Thursday, 14 Jun 2012
Male surveyor using the odolite instrument on a building site (c) Alastair Berg / Getty Images
Infrastructure & Construction sector in Costa Rica
The current President is determined to improve infrastructure, committing £4.16 billion during her administration. Construction is currently experiencing a 15% growth rate.
Whilst Costa Rica is ranked by the World Economic Forum at 77 in terms of infrastructure; the quality of roads, railways and ports is low, weighing in at 111, 100 and 132 (out of a possible 139) respectively.
The government is determined to improve this ranking by promoting a number of large infrastructure projects totalling an estimated £4.16 billion during the 2010-2014 administration. Projects include roads, motorways, bridges, airport expansion, ports development, rehabilitation of the currently out of use railway system and the introduction of sewerage systems.
Private national and foreign companies and consortiums carry out these projects through a public bidding process under a normal regime or under a concession scheme.
In 2011 the construction sector represented 5.2% of the country’s GDP. Total construction activity has increased 15% during the first quarter of 2012 as compared with 2011*.
In 2011 the planning application system was made electronic resulting in applications being approved in just over 1 month as compared to 18 months the previous year.
Recent growth has resulted from private sector stimulus in construction projects including condominiums, housing, industrial plants, offices, shopping malls, and hospitals. During the first quarter of 2012, almost 40% of all construction permits processed (in terms of m2) were for projects in the capital city, of which housing projects accounted for 45% of applications filed
The Costa Rican Government is undertaking feasibility studies or preparing tenders for several infrastructure projects, including:
Mesoamerican Project (improvement and expansion of the North Inter-American Highway) - estimated at £139.6 million.
Strategic Road Network for the Greater Metropolitan Area – estimated at £19.23 million.
Heredia Trunk Road Project - estimated at £67.86 million.
Construction of the Northern Ring Road for San Jose – estimated at £135.73 million.
The Costa Rican Concessions Council is undertaking feasibility studies or preparing tenders for several infrastructure projects through the Public Works Concession scheme (investments of £ 2.89 billion), including:
Inter-Provincial Electric Train (TREM) – estimated at £ 219.10 million.
Motorway Extension San José – Cartago – estimated at £180.97million.
The Concession Model for Private Initiative allows private entities to propose new projects to the Government; examples include:
Transhipment mega port (Caribbean coast) – estimated at £ 421.40 million.
Road development from the Central Valley to the Port of Limón – estimated at £ 428.52 million.
Railway with Logistical Drop off Points – estimated at £ 287.62 million.
The vast majority of equipment used in the construction industry is imported into Costa Rica. Since the market is experiencing a recent surge, there is a high level of demand for these goods.
Consultancy services in civil engineering; in particular as concerns environmental engineering (e.g. hydraulic engineering), the development of roads, bridges and ports. Additionally expertise is lacking in the planning and design of hospitals.
University courses in civil engineering linked to the particular areas of expertise mentioned above.
Foreign private investment in large scale projects across a range of sectors including, commercial, industrial and residential properties and hospitals.
Getting into the market
Costa Rica boasts more than 100 years of democracy and has a strategic location and an excellent business climate. Costa Rican laws guarantee equal rights to foreign companies.
Businessmen will generally speak reasonable English, but if not they will let you know. They tend to avoid precise commitments, although they may make them vocally to avoid hurting another’s feelings. Appointing a local representative works well as an initial point of entry into market since they understand local bureaucracy and law.
The European Union and Central America have concluded negotiations for an association agreement which is hoped to be ratified in late 2012, which will bring new benefits, such as lower trade tariffs for European goods.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team.
Luisa Pastor, Trade & Investment Director, British Embassy San Jose. Tel: +506 2258 2025 or email: Luisa.Pastor@fco.gov.uk.
Kate Cruse, Trade & Investment Officer, British Embassy San Jose. Tel: +506 2258 2025 or email: Kate.Cruse@fco.gov.uk.
Expo Construction and Housing 2012 (Expo Construcción y Vivienda 2012)
Date: 15 – 19 February 2012
Website address: http://www.construccion.co.cr/expo2012
Expo Construction and Housing Special Edition 2012 (Expo Construcción y Vivienda Edición Especial 2012)
29 August - 2 October 2012
Website address: http://www.construccion.co.cr/expo2012
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.