COLOMBIA Investment Environment and Business Opportunities in Colombia February 2013
About us Proexport is Colombia s entity in charge of the promotion of International Tourism, Foreign Direct Investment, and non-traditional exports EXPORTS INVESTMENT TOURISM
Proexport s network: 28 offices around the world and 8 offices in Colombia
Overseas Colombia and overseas Colombia Exports Portfolio 1 2 3 Joint working plans with entrepreneurs interested in exports. Commercial Information and offer adjustment trough different areas such as Zeiky, DEI and Cooperation. Buyer missions 4 Business Matchmaking 5 6 International Fairs Technical Support and Commercial Missions 7 Showrooms 8 9 Web page for exporters and buyers Commercial Agendas 10 Exporter Missions
Overseas Colombia and Overseas Colombia Investment Portfolio 1 Seminar for investors already installed 2 SIFAI (System to facilitate and Attract Investment) 3 Coordination of regional promotion 4 Tailor made information requests 5 Coordination of site visits. 6 Contacts with key entities in the public and private sector 7 International Events and seminars.
Overseas Colombia and Overseas Colombia Tourism Portfolio 1 2 Joint working plans Exporter Plans Institutional Projects 3 Special Projects 4 Business meetings 5 Promotion Activities 6 7 Joint promotion plans with operators Workshops, destinations presentations and International Fairs 8 9 Familirization Trips / media Tourism Portal 10 Added Value Institutional Presence
Recent investment projects supported by Proexport Established one of its two world class R&D centers. Opened a new Data Center oriented to Systems Integration, Outsourcing and Support Services. Develop a Sugarcane ethanol project on approximately 10,000 hectares. 2011 2009 2010 Opened a new global service center in Medellin 2011 Grupo Roble opened a new business hotel offering 264 rooms, located in the heart of Bogota s financial district. Acquired ESI de Colombia, a value added reseller of industrial electrical equipment an engineering services 2011 2011
Important multinationals around the world have selected Colombia as a strategic location for their expansion projects In the process of constructing its most technologically advanced detergent plant worldwide. 2012 Expansion of its operations in Cartagena in order to double its production capacity of steel tubes for the oil and gas sector. (Over USD 200 million) 2012 Expansion of its production plant to assemble a new line of SUV for local market and exports, including Mexico. (USD 30 million) 2011 Acquisition of 20% of Drummond s thermal coal operations. The companies will work together to expand the mining area as well as rail and port facilities to lift production to 35 million tones in 2013. (USD 1.6 billion) 2011
Important multinationals around the world have selected Colombia as a strategic location for expansion Establishment of one of its three Global Innovation Centers. (USD 20 million) 2011 Opened a new global service center in Medellin. 2011 Creation of an industrial complex with 11 plants of different lines of building materials to supply the local market. (USD 250 million) 2012 Construction of an stamping plant in Bogota that will have the capacity to produce 60.000 cars per year. (USD 200 million) 2012 Acquired ESI de Colombia, a value added reseller of industrial electrical equipment and engineering services. 2011
The facts behind the headlines
A competitive location with easy access to markets around the globe Canada Toronto 6H05M Los Angeles 8H20M Mexico Mexico City 4H45M United States Quito 1H30M Ecuador Lima 3H00M Peru Santiago Chile 5H00M Miami 3H00M Chile New York 5H35M Caracas 1H20M Brazil Sao Paulo 5H45M Buenos Aires 6H15M Argentina Madrid Paris Frankfurt Barcelona Over 700 weekly direct international flights. More than 4.900 weekly domestic flights. Less than 6 hours to the main capital cities in Latin America. More than 20 different airlines operating in Colombia.
2012: a year of great economic achievements Expected GDP growth: 4.3% Unemployment rate: 9.6% 1 million barrels per day of oil production Higher than expected average growth rate for Latin America (3.2%) Lowest in last 11 years. Fourth largest producer in Latin America Direct Foreign Investment: USD 16.684 MM* 4.0% of GDP Record figure in the history of Colombia *Foreign exchange balance Exports of goods and services USD 54,690 MM* 6.3% growth rate Record figure in the history of Colombia * Jan Nov 2012 figure Controlled inflation 2.4%* *Under inflation target
The second largest Spanish speaking country in the world and the 23 rd most populated Population 2013* Million 98.62 82.16 78.09 66.46 58.65 47.10 47.09 30.38 25.53 22.91 19.04 15.20 10.28 8.86 7.99 7.16 6.60 6.13 4.48 3.96 3.85 Source: DANE. EIU - Economist Intelligence Unit. 2013. * Forecast.
Macroeconomic stability and strong economic performance in the long run GDP, inflation and unemployment rate. 2002 2016p % 15.6 14.1 13.7 11.8 12.0 11.2 11.3 12.0 11.8 10.8 10.2 10.1 9.9 9.7 9.3 Unemployment 7.0 2.5 6.5 3.9 5.3 5.5 6.7 6.9 4.7 5.7 4.9 4.5 7.7 3.5 2.0 1.7 4.0 5.9 3.7 4.4 4.7 5.0 4.9 5.1 2.4 3.1 3.1 2.9 2.9 GDP Inflation 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013p 2014p 2015p 2016p p: Projected. e: Estimated Source: DANE- Colombia Central Bank - EIU: Economist Intelligence Unit. 2013.
The top three risk-rating agencies awarded the investment grade to Colombia August 2012 S&P upgrades Colombia s sovereign debt outlook to positive Effective implementation of recent fiscal reforms could improve its debt and interest burdens S&P Rating Agency Term Long Term Foreign Currency Short Term Foreign Currency Long Term Local Currency Short Term Local Currency Long Term Foreign Currency Short Term Foreign Currency Long Term Local Currency Rating BBB A 3 BBB + A - 2 BBB F 3 BBB Date 16 Mar - 2011 16 Mar - 2011 5 Mar - 2007 5 Mar - 2007 22 Jun - 2011 22 Jun - 2011 22 Jun - 2011 Outlook Positive Stable Long Term Foreign Currency Baa3 7 Feb - 2012 Stable In 2011, the three top risk-rating agencies lifted Colombia s sovereign debt rating to investment grade, coinciding with the excellent economic and financial period that the country was facing: A reduction in its vulnerability to external shocks Its historic fulfillment of obligations Confidence in the government s macroeconomic policy A true improvement in security policies Source: S&P Ratings; Dinero Magazine.
Jan/11 Jan/11 Feb/11 Mar/11 Mar/11 Apr/11 May/11 May/11 Jun/11 Jul/11 Aug/11 Aug/11 Sep/11 Oct/11 Oct/11 Nov/11 Dec/11 Dec/11 Jan/12 Feb/12 Feb/12 Mar/12 Apr/12 Apr/12 May/12 Jun/12 Jul/12 Jul/12 Aug/12 Sep/12 Sep/12 Oct/12 Nov/12 Nov/12 Dec/12 The risk perception of Colombia continues to improve and is one of the lowest in the region 250 230 210 The current low risk perception is a recognition of positive behavior of the Colombian economy in recent years. CDS* Index Average 2012 Chile Colombia Mexico Perú Brasil Argentina 97,23bp 119,43bp 120,07bp 130,05bp 130,06bp 1.118,77bp Higher Risk France 153,23bp 190 170 150 130 110 90 70 Colombia Brazil Chile Mexico Peru Francia 50 *Credit Default Swaps Index. Measures the difference between the interest rate paid over a Colombian bond in dollars abroad against the interest rate paid for a US bond. The smaller the difference the lowest the risk in the country. Source: Bloomberg, 2013
Colombia shows a remarkable growth on its exports Exports. 2000 Nov. 2012 FOB Values USD Million 56,954 54,690 Top Export Destinations Jan-Nov 2012 United States US $19,914 million 36.4% share 37,626 39,820 51,452 China US $2,878 million 5.3% share 13,158 13,129 Spain US $2,754 million 5.0% share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan - Nov 2011 Jan - Nov 2012 Venezuela US $2,516 million 4.6% share Variation 2009-2010: 21,2% Variation 2010-2011: 43% Variation Jan Nov 2011 vs. Jan Nov 2012: 6,3% Source: DANE.
Imports also have increased rapidly Imports 2000 Nov. 2012 US$ Million, CIF 54,675 54,152 Top imports origen Jan-Nov 2012 United States 39,669 50,170 US $13,029 million 24.1% Share China 32,830 US $8,686 million 16% Share 11,757 13,881 Mexico US $5,963 million 11% Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan - Nov 2011 Jan - Nov 2012 Brazil US $2,577 million 4.8% Share Variation Jan Nov 2011 vs. Jan Nov 2012: 7.9% Variation 2010-2011: 31.2% Source: DANE
Billions Trade Trends: Houston - Colombia Total nominal trade value between Houston and Colombia increased at a compound annual growth rate of 19.4 percent from 2001 to 2011. $12.0 Houston - Colombia Total Trade $10.0 $8.0 $6.0 $4.0 IMPORTS EXPORTS TOTAL $2.0 $0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Nov. '12 YTD Source: GHP
Free Trade Agreements Iceland Norway Canada Liechtenstein European Union Mexico Guatemala Honduras United States Costa Rica Panama Venezuela Switzerland Israel Turkey South Korea Japan El Salvador Ecuador Peru Brazil Pacific Alliance Bolivia Chile Paraguay Argentina Uruguay IN FORCE SIGNED IN NEGOTIATION ALL Fuente: Colombian Ministry of Commerce, Industry and Tourism. 2012.
FDI inflows are expected to reach USD 17 billion in 2012 FDI. 2000 Sep. 2012 USD Million Main Investing Countries in Colombia Jan Nov 2012 13,605 10,652 11,825 Chile USD 431.1 million 10.3% share 8,070 Brazil USD 412.3 million 9.85% share 3,683 United States USD 394.4 million 9.42% share Average 2000-2005 Average 2006-2010 2011 Jan-Sept 2011 Jan-Sept 2012 Netherlands USD 332.6 million 7.95% share Variation 2010 2011: +92% Share of all countries with positive cumulative investment, without reinvested profits or investments in the oil sector. Accumulated Value January September 2012: USD 11,825 million Note: the list of the top countries investing in Colombia does not include Anguilla or Panama 1st and 2nd place, respectively. Source: Balance of Payments - Banco de La Republica.
Colombia is the second most promising market for investment in Latin America over the next three years If you were to invest in a Latin American country in the next 3 years, where would you invest? 68% 38% 25% 25% 18% Brazil Colombia Chile Mexico Peru Colombia is earlier in its growth cycle and more emerging than many other countries in the region Colombia s Government seems pro-business and is taking the right steps toward encouraging investment in the country Source: North American and European Investor Opinions of Latin American Companies. J.P. Morgan. 2011.
Colombia adheres to the OECD Declaration on International Investment and Multinational Enterprises. OECD Investment Policy Review (February, 2012) recognices Colombia s progress in pursuing policy reforms to promote investment liberalisation and improving the business climate As an adherent to the Declaration, Colombia commits to : I As an adherent to the Declaration, Colombia commits to treating foreign investors in the same way as domestic investors and to promoting responsible business conduct, in line with the Guidelines for Multinational Enterprises II In turn, the country benefits from similar assurances from other adherents to treat Colombian investors fairly. III Colombia s adherence provides further international support for the principles of sound investment policy and corporate responsibility laid down in the Declaration. The review examines Colombia's achievements in developing an open and transparent investment regime and its efforts to reduce restrictions on international investment OECD Source: OECD, 2012.
Colombia s FDI outflows also set a record in 2011 FDI in Colombia by sector 2000-2011 Main destinations of FDI from Colombia 2000-2011 Others, 2% Trade, restaurants and hotels, 6% Transport and communications, 6% Electricity, gas and water, 11% Oil and Mining, 31% Industry, 24% 1. U.S. 2. England 3. Panama 4. Mexico 5. Peru 6. Chile 7. Brazil 8. Uruguay 9. Guatemala 10. Spain 6,562 7,843 4,662 Financial Services, 20% 2,254 3,088 Colombia s FDI outflows 2000 2011. US$ Millon Source: Banco de la República. Balanza de pagos. Calculations: Proexport 857 938 913 1,098 325 16 142 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1,053 1,195 1,223 1,354 1,475 1,582 1,692 Colombia is increasingly attractive to visitors Foreign visitors in Colombia 2006 2012 Thousands Main nationalities of foreign visitors in Colombia, 2012 United States 51 127 228 285 296 313 254 319,202 visitors 18.9% share Venezuela 250,404 visitors 14.8% share Ecuador 114,564 visitors 6.8% share 2006 2007 2008 2009 2010 2011 2012 Arrivals (Migración Colombia) Visitors in Cruises Argentina 111,555 visitors 6.6% share Sources: Colombia Migration, MCIT, Bank of the Republic. Proexport Calculations.
Productive Transformation Program: A public - private partnership to strengthen and build world class sectors 16 Strategic Sectors SERVICES MANUFACTURING AGRICULTURE BPO &O Graphic Communications Chocolates and Candy Software & IT Fashion System Cattle Health Tourism Auto parts and Vehicles Industry Palm, Vegetable Oils and Biofuels Ecotourism Cosmetics Shrimp farming Electric energy and services Steel Dairy products Horticulture
A country of regions and differentiated opportunities for investors Pacific Region Caribbean Region Central / Andean Region Orinoquian Region Caribbean Region: Tourism, Logistics, Petrochemical, Construction Supplies Atlantic Export Platform Central/Andean Region: Outsourcing Services, high value-added manufacturing, hub to cover domestic market, specialized agribusiness Pacific Region: Manufacturing, Agribusiness, logistics, biotechnology, Pacific export platform Amazon Region Orinoquía Region: Agriculture, forestry, biofuels, hydrocarbons Amazon Region: Conservation, ecotourism (Leticia)
Regions with opportunities by sectors Assembly: In 2010, Colombia ranked as the fourth largest producer of the region with a high growing potential. This sector employs 2.5% of manufacturing labor force in Colombia. National and regional mass transportation system development (Panama) Presence of international assembly plants: Renault, General Motors, Mazda, Toyota Hino, Busscar, Superpolo and Daewoo Bus. Auto parts 61% growth in auto part exports over the last five years. Around US $700 million sales in auto parts to local producers. Car fleet 1.2 million units bigger Creation and construction of a technological development center for industry strengthening. Domestic and foreign companies certified according to the highest international standards. Competitive incentive system: Warehouses for Processing or Assembling vehicles and auto parts (DHTE): 0% duty for importing vehicles produced or assembled to any of the Andean countries, as well as the auto parts and materials produced in these warehouses. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors Production: About 20% industry growth (2010). Skilled Labor: More than 140,000 graduates with industry-related degrees between 2001 and 2010. Natural ingredient and cosmetic packaging companies Research and Development: One of the most biodiverse countries in the world R&D Centers Network for industry support: National Biotechnology Program and two important R&D centers supported by the public sector. Network of Universities and R&D Centers: 11 academic centers working on sector development and research. Tax Benefit through Colciencias: 175% income tax discount on the value invested in R&D. Logistics Centers: Trade Agreements: 7 trade agreements, 3 agreements signed and 3 under negotiation. Export Logistics: more than 3,700 scheduled shipping routes from 4 main ports that cover both the Atlantic and the Pacific oceans Main exporters of the Region One of the fastest growing markets with the highest share in the region. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors BPO Creation of Shared Services Centers for Latin America. Opportunities for Outsourcing Companies that provide Costumer Care, ESO, FAO, HRO, Telemedicine, and R&D services Software & IT Services Development and integration of IT Services and Applications. M&A and Software Factories Creation of Data Centers Telecommunications Provide Telecommunications Services for growing markets and strengthen Telecommunications Infrastructure. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors Dynamism of the construction sector in Colombia : Over 100% in terms of GDP in the last 9 years, and a growth of 30% of foreign investment in the last 6 years During 2011 Colombia s GDP grew 5.9% and the construction sector 5.7%, which reflected a growth of 6.7% in infrastructure and 5.3% in building. Great opportunities in local market: Positive trend with a compound growth of 16% in exports and an increase of 78% in direct investment. Human Resources: Availability of 131.00 professionals and technicians in the sector with an offer of qualified human capital, 28 specialized programs in training for the people who work with construction materials. Government committed with the sector development: housing and infrastructure are priorities which will generate a growing demand of construction materials of low, medium and high range. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors Wide range of agriculture and livestock options due to Colombia's geographic position and characteristics. 12 million potential hectares for agricultural expansion. great variety of climates and water availability. constant brightness throughout the year Tax exemption for long term crops. Between 2004 and 2014, new crops are exempt from tax in a 10 year period. A government committed to the development of agriculture: The National Development Plan 2010-2014 identifies the agriculture sector as one of the five (5) engines for economic growth in Colombia. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors Due to sector s great dynamic there are opportunities in the Oil Products and Services sector for growth and improvements on an international scale. Growth is projected in terms of the number of wells explored (570 by 2014) and extraction (nearly one million barrels of oil per day, 2012). The Cartagena Refinery will begin operating in 2013 with a capacity of 165,000 BDP. The demand for related goods and services at this facility as well as at the Barrancabermeja Refinery will increase. Various investment opportunities exist in producing specialized, high-quality goods and developing high-tech oil services. A regional goods and services export platform can be established to meet the needs of the Venezuelan, Peruvian and Ecuadorean markets. Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Regions with opportunities by sectors Research, Development and innovation Iniciatives and incentives to promote R&D+I: COLCIENCIAS Public and private entities committed to innovation in the clothing sector: INEXMODA, CIDETEXCO Recursos humanos e naturais para o desenvolvimento de projetos. Production and logistic centers Sector with over 100 years of tradition and experience: Colombia has approximately 450 textile manufacturers and 10,000 apparel companies. Growing domestic demand in the textile sector: National domestic demand in 2011 was 5.9% driven by a vigorous household consumption, which rose 4.3%. Government programs of training for the sector: SENA - Currently has 12 specialized programs for the sector with national coverage. Export platform: 11 Free Trade Agreement with preferential access to over 1,500 consumers Excellent geographical location to supply the Americas. Air and maritime infrastructure: Over 3.700 maritime frequencies, near 1.000 air frequencies. Over 18 cargo airlines and more than 13 commercial airlines Automotive Cosmetics, Toiletries and Cleaning Products IT and BPO&O Building & construction Materials Agribusiness Oil Products and Services Textiles
Elena Bustamante ebustamante@proexport.com.co www.proexport.com.co