Costa Rica throws a curve before we even get there
Life is about adapting to change and it looks like we’ll be getting a nice lesson in adaptation if the Costa Rican legislature passes some proposals that could make an incredible impact on the resident expat population. The potential changes center on the income requirements needed for certain types of residency which affect most legal expat residents.
The proposal came up quietly on October 27 (and has not been publicized much at all) and 4 days ago was unanimously approved and sent to the legislature for action, which is obscenely fast for a country where things tend to take their time. It seems a little fishy and coincided with an official visit from China’s president (the CR goverment started sucking up to the Chinese government last year by breaking relations with Taiwan). Here’s a quick rundown of the changes:
1. The old requirements
One could become a Pensionado (retiree) by proving $600/mo in pension income. One could become a Rentista (legal resident) by proving a monthly income of $1000 per adult and $500 per child - for 60 months. That requires a bank deposit of $60k per adult and $30k per children. For a family of four like us, the total bank deposit would be $180k.
2. The new requirements
Pensionados would have to prove $2000/mo in pension income, and Rentistas would need to show $5000/mo for 60 months for an individual or a family. The Rentista deposit would then be $300k!
The big unanswered question, based on ambiguous working in the proposal, is whether current pensionados and rentistas would be have to meet the new requirements when they have to renew their residency. If they do, then there will be a mass exodus as people are forced out, though many can choose to stay as perpetual tourists (tourist visas are granted for 90 days, after which one must leave the country for 72 hours; the new law would seemingly allow an extension once for $100, theoretically reducing the number of visa runs required to 2 per year). Perpetual tourism carries the risk that you can be denied reentry or that they’ll firm up the rules as to how frequently one can leave & reenter.
The exodus would occur over a few years as people’s renewal dates came up, and the Costa Rica we move to will change, perhaps drastically, before our eyes. And how awful would it be for a retiree on a fixed income who thought they had a place to live? Just having a residency option for pensionados implies that they are welcome. Though to be fair, older people use healthcare more and this could be a positive for citizens from a budgetary view. (the proposal also mandates that residents join & support the national healthcare system)
What could be the repercussions? Gringos provide employment to household help like maids & gardeners. Many own businesses like B&Bs and restaurants that employ Costa Ricans (though pensionados and rentistas aren’t allowed to legally work, they can own a business). And many businesses have arisen that are geared to the expat population. It sounds like unemployment will rise, wages will fall, and will crime then follow? That seems very possible in areas heavily populated by expats. And would thieves just assume that the remaining expats could afford the new figures and be good targets for crime? I don’t know and hope not, but basically, the big negative would be increased crime in a country where petty theft is already commonplace and violent crime seems on the rise.
There are also conspiracy theories - perhaps CR is in cahoots with the US government to get tax revenue - sorry, I mean citizens - to move back or maybe it has to do with relations with China. The latter is the one I’ve given a bit of thought to, seeing how breaking relations with Taiwan only serves to please the Chinese government and subsequently China decided to build CR a new national soccer stadium. Hu Jintao brought plans for a free trade agreement with him, and it really makes sense for China to use CR as a conduit to the US. Or create a manufacturing base, which would replace the lost jobs (good) but affect the environment (bad).
That’s enough for now. I gotta sleep on this, consider the positives and reflect on what it is that I expect to really get out of living there.
Tags: China, politics, residency
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on Sunday, November 30th, 2008 at 7:56 am and is filed under costa rica, reflections.
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I have been watching this, too, but not really worried because we are only for a year.
But I think you’re right to be concerned as a family looking to make a permanent move here. I already know of one American family who is moving back because of the proposed new rules.
Many are talking about going to Panama, the new Costa Rica, where the rules are much more lenient and the welcome mat practically rolled out for expats and investors.
But don’t you plan on having your baby here? That, of course, gives you instant residency,
Good luck making the decision.
this seems to bubble every few years here. I do get afraid that one day CR will choke off a valuable life source of people moving here with resources. CR needs not only the $$ but the valuable educated community that can work to help change poverty and even find home for puppies. CR can’t afford to be without them.
(PS check out your link back tunygrass.com. I think there are two ..before tinygrass…..
http://www..tinygrass.com)
Susan’s last blog post..Tip the man with the orange vest and your car will be safe, until he has to go to the bathroom
I hope this is something that will be blown over without passing. How frightening for expats thinking they have a home.
Summer’s last blog post..Sunday Morning Relaxing
@Canuckfamily: Panama already tried a change by reducing their tourist visas to 30 days and pretty quickly changed it back. I’ve never imagined that CR would be THE place without having lived there for a year or two. In any case, my curiosity about other countries wouldn’t let me put all my eggs in one basket. But you are right - our residency plans are not affected by these changes. I’m just concerned about what would happen to CR overall.
The one thing that really stands out about the proposed CR changes is the huge affect it will have on the economy. Aside from the Ticos who are employed by expats, either in households or businesses, there are the businesses that cater to expats. I’m sure the companies running Auto Mercado and other higher end stores can’t be happy. There is too much money involved for the changes to be logical. Which leads to the possibility that the CR government is completely illogical (or paid off) if this becomes law.
@Susan: The negative affect on the economy, plus the reduction in the educated community that you mentioned, is too great for this to really happen. And if it does, I dunno what investor will be able to look upon CR favorably.
@Summer: Here’s hoping - thankfully it doesn’t affect our plans but might make CR a different experience than I was expecting. That may not be a bad thing - what if real estate prices drop to levels from 10 years ago? We’d be able to afford land without a mortgage and build. At which point we’ll ask you for advice on straw bale houses and alternative energy