Socialism and Monopolies will be the Death of Costa Rica

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Just about two weeks ago, Costa Rica suffered a historical blackout that darkened the entire nation for about three hours… Just a few days later, the Electricity and Telephony Monopoly (ICE), asked the Costa Rican Government to allow them an average of 23% in rate hikes, siting the increased cost in petrol to power thermal energy plants. According to La Nacion, the countries biggest newspaper, the Utility had already used 80% of it’s operating budget for the year for Thermal Electric generation. ICE claims that an exceptionally dry dry season has depleted Hydro Electric dams of water needed to generate electricity. When the government refused, the Utility commenced with rolling blackouts over the entire nation for the last nearly two weeks. Every day for 3-4 hours, communities have their power shut down. Those companies with backup generators are forced to bear the cost of paying for the generation of their power. Smaller businesses and individual families, simply suffer. The imagery is amazing…. Meat markets forced to lock up all their meat in freezers and unable to take the meat out for fear of losing the cool in the freezer, are losing money every day. Other small businesses, including offices of various types, are basically without productivity for 1/3-1/2 a day. And to make matters worse, they change the time of the outages per area, seemingly AT RANDOM!

Last week our power was out every day from 2-5pm. Yesterday it was 7am-11:30 am, and today 11:00am-2:00pm, making it impossible to plan… Phone lines that supposedly allow one to consult when the power will be off, are congested. News reports are speculative… It is an incredible scene of lost productivity on a national scale, and ARROGANCE on the part of ICE. Interestingly, over the weekend there was an article in La Nacion, where several residents of the area of a Large Dam just south of San Jose, accused ICE employees of dumping water from the dam. In recent months, Syndicatos (Unionist) from ICE’s trade union have been in the forefront of trying to block passage of CAFTA, or the TLC as it is known here. An incredible amound of cowardice on the part of the Costa Rican legislative and executive branches, has led to Costa Rica standing nearly alone as a non signatory of the treaty in the region. As a result, Costa Rica plods along with Energy, Telephony, and Insurance Monopolies…

In the last two years I have done very little business In Costa Rica. My consulting business has expanded regionally and I am building Call Centers and Contact Centers in Guatemala, El Salvador and Honduras… These countries have long lagged behind Costa Rica as a destination for foreign investment, especially in the technology sector. Today a company is more likely to establish a Call Center in Guatemala, than in Costa Rica, where I helped found the Central American Call Center industry, 13 years ago this month… The fact of the matter is that this is happening because Costa Rica is NOT as business friendly as these other countries, and because turning the power off for four hours a day EVERY day is not the way to build confidence in your infrastructure. The last two weeks have been a slap in the face to the Average Costa Rican, but Costa Ricans are famous for “grinning and bearing it.” ICE’s horrendous customer service, poor performance, bureaucracy, all of which I have experienced first hand, are NORMS to the average Tico, most of which have never traveled, the majority never getting further than 100 miles from their own neighborhood… I often muse that if Ticos, who have been waiting nearly 6 months for new cellular phone lines, realized that they could get off an airplane in Guatemala, El Salvador or Honduras and purchase a GSM Chip in the airport, along with prepaid time… Or that in Honduras, one can order Cell Phone, Home Phone, VOIP, Cable TV and Internet from the same provider and have it appear on the same bill. The average Costa Rica has no clue as to the impact of the TLC Positive or Negative on their lives, but the Unionist have done a better job of presenting a negative case, than business people have done in pushing the benefits of the treaty.

I have always been amazed at the staggering inefficiency of Costa Rica’s socialist society. Life consist of standing in one line after another, being treated at best as an inconvenience by bureaucrats, who seem to think that their job is a RIGHT, and at worst, like second class citizens. ICE employees are some of the worst…. ICE is one of the largest companies in Central America, and certainly the largest in Costa Rica. It is not uncommon to go to an ICE office for some service just before lunch, and have more than half the service representatives get up and walk out to lunch, with a line of 100 people or more. But its not just ICE, its everywhere. The entire Costa Rican Society seems to be based on employing the maximum number of people, and having the lowest amount of productivity and efficiency… Example. I often take my family to a local McDonalds. It looks like any other McDonald’s in the world, including an abundance of perky young people working the counter. Almost every time I go to McDonald’s, I am reminded of a Keystone Kops film. 25 people running around in the kitchen and 15-25 minutes to get my order (No I am not exaggerating). Costa Rican companies…. The majority of them, are just like the big monopolies, they have little concept of Customer Service, and when you find an exception, you stick with it. Unfortunatly, with ICE, INS, RACSA and the other monopolies, you have no “choice,” and if the TLC fails to pass, it will be a triumph of ignorance over what is GOOD for the country. For years ICE has maintained the loyalty of Costa Ricans by boasting what are arguably the lowest rates in the region, and they have boasted that their penetration in rural areas was greater than that of other institutions in neighboring countries. The rates are probably still lower on the whole than other parts of the region, but when you see little Mayan women in the outback of Guatemala, sporting the latest Motorola V3, you know that the second boast is a thing of the past…

Whether ICE dumped water from a Dam to help justify these ridiculous rolling blackouts, we may never know since investigative journalism in Costa Rica is about as effective as a FOX news investigation of the Bush White House. What IS clear is that Costa Rica will either vote to end Monopolies and demand more of thier public and private sector, or…Costa Rica will continue to have high employment numbers, with some of the most educated coffee plantation workers in the world, because I can tell you that the future of hight tech investment in Costa Rica is riding squarely on the ability of Costa Ricans to demand more… Call Centers and big multinational back office and service organizations have invested heavily here, whether they will continue to invest in an environment where the Electrical Monopoly can hold the entire nation hostage, is questionable…

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The Business Adventures of an Expat Call Center Guru in Costa Rica