CAMTIC English Presentation (Enero, 2011)

Estrategia
“Costa Rica: Verde e Inteligente 2.0”

Costa Rica Green & Smart
The National Strategy to deploy
a sustainable ICT business eco-system

A journey that has just started!

Otto Rivera,
Excecutive Director,
Costa Rica’s Chamber of Information and Communication Technologies –CAMTIC-

Agenda

• Sharing a common vision
• Key performance indicators: Costa Rica is ICT…
• Several ‘on going’ ICT initiatives
• Costa Rica: green and smart!
• The Hicks and Nicholson Model
• The strategy: the starting point
• Developing a sustainable ICT business eco-system
• A world class ICT industry
• Reaching the global market
• Challenges and limitations
• The global crisis impact
• The future
• Comments and questions

One shared vision

Costa Rica as a:

• Peaceful country
- Constitutional abolition of army in 1948
- Perpetual Neutrality Declaration in 1983
- Peace with Nature – Global Proposal lead by Dr. Arias
- Forever Costa Rica – its national dimension

• World leader as eco – tourism/paradise

• Leader on sustainable energies and environmental
conservation policies

• Democratic and transparent society, out of poverty and
unemployment

• A high-tech developing economy

Key country performance indicators

• 1st Latin America country in Trade Policies (World Trade
Indicators/WB, 2008)
• Some key performance indicators from World Economic
Forum -2008-:
- 12th: High Tech Exports
- 18th: Flexibility of Labor Market
- 19th: Quality of Public Education Expenses (6% of GDP)
- 27th: Trained Labor Force
- 59th: Competitiveness Global Index
• Oldest standing democracy in Latin America (120 years old,
since 1889)
• 60 years with no army (Constitutional abolition in 1948)
• Free & mandatory education up to 9th grade (since 1864)
• Universal health and pension systems (since 1943)

Several on going initiatives in ICT… mostly
complimentary approaches…
• Digital Democracy (E-inclusion approach -Lead by MICIT-)

• E-Administration (Dedicated to the evangelization, plan and
pushing e-Gov projects –Lead by Inter-institutional High
Commission and the E-Gov National Secretariat-)

• Digital Costa Rica (Focused on E-Government -Lead by
private partners under coordination of Club de Investigación
Tecnológica-)

• Century 21st. Agenda (Research, development and
innovation approach –Lead by private partners from
academia, research and industry communities under
coordination of Asociación Estrategia Siglo 21st.-)

• Costa Rica Green and Smart! (Devoted to develop a world
class ICT business ecosystem –Lead by CAMTIC- with many
participants from Government, Academia, local industry and
MNCs)

Is it urgent to integrate and align these initiatives?

• The answer: YES!
• The chances: SMALL…
• Why?:
- not a political urgency …
- not “politically sexy” initiative…
- ICT among “the winners” after CAFTA
- a “cap” in creating new institutions
• Mainly a private sector driven strategy
• Historically… Government has never invested directly in
ICT in Costa Rica
• Indirect investments in education, health or infrastructure
have been positively impacted ICT as externalities
• However: we keep pushing!!!
• IADB can play a key role by “suggesting ideas” or
“initiatives”…

Strategic Priorities

Enterprises
capacity building

Developing a sustainable
ICT business eco-system

Balancing the Dual Role of ICT within a
national competitiveness strategy

Economic Sector

Cross-fertilization business
enabling tool

Success ICT Business & Exporting Model

Global Marketplace

International International
Reputation Linkages
World Class National Industry
Enterprises & Clusters / Competition & Cooperation

Sustainable ICT Business Eco-system
People / Educational Platform / Networking
Research-Development-Innovation
Financial Capital / Infrastructure
Institutions / Regulation

Vision / Strategy
Private & Public, Academia Authors: Heeks and Nicholson

Success cases in progress

• Ireland
• Montreal
• New Zealand
• Uruguay
• Costa Rica

• Jalisco
• Cordoba / Buenos Aires
• Panama
• Guatemala
• Shenzhei – Dailan

How does Costa Rica stand and compete?
• Human development centric national approach
• Open to talent immigrants and the still standing “land of
opportunity aura” or “Switzerland of the Americas”
• Strong “country brand” based on:
- quality of living,
- renewable energy availability
- low business and personal risks
- geographic, time-zone and market proximity to US
- cultural and “geo-strategic” alignment to Western’ ideals
- flexible labor and foreign currency markets
- Modern legislation: IP, telecomm (!!), digital signature…
• Strong “country brand” in ICT US industry, improving in EU
• Some smart ideas:
- Attracting talent
- Digital product: CAFTA, hopefully in EU-CAAA and others

Costa Rica Free Trade Agreement Policy
• Strong national trade policy based on free trade agreements
• ‘Zonas Francas’ as key attractors of FDI … but in the
future???
• Current (600 million): • In progress (1.7 Billion):
– Canada – European Union
– Central America – CHINA (MOU signed
– Chile on Nov. 17th. 2008)
– Mexico • Expected (400 Million):
– Panama – Singapur
– Dominican Republic – Colombia
– CARICOM – Brazil
– USA (Effective 1/1/09) – Qatar -Egypt

A platform to potentially reach a 2.7 billion people market!
- Strong message to MNCs
- Good potential to local SMEs

Vision / Strategy

Global Marketplace

Reputation Linkages


Vision / Strategy
Private & Public, Academia Authors: Heeks and Nicholson

The value of national ICT strategy

• A unifying message
• A unique and consistent vision
• A tool to facilitate/promote associative
initiatives
• A valuable ‘road map’ to set up priorities
• A tool for policy makers to guide decision
taking
• A sign of maturity to local and international
community

Complimentary roles

Industry:
Industry:
-- Strong commitment to invest and cooperate
Strong commitment to invest and cooperate
-- Focused on social/common interests
Focused on social/common interests
-- Not a group of pressure … but a team work
Not a group of pressure … but a team work
Academia:
Academia:
--International standing programs and quality
International standing programs and quality
--Top research and innovation approach and centers
Top research and innovation approach and centers
--Balancing academic and industry needs
Balancing academic and industry needs
Government:
- Long term vision
- Flexible and open leadership
- Pro actively focused in filling ecosystem lacks

Government:

-As a catalyst agent
- Flexible and open to listen and to share initiatives
- Ready to promote dialog
- Open to team work methodologies
- Available to directly invest in the process
- Active as a transformation agent with focused
on the eco-system
-Special emphasis on educational system,
both public and private

Vision / Strategy
Private & Public, Academia

Associative … key but always challenging…

Threats & Straights &
Weaknesses Opportunities

Taking control of
your own
destination!

Associative … always context driven
(The case of Costa Rica)

Global competition: 2009 -2011
250 companies agreeing to be part of a
Regional Federation of ICT (* To be defined)
Regional competition: TIC: 2003
90 companies transformed Caprosoft into CAMTIC,
Cámara de Tecnologías. de Información
y Comunicación

HR and Quality Challenges: 1998
16 companies founded CAPROSOFT,
Cámara de Productores de Software

Intellectual Property Protection: 1993
8 companies created Asociación para
la Protección de la Propiedad Informática (APPI)

Challenges with the Academia

Public & Private technical
education system

ICT-Tools
Soft-skills Public
Private
University Foreign Languages University
System Basic Sciences
System
Mathematics

Primary and Secondary
System

Challenges with the Government

Executing
Planning Multiple
autonomic
Short vs. long entities
terms
Legacy legislation
Specific vs. and infrastructure
general goals

Limited financial
Formal vs. natural/true resources
leadership
Very limited skilled
human recourses
Little or no experience in enhancing
high-tech /knowledge economy

Task Forces Tactic… delivering the strategy

Networking IP

Export Communication
Promotion Infrastructure

@-Government
HR: Public
Universities CAMTIC
HR: Digital Signature
Technical
Education
Corporate Social
HR:Private
Responsibility
Universities
Angel – Venture
HR: Human Capital
Development

A sustainable ICT business Eco-System

Global Marketplace

Reputation Linkages


Vision / Strategy

The ICT business eco-system definition

Key
Regulation &
Infrastructure
Services
Digital Components Framework ICT Direct
Manufacturing Services
Government & NGO

Academia & Research
ICT

Community
ICT Enabled
Software Development Services

Financial Community

Growing number of ICT companies

Digital components Direct
Manufactures Services

25 375
firms 705 companies

350
Companies
Firms 65 companies
Enabling
Software Services
Development

Fuente: Camtic & Procomer (2007)

Direct employment

Digital Components Direct
Manufactures Services

10,050 12,705
employees employees

54,755
21,050
9,600 employees
employees
Enabling
Software Services
Development
Sources: Camtic & Cinde
Note. Commercial companies, sportbooks and telecommunication operators are not
incluced.

Sales: local and international markets (as of
2007)

Digital Components Direct Services

US$1926 M US$7922M
0% local 59% local
100% exports 41%exports

US$3,456 M
US$517 M
US$221 M
5% local
59% local
95% exports
41% exports
Enabling
Software Services
Development

Sources: Camtic, Procomer & Cinde (2007).

Costa Rica’s ICT Sector in brief…

• US$3.5 billion of annual sales:
10.6% of GDP

• US$2,8 billion of exports:
28.8% of total

• 54,755 + direct employment:
3.4% of labor force

A sustainable ICT eco system
A Systemic Approach

Regulation Infrastructure
Networking Institutions

People R+D+I Money
Education

Metrics

SOFT

Human Resources “normal distribution” Pyramid

PhDs
Post-
“Licenciatura”
Or Master Degrees

Professionals
(Bachelor Degrees)

Specialist (Technicians)

General Technicians

Labor market: supply and demand gap

The market adjustment …
S’

$ S

Higher salaries

More students
Immigrants & Re-
converted from other
areas

D D’

HR and other challenging topics

• Training as technologies changes and become more
complex

• Shifts in HR soft/hard skills

• Academic vs. industry oriented training/educational
profiles ( 8 are needed, 4 are been taught)

• Permanent immigration and its regulatory trends

• Temporary transfer of people among countries to provide
services to customer’s projects

• Very high turn over, specially among youngest

Networking & Capacity building

LINK:
Social & Business Networking + Direct Services

• Incubation network of innovative ICT initiatives based on a
business oriented model

• Acceleration programs for innovative SMEs

• Development of ICT focused Angel / Venture Capital Networks

• Export Promotion Support to innovative SME

Networking & Capacity building
LINK as a Capacity Building Consortium:

• IADB – MIF

• Parquetec

• Fundación Mesoamérica

• Incae Business School

• CAMTIC - CADEXCO

• Procomer

• Financiera Desyfin

• Corporación Andina de Fomento

Networking & Events

Meeting and virtual platform:

• Costa Rica Technology Insight Series (6 on the road by
2008)
• Costa Rica Services and Technology Summit (To take place
on June 4-5, 2009)
• Angel Investor Network
• Yo Emprendedor
• www.ceventic.com – CLICK!: Frequent Newsletter
• www.CostaRicaisIT.net /
• Strong web presence: FaceBook – YouTtube – Linkin - Other
• Frequent thematic breakfasts, lunches or seminars
• Frequent training and workshops on ‘hot’ technical, back
office or market topics

Promoting private equity via Stock Market: MAPA

Private Stock options for innovative ICT SMEs (*)

• Partnership with CR Stock Market (inspired in similar product
developed at EU)
• Based on monitoring SME key performance indicators:

– AIM – Ofex/Plus London 1995
– Expandi – Milano 2003
– IEX – Dublin 2005
– Alternext – Paris 2005
– Nordic Alternative Market – OMHEX 2005
– Entry Standard - Germany 2005
– Alternative Market - Spain 2006
– Mapa – Costa Rica 2008

HR improvement programs … a hug plus in Costa Rica
Costa Rica Multilingual
• Massive English certification program based on EU English
as 2nd Language Standard Certification (35K annually) and
5k English native teachers as the key pillar
• French as 2nd Language certification program, in
partnership with the Government of France (hundreds of
French native teachers training Costa Rica’s French
teachers – introduction since primary)
• Chinese-Mandarin massive certification program (based on
the recently created program of the Confucius Institute, U-
Beijing & U. of Costa Rica)

ICT Specialist Costa Rica
• Filling the gap (in numbers and skills)
• Levering soft & hard skills on new technologies
• Creating the “R+D+innovation way of thinking”
• Based on a joint research of Camtic and the two major
public universities
• US$3.0 Million+ on public funding as scholarship program
associated

Institutional framework

• Ministry of Science and Technology and National Council
for Science and Technology

• Ministry of Energy, Environment and Telecommunications

• Ministry of Competitiveness and Regulatory Simplification

• Ministry of National Planning

• Ministry of Economics, Industry and Commerce

• Permanent Commission of Science and Technology of
Costa Rica’s Congress

Institutional framework
• National Advisory Council of Competitiveness

• National Commission of Science and Technology
Performance Indicators

• National Advisory Committee of Science and Technology
Policy

• Conforming Commission of Universidad Técnica Nacional

• National Advisory Committee for Research, Development
and Innovation Policy

• Other …

Regulatory challenges
• General Telecommunication Law & 13 other regulations

• Electronic Signature Law (including ISO XXXX regulations)

• Intellectual Property Law (Great advance: third party custody)

• National Banking System for Development Law and related
regulations (Still a challenge for SMEs at services sector)

• Software Promotion Bill (A “soft” approach)

• Technological Neutrality Bill (Government modernization)

• Habeas Data Bill (Humanization of technology)

• Immigration Bill (Immigration as a developing tool!)

Limitations and pending elements on Costa Rica’s
ICT eco-system
• ICT Research, Development and Innovation Centers
- Cenibiot (2010)
- CidTIC (still a proposal)

• Lack of relationships with key research international centers:
- InBIO
- EARTH
- CATIE

• Limited cross fertilization promotion and networking
framework to straight ICT utilization across key sectors:
- agro (coffee, sugar, banana, oil palm)
- tourism (traditional and new areas)
- energy
- environment
- health

Statistics… still a pending subject!
• Initial mapping efforts in 2000/2001 (Prosoftware)
• Business and HR focused
• Second generation of mapping efforts in 2006/2007
• Also focused on business variables and HR metrics
• First comparisons in 2008
• Still a mix of soft (70%) & hard (30%) data
• Recently improved by two new projects (US$180K in grants
from IDRC & EU’s 7th. FP, US$130K from IDRC):
- R+D+I capacities
- HR labor market and regulatory/institutional benchmarking
• New efforts via MICIT (National Commission on S,T&I
Indicators) are in progress: USD200K investment
• Banco Central also increasing interest
• Ministerio de Hacienda (Dirección de Tributación) is also
very active in finding information…

Telecommunication market new regulation to be
implemented

• “Convergence centric” new legislation with huge challenges:
- new generation networks approach… good and bad
- (Good) Modern approach on seamless networks not on
services
- (Bad) No experience… huge challenges with specific
regulations
- Regulatory Body conformation is in progress
• Telecomm market will grow 2 to 3 times the current size (from
USD$650M up to USD$1.5B) within next 5 years of less

• High and diverse fiber optic availability:
- Caribbean Sea (2)
- Pacific Ocean (1)
- Central America - North (3) –Puebla-Panama Plan Project-
- Panama - South (4) – Puebla-Panama Project-


Global Marketplace

Reputation Linkages


Vision / Strategy

Rich ecosystem
Strong ICT multinational presence (some examples)

- Digital Components: Intel – Hospedia – Continental AG
- ICT Outsourcing: Hewlett Packard – IBM Global – BT - Align Tech
- Software: Microsoft – Oracle –Avionics- (Intel, HP)
- ICT BPO & IT Support: Western Union – Amazon – P&G
- R&D: (Intel – HP)

Strong ICT local industry (some examples)

- 75% of Central America / DR software products
- 94% of firms are SMEs
- 55% of all companies are exporting regularly
- 87% of the firms launched new products/services in 2007
- 83% has started new business models (web, services, OSS)

5 public and 59 private universities

Capacity building initiatives for ICT SME straighten

Capacity Building for Exporting SMEs
• Product/marketing maturity assessments
• Business plan development assistance
• Critical mission processes assessments and advising
services
• “Exporting Step-by-Step” training initiative
• Secure export planning and “save landing” consultancy
services
• Trade mission preparation and delivery advisory
• Reduced rates for all SMEs on all services

Quality Maturity Programs (continuation of ProSoftware
program with IADB funding)
• ISO
• CMMi
• PMI

Promising future … even with the crisis

Huge opportunities to come:

- Most of top multinationals are diversifying local operations
- Second generation strategy is in place in most
multinationals
- Intel has open a software research and development center
- It also has open a corporate share services support center
- Hewlett Packard will grow to 9000 direct jobs by 2009
- HP has also announced a massive research laboratory in
2009

Higher levels of complexity and value added activities as second
generation initiatives land in Costa Rica

Local companies are also more sophisticated…

Local companies also are moving up in value chains:

• Several consortiums are currently conforming

• New outsourcing projects flowing from multinationals to
Costa Rican smaller companies

• Many former managers or key staff that have left MNCs are
now entrepreneurs or have joined Costa Rican firms

• Some former managers are now free-land consulting agents
serving regularly local firms (Camtic has 3 top consultants
working for LinkExportaciones)

Skysoft Lab Consortium – Space Industry -

• Thanks to not having army during the last 60 years, Costa
Rica is granted as a secure country to develop space
projects, all of them under military secret IP protection

• Costa Rica has a growing presence of space research and
development companies.

• Former astronaut Dr. Franklin Chang-Diaz has built large
and sophisticated research, development and testing
facilities to work in building the first full-scale prototype ever
of Variable Specific Impulse Magnetoplasma Rocket -
VASIMR -, a new fuel and engine technology for
interplanetary space traveling and other utilizations on
Earth

• Initial actions are in progress to create the Skysoft
Consortium, an initiative to create an ICT/software
dimension in the new space industry cluster

MasterMed – E-Health/Tourism Services Industry -

• CR’s Public Health System is an example for a developing
country

• CR is awarded as #1 Eco-Tourism destination in the world

• Limited sources of information on drugs and their interactions

• A massive data base and access technology (3,500+ active
ingredients/8000 trademarks)

• Partnership among Academia and Industry over an
intellectual property agreement

• WEB, PCs, PDAs and cell phones - services based business
model

Environmental Technology Cluster

• Country advantages:
- Ranked #5 country by EPI (among 149, WEF-2008)
- 92% of electricity from renewable sources
- 90% of potential still to be developed
- 36% territory/70% territorial water protected
- 14% increase on forest coverage (54%+ in 25 years)

• Committed as the first carbon-neutral country by 2021

• We must increase another 9% of forest coverage

• Partnership with MINAET to incorporate ICT to the
environmental cluster.

Digital Design / Animation Cluster

• Top universities with international standards

• Good young artists with high tech skills as key element

• Early adopters of digital design-animation technologies

• Cluster approach since the early stages of sub-sector
development

• First customers are industry leaders (Disney, well recognized
Disney sub-contractors)

• A niche of software development young and dynamic firms

• A mixture of products and services (outsourcing)

Code migration cluster: ArtInsoft Case of Study
• Lead by on pioneer professor-entrepreneur (Dr. Carlos
Araya)

• Initial concepts and models were based on PHD doctoral
thesis

• ArtInSoft as the center of a very specific and deep cluster

• Complex projects around the world with top companies

• A mix of software products and outsourcing services

• Lots of externalities and benefits for SMEs working at the
cluster

• Almost 100% Costa Rican firms / Similar to Genexus,
Uruguay

The competition – cooperation concept
• A huge barrier for most countries when developing
associative initiatives, specially in small-scaled eco-systems
• A cultural challenge: lowered in Costa Rica but huge in the
rest of Central America and most of Latin America
• Personal relationships & transparent leadership
• Open and plural mechanisms (national task forces as a plus)
• ALETI is a good example: 10 years with little progress…
• The integration of a Central American ICT Federation has
been impossible so far (I started promoting the idea during
1st. Costa Rica Technology Insight in 2002)
• MNCs tend to isolate … local managers are usually a barrier
• Local software SMEs tend to be the foundation
• Depending on local conditions, promoting cooperation must
be driven from the technology …
• Easier to focus on foreign markets if cooperation need to be
focused on market

Global crisis and recession impact
• Opportunities and challenges
• Cost reduction is driving decisions
• India terrorist attacks will definitively impact (How?)
• Two contradictory trends:
- Recession pushes our markets down
- Cost reduction pushes our markets up
- What will be the final balance?
• Should we change projects in progress? Link???
• Local markets reacting quickly:
- Government budgets on ICT projects will make a difference
- Labor market trends? Not clear yet…
- Loans have never been the key variable for ICT SMEs
- Loans are a key variable for all customers
• Were we prepared? Are we getting prepared? Would we get
prepared?

Future challenges
• Vision – Strategy shifting from:
- ICT to Cross-Fertilization centric approach
- national to regional eco-system
- general market to specific niches
- balancing short and long term thinking and acting
- national/regional ICT promotion agency (a public-private) & vision

• Sustainable business/exporting ICT eco-system:
- HR availability: numeric and qualified: today vs. tomorrow
- HR training: a fast moving target …
- creation of R+D+I capacities: CidTIC, CeniBIOT
- loans with no collaterals? Significant VC?
- has “soft or new” economy higher risk that “hard or old” economy?

• Software: product or service… or both????

• New business models (web based services, software as a service,
outsourcing, other)? … How-when to migrate?

• International payments & Intellectual Property

CAMTIC English Presentation (Enero, 2011)

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