Ministerio de Comercio,
Industria y Turismo
República de Colombia
Colombia, a Golden Opportunity
October 2007
Ministerio de Comercio,
Industria y Turismo
General data
República de Colombia
• Official Name: Republic of Colombia
• Capital: Bogotá, 7MM inhabitants
• Population (2005): 42 MM inhabitants (77% urban,
23% rural)
• GDP (2006): USD135 Billion
• GDP p-capita (2006): USD 3,214
• GDP p-capita at PPP (2006): USD 9.300
• GDP Growth (2006): 6,8%
• Annual Inflation (2006): 4.5%
• Exports (2006): USD 24,392 MM
• Imports(2006): US 26,163 MM
• FDI* (2006): USD 6.296 MM
• Literacy Rate: 92.1%
• Currency: Colombian peso
Source: Presidency of Colombia, Central Bank, Proexport
* Foreign Direct Investment
Economy
Ministerio de Comercio,
Industria y Turismo
República de Colombia
GDP Growth
The country has been growing steadily, faster than the average of the Latin American
Region. The GDP growth in 2006 was 6.8%, the highest since 1978. For the present year
it is expected an impressive behavior of the economy.
GDP Growth: Colombia vs. Latin America (2000-2007 1st sem)
%
7.48
8
6.8
7
5.13
6
5
4
3
2.2
2
1.4
1.7
2001
2002
3.84
3.9
2003
2004
1
0
-1
2000
Latin America
2005
Colombia
2006
2007 - 1st
Semester
Source: Economic Commission for Latin America and the Caribbean (ECLAC), DANE, Forecasts ECLAC and National Planning Department,
and World Economic Forum for Latin America in 2007
Economy
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Inflation
Colombia’s inflation rate is at its lowest level in 42 years. It is the only Latin-American country that has
never defaulted and one of the few that never experienced hyperinflation.
Inflation Rate (1997 – 2007 1st sem)
%
18
17.7
16.7
15
12
9.2
9
8.8
7.7
7.0
6.5
5.5
6
4.9
4.5
4,7
3
1997
Source: DANE
1999
2001
2003
2005
2007 - 1st
Semester
Economy
Foreign Direct Investment
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Colombia received in 2005 and 2006 the highest inflows of FDI recorded to date:
FDI Flows (2000 – 2007f)
USD MM
12.000
10.255
10.000
Sab Miller´s investment
USD 4,715 MM
8.000
8.000
First
Semester
2007
6.000
4.000
2.000
2.395
2.525
2.139
1.758
2000
2001
2002
2003
5.661
6.463
2005
2006
4.109
3.117
0
* Proexport forecast
Source: Balance of Payments, Central Bank
2004
2007 (f)
Economy
FDI Flows of UK in Colombia (2000 – 2006)
USD MM
Ministerio de Comercio,
Industria y Turismo
República de Colombia
FDI flows (2000 - 2006)
USD
3.747
2000
1800
1600
1400
1200
1000
800
600
405
400
198
200
-9
35
17
2002
2003
2004
0
2000
2001
Source: Balance of Payments –Colombian Central Bank
18
2005
2006
Ministerio de Comercio,
Industria y Turismo
Exports
República de Colombia
Colombian total exports doubled between 2002 and 2006.
Exports (2000 – 2007f)
USD MM
45.000
27.000
40.000
24.391
35.000
21.188
30.000
25.000
20.000
16.730
13.158
12.330
11.975
2000
2001
2002
13.128
15.000
10.000
5.000
0
2003
Traditional
F: Proexport´s Forecast
Source: DANE, Proexport
2004
Non Traditional
2005
2006
2007f
BILATERAL TRADE COLOMBIA-UK
(2000-2006)
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Colombian exports to U.K. have increased since 2000.
Bilateral trade reached US695 and grew 38,4% from 2000 to 2006.
800.000
USD Thousands
700.000
600.000
500.000
400.000
300.000
200.000
100.000
0
2000
2001
2002
2003
2004
2005
2006
Years
EXPORTS FOB
Source: DANE, OEE-Mincomercio
IMPORTS CIF
TRADE BALANCE
TOTAL TRADE
Economy
Number of Foreign Visitors
Ministerio de Comercio,
Industria y Turismo
República de Colombia
The number of foreign visitors has doubled between 2002 - 2006
Arrivals of foreigners into Colombia (2001 – 2007f)
Number of Travelers
1.300.000
1.200.000
1.050.569
933.244
900.000
790.940
615.623
600.000
566.761
624.909
300.000
0
2001
2002
F: Proexport´s Forecast
Source: Security Administration Department - DAS
2003
2004
2005
2006
2007f
Economy
Ministerio de Comercio,
Industria y Turismo
República de Colombia
British visitors to Colombia
British visitors to Colombia (2001 – 2006)
Number of Travelers
9.000
7.687
8.000
7.000
5.563
6.000
4.771
5.000
4.000
2.625
3.000
1.998
2.000
1.000
803
0
2001
Source: DAS
2002
2003
2004
2005
2006
Business Environment
Ministerio de Comercio,
Industria y Turismo
República de Colombia
According to the World Bank Doing Business report in 2007 Colombia has become one of the top
reformers in the world on Business Environment.
Security
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Security levels have increased dramatically thanks to the democratic security policy of President
Uribe
Source: Opinion survey by National Association of Industrials (ANDI), Proexport´s Forecast
*EOIC: Industrial opinion survey
Market Confidence
Marzo 22 de 2007
Edíción impresa de The
Economist
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Market Confidence
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Standard & Poor´s
upgrades Colombia
from BB to BB+,
March 2007
Fitch Ratings
upgrades Colombia
to BB+,
June 2007
Moody´s also
upgraded Colombia
in June 2007
Market Confidence
Ministerio de Comercio,
Industria y Turismo
República de Colombia
“The growing confidence in Colombia brings a
new set of challenges. The streets are safer, and
citizens are road tripping again. Export-import
activity is steadily growing. Tourism has nearly
tripled in five years, and beach-lined, historic
Cartagena is among South America's most
expensive real estate markets”
Roben Farzad, Mayo 28, 2007
Market Confidence
Ministerio de Comercio,
Industria y Turismo
República de Colombia
“In the space of just five years
something remarkable has happened
– the cities have become relatively
safe. Murder and kidnapping rates
have plunged, and there are no more
bombs. The only explosion are in
property prices”
Rory Caroll June 8th, 2007
Ministerio de Comercio,
Industria y Turismo
Market Confidence
República de Colombia
“Last year, for the third year in a
row, Colombia’s economy grew
by 5% and registered a surge in
investment.”
March 2007
Market Confidence
Ministerio de Comercio,
Industria y Turismo
República de Colombia
“Colombia has been fighting to prove
that it is a safe and worthwhile
investment destination and has now put
itself firmly back onto the investment
map.
Courtney Fingar , January 2007
Ministerio de Comercio,
Industria y Turismo
República de Colombia
10 full-color pages, with international models displaying bathing suits and accessories by both
Colombian and international designers. The location was San Pedro de Majagua, in Islas del Rosario.
Foreign investors present in Colombia
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Almost 700 multinational companies have operations in Colombia
Recent cases of FDI in Colombia
BHP Billiton(2007):
•Increase capacity in oil and coal mines.
British Petroleum (2007):
• Will operate the concession of block RC#4 with 35% interest.
•Also Block RC#5, was awarded to BP Exploration.
PGS Petroleum Geo System (2007):
•Geological services
Shell (2007):
• Along with Ecopetrol will explore Caño Sur Block
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Recent cases of FDI in Colombia
AmeriSur(2007)
• Acquires 48,7% of Fenix Block
HSBC (2006):
•Invest in the Colombian banking market.
.
PetroLatina (formerly Taghmen Energy) (2006):
• Gas and petroleum exploration
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Commercial Agenda
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Colombia is pushing forward on its internationalization process
Internationalization Panorama 2002
México
CAN
Ministerio de Comercio,
Industria y Turismo
Commercial Agenda
República de Colombia
Negotiating agenda 2010
EFTA
Unión Europea
Estados Unidos
Canadá
Cuba
México
Triángulo Norte
Centroamericano
CAN
MERCOSUR
Chile
FTA’s convergences
Ministerio de Comercio,
Industria y Turismo
República de Colombia
FTA’s convergences
Ministerio de Comercio,
Industria y Turismo
República de Colombia
FTA’s convergences
Ministerio de Comercio,
Industria y Turismo
República de Colombia
FTA’s convergences
Ministerio de Comercio,
Industria y Turismo
República de Colombia
COMMERCIAL AGENDA:
Double Taxation Agreements-DTAs
Investment Agreements -BITs
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Colombia is carrying out an agressive internationalization process
DTA’s and BIT’s negotiated by 2002
DTA
BIT
DTA + BIT
COMMERCIAL AGENDA:
Double Taxation Agreements-DTAs
Investment Agreements -BITs
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Both instruments will be available to every negotiating partner
Joint Negotiating Agenda 2010: DTA and BIT
JOINT AGENDA
Chile
Venezuela
EFTA
México
UK
USA
Canada
Netehrlands
France
Japan
Italy
Germany
China
India
Belgium
Sweden
Danemark
Andean
Comunnity
Total countries: 23
DTA
BIT
DTA + BIT
Government Support
Competitive Tools
1. Special Free Trade Zones
2. Legal Stability Contracts
Ministerio de Comercio,
Industria y Turismo
República de Colombia
Ministerio de Comercio,
Industria y Turismo
Government Support
República de Colombia
Single-Company FreeTrade Zones
Companies do not require to be established in a pre determined
geographic zone to apply for Free Trade Zone Regime and enjoy
15% Corporate Tax amongst other benefits
Agroindustrial Free Trade Zone (Investment or Employment)
Investment in Millions
Employment
7,8 GBP
500
Ministerio de Comercio,
Industria y Turismo
Government Support
República de Colombia
Special Services Permanent Free Trade Zone
Investment in
Millions
Direct Employment
0,98 – 4,9 GBP
501
4,9 – 9,8 GBP
351 – 500
9,8 – 15,6 GBP
150 – 350
50% of employment can
be hired, for duly
qualified health services
companies.
Special Goods Free Trade Zone
Investment in Millions
Direct Employment
15,6 GBP
150
Each additional
2,4 MM GBP
reduces 15 jobs
Colombia offers legal stability contracts
to guarantee investment projects.
Objectives
Conditions
Duration
Ministerio de Comercio,
Industria y Turismo
República de Colombia
To promote new investements and to enhance the existing ones in colombian territory,
protecting any provisions critical for the investment projects*.
Amount of the investment: 7,500 current minimum legal wages. (732.854 GBP
aprox.)
One time payment of a premium to the government equivalent to 1% of the
investment made.
Up to 20 years
Proposal
Technical
evaluation
report
Evaluation and
approval of the
request
Approval
* Excludes laws on mandatory taxes issued during state of emergency, social security, indirect taxes, financial sector regulations and public utility
services rate regime.
Ministerio de Comercio,
Industria y Turismo
Conclusions
*
Colombia
is
República de Colombia
experiencing
a
marked
improvement
in
its
macroeconomic performance, security and stability for businesses
*
We are committed to generating the most favorable conditions for both
domestic and foreign investment.
*
This is reflected in very attractive instruments such as the free-trade
zones regime, legal stability contracts and extended markets for
investors
*
Opportunities are created by information asymmetries in the market.
Colombia is one of those as there is a mismatch between perception
and reality