Costa Rica Business – Excessive Regulations Paralyses Business

Eric Stevens is a North American consultant who for the last year, has
been working on problems of transparency and administrative contracts in
the country.

He analysed the Office of the Comptroller of the Republic, the Executive Branch
and municipalities. He believes an excess of required procedures allows corruption.

Q: What do you think of the required procedures in Costa Rica and do they reduce
corruption?

A: In Costa Rica, the road to transparency is paved with good intentions, but the exact opposite occurs. The regulatory process and excess of institutions cause a virtual paralysis of the country.

Q: What causes this?

A: Not only is the internal process almost paralyzed by inefficiency and delays but also you have to take into account Costa Rica’s competitiveness. El Salvador is the country that has most drastically cut its regulations and the one that
attracts the most investment. If nothing changes in a few years, Costa Rica will
stop being the economic leader in the region.

Q: How soon will this happen?

A: The change is already happening. If someone wants to invest in El Salvador,
everything is worked out in one week. Costa Rica has a process that invites people
not to come, while its neighbors are moving toward simplification.

Q: How long will it take to lose our hegemony on the Isthmus?

A: If nothing changes, within ten years it will be obvious. But this process
is reversible. At some point, someone has to make essential changes, although
there are forces working against this.

A: Yes. Transparency is important in administrative arrangements because it’s
there where errors, pitfalls and robbery occur. This is the same everywhere
in the world; it’s a sport. You are at a very important crossroads; how
to make institutional reform by simplifying procedures for Costa Ricans and foreigners.

Q: What is the worst excess in procedures?

A: The private sector is extremely frustrated because it cannot compete
and this leaves the way open for others who are less transparent and prepared
to offer favors and pay-offs. So companies are left out that want to offer good
goods and services.

Q: How do you perceive the way institutions deal with administrative contracts?

A: The municipalities reflect what goes on at all levels. In workshops that we
gave, 33 government institutions and 11 from the private sector participated for
eight work months and they all made clear their frustration.

Q: How can this be changed?

A: There should be more communication when documents are presented to an institution
so that matters can be handled at the counter. Also, in the institutional environment
there should be the will to apply changes that directors can make. Lastly, they
should study existing laws and make suggestions to Congress.

Q: What do you think of Costa Rican law?

A: The laws clash with each other. It depends on with whom you talk. Each will
cite a different law. There are laws that contradict themselves. All the
laws should be analyzed and those that don’t work any more should be removed.

Q: Do requirements and procedures help avoid corruption?

A: No, they only feed corruption. It’s human nature to look for the easy
way out. Corruption will never be eliminated but each step taken to simplify
the process makes acts of corruption more difficult.

Q: How can procedures be simplified without losing control of contracts and investments?

A: Modernize the laws that contradict each other.

Q: Do you see a climate for change?

A: It was one of my fears. The 80 people who registered for the workshops showed
up and that’s a prime indication of interest. We identified problems and
sought solutions and the group that participated owned the process.

Q: What role should citizens play?

A: They should believe in the changes and understand that the President, representatives
and public officials are employees of the state, not gods. They must tell
the people where the money is and how it is used because you have to treat them
like employees. You have to demand accounting and be interested in who gets elected.

Q: In the municipal field, the majority of boards cannot collect.

A: One of the things they mentioned is that they need training and they don’t
attract more resources because they don’t have the administrative resources
to do what they are supposed to.

Q: Has the Municipal Institute of Advancement and Training failed?

A: If they have not failed, at the least, they have not trained.

Our thanks to Jairo Villegas S. and Ronald Matute and our friends at La
Nacion – Costa
Rica’s largest Spanish circulation newspaper for their permission to use
this article…

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.