colombia presentation

Presentación Colombia -

Inglés

COLOMBIA

Investment Environment and Business Opportunities in Colombia

September - 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

EXPORTS INVESTMENT TOURISM

Proexport Services

Proexport in Colombia

www.proexport.com.co

25

Regional Offices8

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 del Norte.

Cartagena. Medellín. Bucaramanga. Cali = Cámara de Comercio.

Pereira. Bogotá. Manizales. Cúcuta.

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. SouthKorea. Russia. Japan. Singapore. Indonesia.

Proexport in the world

General facts

Colombia is the country with the highest biodiversity per km2

It is among the 17most megadiverse countries of the planet.

55%of the population is less than 30 yearsold. There are eight cities with over

500 thousand people.

With an extension of1,141,000 km2 almost 3times the size of California and

twice the size of Texas.

Colombia is the only country in

South America with access toboth, the Atlantic and thePacific ocean.

Times of great economic achievements

GDP2013: +4.7%GDP 2012 : +4.0%

Higher than the Latin American average growth (3.2%).

Controlled Inflation: 1.94%

Below target inflation

Unemployment rate 2013:9.6%Unemployment rate 2012: 10.4%.

FDI2013: US$16.354FDI 2012 : US$ 15.119

Record figure in Colombian historyFigures in US Millions

1.02 million barrels per day

of oil production

Third largest producer in South America

A competitive location with easy access to markets around the globe

Mexico City4H45M

Los Angeles8H20M

Quito1H30M

Lima3H00M

Peru

Ecuador

México

United States

Canada

Brazil

ArgentinaChile

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 airlinesoperating in Colombia.

New York 5H35M

Toronto6H05M

Caracas 1H20M

Santiago Chile

5H00M

Buenos Aires 6H15M

Sao Paulo 5H45M

Madrid9H40M

Paris 10H40M

Frankfurt11H15M

The second largest spanish speaking country in the world and the 24th most populated

Source: DANE. EIU - Economist Intelligence Unit. 2014.

* Forecast.

202,8

117,5

90,683,5 81,0

64,650,5 47,7

35,6 30,8 30,223,5

17,710,7 9,7 8,5 8,2 8,1 7,1 5,5 5,1 4,4

Población 2014*Millones

Colombia is within the 30th largest economy in the worldand one of the largest non-OECD economies

150

226

302

300

397

425

373

432

448

387

401

415

595

600

816

1,176

1,790

2,324

2,560

Nueva …

Dinamarca

Israel

Noruega

Perú

Hong Kong

Chile

Suecia

Belgica

Singapur

Suiza

Vietnam

Colombia

Malasia

Argentina

Australia

México

Brasil

Alemania

GDP at PPP – 2015 enUS$ Billion

Note: GDP adapted to PurchasingPower Parity PPP. Projected data.

Fuente: FMI . 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 economicgrowth

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$

High Income

Middle HighIncome

Middle LowIncome

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.

5,805

8.850

10.800

14,110

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

Macroeconomic stability and strong economic performance in the long term

P: ProjectedSource: DANE; Banco de la República; Fedesarrrollo July 2014, EIU - Economist Intelligence Unit . 2014

Inflation

GDP

Unemployment rate

GDP Growth, Inflation and unemployment Rate 2002 – 2018p (%)

15.6

14.113.7

11.8 12.011.2 11.3

12.0 11.8

10.810.4

9.6

7.06.5

5.54.9

4.5

5.7

7.7

2.03.7

2.41.9

9.1 9.0 8.9 8.9 8.6

3.03.4 3.6 3.5 3.3

2.53.9

5.34.7

6.7 6.9

3.5

1.7

4.0

6.6

4.04.7

5.0 5.0 4.7 4.6 4.6

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p 2015p 2016p 2017p 2018p

Economic growth has been fueled by high rates of investment

Gross Capital Formation (% of GDP)2000 – 2016f

Source: EIU – Economist Intelligence Unit

Figures at constant prices of 2005.

p- Projected

f- Forecast

14%

16%

18%

25% 24%

27%28%

31%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014p2015p2016p2017p2018p

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

Millioninhabitants

11.6

11.6

Source: Fedesarrollo, 2013

Middle class in Colombia as a percentage of total population

Baseline scenario: 4.6% GDP growthBelow baseline scenario: 4.2% GDP growthAbove baseline scenario: 5.3% GDP growthMiddle 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

Source: S&P Ratings; Revista Dinero, Colombian Treasury.

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

(July 2014) Moody´s upgrades Colombia's rating

to Baa3 from Baa2.

Rating DateRating 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

PositiveBaa2 28– Jul - 2014

Term

Stable

The key drivers for Moody´s upgrade on July 2014 were:

1. Expectations of continued strong growth dynamics despite external headwinds and robust long-term growth prospects supported by the

fourth generation (4G) infrastructure investment program;

2. Sound fiscal management that has led to moderate fiscal deficits coupled with continued compliance with the fiscal rule and expectations

that this will continue.

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.

CountryRanking 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.

RankingCountry

6 Colombia

16 Peru

34 Chile

68 Mexico

80 Brazil

80 Panama

98 Argentina

182 Venezuela

8.3

7.06.3

5.75.3 5.3 5.0

2.3

Colo

mbia

Peru

Chile

Mexic

o

Bra

zil

Panam

á

Arg

entina

Venezu

ela

Investment Protection IndexDoing Business - 2014

Total commerce has grown almost 5 times in the past 10 years

United States

• Exports: US$18,458 million

• Imports: US$ 15,681 million

China

• Exports: US$ 5,102 million

• Imports: US$9,841 million

Mexico

Exports: US $863 million

Imports: US$ 5,299 million

Brazil

• Exports: US $1,590 million

• Imports: US$ 2,547 million

Exports and Imports.2000 – 2013US$ millions

Source: DANE, 2014

24.9

15

25.1

51

24.6

71

27.

008

33.4

75 42.3

95 50.5

53

62.8

88

77.

295

65.6

83

80.5

02

111.6

28

118.7

58

118.2

19

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Comercio total (X+M)

Colombia shows a remarkable growth of its exports

Variation 2010 - 2011: 43% Variation 2011 - 2012: 5,7%Variation 2012 -2013: -2.2%Source: DANE .Taking into aacount tradtional and non – traditional exports.

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%

13,158 13,129

21,190

37,626

56,954 58,822

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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 2013Imports 2000 – 2013CIF Values - US$ million

United States• US$ 16,337 million

• 27.5%

Mexico• US$ 5,496 million

• 9.3%

China


• 17.4%

Brasil• US$ 2.590 millones

• Participación: 4.4%

Free Trade Agreements

Source: Colombian Ministry of Commerce, Industry and Tourism. 2014.

Canada

United States

Mexico

Guatemala

Honduras

El Salvador

Ecuador

BrazilPeru

Argentina

Paraguay

Uruguay

Liechtenstein

Switzerland

Island

Norway

EuropeanUnion

Turkey

Israel

Japan

Panama

Chile

Bolivia

Costa Rica

Venezuela*

PacificAlliance

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, Peru and México.

In force

Signed

In negotiation

International Investment Agreements - IIA


Canada

United States

Mexico

Guatemala

Honduras

El Salvador

Peru

Switzerland

Turkey Japan

Chile

Note: The International investment agreements (IIA) include Agreement Investment Treaties – BIT (agreement) and Free Trade Agreements – FTA- with investment section (chapter).

Spain

China

India

UnitedKingdom

Kuwait

Singapur

Azerbaijan

Qatar

Russia

France

UAE

In force

Signed

In negotiation

Double Taxation Agreements - DTA


Canada

Mexico

Peru

Suiza

Japón

Chile

Corea del Sur

Spain

India

Bélgica

Alemania

FranciaRepública

Checa Portugal

United States

Bolivia

Ecuador

Países Bajos

In force

Signed

In negotiation

Colombia: A gateway to the Pacific Alliance

Source: MCIT, 2013

GDP of USD 2,010.3

billionThe members generate 35% of

the region´s GDP

Population of 209 millionAlmost Brazil´s Population

50% of Latin American

commerceTotal trade of US$ 1,116

billion (2012)

FTAs with 60

countriesAccess 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 10 times of what it received 10 years ago

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 sectorNote: the list of the top countries investing in Colombia does not include Panama.

Top Investing Countries in Colombia 2000– 2014 I Trim

FDI Inflows. 1994 –2014 I TrimUS$ million

United States


• 23.1 %

England


• 14.1%

Spain


• 7.6%

Chile


• 4%

2,504

7,821

15,11916,354

Prom. 1994 - 2002

Prom. 2003 - 2011

2012 2013

Var. 8%

1,944 1,959

1,708 1,449

2013(I Trim)

2014(I Trim)

Oil and Gas

Other sectors

Var. -6,6%

Investment in non-

mining sectors grew

0,8%

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 – 2014 I TrimUS$ million

FDI outflows by sectors,1994 – 2014 I Trim

United StatesUS$ 7,364 million

18.2%

EnglandUS$ 5,601 million

13.8%

PanamaUS$ 6,813 million

16.8%

PeruUS$ 2,718million

6.7%

3,652

40,556

Stock … Stock…

-606

7,652

895

2012 2013 2014 - I Trim

Financial services , 30,2%

Industry , 24,0%

Oil & Mining , 19,5%

Electricity, water & gas , 11,5%

Transport & Communications

, 7,4%

Commerce, Restaurants &

Hotels , 4,3%

Others , 3,1%

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

51127 228

285296

313254

306

2006 2007 2008 2009 2010 2011 2012 2013

Arrivals (Migración Colombia) Visitors in cruises

United States

• 336,454 visitors

• 18.4%

European Union


• 16.8%

Venezuela


• 14.3%

Argentina

• 129,069 visiors

• 6.4%

Main nationalities of foreign visitors in Colombia, 2013

Foreign visitors in Colombia2006 – 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”

Opportunity Sectors – Oil & Energy

Colombia is one of the main 20 oil producers countries in the world with more than 1 daily barrels.International Energy Agency, 2013

Colombia is the second biofuel productor in Latinamerica

According to “Energy Architecture Performance Index 2013” Colombia is the first in Latin Americaand the sixth worldwide . WEF, 2013.

It is expected that the hydroelectric capacity reaches 18,653 MV in 2018.

0,53 0,59 0,67

0,79 0,91 0,94

1,00 1,03 1,10

1,24

2007 2008 2009 2010 2011 2012 2Q 2013 E 2013 E 2014 E 2018

Oil production in ColombiaMillions of daily barrels

Opportunity sectors– Infraestructure & Logistics

Fuente: Agencia Nacional de Infraestructura (ANI), 2013

Concesiones ExistentesConcesiones Nuevas

Colombia has one of the mostimportant public initiatives in

the country. Looking for theimprovement andbuilding of 8.170 km ofroads estimated in US$24,4

billions. ANI, 2013

The government aims

increasing the portcapacity in 70% through

the port extension, publicports building and the accesschannels dredging.

Opportunity sectors – Manufactures for the local and foreign markets.

Building materials, cars and parts, clothing, cosmeticsand cleanness products, electric machines, others.

Colombia has a business network of more than

3,700 industrial companies with export

experience

More than 400.000 graduates and specialists in

engineering related areas between 2000 and 2011

8 metropolitan areas with more than 500thousand citizens

Medellín

2.441,123 hab.

Cali

2.344,734 hab.

Barranquilla

1.212,943 hab.

Bogotá

7.776,845 hab.

Cartagena

990,179 hab.

Cúcuta

643,666 hab.

Ibagué

512,631 hab.

Bucaramanga

527,451hab.

Opportunity sectors – Services

Colombia has become in a exports platform forLatin-American countries, USA and Europe. Offeringvoice and data services in Spanish, English andPortuguese.

7 submarinecables capable of

generating a band width of more than

53,14 TB/s and 2 submarine cables in

progress (SAC and PCCS).

Source: Teleography

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 yearsold with more than 1 yearunemployed. Length of benefit byemployee: 2 years.

New employees under twenty eight(28) years old. Length of benefit byemployee: 2 years.

New employees certified in displacementsituation, 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 5,000SMMLV.

Payment of income tax.

Payment of levies and other contributions frompayroll.

The business registration and renewal.

0% - 2 first years25% - third year50% - fourth year75% - fifth year

100% - from the sixthyear.

0% - first year50% - second year75% - third year

100% - from the fourthyear.

Application of escalation

Free TradeZone

PermanentFree Trade

Zone

SpecialStanding

"Uniempresarial" (FTZ)

Guajira

MagdalenaAtlántico

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 afterDecember31, 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 RegionTourism, Logistics, Petrochemical, Construction Supplies Atlantic Export Platform.

Central/Andean RegionOutsourcing Services, high value-addedmanufacturing, hub to cover domesticmarket, specialized agribusiness.

Pacific RegionManufacturing, Agribusiness, logistics, biotechnology, Pacific export platform.

Eastern RegionAgriculture, forestry, biofuels, hydrocarbons

Amazon RegionConservation, ecotourism (Leticia)

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