As national lockdowns are slowly lifted, fDi is reaching out to professionals on the FDI frontline as they grapple with the biggest global challenge in recent history.
Costa Rica has been relatively successful in getting to grips with the health emergency, while at the same time guaranteeing business continuity. Jorge Sequeira, managing director of national investment promotion agency Cinde, talks about his country’s approach to crisis management.
Q: How has your team reacted to the crisis?
A: There are around 380 foreign companies operating in Costa Rica, we have excelled in terms of guaranteeing their business continuity. From early on in the crisis, we set up a public-private dialogue, which gave us a chance to react rapidly. In about one week, 98% of the companies were able to shift to working from home.
These achievements helped show international companies that Costa Rica is a resilient country, where they can find a secure health, legal and business environment. Many of their local subsidiaries had to accommodate functions and processes from other countries – such as India, Colombia or the US – that had to be moved to safeguard business continuity.
Q: What do you expect over the mid-to-long-term?
A: Global value chains are going to be restructured as companies seek more diversified supply chains without depending too much on China. They might leave China altogether, or go for a China+1 option, where they keep one foot in China to serve the domestic market, but also invest in reshoring or nearshoring operations.
It creates an opportunity for Costa Rica. Our value proposition is based on three pillars – people, planet and prosperity. Within this context, Costa Rica has advantages for investors that seek human talent, resilient business environments, and proximity to North America, but also look for a country that is responsible with its people and environment.
Q: How are you developing Costa Rica’s value proposition for nearshoring investment?
A: First, by talking to existing customers. Particularly in this crisis, we want them to stay in the country, to avoid business interruptions, as well as helping them find new opportunities to grow and diversify their businesses.
Second, by talking to companies receptive to the country’s value proposition. Costa Rica is a small country with a high concentration of international companies handling sophisticated technologies in sectors such as IT services, aerospace and automotives.
There is a great opportunity for technological convergence. We are fostering the collaboration between different companies to develop new products and we are leaning towards more research and development activities in the fields of biotech, biomaterials, pharma, clinical trials and medical devices. Moreover, the government recently declared the fields of life sciences, innovations and technologies to be of public interest, which helps efforts to turn Costa Rica into a life sciences hub.
Q: Costa Rica was admitted to the OECD on May 15. What does this mean for its FDI value proposition?
A: We see this as a business card. It tells of a country committed to the best public policies for its people and businesses alike. Our policies are not perfect, but we are upholding the highest standards to become an even more stable and safer investment destination. There is much room for improvement, but being part of the OECD helps us benchmark against the best and become more competitive.
Q: How is the crisis going to change investment promotion in the future?
A: Clearly, it’s going to transform investment promotion agencies (IPAs). Investors will travel less in the future and there will be a shift to virtual agendas. Site visits will still happen when it’s time for the investor to make a decision, but many preliminary visits will happen virtually. The digital transformation agenda of IPAs is going to accelerate rapidly.
We are now working at a model of predictive analytics to better identify prospective investors. We want to be more selective in the way we identify investors so we can allocate resources more efficiently and better find investors that best fit with the country’s value proportion.
We are also working with our stakeholders – such as free zone developers – to encourage them to shift to digital services, and provide virtual tours of their facilities.
Jorge Sequeira is the managing director of Cinde.
You can find the full archive of the fDi’s Virus Diaries series at the following link. If you work in economic development or investment promotion and want to share your experience in dealing with the coronavirus, get in touch at fDi@ft.com.