Doing Business in Colombia September2012

7/30/2019 Doing Business in Colombia September2012

1/29

U.S. Department of CommerceInternational Trade Administration

Doing Business in Colombia


2/29


Colombia at a Glance

3rd largest populat ion inLat in Am eri ca (48 mil l i on)

Locat ion- 2 coast s

Li t e racy Rat e: 94%

5 ci t i es w i t h 1 m i l l ion+consum er bases

Fast est growing market inLat in Am eri ca for oi l andgas product ion


3/29


Democrat ic Republ i c

President appr oval 64-54% (as of Sept 2012)

Dow n f rom 78% in Febr uary 2012

Next President ial Elect ions: May 2014

Headlines

Government


4/29

Colom bia at a Glance:

Demographics Midd le class is a grow t h indicat or f or buying

power and opport uni t y for innovat ion.

Percent age of peopl e in 20-40 age group:20-29 17%

20-34 24%

20-39 31% The m iddl e cl ass repr esent s 35. 3% of t he

t ot al Colombian populat ion

http://www.grspro.com/pics/computer.jpg


5/29


Colombia at a Glance:Technology Trends

20 % of hom es have int ernet access.

There are 21 comput ers f or every 100

ind ivi duals. It is incr ease of 50% since t hecurrent government st art ed.

77% of Publ ic school s have i nt ernet access.

This year t he governm ent pur chased 321, 000comput ers f or publ ic schools.
http://www.google.com/imgres?imgurl=http://www.mercer.lib.oh.us/Computer%20class.jpg&imgrefurl=http://www.mercer.lib.oh.us/computer.htm&usg=__s2c5hNGwuKcPVYpwQ5O-YcM2uIE=&h=1050&w=1050&sz=116&hl=en&start=3&zoom=1&tbnid=xQeFaKVdKfHNwM:&tbnh=150&tbnw=150&ei=OU_OT6yyKumN6QHk_aGSDA&prev=/search?q=computer&hl=en&gbv=2&tbm=isch&itbs=1http://www.google.com/imgres?imgurl=http://www.mercer.lib.oh.us/Computer%20class.jpg&imgrefurl=http://www.mercer.lib.oh.us/computer.htm&usg=__s2c5hNGwuKcPVYpwQ5O-YcM2uIE=&h=1050&w=1050&sz=116&hl=en&start=3&zoom=1&tbnid=xQeFaKVdKfHNwM:&tbnh=150&tbnw=150&ei=OU_OT6yyKumN6QHk_aGSDA&prev=/search?q=computer&hl=en&gbv=2&tbm=isch&itbs=1http://www.grspro.com/pics/computer.jpg


6/29


Colombia at a Glance:Technology Trends

Colom bia has t he low est cost comput ers in Lat inAm erica ( Int el )Colom bia is t he 2dn grow ing comput er m arket in LA.(32% f rom m arch 2011 t o march 2012)556,311 comput er unit s sold in t he last quart er of 2011.


7/29


Next Tier Market under President Obama sNat ional Export In i t ia t ive

GDP grow t h of 5. 9% in 20117.7% in 3rd quart er of 2011

Em phasis on Maj or p roj ect s

$26B next four years

Direct invest m ent : $13B

Why Colombia?

An Economic Miracle


8/29


Why Colombia?An Economic Miracle

Logist i cs p lat fo rm

Wel l managed f ore ign deb t Frequent t ravel t o U.S.

U.S. p roduct s p refe r red

Grow ing populat i on

Photo: New El Dorado Airport
http://images.google.com/imgres?imgurl=http://img529.imageshack.us/img529/8215/aeropuertoeldorado003s1bg.jpg&imgrefurl=http://www.skyscrapercity.com/showthread.php?t=567636&h=545&w=967&sz=202&hl=en&start=4&um=1&tbnid=Jlrqo8Xw1AHcCM:&tbnh=83&tbnw=148&prev=/images?q=como+quedara+++nuevo+aeropuerto+El+Dorado&um=1&hl=en&sa=G


9/29


Market Trends:Maj or Proj ects

TransMi len io Bogot

Two Re f inery Modern izat ionpro jec ts

Port s Cart agena, Salgar,Buenaventura

In f r ast ruct ure Roads, ElDorado Airport

Tour i sm inf rast ruct ure: (e.g,24 new hot el s (4000 room s) by2014). Marri ot t in Cal i end of2013, 6 new hot el s in BAQ,Tryp and Wyndham in BOG.
http://www.abel-art.com/medellin/pages/medellin28.html


10/29


Market Trends:Maj or Proj ects

Government announcedUSD$ 33 bil l ion f orinf rast ruct ure works f or2013.Governm ent w il l i nvest USD$400 mi l l ion t o t urn t heMagdalena River in t o a Wat er - Highway . Annual f rei ghtt ransport at ion on t he r i ver,w i l l i ncrease fr om 2 m i l l iont ons t o 8 mi l l ion t ons.

Infr ast ruct ure goals against GDP

Wh C l bi ?


11/29


Why Colombia?GDP Growth

1991-2012

Source: DANE/IMF

*GDP per capita (nominal value)

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

1991 1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1.9%

5.8% 5.6%

2.0%

3.7%

0.9%

-4.2%

3.0%

1.7%

3.9%

5.3%4.7%

6.7% 6.9%

2.7%

0.8% 0.8%

4.2%

5.6%5.0%

Asia Crisis

Internal Political and Economical Cirsis

ATPDEA Begins World Financial Crisis

Wh C l bi ?


12/29


Why Colombia?GDP Per Capita Growth

2009-2016

Source: DANE/IMF

*GDP per capita (nominal value)

$5.206,6

$6.359,6$6.980,4

$7.294,3$7.707,9

$8.025,1$8.394,5

$8.816,8

$0,0

$1.000,0

$2.000,0

$3.000,0

$4.000,0

$5.000,0

$6.000,0

$7.000,0

$8.000,0

$9.000,0

$10.000,0

2009 2010 2011 2012 2013 2014 2015 2016


13/29


Challenges

Social Economic

Obt ai n a peacef ulsolut ion t o t he int ernal

conf l ic t Def eat cor r upt i on i n

off ic ial agencies

Hi gh di sp lacem ent

ra te Reduce pover t y

Lar ge inf or maleconomy

Bureaucracy and redtape

Sluggi sh j ud iciary

Tax evasi on

SMEs lack access t ocredi t


14/29


Presidents Obama and Santos announcingthe US Colombia FTA April 2012


15/29

Market Trends:

U.S.-Colombia FTA Wi l l he lp NEI but is NOT a cure-al l It can: - Increase expor t s t o Colombia by $1.1 b i l l ion

- Creat e/ save j obs

- - Increase market access f or goods andColom bia s $166 bil l i on servi ces m arket

- - Non-t ar i f f barr iers t o t rade w i l l be

progressivel y el im inat ed as FTA ent ersin to f orce

- Impr ove business cl i m at e by reducingcorrupt ion and inf ormal i t y



16/29


Market Trends:Colombia s FTA Negot iat ions

Agreements implemented:

Andean Communi ty (CAN) (Ecuador, Peru, Bolivia)

Mercosur (Argentina, Brazil, Paraguay, Uruguay)

Mexico

Chile

Canada USA

Ratified:

Cent ral America Triangle (Honduras, El Salvador

and Guatemala) European Free Trade Association EFTA (Switzerland,

Norway, Iceland and Liechtenstein)

Pending implementat ion:

European Union


17/29

Market Trends:

U.S.-Colombia FTA 90% of Colombian product s ent ered t he U.S. market

duty-free, whi le U.S. merchandise entering Colombiaf ace t ari f f s averaging near ly 9%. (APTDEA)

FTA w i l l e l iminat e t ar i f f s f or over 80% of U. S. expor t s o fconsumer and indust r i al product s (excluding pet rol eum)im m ediat ely upon im plem ent at ion and 87% w it hin 5 yrs.

The impac t of e l im inat ing t ar i f f s and re lat ed bar r ie rs in

Colom bia is est im at ed t o incr ease U.S. GDP by near ly$2. 5 b i l l ion.



18/29

Market Trends:

U.S.-Colombia FTA73% of the industrial products that originate from

U.S., will enter into COLOMBIA duty free.


Category # of Products %

F Already duty free 160 3%

A Immediate 4,322 73%

B y U In 5 years 400 7%

C In 10 years 970 16%

K In 7 years 52 1%

T In 11 years 1 0%

Total 5,905 100%


19/29


TOTAL EXPORTS

US - COLOMBIA

$14,314,594,567

$215.040.712

Plastics exports vs Total Exports fromEEUU to Colombia (USD), 2011

Total Exports to Colombia (USD)

Plastic & Rubber Produc ts (USD)

2%

Source: Foreign Trade Division, U.S. Census Bureau

In 2011, the US exports of plastics and rubber products to Colombia was about 2% of the

total exports.


20/29


US COLOMBIA

TRADE STATISTICS

PLASTICS AND RUBBER PRODUCTS

2010 2011

Imports from

Colombia(USD) $ 106,003,152 $ 113,943,431

Exports to

Colombia

(USD) $ 178,737,355 $ 215,040,712

$0

$50.000.000

$100.000.000

$150.000.000

$200.000.000

$250.000.000

2010 2011

Trade Plastics & Rubber Products - USD

Imports from Colombia (USD) Export to Colombia (USD)

Source: Foreign Trade Division, U.S. Census Bureau

The US exports to Colombia increased 20% between 2010 2011


21/29

Market Trends:U. S. Colom bia FTA

Previously U.S. auto par t s face a 17.4% t ar i f f , bu i ld ing product sf ace a 13.2% t ari f f and consum ers goods f ace a 15% t ari f f .

Non- ta r i f f bar r ie rs t o t rade are progressively e l im inat ed as FTA

ent ers int o force. 99% of qual i f y ing indust r ial and t ext i le goods w i l l become dut y

f ree.

Most remain ing t ar i f f s w i l l be phased out 15 years.

89% of Agr icul t u ral goods w i l l become dut y f ree.


HTS Base Rate Staging Category

85129090 (Part s of w indshieldwipers of a k ind used f or mot or

vehicles or cycles)

2.5% A

39252000 (Doors, wind ows, andtheir f rames)

5.3% A

70133110 (Glassware for table orkit chen purp oses)

15% A


22/29

Market Trends:

U.S.-Colombia FTA 76% of sales f rom US t o Colom bia consist s of :

Machines and m echanical equipm ent

Or ganic Chem ical s Transpor t Equipm ent

Minerals & Fuels

Plast ics and m achinery

Elect r ical m achinery Agro indust r ial



23/29

Market Trends:

U.S.-Colombia FTA Liberal izat ion of product s in key sect ors such as:

Const ruct ion Equipm ent / Bui l ding Product s

Ai r craf t s and par t s Fer t i l i zers

Agrochem icals

IT

Medical and scient i f i c equipm ent Ref urbished Aut o, m achinery, m edical

equipment



24/29

Market Trends:

U.S.-Colombia FTAImports to Colombia from USA

15 May to Aug 11 2012 (In USD Millions)



25/29

Market Trends:

U.S.-Colombia FTA


Some pr oduct s w it h highl i ght ed incr ease (%)f rom May2012 t o Aug 2012 against t he same per iod in 2011


26/29


Market Pract ices

Tips for Success in Colombia

Be inform ed Read CCG

Use si t uat ional aw areness f or secur i t y

Colomb ia: Check t he Cl int on List / OFACwebsi te

Ident i fy par t ners/ background check

Include arb i t rat ion c lause in cont ract s

Be f ami l iar w i t h t he laws and regu lat ions

Always get legal advice


27/29


Market Pract ices


Language & t ranslat e mat er ials

Don t push for b ig orders ease int o i t

St ay wel l in f orm ed t h ings change very quicklyin Colombia Info is cr it ical

Be aw are t hat Colombia has i t s ow n cu l t u ralnuances


28/29


Market Pract ices


USDOC FTA tool: An easy to use tool to find outwhat tariffs are:

http://export.gov/fta/ftatarifftool/

http://export.gov/fta/ftatarifftool/
http://export.gov/fta/ftatarifftool/http://export.gov/fta/ftatarifftool/


29/29

Documents

Doing Business in Colombia September2012