Ministerio de Comercio,

Industria y Turismo
República de Colombia

Colombia:
The transformation of
a country

Ministerio de Comercio, May 2009

Industria y Turismo

República de Colombia
 Ministerio de Comercio,
Industria y Turismo
República de Colombia

1) Where are we coming from?

2) What are we doing?

3) Where are we going next?

2
 Ministerio de Comercio,
The country has been growing steadier and faster Industria y Turismo
República de Colombia
than the Latin American average 2009 2010
Forecasts
Col L.A. Col L.A.
Latin Focus 0.6 -0.8 2.4 2.3
EIU -3.0 -2.9 1.5 1.4
GDP Growth: Colombia (2000 – 2008) % IMF 0.0 -1.5 1.3 1.6
JPMorgan 0.5 - 3.0 -

President Morgan Stanley -1.6 - 0.2 -

Uribe Goldman Sachs -0.3 - 2.5 -
RBC Capital
Markets
0.4 - 2.2 -
10%

8% 7.5%
6.8%
6% 5.7%
4.6% 4.7%
4% 2.9%
2.2% 2.5% 2.5%
2%

0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-2%

-4%
-4.2%
-6%

Colombia Latin America

Source: DANE (National Accounts), DNP, EIU (Market Indicators & Forecasts)
Note: Last update April 22 th, 2009
3
 Ministerio de Comercio,
Striking performance in FDI, Exports and Industria y Turismo
República de Colombia
foreign visitors
US Million President Exports 2002/2008 Increases
40,000 Uribe
37,626
30,000
20,000 11,975
21,190 214%
10,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
US Million
12,000 FDI 10,252 10,564

8,000 395%
4,000 2,134
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Million of visitors
2.0 Tourism
1.5
1.0
1.5
120%
1.0 0.7
0.5 Source: DANE, Central Bank (Banco de la
República), DAS
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008(pr)
Note: * Forecast
(pr) Preliminary

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 Ministerio de Comercio,
Industria y Turismo
Important results in social indicators República de Colombia

President
2019.4 Uribe
Unemployment Rate
16 15.5
13.6 fell by 4.2 points. 02/08
12 11.3 11.5
12

8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
57.4
58 55
54 52.7
Poverty fell by 13 points
50
46 44
42
2000 2001 2002 2003 2004 2005 2006 2007

0.58 0.57
0.56 0.56
Income Distribution
0.56 GINI (0= equitable distribution;
0.54 1=high concentration of income)
0.54
0.52 Source: DNP, Estimates MERPD- ENH and ECH
2000 2001 2002 2003 2004 2005 2006 2007 Note: * Average January-March

5
 Ministerio de Comercio,
Market Confidence: recovering our Industria y Turismo
República de Colombia
investment grade (soon)

Debt in Foreign Currency

Risk Analysis
Agency
2003 2008 Outlook

STANDARD
BB BB+
& POOR’S

Moody’s Ba2 Ba1

Fitch BB BB+

Source: Standard & Poor’s, Moody’s, Fitch

6
 Ministerio de Comercio,
Security has improved along with sustained Industria y Turismo
República de Colombia
economic growth

The recipe is simple: Democratic Security = Confidence = Investment = Growth

March 22th,2007 In 2008:

- Investment as
proportion of GDP
went to 30%
- GDP grew 2.5%
- Murders continue
to go down

7
 Ministerio de Comercio,
Market Confidence Industria y Turismo
República de Colombia

10
 Ministerio de Comercio,
Industria y Turismo
República de Colombia

1) Where are we coming from?

2) What are we doing?

3) Where are we going next?

11
 Ministerio de Comercio,
Trade agenda: Preferential access to 1.2 billion Industria y Turismo
República de Colombia

consumers
From preferential access to 233 million consumers in 2002 to
access to 1.2 billion consumers in 2010
2002

2010

12
 Ministerio de Comercio,
In 2010, Colombia will be negotiating 19 International Industria y Turismo
Investment Agreements (IIA) with 39 countries and 21 República de Colombia

Double Taxation Agreements (DTA) with 22 countries

International Investment Agreements (IIA) protect investors of each State from expropiation and
discrimination before other national or foreign investors. Additionally, these treaties establish efficient
proceduresfor dispute settlement between investors and the host country.

Double Taxation Agreements (DTA) are designed to protect investors from being taxed twice when the
same income is taxable in two States.
2002
2010

13
 Ministerio de Comercio,
Second most “business friendly” country in Latin Industria y Turismo
República de Colombia
America Doing Business 2007-2009
Two years in a row as the first
reformer in Latin America (2009)
Country Ranking Ranking
2007 2009
Chile 28 40
Colombia 79 53
Mexico 43 56
Colombia Peru 65 62
improved
26 positions El Salvador 71 72
in two Panama 81 81
years! Dominican Republic 117 97
Argentina 101 113
Costa Rica 105 117
Brazil 121 125
Ecuador 123 136
Venezuela 164 174

Source: Top reformers report. World Bank

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The most competitive FTZ’s in Latin America: Ministerio de Comercio,
Industria y Turismo
15% income tax and allows sales to the local República de Colombia

market

Goods
Investment in million And Direct Jobs
15% income tax
US$ 29.81 150
No import duties
Services
No VAT tax Investment in million And Direct Jobs
US$ 1.99 – 9.14 500
Benefit from international agreements
Can also sell in domestic market Agrobusiness Biofuels investment or
employment
Investment in million Or Direct Jobs
US$ 14.91 500

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 Ministerio de Comercio,
58 Free Trade Zones Industria y Turismo
República de Colombia

Number of Approved Free Trade Zones

50
40 Under
Construction
30
47
20
10 24
11
0
1958 - 2007 2007 - 2009 2009 …

New FTZs in Figures

Total new Investment (USD
5,573
Million)
Total new Direct Jobs 42,145

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 Ministerio de Comercio,
Colombia offers legal stability contracts to Industria y Turismo
República de Colombia
guarantee investment projects.

Investments over US$1,500,000

Conditions Investor pays 1% premium based on the amount of the investment.

Period Up to 20 years maximum.

Contracts
38 legal stability contracts, March 31st 2009
approved

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 Ministerio de Comercio,
Industria y Turismo
República de Colombia

1) Where are we coming from?

2) What are we doing?

3) Where are we going next?

18
 Ministerio de Comercio,
Country strategy for competitiveness: Industria y Turismo
República de Colombia
Focus on global opportunities and local
strengths
This process was
implemented in China,
South Korea, Dubai,
Kuwait, Spain and Ireland
World market Strength Analysis
opportunities for Colombia
identification Sectors Selection.
Filters
Source: McKinsey
Potential World Class Sectors
1. BPO&O
2. IT Services and Software 7. Automotive industry
3. Health tourism 8. Electric power
4. Cosmetics and personal care products 9. Textile, fashion & design
5. Biofuels 10. Infrastructure
6. Forestry

Crisis Conclusions

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 Ministerio de Comercio,
Industria y Turismo
Conclusions República de Colombia

• In the last few years, Colombia has experienced a marked

improvement in its macroeconomic performance, internal
security and stability for businesses. As a result social
indicators have improved dramatically.

• Colombia has achieved a solid structural growth, based on an

increase in the investment rate and higher productivity levels.

• The country has guaranteed its external funding for 2009

trough multilateral institutions such as IADB, WB and CAF.

152
 Ministerio de Comercio,
Conclusions Industria y Turismo
República de Colombia

Colombia is aggressively negotiating trade and investment agreements

expanding its markets and becoming more attractive to investors.
The Colombian Government is committed to generating the most
favorable conditions for domestic and foreign investment instruments
such as the free-trade zones regime and legal stability contracts.

153
 Ministerio de Comercio,
Industria y Turismo
República de Colombia

Ministry of Commerce: www.mincomercio.gov.co

Investment Promotion Agency: www.investincolombia.com.co
154