VZCZCXYZ0001
RR RUEHWEB

DE RUEHSJ #0090/01 0192326
ZNR UUUUU ZZH
R 192324Z JAN 10
FM AMEMBASSY SAN JOSE
TO RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/SECSTATE WASHDC 0259
INFO RUEHSJ/AMEMBASSY SAN JOSE

UNCLAS SAN JOSE 000090 
 
SIPDIS 
DEPT FOR OFFICE OF INVESTMENT AFFAIRS-EB/IFD/OIA 
WHA/CEN 
(JENNIFER VANTRUMP) 
PASS TO USTR FOR JKALLMER, TREASURY FOR DO/JWALLACE, USDOC FOR ITA/JKOZLOWICKI, USTR FOR JKALLMER, OPIC FOR RO'SULLIVAN 
 
E.O. 12958: N/A 
TAGS: ETRD KTDB KIPR OPIC KIDE USTR ECON CS PGOV
SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT: COSTA RICA 
 
REF: 09 STATE 124006 
 
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Overview of Foreign Investment Climate - Costa Rica 
 
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1.Costa Rica's investment climate is generally favorable and has 
been for many years.  Consequently, foreign direct investment is 
high and has been a significant contributor to Costa Rica's 
economic growth.  Nevertheless, the country's legal and cultural 
environment continues to present stumbling blocks to investors. 
The January 1, 2009 entry-into-force of CAFTA-DR in Costa Rica 
unambiguously improves Costa Rica's investment climate.  In 
response to Ref A, Post prepared the following report: 
 
 
 
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Openness to Foreign Investment 
 
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¶2. Costa Rica actively courts foreign direct investment (FDI).  The 
four-year administration of President Oscar Arias, (which will end 
in May 2010), places a high priority on attracting and retaining 
high-quality foreign investment in Costa Rica.  The Foreign Trade 
Promotion Corporation (PROCOMER) as well as the Costa Rican 
Investment and Development Board (CINDE) lead Costa Rica's 
investment promotion efforts.  FDI in Costa Rica has slumped during 
the current global financial crisis but continues to play an 
important role particularly in the Real Estate and Tourism industry 
sectors (see "Foreign Direct Investment Statistics" below.)  The 
investment promotion agency CINDE estimates a roughly 30 percent 
drop in FDI in 2009 but expects a subsequent rebound. 
 
 
 
Costa Rica, together with El Salvador, Guatemala, Honduras, 
Nicaragua, and the Dominican Republic, is a signatory to the U.S. - 
Central America - Dominican Republic Free Trade Agreement 
(CAFTA-DR).  Costa Rica is the last country for which the treaty 
entered into force (EIF), on January 1 2009.  Costa Rica spent the 
previous two years meeting a series of legal and implementation 
requirements for EIF, and during the first part of 2010 is expected 
to fully implement the remaining measures.  CAFTA-DR improves Costa 
Rica's investment climate by strengthening the protection of 
intellectual property rights, providing a mechanism for 
arbitration, opening key sectors to competition, and assuring 
access to markets in other CAFTA-DR economies.  With CAFTA-DR 
successfully concluded, Arias administration trade policy is now 
focused on the negotiation of similar agreements, most notably with 
the European Union and China. 
 
The country's commercial code details all business requirements 
necessary to operate in Costa Rica.  The laws of public 
administration and public finance contain most requirements for 
contracting with the state.  All businesses must be registered in 
the national registry, thereby becoming national companies that may 
have national or foreign owners.  The investment requirements for 
foreign and national persons and companies are identical. 
Businesses may be established starting from nothing, acquired, 
merged with, or taken over in much the same way as is done in the 
U.S.  Foreign partnerships with local businesses are quite common. 
The state does exercise some monopoly control in some economic 
sectors as detailed below in the "Competition from State-Owned 
Enterprises" section. 
 
 
 
Several public institutions are responsible for consumer protection 
as it relates to monopolistic and anti-competitive practices.  The 
"Commission for the Promotion of Competition" (COPROCOM), a 
semi-autonomous agency housed in the Ministry of Economy, Industry 
and Commerce, is charged with investigating and correcting 
anti-competitive behavior across the economy.  SUTEL, the 
Telecommunications Superintendency, is charged with regulating fair 
competitive practices in the Telecommunications sector.  Both 
agencies are charged with defense of competition, deregulation of 
economic activity, and consumer protection.  They have shown some 
 
ability to act, although SUTEL has been operating for less than one 
year. 
 
The judicial system generally upholds contracts, but caution should 
be exercised when making investments in sectors reserved or 
protected by the constitution or by laws for public operation. 
Investments in state-protected sectors under concession mechanisms 
can be especially complex due to frequent challenges in the 
constitutional court of contracts permitting private participation 
in state enterprise activities.  Furthermore, independent 
government agencies can issue permits or requirements that may 
contradict the decisions of other independent agencies, causing 
significant project delays. 
 
 
 
The Arias administration is moving ahead with efforts to build 
infrastructure and manage public works projects by using the 1998 
concessions law, modified in June 2008.  The modifications to the 
concessions law were designed to streamline related processes.  Two 
concession agreements are currently functioning.  Operations at the 
Port of Caldera, the country's principal Pacific port, began 
successfully in 2006.   The other concession agreement is for the 
San Jose-to-Caldera highway, which is open to transit along a 
portion of the route with the remainder of the route to be finished 
in fourth quarter 2010. 
 
Investors must exercise "caveat emptor," since many firms operate 
in the informal sector of the economy.  Appropriate due diligence 
should include confirming a company's registry and formal 
participation in the Costa Rican economy such as paying taxes. 
 
 
 
While the government focuses on promoting foreign investment in 
export industries, foreign franchises have prospered in the 
domestic market over the past thirty years.  Both foreigners and 
nationals have invested in bringing U.S. brands from a wide array 
of business sectors to Costa Rica, including fast food (such as 
Taco Bell, Kentucky Fried Chicken, Pizza Hut, Domino's Pizza, Papa 
John's Pizza, McDonald's, Burger King, Wendy's, Subway, Quiznos and 
TCBY Yogurt), car rentals (including Hertz, Avis, Dollar, and 
Budget), hotels (such as Marriott, Doubletree by Hilton, 
Intercontinental, Regents, Hampton Inn, and Best Western), and 
designer clothing boutiques (including Tommy Hilfiger, Liz 
Claiborne, and athletic wear brands such as New Balance).  Price 
Smart (owned and managed by the founders of Price Club in the U.S.) 
has four Costa Rican stores.  WalMex, via a 2009 acquisition, 
controls Wal-Mart Central America, a company comprised of 146 
stores operating under the Pali, Maxibodegas, Mas x Menos, and 
Hipermas brands. 
 
 
 
Index 
Ranking       Year 
 
TI Corruption Index 
5.1         2008 
 
Heritage Economic Freedom:  Rank(Freedom%] 46(66.4)     2009 
 
World Bank Doing Business                                     121 
2008/2009 
 
Millennium Challenge Corporation (MCC) measures are not available 
for Costa Rica. 
 
 
 
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Conversion and Transfer Policies 
 
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¶3. There are no restrictions on receiving, holding or transferring 
foreign exchange.  There are no delays for foreign exchange, which 
is readily available at market clearing rates and readily 
transferable through the banking system.  From 1983 until 2006, 
Costa Rica maintained a crawling peg exchange regime with the U.S. 
dollar.  However, in October 2006, the country transitioned to a 
crawling band regime, which is in reality a "dirty float" with 
explicit upper and lower limits.  The Central Bank also created a 
 
foreign exchange market, "MONEX", (USD/Colon) in which buyers and 
sellers are matched blindly.  Participants may register without any 
initial fee and may either buy or sell amounts over the $1,000 USD 
minimum.  A variety of instruments designed to insure against 
exchange rate volatility are being introduced into the market and 
may be obtained through the Securities Exchange ("Bolsa de 
Valores") or through banks.  To date, the result appears to be 
satisfactory with the Central Bank, but market participants have 
struggled to adapt to the greater uncertainty.  Dollar bonds and 
other dollar instruments may be traded legally.  No restrictions 
are imposed on reinvestments or on the repatriation of earnings, 
royalties, or capital except when these rights are otherwise 
stipulated in contractual agreements with the government of Costa 
Rica.  Royalties are taxed in accordance with Title IV of the 
Income Tax Law No. 7092 at rates varying from 10 to 25 percent. 
 
 
 
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Expropriation and Compensation 
 
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¶4. Expropriation of private land by the government without prompt 
or adequate compensation has hurt some Costa Rican and foreign 
investors.  These incidents usually involve land expropriated to 
create national parks, indigenous reserves, or agricultural 
projects for poor farmers.  One long-standing case required over 
fourteen years to wind its way through the Costa Rican court 
system, only to conclude without providing compensation to the U.S. 
citizen landowner.  Another case involving titled beach land 
subject to an expropriation order for a national park has 
highlighted conflicting decisions between different government 
entities and the pitfalls experienced when the government lacks the 
funds to pay for land that it is required by law to protect. 
 
 
 
Article 45 of Costa Rica's constitution stipulates that no property 
can be expropriated from a Costa Rican or foreigner without prior 
payment and demonstrable proof of public interest.  The 1995 Law 
7495 on expropriations further stipulates that expropriations can 
take place only after full and prior payment is made.  Foreigners 
and Costa Ricans are supposed to receive equal treatment. 
Provisions include: (a) return of the property to the original 
owner if it is not used for the intended purpose within ten years 
or, if the owner was compensated, right of first refusal to 
repurchase the property back at its current value; (b) a 
requirement that the expropriating institution complete 
registration of the property within six months; (c) a one-month 
period during which the tax office must appraise the affected 
property; (d) a requirement that the tax office itemize crops, 
buildings, rental income, commercial rights, mineral exploitation 
rights, and other goods and rights, separately and in addition to 
the value of the land itself; and (e) provisions providing for both 
local and international arbitration in the event of a dispute.  The 
expropriations law was amended in 1998 and then again in 2008 to 
expedite some procedures, particularly those necessary for 
acquiring land for the construction of new roads. 
 
 
 
Invasion and occupation of private property by squatters, who are 
often organized and sometimes violent, occurs in Costa Rica.  The 
Costa Rican police and judicial system have at times failed to 
deter or to peacefully resolve such invasions.  It is not uncommon 
for squatters to return to the parcels of land from which they have 
been evicted, requiring expensive and potentially dangerous 
vigilance over the land. 
 
 
 
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Dispute Settlement 
 
-------------------------- 
 
¶5. Costa Rica uses the Roman civil law system rather than common 
law.  The jury system is not used, although judicial reform efforts 
have included testing the use of juries in some cases.  The 
 
fundamental law is the country's political constitution of 1949, 
which grants the unicameral legislature a particularly strong role. 
The civil and commercial codes govern commercial transactions.  The 
courts are independent, and their authority is respected.  The 
roles of public prosecutor and government attorney are distinct: 
the public prosecutor or Attorney General ("Fiscal General") 
operates a semi-autonomous department within the Judicial branch 
while the government attorney or Procurator General ("Procurador 
General") works within the Ministry of Justice and Grace in the 
Executive branch.  Judgments of foreign courts are generally 
accepted and enforced.  The Constitution specifically prohibits 
discriminatory treatment of foreign nationals. 
 
Monetary judgments are usually made in Costa Rican colones. 
However, if the dispute involves a dollar-denominated transaction, 
the award may first be calculated in dollars and then converted to 
colones for payment. 
 
 
 
Litigation can be long and costly.  The legal system is 
significantly backlogged, and civil suits take over five years on 
average from start to finish.  Some U.S. firms and citizens have 
satisfactorily resolved their cases through the courts, while 
others have seen proceedings drawn out over a decade without a 
final ruling.  The process to resolve squatter cases through the 
courts can be especially cumbersome.  Also, civil archives 
recording land title are at times incomplete or contradictory. 
Potential buyers should retain experienced legal counsel and 
carefully conduct due diligence to ensure that properties are free 
of conflicting ownership claims. 
 
 
 
Arbitration is theoretically possible under the civil and 
commercial codes.  However, U.S. investors have experienced mixed 
results from such proceedings organized by local attorneys.  A 1998 
law governing alternative conflict resolution (Law 7727) sought to 
encourage arbitration and simplify the procedures under which 
arbitration takes place.  Several arbitration centers operate, 
including one at the Costa Rican - American Chamber of Commerce. 
Some cases reportedly have been successfully and quickly resolved 
under the law. 
 
 
 
Costa Rica has been a member of the International Center for the 
Settlement of Investment Disputes (ICSID) since 1993, when it 
acceded to the Washington Convention.  Since then, the ICSID has 
successfully resolved one land expropriation case.  Costa Rica is 
also a member of the World Bank Multilateral Investment Guarantee 
Agency (MIGA), which provides a forum for international arbitration 
in investment disputes, as well as investment guarantees.  Private 
energy producers have included international arbitration clauses in 
their contracts.  Costa Rica has not joined the United Nations 
Protocol for the Compulsory Settlement of Disputes between 
Countries. 
 
 
 
The provisions of Chapter 10 of CAFTA-DR provide an additional 
avenue for aggrieved investors to pursue international arbitration. 
The arbitration process under CAFTA-DR is designed to be open and 
transparent; hearings and documents are public, and amicus curiae 
submissions are expressly authorized.  The CAFTA investment chapter 
includes checks to help assure that investors do not abuse the 
arbitration process.  The agreement includes a provision that 
allows tribunals to dismiss frivolous claims and award attorney's 
fees and filing costs. No arbitration cases had yet been filed 
during CAFTA-DR's first year (calendar year 2009). 
 
The Costa Rican bankruptcy law, addressed in both the commercial 
code and the civil procedures code, is similar to corresponding 
U.S. law.  Title V of the civil procedure code outlines creditors' 
rights and the processes available to register outstanding credits, 
administer the liquidation of the bankrupt company's assets, and 
pay creditors according to their preferential status. 
 
 
 
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Performance Requirements and Incentives 
 
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¶6. Three investment incentive programs operate in Costa Rica:  the 
free trade zone system, a so-called active finishing regime, and a 
duty drawback procedure.  These incentives are available equally to 
foreign and domestic investors.  These incentives include tax 
holidays, free or subsidized infrastructure and industrial parks, 
and training of specialized labor force. 
 
 
 
Individual companies are able to create industrial parks that 
qualify for Free Trade Zone status by meeting specific criteria and 
applying for such status with Costa Rica's Foreign Trade Promotion 
Authority (PROCOMER).  Presently, there are 251 companies operating 
within 28 FTZs within Costa Rica.  Companies in FTZs receive 
exemption from virtually all taxes for eight years and at a reduced 
rate following that period.  In addition to the tax benefits, 
companies operating in FTZs enjoy simplified investment, trade and 
customs procedures, which provide a convenient way to avoid Costa 
Rica's burdensome business licensing process.  The tax holidays 
provided for investment in FTZ manufacturing companies are 
scheduled to phase out in accordance with World Trade Organization 
(WTO) agreements by 2015, to be replaced by Law 8794 which 
eliminates explicit export incentives and replaces them with 
favorable tax treatment of specific types of company or 
organization.  The WTO-mandated change does not apply to those 
companies that export only services.  Call centers, logistics 
providers, and software developers are among the companies that may 
benefit from FTZ status but don't physically export goods.  Such 
service providers have become increasingly important participants 
in the free trade zone regime. 
 
 
 
The active finishing regime, created by decree in 1997, suspends 
taxes for renewable one-year periods on imported inputs of 
qualifying companies, and then exempts the inputs from those taxes 
when the finished goods using or containing them are exported.  The 
regime also facilitates a five-year renewable suspension of taxes 
on capital goods used to manufacture exported goods.  Companies 
within this regime may sell to the domestic market if they have 
registered to do so and pay pro rata import duties on capital 
equipment used for the domestic market.  Finally, the drawback 
procedure provides for rebates of duties or other taxes that have 
been paid by an importer for goods subsequently incorporated into 
an exported good. 
 
While the procedures necessary to obtain residency in Costa Rica 
are traditionally long and very bureaucratic, immigration officials 
believe that a new law taking effect in March of 2010 will make the 
process less burdensome.  In any case, existing immigration 
measures do not appear to have inhibited foreign investors' 
mobility to the extent that they affect Foreign Direct Investment 
(FDI) in the country. 
 
 
 
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Right to Private Ownership and Establishment 
 
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¶7. All private entities and persons, domestic or foreign, may 
establish and own businesses and engage in all but a few forms of 
remunerative activity. The exceptions are in sectors that are 
reserved for the state (legal monopolies) or that require 
participation of at least a certain percentage of Costa Rican 
citizens or residents (electrical power generation, broadcasting 
and professional services).  Under CAFTA-DR, the insurance and a 
part of the telecommunications sectors are now opening to 
competition.  In other activities, such as medical services, state 
firms operate, but that does not preclude private sector 
competition, which generally receives equal treatment to state 
companies.  Three banks owned by the state receive some advantages 
over their 11 private competitors, namely that they cannot be 
forced into bankruptcy, a guarantee not afforded to private banks. 
 
 
 
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Protection of Property Rights 
 
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¶8. Secured interests in both chattel and real property are 
recognized and enforced, and mortgage and title recording is 
mandatory.  The laws governing investments in land, buildings and 
mortgages are generally transparent.  However, there are continuing 
problems of overlapping title to real property and fraudulent 
filings with the national registry, the government entity that 
records property titles.  The Costa Rican government does not 
prevent foreign title companies from operating.  While title 
guaranty is not a service traditionally offered in the country, 
Stewart Title Company, First Costa Rican Title and Trust and Latin 
American Title Company all offer title guaranty and related 
services. 
 
 
 
Similar to fraudulent filings, investors have faced difficulties 
with transactions involving property located in indigenous 
protected zones that has been represented as property without other 
claims or risk of expropriation.  Investors should exercise 
appropriate due diligence when conducting transactions dealing with 
land in indigenous zones as they may either be unable to obtain 
free and clear title or risk future expropriation. 
 
 
 
Investment in Costa Rican real estate requires care; many U.S. real 
estate investors have experienced problems with obtaining clean 
titles, adverse possession by squatters, and unscrupulous lawyers. 
Landowners should be sure to demonstrate a continuing presence on 
and control over their land. 
 
Investment in beachfront property in Costa Rica faces a unique set 
of circumstances.  Almost all beachfront is public property for a 
distance of 200 meters from the mean high tide line, with an 
exception for long-established port cities.  The first 50 meters 
from the mean high tide line cannot be used for any reasons by 
private parties.  The next 150 meters, also owned by the state, can 
only be leased from the local municipalities for specified periods 
and particular uses, such as tourism installation, vacation homes, 
etc.  Investors should exercise caution and obtain qualified legal 
counsel before purchasing property, particularly near beachfront 
areas.  Potential investors in Costa Rican real estate should also 
be aware that the right to use traditional paths is enshrined in 
law and can be used to obtain court-ordered easements on land 
bearing private title.  Disputes over easements are particularly 
common when access to a beach is an issue. 
 
Costa Rica is a signatory of many major international agreements 
and conventions regarding intellectual property. The GATT agreement 
on Trade Related Aspects of Intellectual Property (TRIPS) took 
effect in Costa Rica on January 1, 2000.  Costa Rica in 2002 
ratified the World Intellectual Property Organization (WIPO) 
"internet treaties" pertaining to Performances and Fonograms (WPPT) 
and Copyright (WCT).  Building on the existent regulatory and legal 
framework, CAFTA-DR required Costa Rica to further strengthen and 
clarify its IPR regime, with several additional IPR laws added to 
the books in 2008. 
 
 
 
While the legal framework governing intellectual property is 
basically in place, Costa Rica does not adequately enforce those 
rights.  The current attorney general has publicly encouraged 
aggrieved parties to file legal action in civil court and has 
stated that given limited judicial resources, IPR enforcement is a 
low priority. 
 
 
 
In 2009 Costa Rica remained on the Watch List in the United States 
Trade Representative's (USTR) annual Special 301 Report.  The USTR 
noted that IPR enforcement with respect to copyright piracy and 
trademark counterfeiting required greater priority and resources. 
Significant delays in judicial proceedings and a lack of official 
investigators, public prosecutors, and criminal and civil judges 
specializing in intellectual property continue to hamper effective 
enforcement.  Since 2005 the U.S. Embassy in Costa Rica has 
actively recruited candidates to attend various IPR training 
seminars offered and funded by the United States Patent and Trade 
Office (USPTO) and the United States Department of Justice (DOJ). 
 
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Transparency of Regulatory System 
 
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¶9. Costa Rican laws, regulations and practices are generally 
transparent and foster competition, except in the sectors 
controlled by a state monopoly, where competition is explicitly 
excluded.  Tax, labor, health and safety laws are not seen as 
interfering with investment decisions.  When applying environmental 
regulations, the Costa Rican organization that reviews 
environmental impact statements has been slow in issuing its 
findings, causing delays for investors in completing projects. 
 
 
 
There are several independent avenues for appealing regulatory 
decisions, and these are frequently pursued by persons or 
organizations opposed to a public sector contract or regulatory 
decision. The avenues include the comptroller general (Contraloria 
General de la Republica), the Ombudsman (Defensor de los 
Habitantes), the public services regulatory agency (ARESEP), and 
the constitutional review chamber of the Supreme Court.  The 
procurator general's office (Procurador General de la Republica) is 
frequently a participant in its role as the government's attorney. 
 
 
 
The process has kept the regulatory system relatively transparent 
and free of abuse, but it has also rendered the system for public 
sector contract approval exceptionally slow and litigious. There 
have been several cases in which these review bodies have 
overturned already-executed contracts, thereby interjecting 
uncertainty into the process.  Bureaucratic procedures are 
frequently long, involved and can be discouraging to new investors. 
 
 
 
 
A similarly transparent process applies to proposed laws and 
regulations. The Legislative Assembly generally provides ample 
opportunity for supporters and opponents of a law to understand and 
comment upon proposals.  To become law, a proposal must be approved 
by the Assembly by two plenary votes.  The signature of ten 
legislators (out of 57) is sufficient after the first vote to send 
the bill to the Supreme Court for constitutional review. 
Regulations must go through a public hearing process before being 
signed into law. 
 
 
 
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Efficient Capital Markets and Portfolio Investment 
 
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¶10. There are no controls on capital flows in or out of Costa Rica 
or on portfolio investment in publicly traded companies.  Larger 
investors often arrange their financing abroad where rates tend to 
be lower and lending limits are higher.  Foreign investors are able 
to borrow in the local market, but they are also free to borrow 
from abroad. 
 
 
 
Within Costa Rica, long-term capital is scarce.  Dollar-denominated 
mortgage financing is popular and common, even for Costa Ricans who 
do not earn their income in dollars, because of more favorable 
lending terms for dollar-denominated vs. colon-denominated loans. 
As an alternative to encourage long-term credit, since 2005 the 
government has published the value of "Development Units" 
("Unidades de Desarrollo"), an inflation-adjusted index value that 
may be used to denominate debt transactions.  There is a small 
secondary market in commercial paper and repurchase agreements. 
The securities exchange (Bolsa Nacional de Valores) is small and is 
dominated by trading in government bonds.  However, the exchange is 
actively promoting programs in several promising areas including 
currency futures and small stocks.  Stock trading is of limited 
significance and involves only a dozen of the country's larger 
companies, resulting in an extremely illiquid secondary market. 
 
Stock volume traded in all of 2008 was $56.8 million, an average of 
about $ 1 million per week, and 2009 volumes are estimated to have 
dropped to about half that figure. 
 
Credit is generally allocated on market terms, although the 
state-owned banks are expected to act as development banks for 
activities deemed to be of public interest.  A new "development 
bank" structure began functioning in 2009 and mandates that 17 
percent of resources from private banks' checking and savings 
accounts be destined to small and mid-sized companies.  A bank may 
administer those resources itself or cede the funds to an 
administering bank.  While several private banks have expressed 
some interest in administering those resources, mandated conditions 
(including a very narrow lending margin) have discouraged most 
banks' participation and limited participation so far to 
state-owned banks and cooperative credit unions.   In recent years, 
smaller private banks have been absorbed by large multinationals, 
so that Costa Rica currently hosts subsidiaries of HSBC, Citibank, 
Scotiabank and GE Finance Corporation.  Nevertheless, the three 
state-owned commercial banks are still dominant, accounting for 
43.7 percent of the country's financial system's assets as of 
November 2008. 
 
 
 
Consolidated total assets of the country's public commercial banks 
were approximately USD 9.9 billion in July 2009, while consolidated 
total assets of the nine private commercial banks were 
approximately USD 7.20 billion. The combined assets of all bank 
groups (including affiliated pension funds and brokerage houses, 
plus factoring houses and credit unions) were approximately USD 
22.7 billion as of November 2008.  The banking system has been 
notably stable over the past year with non-performing loans 
totaling 2.3 percent of total assets as of November 2009. 
 
 
 
Costa Rica's national council for the supervision of the financial 
system (CONASSIF) oversees Costa Rica's financial sector and 
consists of four principal components.  The country's general 
superintendent of financial institutions (SUGEF) regulates banks 
and other financial institutions.  The general superintendent of 
securities markets (SUGEVAL) oversees the securities exchange.  The 
general superintendent of pensions (SUPEN) oversees pension funds. 
The newly created superintendent of insurance (SUGESE) oversees all 
insurance operators.  The Costa Rican government is working to 
strengthen supervision of the financial sector with assistance from 
international donors. Legal and accounting systems are transparent 
and consistent with international norms.  Many well-known 
accounting firms in Costa Rica are affiliated with large U.S. 
firms. 
 
 
 
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Competition from State-Owned Enterprises 
 
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¶11. State enterprises have enjoyed monopolies in the sectors of 
wireless telephony, data telecommunications, and insurance; 
however, CAFTA-DR opens these specific sectors up to market 
competition.  On the telecommunications side, the 
telecommunications regulation board "SUTEL" and the 
Telecommunications Vice Ministry worked over the course of 2009 to 
build the framework of a competitive telecommunications sector. 
SUTEL licensed Voice-Over Internet Protocol (VOIP) providers for 
operation and one internet provider is operating its own cable 
link.  SUTEL is now working to hold a spectrum auction in mid-2010 
which will likely lead to an early-2011 launch date for one or more 
cellular phone competitors to the state monopoly "National 
Electrical (and telecommunications) Institute" ("ICE").  On the 
insurance side, the new Insurance Regulator SUGESE has authorized a 
number of new competitors to the state monopoly "National Insurance 
Institute" ("INS"). Those new insurance providers are scheduled to 
begin operations by mid 2010. 
 
 
 
Fixed-line telecommunications as well as energy generation and 
distribution remain firmly in the control of state enterprises. 
Transport infrastructure (airports, ports, roads) is likewise 
controlled by the state, although the current government 
 
successfully managed the development of a major highway concession 
and is exploring public-private partnership arrangements with Costa 
Rica's major port and an airport.  Petroleum imports are 
monopolized by the state petroleum company "RECOPE."  Each 
state-owned enterprise has its own independent board of directors 
and internal operating regulations and procedures. The comptroller 
general's office (which reports directly to the Legislative 
Assembl