colombia presentation june 2016
TRANSCRIPT
Presentación Colombia – Inglés Investment environment and business opportunities in Colombia
June 2016
A dynamic and stable
economy
Multiple development
centers and regions coupled
with a growing middle class
securing greater product
and services demand.
A growing pool of qualified Colombian companies able to partner with international
investors to reach out to regional markets.
Diverse Opportunities
for investment in a
wide variety of sectors
A trade platform with over
10 Trade Agreements
enabling investors to reach
third markets with
preferential access
A growing market
located strategically
to facilitate business
transactions with the
region.
Colombia Offers:
24
30
35
57
102
134
180
193
204
215
237
240
263
312
579
11,385
1.187
1.673
Estonia
Paraguay
Bolivia
Uruguay
Ecuador
Venezuela
Peru
Greece
Portugal
Vietnam
Finland
Chile
Colombia
Israel
Argentina
Turkey
Mexico
Brazil
*Estimated.Source: IMF, 2015
GDP current prices 2016* (US$ billion) Latin American Economies
Colombia is the 38th largest economy in the world and the 4th in Latin America
Dynamic growth driven by its manufacturing industry
Source: DANE – Ministry of Finance 2016: Forecasted
1,2%
4,3%3,9%
4,1%
1,4%
2,9%3,3%
0,6%
3,1%
8,0%
4,0%3,8%
2,6% 2,6% 2,6%
1,1%
-5,6%
3,0%
Manufacturing
industries
Financial services Construction Commerce,
restaurants and hotels
Transport, warehousing
and
telecommunications
Social services Agriculture Mining and Quarrying Total GDP
2015 2016
Gross Domestic Product, average growth2010 – 2015*
4.5%
Co
lom
bia
5.2%
Peru
3.2%
Mex
ico
4.3%
Ch
ile
3.7%LA
TAM
2.2%
Bra
zil
3.7%
Arg
enti
na -0.7%
Ven
ezu
ela
Source: IMF, 2016* Biggest economies in the region .
Number of years of recession 1966– 2015
1
7
7
7
15
6
Colombia’s economy stands out due to its dynamic growth and stable long
term performance
Source: 1966 – 2014: World Bank - 2015: IMF
19,7%
21,8%
23,3%
24,7%
24,0%
24,2%
27,0%27,2%
27,7%
29,1% 29,0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
With a constant gross fixed capital formation, where the
companies are the most willing to invest in fixed capital
Gross fixed capital formation(Investment as GDP %)
60,1%
25,0%
14,2%
0,6%0,1%
Companies
Households
Government
Banks
Non-profit
organizations
Investment sources 2015 (%)*
Source: DANE * Procolombia´s estimates
Gross fixed capital formation 2015
US$ 78 billion
Gross Domestic Product
Estimated growth 2016
Image taken from: http://www.agenciadenoticias.unal.edu.co/typo3temp/pics/e16bc4deb4.jpg
Colombia, one of the top
growing economies in 2016 among the
largest Latin American
countries
2.5%C
olo
mb
ia
3.7%
Per
u
2.4%
Mex
ico
LATA
M
Bra
zil
1.5%
Ch
ile
Ven
ezu
ela
Source: IMF, 2016.
-1%A
rgen
tin
a
-3.7%
-8%
-0.3%
206,1
122,5
64,5 61,250,8 48,8 46,3 43,6
32,4 31,6 31,4 24,4 18,2 16,5 11,7 11,4 10,9 10,4 10,0 9,9 8,6 8,5 5,6 5,3 3,4
Population 2016* (million)
* Estimated.Source: IMF, 2016
Latin American Economies
Colombia is the 27th most populated in the world and the 3rd in Latin America
49.7%
30.6%
27,8%
16.3%
29.9%
30,5%
2002 2003 2004 2005 2008 2009 2010 2011 2012 2013 2014 2015
A growing middle class
Colombia has
continuouslydecreased its
poverty levels
Source: Poverty: National Administrative Department of Statistics – DANEMiddle class: The gained decade: the evolution of the middle class in Colombia between 2002 and 2011. Document CEDE # 50. Universidad de los Andes. And RADDAR for 2013 data.Middle class 2015: DNP
Percentage of people in poverty 2002 – 2015
PovertyMiddle Class
Source: S&P Ratings; Dinero magazine, Colombian Treasury.
Ra
tin
gTe
rm
Long Term –Foreign
currency
BBB BBB Baa2
Long Term –Foreign
currency
Long Term –Foreign
currency
COLOMBIA,an investment grade countryIn July 2014, Moody´s was the last rating agency in improving Colombia´s rating due to two key drivers:
1. Positive growth forecast thanks to 4G infrastructure.
2. A sound fiscal management that will continue in the future.
0,00
0,05
0,10
0,15
0,20
0,25
0,30 FDI Regulatory Restrictiveness Index 2014
Closed = 1 - Open = 0
COLOMBIA Low barriers to FDI
Source: OECD
Latin America economies
Average
OECD Average
Colombia was officially
invited on may 2013 to
initiate the process to become full member of the
OECD
“The OCDE investment policy
review examines Colombia's
achievements in developing
an open and transparent
investment regime and its
efforts to reduce restrictions
on international investment”
OECD
Colombia is implementing
the roadmap to become
full member of the OECD
OECD already approved 16 out of 23
Colombian committees
• Agriculture• Competition• Statistics• Health• Consumer policy• Financial markets• Scientific and
TechnologicalPolicy
• Regulatory Policy• Fiscal Affairs• Fishing
• Education• Territorial Development
Policy• Information, Computer
and CommunicationsPolicy
• Working Group onBribery in InternationalBusiness Transactions
• Investment CorporateGovernance
Source: World Bank. Doing Business 2016.
*Positive numbers indicate an improvement in the business environment
In 2016, the World Bank changed its methodology including new variables for 5 topics: Dealing with construction permits, getting electricity,
enforcing contracts and labor market regulation.
Photo taken from: http://orig12.deviantart.net/1026/f/2008/176/b/4/brick_road_2_texture_by_jay_b_rich.jpg
ColombiaHAS THE MOST REFORMS IN
LATIN AMERICA TO IMPROVE BUSINESS
ENVIRONMENT
Country Ranking 2016# de reforms2006 - 2016
Colombia 54 30Mexico 38 23Ecuador 117 23
Peru 50 21Chile 48 13
Panama 58 13Brazil 116 11
Argentina 121 5
Ranking Doing Business*
2007-2016
Change in positions
25
23
12
6
5
5
3
-20
Colombia
Panama
Chile
Ecuador
Mexico
Brazil
Peru
Argentina
Colombia remains as one of the top 20 destinations for FDI
Source: UNCTAD – World Investment Report 2013 and 2014
Top 20 host economies in 2014 (USD billion)
Developed economies 2014
Developing and transition economies 2014 129
103
92
7268
62
54 52
3430
23 23 23 23 22 21 19 16 15 14
Rank
18
Non-mining sectors accounts 70% of FDI inflows in 2015
Source: Balance of Payments - Banco de la Republica.
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. Last values available by country at 2014
Top Investing countries in Colombia 2000 – 2015
FDI Inflows. 2008 to 2015US$ million
4,197
7,095 8,12010,011
8,511
5,722
7,9458,089
6,313
3,596
Average 2008-
2011
2012 2013 2014 2015
16.20915.039
9,919
16.325
12.108
Oil and mining
Other sectors 22%
SPAIN
8.6%
UK
13%
SPAIN
8.4%
SWITZERLAND
6.2%
TOTAL 2000-2015
US$ 137,179 M
70%
No import duties. VAT exemption for goods sold from
Colombia to FTZ.
Benefit from international trade agreements.
Allows sales to the local market.
Free trade zones for different investor styles.
Reduced Income tax and VAT Exemptions allowing access to local market
Total number Free Trade
Zones:102
Number of Special
Standing Single
enterprise: (62)
Number of
permanent Free
Trade Zones(40)
3.652
47,779
1994 - 2002 1994 - 2015
The stock of investment flows from Colombia to the world has grown
12-fold since 2002
Source: Banrep, 2015.
Source Top Latin American investors: EIU, 2015.
Stock of outward FDI
1994 – 2015 US$ million
Top Latin American
investors to the world (2015) US Billion
MEXICO
US$8COLOMBIA
US$4.2
US$12.5CHILE
US$13.5BRAZIL
Colombia has access to 47 countries and more than 1.5 billion
consumers through its network of trade agreements
Source: Colombian Ministry of Commerce, Industry and Tourism. 2015.
*These are Partial Scope Agreements (PSA)
*The red line refers to member countries of The Pacific Alliance other than Colombia. – Chile, Peru and Mexico.
Canada
United States
Mexico
GuatemalaHonduras
El Salvador
Ecuador
Brazil*Peru
Argentina*
Paraguay*
Uruguay*
EFTA
European Union
Turkey
Israel Japan
Panama
Chile
Bolivia
Costa Rica
Venezuela*
South Korea
Cuba*
Nicaragua*
Caricom*
Colombia, less than 6 hours away by
airplane from the main cities in the
americas
* This information takes into account the
routes departing from international airports
in Barranquilla, Bogotá, Cali, and Medellín.
Source: Routes and Tariffs - Tools for the
Colombian Exporter, processed by
ProColombia.
New York
(5hr 35min)Los Angeles
(9hr 25min)
Mexico City
(4hr 20min)
Paris
(13hr 20min)Madrid
(9hr 40min)
London
(14hr 05min)
Tokyo
(25hr 05min)
Beijing
(24hr 40min)
Dubai
(19hr 40min)
Moscow
(17hr)
Miami
(4hr 30 min)
Lima
(3hr 10 min)
Santiago de Chile
(6hr 55 min)
Berlin
(14hr 10 min) Hong Kong
(24hr 15min)
Toronto
(8hr 54 min)
Mumbai
(24hr 30min)
Seoul
(23hr 35min)
Sao Paulo
(5hr 50min)
1,017 international direct frequencies per week.
Istanbul
(15hr 25 min)
More than 6,052 domestic frequencies per week
Colombia:
A gateway to the Pacific Alliance
Source: IMF – UNCTAD, 2015.
Mexico
Colombia
Peru
Chile GDP of US$2,129 billion
The members generate 37%
of the region´s GDP
Population of 219 million
More than Brazil´s
population
FTAs with 60 countries
Access to
86% of the World GDP
MILA is the first cross border initiative to
integrate equities markets, without any
sort of merger or global corporate
integration, using only technological tools
Listed companies:
59044% of the regional FDI
Total FDI of US$69,608 million
(2014)
Major multinational corporations have chosen
Colombia as an investment project destination
Sectors of opportunity – Infrastructure:
A major driver for growth
Airports Ports
Roads Fluvial National
plan
Step railways
US$ 900 million in improvements for 47 airports (2015 – 2018)
US$1.4 billion between 2015 and 2018 to improve ports infrastructure
US$ 17 billion to increase road infrastructure: 7.000 Km of Highways1.400 Km of Double Lane Highways141 tunnels1.300 Viaducts
US$ 1.8 billion to improve the navigability of Magdalena riverUS$ 53 million: More than 900 km railways under adjustments
Projects focus on renewable energy will have special VAT exemptions, deduction from taxable income and customs exemptions
Source: Ministry of Transport - Exchange rate US$=COP$3.000
Some niche opportunities:
Sectors of opportunity - Infrastructure:
A major drive for growth
In 2014, Iridium awarded
two road concession
projects in the
government’s “highway
concession program
(4G)”.
Those projects total 78Km.
Strabag will be in
charge of 75 Km of new
highways, the
modernization of a 65
km section
Shikun & Binui awarded the
project “Corredor
Perimetral de Oriente de
Cundinamarca = 153 km
length ”
Spain Austria Israel China
Source: Procolombia based on national press
HEC will build “The mar 2
highway” that will improve
the logistic development at
the northeast region of the
country. Total project length
246 km.
Source: World Economic Forum 2014 and UPME / * UPME (Colombian Planning Unit of Mines and Energy). MW approx.
0,66
0,67
0,67
0,7
0,71
0,72
0,72
0,72
0,73
0,75
Latvia
Costa Rica
Spain
Colombia
Denmark
Switzerland
Sweden
France
New Zealand
Norway
The Global Energy Architecture Performance
Index 2014
Colombia was ranked first in Latin America and seventh in the world according to the “Energy Architecture Performance Index 2014”. WEF, 2014.
103 Power Generation projects in different
stages: Installed capacity of 4,974 MW*
13 power transmission projects in different
stages*
High potential in Biofuels and alternative energies
Wind GeothermalSolar
Some niche opportunities
Sectors of opportunity – Energy: a diversified source base and
a pivotal location in the Americas
Sectors of opportunity - Energy:
A diversified source base and a pivotal location in the Americas
Endesa, the subsidiary of
the Italian group Enel,
acquired participation in
Emgesa and Betania
power generation
companies with 2,895 MW
of installed capacity.
Union Fenosa bought
" Electricaribe and
Electrocosta “ and
became the main power
distribution and trading
company in the North
coast of Colombia.
Colombia subsidiary of
AES Corporation
(Applied Energy
Services). Chivor is one
of the country's largest
generator with a total
effective installed
capacity of 1,000 MW.
The low-grade coal-red
power plant
Termopaipa in Paipa
(Colombia) was the rst
power plant abroad
which was planned,
financed and built by
Steag.
Spain Spain United States Germany
Source: Procolombia based on national press
Some key facts about Manufacturing in Colombia manufacturing for the local and foreign markets
Some niche opportunities:
Automotive Ceramics
Metalworking Architectural glass
Fertilizers Plastic Packaging
Natural ingredients for
cosmeticsPesticides
3rd largest labor force in Latin America.
2nd in the region for competitive industrial labor
(US$1.6/hour)
0% import tariff relief for key industrial inputs
75% indirect financial support for Innovation and
R+D+i projects
102 Free Trade Zones with 15% corporate tax
Colombia is 40% more competitive and 60% faster
than many ports in the Americas
Mexico
The new factory is one of its three most modern factories inthe world, due to its modern approach
and care for theenvironment.
Foton invested more than US$12 million in
its new assembly plant for its SUV and
4x4 models
Whirlpool had a joint venture with Hacebto produce washing
machines.
Manufacturing plant: US$ 70 million
Netherlands &
United KingdomChina
A regional platform for manufacturingactivities with high standards of productivity
Source: Procolombia based on national press
United States
Its factory in Colombia is listed as one of the 'flagship
factories'in the group, which
hasoperations in more than 130 countries.
Switzerland
Sectors of opportunity - Services
IT, BPO, ITO, Shared Services, Apps
Source: MinTic and IDC
Some niche opportunities
Cloud computing
Big data
Software development
Innovation and
development centers
Aggregated shared services centers for diverse industries
Colombia is one the three major
providers of IT services in the region.
The broadband connections increased from 2.2 to10.1 million between 2010 and 2015.
In the next 4 years, broadband connections will be triplereaching 27 million connections.
Available labor force of more than 1,200,000 professionalsgraduated in fields related to financial and value addedshared service operations.
VAT exemption for service exports.
IBM opened its third Data
Center in Colombia
offering a processing
power of 5 petabytes.
It´s one of the most
advanced centers for
Cloud Computing and Big
Data Analytics companies
in the country.
AT&T acquired DirecTV Colombia
and it´ll increase the telecoms offer
Colombia through new services and
packages.
It has two operations centers in Bogota where it
manages a diversified portfolio
of blue ribbon clients, with the
capacity for up to a thousand positions.
United States United States Spain
Sectors of opportunity - Services
IT, BPO, ITO, Shared Services, Apps
Source: Procolombia based on national press
Its BPO operation
currently has more than
1,400 credit processes,
customer service, and
document
management active
positions.
Japan
Sectors of opportunity
Agribusiness
Rubber Biofuels Forestry
Some niche opportunities
Aquaculture Cocoa Cereals
Fruits and vegetables
Meat Processed food
Source: FAO, Ministry of Agriculture.
Colombia is the 2nd largest flowers exporterworldwide, with around U$1.285 million
Colombia is the 3th largest coffee producerworldwide and the 2nd of Latin America.
Colombia is the 4th largest producer of oilpalm over the world, with around 1 milliontonnes.
Colombia has one of the largest biodiversityby km2 in the world.
In 2018, there will be one million morehectares due to “Colombia Siembra Plan”
Investment Opportunities
Dole invested US$ 15
million in a salad plant
and a distribution
center
Smurfit Kappa is the larger provider of corrugated paper in
Colombia.
They will invest US$ 60 million in a new plant in Tocancipa
Established in 2007 as a resultof a joint venture with the
Colombian company Alquería.
United States Ireland France
Sectors of opportunity
Agribusiness
Source: Procolombia based on national press
Sectors of opportunity - Tourism Infrastructure, real estate and retail
Nature &
Adventure Wellness
City
HotelsEntertainment
Some niche opportunities
*Inbound tourist includes: resident Colombians abroad, foreign non resident in Colombia,
special cross borders, and cruise visitors.
Source: Migration Colombia and MinCIT. ProColombia calculations.
2012 2013 2014 2015
3.5 3.7
4.2 4.4
Inbound tourists* 2012 – 2015
(million of people)
Investment Opportunities in:
Colombia ranks 25th in the ICCAranking (International Congress andConvention Association)
Luxury and wellness hotels can takeadvantage of the Colombian biodiversityto offer high quality services.
Corporate Tax Exemption for hotels withmore than 65% of their building byDecember 2017
VAT exemption for health tourismservices
This American
chain has 15 hotels
in Colombia with
more than 1,850
rooms
Holiday Inn hotels
opened in Bogota
and Cartagena,
totaling 331 rooms.
NH Hotels has 15 hotels in Colombia, with more
than 1,600 rooms
This luxury chain has 2 hotels in Bogota
with 126 rooms in the more exclusive
locations in the city
United States United Kingdom Spain Canada
Sectors of opportunity
Tourism infrastructure, real estate and retail
Source: Procolombia based on national press
Source: MinTic and IDC
Sectors of opportunity – Services
Capital FundsColombia offers several benefits
to invest in capital funds.
Colombia was ranked fourth inLatin American and theCaribbean due to its favorable
conditions for development of the PEFindustry.
19 International GeneralPartners in Colombia.
Capital funds such as Advent International
and Victoria Capital have chosen thecountry as a hub to serviceother countries in the region
Some niche opportunities
Health
TIC Biotechnology
Agribusiness
Real Estate
Infrastructure
Banking
Energy
Canada
Mainly infrastructure
investments.
In Colombia its
investments have been
focused in companies such
as Intertug and Ocensa.
United States
Firm focused on investing in
the category of hotel assets
in Colombia.
Its largest investment in
Colombia has been the
Hyatt Regency Hotel in
Cartagena.
Investments mainly in the
sectors of infrastructure,
energy and real estate.
Investments in the
Colombian power
company SA as part of its
expansion plan in the
region.
United States
Sectors of opportunity
Services Capital Funds
Source: Procolombia based on national press
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