Costa Rica’s beloved astronaut, scientist, businessman and inventor, Franklin Chang Diaz, has been elected to serve on the Board of Directors of Cummins, Inc., a U.S. company that designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems (click for link to press release).  Chang will serve on the Board’s Safety, Environment and Technology Committee, as well as the Audit, Finance and Governance and Nominating Committees.  Chang, 59 years old, graduated from MIT with a doctorate in nuclear engineering and has flown seven missions with the space shuttle.  He founded Ad Astra Rocket Company, which is developing the VASIMAR rocket engine that could cut space travel time for Mars missions in half.  Chang resides part-time in Houston, Texas and partly in Liberia, Costa Rica.  He and his wife, Peggy, have four daughters, ages 14 to 36.  In addition to his participation in the NASA space program for 25 years (he retired in 2005), Chang has been instrumental in improving education opportunities for the youth of Costa Rica.

Link to Article in La Nación

Walmart of México, also known as Walmex, has acquired 100% of the stock of Walmart Centroamérica.  The acquisition includes the 51% stake held by Walmart Stores, Inc. (of the U.S.) and the remaining 49% held by partners in Costa Rica (CSU) and Guatemala (La Fragua).  The transaction will take place primarily in 593 million new shares of Walmex stock.  A smaller portion, $110 million, will be paid in cash.  As a result of announcement of the deal, shares of Walmex shot up 3.19% to 58.1 pesos (or, a little over $4.00) on the Bolsa Mexicana.  In addition to the initial compensation, Walmex will issue an additional 55 million shares in an “earnout.” These shares will be kept in treasury and issued to shareholders of Walmart Centroamérica once the merged entity reaches a predetermined level of profitability.  The deal also gave the shareholders of Walmart Centroamérica the opportunity for some participation in corporate governance of the merged entity.  The president of Walmex, Eduardo Solórzano, expressed his pleasure about the growth prospects the deal brings for Walmex, adding that this deal is the first time that Walmart Stores, Inc. has shown sufficient confidence in a foreign company (in the case, Walmex) as to allow it to gain control of Walmart’s operations in other countries.  Walmex operates 1,410 commercial units in México, including supermarkets, clothing stores and restaurants.  Walmart Centroamérica operates 519 units in Central America, plus 11 distribution centers, and employs 30,000 in Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua.  For the fiscal year end of September 2009, Walmart Centroamérica had sales of $3.3 billion.  With this transaction, Walmex expect to reach sales of $25 billion.

Link to Article in La Nación

So says the recent report entitled, Estado de la Nación (State of the Nation).  The bottom line according to the report is that Costa Ricans are consuming more resources than the country can provide and generate more waste than it can absorb.  All this seems to fly in the face of Costa Rica’s avowed harmony between development and care for the environment.  The report goes to show that to maintain a proper equilibrium between these two often competing forces is a very delicate balancing act.  The report evaluates Costa Rica’s impact along two measurements, “bio-capacity” and “ecological footprint.”  Bio-capacity has to do with the capacity of an ecosystem to produce biologically useful material and absorb waste generated by humans.  Investigators found that Costa Rica’s bio-capacity per person is 1.66 hectares.  That is, to produce a sufficient amount of material and absorb the resulting waste from consumption each person in Costa Rica needs 1.66 hectares of space.  This measurement takes into account the current actual lifestyle of a typical Costa Rican, in terms of rate of consumption and generation of waste.  As for “ecological footprint” the report found that each tico has a footprint of 1.86 global hectares.  When you subtract Costa Rica’s ecological footprint from its bio-capacity a deficit is produced.  This basically shows, according to the researchers, that Costa Rica would need 12% additional territory to meet the needs of development.  In short, the development is unsustainable and thus dependent on the bio-capacity of other countries.  Costa Rica thus is viewed as an eco-debtor.  Even so, Costa Rica is nevertheless well below the average ecological footprint of other countries of the world, which stands at 2.7 global hectares per inhabitant.  The report cites as the cause for the deficit both patterns of consumption along with population growth.  Also contributing to Costa Rica’s poor showing are high emission of contaminating gases, the consumption of its forests, and inefficient use of its resources. 

Link to Article in La Nación

A professor at the University of Costa Rica (UCR) has invented a new system for attaching bamboo to walls, foundations, and other structures.  The commercial name for this new invention is Guaduatec and it is the invention of Alejandro Ugarte, professor of architecture at UCR.  Architects have problems with using bamboo because of its geometric shape and the fact that its dimension change over time due to variances in environmental conditions.  Bamboo normally is attached to other surfaces by using perforations in the canes, but this over time can cause fractures and thus connections with screws and nails will loosen.  The new mechanism adapts to the changing dimensions of the bamboo cane and thus prolongs and expands its usefulness as a construction material.  It consists of two plates that mold to the shape of the cane that are joined by a springed tensor that runs through the stalk, holding the two plates together and the cane firmly in place.  If the bamboo increases or decreases in dimension, the plates will adjust by means of the tensor.  Bamboo is environmentally friendly and can substitute for wood in many structures.  It has the potential to play an important role in reforestation and can also be more easily recycled and reused as a construction material.

Link to Article in La Nación

Ley 8683, or commonly known as the Impuesto Solidario para el Fortalecimiento de Programas de Vivienda, is now the law in Costa Rica.  What does all that mean?  It means that if you own a home with a value greater than around $175,000, you have a new tax to pay.  In English you would call it a tax on luxury homes.  In Spanish, impuesto a casas de lujo.  In the aforementioned case of a home “valued” at $175,000, the tax would be .0025%.  That is the case up to around $440,000, using current exchange rates to convert colones, the local currency, to dollars.  The scale is graduated and tops out at .0055% for homes valued over $1,500,000 (again, using today’s exchange rate).  The rub comes in calculating value.  Up until now home owners could pretty much declare any darn value they wanted to.  Not any more.  The Ministro de Hacienda is getting downright scientific about all this, even to the point of developing a computer program that owners can use to calculate the value of the home.  The report of value must be filed within three months of the law going into effect, which was October 1, 2009.  The tax must be paid within the first 15 days of January, 2010.  The calculation of value is very complicated and goes strictly by the guidelines of value for various types of structures (and that includes the home and other improvements such as pools, jacuzzis, garages, etc.).  All of it is laid out in a manual, or you can just download the computer program, which happens to be in Spanish of course.  I downloaded it today and began to play around with it.  Just do not change the suggested “directory” when going through the download instructions, or it won’t work.  Couple of things to note here.  First, this tax is in addition to the normal quaterly property tax, up until now which was based on the declared value.  Not any more, because in the future even that old tax will be based on what you report under the guidelines of the new “additional luxury tax.”  So if you report a $200,000 value under the new tax, you could end up paying $500 for the old tax (previously based on the “declared value” of probably close to nothing), plus another $500 for the new luxury tax, for a total of $1,000 annually.  You have to reevaluate every three years, or in any year when an improvement was made to the property.  The money collected from this new tax is supposed to be exclusively earmarked to eliminate “tugurios,” or shacks, and provide adequate housing for the folks that live in them.  That is a good thing.  My only fear is what the implementation of this tax might mean for the Costa Rica real estate market.  It is one thing to help the poor, but if in so doing you greatly discourage foreign investment, are you not cutting off your nose to spite your face?  Only time will tell.

You Can Download the Tax Evaluator Here (zip file)

Well I guess if you’re gonna get tapped for an ambassadorship, it might as well be in paradise.  That is what Anne Slaughter Andrew, if she knows anything about where she is headed for the next four (or could it be eight) years, should be thinking.  Obama has nominated her to be his eyes and ears here and if Senate approved, which she certainly will be, San Jose will have a new U.S. ambassador.  Andrew is an expert in environmental issues and is the founder of New Energy Nexus, LLC, a firm that consults with emerging clean energy companies.  She is the wife of Joseph Andrew, who was the national chairman of the DNC (Democratic National Committee) from 1999 to 2001.  Andrew earned her B.A. from Georgetown University and her J.D. at the Indiana University Law School.  Andrew may lack the diplomatic experience of past ambassadors, but since relations between U.S. and Costa Rica are fairly “warm and fuzzy,” Obama opted for someone he personally knew and trusted, rather than someone the Department of State may have picked for the post. And if it was a “political favor,” it was a nice ripe one! The pick may also have had much to do with Obama’s concern over environmental issues and Costa Rica is a country that is setting many trends in that area. Andrew also co-founded the medical technology consulting firm known as Anson Group.

The tourism sector in Costa Rica attracted $223 million foreign direct investment (FDI) in the first six months of 2009.  That is less than in 2007 and 2008, but not nearly as drastic a decrease as many had predicted.  Prime reasons supporting the continued strong demand are the many marina projects that are now underway, such as the Marina Papagayo in Guanacaste.  Direct investment in tourism represented about 38% of the total FDI.  IN 2008, investment in tourism represented only 14% of the 2 billion in total FDI that year.  Gonzalo Vargas, president of CANATUR (the Costa Rican Tourism Chamber), commented in an article in El Financiero, that while tourist arrival numbers are down, investors are thinking more in the long term.  Overall, however, FDI this year is way down, 50% less than in 2008.  The first six months of this year recorded a total FDI of around $592 million compared with over $1 billion last year.  The Central Bank predicts that FDI will be down 30% for the full year and will recuperate at a slow pace next year.  The sectors that have suffered the most are real estate and industry, which enjoyed strong showings in previous years.  The industrial sector’s share of total FDI was 17.2% for the first six months.  Its share of total FDI has been falling since 2004 as other sectors, principally tourism and real estate, have been on the steady rise. 

Link to Article in El Financiero

It has been up until now dreadfully difficult to build a new marina in Costa Rica.  For years the only one in the country was Los Sueños, located at Playa Herradura near Jaco beach.  Within the last year another marina, the Marina Papagayo, has opened its slips to massive luxury yachts.  There are several other projects in various stages of administrative approval.  The problem is that administrative approvals have been the “black hole” for marina developers.  A hole from which hardly anyone ever escaped.  That all could be changing now with the new “Ley de Marinas” approved last week by the legislature. The new law tightens up certain environmental controls and enforces compliance with Costa Rica’s Equal Opportunities for the Disabled law. But were the beauty lies for developers, at least potentially, is the way it clarifies and streamlines the approval process and allows for a much faster pace of gaining the myriad of administrative approvals and concessions necessary to push a marina project to actual construction.  Is it a good thing?  Well not all of the “diputados” (or legislative representatives) agree.  Some, like Ana Helena Chacón, believe that it is essential for promoting more tourism in coastal communities and thus more jobs and economic development.  On the other hand, Olivier Pérez doesn’t like marinas in the least.  He says they are only for the benefit of a select few..a very rich select few.  He also claims that large luxury marinas displace the local population and can lead to social unrest.  He nevertheless voted for the measure, because the regulation offered by the new law is better than what is on the books currently.  I have been saying for some time that Costa Rica could use another marina or two, but that doesn’t mean the floodgates should be open allowing a dozen to fast-track towards completion.  There are serious social and environmental implications posed by marina development and each situation should be reviewed carefully.  Also, in the end the ticos living and working in the communities affected should have the final word.

Link to Article in La Nación

Once more this is the case as the U.S. fast food chain Wendy’s will open another restaurant in Costa Rica.  The franchise owner in Costa Rica, Comidas Rápidas Wentica, will open its newest location in the mall Paseo de las Flores in Heredia.  This will be its fourth restaurant, adding to others in Santa Ana, San Pedro and Desamparados. This newest restaurant will measure 400 square meters and have the capacity to feed 150 persons.  This installation will feature a playground, auto-service and ample parking.  The mall is located directly across the highway from Universidad Interamericana, which adds to the appeal of the location for Wentica.  The new operation at Paseo las Flores will employ 35 to 40 ticos.  The Wendy’s chain first arrived to Costa Rica in 2006 with a restaurant in the center of San Jose, in the same location that previously was occupied by the defunct chain, Hardees.  An executive with the franchisee told La Nación that the company plans to continue its expansion in the GAM (Gran Area Metropolitana).  Specifically he mentioned the possibility of future sites in Curridabat, Paseo Colón, La Sabana, Escazu and the Juan Santamaría International airport.  It all depends on the attractiveness of the location and the price, said the exec, who added that the chains experience in Costa Rica has been very favorable.  The investment in this new location is around $1 million.

Link to Article in La Nación

The 19 commercial airlines now flying into the Juan Santamaría airport in Alajuela, Costa Rica’s busiest international airport, cut 1,184 flights during the period January to August, 2009 as compared with the same period in 2008.  The reason?  Well the numbers tell the story. The economic crisis has taken its toll on Costa Rican tourism.  During the period January to August of 2008, there were 20,665 flights.  For the same period this year, there were only 19,481, for a 6% decrease.  During that period 117,000 less passengers arrived at the airport (1,053,000 total arrivals versus 1,170,000 during the same period in 2008).  The principal routes that have been cut are from the U.S. as that country accounts for 12 daily flights and over half the total tourism arrivals.  In addition to cutting flights, some airlines are opting to use smaller planes.  For instance, if the market demands at least 80 seats, a 90 seat-er will be more profitable than a plane that seats 150.  William Rodríguez, vice president of the Costa Rican Tourism Chamber, told La Nación that while this year tourism will likely see a sizable decrease compared to the exceptional year of 2008, already the market is beginning to witness a turnaround.  Although ICT (the Tourism Ministry) wants to attract more flights to Costa Rica, Director Mario Zamora noted that now is not a good time to spend money and time trying to do so.  Allan Flores, also with ICT, added that the $20 million allocated by ICT to promotion of tourism in other countries has definitely softened the blow a bit with respect to Costa Rica as compared to other major tourism destinations.

Link to Article in La Nación