Colombia

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 – CÁ MARA DE COMERCIO. VILLAVICENCIO. BOYACÁ =
TUNJA - DUITAMA - SOGAMOSO. IBAGUÉ. SANTA MARTA. SAN
ANDRÉS. ABURRÁ
SUR. NEIVA. BARRANQUILLA = CÁ MARA
COMERCIO – UNIVERSIDAD NORTE. CARTAGENA. MEDELLÍN.
BUCARAMANGA. CALI = CÁ MARA COMERCIO. PEREIRA. BOGOTÁ .
MANIZALES. CÚ CUTA. POPAYÁN. BOYACÁ .
8
Regional Ofices
BARRANQUILLA. BOGOTÁ. BUCARAMANGA.
CALI. CARTAGENA. CÚ CUTA. MEDELLÍN.
PEREIRA
www.proexport.com.co
Proexport en in the world
26 commercial offices
prescence in 30 countries
UNITED STATES. CANADA. MEXICO. GUATEMALA. COSTA RICA.
CARIBBEN. VENEZUELA. BRAZIL. ECUADOR. CHILE. PERU. ARGENTINA.
SPAIN. GERMANY. PORTUGAL. UK. FRANCE. TURKEY. UNITED ARAB
EMIRATES. INDIA. CHINA. SOUTH KOREA. RUSSIA. JAPAN. SINGAPORE.
INDONESIA.
Colombia: A gateway to the Pacific Alliance
Mexico
Population of 209 million
Almost Brazil´s Population
Colombia
Peru
50% of Latin American
commerce
FTAs with 60
countries
Total trade of US$ 1,116
billion (2012)
Access to benefits of
markets that represent
85.7% of the World GDP
GDP of USD 2,010.3
billion
Chile
Source: MCIT, 2013
The members generate 35% of
the region´s GDP
Colombia is an ideal export platform towards the
Americas
Air Conectivity from Colombia
and S. Korea to Latin America
Maritime Conectivity from Colombia
and S. Korea to Latin America
Origin
Country
S. Korea
Colombia
S. Korea
Port
Destination
Country
Kwangyang
Brazil
Santos
Atlantic Coast
Brazil
Santos
Kwangyang
Argentina
Colombia Atlantic Coast Argentina
S. Korea
Colombia
Kwangyang
Atlantic Coast
Colombia Pacífic Coast
S. Korea
Port
Kwangyang
Colombia Atlantic Coast
Colombia Pacífic Coast
Chile
Chile
Chile
Buenos
Aires
Buenos
Aires
San
Vicente
San
Antonio
San
Vicente
Mexico Manzanillo
Mexico
Veracruz
Mexico Manzanillo
Transit
Freigh US$
time
20 STD
(days) Container Tones
37
2.659
Origin
Country
City
Destination
Country
City
S. Korea
Canada
Seul
14
1.400
2.504
Seul
1.300
4.803
Toronto
6 Hours 05
min
4,35
1,52
Brazil
Brazil
23 Hours 55
min
Sao Paulo
5 Hours 55
Sao Paulo
min
8,85
1,30
46
S. Korea
36
Canada
89
Colombia Bogotá
19
13 Hours
50
S. Korea
42
Toronto
95
Colombia Bogotá
Flight Time* US$/KG
Seul
172
12
775
28
11
456
16
Colombia Bogotá
S. Korea
Seul
Colombia Bogotá
18
4.781
171
7
1.094
39
10
859
31
S.Korea
Seul
Colombia Bogotá
Argentina
Argentina
Buenos
Aires
Buenos
Aires
Chile
Santiago
Chile
Santiago
Mexico
Mexico
Mexico
Mexico
24 Hours 20
min
7 Hours 25
min
25 Hours 33
min
5 Hours 50
min
19 Hours 34
min
4 Hours 40
min
9,10
2,25
9,10
2,28
5,56
0,75
Colombia is the sixth destination of South Koreas exports
in Latin America
Exports from Corea towards Latin
America
2003 – 2013
Mexico
28,2%
Exports from Korea to Colombia by
sectors
2013
Organic chemicals
Optical, photo, technical,
medical, apparatus
Venezuela
1,3%
Colombia
3,9%
Perú
4,2%
Chemical products
Iron and steel
Brasil
28,1%
Rubber products
Electronic equipment
Plastics
Chile
7,1%
Total Exports towards Latam:
US$ 34,4 millions
Machinery, nuclear reactors,
boilers, etc
Argentina
3,1%
1.57%
1.77%
2.87%
5.21%
6.02%
6.59%
11.81%
14.25%
41.49%
Vehicles
Resto
8.44%
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
Colombia
2,0%
Perú
0,6%
Brasil
55,6%
Chile
0,16%
Extracción de Petróleo
1.40%
Retail
1.43%
Telecomunicaciones
1.53%
Químicos
2.29%
Energía eléctrica
3.29%
Ensamble
3.51%
Sistema Moda
4.34%
Autopartes
Total proyectos: 197
Proyectos en Colombia : 30
Source: fDi Markets, 2014.
Argentina
0,17%
6.63%
11.75%
Metalmecánico
63.84%
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
43.3
37.9
27.4
16.3
11.8
1.2
2000
2001
2002
0.2
0.8
2.7
2003
2004
2005
4.3
2006
-0.2
-3.6
15.9
2007
2008
2009
2010
2011
2012
2013
-2.7
Source: Banco de la República, 2014.
FDI Proyects by sector from S.Korea towards
Colombia 2000-2013
Automotive
OEM
BPO y/o KPO 10%
10%
Autoparts
40%
Comunications
10%
Source: fDi Markets, 2014.
Audio and
House hold
appliances
30%
Some investment cases
2003-2013
There are investment opportunities for S. Korean
projects in 16 different regions in Colombia
Processed
Foods
•
•
•
•
•
•
Antioquia
Atlántico
Cundinamarca
Risaralda
Santander
Valle del
Cauca
Oil & gas
goods and
services
Auto-parts
•
•
•
•
•
Antioquia
Atlántico
Cundinamarca
Risaralda
Valle del
Cauca
Source: fDi Markets, 2014. Proexport sector and
•
•
•
•
•
•
•
•
Arauca
Bolívar
Casanare
Cundinamarca
Huila
Meta
Putumayo
Santander
Automotive
OEM
• Atlántico
• Cundinamarca
• Valle del
Cauca
Metal Products
•
•
•
•
•
•
•
Atlántico
Bolívar
Boyacá
Caldas
Magdalena
Risaralda
Tolima
The second largest spanish speaking country in the
world and the 23rd most populated
Population 2014*
Millions
202.80
116.20
81.67 78.09 83.70
64.60
47.40 50.50
Source: DANE. EIU - Economist Intelligence Unit. 2014.
* Forecast.
35.60 31.60 30.20
23.51 17.70
10.50 9.70
8.50
8.10
7.20
8.20
5.10
5.50
4.60
Colombia is the 28th largest economy in the world
and one of the largest non-OECD economies
GDP at PPP – 2015
US$ billion
3,688
Germany
2,644
Brazil
2,560
France
2,324
Mexico
1,790
South Korea
1,176
Australia
Malaysia
606
Colombia
599
535
Philippines
Switzerland
481
Belgium
481
455
Sweden
Hong Kong
422
Vietnam
420
Peru
400
Chile
380
Norway
373
Israel
301
Singapur
299
Denmark
New Zeland
257
167
PPP - Purchasing Power Parity. e: estimated.
Source: EIU - Economist Intelligence Unit. 2014
Colombia's per capita income has doubled since 2000
Per capita National Income (PPP)
2000 – 2018p, US$
Income
16,000
14,400
14,000
12,000
10,910
10,000
8,940
Middle High
Income
8,000
6,000
High Income
5,826
4,000
Middle Low
Income
2,000
Low Income
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p 2015p 2018p
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%
2020
2012
37.3%
59.9%
43.8%
24.7
32.1
19.0
22.3
11.6
25.3%
11.6
2002
16.2%
6.7
6.7
Below Baseline Scenario
Above Baseline Scenario
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
Gross Capital Formation (% of GDP)
2000 – 2018f
30% 31%
27%
25%
28%
24%
22%
18%
16%
14%
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
Source: EIU – Economist Intelligence Unit
Figures at constant prices of 2005.
e- Estimates
Macroeconomic stability and strong economic
performance in the long run
GDP Growth, Inflation and unemployment Rate
2002 – 2018p (%)
Unemployment rate
GDP
Inflation
15.6
14.1
13.7
11.8
12.0
11.2
11.3
12.0
11.8
10.8
10.4
8.5
6.7
7.0
6.5
5.3
5.5
2.5
4.7
4.9
3.9
6.9
5.7
4.5
7.7
3.5
4.0
2.0
4.0
2004
2005
2006
2007
2008
2009
4.3
3.7
1.7
2003
8.1
7.4
7.1
6.8
4.6
4.5
4.3
4.5
3.4
3.6
3.5
3.3
2015f
2016f
2017f
2018f
6.6
2.4
2002
8.8
2010
f: Preyected e: Estimates
Source:: DANE; Banco de la República; Grupo Bancolombia 2014; EIU - Economist
2011
2012
4.4
3.0
1.9
2013
2014f
Some Key figures
GDP2013: +4.3%
GDP
2012
: +4.0%
Higher than the Latin American
average growth (3.2%).
Controlled
Inflation: 1.94%
FDI2013: US$16,772
FDI
2012
: US$ 15,529
Record figure in Colombian history
Below target inflation
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
S&P (April 2013) and Fitch
(december 2013) improved
Colombia´s sovereign debt
outlook.
“Effective implementation of
recent fiscal reforms could
improve its debt and interest
burdens”– S&P
Term
Rating
Date
Long Term– Foreign
Currency
BBB
24– Apr- 2013
Short Term–
Foreign Currency
A–2
24– Apr- 2013
Long Term– Local
Currency
BBB +
5 – Mar - 2007
Short Term – Local
Currency
A-2
5 – Mar - 2007
Long Term–
Foreign Currency
BBB
13 – Dic- 2013
Short Term–
Foreign Currency
F–2
22 – Jun - 2011
Long Term – Local
Currency
BBB+
22 – Jun - 2011
Long Term– Foreign
Currency
Baa3
7– Feb- 2012
Outlook
Stable
Stable
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*
Colombia
23
Panama
16
Chile
34
Peru
42
Colombia
43
Mexico
53
Panama
55
Venezuela
Costa Rica
102
Ecuador
Brazil
116
Brazil
-9
Argentina
126
Chile
-9
Ecuador
135
Venezuela
181
Source: Doing Business 2014. World Bank.
*Positive numbers indicate improvements in business environment.
Costa Rica
13
Mexico
10
Peru
Argentina -17
6
-1
-7
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.
IIIColombia’s adherence provides further international support for
the principles of sound investment policy and corporate
responsibility laid down in the Declaration.
Source: OECD, 2012.
“The review
examines
Colombia's
achievements in
developing an open
and transparent
investment regime
and its efforts to
reduce restrictions
on international
investment” OECD
118,219
Top trading partners in 2013
United States
• Exports: US$18.458 million
• Imports: US$ 15.681 million
80,502
China
65,682
• Exports: US$ 5.102 million
• Imports: $9.841 million
50,553
42,395
33,476
27,009
24,671
25,151
24,915
62,888
77,295
112,095
Exports and Imports.
2000 – 2013
US$ millions
119,299
Colombia’s overall trade increased fivefold
in the past 10 years
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
Total Comerce (X+M)
Source: DANE, 2014
2009
2010
2011
2012
2013
Colombia has increased the number of FTAs
to expand its global reach
2002
2014
In 2014, Colombia will have access
to more than 45 countries and 1,500
million potential consumers.
In 2002, only two Free Trade
Agreements were in force,
covering 5 countries.
Noruega
Islandia
Liechtenstein
Canadá
Suiza
Union
Europea
Estados Unidos
Tuquia
Corea del Sur
Japón
Israel
México
Costa Rica
México
Guatemala
Honduras
Venezuela*
Nicaragua*
Panamá
El Salvador
Ecuador
Venezuela*
Ecuador
Alianza
Pacifico
Brasil
Perú
Bolivia
Paraguay
Perú
Chile
Bolivia
Cuba*
Panamá
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
Top Investing Countries in
Colombia 2000– 2013
FDI Inflows. 1994 –2013
USD million
Var.
8%
15,529
16,770
United States
• US$ 25,980 million
• 24 %
United Kingdom
13,405
• US$ 15,672 million
• 14,5%
Spain
6,897
• US$ 7,902 million
• 7,3%
2,504
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
FDI outflows by sectors,
1994 – 2013
Stock of outward FDI. 1994 - 2013
USD million
39,482
7,652
Transport &
Commerce,
communicatio restaurants &
n, 6.0%
hotels, 4.6%
Others, 2.8%
Industry,
25.1%
Electricity, gas
& water,
12.4%
-606
3,652
Stock
1994 - 2002
Panama
Stock
1994 - 2013
USD 6,505 million
18%
2012
United States
USD 6,455 million
17%
Oil &
Mining,
21.4%
Financial
services,
27.7%
2013
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
The Bancolombia Group has subsidiaries in
El Salvador, Panama, and Puerto Rico.
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.
Colombiana SA has opened 1 branches
throughout the Americas and has a production
plant in Guatemala to supply the American
market.
In 2012, Bancolombia acquired 100% of
the ordinary shares and 90.9% of the
preferred shares of HSBC Bank in
Panama.
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.
SURA Brand has operations in Mexico, Peru,
Tecnoquímicas has direct presence in Central
America through its 3 production plants in El
Salvador.
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
1.24
0.53
2007
0.59
2008
0.67
2009
0.79
2010
0.91
0.94
2011
2012
1.00
1.03
2Q 2013
E 2013
1.10
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
Barranquilla
1.202.749
hab.
Cartagena
935.496 hab.
Cúcuta
Medellín
615.795 hab.
2.386.233 hab.
Bucaramanga
More than 400,000 graduates and
specialists in engineering studies
between 2001 and 2011.
520.229 hab.
Cali
2.283.057 hab.
Colombia has an Industrial network
of over 3,700 companies
8 metropolitan areas with over 500
thousand inhabitants.
Bogotá
7.658.081 hab.
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.
CFX
Maya - 1
Acros - 1
Panameriana
TCS - 1
6 submarine cables
Medellin
Bogotá
Cali
capable of generating
a band width of more
than 550 Gbps.
Sectors of opportunity- Tourism
Foreign visitors in Colombia
2006 – 2013, thousands
51
127
228
285
296
Main nationalities of foreign
visitors in Colombia, 2013
313
254
306
United States
• 336,454 visitors
• 18.4%
1,692 1,832
1,582
1,475
1,354
1,223
1,053 1,195
European Union
• 307,212 visitors
• 16.8%
Venezuela
2006
2007
2008
2009
2010
2011
2012
2013
• 261,343 visitors
• 14.3%
Argentina
Arrivals (Migración Colombia)
Visitors in cruises
Source: Migración Colombia, MCIT, Banco de la República. Cálculos de Proexport
• 129,069 visiors
• 6.4%