Why Colombia Investment Environment & Business Opportunities

Transcription

1 Why Colombia Investment Environment & Business Opportunities Tobias Meurer Mai 2017

2 Table of Content 1. Recent Macroeconomic Developments 2. Investment Environment 3. Export Platform 4. Wood processing and furniture manufacturing sector 2

3 Colombia In a nutshell Growing Economy Colombia is the third largest and one of the fastest growing markets in Latin America. Ideal Export platform More than 13 trade agreements in force, e.g. with the USA and European Union, make the Andean trade-hub an ideal export platform. Low Inflation Rate Colombia has a stable and low inflation rate compared to the South American average (Ø : 4% per year) Improved Safety The security situation in Colombia has continually improved and the Colombian Government just signed a historic peace deal with Farc rebels. 3 Large Domestic Market With 49 million inhabitants Colombia is the second most populated country in South America.

4 %Mexico Colombia A dynamic and stable economy %Brazil Gross Domestic Product, Annual growth rate Macroeconomic stability index World ranking % 4.3 % 4.1 % 3.6 % 3.3 % % 1.4 % Peru Colombia Mexico Ecuador 83 Peru Colombia Costa Rica Chile Ecuador Canada United States Uruguay Brazil Source: IMF, 2016 Source: Global competitiveness Index,

5 Colombia Increasing Purchasing Power Percentage of people in poverty ,7% Poverty Middle Class Colombia s middle class is 30,6% 29,9% 30,5% 27,8% steadily growing while its poverty rate is 16,3% continuously decreasing Source: Poverty: National Administrative Department of Statistics DANE

6 Table of Content 1. Recent Macroeconomic Developments 2. Investment Environment 3. Export Platform 4. Food & Beverage Sector 6

7 Colombia Top Investing Countries Others 52.6% United States 21% UK 12,3% Total Investment from IIIQ Switzerland 5.4% Spain 8.7% US$146,860 Billion 7 Source: Poverty: National Administrative Department of Statistics DANE

8 Colombia - 2 nd best Business Environment in Latin America According to Doing Business, within the Latin American and Caribbean region, Colombia is: Doing Business ranking, 2017: #1 in getting credit #1 in protecting minority investors #2 in dealing with construction permits #2 in ease of doing business #3 in registering property #5 in starting a business 47 Mexico 53 Colombia 54 Peru 90 Uruguay 114 Ecuador 123 Brazil 8 Source: World Bank. Doing Business 2017.

9 Colombia - The most reformative country in Latin America Colombia is the most reformative country in Latin America when it comes to improving the overall business Environment Ranking Doing Business* Change in positions Colombia Peru Country Ranking 2017 #reforms Colombia Panama 9 Mexico 47 5 Ecuador Mexico Brazil Argentina Ecuador Peru Chile 57 8 Panama Brazil Chile -29 Argentina Source: World Bank. Doing Business 2017.

10 Table of Content 1. Recent Macroeconomic Developments 2. Investment Environment 3. Export Platform 4. Food & Beverage Sector 10

11 USD 55 billion will be invested in infrastructure Fourth Generation of PPP S 4G Roads: USD 24 billion Improvement of km of roads KM of new roads 40 new concessions Ports: USD 2,1 billion (between ) Opportunities to develop and improve the infrastructure of airports, roads, ports and waterways Railway concessions program (feasibility study phase 2) USD 4,2 billion Airports: investments worth USD 1,8 billion (10 projects) and 2 construction projects worth USD 2,3 billion. ( ) Improvement of the navigability of the Magdalena River worth USD 1,3 billion 11 Source: Ministry of Transport

12 The government will boost projects through PPP (USD 22 billion) Airports An investment of approximately USD 900 million in adjustments, expansions and renovations for 47 airports between 2015 and 2018 Roads USD 17 Billion Km of roads, Km of double lane roads, 141 tunnels, viaducts, and USD 3.2 billion in 9 PPP projects of private initiative that include 4G roads Railroads USD53 million More tan 900Km of railroads to be restored. Ports USD 1.4 Billion ( ) Source: Ministry of Transport National Plan to improve waterways USD 2.6 Billion USD1.8 Billion to improve the navigability of the Magdalena River 12

13 Colombia An Ideal Export Platform Colombia has access to 47 countries and more than 1.5 billion consumers through its trade agreements Canada United States Mexico Guatemala Honduras Panama Nicaragua* Ecuador Cuba* El Salvador Peru Caricom* Costa Rica Venezuela Bolivia Brazil AELC European Union Israel South Korea Japan In force In negotiation Signed Pacific Alliance Chile Paraguay Uruguay Argentina 13 Source: Colombian Ministry of Commerce, Industry and Tourism. 2015

14 Colombia - A Gateway to the Pacific Alliance Population of 218 million More than Brazil s population MILA is the first cross border initiative to integrate equities markets. FTAs with 60 countries Access to 86% of the World GDP Listed companies up to December 2015: 608 Mexico Market capitalization: Colombia Peru Chile 14 Source: IMF UNCTAD - MILA, % of the regional FDI Total FDI of US$69,054 million (2015) US$771 billion GDP (PPP) of US$3,710 million The members generate 41% of the region s GDP

15 Free-Trade Zones within Colombia Atlántico Risaralda Bolívar Antioquia Caldas Magdalena Santander Guajira Norte de Santander Boyacá Valle del Cauca Cauca Quindío Huila Cundinamarca Caribbean Andean Region Pacific Region 15

16 Free-Trade Zone Regime: Incentives Single 20% income tax rate No customs taxes (VAT and CUSTOMS DUTIES) are triggered when raw materials are introduced to the Free Trade Zone from abroad. VAT exemption for raw materials, inputs and finished goods sold from the national customs territory to the Free Trade Zones. Exports made from Free Trade Zones to foreign countries, may apply the benefits of international trade agreements signed by Colombia Possibility of performing partial processing outside the Free Trade Zone for up to 9 months. Possibility of selling goods or services to the national territory without restrictions or quotas, paying the applicable custom duties on the imported goods. 16

17 Table of Content 1. Recent Macroeconomic Developments 2. Investment Environment 3. Export Platform 4. Furniture Sector 17

18 Furniture Sector in Latin America The furniture sector in Latin America and the Caribbean area has a 600 million population, over 63 metropolitan areas and reaches a total household consumption of more than US$ 300 billion. It is one of to be watched areas when it comes to future development, Brazil and Mexico being among the fastest growing emerging economies in the world. Furniture consumption in Latin America and the Caribbean is worth US$ 17 billion. According to CSIL forecasts, the most promising among larger markets, in terms of growth in the next two years, are Mexico, Chile, Peru and Colombia. 18

19 Colombia - A promising Market Colombia shows a deficit in housing of 4,9 million units and Latin America of 58 million units. (Source: ECLAC) Colombia s National Government has 4 construction programs* (+410 thousand new homes) bringing strong government support to the sector. The boom in the construction and infrastructure sectors will increase the demand for building materials as well as for wood and furniture. Attractive incentives for investments in the hotel industry caused a Boom of Hotel Sector, which will ultimately fuel the demand for interior design * Casa Ya, Casa Ahorro, programa casas gratis, Subsidios de créditos 19 Source: ECLAC, Business Monitor

20 Colombia - A promising Market Opening Hotels Rooms Hotel openings 20 Source: MICT- Minestry of Trade, Industry and Tourism

21 Colombia Countries destination of exports in 2015 Furniture Sector 6% 6% 8% 8% 9% 5% 4% United States Venezuela 33% Peru Ecuador Domenician Republic Chile México 21% Costa Rica Main countries destination of exports of the furniture sector 21 * Numbers from July to December 2015 Source: Sistema de Inteligencia de Comercial de Legiscomex.com

22 Colombian products are mainly exported to North and Central American markets Colombian exports of wooden furniture destinations countries 2016 North America USD 26.6 million 26% 9% Caribbean region US$ 9.2 million Export destinations of wooden furniture. USD FOB million Country United States 21,1 17,3 17,8 15,9 15,1 19,1 21,3 Central America US$ 27.5 million 27% 17,5% Panama 13,3 18,6 26,2 23,2 19,9 18,4 18,6 India 2,8 4,2 7,5 13,2 14, ,6 Chile 8,3 7,3 3,9 5,3 6,6 5,6 6 Source: DANE 79.6% Colombian exports are mainly concentrated in North and Central American markets South America US$ 17.9 million Costa Rica 6 3,9 5,6 5,6 4,8 5,6 5,3 Mexico 4,1 6,2 4,4 5,3 4,9 5 4,7 Peru 8,7,7,5 6,6, 7,2 8,1 5,8 4,3 Others 55,0 72,2 64,2 53,4 54,7 37,4 33,6 Total 119,7 137,5 136,6 129,5 128,9 109,

23 In 2016 exports of wooden furniture accounted for 0.72% of total non-mining exports and 1.6% of total manufacturing exports Exports of wooden furniture USD FOB (million) Exports of wood and wooden furniture Sub-sectors 2016 (%) Home Furniture USD FOB 21.4 million 21.1% Office furniture USD FOB 49.3 millon 30.6% 48.3% Wood for furniture USD FOB 31.2 million US$ million Total exports of wooden furniture between 2010 to 2016 Source: DANE 23

24 Wooden furniture market sales reached USD172 million in 2015 Source: Annual Manufacturing survey, 2016 DANE Sales of wooden furniture in Colombia USD million Products Sales 2014 Sales 2015 Modular wooden office furniture 101,0 69,0 Other wooden furniture 70,7 56,3 Wooden furniture for commercial stablishments 22,3 13,5 Wood furniture for kitchens 13,3 11,8 Wooden furniture for living rooms 6,7 6,2 Wooden furniture for bedrooms 6,7 5,6 Special wooden bathroom furniture 3,9 3,9 Wooden furniture for televisions and sound systems 5,1 3,7 Wooden furniture for dinning rooms 2,4 1,7 Wooden frames for furniture 0,4 0,3 Wooden furniture for schools 0,5 0,1 Total 233,0 172,1 24

25 In 2016, the main 5 products exported by Colombia accounted for 50.3% of total wooden furniture exports US$14.9 million US$ 10 million US$ 9.9 million US$ 8.4 million US$ 8.1 million Panama India United States Panama United States United States China Rep. Dom. United States Brazil Chile Vietnam Panama Mexico Australia Other wooden furniture Other tropical wood, unworked Other seats, whether or not convertible into beds (other tan those of heading 94.02) Other metal furniture Other seats with metal frames, with filling (except those of heading 94.02) Source: DANE 25

26 71.5% of the furniture and wood supply in Colombia are concentrated in 4 departments Atlántico 3 exporters Córdoba 2 exporters Antioquia 3 exporters Valle del Cauca 4 exporters Source: DANE Magdalena 2 exporters Bolívar 2exporters Cundinamarca 1 exporters Bogotá 3 exporters 20 companies Exceeded Export value for over one million dollars (2016) Wooden furniture exports by department US$ FOB million Departamento Valle del Cauca 18,8 22,8 20,6 22,9 24,0 21,6 21,1 Atlántico 22,0 22,1 24,7 21,2 25,2 17,9 20,7 Bogotá 37,0 50,2 34,5 29,4 24,1 22,8 19,1 Antioquia 12,2 17,2 21,0 18,1 16,3 14,0 11,8 Cauca 1,6 3,2 2,8 3,8 1,0 4,9 8,5 Cundinamarca 11,0 9,9 17,0 12,0 7,0 7,4 7,1 Bolívar 3,2 1,8 3,6 7,8 11,8 5,7 4,3 Magdalena 0,1 0,4 1,6 2,1 8,3 6,7 3,0 Córdoba 3,0 3,9 5,2 3,8 4,3 3,0 2,7 La Guajira 0,6 0,7 0,2 0,07 1,9 1,7 1,0 Others 9,6 4,9 4,8 7,8 4,5 3,1 2,1 Total 119,7 137,5 136,6 129,5 128,9 109,2 102,0 26

27 Thank you for your kind attention!