by Rod Hughes

The German tire company, Continental AG, has announced plans to build a $60 million plant at the El Coyol Tax Free Zone in Alajuela, Costa Rica’s second largest city. The company, established in 1871, is the world’s fourth largest tire producer, supplying Volkswagen, Daimler-Chrysler, Ford, BMW, General Motors, Toyota, Honda, Renault and Porsche.

According to Carlos Wong, manager of the Coyol zone, the company delayed before making the final commitment to see which way the referendum on the Central American Free Trade Agreement (CAFTA) would go. The firm’s alternative site was in Mexico. Wong said that the company’s plant would resemble the big Intel computer component operation here, beginning with the hiring of 350 staff and increasing to a thousand for the first stage.

Continental AG first produced rubber tires for horse-drawn vehcles and bicycles until 1904 when the company manufactured its first auto tire.

Direct foreign investment was up 71% last year. According to the UN’s World Investment Report, this represented nearly $1.5 billion. Of this figure, real estate has been the fastest growing at 26%, helped along by Scotiabank’s acqusition of the Interfin Bank. But still, by other standards, the country has been lagging. In the index that studies the capacity to attract foreign investment, the country has lost four places since 2000, now occupying 71st place of 141 countries.