Doing Business in Colombia
U.S. Department of Commerce International Trade Administration
Colombia at a Glance • 3rd largest population in Latin America (47 million) • Location- 2 coasts • Literacy Rate: 94%, but English is low (11/12 Education First ranking- Colombia is 50 out of 54 countries analyzed;Libya-54, Argentina20; Chile- 39; Venezuela- 40; Ecuador43; Brazil-46.
• 5 cities with 1 million+ consumer bases • Fastest growing market in LA for oil & gas production U.S. Department of Commerce International Trade Administration
Colombia at a Glance: Demographics • Middle class is a growth indicator for buying power and opportunity for innovation. Percentage of people in 20-40 age group: 20-29 17% 20-34 24% 20-39 31% • Average age is 28 years • The middle class represents 35.3% of the total Colombian population (4th best in S. U.S. Department of Commerce America) International Trade Administration
Why Colombia? An Economic Miracle • Next Tier Market under President Obama’s National Export Initiative • 2012 GDP growth was 4% (5.9% in 2011) Mining has a 5.9% share, Financial Sector- 5.5% share, Ag- 2.6%, Mftring decreased 0.7% • Emphasis on Major projects – $26B – next four years • FDI in 2012 was $15.3B; $13.5B in 2011 U.S. Department of Commerce International Trade Administration
Why Colombia? GDP Per Capita Growth 2009-2016 $10,000.0 $9,000.0
$8,816.8
$8,000.0
$8,025.1 $7,000.0
$6,980.4 $6,000.0
$7,294.3
$8,394.5
$7,707.9
$6,359.6
$5,000.0
$5,206.6 $4,000.0 $3,000.0 $2,000.0 $1,000.0 $0.0 2009
2010
Source: DANE/IMF *GDP per capita (nominal value)
2011
2012
2013
U.S. Department of Commerce International Trade Administration
2014
2015
2016
Market Trends: Technology & Education •MinTIC launched the Vive Digital Plan in 2010 to increase internet access, provide computers for school children, increase the fiber optic network, launch 4G broadband technology, and other IT related goals through an estimated $1.7 billion in public and private sector investments from 2010 to 2014. •20 % of all homes have internet access, but 64% of urban Colombians have internet access. •There are 21 computers for every 100 individuals- a 50% increase since 2010. •77% of Public schools have internet access. •In 2011,the government purchased 321,000 computers for public U.S. Department of Commerce schools. International Trade Administration
Market Trends: Leading Sectors for U.S. Exports www.buyusa.gov/colombia/en
• Oil & Gas Machinery/Services • Transportation and Infrastructure • Mining Equipment • Construction Equipment • Information Technology and Communications • Military Equipment
• Auto Parts/Accessories • Electrical Power Systems • Travel and Tourism • Food Beverage Processing/Packaging Equipment • Medical Equipment
U.S. Department of Commerce International Trade Administration
Challenges Economic
Social
• Large informal economy-tax evasion • Bureaucracy/red tape • Sluggish judiciary • SMEs lack access to credit • Transportation Infrastructure- 2nd highest cost in S.A. E.g., 1 ton ShanghaiCAR= $60. CARBOG=$94 (World Bank U.S. Department of Commerce International Trade Administration study 12/12)
• Obtain a peaceful solution to the internal conflict • Defeat corruption in official agencies • High displacement rate • Reduce poverty
Presidents Obama and Santos announcing the US – Colombia FTA April 2012
1 Year Later U.S. Department of Commerce International Trade Administration
Market Trends: U.S.-Colombia FTA – Increase market access for goods and Colombia’s $166 billion services market – Non-tariff barriers to trade will be progressively eliminated as FTA enters into force – Improve business climate by reducing corruption and informality – National Treatment
U.S. Department of Commerce International Trade Administration
Market Trends: U.S.-Colombia FTA • 90% of Colombian products entered the U.S. market duty-free, while U.S. merchandise entering Colombia face tariffs averaging nearly 9%. (APTDEA) • FTA will eliminate tariffs for over 80% of U.S. exports of consumer and industrial products (excluding petroleum) immediately upon implementation and 87% within 5 yrs. • The impact of eliminating tariffs and related barriers in Colombia is estimated to increase U.S. GDP by nearly $2.5 billion. U.S. Department of Commerce International Trade Administration
Market Trends: U.S.-Colombia FTA • 76% of sales from US to Colombia consists of: – Machines and mechanical equipment – Organic Chemicals – Transport Equipment – Minerals & Fuels – Plastics and machinery – Electrical machinery – Agro industrial
U.S. Department of Commerce International Trade Administration
Market Trends: Colombia’s FTA Negotiations
Agreements implemented: • Andean Community (CAN) (Ecuador, Peru, Bolivia) • Mercosur (Argentina, Brazil, Paraguay, Uruguay) • Mexico, Chile, Cost Rica (2013) • Canada (Oct 2011) • USA (2012) • European Union (July 2013) • Israel and Panama (Sept 2013) • Negotiations: Japan (started Dec. 2012) • Alliance of the Pacific: The final agreement establishes that 92% of goods will be tariff free immediately, and the remaining 8% of products will be duty free in the short and medium terms. U.S. Department of Commerce International Trade Administration
Market Practices: Tips for Success • Be informed – Read Country Commercial Guidewww.buyusa.gov/colombia/en • Use situational awareness for security • Colombia: Check the “Clinton List”/OFAC website • Identify partners/background check • Include arbitration clause in contracts • Be familiar with the laws and regulations • Always get legal advice U.S. Department of Commerce International Trade Administration
Market Practices: Tips for Success • Language & translate materials • Don’t push for big orders … ease into it • Stay well informed – things change very quickly in Colombia – Info is critical • Be aware that Colombia has its own cultural nuances
U.S. Department of Commerce International Trade Administration
Market Practices: Tips for Success • Colombian government procurement website https://www.contratos.gov.co/puc/ • US Embassy Business Opportunities http://usbusiness-opportunitiesembassybogota.com/public-procurementopportunities • USDOC FTA tool: An easy to use tool to find out what tariffs are: http://export.gov/fta/ftatarifftool/ U.S. Department of Commerce International Trade Administration
ttp://export.gov/fta/ftatarifftool/
Cameron Werker Commercial Counselor
[email protected]
Nicole DeSilvis Commercial Attaché
[email protected]
Jeff Hamilton Commercial Attaché
[email protected] US Commercial Service Unit 3030 Box 5120 DPO, AA 34004 Tel: (571) 383-2519 Fax: (571) 315-2171 U.S. Department of Commerce International Trade Administration www.buyusa.gov/colombia
