100 Costa Rica macro future view

[Richard Bexon]

Good morning, Pedro. How are you doing? Hey, Richard.

[Pedro Beirute]

Happy to be here.

[Richard Bexon]

No, thank you for doing us the honor and blessing us with your time today as we celebrate our 100th episode. As I'd mentioned, I didn't think we'd get to 100 episodes, I never even thought this when I started it, but it's an absolute honor to have you on it.

[Pedro Beirute]

Very excited and very honored and grateful for this opportunity to share opportunities to move, relocate, or invest in Costa Rica.

[Richard Bexon]

Awesome. Awesome. Well, let's get straight into it, Pedro.

I mean, you know, I mean, the global situation at the moment, you know, there's, I would say that there's a lot of, you know, I suppose darkness, however, Costa Rica always seems to be shining bright. I mean, it's done absolutely great during the pandemic, but why is this and what do you think that Costa Rica offers that other countries don't?

[Pedro Beirute]

Yeah, so if you can think of something we have learned during the last three years, it's how uncertain the world is, how unexpected events come from one day to another to change all the fundamentals of society, right? From pandemic to wars, to logistics crisis, supply crisis, nearshoring, reshoring, etc. None of us three years ago could have anticipated the level of change we have gone through.

The interesting thing is that out of all this turnout that we're seeing at a global scale, Costa Rica shines. I've been told by many people that Costa Rica is the utopia of the world. And when you think or reflect on why is that, it's because we offer the fundamentals of a good society and everything around well-being and creating opportunities and the right environment for people to foster, to prosper, right?

As a small country in Central America of only 5 million people, Costa Rica has been known for decades as a tourism destination. People wanting to explore nature and adventure have found in Costa Rica the perfect location to connect with life essentials, with nature, with nice beaches, rivers, mountains, rainforests, great weather all year round, friendly people, safe location, and so on. That shine from the tourism has been evolving during the last few years to also great opportunities for investors or digital nomads or people that also want to come to Costa Rica to do more than just enjoying vacations.

So Costa Rica, it's a country that for 200 years has invested in education, making it public and mandatory. During the last 70 years, we have been also globally recognized as a peaceful country with no army, which has created a society that is basically against conflict. It's a friendly, peaceful society in which you really develop a lot of friends.

In the 70s, meaning like 50 years ago, because the country also became very innovative because we started doing environmental conservation when it was not popular, when oil was available everywhere and very low cost. We said, you know what, we're going to take a different route to our development, which is a sustainable development. So we banned oil exploration and we started to have public policies oriented towards conservation and preservation of our environment.

And that made us different from the rest of the world. These days in which sustainability and conservation is so important. We have 50 years of tradition on that.

It's not five years, 10 years or 20 years. We have really walked the talk for the last 50 years. And that has made us also a global leader in terms of conservation, in terms of sustainable development, which has at the same time attracted many companies and many individuals that have that sense of purpose and that sense of creating better societies.

At a corporation level, we approved a law like 30 years ago. It's called Free Zones Law, which basically made it attractive to companies to establish, to relocate here in Costa Rica and obtain interesting tax incentives, advantages together with stability, democracy, location in the same time zone of the US, two ports, one in the Pacific, one in the Caribbean. And of course, talent, an attractive hub for more than 300 different multinationals that decided to operate from Costa Rica, despite being a small country, despite being a boutique country, they have decided to establish their regional headquarters here in Costa Rica.

And what has happened over the last few years and that was accelerating during pandemic were also laws, legislation that now is targeting individuals. Individuals, either as a digital nomads or as investors. We have approved these two laws that make it easy, attractive, safe, secure to relocate in Costa Rica if you are investing or if you're working for a foreign company and you just want to live in this piece of paradise.

[Richard Bexon]

Yeah, well, I mean, I think at a global level, Costa Rica is I think you mentioned there a utopia. A lot of people always get concerned about investing out of their own country just because they like they may not know it. But I think once you've been down here to Costa Rica and seen its greatest asset, which I believe are its people, it's educated.

I think you said there it's passive people. It's just it is a utopia down here. And I think that there aren't many people.

I don't think I've ever met someone that came to Costa Rica and going, I hated that, you know, because it's beautiful, great people. And I mean, it's an amazing environment and it's a very young country as well. Just in general, when you look at it, I mean, it's not that overdeveloped and thank God it's not.

And I don't think it ever will be just because of the environmental studies that are required when ever doing anything big here. So, you know, I think because we've done a great job of protecting that and I think that protects people's assets over a long term when investing here as well. But I mean, where do you believe that the growth and investment in Costa Rica will be in the next five years, Pedro?

[Pedro Beirute]

Yeah, so to support what you just said, Richard, this is something that has been like that for decades, right? This is not a new government trying to sell that image to the world, but really something that has a strong bedrock, which is education, stability, rule of law, all this democracy in Latin America and so on. So that's the foundation for many new projects in different areas.

We, our intention is to attract a type of investors and attract a type of companies that are aligned to our vision. And our vision is sustainable development understood by what is known as the three piece, people, profit and planet. If someone just wanted to make money, maybe this is not the right location because you will face some public policies and some cultural orientation towards also protecting the environment, also towards protecting people and have this social impact.

So really it's people or companies that are conscious about this comprehensive development model of planet, people and profit or prosperity. In other words, environmental, social and financial return. So that's a type of investors we want to bring on that basically can raise the bar for our country in that sense.

And from there, many things from private equity investors that want to invest in local startups or SMBs to people that want to invest in real estate, real estate that again, it's conscious with the environment. So maybe Costa Rica is not the right location for these mega hotels, mega projects, thousands of room in a single location or even houses development that are not aligned to our environmental and conservation conscious. So it's more boutique.

It's more something that has this kind of impact and not something that is massive or that will not be aligned.

[Richard Bexon]

Yeah, I mean, I think that's something that Costa Rica has done great, which is not, you know, it's not, you know, it's not being penny foolish and pound wise. It's basically all pound wise from the point of view of being that like, you know, that Costa Rica is willing to make less money, but to have a sustainable country and take care of its people. And I think that that can be seen as it's amazing.

And that even comes down to food. And I know that that's something really weird. But like people come to Costa Rica and go, wow, I never knew food tasted like that.

Or when I eat, I don't feel bloated. Like everything is fresh here. And that's why I say to people sometimes is, you know, Costa Rica has never really suffered.

And I mean, suffered from the point of view of like, OK, there was a civil war back in the late 40s. But like since then, it's not been that like, again, anything major has happened like that's happening in Ukraine at the moment. But like it's just a very peaceful country that has like again, and it's not suffered, which is a good thing.

It keeps like it as it is. It keeps the people like it is because whereas you look at the neighbors of Costa Rica, they are completely different than Costa Rica.

[Pedro Beirute]

Yeah, I mean, what you mentioned, which was a civil war, it was really people against the fraudulent elections that happened at that point. But it was not really like, of course, it was there was some tension there, but. Never as in other countries, it lasted for a very short period of time, and it was just people demanding respect for the elections since then, which happened in the late 40s, last century.

Costa Rica has enjoyed a very peaceful democracy, as I said before, this is the oldest democracy in in the region. And yeah, somehow the country is an exception to the region in which usually there's some turmoil and social challenges, I guess, because that's the type of society we want to build. We realize there is a trade off, meaning that by not doing, let's say, oil exploration, we will leave money on the table or by not promoting businesses that are, for example, connected to the military.

It's also a trade off. But we really believe that development has to do not much or not that with not that much with transforming economies and growing GDP, but really with transforming people's lives and promoting well-being society in which, yeah, we're not a rich country, we're not a high income country, we're a middle income country, but people enjoy high income country standards of education, health care, stability and the air you breathe, right?

So somehow we prefer that over having luxuries or just being a high income rich country.

[Richard Bexon]

Well, I mean, Costa Rica is always comes out in some of the happiest countries in the world. And I think that we know why that is. And it's amazing, again, you may have these amazing economies in these countries, but it's these people come here, they have vacation homes here, they come and live here, they retire here, they become digital nomads here.

There is something very unique about this country. I think my long term fear is that like that five million is going to become 10, 15 and it's going to be busy. I mean, maybe not just because I love that we don't have tons of highways everywhere.

I love that roads aren't paved. I think it keeps it authentic. And I think it keeps it raw.

And once a road gets paved, you know, development usually happens. So I know it needs to happen, but I love that it happens slowly here.

[Pedro Beirute]

Yeah, it's part of the adventure here in Costa Rica, not having all the infrastructure of developed country. And it's it's part of the ride, enjoying the nature, slow down, take it easy. And of course, with a reasonable level of comfort, right?

Yeah, it's a it's a unique country.

[Richard Bexon]

I always say that those dirt roads are free Costa Rican massages. So, yeah, I love them. But, you know, anyway, here we focus more on kind of helping people invest in Costa Rica when it comes to real estate developments and also tourism here kind of shaping that.

I mean, I've had clients that have come to me before that said like, Rich, I want to do this big development. And I'm like, guys, I'm not touching that. It's not sustainable and it's not boutique and it's not authentic.

I will not do that. Or, hey, I want to put a casino. I'm out.

I'm not touching that. Like it's important to me of like I'm aligned with the country in which my kids, you know, my wife is from, my kids are being brought up in and that I'm about to hopefully get citizenship in. So but I mean, based on this, I mean, what advice would you give to anyone looking to make an investment in Costa Rica and, you know, what things should they consider?

[Pedro Beirute]

Yeah, we just recently approved two relevant laws for this profile of investors. One is a law known as a law to attract investors, which include both people that wants to invest as well as people that want to retire here because they enjoy a pension or rent from savings they have had in the past. The law basically grants a residency to people willing to invest more than $150,000, which is a very reasonable amount if you want to like buy a house or buy a farm or something like that.

And with this law, you can import all your goods from abroad, meaning your house, your furniture, your house, of course, your IT equipment, your computer, etc. You can bring up to two cars without paying import duties. That's a lot of that's a big advantage because import duties for cars here are like 80 percent.

So you can bring your car. Also, you can enjoy 20 percent discount in when you're transferring goods, meaning you're buying a land or a house, etc. There's an exemption there.

So that law is to attract investors or people that enjoy a rent or a pension. The other law is to attract digital nomads, which is also very attractive because it basically extends the length of a stay you can have here in Costa Rica from 90 days to one year or up to two years if you demonstrate that you have an income from a company or for an employer outside of Costa Rica. You have to demonstrate that your income is at least $3,000 per month or $4,000 per month if you are coming with your family.

And basically, it will give you security that there will be no taxes charged to you while you are here in Costa Rica. Income tax, I mean. That was kind of a gray area in the past that you can use your international driver's license, meaning your driver's license from the U.S. or from Canada or from Europe, whatever, and use it here without going through the process of getting a local.

[Richard Bexon]

I've done that one. Yeah, it's a bit of a nightmare.

[Pedro Beirute]

Exactly. You can open a bank account without a lot of problems. And yeah, most important that you will not pay income tax here, even for technology company employees that they get like stock options or a purchase plan or restricted stock units, things like that, that in some countries that is not clear how to tax that if you're not living in the country and you're living abroad.

Here, the new legislation basically is clear about that you're a visitor to our country and we will not charge you for any income tax. Of course, you have to pay here value added tax and regular tax.

[Richard Bexon]

Pedro, a question on the investor, you know, because I mean, it's been a while since that actual law was passed, but the implementation of it is still like dragging its feet. There's still no clarity on that. I mean, you can still apply for residency if you've invested more than 150,000.

But all of the benefits that come with it still are not very clear. Do you do you have any insight into that?

[Pedro Beirute]

Yeah, exactly. That's kind of a gray area because the law was approved last year, but the regulation of the law has not been approved yet. We went through a government transition in the last month in which that kind of paused the efforts we were having to regulate.

I have the inside information that the new government is working on it. The Ministry of Presidency is working on it. Fantastic.

They would like to issue the the regulation as soon as possible because they realize that there's a lot of people in the situation that you just described. Of course, they can apply for the residency. Of course, they can start the paperwork.

But it's not clear if they can obtain all these benefits I just mentioned. So we want to remove that uncertainty out of the way immediately so that people feel safe, because as you said, right now, it's not clear if you bring your car, probably you'll need to pay the taxes and you will be able to recover them after after the regulation passes, because the law has already been approved, meaning that by law you can enjoy those benefits. But the process on how to enjoy those benefits is not clear.

So we hope to have that expedited and clear as soon as possible so that everything is is clear, transparent, easy, fast and.

[Richard Bexon]

Definitely, I mean, I think we'll I mean, we get quite a few questions on that from a lot of people just asking when that's going to be implemented. And I think it was like, look, there's a transition of government. It's now in place.

I mean, we're pushing on our side, I think, was a conversation that we had before.

[Pedro Beirute]

I know it's a priority for the new government. So I hope it will be out in weeks.

[Richard Bexon]

OK, that's awesome. That's awesome to hear. I mean, if you I mean, where do you think the opportunity lies in investing in Costa Rica at the moment, you know, based on everything, you know?

I mean, I'm not asking you to be an investment advisor, but I mean, which areas would you like to see more investment in Costa Rica?

[Pedro Beirute]

Yeah, so several areas, of course, it will depend on the appetite and on the purpose that this investor may have. Anything that has to do with sustainable businesses, sustainable activities is definitely an opportunity. If let's say you want to invest in agriculture, in food security.

So something that is growing because there is an increased global demand is on things that are organic, that are bio, as it's called in Europe, because consumer, especially after pandemic, is more conscious about what they eat. And that has a tremendous growth opportunity. Things that are related to superfoods that make you feel healthier, better and so on.

Of course, real estate, as you mentioned before, because Costa Rica is it's a it's a country that has several micro climates. So, yeah, the usual or traditional play would be like a beach, coastal locations. But the country has more to offer than that.

If people prefer like cool weather, there are several mountains and several micro climates that you can consider. It's good weather all year round. So that's also good because it's not like a seasonal opportunities.

Yeah. Here you enjoy the same nice weather from January to December. So it's not like you will have a hot season and a bad season or that you will enjoy more certain months of the year and then the other months of the year.

You would not because it's too cold or it's too hot. Of course, we have rainy and dry season, but it's part of that. Right.

And I've never heard that weather has been a complaint.

[Richard Bexon]

Best weather in the world.

[Pedro Beirute]

Coming to to to Costa Rica and rainy season is very attractive. I personally love rainy season because everything is with you because you see that the rivers with all its power, you see the bird life comes out. Yeah, that comes out.

And it's it's beautiful.

[Richard Bexon]

Yeah, I agree. I agree. Well, Pedro, I know you're busy.

So my last question for you, sir, if you inherited $500,000 and had to invest it into business or real estate in Costa Rica, what would you invest it in?

[Pedro Beirute]

You just told me before that not as an investment advisor, but I will do my research. I really think, Richard, that whatever you invest in, it needs to be connected to your purpose in life, to your heart, not just to your brain. Yep.

To what you like, to what you enjoy. So based on that, yeah, it could be a house in the coast or it can be a startup in the mountains or it can be a little data center using renewable energy from rivers. I like that.

Yeah, it depends on what are your personal interests. But based on that, yeah, if you're a miner, if you are into crypto and blockchain, et cetera, maybe your contribution to the world is to to do like a little mine or data center next to a river and take that electricity from the water and do good to the planet while you're also doing good to your business and creating jobs and be part of a rural community and help the local school and help the local association to foster or promote education with unprivileged children and so on.

I'm sure that many ideas will come if you have the passion, the purpose and the will to create a better society.

[Richard Bexon]

Awesome. Well, Pedro, I really appreciate you taking the time out of what I know is a very busy day to talk to us here on the podcast. I'm sure that the listeners loved hearing about this.

And I think for anyone that was looking to invest in Costa Rica, now it's very clear of of why you should invest it. So, Pedro, thank you very much for your time and have a great day. Thank you.