colombia outlook and investment potential nov06
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CONSULATE GENERAL OF COLOMBIA
SYDNEY
Colombia: Outlook and Investment Potential
DID YOU KNOW THAT...
Colombia owns the Latin America’s biggest coal mine: El Cerrejon, which is one of the biggest coal mines in the world?
Around 400 transnationals, with US$26.6 billion of annual sales, run their operations in Colombia?
More than 50% of the flowers sold in the USA come from Colombia?
Colombia is the world's third largest banana producer?
Colombia ranks fourth in the world in palm oil production, drinking water supplies and nickel?
Colombia: Outlook and Investment Potential
WERE YOU AWARE THAT:
Colombian novel prize in literature, Gabriel Garcia Marquez, is one of the most read novelists in the world? (One of his books sold more than 500.000 in 3 years)
One of the major Colombian painters and sculptors, Fernando Botero, has exhibited his works at the Champs Elysées in Paris, Central Park in New York, St. Mark's Square in Venice and in the Paseo de Recoletos in Madrid?
The Nasa Neuroscience Director is the Colombian scientist Rodolfo Llinás?
1. GENERAL INFORMATION
GENERAL INFORMATION ABOUT COLOMBIA
• Official Name: Republic of Colombia
• Total Area: 1,141,748 Km2
• Land Frontiers: Venezuela, Peru, Ecuador, Brazil and Panama
• Coast Lines: Atlantic and Pacific Oceans
• Population: 44 million inhabitants
• Capital: Bogotá, 8 million inhabitants
• Government: Democratic. Presidential election every 4 years
• Official Language: Spanish
• Religion: Freedom of religion (Catholicism)
• Currency: Peso (COP$ 2,320=US$ 1 - average 2005)
1. GENERAL INFORMATION
1.1. STRATEGIC LOCATION
Sydney14.380
km
Los Angeles
5.660 km
Manila17.290
km
New York3.980
km
London8.470 Km
Madrid8.030 Km
Johannesburg
11.470 km
Quito720 Km.
Caracas1.030 Km.
Lima1.890 Km.
Santiago
4.250 Km.
B. Aires4.690 Km
Rio 4.540 Km
Seattle6.700 Km
Easy access to all markets
Mid point between North and South America
Geographic and environmental diversity
Less than 9 hours in airplane from the principal cities of the continent.
Air trasportation costs to United States are the lowest compared to its main competitors
1. GENERAL INFORMATION
1.2. MULTIPLE PORTS
TEN PORTS:
2 PORTS - PACIFIC OCEAN
8 PORTS- ATLANTIC OCEAN
Buenaventura is an important port in the Pacific Ocean that facilitates de trade exchange with Asian countries
and Australia.
1. GENERAL INFORMATION
1.3. MULTIPLE REGIONAL DEVELOPMENT AREAS
COLOMBIA IS DIVIDED IN FIVE MAIN ECONOMIC REGIONS:
•Caribbean Region Tourism, commerce, agriculture, mining,
port activities, fishing and industry•Pacific Region Forestry, mining, fishing, agriculture,
industry, commerce, cattle, port activities.
•Andean region Industry, oil exploration, agriculture, commerce, services, farming, tourism,
mining.•Orinoquia Region Agriculture, mining, forestry, fishing, oil exploration, cattle, commerce•Amazon Region Forestry, ecotourism, fishing, agriculture
Interesting market opportunities for investors. Several development areas throughout the country Country's risk diversification by region.
1. GENERAL INFORMATION
1.4. POLITICAL STABILITY
Colombia is Latin America’s oldest and most stable democracy.
President Uribe has reached a popularity index of 67%
The Government has set up three basic policies:Democratic securityThe struggle against corruption and political chicaneryEconomic and social reactivation
The existence of subversive groups does not influence the internal democratic stability.
Many State actions against illegal armed groups are already taking place, thanks to a Democratic Security Policy conducted by President Uribe, supported by the international community.
The Government, the congress and the civil society have been working together to neutralize subversive groups.
1. GENERAL INFORMATION
1.5. SECURITY IMPROVEMENT
Public Security Index, Citigroup Colombia(2000-2006)
The policy for Democratic Security has achieved significant successes in 24 months of government, with regard to a reduction in the murder rate, kidnaps, terrorism, massacres and human rights violation.
Democratic Security Policy has strengthened the Colombian military capacity, in terms of force, means, resources and credibility.
The individual demobilizations of guerrillas totaled 8.977 (Until December 2005)
Kidnappings decreased by 51.80% in 2005. Terrorism decreased by 27.3% in 2005. Victims caused by massacres decreased by 2.7% in 2005.
30405060708090
100110120
2000
BA
SE
Sep
-02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep
-03
Nov
-03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep
-04
Nov
-04
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep
-05
Nov
-05
Jan-
06
2. CURRENT ECONOMIC SITUATION
IN COLOMBIA
Colombia: Outlook and Investment Potential
2. ECONOMIC SITUATION
2.1. ECONOMIC GROWTH
GDP Growth: Colombia
Good Performance in Latin American context. Third
greatest in Latin America.
In 2005, the economy grew 5.13%
GDP per capita: US$ 2,277
Colombia vs. Latinoamerica (1980-2005) %
4,35,13
4,3
2,18
2,58
2,8
-2,68
1,28
2,78
2,45
4,35
1,42
-4
-3
-2
-1
0
1
2
3
4
5
6
1980-1985 1985-1990 1990-1995 1995-2000 2000-2005 2005
America Latina Colombia
Fuente: Comisión Económica para América Latina y el Caribe – CEPAL, DANE
2. ECONOMIC SITUATION
6,312,0
0
20
40
609
7-J
98
-J
99
-J
00
-J
01
-J
02
-J
03
-J
04
-J
05
-J
Pasiva Activa
2.2. ECONOMIC STABILITY
Inflation Rate
Colombia had an inflation of 4,85% during 2005.
The savings and lending rates have shown a stable performance, as they reached 6.3% and 12%, respectively, in January 2005.
Interest rates 1997-2005
0
5
10
15
20
25
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
(p)
4.85%
1994- January 2006
2. ECONOMIC SITUATION
2.3. ECONOMIC STABILITY
Finance obligations
Colombia has never experienced defaulted on its
international debts or financial obligations.
Some economic indicators 2004 2005
Private investment increased 43.5% 44%
Exports grew 21% 54.6%
Imports grew 27%
Unenployment rate 12.10% 11.8%
Colombia: Outlook and Investment Potential
3. CURRENT BUSINESS OPPORTUNITIES
AUSTRALIA-COLOMBIA
GDP in Latin America (2005)
Current Prices, US$ Millions
Fifth largest economy and third largest population in Latin America
7,247
9,650
15,926
33,062
78,576
113,956
132,848
181,662
768,737
792,683
122,610
26,900
0 200000 400000 600000 800000 1000000
Paraguay
Bolivia
Uruguay
Costa Rica
Ecuador
Peru
Chile
Colombia
Venezuela
Argentina
Mexico
Brazil
Source: International Monetary Fund and World Bank, *Data for Colombia in 2005 from Bank of the Republic (Central Bank) and DANE
Colombia
Among the Andean countries, Colombia has the second-largest economy and the largest population.
3
4
6
9
13
15
26
28
39
105
184
41*
0 50 100 150 200
Uruguay
Costa Rica
Paraguay
Bolivia
Ecuador
Chile
Venezuela
Peru
Argentina
Colombia
Mexico
Brazil
Population in Latin America (2005) Millions of persons
Colombia
Market sizeQualified human capital3. BUSINESS OPPORTUNITIES
3.1 MARKET SIZE
Source: The World Competitiveness Yearbook 2006-IMD
Qualified human capital
Availability of trained workforce(0= not available; 10= available)
Ranking (61 countries)
6.2
5.4
5.3
4.2
5.2
6.9
0 2 4 6 8
Venezuela
Argentina
Brazil
Mexico
Chile
Colombia
26
39
44
40
57
12
Competent managers(0= not available; 10= available)
Ranking (61 countries)
4.3
5.2
5.4
6.0
7.4
7.1
0 2 4 6 8
Venezuela
Mexico
Argentina
Brazil
Colombia
Chile3
6
29
37
40
55
Colombia
Colombia
3. BUSINESS OPPORTUNITIES
3.2. HUMAN RESOURCES AVAILABILITY
Remuneration manufacturing industryUS$/hour (Including benefits)
Source: The World Competitiveness Yearbook 2006-IMD
Remuneration service professionals US$/year (Department Managers)
43
35
13
11
10
5
18
19
0.8
1.7
2.0
2.6
3.6
16.4
23.2
2.2
0 5 10 15 20 25
China
Argentina
Chile
Colombia
Mexico
Brazil
Spain
USA
16
56
35
22
19
17
9
12
10
5,850
7,800
8,500
14,800
19,500
24,200
25,500
33,600
56,050
0 20000 40000 60000
Brazil
MexicoVenezuelaArgentina
ColombiaChinaChile
SpainUSA
Colombia 19,500
Ranking (60 countries) Ranking (60 countries)
Colombia
Qualified human capital3. BUSINESS OPPORTUNITIES
3.3. LOW LABOR COSTS
3. BUSINESS OPPORTUNITIES3.4. INVESTMENT GRADE RATING ACORDDING TO THE LEADING
CREDIT RATING AGENCIES
ChileMexico
Standard & Poor‘sChile***
Mexico
Colombia**
Peru**Brazil**
Argentina* Venezuela**
A -
BBB-
BB
BB-
B+
CCC+
SDInvestment Grade
Chile**Mexico***
Colombia*
Brazil**
Peru**
Argentina**Venezuela**
Moody’s
Baa1
Baa2
Ba2
Ba3
B1
Caa1
Ca InvestmentGrade
Colombia
Peru
Brazil
Argentina
Venezuela
Fitch
A -
BBB-
BB
BB-
B
B
DDDInvestmentGrade
Colombia has the third best rating on foreign currency sovereign bonds
* Negative Outlook** Stable Outlook*** Positive Outlook
3. BUSINESS OPPORTUNITIES
3.5. INVESTMENT AND EXPORT TRADE INCENTIVES
Free Trade ZonesGeographical zones with tax, foreign
exchange and procedural incentives.
Special Economic Export Zones5 cities with specific flexible labor
regulations in addition to similar incentives as in FTZ
• Only for new investment
Paez and Quimbaya ZonesSpecial and limited regimes for areas
affected by natural disasters with tax exemptions.
Plan Vallejo Import-Export mechanism for the production of exports with customs and VAT exemptions
New Customs Legislation Special set of export incentives In force since on July 1st, 2000 Custom Statute, Decree 2685 of 1999.
VARIOUS MECHANISMS OPERATE IN COLOMBIA TO PROMOTE INVESTMENT AND EXPORT ACTIVITY THROUGH A SERIES OF SPECIAL INCENTIVES.
3. BUSINESS OPPORTUNITIES
3.6. PRIVILEGED ACCESS TO GLOBAL MARKETS
Andean Community (CAN)Free Trade ZoneCommon External Customs Tariff
Chile - CARICOMFree Trade Agreements
G-3 Free Trade Agreement with Mexico and Venezuela
ALADIPartial-Scope AgreementsFree Trade Zone
CAN - MERCOSURFree Trade Zone
World Trade Organization –WTOMultilateral Treaty , Member since 1995
TRADE AGREEMENTS
ATPDEA (EEUU)Unilateral agreementMore than 6.100 Duty Free products.
ANDEAN GSP (European Union)
Unilateral agreement Most Industrial and Agricultural Products are Tariff-Free.
TARIFF PREFERENCES
Foreign investors in Colombia can receive the benefits of important trade agreements and tariff preferences, that have given to Colombia
privileged access to world markets, representing a competitive advantage for Colombian exports.
TLC with United States is under discussion.
3. BUSINESS OPPORTUNITIES
3.7. COLOMBIA’S FOREIGN INVESTMENT REGIME
Foreign Investment Regime:• Free remittance of profits• Equalitarian treatment• Universality principle (restrictions: defense and national security
toxic, radioactive dangerous waste disposal activities)
International Agreements for foreign investment protection:
• OPIC (Corporation of Private Investment in Foreign Countries)• MIGA (Multilateral Agency of Investment Guaranty)• ICSID (International Center to solve disagreements related to
investment)• Bilateral Investment Treaties (BIT’s) under discussion• Registered on the Intellectual Property World Organization
3. BUSINESS OPPORTUNITIES
3.8. FOREIGN DIRECT INVESTMENT IN LATIN AMERICA
Colombia: Fourth Foreign Direct Investment destination in Latin America 2006
Trend Report: PROEXPORT
Trend Report: PROEXPORT
3. BUSINESS OPPORTUNITIES
3.8. FOREIGN DIRECT INVESTMENT IN COLOMBIA
16%
14%
12%
8%
8%
10%
6%
5%
3%
4%
TOTAL*: US $32,444 MM16%
* Excluding the petroleum sector and reinvestment of profits
Source: Bank of the Republic (Central Bank)
Main investment partners
USA
England
Spain
Panama
Virgin Islands
Cayman Islands
Bermuda
Netherlands
Mexico
Canada
Others
Accumulated FDI by country* (1994 – 2005)% of Total
The main foreign investors in Colombia are:
3. BUSINESS OPPORTUNITIES
3.9. FOREIGN DIRECT INVESTMENT BY COUNTRY OF ORIGIN
3. BUSINESS OPPORTUNITIES
3.10. FOREIGN COMPANIES IN COLOMBIA
Some Strategic Alliances / Acquisitions
Type Sector Colombian Company Foreign Company Country
Acquisition Public Services Procesos y Diseños S.A John Wood Group Pcl ScotlandAcquisition Mining Intercor Consorcio CZN UKCapital /Expansion Commerce Carulla Newbridge Andean Partners USCapital / Expansion Mining Gas Natural S.A Gas Natural SpainCapital / Expansion Communications Comcel America Movil MexicoCapital / Expansion Communications Caracol Radio Grupo Prisa SpainJoint Venture Food Services Colombina Joyco SpainLocal Market Pharmaceutics Nucleotronics Bio Products Laboratory UKJoint Venture Basic drainage Aguas de Cartagena Aguas de Barcelona SpainInternet Communications/IT Bavaria UOL BrazilTechnological Transference
Insurance Colseguros Allianz France/Germany
Capital / Expansion Commerce Exito Casino FranceDistribution Food services C. Nacional de Chocolates Mavesa VenezuelaCapital / Expansion Communications Celumóvil Bell South USAcquisition Financial Banco Ganadero BBVA SpainAcquisition Financial Banco Real ABN-AMRO NetherlandsExpansion Automobile CCA Ford Motor US
3. BUSINESS OPPORTUNITIES
3.11. AN EXAMPLE OF POSITIVE EXPERIENCE
BHP BILLITON
BHP Billiton owns a third of Latin America’s biggest coal mine: El
Cerrejon. The biggest coal mine in the world, located in the province of La Guajira
on the Colombian Caribbean coast. It produces the lowest cost coal supplying the
Atlantic basin.
Billiton's owns 99.9% of the nickel mine Cerro Matoso.
Cerro Matoso is located in the province of Córdoba, in northern Colombia.
An integrated nickel mining and smelting operation, Cerro Matoso combines one of the
richest lateritic nickel deposits in the world with a low-cost ferronickel smelter. Cerro Matoso is one of the world's lowest cost,
major ferronickel producers.
3. BUSINESS OPPORTUNITIES
TELECOMMUNICATIONS
ELECTRIC ENERGY PROJECTS
HIGHWAY CONCESSIONS
MASSIVE TRANSPORTATION SYSTEMS
OIL SECTOR
RECOVERY OF THE MAGDALENA RIVER
INFRASTRUCTURE INVESTMENT
3.12. MAIN PROJECTS TO INVEST IN COLOMBIA
GAS
COAL
MINING
FORESTRY
TOURISM
SOFTWARE
AGRO INDUSTRY AND FISHERY
OIL PALM AGRO INDUSTRY
ATTRACTIVE SECTORS
3. BUSINESS OPPORTUNITIES
3.12. MAIN PROJECTS TO INVEST IN COLOMBIA
4. EXPORTS
TRADE BALANCE COLOMBIA - AUSTRALIA
Total trade between Colombia and Australia has had a decrease in the last years. In 2005, the total trade was (A$m) 49
EXPORTSAustralia to Colombia
IMPORTSColombia to Australia
Source: DFAT (Department of Foreign Affairs and Trade Australia
4. EXPORTS
4.1. TRADE BALANCE
AUSTRALIA EXPORTED US$22 MILLIONS IN 2005 TO COLOMBIA.
Source: DFAT (Department of Foreign Affairs and Trade Australia
4. EXPORTS
4.2. POTENTIAL PRODUCTS TO EXPORT TO COLOMBIA
EDUCATION (Aproximately 2000 colombian students in Australia)
WINE
INFORMATION TECHNOLOGY
E-COMMERCE SERVICES
SOFTWARE
MEDICAL EQUIPMENT
TELECOMMUNICATION SERVICES
TOURISM
AIR CRAFT SPARE PARTS
CHEMICALS
5. IMPORTS
5.1. TRADE BALANCE
IN 2005 AUSTRALIA IMPORTED US$28 MILLION FROM COLOMBIA.
Calima Pty Limited has been distributing its 100% Colombian Coffee to the industry for the last 2 years, increasing a broader awareness of the culture, and heritage of Colombia through a number of high profile cafes/restaurants in Sydney, and expanding to other cities.
Source: DFAT (Department of Foreign Affairs and Trade Australia
5. IMPORTS
5.1. TRADE BALANCE
IN 2005 AUSTRALIA IMPORTED US$28 MILLION FROM COLOMBIA.
Calima Pty Limited has been distributing its 100% Colombian Coffee to the industry for the last 2 years, increasing a broader awareness of the culture, and heritage of Colombia through a number of high profile cafes/restaurants in Sydney, and expanding to other cities.
Source: DFAT (Department of Foreign Affairs and Trade Australia
5. IMPORTS5.2. THE 25 COLOMBIAN COMPANIES WITH MORE
EXPORTATIONS
Out of the 25 colombian companies with higher exports. Australia already has a very important investment in two of them (Cerro Matoso and Cerrejon).
Australian investors have ample business opportunities with several other companies.
The potential products are: chemicals, fertilizer, chocolates, biscuits, confectionery, dairy products, construction materials, etc.
5. IMPORTS
5.3. OTHER IMPORTANT PRODUCTS TO IMPORT
LEATHER
EXOTIC FRUITS
FLOWERS
ORGANIC PRODUCTS
COFFEE
CONFECTIONERY
WOMEN’S CLOTHES AND UNDERWEAR
BANANA
CRAFTS
LIQUOURS (RUM)
5. IMPORTS
5.4. WHY COLOMBIAN PRODUCTS IN AUSTRALIA?
COLOMBIAN EXPORTING COMPANIES ARE CERTIFIED INTERNATIONALLY BY ORGANIZATIONS SUCH AS THE ISO (International Organization for Standarization)
PRODUCTS ARE COMMERCIALLY COMPETITIVE, WITH FLEXIBLE PRICING ISSUES
COLOMBIAN COMPANIES ARE WILLING TO NEGOCIATE ADVANTAGEOUS AGREEMENTS FOR AUSTRALIAN COMPANIES
OPEN MIND FOR NEW BUSINESS
6. CONCLUSION
COLOMBIA IS AN EMERGING MARKET IN THE ANDEAN REGION WITH AMPLE OPPORTUNITIES FOR INVESTMENT
GREATER NUMBER OF INCENTIVES TO TAKE ADVANTAGE OF BY INVESTING IN COLOMBIA
BETTER INFRASTRUCTURE, IMPROVEMENTS IN DATA AND TELECOMMUNICATIONS TECHNOLOGY, POLITICAL AND SOCIAL STABILITY, OFFER A SUITABLE ENVIRONMENT FOR INVESTMENT IN COLOMBIA
THERE ARE MANY INTERACTIVE BUSINESS OPPORTUNITIES BETWEEN AUSTRALIA AND COLOMBIA ON TRADE, JOINT VENTURES AND PRODUCTION.
ADDITIONAL INFORMATIONwww.proexport.com.co www.coinvertir.org
www.banrep.gov.co www.mincomercio.gov.co
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