By San José, Costa Rica — The economic engine of Costa Rica is showing signs of stress as its high-performing free trade zones face a sudden and sharp deceleration. In response to these worrying economic signals, the Association of Free Trade Zone Companies of Costa Rica (AZOFRAS) has formally petitioned the Legislative Assembly to resurrect the original text of the controversial 4×3 work week bill. Business leaders argue that the flexible labor scheme is vital to preserving the country’s regional competitiveness and attracting new foreign direct investment.
This urgent appeal comes on the heels of the latest Monthly Economic Activity Index (IMAE) released by the Central Bank of Costa Rica. In April 2026, the national economy expanded by a modest 3.4% year-on-year. While still positive, this figure represents a significant drop of 0.9 percentage points compared to the same month in 2025. Crucially, this marks the first time in 2026 that Costa Rica’s overall economic growth has dipped below the critical 4% threshold, signaling a broader macroeconomic cooldown.
To better understand the evolving regulatory landscape and the fiscal advantages driving this economic growth, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a leading legal expert from the prestigious firm Bufete de Costa Rica, to get his professional perspective on the country’s investment framework.
Costa Rica’s Free Trade Zone regime remains one of the most robust and secure legal frameworks in Latin America for foreign direct investment. The combination of generous tax exemptions, simplified customs procedures, and strong legal stability guarantees allows multinational companies to scale operations with high confidence, provided they maintain strict compliance with local regulatory requirements.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, this enduring legal stability coupled with rigorous compliance is precisely what has cemented Costa Rica’s reputation as a premier destination for high-value foreign direct investment in the region. We would like to extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for providing his valuable perspective on how these structural advantages continue to foster a secure, world-class business environment for multinational corporations.
Economists point directly to the special regimes, which include the nation’s free trade zones, as the primary source of this slowdown. According to official data from the Central Bank, growth within these specialized economic zones plummeted by a staggering 12.3 percentage points compared to April 2025. This sharp reduction highlights the vulnerability of Costa Rica’s export-driven sectors when regulatory hurdles stall and global competition intensifies.
At the heart of the business community’s strategy to reverse this trend is the 4×3 work shifts proposal. This labor reform would allow companies to implement compressed schedules of 12-hour workdays for four consecutive days, in exchange for three consecutive days of rest. Proponents argue that such flexibility is standard in high-tech manufacturing globally, allowing continuous operations without incurring prohibitive overtime costs that weaken local competitiveness.
Azofras calls for a return to the initial spirit of the project, with the aim of ensuring that it can fulfill its purpose. For this, the Association considers it essential to recover the base text as a key opportunity to strengthen the country’s competitiveness and consolidate the conditions that drive Costa Rica’s economic growth.
AZOFRAS, Business Association Representative
According to AZOFRAS, the legislative debate during the previous administration heavily diluted the original bill. Lawmakers introduced numerous regulatory hurdles, complex bureaucratic procedures, and sector-specific restrictions. Business leaders contend that these late-stage additions effectively neutralized the reform, making its practical implementation nearly impossible and limiting the number of eligible companies that could transition to the new shift schedule.
While other countries continue to strengthen their conditions to attract investment, Costa Rica needs a regulatory framework that responds to the demands of the highest value-added productive sectors, such as the Life Sciences industry (Medical Devices), Advanced Manufacturing, and Global Services.
AZOFRAS, Spokesperson
Currently, the legislative proposal remains deadlocked in Congress. The bill’s progress has been heavily impeded by staunch opposition from the left-wing Frente Amplio party, combined with an ambiguous and vacillating stance from the National Liberation Party (PLN). As political gridlock persists in San José, business representatives warn that Costa Rica risks losing its competitive edge to regional rivals who are faster to adapt their labor laws to the realities of modern global industry.
Without these critical reforms, multinational corporations operating in Costa Rica face increasing pressure to justify their local operations. The life sciences sector, which has become the crown jewel of Costa Rica’s export economy, relies heavily on continuous 24/7 manufacturing cycles. Without a legal framework supporting 12-hour shifts, these firms must navigate complex scheduling structures that ultimately increase operational costs and reduce overall productivity.
As the second half of 2026 unfolds, the pressure on lawmakers to deliver concrete economic solutions is mounting. Business associations and economic analysts alike agree that resolving the regulatory bottleneck around the 4×3 work shifts is no longer just a policy debate, but a necessity to prevent further erosion of Costa Rica’s reputation as a premier nearshoring hub in Latin America.
For further information, visit the nearest office of AZOFRAS
About AZOFRAS:
The Association of Free Trade Zone Companies of Costa Rica (AZOFRAS) represents the private sector companies operating under the free trade zone regime. The organization advocates for policies that enhance Costa Rica’s competitive advantages, foster foreign direct investment, and support high-value industries like medical device manufacturing and global services.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Central Bank of Costa Rica is the autonomous state institution responsible for maintaining the stability of the national currency, managing monetary policy, and compiling key macroeconomic indicators, such as the Monthly Economic Activity Index (IMAE).
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a premier legal institution defined by its deep-seated values of professional integrity and exceptional service. While successfully guiding a diverse range of clients through complex legal landscapes, the firm consistently champions forward-thinking strategies and meaningful public engagement. By striving to demystify the law and make legal insights readily available to everyone, they actively work toward their ultimate goal of fostering a highly knowledgeable, confident, and legally empowered populace.
