication. Grupo M head quarters are in Costa Rica managing stores in Costa Rica (180), Nicaragua (52), Honduras (36), Guatemala (10) and El Salvador (47). In the context of current global financial markets, providing long-term funding is considered unique in this region. This syndicated loan is composed in two tranches: 65 million USD for a 5 year period, and then a 35 million USD tranche with a seven years period. The latter was fully provided by FMO, thus providing comfort to the commercial banks with shorter tenors in the syndication. Arthur Arnold, FMOs CEO, comments: “The idea of enabling the expansion of this retail business while at the same time creating access for lower income households was a decisive driver for investing in Grupo M. Traditionally, this is FMOs role. We act as a catalyst and facilitator for the entry of commercial banks and private investors into what is still a frontier area for many financiers. By providing long-term funds within this Citi-led syndication, FMO demonstrates its commitment to sustainable investment in Central America.”
Minimum wages will increase 6,58% on July 1st
Costa Rica's National Salary Council approved a 6.58 percent increase on minimum wages in the private sector staring July 1. This significant increase should boost purchasing power of especially the lowest incomes facing increased economic pressure due to rising costs of basic needs such as food. Some labour leaders are not satisfied with the increase claiming that the calculated raise of ¢164,007 ($315.60) a month is too little. It is far less than the proposed ¢180,000 ($346.40) . The syndicates demanded a 10% raise. Accumulative inflation from January to June has reached 5.94 percent. The Labour Ministry added that number to 0.64 % – which was the difference between predicted and actual inflation for past December, when the last salary adjustment was calculated – to arrive at the minimum wage increase of 6.58 percent.
Several companies want to enter Costa Rican telecommunication market
Digicel Group is interested in investing in Costa Rica triggered by the new legislation allowing for more competition for mobile services. Signals Telecom Consulting, recently reported that Digicel, America Movil, Millicom and Telefonica were the most likely candidates to go after market shares in Costa Rica. Clients will be spending more than US$5.9 billion within five years for these services. Costa Rica is an interesting market because only 40 % of the population that can use mobile phones actually has one. On the other hand Costa Rica obtains the highest average revenue per user in Central America. Annual growth is in this sector is estimated at 20 per cent per year and fixed over the next five years. Revenues are estimated at US$600 million up to US$1 billion per year fixed between 2010 and 2013.
Costa Rica takes drastic measurements to reduce oil bill
Besides offering tax breaks on hybrid cars, the government is implementing the following gas-saving measures:
- Interline bus routes: Seven new bus routes, runnned by bus consortium MPT S.A. transporting passengers using the perimeter of downtown San José.
- San José-Heredia train: The Costa Rican Railroad Institute (Incofer) estimated it would take six months to rehabilitate the railroad running between San José and Heredia as a new option for commuters, pending approval $4 million supplementary budget for rail and bridge work along the route.
- Peak hour restrictions: approved decree on peak hour restrictions for routes that run through the southern perimeter of San José. Restrictions started June 26th.
- Reduction in Diesel fuel price and extra taxing (increase) Regular and Super gas prices. A 100% increase of annual car/road tax (marchamo) when buying a diesel motor vehicle, except for buses or light weight trucks.
Costa Rica tourism sector remains strong despite economic slowdown in the US
Costa Rican tourism statistics show that visits to the country have increased in the past year. This positive trend was not expect because of negative factors such as: rising fuel costs, increased airline ticket prices and slow economy world wide. Costa Rica has seen almost 1,000,000 visitors in the first five months of 2008, an increase of 133,000 visitors (16%) when compared to the same time period in 2007. Approximately 54% of Costa Rica’s tourists are American and 17% are from Europe. In 2007 1.9 million tourists came to Costa Rica, spending $1.921 billion. In 2008, ICT expects a 6% increase of foreign visitors, and by 2012, a yearly tally of 2.3 million visitors.
First mega tourist project at the Atlantic coast
Isla Moin project will be located near the city of Limon and developed by SolerPazos Group (Jose Soler & Edificar). The first phase of the 200-acre project calls for the construction of more than 200 housing units around canals and beachfront, as well as a 123-slip marina. Eventually, Isla Moin is expected to include 800 condominiums, villas and estate homes, a luxury hotel and room for 500 boats.
Spanish companies to invest $1 Billion in Costa Rica
Three of Spain’s biggest hotel chains have announced plans to expand in Costa Rica bringing more than $1 billion dollars for development. This year Costa Rica could receive around 45,000 additional Spanish tourists due to a increase in direct flights from Madrid, Spain to San Jose, Costa Rica. The Spanish based airline, Air Comet announced plans to purchase 12 new airplanes within this year in order to increase Costa Rica travel and tourism from Spain. Air Comet’s tickets will start at $500 and will operate every Monday, Wednesday, and Saturday. RIU Hotels & Resorts is the second largest hotel chain in Spain and will built its first establishment in Costa Rica on Playa Matapalo on Costa Rica’s North Pacific Coast. RIU plans to open Hotel RIU Guanacaste in the winter of 2009. The Spanish chain Sirenis Hotels & Resorts has also announced plans to begin construction this year for their first Costa Rica hotel project to take place in the Gulf of Papagayo in Northern Costa Rica. Construction will begin this year and the resort will house 350 bedrooms. The Spanish real estate group Space and Nature group (NVESA) will build four hotels within the country and one residential real estate project.
Textile pioneer closing operations in Costa Rica
VF Jeanswear, the maker of Wrangler and Lee jeans, announced it will close its three Costa Rica plants in July, laying off 400 employees and ending a 20-year run of exporting jeans from this country. The closure shows the tension within the textile sector's. Decreased exports and looming uncertainty over the future of Costa Rica’s implementation of the Central American Free-Trade Agreement with the United States (CAFTA) add to the problem. VF is opting to maintain operations in Honduras and Mexico. Textile exports in January dropped by 23.4% from January 2007. At its height VF employed 4,000 people and exports from its Tico plants grossed $120 million.
Costa Rica coffee harvest down 3.6%
Costa Rica estimates it will produce 1.807 million 60-kg bags of coffee in the 2008/09 harvest, down 3.6 percent from the previous cycle due to the biannual nature of the crop, according to a top official from the national coffee institute ICAFE.
