COLOMBIA: Investment Environment and Business Opportunities Seminar: Market Overview of Latin American Countries SBC Mokpo, June 13th 2014
About us Market Overview of Latin American Countries Proexport is in charge of the promotion of International Tourism, Foreign Direct Investment, and non-traditional exports in Colombia EXPORTS INVESTMENT TOURISM www.proexport.com.co
Proexport in Colombia 25 Information centers 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 NORTE. CARTAGENA. MEDELLÍN. BUCARAMANGA. CALI = CÁMARA COMERCIO. PEREIRA. BOGOTÁ. MANIZALES. CÚ CUTA. POPAYÁN. BOYACÁ. 8 Regional Ofices BARRANQUILLA. BOGOTÁ. BUCARAMANGA. CALI. CARTAGENA. CÚ CUTA. MEDELLÍN. PEREIRA www.proexport.com.co
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Colombia: A gateway to the Pacific Alliance Mexico Population of 209 million Almost Brazil s Population Colombia Peru 50% of Latin American commerce Total trade of US$ 1,116 billion (2012) FTAs with 60 countries Access to benefits of markets that represent 85.7% of the World GDP Chile GDP of USD 2,010.3 billion The members generate 35% of the region s GDP Source: MCIT, 2013
Colombia is an ideal export platform towards the Americas Maritime Conectivity from Colombia and S. Korea to Latin America Air Conectivity from Colombia and S. Korea to Latin America Origin Destination Transit time Country Port Country Port (days) S. Korea Kwangyang Brazil Santos Freigh US$ 20 STD Container Tones 37 2.659 95 Colombia Atlantic Coast Brazil Santos 14 1.400 50 S. Korea Kwangyang Argentina Colombia Atlantic Coast Argentina S. Korea Kwangyang Chile Colombia Atlantic Coast Chile Colombia Pacífic Coast Chile S. Korea Kwangyang Mexico Manzanillo Colombia Atlantic Coast Mexico Veracruz Colombia Pacífic Coast Mexico Manzanillo Buenos Aires 42 2.504 89 Buenos Aires 19 1.300 46 San Vicente 36 4.803 172 San Antonio 12 775 28 San Vicente 11 456 16 18 4.781 171 7 1.094 39 10 859 31 Origin Destination Country City Country City Flight Time* US$/KG S. Korea Seul Canada Toronto 13 Hours 4,35 6 Hours 05 Colombia Bogotá Canada Toronto min 1,52 S. Korea Seul Brazil Sao Paulo Colombia Bogotá Brazil Sao Paulo S. Korea Seul Argentina Colombia Bogotá Argentina Buenos Aires Buenos Aires S. Korea Seul Chile Santiago Colombia Bogotá Chile Santiago S.Korea Seul Mexico Mexico Colombia Bogotá Mexico Mexico 23 Hours 55 min 8,85 5 Hours 55 min 1,30 24 Hours 20 min 9,10 7 Hours 25 min 2,25 25 Hours 33 min 9,10 5 Hours 50 min 2,28 19 Hours 34 min 5,56 4 Hours 40 min 0,75
Colombia is the sixth destination of South Koreas exports in Latin America Exports from Corea towards Latin America 2003 2013 Exports from Korea to Colombia by sectors 2013 Mexico 28,2% Organic chemicals 1.57% Colombia 3,9% Perú 4,2% Venezuela 1,3% Brasil 28,1% Optical, photo, technical, medical, apparatus Chemical products Iron and steel Rubber products Electronic equipment 1.77% 2.87% 5.21% 6.02% 6.59% Chile 7,1% Plastics Machinery, nuclear reactors, boilers, etc 11.81% 14.25% Total Exports towards Latam: US$ 34,4 millions Argentina 3,1% Vehicles Resto 8.44% 41.49% Total Exports towards Colombia : US$ 1.296.408
2% of South Korean FDI in Latin America is intended towards Colombia Korean FDI in Latin América 2003 2013 FDI form Korea to Latina America and the Caribbean 2003 2013 Mexico 30,9% Others Extracción de Petróleo 6.63% 1.40% Colombia 2,0% Retail Telecomunicaciones 1.43% 1.53% Perú 0,6% Brasil 55,6% Químicos Energía eléctrica 2.29% 3.29% Ensamble 3.51% Chile 0,16% Sistema Moda 4.34% Total proyectos: 197 Proyectos en Colombia : 30 Argentina 0,17% Autopartes Metalmecánico 11.75% 63.84% Source: fdi Markets, 2014. Total projects: 197
South Korean FDI in Colombia has been mainly in the automotive and household appliances sectors FDI flows from S. Korea towards Colombia 2000-2013 37.9 43.3 27.4 1.2 11.8 0.2 0.8 2.7 4.3 16.3 15.9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-3.6-0.2-2.7 Source: Banco de la República, 2014. FDI Proyects by sector from S.Korea towards Colombia 2000-2013 Some investment cases 2003-2013 Automotive OEM BPO y/o KPO 10% 10% Comunications 10% Autoparts 40% Source: fdi Markets, 2014. Audio and House hold appliances 30%
There are investment opportunities for S. Korean projects in 16 different regions in Colombia Processed Foods Auto-parts Oil & gas goods and services Automotive OEM Metal Products Antioquia Atlántico Cundinamarca Risaralda Santander Valle del Cauca Antioquia Atlántico Cundinamarca Risaralda Valle del Cauca Arauca Bolívar Casanare Cundinamarca Huila Meta Putumayo Santander Atlántico Cundinamarca Valle del Cauca Atlántico Bolívar Boyacá Caldas Magdalena Risaralda Tolima Source: fdi Markets, 2014. Proexport sector and
23.51 17.70 10.50 9.70 8.50 8.10 7.20 8.20 5.10 5.50 4.60 The second largest spanish speaking country in the world and the 23 rd most populated Population 2014* Millions 202.80 116.20 81.67 78.09 83.70 64.60 47.40 50.50 35.60 31.60 30.20 Source: DANE. EIU - Economist Intelligence Unit. 2014. * Forecast.
Colombia is the 28th largest economy in the world and one of the largest non-oecd economies GDP at PPP 2015 US$ billion Germany Brazil France Mexico South Korea Australia Malaysia Colombia Philippines Switzerland Belgium Sweden Hong Kong Vietnam Peru Chile Norway Israel Singapur Denmark New Zeland 167 301 299 257 PPP - Purchasing Power Parity. e: estimated. Source: EIU - Economist Intelligence Unit. 2014 422 420 400 380 373 481 481 455 606 599 535 1,176 1,790 2,324 2,644 2,560 3,688
Colombia's per capita income has doubled since 2000 Per capita National Income (PPP) 2000 2018p, US$ 16,000 14,000 14,400 Income High Income 12,000 10,910 10,000 8,000 6,000 5,826 8,940 Middle High Income 4,000 2,000 Middle Low Income 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p 2015p 2018p Low 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
A rapidly growing middle class Middle class in Colombia as a percentage of total population Million inhabitants 2025 46.3% 59.9% 24.7 32.1 2020 37.3% 43.8% 19.0 22.3 2012 25.3% 11.6 11.6 2002 16.2% 6.7 Below Baseline Scenario Above Baseline Scenario 6.7 Baseline scenario: 4.6% GDP growth Below baseline scenario: 4.2% GDP growth Above baseline scenario: 5.3% GDP growth Middle class: Monthly household income between 3.2MW and 13MW (MW) minimum wage in Colombia 2013: US $333.
Economic growth has been fueled by high rates of investment Source: EIU Economist Intelligence Unit Figures at constant prices of 2005. e- Estimates Gross Capital Formation (% of GDP) 2000 2018f 30% 31% 27% 28% 25% 24% 22% 14% 16% 18% EIU estimates Gross Capital Formation will be 31% of GDP by 2018. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Macroeconomic stability and strong economic performance in the long run GDP Growth, Inflation and unemployment Rate 2002 2018p (%) Unemployment rate 15.6 14.1 13.7 GDP Inflation 11.8 12.0 11.2 11.3 12.0 11.8 10.8 10.4 6.7 6.9 7.7 6.6 8.5 8.8 8.1 7.4 7.1 6.8 7.0 2.5 6.5 3.9 5.3 5.5 4.7 4.9 4.5 5.7 3.5 2.0 1.7 4.0 3.7 4.0 2.4 4.3 4.4 4.6 4.5 4.3 4.5 3.0 3.4 3.6 3.5 3.3 1.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f f: Preyected e: Estimates Source:: DANE; Banco de la República; Grupo Bancolombia 2014; EIU - Economist
Some Key figures GDP2013: +4.3% GDP 2012 : +4.0% Higher than the Latin American average growth (3.2%). Controlled Inflation: 1.94% Below target inflation FDI2013: US$16,772 FDI 2012 : US$ 15,529 Record figure in Colombian history Unemployment rate 2013:8.5% Unemployment rate for December 2012: 9.2%. 1.01 million barrels per day of oil production Fourth largest producer in South America
An investment-grade country with positive outlook Rating Agency Term Rating Date Outlook Long Term Foreign Currency BBB 24 Apr- 2013 S&P (April 2013) and Fitch (december 2013) improved Colombia s sovereign debt outlook. Short Term Foreign Currency Long Term Local Currency Short Term Local Currency A 2 BBB + A - 2 24 Apr- 2013 5 Mar - 2007 5 Mar - 2007 Stable Effective implementation of recent fiscal reforms could improve its debt and interest burdens S&P 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 Stable Long Term Foreign Currency Baa3 7 Feb- 2012 Positive On December 2013 Fitch Ratings upgraded Colombia's ratings due to Colombia's improvement in its external accounts and positive government debt dynamics, which support the convergence of external and fiscal credit metrics with rating peers. In addition, the sovereign's credible and consistent policies provide it with the capacity to withstand external shocks; this was demonstrated during the recent increase in financial volatility witnessed by several emerging markets.
Colombia with the most reforms in Latin America towards the improvement of Business environment Ranking Doing Business* 2008-2014 Change in the number of positions Country Ranking 2014* Chile 34 Peru 42 Colombia 43 Mexico 53 Panama 55 Colombia Panama Costa Rica Mexico Peru Venezuela -1 6 10 13 16 23 Costa Rica 102 Ecuador -7 Brazil 116 Brazil -9 Argentina 126 Ecuador 135 Venezuela 181 Chile Argentina -17-9 Source: Doing Business 2014. World Bank. *Positive numbers indicate improvements in business environment.
Colombia was officially invited on May 2013 to initiate the process to become full member of the OECD OECD Investment Policy Review (February, 2012) recognizes Colombia s progress in pursuing policy reforms to promote investment liberalization and improving the business climate As an adherent to the Declaration, Colombia: I 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 and fairly treatment from other adherents. The review examines Colombia's achievements in developing an open and transparent investment regime and its efforts to reduce restrictions on international investment OECD III Colombia s adherence provides further international support for the principles of sound investment policy and corporate responsibility laid down in the Declaration. Source: OECD, 2012.
Colombia s overall trade increased fivefold in the past 10 years 24,915 25,151 24,671 27,009 33,476 42,395 50,553 62,888 77,295 65,682 80,502 112,095 119,299 118,219 Exports and Imports. 2000 2013 US$ millions Top trading partners in 2013 United States Exports: US$18.458 million Imports: US$ 15.681 million China Exports: US$ 5.102 million Imports: $9.841 million Mexico Exports: US $863 million Imports: US$ 5.299 million Brazil Exports: US $2.457 million Imports: US$ 1.590 million 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Comerce (X+M) Source: DANE, 2014
Colombia has increased the number of FTAs to expand its global reach 2002 2014 In 2002, only two Free Trade Agreements were in force, covering 5 countries. In 2014, Colombia will have access to more than 45 countries and 1,500 million potential consumers. Islandia Noruega Canadá Estados Unidos Liechtenstein Suiza Union Europea Tuquia Corea del Sur Japón México Israel México Panamá Venezuela* Guatemala Honduras Nicaragua* El Salvador Ecuador Costa Rica Panamá Cuba* Venezuela* Ecuador Perú Alianza Pacifico Perú Bolivia Brasil Paraguay Bolivia Chile Uruguay Argentina Argentina Tratados de libre comercio In force Signed Under negotiation
In 2013 Colombia reached a new record in FDI: Nearly 7 times of what it received 10 years ago FDI Inflows. 1994 2013 USD million Top Investing Countries in Colombia 2000 2013 15,529 Var. 8% 16,770 United States US$ 25,980 million 24 % 13,405 United Kingdom US$ 15,672 million 14,5% 6,897 Spain 2,504 US$ 7,902 million 7,3% Chile Average 1994-2002 Average 2003-2010 2011 2012 2013 US$ 4,283 million 4,1% 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 sector Note: the list of the top countries investing in Colombia does not include Panama.
Important multinationals have recently chosen Colombia as a location for new projects Femsa began construction of a new bottling plant in the country. Expected to be the third largest bottler in Latin America Hewlett Packard, the North American multinational in information technology, opened a global service center in Medellin. Japanese fiber optic cable manufacturer, Furukawa, will open a production plant in Palmira, Valle del Cauca in order to take advantage of Colombia s FTA s. Mexichem invested a total of US$ 24 million to increase its production capacity in Colombia. Prebuild of Portugal set up operations in Colombia to produce floors, windows and wood products for the construction materials sector.
Important multinationals have recently chosen Colombia as a location for new projects The multinational Unilever, opened one of its most advanced detergent plant worldwide, through which it seeks to supply domestic and foreign markets General Motors established a stamping plant in Bogota that has the capacity to produce 60,000 cars per year. The lndian chemical producer for agricultural products, UPL acquired Evofarms, a Colombian producer of generic crop protection chemicals. EATON acquired ESI de Colombia, a value added reseller of industrial electrical equipment and engineering services. Bayer established a cropscience plant in Atlantico to cover 14 countries including Brazil and Mexico.
The stock of Colombia s outward FDI has grown nearly ten-fold since 1994 Stock of outward FDI. 1994-2013 USD million FDI outflows by sectors, 1994 2013 39,482 7,652 Transport & communicatio n, 6.0% Commerce, restaurants & hotels, 4.6% 3,652-606 Electricity, gas & water, 12.4% Others, 2.8% Industry, 25.1% Stock 1994-2002 Stock 1994-2013 2012 2013 Financial services, 27.7% Oil & Mining, 21.4% Panama USD 6,505 million 18% United States USD 6,455 million 17% United Kingdom USD 5,180 million 14% Peru USD 2,507 million 7% Source: Banrep, 2014; World Investment Report, Overview 2013; FDI Markets, Global Greenfield Investement Trends. 2013; CEPAL 2013.
Some examples of high profile Colombian multilatinas 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. The Bancolombia 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. Colombiana SA has opened 1 branches throughout the Americas and has a production plant in Guatemala to supply the American market. Carvajal SA, is a conglomerate with presence in 15 countries. In 2013, Carvajal S.A made an investment of $ 23.7 million for the construction of a manufacturing and distribution center in Peru. Tecnoquímicas has direct presence in Central America through its 3 production plants in El Salvador. SURA Brand has operations in Mexico, Peru, Uruguay and Chile. In 2011, the group bought ING assets in Latin America for USD $ 3,614 million.
Sectors of opportunity- Energy Production in Colombia and Forecast Million Barrels per Day 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 Colombia is ranked among the top 20 oil-producing countries in the world with over one million barrels per day. International Energy Agency, 2013. Colombia is Latin America s second largest producer of biofuels Total expected hydroelectric capacity is expected to reach 18,653 MW in 2018 Colombia was ranked first in Latin America and sixth in the world according to the Energy Architecture Performance Index 2013 Rankings WEF, 2013.
Sectors of Opportunity- Infrastructure & Logistics Colombia s largest public investment initiative estimated at USD$ 24.4 billion and 8,170 Km of roads to be constructed or improved. ANI, 2013. The Government aims to increase port capacity by 70% through the expansion of the existing ports, the construction of public service ports and the dredging of the access channels.
Sectors of opportunity- Manufacturing for the local and foreign markets Construction materials, vehicles and autoparts, apparel, cosmetics and personal care, electric machinery among others More than 400,000 graduates and specialists in engineering studies between 2001 and 2011. Colombia has an Industrial network of over 3,700 companies Cartagena 935.496 hab. Medellín 2.386.233 hab. Cali 2.283.057 hab. Barranquilla 1.202.749 hab. Cúcuta 615.795 hab. Bogotá 7.658.081 hab. Bucaramanga 520.229 hab. 8 metropolitan areas with over 500 thousand inhabitants. Ibagué 512.631 hab.
Sectors of opportunity - Services Colombia has become an exports platform to LATAM, USA and Europe offering voice and back office BPO, ITO, KPO services in Spanish, English and Portuguese. Acros - 1 Panameriana CFX Maya - 1 TCS - 1 Medellin Cali Bogotá 6 submarine cables capable of generating a band width of more than 550 Gbps.
Sectors of opportunity- Tourism Foreign visitors in Colombia 2006 2013, thousands Main nationalities of foreign visitors in Colombia, 2013 306 254 313 296 285 127 228 51 1,053 1,195 1,223 1,354 1,475 1,582 1,692 1,832 2006 2007 2008 2009 2010 2011 2012 2013 United States 336,454 visitors 18.4% European Union 307,212 visitors 16.8% Venezuela 261,343 visitors 14.3% Arrivals (Migración Colombia) Visitors in cruises Argentina 129,069 visiors 6.4% Source: Migración Colombia, MCIT, Banco de la República. Cálculos de Proexport