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COLOMBIA
Investment Environment and Business Opportunities in Colombia
2014
About us
Proexport is in charge of the promotion of International Tourism, Foreign Direct Investment, and non-traditional exports in Colombia
www.proexport.com.co
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Proexport in Colombia
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25
Regional Ofices 8
Information centers
BARRANQUILLA. BOGOTÁ. BUCARAMANGA. CALI. CARTAGENA. CÚCUTA. MEDELLÍN. PEREIRA
VALLEDUPAR. PASTO. PALMIRA. ARMENIA = UNIVERSIDAD GRAN
COLOMBIA – CÁMARA DE COMERCIO. VILLAVICENCIO. BOYACÁ =
TUNJA - DUITAMA - SOGAMOSO. IBAGUÉ. SANTA MARTA. SAN
ANDRÉS. ABURRÁ SUR. NEIVA. BARRANQUILLA = CÁMARA
COMERCIO – UNIVERSIDAD NORTE. CARTAGENA. MEDELLÍN.
BUCARAMANGA. CALI = CÁMARA COMERCIO. PEREIRA. BOGOTÁ.
MANIZALES. CÚCUTA. POPAYÁN. BOYACÁ.
26 commercial offices
prescence in 30 countries
UNITED STATES. CANADA. MEXICO. GUATEMALA. COSTA RICA. CARIBBEN. VENEZUELA. BRAZIL. ECUADOR. CHILE. PERU. ARGENTINA. SPAIN. GERMANY. PORTUGAL. UK. FRANCE. TURKEY. UNITED ARAB EMIRATES. INDIA. CHINA. SOUTH KOREA. RUSSIA. JAPAN. SINGAPORE. INDONESIA.
Proexport en in the world
General facts
Second most bio-diverse
country in the World It is among the 12 most megadiverse countries of the planet.
55% of the population is less than 30 years old. There are seven cities with over
one million people.
With an extension of 1,141,000 km2 almost 3 times the size of California and
twice the size of Texas.
Colombia is the only country in
South America with access to both, the Atlantic and the Pacific ocean.
Times of great economic achievements
GDP2013: +4.3% GDP 2012 : +4.0%
Higher than the Latin American average growth (3.2%).
Controlled Inflation: 1.94%
Below target inflation
Unemployment rate 2013:8.5% Unemployment rate for December
2012: 9.2%.
FDI2013: US$16,772 FDI 2012 : US$ 15,529
Record figure in Colombian history
1.01 million barrels per day
of oil production
Fourth largest producer in South America
A competitive location with easy access to markets around the globe
Mexico City 4H45M
Los Angeles 8H20M
Quito 1H30M
Lima 3H00M
Peru
Ecuador
México
United States
Canada
Brazil
Argentina Chile
Spain
France
Germany
Over 878 weekly direct international flights.
More than 4,500 weekly domestic flights.
Less than 6 hours to the main capital cities
in Latin America.
More than 20 different airlines operating in Colombia.
New York 5H35M
Toronto 6H05M
Caracas 1H20M
Santiago Chile
5H00M
Buenos Aires 6H15M
Sao Paulo 5H45M
Madrid 9H40M
Paris 10H40M
Frankfurt 11H15M
202.80
116.20
81.67 78.09 83.70
64.60
47.40 50.50
35.60 31.60 30.20 23.51
17.70 10.50 9.70 8.50 8.10 7.20 8.20 5.10 5.50 4.60
Population 2014* Millones
The second largest spanish speaking country in the world and the 23rd most populated
Source: DANE. EIU - Economist Intelligence Unit. 2014.
* Forecast.
167
257
299
301
373
380
400
420
422
455
481
481
535
599
606
1,176
1,790
2,324
2,560
2,644
3,688
New Zeland
Denmark
Singapur
Israel
Norway
Chile
Peru
Vietnam
Hong Kong
Sweden
Belgium
Switzerland
Philippines
Colombia
Malaysia
Australia
South Korea
Mexico
France
Brazil
Germany
GDP at PPP – 2015 US$ billion
Colombia is the 28th largest economy in the world and one of the largest non-OECD economies
PPP - Purchasing Power Parity. e: estimated.
Source: EIU - Economist Intelligence Unit. 2014
0 1 2 3 4 5 6 7 8 9
China
India
Nigeria
Vietnam
Indonesia
Colombia
Egypt
Turkey
Brazil
Russia
South Korea
Mexico
South Africa
United States
Canada
Japan
United Kingdom
Germany
France
Italy
Colombia will contribute significantly to world economic growth
BRICs
Other EM
CIVETs
G7
Why?
Respect for private and intellectual property.
Natural resource boom
Advance in national security and peace process
FTAs with almost 50 countries (including the US)
Rapid FDI growth
Source: “Diamonds in the rough: Unearthing opportunity in an uncertain world” .
The Economist March 2013.
Colombia's per capita income has nearly doubled since 2000
Per capita National Income (PPP)
2000 – 2018p, US$
5,826
8,940
10,910
14,400
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p 2015p 2018p
High Income
Middle High Income
Middle Low Income
Low Income
Income
Source: EIU – Economist Intelligence Unit. PPP = purchasing power parity. Economies are divided according to 2012 income per capita, calculated using the World Bank Atlas method. The groups are: low income, US$1,035 or less; lower middle income, US$1,036 - US$4,085; upper middle income, US$4,086 - US$12,615; and high income, US$12,616 or more.
15.6
14.1 13.7
11.8 12.0 11.2 11.3
12.0 11.8
10.8 10.4
8.5
7.0 6.5
5.5 4.9
4.5
5.7
7.7
2.0 3.7
2.4 1.9
8.8 8.1
7.4 7.1 6.8
3.0 3.4 3.6 3.5 3.3
2.5 3.9
5.3 4.7
6.7 6.9
3.5
1.7
4.0
6.6
4.0 4.3 4.4 4.6 4.5 4.3 4.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Macroeconomic stability and strong economic performance in the long run
Inflation
GDP
Unemployment rate
GDP Growth, Inflation and unemployment Rate 2002 – 2018p (%)
f: Preyected e: Estimates Source:: DANE; Banco de la República; EIU - Economist Intelligence Unit . 2014
Economic growth has been fueled by high rates of investment
14%
16%
18%
25% 24%
27%
33%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014f 2015f 2016f
Gross Capital Formation (% of GDP) 2000 – 2016f
Source: EIU – Economist Intelligence Unit
Figures at constant prices of 2005.
e- Estimates
f- Forecast
A rapidly growing middle class
16.2%
25.3%
37.3%
46.3%
43.8%
59.9%
2002
2012
2020
2025
Below Baseline Scenario
Above Baseline Scenario
6.7
6.7
22.3
19.0
32.1
24.7
Million inhabitants
11.6
11.6
Source: Fedesarrollo, 2013
Middle class in Colombia as a percentage of total population
Baseline scenario: 4.6% GDP growth Below baseline scenario: 4.2% GDP growth Above baseline scenario: 5.3% GDP growth Middle class: Monthly household income between 3.2MW and 13MW (MW) Minimum wage in Colombia 2013: US $333.
Economic growth, Investor Confidence and Security
* Figures do not include FDI registered for SabMiller adquisition of Bavaria in 2005 (USD 4,800 MM). ** Perception of insecurity as a key issue affecting industrial growth in the country. Monthly Industrial Survey -ANDI. Source: National Business Association of Colombia - ANDI. Balance of Payments – Banco de la República.
0,0
5,0
10,0
15,0
20,0
25,0
30,0
0
1000
2000
3000
4000
5000
6000
IED - US$ million* Insecurity perception**
Colombia, an investment-grade country with positive outlook
S&P (April 2013) and Fitch (december 2013) improved
Colombia´s sovereign debt outlook.
“Effective implementation of recent fiscal reforms could
improve its debt and interest burdens”– S&P
Source: S&P Ratings; Revista Dinero, Colombian Treasury.
On December 2013 Fitch Ratings upgraded Colombia's ratings due to Colombia's improvement in its external accounts and positive government debt dynamics, which support the convergence of external and fiscal credit metrics with rating peers. In addition, the sovereign's credible and consistent policies provide it with the capacity to withstand external shocks; this was demonstrated during the recent increase in financial volatility witnessed by several emerging markets.
Since 2011 the Colombian sovereign debt has been rated positively by all three agencies, coinciding with a reduction in the vulnerability to external shocks, the fulfillment of its obligations, confidence in the macroeconomic policy of the country and improved security policies.
Rating Date Rating Agency
Long Term– Foreign Currency
Short Term– Foreign Currency
Long Term– Local Currency
Short Term – Local Currency
Outlook
Stable
BBB
A – 2
BBB +
A - 2
24– Apr- 2013
24– Apr- 2013
5 – Mar - 2007
5 – Mar - 2007
Long Term– Foreign Currency
Short Term– Foreign Currency
Long Term – Local
Currency
BBB
F – 2
BBB+
13 – Dic- 2013
22 – Jun - 2011
22 – Jun - 2011
Long Term– Foreign Currency
Positive Baa3 7– Feb- 2012
Term
Stable
Colombia with the most reforms in Latin America towards the improvement of Business environment
Source: Doing Business 2014. World Bank. *Positive numbers indicate improvements in business environment.
Country Ranking 2014*
Chile 34
Peru 42
Colombia 43
Mexico 53
Panama 55
Costa Rica 102
Brazil 116
Argentina 126
Ecuador 135
Venezuela 181
Ranking Doing Business* 2008-2014
Change in the number of positions
23
16
13
10
6
-1
-7
-9
-9
-17
Colombia
Panama
Costa Rica
Mexico
Peru
Venezuela
Ecuador
Brazil
Chile
Argentina
Colombia is the leader in terms of Investor Protection in the region
Source: Doing Business. World Bank . 2014.
Ranking Country
6 Colombia
16 Peru
34 Chile
68 Mexico
80 Brazil
80 Panama
98 Argentina
182 Venezuela
8.3
7.0 6.3
5.7 5.3 5.3 5.0
2.3
Colo
mbia
Peru
Chile
Mexic
o
Bra
zil
Panam
á
Arg
entina
Venezu
ela
Investment Protection Index Doing Business - 2014
Total commerce has grown almost 5 times in the past 10 years
24.9
15
25.1
51
24.6
71
27.
009
33.4
76
42.3
95
50.5
53
62.8
88 77.
295
65.6
82 8
0.5
02
112.0
95
119.2
99
118.2
19
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Comerce (X+M)
United States
• Exports: US$18.458 million
• Imports: US$ 15.681 million
China
• Exports: US$ 5.102 million
• Imports: $9.841 million
Mexico
Exports: US $863 million
Imports: US$ 5.299 million
Brazil
• Exports: US $2.457 million
• Imports: US$ 1.590 million
Exports and Imports. 2000 – 2013 US$ millions
Source: DANE, 2014
Colombia shows a remarkable growth of its exports
Variation 2010 - 2011: 43% Variation 2011 - 2012: 5,7% Variation 2012 -2013: -2.2% Source: DANE .
13,158 13,129
21,190
37,626
56,915 58,822
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Exports. 2000 – 2013 FOB Values US$ millions Top export destinations 2013
United States
• US$ 18,459 million
• Part. 31.4%
Panama • US $2,939 million
• Part. 5.7%
China
• US $5,102 million
• Part. 8.7%
India • US $2,993 million
• Part. 5.1%
Imports also have increased rapidly
Variación 2011 – 2012: 7.2% Fuente: DANE
11,757
21,204
39,666
32,891
54,233
59,397
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Top imports by origin 2013 Imports 2000 – 2013 CIF Values - US$ million
United States • US$ 16,337 million
• 27.5%
Mexico • US$ 5,496 million
• 9.3%
China
• US$ 10,363 million
• 17.4%
Brasil • US$ 2.590 millones
• Participación: 4.4%
Free Trade Agreements
Source: Colombian Ministry of Commerce, Industry and Tourism. 2013.
Canada
United States
Mexico
Guatemala
Honduras
El Salvador
Ecuador
Brazil Peru
Argentina
Paraguay
Uruguay
Liechtenstein
Switzerland
Island
Norway
European Union
Turkey
Israel
Japan
Panama
Chile
Bolivia
Costa Rica
Venezuela*
Pacific Alliance
South Korea
Cuba*
Nicaragua*
*These are Partial Scope Agreements (PSA) - - - The dotted line refers to member countries of The Pacific Alliance other than Colombia. – Chile, Perú and México.
In force
Signed
In negotiation
International Investment Agreements - IIA
Source: Colombian Ministry of Commerce, Industry and Tourism. 2013.
Canada
United States
Mexico
Guatemala
Honduras
El Salvador
Peru
Uruguay
Liechtenstein
Switzerland
Island
Norway
European Union
Turkey
Israel
Japan
Panama
Chile
South Korea
* Negotiations recently concluded. Note: The International investment agreements (IIA) include Agreement Investment Treaties – BIT (agreement) and Free Trade Agreements – FTA- with investment section (chapter).
Spain
China
India
United Kingdom
Kuwait
Singapur
Azerbaijan
Qatar
Russia
In force
Signed
In negotiation
Double Taxation Agreements - DTA
Source: Colombian Ministry of Commerce, Industry and Tourism. 2013.
Canada
United States
Mexico
Peru
Switzerland
Holland
Norway
Turkey Israel
Japan
Chile
South Korea
*Negotiations recently concluded. Note: The International investment agreements (IIA) include Agreement Investment Treaties – BIT (agreement) and Free Trade Agreements – FTA- with investment section (chapter).
In force
Signed
In negotiation
Future
Spain
China
India
Belgium
Singapur
Qatar
Bolivia
Ecuador
Honduras
Brazil
United Arab Emirates
Italy
Germany
France
Czech Republic
Colombia: A gateway to the Pacific Alliance
Source: MCIT, 2013
GDP of USD 2,010.3
billion The members generate 35% of
the region´s GDP
Population of 209 million Almost Brazil´s Population
50% of Latin American
commerce Total trade of US$ 1,116
billion (2012)
FTAs with 60
countries Access to benefits of
markets that represent
85.7% of the World GDP
Mexico
Colombia
Peru
Chile
In 2013 Colombia reached a new record in FDI: Nearly 7 times of what it received 10 years ago
2,504
6,897
13,405
15,529 16,770
Average 1994 - 2002
Average 2003 - 2010
2011 2012 2013
Var. 8%
Top Investing Countries in Colombia 2000– 2013
FDI Inflows. 1994 –2013 USD million
United States
• US$ 25,980 million
• 24 %
United Kingdom
• US$ 15,672 million
• 14,5%
Spain
• US$ 7,902 million
• 7,3%
Chile
• US$ 4,283 million
• 4,1%
Source: Balance of Payments - Banco de la República. Share of all countries with positive cumulative investment, The information includes reinvested profits or investments in the oil sector Note: the list of the top countries investing in Colombia does not include Panama.
Colombia was among the top 20 destinations of FDI in the world in 2012
Source: World Investment Report, Overview 2013; FDI Markets, Global Greenfield Investement Trends. 2013; CEPAL 2013.
According to The World Investment Report -UNCTAD Colombia is one of the top twenty host
economies for FDI in the world with USD 16 billion in 2012.
168
121
75
65
65
62
57
57
51
45
30
29
28
28
26
25
20
16
14
14
1; United States
2; China
3; Hong Kong (China)
4; Brazil
5; Virgin Islands (UK)
6; United Kingdom
7; Australia
8; Singapur
9; Russia
10; Canada
11; Chile
12; Ireland
13; Luxembourg
14; Spain
15; India
16; France
17; Indonesia
18; Colombia
19; Kazakhistán
20; Sweden
During 2012 Colombia attracted 93
Greenfield projects making it the third
country in the region in terms of the number of projects.
Colombia is the third destination for
FDI in Latin America with
USD 15,649 Million.
The stock of Colombia’s outward FDI has grown nearly ten-fold since 1994
Source: Banrep, 2014; World Investment Report, Overview 2013; FDI Markets, Global Greenfield Investement Trends. 2013; CEPAL 2013.
Stock of outward FDI. 1994 - 2013
USD million
3,652
39,482
Stock 1994 - 2002
Stock 1994 - 2013
FDI outflows by sectors, 1994 – 2013
Industry, 25,1%
Oil & Mining, 21,4%
Financial services, 27,7%
Electricity, gas & water, 12,4%
Transport & communicatio
n, 6,0%
Commerce, restaurants & hotels, 4,6%
Others, 2,8%
United States USD 6,455 million
17%
United Kingdom USD 5,180 million
14%
Panama USD 6,505 million
18%
Peru USD 2,507 million
7%
-606
7,652
2012 2013
Sectors of opportunity- Tourism
Source: Migración Colombia, MCIT, Banco de la República. Cálculos de Proexport
1,053 1,195 1,223 1,354 1,475 1,582 1,692 1,832
51 127 228
285 296
313 254
306
2006 2007 2008 2009 2010 2011 2012 2013
Arrivals (Migración Colombia) Visitors in cruises
United States
• 336,454 visitors
• 18.4%
European Union
• 307,212 visitors
• 16.8%
Venezuela
• 261,343 visitors
• 14.3%
Argentina
• 129,069 visiors
• 6.4%
Main nationalities of foreign visitors in Colombia, 2013
Foreign visitors in Colombia 2006 – 2013, thousands
Some examples of high profile Colombian “multilatinas”
One of the largest food companies in
Colombia, Nutresa has presence in
12 countries in Latam, with
manufacturing plants in 8 of them.
Recently, the company signed an
agreement to acquire 100% of the
shares in Tresmontes Lucchetti
S. A. in Chile for USD 758
million.
SURA Brand is currently well known in the
insurance, pension and investment fund
business through its operations in Mexico,
Peru, Uruguay and Chile.
In 2011, the group bought ING assets in Latin
America for USD $ 3,614 million.
It is the largest financial conglomerate in
Colombia. The Group has subsidiaries in El
Salvador, Panama, and Puerto Rico.
In 2012, Bancolombia acquired 100% of the
ordinary shares and 90.9% of the preferred
shares of HSBC Bank in Panama.
Carvajal SA, is a conglomerate with
presence in 15 countries and
recognized for its role in the field of
packaging, stationery, design and
advertising.
In 2013, Carvajal S.A made an
investment of $ 23.7 million for the
construction of a manufacturing and
distribution center in Peru.
Colombiana SA is one of the country's
leading companies in the production and
marketing of sweets, chocolate and biscuits.
The company has strengthened its
international strategy with the opening of 11
branches throughout the Americas and has a
production plant in Guatemala to supply the
American market.
Tecnoquímicas is specialized in heath products
and services, personal care and household
cleaning, processed foods, and agricultural and
veterinary products in Colombia and Latin
America.
The company has direct presence in Central
America through its 3 production plants in El
Salvador.
Some examples of high profile Colombian “multilatinas”
Labor incentives
New employees with incomes lower than 1.5 Minimum Wages (US$ 476). Length of benefit by employee : 2 years.
New women employees above 40 years old with more than 1 year unemployed. Length of benefit by employee: 2 years.
New employees under twenty eight (28) years old. Length of benefit by employee: 2 years.
New employees certified in displacement situation, reintegration or disability. Length of benefit by employee: 3 years.
Discount in the income tax and supplementary contributions, and other contributions from payroll.
(Do not include positions generated by mergers or replacements)
Incentives for job creation and formalization
Start of main economic activity: date of registration in the commercial register.
Small firms: staff no more than 50 employees, total assets not exceeding 5,000 SMMLV.
Payment of income tax.
Payment of levies and other contributions from payroll.
The business registration and renewal.
0% - 2 first years 25% - third year 50% - fourth year 75% - fifth year
100% - from the sixth year.
0% - first year 50% - second year 75% - third year
100% - from the fourth year.
Application of escalation
Free Trade Zone
Permanent Free Trade
Zone
Special Standing
"Uniempresarial" (FTZ)
Guajira
Magdalena Atlántico
Bolívar
Valle del Cauca
Cauca
Norte de Santander
Santander
Boyacá
Cundinamarca
Huila
Antioquia
Caldas
Risaralda
Quindío
FTZ requested or approved prior to
December 31, 2012.
• 15% Income tax.
FTZ filed after December 31, 2012.
• Income tax of 15% + 9% tax CREE. Caribbean Region
Andean Region
Pacific Region
Free Trade Zones: Reduced income tax and sales allowed to the local market
Free Trade Zones: Reduced income tax and sales allowed to the local market
No import duties. VAT exemption for goods sold from Colombia to FTZ.
Benefit from international trade agreements.
Allows sales to the local market.
Free trade zones for different investor styles.
A country of regions and differentiated opportunities for investors
Caribbean Region Tourism, Logistics, Petrochemical, Construction Supplies Atlantic Export Platform.
Central/Andean Region Outsourcing Services, high value-added manufacturing, hub to cover domestic market, specialized agribusiness.
Pacific Region Manufacturing, Agribusiness, logistics, biotechnology, Pacific export platform.
Eastern Region Agriculture, forestry, biofuels, hydrocarbons
Amazon Region Conservation, ecotourism (Leticia)