Lets all read it here instead
ROADBLOCKS IN COSTA RICA 01/10/04 - Wild Bill
I recently had a conversation with an investor in a Costa Rican offshore operation. He and the guy who makes his numbers told me about a trip they recently took for some normal business meetings in San Jose. They also had a meeting with a high-level government administrator.
They discussed some issues, while expressing their interest in further investing in the country. But they stipulated that conditions must be improved. The tone and answers of the government official were not promising.
One of their biggest complaints was the cost of technology equipment. They complained that the servers and server infrastructure were barely economical because of the unreasonable differential in costs of the equipment to what a business could access today in the United States.
They also had trouble dealing with an inefficient communications monopoly which limited their choices in what equipment they could use and how reliable the service could be. They felt other countries with far less to offer from a technical standpoint at least work with potential investors in the industry to create solutions, not just more roadblocks.
As a result, the conditions are essentially slowing an expansion of their business and those of their competitors. That’s an expansion that customer demand would support. Further, expansions could provide more technical (hence higher-paying) jobs that the country seems to believe are the key to a more prosperous future. Ultimately it would bring more dollars into the economy, which would benefit everyone.
This short-sighted official responded that he wasn’t all that concerned about their wish list. He felt the move to more functions on the Internet would hurt the country since it could reduce the number of phone clerks and other jobs that are filled by mostly local workers.
Everything he brought up in response continually got back to a demand for more jobs and more money, as if operations were stealing opportunities and money from the local economy. Remember, most offshore sports books won’t even allow locals to have betting accounts. Therefore, they certainly couldn’t be using the usual anti-casino argument that locals are wasting their money gambling.
This official believes the prior administration was too generous to foreigners. He thinks their investments essentially were greedy schemes that left too little for the locals before being taken out of the country.
As it has been noted in the posting forums, the government proves this in other ways, including increasing the income requirements of retired foreigners before allowing them to reside in the country. All of these people want to spend money in the country. But the government tries to turn it into another argument against greedy foreign interests.
Talk about missing the big picture. I find the whole batch of attitudes shocking. From the constant uncertainty of what politician will be next to take a shot at the industry, to the fall of a number of the corrupt schemes that are allowed to operate openly in the country. It is quite clear that the industry is thriving despite the limitations of the business climate in Costa Rica.
The intellectual arguments aside regarding how best to employ an economy’s resources, this seeming belief that taking a populist tone will bring more wealth to a country with deteriorating competitiveness has to be considered troubling.
As more jurisdictions see the benefits of an industry that has virtually no local customers, and provides many well-paid jobs that help sustain a local economy, I am starting to expect that some operations will indeed eventually be moving out of Costa Rica.
Occasional gaffes are one thing. But when people in important positions clearly don’t quite understand what it takes to get and keep good investments, what other conclusion can be reached?
