of 24
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September 2009
Textile & ApparelIndustry
ColombiaHard-Working, Commited, Talented
n
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1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop productionprojects in the Textile & Apparel Industry:
1. For the access to markets2. For the domestic market3. For the industry track record4. For the competitive human resources5. For the legal incentives and special tax regimes
4. Conclusions
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1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop productionprojects in the Textile & Apparel Industry.
.
2. For the domestic market3. For the industry track record4. For the competitive human resources5. For the legal incentives and special tax regimes
4. Conclusions
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The country has shown a consistent growthhigher than that of Latin America.
GDP Growth Rate: Colombia (2000 – 2008) %
Projection2009 2010
Col L.A. Col L.A.
Latin Focus 2.1 1.1 3.0 2.9
EIU -3.0 -1.2 1.5 1.7
IMF 3.5 3.2 5.0 4.1
Source: DANE (National Accounts), DNP, EIU (Market Indicators &
Forecasts)Note: * Last Update: April 7, 2009
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Huge increases in FDI, exports and foreignvisitors
00/00
214%
ExportsUS$
Millions
US$Millions
Source: DNP, Banco de la República (Central Bank),Note: * (pr) Preliminary Projection
FDI
Tourism
395%
120%
Millions of
Visitors
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Market confidence: recovery of investmentrating (coming soon)
Risk AnalysisForeign Currency Debt
2003 2008 Outlook
& POOR’S BB BB+
Moody’s Ba2 Ba1
FitchBB BB+
Source: Standard & Poor’s, Moody’s, Fitch
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%
Violence levels have declineddramatically
00/00
Source: Ministry ofDefense
%
0%
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The specialized press has shared ourdevelopment with the world
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1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop productionprojects in the Textile & Apparel Industry.
.
2. For the domestic market3. For the industry track record4. For the competitive human resources5. For the legal incentives and special tax regimes
4. Conclusions
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We increased our preferencial access from 233 million consumersin 2002 to 1.2 billion consumers in 2010
Commercial agenda: preferential access to 1.2
billion consumers
20022010
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2002
2011 Investment agreement agenda:19 IPPA´s with 42 countries, and DTT’s with 23 countries
Double Taxation Treaties (DTT) –International Investment Agreements (IIA)Both instruments will be available to all commercial parties
2010
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Two years as the most reformingcountry in Latin America (2009)
Second “most friendly” country in LatinAmerica in the Doing Business 2007-2009
2007
2009
28 40
43 56
65 62
Colombia jumped 26
spots intwo years!
81 81
117 97
101 113
105 117
121 125 123 136
164 174
Source: Top Reformers Report. World Bank
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Most competitive Free Trade Zones in Latin America:
15% profitability and allow sales to the local market
• Capital Gains Tax 15%
• No Customs taxes are incurred or paid (VAT,
Investment in millions Direct Jobs
US$ 29.81 150
Investment in millions Direct Jobs
–
13
Tariffs)
• Benefits of international trade agreements.
• Share in the local market
. .
Investment in millions Direct Jobs
US$ 14.91 500
Investment in millions Direct Jobs
US$ 1 50
, , , .
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56 Free Trade Zones
Approved Free Trade Zones
14
Figures for New FTZ’s
Total Investment (USD Millions) 4,668
Direct Jobs 39,620
Indirect Jobs 86,137
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Colombia offers legal stability contracts as a
guarantee for investment projects
For amounts greater than US$ 1,500,000
A bonus paid to the Government of 1% of the investment.Conditions
Term Up to 20 years
ApprovedContracts 41 legal stability contracts, as of February 2009
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1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop productionprojects in the Textile & Apparel Industry.
.
2. For the domestic market3. For the industry track record4. For the competitive human resources5. For the legal incentives and special tax regimes
4. Conclusions
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The Apparel and Textile Industriesgenerate more than 800,000 direct jobs,
The Apparel industry production grew11.8% in real terms* from 2006 to2007.
Colombia has positioned itself in recent years as acenter for apparel production and fashion in Latin
America
*Prices from year 2000
w c represen s o e o a a or
force in the manufacturing industry.
Textiles and Apparel exports on averagerepresent 12% of non traditional exportsfrom Colombia, during the last five years.
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The production of fibers and yarns, fabrics and garments grew at a real
rate of -3.3%, 8.6% and 11.8% respectively during 2007.
The textile and garment productionexceeds US$ 2.5 billion annually
Source: DANE (National Department of Statistics)
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Garments, 72% of the totalTextile and Apparel Industry
Total Industry Production - 2007
and is especially strong in garments suchas T-shirts and Jeanswear
.
Fibers and Fabrics share theremaining 28%
Source: DANE (National Department of Statistics)
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Textile sales by region - 2007 - US$ millions
80% of the industry activity is concentrated in theregions of Antioquia and Bogotá
Region Operating Sales Operating Costs Operating Profits Share of Sales %
Bogotá 1,060.1 818.2 241.9 45.2
Antioquia 974.3 796 178.2 41.6
Atlántico 109.5 92.7 16.8 4.7
Cundinamarca 75.4 57.2 18.2 3.2
Source: DANE (National Department of Statistics)
Risaralda 66.1 48 18.1 2.8
Tolima 26 24.2 1.8 1.1Valle 17.3 14.4 2.8 0.7
Cauca 7.9 6.9 1.0 0.3
Cesar 3.9 3.5 0.4 0.2
Caldas 2.8 2.2 0.6 0.1
Santander 0.9 0.6 0.3 0.04
Bolívar 0.3 0.3 0.1 0.01
Quindío 0.3 0.2 0.1 0.01
Total 2,344.7 1,864.40 480.4 100.0
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Textile & apparel export industry :12% of non-traditional exports from Colombia
in the last five years.
Source: DANE (National Department of Statistics)
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CountryWeight in
TonsFOB valueUS$ million
FOB Share (%)
Venezuela 20,213 777 56.2
United States 17 096 283 20.5
Although we export textiles, more than 65% of
industry exports are dedicated to value-addedclothing of knit fabrics: US$ 1,381 million
Main DestinationsGarment Exports – 2008
, .
México 2,725 91 6.6Ecuador 1,904 67 4.9
Costa Rica 632 21 1.5
Peru 656 19 1.4
Puerto Rico 427 14 1.0
Others 6,866 111 8.0
Total 50,518 1,382 100.0
Source: National Department of Statistics, DANE
Source: DANE (National Department of Statistics)
Total : US$ 1,382 million
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DestinationFOB ValueUS$ million
FOB Share (%)
Venezuela 527.2 71.0
Principal destinationsTextile exports - 2008
Venezuela and Ecuador are the main importers of
Colombian textiles to satisfy domestic industrydemand
cua or . .
Mexico 35.6 4.8
United States 22.3 3.0
Brazil 15.6 2.1
Others 68.3 9.2
Total 742.6 100.0
Source: DANE (National Department of Statistics)
Total : US$ 742 million
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1. For the free market accessof more than US $207,000million annually*
• Thanks to Trade agreements signed
Europe, Colombia has become aproduction and distribution center forSouth, Central and North America.
• Additionally, transportation costs andlead times are better when
compared to Europe or Asia.
* GDP at 2007 prices, DANE (National Department of Statistics)
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4:30 Mexico City
3:00 Miami
1:40 Caracas
5:30 New York
Bogotá, only a 3 hour flightfrom Miami and 5 hours
from São Paulo and New
5:45 São Paulo
6:10 Buenos Aires
2:30 Lima
York
5:00 Santiago
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2. For the domestic marketof more than US $900 million
• During 2008, textile imports totaledmore than US $952 million andapparel imports US $407 million.
• Colombia mainly imports fibers andsynthetic filaments.
• Market segments such as
Jeanswear and Lingerie are high-volume importers of raw goods andmaterials for production.
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The local textile production does not cover
domestic demand, therefore Colombia importsmore than 50% of textiles used in local industry
Source: National Department of Statistics, DANE - PROEXPORT
Source: DANE (National Department of Statistics)
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66% of imports are fibers and synthetic
fabrics
Imports originTextile imports - 2008
Country Weight in TonsFOB value
US$ millionFOB Share (%)
China 43,259 191.9 20.2
United States 20,427 125.4 13.2
Mexico 22,033 83.8 8.8
India 29,910 80.5 8.5
Source: DANE (National Department of Statistics)
Total: US$ 952 million
Brazil 9,514 49.0 5.2
Taiwan 13,250 42.6 4.5
Pacific FTZ in Col 20,093 40.2 4.2
Peru 5,999 35.4 3.7
Pakistan 8,619 31.4 3.3
South Korea 6,997 29.1 3.1
Others 52,994 242.4 25.5
Total 43,259 951.8 100.0
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Cotton fabrics, artificial fibers andfabrics, the most demanded by the local
industry
Local Sales - Textiles - 2006 (%)
Source: DANE (National Department of Statistics), Manufacturing Survey.Exchange Rate: Col$ 2,361 / US$
Total: US$ 3.32 billion
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Colombia mostly imports Garments and Knitted
Clothing Accessories
Source: DANE (National Department of Statistics)
Total: US$ 407 million
00
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3. For the textile & apparelindustry track record
• Companies such as Coltejer andFabricato have been producing for thelocal market and abroad for over 100
years.
• The textile & apparel market involvesmore than 6,000 companies with sales of more than US $4 billion in the year 2007 .
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Industrial production represents 11% of all
manufacturing activity and 1.7% of ColombianGDP, while generating 600,000 jobs.
Shifting from “807” to Full Package production
More than 100 years of experience anddevelopment
Medellín is the production center for textiles andapparel in Colombia.
schemes to develop the industry vertically,
Colombian companies offer the full service:everything from design in niche markets toLingerie and Jeanswear.
Colombia has specialized in becoming a designreference center for Latin America.
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Colombia is recognized in Latin Americafor its fashion shows, especially for eventslike Colombiatex and Colombiamodawhich attract recognized internationalcompanies.
One of the most important fashion showsin Latin America takes place in Medellín
Colombia has a 0.31% and 0.17% shareof the world market value in textile andapparel production respectively, and0.25% in the fashion show market.
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4. For the competitive
human resources
• Colombia’s labor costs are among thethe lowest in Latin America. Laborflexibility and the availability of skilledhuman capital enables productionprojects in Colombia to be profitable.
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According to EIU*, Colombianworkers occupy second placein labor productivity in LatinAmerica, measured by:• Number of annuall labor
,
strikes,• Labor productivity
Scale: 10: Outstanding – 0: Worst.
Source: EIU * (Economist Intelligence Unit) 2009.
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.
Availability of Skilled Labor Competitiveness - Senior Management
4.13
2.48
3.58
3.52
Venezuela
Argentina
Venezuela
Argentina
Source: IMD, World Competitiviness Year Book, 2008 Score /10
6.89
5.08
4.94
.
6.28
5.79
4.72
.
raz
Mexico
Chile
Colombia
Colombia
Brazil
Chile
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US$ / month
P: ProvisionalF: Estimated
Source: EIU, 2009
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,
Source: Werner International
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00 00
The Colombian Textile Industry workforce ishighly skilled, 22% of the total employed
population works in this industry.
Employee TypeNumber ofWorkers
Total 132,021
Permanent53,097
Temporary 34,791
Others 44,133
*
*Adjusted for inflation and exchange ratem. monthlySource: DANE, Banco de la República (Central Bank), Colombia
The average salary for a TextileIndustry worker is US$ 274 (m) in2009, whereas the minimumsalary is US$ 221 (m). This salaryis locally and internationally
competitive.
Salary & Wages 339.8 million
Monthly Salary 214.5 273.9
Social contributions 229.0 million
Monthly Payroll 144.5 184.5
Monthly Salary Cost US$ 359.0 458.4
Exchange Rate 2,361.1 2,252
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5. For the legal incentives andspecial regimes for foreign trade.
• Colombia is a country with positiveinvestment conditions. Not just competitively,but also in terms of the legal framework,which provides excellent incentives.
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PERMANENT FREE-TRADE ZONECan be new or existing zones, organized as anindustrial park, wherein companies develop their industrial goods and services for trade .
SPECIAL PERMANENT OR SINGLE
ENTERPRISE FREE-TRADE ZONE
Authorized such that only one company, using its ownfacilities, develops their industrial goods and services
for trade.
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Most competitive Free-Trade Zones in Latin America:15% profitability, allow sales to the local market
• Capital Gains Tax 15%.
• No Customs taxes are incurred or paid (VAT,
Investment in millions Direct JobsUS$ 29.81 150
43
Tariffs).
• Benefits of international trade agreements.
• Sales to the local market.
Investment in millions Direct Jobs
US$ 1.99 – 9.94 500
Investment inmillions
Direct Jobs
US$ 14.91 500
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• 40% deduction on the value of investments made in Real Productive Fixed Assets.
• 100% deduction on industry, commerce, advertising & publicity, and property taxes
so long as they have been paid in the respective tax year and are coincidentallyrelated to the economic activity of the taxpayer.
• 25% deduction of the tax on financial transactions, regardless of the type ofeconomic activit of the tax a er.
• 125% deduction on capital gains taxes for science & technology projects.• VAT exemption on products designated for export.
• “Vallejo Plan”: VAT exemption on the temporary import of raw goods and materialsfor the production of finished goods designated for export.
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Special regime for foreign trade,“Vallejo Plan” for raw goods and materials
Allows: the import of raw goods and materials for the production of a determined amountof finished goods.
Benefit: imports are completely exempt from customs taxes (VAT and Tariffs) for adetermined amount of finished goods.
Obligation: to export all finished goods to third-party countries in a determined period (18months).
User : any company that requests these privileges to the DIAN (National Customs and Tax
Administration).
The “Junior Vallejo Plan” or Replacement Plan
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The “Junior Vallejo Plan” or Replacement Plan
Allows: that goods exporters, whose production process has used a determined amount ofimported raw goods and materials subject to Customs taxes and VAT, may import the same
quantity of raw materials with tax exemptions.Benefit: raw materials imported exempt from Customs taxes (VAT, Tariffs).
Users: any company exporting finished goods.
Customs mechanism used mostly for SMEs
.
Difference with the sale price of raw materials: there is no need to present additionalevidence or samples, just export and import declarations of finished goods along withdescriptions of the raw material.
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The “807 Vallejo Plan”
Allows: the temporary import of raw goods and materials by an “807” type manufacturer fors assembly only into a finished good destined for export
Benefits: 1. Import of raw goods and materials exempt from Customs taxes (VAT, Tariffs).2. Not necessary to pay non-refundable import taxes
. , .
Users: “807” type manufacturers (Assembly only plants)
Obligation: guaranteed export of 100% of the goods produced by assembly onlymanufacturer.
The use of the highly exporting users
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The use of the highly exporting users(ALTEX) framework
Requirements for recognition:
Export activity of more than FOB value of USD $2 million during the 12 months prior toa lication submission.
The value of the direct exports, or value determined through the CustomsIntermediary Society, must account for at least 30% of the total sales for the year priorto application submission.
The use of the highly exporting users
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The use of the highly exporting users(ALTEX) framework
The following is achieved:
Efficiency in the supply chain: Presentation of global shipping applications to make
partial exportations, elimination of physical customs inspections (some exceptions) orsite inspections.
Cash Flow Increase : Single worldwide guarantee to the DIAN, on all imports and.
Taxation: Exemption from VAT in the import of industrial equipment not produced in thecountry destined for raw materials transformation.
In the production chain: Authorization as private deposit for industrial processing.Joint Qualification: Possibility of being both UAP (Permanent Customs Users) and
ALTEX certified.
.
Other frameworks such as the customs deposit
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pauthorization for industrial processing
Allows: the storage of raw goods and materials that will be submitted totransformation, processing or industrial manufacturing.
Users: highly exporting users (“ALTEX”) and Permanent Customs Users (UAP).
Benefit: possibility of importing under temporary import conditions, goods intended for-, .
These imports are for the production of finished goods destined for export only.
Customs mechanism used mostly by textile and metalworks companies
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1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop productionprojects in the Textile & Apparel Industry.
.
2. For the domestic market3. For the industry track record4. For the competitive human resources5. For the legal incentives and special regimes
4. Conclusions
Recognized companies have invested in Colombia
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DuPont de Colombia S.A.
•In 1963, this company began operating directly in
Colombia in diverse commercial areas such asTextile and Nylon Industry products, advancedfiber systems, polymers and packing materials,lycra, photopolymer sheets for markingpackages, security holograms, and much more.
Recognized companies have invested in Colombia
“Colombia has a privileged geographic
location that makes her a stepping stone,
an equidistant point for all regional markets”
-
Guillermo A. Heins, President & General
Manager for Colombia, Ecuador, Peru and
Venezuela, DuPont
•Through the years in Colombia, DuPont hasestablished important alliances.
•In addition, DuPont de Colombia S.A., thecorporation and the associate companies in thecountry, have made excellent investments in theautomotive, textile, housing, paint and other local
industries.
R i d i h i t d i
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Coats Cadena S.A.
•Coats is the largest manufacturer and provider of industrial sewing and embroidery threads in the world.
•The wide range of Coats products provide solutions for every application – for jeans, athletic shoes, airbags or
Recognized companies have invested in
Colombia
even bulletproof vests.
•Our global product offering, and the availability of our brands of the highest quality, offers the best productsand services to satisfy global specifications in 67countries all over the world. This range of products isbacked up by Coats Sewing Solutions – value-added
services to help you improve your sewing capability,allowing you to offer better-quality sewn products inless time.
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Customized Information
Contacts: with the public and private sectors
Proexport will provide you with world class services
,
On-Site Investor’s Service
Free and confidential: All services are free-of-charge and all informationprovided in the process is treated as confidential.
Trade offices of Proexport
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around the world
Trade offices
Trade agencies
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