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Colombia: An Upcoming Emerging Market for International Investors
May 2011
About Us
EXPORTS INVESTMENT TOURISM
Proexport promotes International Tourism, Foreign
Direct Investment and Exports
Colombia: Country with Investment Grade (S&P)
"The recent gains in public
confidence resulting from an
improved security
environment are likely to
persist."
Colombia's economy has
displayed resilience against
external shocks, and the
country's favorable medium-
term growth prospects
should contain the public-
sector debt burden
Source: Standard & Poor’s – 16 March 2011
“The new BRICs are Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa
(CIVETS). They are countries with major populations, dynamic, diverse economies,
political stability and each of them has a brilliant future. Any company with global
ambitions will have to take immediate action in these markets.”
Michael Geoghegan, CEO HSBC
April 26, 2010 in his speech to AmCham Hong Kong
Colombia, The C in the CIVETS
0
5
10
15
20
-2
0
2
4
6
8
Eco
no
my
Gro
wth
Colombian Economy Growth Vs Security Perception, 2001 – 2010 (%)
Economy Growth Security Problem
Secu
rity Percep
tion
Enhanced economic performance has come
hand in hand with improved security
Source: ANDI (Asociación Nacional de Industriales)
World
Crisis
* Forecast (23 March 2011)
Source: EIU (Economist Intelligence Unit)
Colombian Economy: Bigger than Chile, Ireland, Malaysia,
Egypt, Singapore and New Zealand
GDP
US$ Thousand Millions – 2010*
285
257 249 238 233 229 227 220 217 217
205
157 140 130 127
104 92
36
0
50
100
150
200
250
300
Note: GDP fixed to prices under Power Purchasing Parity
* Forecast (23 March 2011)
Source EIU (Economist Intelligence Unit)
The 28th largest world economy when adjusted by PPP
and one of the largest non-OECD
426 413
382 350 346 340
323
276 274 257 256
228 218 184 170
120
0
50
100
150
200
250
300
350
400
450
GDP (PPP) US$ Thousand Millions – 2010*
Source: EIU (Economist Intelligence Unit)
*Forecast (23 March 2011)
The third largest population in Latin America and the second
largest Spanish speaking population in the world
111.2
46.3 45.8 40.1 38.2
33.7 29.6 28.2
21.9 16.9
11 10.6 10.6 9.3 8.4 7.8 7.4 5 4.9 4.3
0
20
40
60
80
100
120Population
(Millions of People) - 2010*
2,482 2,403 2,356 2,239 2,722
3,354 3,677
4,608
5,316 5,052
5,980
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Colombian GDP Per-Capita 2000 – 2010* (US$)
GDP Per-Capita has doubled since 2004
Source: EIU (Economist Intelligence Unit)
*Forecast (23 March 2011)
140%
5.851 6.016 6.175 6.3596.820
7.205
7.8518.456
8.747 8.8009.180
4.000
5.000
6.000
7.000
8.000
9.000
10.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GDP per- capita is reaching US$10,000 when adjusted by PPP
GDP at purchasing power parity (PPP), divided by population
* Forecast (23 March 2011)
Source: EIU (Economist Intelligence Unit)
57%
Colombian GDP per Capita (PPP)
2000 – 2010* US$
Annual FDI net inflows have multiplied by four
Variation 2008 - 2009: -32%
Variation 2009 – 2010: -5%
*FDI by Exchange Balance
**Participation by country positive accumulated inflows, it doesn´t includes investment or reinvestment of profits in the oil sector, Value 2009: US$ 36,364 million (so far there is not
data for countries at first semester of the year)
Source: Banco de la República (Balance of Payments) (Central Bank)
Main investors in Colombia
Stock 2000 – September 2010**
2,436
1,720
10,252
6,656
10,596
7,137
6,760
0
2,000
4,000
6,000
8,000
10,000
12,000
FDI, 2000 – 2010 US$ Millions
United States
• Stock US$ 11,919 M
• Share 30.5%
Great Britain
• Stock US$ 4,658 M
• Share 11.9%
Spain
• Stock US$ 2,820 M
• Share 7.2%
Mexico
• Stock US$ 2,213 M
• Share 5,7%
United States
• US$ 16.879 M
• Share 42,5%
China
• US$ 1.967 M
• Share 4,9%
Netherlands
• US$ 1.617 M
• Share 4,1%
Ecuador
• US$ 1,825 M
• Share 4,5%
Exports have tripled in nine years
13,158
37,626
32,852
39,820
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Exports, 2000 – 2010 US$ Millions
Variation 2008 - 2009: -12,7%
Variation 2009 - 2010: 21,2% Source: DANE (Departamento Nacional de Estadísticas) ( National Department of Statistics)
Colombia Exports by Country
2010
United States
• 345.158 Visitors
• Share 23,4%
Venezuela
• 197.173 Visitors
• Share 13,4%
Ecuador
• 122.076 Visitors
• Share 8,3%
Argentina
• 83.674 Visitors
• Share 5,7%
In nine years international visitors in Colombia doubled. While
tourism in the world increased 6,7%, in Colombia this trend
increased 8,9% in 2010*
Variation 2008–2009: 17,2% (includes cruise)
Variation 2009 - 2010: 10,3% (includes cruise) *It doesn't Include cruise
**Includes cruise
Source: DAS (Departamento Administrativo de Seguridad) (National Department of Security)
732 668
1,700
1,876
0
400
800
1,200
1,600
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tourism, 2000 – 2010 Thousand of Visitors**
International visitors in Colombia
by Country – 2010*
In terms of Globalization, Colombia is ranked 3rd among Latin America
countries, performing better than world economies such as Japan,
Brazil, Russia and Indonesia.
Source: Ernest and Young – The Globalization Index 2010, Ranking among 60 countries.
Globalization Index, 2010
4.32
3.81 3.61 3.58 3.57
3.43 3.37 3.28 3.18 3.13 3.04 3.00 2.96 2.85
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
MILA (Integrated Latin-American Market): Merging of the Chilean,
Peruvian and Colombian Stock Exchange Markets
MILA will become the biggest stock exchange market by number of issuers
It is expected a foreign investment growth, multiplying dealings by 5 in forthcoming
years
Over 500
Companies
46 dealing over
US$ 1 million daily
58 dealing between
US$500 thousand and
US$ 1 million
Source: Top Reformers Report, World Bank
*Positive figures show improvements in business environment
Doing Business Ranking Variation, 2007-2011*
(Change in positions)
Colombia: the third most “Business Friendly” country in Latin
America and top reformer in the region
Latin-
America
Ranking
Country
Mexico 35
Peru 36
Colombia 39
Chile 43
Panama 72
Argentina 115
Costa Rica 125
Brazil 127
Ecuador 130
Venezuela 172
Ranking made up by 183 countries
Source: Doing Business, 2011 (World Bank)
World
Ranking Country
5 Colombia
20 Peru
28 Chile
44 Mexico
74 Brazil
109 Argentina
109 Panama
179 Venezuela
Strength of Investor Protection, 2011
Rating
Ranked among the top countries on investor protection
In Force
Signed
In Negotiation
Future
IN FORCE
•CAN (Peru, Ecuador y Bolivia)
•MERCOSUR (Argentina, Paraguay, Uruguay and Brazil)
•Chile
•G2-Mexico
•North Triangle (Honduras, Guatemala y El Salvador)
SIGNED
•United Stated
•EFTA (Iceland, Liechtenstein, Norway and Switzerland)
•Canada
•European Union (Signature)
IN NEGOTIATION
•South Korea
•Panama
•Turkey
FUTURE
•Japan
•Australia
•New Zealand
•Costa Rica
•Dominican Republic
•Gulf Community
Positioning Colombia as an export platform: 11 free trade agreements
(FTA) with 48 countries allowing preferential access to over 1,500
million consumers
Encourage and improve production of competitive
products and services ESTABLISHED SECTORS
Promote development of NEW & EMERGING
SECTORS
Business Process Outsourcing and Off shoring BPO&O
Promote value added, innovation & development in
AGRIBUSINESS SECTOR
Chocolate Confectionery
Palm and vegetable Oil
Shrimp Farming Cattle
Productive Transformation Program: A Public - Private Partnership to strengthen and build “world class sectors”
Health Services Exportation
15% income tax rate.
No import duties.
VAT exemption for goods sold from Colombia to FTZ
Benefit from international trade agreements. (Except
Peru)
Allow sales to the local market.
Free Trade Zones
Single-Company (SCFTZ)
Permanent (PFTZ)
The most competitive FTZ’s in Latin America: 15% income tax
and allows sales to the local market
Free Trade Zone Approved
22
Source: Ministry of Trade, Industry and Tourism. The investment amounts required to obtain the Free Trade Zone status are
calculated in Minimum Monthly Legal Wages (M.M.L.W). This information is presented in dollars using a US$1 = COP 2,000
exchange rate. For 2011, the M.M.L.W is COP 535.600. The M.M.L.W, as well as the exchange rate are subject to variations.
Single - Company Free
Trade Zone
Permanent Free Trade
Zone
Investment commitments
Total Investment (USD
Million) 6.658
Direct Jobs 46.721
Indirect Jobs 95.001
Investment executed so far
Total Investment (USD
Million) 2.317
Direct Jobs 5.509
Indirects Jobs 26.052
89 Free Trade Zones
Investments over US$2.01 million* (7500 M.M.L.W.)**
Investor pays 1% premium based on the amount of the investment. 0.5% in unproductive periods
Period
Conditions
From 3 to 20 years maximum
Signed
contracts 67 legal stability contracts approved, 66 legal stability contracts signed
*The investment requirement is calculated with an exchange rate of COP $ 2000 = 1 USD. It is responsibility of
the investor to calculate the investment requirement at the moment of submitting the application for the Legal
Stability Agreement.
** One minimum monthly legal wages – M.M.L.W. equivalent COP$ 535.600 or US$ 267,8
Colombia offers Legal Stability Contracts to guarantee investment projects
• Exemption for 30 years for companies that build or restyle hotels before 2018. Tourism
• Exemption for 20 years starting from 2003. Eco-tourism
• Exemption for 10 years after the start of production in crops planted between 2003 and 2014. Late yield crops
• Permanent exemption for investment in new forest plantations, sawmilling and timber plantations. Forestry
• Publishing of books, magazines, booklets or collections of scientific or cultural characteristics are exempt until 2013.
Editorial
• Exemption for 10 years for products manufactured in Colombia with high scientific and technological research content, starting from 2003.
New medicinal products and software
• Exemption for 15 years for sale (by the generators) of electricity based on wind resources, biomass or agricultural waste.
Renewable energy
• Exemption for 15 years starting from 2003 to provide services in slabs and boats with net weight below 25 tons.
River transport
• 125% income tax deduction over investments in scientific and technological developments.
Scientific and Technological Development
Other incentives by sector: Income tax exemption for
up to 20 years
• Information tailor made to your needs
• Facilitation of contacts with the public and private sector
• Setting up of agendas to Colombia
• Services for investors already established in Colombia
• Free of charge and confidential
• Investment specialists in New York, London, Beijing and Sao Paulo.
PROEXPORT’s services to Investors
www.proexport.com.co
Thank you!
