Colombia Outlook And Investment Potential Nov06

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    CONSULATE GENERAL OF COLOMBIA SYDNEY

  • Colombia: Outlook and Investment PotentialDID YOU KNOW THAT...

    Colombia owns the Latin Americas 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 PotentialWERE 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

    Elyses 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 Llins?

  • 1. GENERAL INFORMATIONGENERAL INFORMATION ABOUT COLOMBIAOfficial Name: Republic of ColombiaTotal Area: 1,141,748 Km2Land Frontiers: Venezuela, Peru, Ecuador, Brazil and PanamaCoast Lines: Atlantic and Pacific OceansPopulation: 44 million inhabitants Capital: Bogot, 8 million inhabitantsGovernment: Democratic. Presidential election every 4 yearsOfficial Language: SpanishReligion: Freedom of religion (Catholicism)Currency: Peso (COP$ 2,320=US$ 1 - average 2005)

  • 1. GENERAL INFORMATION1.1. STRATEGIC LOCATIONSydney14.380 kmLos Angeles5.660 kmManila17.290 kmNew York3.980 kmLondon8.470 KmMadrid8.030 KmJohannesburg11.470 kmQuito720 Km.Caracas1.030 Km.Lima1.890 Km.Santiago4.250 Km.B. Aires4.690 KmRio 4.540 KmSeattle6.700 Km

    Easy access to all marketsMid point between North and South AmericaGeographic and environmental diversityLess 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 INFORMATION1.2. MULTIPLE PORTSTEN PORTS:

    2 PORTS - PACIFIC OCEAN

    8 PORTS- ATLANTIC OCEANBuenaventura is an important port in the Pacific Ocean that facilitates de trade exchange with Asian countries and Australia.

  • 1. GENERAL INFORMATION1.3. MULTIPLE REGIONAL DEVELOPMENT AREASCOLOMBIA IS DIVIDED IN FIVE MAIN ECONOMIC REGIONS:

    Caribbean Region Tourism, commerce, agriculture, mining, port activities, fishing and industryPacific 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, commerceAmazon Region Forestry, ecotourism, fishing, agricultureInteresting market opportunities for investors.Several development areas throughout the countryCountry's risk diversification by region.

  • 1. GENERAL INFORMATION1.4. POLITICAL STABILITYColombia is Latin Americas 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 INFORMATION1.5. SECURITY IMPROVEMENTPublic 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.

  • 2. CURRENT ECONOMIC SITUATION IN COLOMBIAColombia: Outlook and Investment Potential

  • 2. ECONOMIC SITUATION2.1. ECONOMIC GROWTHGDP Growth: ColombiaGood Performance in Latin American context. Third greatest in Latin America.In 2005, the economy grew 5.13%GDP per capita: US$ 2,277

    Fuente: Comisin Econmica para Amrica Latina y el Caribe CEPAL, DANE

    Reception - HAY QUE BUSCAR GRAFICO GDP

  • 2. ECONOMIC SITUATION2.2. ECONOMIC STABILITYInflation RateColombia 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

    4.85%1994- January 2006

  • 2. ECONOMIC SITUATION2.3. ECONOMIC STABILITYFinance obligationsColombia has never experienced defaulted on its international debts or financial obligations.

  • Colombia: Outlook and Investment Potential3. CURRENT BUSINESS OPPORTUNITIES AUSTRALIA-COLOMBIA

  • GDP in Latin America (2005) Current Prices, US$ MillionsFifth largest economy and third largest population in Latin AmericaSource: International Monetary Fund and World Bank, *Data for Colombia in 2005 from Bank of the Republic (Central Bank) and DANEColombia Among the Andean countries, Colombia has the second-largest economy and the largest population.Population in Latin America (2005) Millions of personsColombiaMarket sizeQualified human capital3. BUSINESS OPPORTUNITIES3.1 MARKET SIZE

  • Source: The World Competitiveness Yearbook 2006-IMDQualified human capitalAvailability of trained workforce(0= not available; 10= available) Ranking (61 countries)263944405712Competent managers(0= not available; 10= available) Ranking (61 countries)3629374055ColombiaColombia3. BUSINESS OPPORTUNITIES3.2. HUMAN RESOURCES AVAILABILITY

  • Remuneration manufacturing industryUS$/hour (Including benefits) Source: The World Competitiveness Yearbook 2006-IMDRemuneration service professionals US$/year (Department Managers)43351311105181916563522191791210Colombia19,500 Ranking (60 countries) Ranking (60 countries)ColombiaQualified human capital3. BUSINESS OPPORTUNITIES3.3. LOW LABOR COSTS

  • 3. BUSINESS OPPORTUNITIES3.4. INVESTMENT GRADE RATING ACORDDING TO THE LEADING CREDIT RATING AGENCIES ChileMexicoStandard & PoorsChile***MexicoColombia**Peru**Brazil**Argentina* Venezuela**A -BBB-BBBB-B+CCC+SDInvestment GradeChile**Mexico***Colombia*Brazil**Peru**Argentina**Venezuela**MoodysBaa1Baa2Ba2Ba3B1Caa1CaInvestmentGradeColombiaPeruBrazilArgentinaVenezuelaFitchA -BBB-BBBB-BBDDDInvestmentGradeColombia has the third best rating on foreign currency sovereign bonds* Negative Outlook** Stable Outlook*** Positive Outlook

  • 3. BUSINESS OPPORTUNITIES3.5. INVESTMENT AND EXPORT TRADE INCENTIVESFree 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 OPPORTUNITIES3.6. PRIVILEGED ACCESS TO GLOBAL MARKETSAndean Community (CAN) Free Trade Zone Common External Customs Tariff

    Chile - CARICOM Free Trade Agreements

    G-3 Free Trade Agreement with Mexico and Venezuela

    ALADIPartial-Scope AgreementsFree Trade Zone

    CAN - MERCOSUR Free Trade Zone

    World Trade Organization WTOMultilateral Treaty , Member since 1995TRADE AGREEMENTSATPDEA (EEUU) Unilateral agreementMore than 6.100 Duty Free products.

    ANDEAN GSP (European Union)Unilateral agreement Most Industrial and Agricultural Products are Tariff-Free.TARIFF PREFERENCESForeign 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 OPPORTUNITIES3.7. COLOMBIAS FOREIGN INVESTMENT REGIMEForeign Investment Regime:Free remittance of profitsEqualitarian treatmentUniversality 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 (BITs) under discussionRegistered on the Intellectual Property World Organization

  • 3. BUSINESS OPPORTUNITIES3.8. FOREIGN DIRECT INVESTMENT IN LATIN AMERICAColombia: Fourth Foreign Direct Investment destination in Latin America 2006Trend Report: PROEXPORT

  • Trend Report: PROEXPORT 3. BUSINESS OPPORTUNITIES3.8. FOREIGN DIRECT INVESTMENT IN COLOMB