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The advent of the global financial crisis saw Costa Rica's tourism sector grind to a halt, and an industry once held as a model in the region felt the tightening purse strings of world travellers and investors alike. Though the prospect of recovery is all but certain, the immediate strain has caused legal problems for ventures created in the golden years of Costa Rica's tourism industry....

The advent of the global financial crisis saw Costa Rica's tourism sector grind to a halt, and an industry once held as a model in the region felt the tightening purse strings of world travellers and investors alike. Though the prospect of recovery is all but certain, the immediate strain has caused legal problems for ventures created in the golden years of Costa Rica's tourism industry. As one lawyer laments: "Every single project in financing is now a litigation case. The partners are fighting and the investors are fighting."

But there's good news for foreign investors in the insurance and telecoms industries, as the government partially opens its state monopolies to private competition in accordance with the recently-signed Cafta (United States-Dominican Republic-central America Free Trade Agreement). While the anticipated bonanza of foreign investment was delayed by the global crisis and reluctant lawmakers, the telecoms industry in particular has seen some movement in 2009. Interest in the insurance sector has been significantly less, but lawyers expect that to change as the world economy recovers.

Most of the large international players in the telecoms market, like Telefónica, Dicell, América Móvil and Millicom, have either created local companies or forged alliances with existing regional players to carve a share of the market, but the secretive nature of this process makes it difficult to tell exactly who is bidding. Perhaps the only people who know the true players involved are the lawyers that represent them, and they are understandably tight-lipped. Local companies Amnet, Ticom and Worldcom were the first to make advances to the government in early 2009.

The latter part of 2008 saw renewed interest from the government in exploring a merger of the three main national banks – Banco Nacional de Costa Rica (BN), Banco de Costa Rica (BCR) and Bancrédito – which have seen their collective market share drop by nearly half since the banking industry was deregulated in 1996. To investigate the option the government set up a committee headed by the finance minister to examine the benefits and drawbacks of a merger, the results of which are expected some time this year. Most lawyers see the merger of all three banks as unlikely, though they do not dismiss the chance of a two-way merger between the smaller Bancrédito and one of the larger banks.