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Investment Environment and Business Opportunities
C O L O M B I A
PROCOLOMBIA
WE PROMOTE EXPORTS
WE PROMOTETOURISM
WE PROMOTE INVESTMENT AND
INDUSTRIAL EXPANSION FOR
INTERNATIONALIZATION
WE PROMOTECOUNTRY BRAND
PROMOTES
33COUNTRIES
PRESENCE OF PROCOLOMBIAIN THE WORLD
*En conjunto con el MinCIT**En alianza con países de la Alianza del Pacífico
GDP PPP 2018*(USD billlion)
Latin American Economies
COLOMBIAIs the 32nd largest economy in the world and 4th in Latin America.
458
463
480
484
543
551
556
661
707
733
749
758
791
919
956
1 000
1 319
2 575
3 371
Peru
Austria
Chile
Hong Kong SAR
Sweden
Switzerland
Singapore
Algeria
Vietnam
United Arab Emirates
Colombia
Bangladesh
South Africa
Argentina
Philippines
Malaysia
Australia
Mexico
Brazil
Source: IMF, WEO, January 2019.
GROSS DOMESTIC PRODUCTEstimatedgrowth 2019
Colombia will be one of the top growing economies in Latin America in 2019
Source: IMF. January 2019.
4,1% 3,5% 3,4% 2,5% 2,3% 2,2%
Chi
le
-5,0%C
olom
bia
Vene
zuel
a
Braz
il
LATA
M
Peru
Mex
ico
-1,6%
Arg
entin
a
Source: IMF, WEO 2019, January
The Colombian economy is on the path of recovery and will expand by about 3.5% in
2019-2020
6,6%
4,0%
4,9%
4,4%
3,1%
2,0%1,8%
2,7%
3,5% 3,7%
0%
1%
2%
3%
4%
5%
6%
7%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GDP Growth (constant prices, % rate)
COLOMBIA IS THE 28thmost populated country in the world
and the 3rd in Latin America
Latin America
*Estimated,.Source: IMF, 2019
210,7
125,9
65,4 60,751,9 50,4 46,2 45,1
32,8 32,5 28,1 25,6 18,8 17,3 11,5 11,4 10,7 10,8 10,4 10,2 9,0 9,1 5,8 5,4 3,5
Population in 2019* (million)
Source: Source: Colombian National Bank (Banco de la República), January 2019.
Since 2013 the unemployment rate has remained at a single-
digit level.
It is expected that in 2019 and 2020, the unemployment rate will continue to be at a one - digit level.
11,3
1211,8
10,8
10,4
9,7
9,18,9
9,2 9,3 9,2 9,1
8
8,5
9
9,5
10
10,5
11
11,5
12
12,5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Unemployment rate(Percent of the population)
A GROWING MIDDLE CLASS WITH HIGH PURCHASING POWER
Share of the population belonging to the middle class vs GDP per capita evolution2002 – 2017
1.8%G D P G r o w t hi n 2 0 1 7
2.7% 3.5%G D P G r o w t hi n 2 0 1 8
G D P g r o w t h f o r e c a s tf o r 2 0 1 9
GDP (USD PPP, constant prices)
Middle class(%)
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
5000
6000
7000
8000
9000
10000
11000
12000
13000
14000
15000
2002 2003 2004 2005 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
30,4%
14.436
Source:Poverty indicators (DANE) and GDP (World Bank) Middle class: Estimated by ProColombia
Source: S&P Ratings; Dinero magazine, ColombianTreasury.* Portafolio 2018
COLOMBIA
Rank
ing
Term
Long Term –Foreign
currency
BBB- BBB
Long Term –Foreign
currency
FitchRatings MOODY S,STANDARD
& POOR S,
Baa2
Long Term –Foreign
currency
In March 2017, Fitch Ratings* improved Colombia´s rating outlook: from Negative to Stable
In July 2014, Moody´s was the last rating agency in improving Colombia´s rating due to two key drivers:
Positive growth forecast thanks to 4G infrastructure.
1. A sound fiscal management that will continue in the future.
2.
an investment grade country
AUSTRALIANEW ZEALAND
JAPANSOUTH KOREA
Being part of the OECD countries means that public institutions in Colombia will meet
standards of the developed world more confidence for investors
COLOMBIA IS THE 37TH MEMBER OF THE OECD
“The OECD investment policy review examines Colombia's achievements in developing an open and transparent
investment regime and its efforts to reduce restrictions on international
investment” OECD
CANADAUNITED STATESMEXICOCHILECOLOMBIA
AUSTRIABELGIUMCZECH REPUBLICDENMARKESTONIAFINLANDFRANCEGERMANYGREECEHUNGARYICELANDIRELANDISRAËLITALY
LATVIALUXEMBOURGNETHERLANDSNORWAYPOLANDPORTUGALSLOVAK REPUBLICSLOVENIASPAINSWEDENSWITZERLANDTURKEYUNITED KINGDOM
Source: OECD, May 2017.
More barriers
Less barriers
Latin American Economies
Closed = 1 - Open = 0
FDI’s Regulatory Restrictiveness Index 2017
COLOMBIALOW BARRIERS TO FDI
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
COLOMBIA IS PART OF THE TOP 30 DESTINATIONS FOR FDI
Source: UNCTAD, 2017.
Developed economies
(USD billion)Top 30 host economies in 2017
Developing and transition economies
275
136
104
63 62 58 50 46 40 35 30 30 29 25 24 19 19 17 17 15 15 15 14 11 10 10 7 7 6
-2
FDI has been largely driven by non-mining sectors over the last 3 years
FDI Inflows(USD millon)
2010 – 2018
Mining and oilOther sectors
Source: Balance of Payments - Banco de la Republica. Share of all countries with positive cumulative investment, The information includes reinvested profits or investments in the oilsectorNote: the list of the top countries investing in Colombia does not include Panama.
Top Investing countries in Colombia
* 2000-2018 United States
USD 36,377 million20,7%
MexicoUSD 6.932 million
4,0%
SpainUSD 17.274 million
9,9%
SwitzerlandUSD 10.763 million
6,1%
1 512
7 468 7 095 8 1219 854 8 584
11 5899 951 8 6504 918
7 180 7 9458 089
6 314
3 139
2 2614 062
2 360
2010 2011 2012 2013 2014 2015 2016 2017 2018
1 1101 872
871
1 463
2018 Q1 2019 Q1
United KingomUSD 21.026 million
12,0%
Foreign Direct Investment from European countries in Colombia 2000-2018USD 67.098 million
38,3%
1 2 3 4 5
FDI increased by 68% during the first quarter of
2019
Source: Directorio de Zonas Francas 2019 DANE
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.
Total numberFree Trade:
114Number of permanent
Free Trade Zones:
43
Number of Special StandingSingle enterprise:
71
Free Trade Zones Offer:Reduced income tax and VAT Exemptions allowing access to local market
Colombia is the country in Latin America with the most
free trade zones
Canada
United States
Mexico
GuatemalaHonduras
El Salvador
EcuadorBrazilPeru
Argentina
Paraguay
Uruguay
AELC
European Union
Israel
Panamá
Chile
Bolivia
Costa RicaVenezuela
South Korea
Cuba*
Nicaragua*
Caricom*
has access to 60 countries and more than 1.5 billion consumers through its network of trade agreements
* Partial scope agreements (PSA)- - - Blue line shows Pacific Alliance´s member countries others than Colombia –(Chile, Peru and Mexico).Source: Chamber of Commerce, Industry and Tourism, Colombia,2017
COLOMBIA
Pacific Alliance
In force
Signed
COLOMBIALess than 6 hours away by airplane from the main cities in the Americas
international direct frequencies per week.
domesticfrequencies per week.
1,109
5,600More than
New York(5hr 35min)Los Angeles
(7hr 40min)
Mexico City(4hr 55min)
Paris(10hr 55min)
Madrid(9hr 40min)
London(10hr 26min)
Tokyo(25hr 05min)
Beijing(22hr 45min)
Dubai(20hr 45min)
Moscow (15hr 58min)
Miami (4hr 00 min)
Santiago de Chile
(5hr 55 min)
Berlin(13hr 45min)
Hong Kong(22hr 45min)
Toronto(6hr 10min)
Mumbai (20hr 50min)
Seoul(23hr 35min)
Sao Paulo(6hr 10min)
Istambul(15hr 16min)
Lima (3hr 05min)
*Esta información tiene en cuenta las rutas que salen de aeropuertos internacionales en Barranquilla, Bogotá, Cali y Medellín. OAG. Para una semana típica del mes de Diciembre de 2017. Fuente: Rutas y Tarifas - Herramientas para las exportaciones colombianas, procesados por ProColombia.
COLOMBIAcounts with more than 4,500 maritime export routes and has access to 680 ports around the world.
Source: Routes and Tariffs - Tools for the Colombian Exporter, processed by ProColombia.
ACCESS TO CHINA IN JUST 29 DAYS (SHANGHAI)
ACCESS TO USA IN JUST 3 DAYS (PORT EVERGLADES)
ACCESS TO PERU IN JUST 2 DAYS
(CALLAO)
ACCESS TO THE NETHERLANDS IN JUST 13 DAYS
(ROTTERDAM)
SANTOS(11 DAYS)
BUENOS AIRES(17 DAYS)
CAPETOWN(34 DAYS)
NEW YORK (6 DAYS)
BARCELONA(15 DÍAS)
LONDON(17 DAYS)
KOLKATA(43 DAYS)
MONTREAL(9 DAYS)
SHANGHAI(29 DAYS)
SIDNEY(21 DAYS)
BUSAN(25 DAYS) TOKYO
(22 DAYS)
AUCKLAND(17 DAYS)
VANCOUVER(17 DÍAY)
LOS ANGELES(10 DAYS)
CALLAO(2 DÍAS)
VALPARAÍSO(5 DAYS)
SAINT PETERSBURG
(21 DAYS)
MIAMI(4 DAYS)
VERACRUZ(5 DAYS)
KARACHI(37 DAYS)
HONG KONG(33 DAYS)
Major multinational corporations have chosen Colombia as an investment project destination
INFRASTRUCTUREA major driver for growth
USD $5.6 billion in rehabilitation, expansion and modernization of 31 airports (2015 – 2018).
The Fluvial National Plan consists of 13 river projects with an investment of USD $2.9 billion.
Until 2035, USD $17 billion will be invested to increase road infrastructure:
7,000 kms of new highways1,370 kms of double lane highways141 tunnels1,300 viaducts
USD $3.3 million investment to recover more than 1,769 kms of railways network.
Source: Intermodal Transport Master Plan 2015-2035 (PMTI , Ministry of Transport - Exchange rate: USD = COP$3,000
Some niches with opportunities:
AIRPORTS PORTS ROADS FLUVIALNATIONAL PLAN
STEP RAILWAYS
1.2.
3.
4.
SUCCESS STORIES -INFRASTRUCTURE:A major driver for growth
Strabag will be in charge of 75 Km new highways, and the
modernization of a 65 km section.
AUSTRIA
In Colombia, Vinci acquired a 20% stake in Conconcreto, an alliance that allowed them to work together in large infrastructure projects and concessions
in Colombia.
FRANCE
HEC will build “The Mar 2 highway”that will improve northeast logistics development. Total project length:
246 km.
CHINA
Source: ProColombia con base en prensa nacional
SECTORS OFOPPORTUNITY - ENERGY:A diversified resource base and a strategic location in the Americas
546 power generation projects registered in different stages: Installed capacity up to 15,940*
22 Open public bids for power transmission projects in Colombia**
High potential in Biofuels and alternative energies.
Aquellos proyectos enfocados en energías renovables tendrán exenciones del IVA, aduanas e impuesto a la renta – Ley 1715.
Source: World Economic Forum 2016 and UPME / * UPME (Colombian Planning Unit of Mines and Energy). MW approx.. **Bids open by UPME
Colombia ranked first in Latin America and eighth in the world,according to the “Energy Architecture Performance Index 2017”. WEF, 2017. The Global Energy Architecture Performance
Index 2017
Some niche opportunities
THERMAL PCH SOLAR
WIND BIOMASS TRANSMISSION NETWORK
0,740,750,750,75
0,760,770,77
0,780,79
0,8
UruguayNew Zealand
ColombiaSpain
AustriaDenmark
FranceSwedenNorway
Switzerland
SUCCESS STORIES -ENERGY:A diversified resource base and a strategic location in the Americas
Between 2017 - 2019, the Italian multinational Enel will invest close toUSD 561 million in energy projects in
Colombia.
Colombian subsidiary of AES Corporation (Applied EnergyServices). Chivor is one of the
country's largest power generator with a total effective installed
capacity of 1,000 MW.
UNITED STATES
The low-grade thermal coal plant, Termopaipa located in Paipa,
was the first power plant planned overseas, financed and built by
Steag.
GERMANYITALY
SECTORS OFOPPORTUNITY –AGRIBUSINESS
Fuente: FAO, Ministerio de Agricultura.
Some niche opportunities:
Investment opportunities
ACUICULTURE CACAO CEREALSFRUITS AND VEGETABLES MEAT
PROCESSEDFOODRUBBER BIOFUELS FORESTAL
Expansion of cultivated areas with a high global demand of agricultural
products, construction of collection centers and assembly of processing
plants (IQF, pulps, jams).
Construction of cocoa processing plants for cocoa butter, cocoa liquor and chocolate
products.
Colombia has the fourth dairy herd and largest dairy production in the
region, which guarantees easy access to raw
materials for the subsequent
transformation of dairy products.
Build specialized industrial facilities to transform
natural rubber into value-added elements.
1. 2. 3. 4.
The American investment fund specialized in the agribusiness sector,
invested in the company, “Cacao de Colombia”, by setting up a
second production plant in Popayán.
Brazilian company dedicated to the production and commercialization of
beef, leather, live animals and its byproducts.
The company acquired freezers from Red Carnica S.A.S located in
Cordoba.
BRAZILUNITED STATES
Source: Procolombia based on national press
SUCCESS STORIES AGRIBUSINESS
In 2014, the Swedish company AarhusKarlshamn (AAK) expanded toLatin America and acquired the
Colombian company FábricaNacional de Grasas (Fanagra).
SWEDEN
Nestlé has a commercial presence in Colombia since 1944. Currently its
product portfolio focuses on biscuits, chocolates, coffee and dairy
products.
SWITZERLAND
SECTORS OF OPPORTUNITYMETALWORKING ANDOTHER INDUSTRIESColombia, a sustainable destination.
Setting up factories that transform iron and steel products with the aim of meeting other industries
demand.
Setting up assembly lines to produce commercial
vehicles (buses), cargo vehicles and motorcycles
to serve both local and international markets using
Colombia as an export platform.
Establishment of cement, ceramic and prefabricated production plants to supply
local and international markets.
Some niches of opportunity:
AUTOMOTIVE AND AUTO PARTS
METALWORKING CONSTRUCTION MATE
INVESTMENT OPPORTUNITIES
1. 2. 3.
The company invested in a float glass production plant to
supply the national market and export to countries in the
Andean region.
SUCCESS STORIES –METALWORKINGAND OTHERINDUSTRIES
FRANCE
The Japanese company of continuous casting and
production of high precision parts, decided to open a plant to serve the American market.
JAPAN
ABB started in Colombia in1988. It has offices in Bogotá, Barranquilla,
Bucaramanga, Cali and Medellín; It also has a modern power transformer
and distribution plant in Dosquebradas, Risaralda. ABB employs more than 700
people in Colombia.
Sweden
Whirlpool and the Colombian company Haceb, signed an alliance to produce washing machines in a plant of US $ 70
million.
UNITED STATES
Source: Procolombia based on national press
SECTORS OF OPPORTUNITY -CHEMICALS ANDLIFE SCIENCES
Setting up agrochemicals formulation and
production plants to serve the growing local market.
Setting up research centers on development of cosmetics based
on natural ingredients. Taking advantage of the Colombian
biological and floristic diversity; and the tax incentives provided by the
National Government for R&D projects.
Assembly of plastic packaging production plants to meet the
needs of the LAC region.
Investment opportunities
Some niche with opportunities
FERTILIZERSNATURAL
INGREDIENTSFOR COSMETICS
PLASTIC PACKAGING
1. 2. 3.
The new factory set up in Colombia is one of its three most modern
factories in the world, thanks to its cutting-edge technology and
ecofriendly facilities.
NETHERLANDS
Started its production operations in 2013, after the acquisition of Abocol,
the most important agrochemical company in Colombia.
NORWAY
The Indian group inaugurated a new production plant in Villa
Rica (Cauca), from which it manufactures 180 million
laminated plastic tubes for consumer products.
INDIA
Inaugurated its new operations center in Antioquia to supply the
markets of Central America and the Andean region.
UNITED STATES
Source: Procolombia based on national press
SUCCESS STORIES -CHEMICALS ANDLIFE SCIENCES
SECTORS OFOPPORTUNITY – SERVICES:IT, BPO, ITO, SharedServices, Apps
Colombia is one the three majorproviders of IT services in the region.
Between 2001 and 2015, 3,405,211 graduates in
different levels of education
Source: MinTic and IDC
1.3 million bilingual people in Colombia in 2016.
1st place in South America in labor qualifies,
accordingto IMD (2015)
6th place in the region in level of companies bilingualism
in 2016.
Colombia has 10 submarine cables, with eight exits through
the Caribbean Sea and two through the Pacific Ocean.
Some sectors with opportunities:
BPO BACK OFFICE-FINANCE
BPO. TELEMEDICINE
BIG DATA ANALYTICS
DATA CENTERS FINTECH SMART CITIES
SHAREDSERVICECENTERS
1. 2. 3.
4. 5.
IBM opened its third Data Centerin Colombia offering a processing
power of 5 petabytes.It´s one of the most advanced
centers for Cloud Computing andBig Data Analytics companies in
the country.
SUCCESS STORIES –SERVICES:
It has two operations centers in Bogota where it manages a
diversified portfolio of blue ribbon clients, with the capacity for up to
a thousand positions.
SPAIN
Qvantel started operations in Medellin. Their project is focused on creation of a
support center BSS (Business Support System) for the entire
LATAM .
Endava has an operation center in Bogotá, where it provides automation and digital evolution services to its customers in the US
and Europe.
UNITED KINGDOM UNITED STATESFINLAND
Source: Procolombia based on national press
SECTORS OFOPPORTUNITY– TOURISMInfrastructure,real estateand retail
NATURE & ADVENTURE
WELLNESS ENTERTAINMENT CITY HOTELS
Investment Opportunities in:Inbound tourists*2013 – 2017
(million of people)
*Inbound tourist includes: resident Colombians abroad, foreign non resident in Colombia, specialcross borders, and cruise visitors.Source: Migration Colombia and MinCIT. ProColombia calculations.
Colombia ranks 25th in the ICCA ranking (International Congress and Convention Association)
Luxury and wellness hotels can take advantage of the Colombian biodiversity to offer high quality services.
Luxury and wellness hotels can take advantage of the Colombian biodiversity to offer high quality services.
VAT exemption for health tourism services
6,5
Some niche opportunities
1.
2.3.
4.2013 2014 2015 2016 2017
3,74,2
4,45,1
6,5
SUCCESS STORIES TOURISM INFRASTRUCTURE,
Holiday Inn hotels opened in Bogota and Cartagena, totaling 331 rooms.
Holiday Inn hotels opened in Bogota and Cartagena, totaling 331 rooms.
Holiday Inn hotels opened in Bogota and Cartagena, totaling 331 rooms.
CANADAUNITED KINGDOM
Source: Procolombia based on national press
real estate and retail
SPAINFRANCE
This hotel chain has presence in Colombia through the hotels:
Sofitel, Mercure, Accor and Ibis.
SECTORS OFOPPORTUNITY-SERVICES,CAPITAL FUNDS
Colombia offers several benefitsto invest in capital funds.
Colombia was ranked fourth in Latin American and
the Caribbean due to its favorable conditions for
development of the PEF industry.
19 International General Partners in Colombia.
Capital funds such as Advent International and Victoria Capital have chosen the country as a hub
to service other countries in the region
Some niches with opportunity
REAL ESTATE HEALTH BANKING TIC
BIOTECH ENERGY AGRIBUSINESS INFRASTRUCTURE
1. 2. 3.
Investments mainly in the sectors of infrastructure, energy and real
estate.Investments in the Colombian power company SA as part of its expansion
plan in the region.
SECTORS OFOPPORTUNITY-SERVICES,CAPITAL FUNDS
Venture capital fund focused on investments in companies in the ICT sector that are mainly in the early
stages of development. In Colombia, it has invested in companies such as:
domicilios.com, en medio, mercadoni, neomarket, bocci and
redseguro.
InfraRED is a global investment fund focused on the infrastructure and
energy sectors. The company acquired 50% of the concession company Perimetral Oriental de
Bogotá SAS, a roadway project of the 4G infrastructure program
CANADA SPAIN
Source: Procolombia based on national press
UNITED KINGDOM
Finance Law
B E C O M I N G O N E O F T H E M O S T C O M P E T I T I V E M A R K E T S I N T H E R E G I O N
Reaching Latam’sand the Caribbeanstandards
33% 32% 31% 30%
For the taxable year 2019.
For the taxable year 2020.
For the taxable year 2021.
For the taxable year 2022.
REDUCTION OF THE CORPORATE INCOME TAX RATE
Some of our incometax exemptions
Income from the development of technological value-added industries and creative activites- Tax incentives to
orange economy companies (7 years)
Income from investments to increase the productivity of
the agricultural sector. (10 years)
Income from sales of energy from non-
conventional sources. (15 years)
Income from the use of new forestry plantations.
Fuvial transport services by shallow draft boats.
(15 years)
MEGA INVESTMENTSNew investment within the national territory of 30.000 UVT (COP$ 1.028.100.000 approx. USD$ 342 million). That generate at least 250 direct Jobs.
Exclusions: Investments in hydrocarbonsand mines are excluded of this regime
To national companies whose main company purpose is the holding of securities, investment in shares or participations abroad, some tax benefits are stablished.Benefits: The dividends distributed by non residents to the holding are exempt of income tax. The dividends distributed by the holding to residents are subject to the dividend tax. Dividends distributed to non residents are income tax exempted.
Requirements: Investments in hydrocarbons and mines are excluded of this regime
HOLDING COMPANIES
Municipalities < 200.000. Income Tax Rate 9% - 20
years. Until 2029
Hotels, theme parks, ecotourism, agrotourismand new boat docks.
Incent i ves
Municipalities > 200.000. Income Tax Rate 9% - 10
years. Until 2023
incentive was extended to municipalities with more tan 200.000. An incentivewas created to theme parks, ecotourism, agrotourism and new boat docks.
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