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Doing Business in Colombia

Doing Business in Colombia. Colombia at a Glance. 3 rd largest population in Latin America Location, location, location Literacy Rate: 94% #16 tourist destination in 2010 by NY Times Fastest growing market in Latin America for oil and gas production. Headlines Government.

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Doing Business in Colombia

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  1. Doing Business in Colombia U.S. Department of Commerce International Trade Administration

  2. Colombia at a Glance • 3rd largest population in Latin America • Location, location, location • Literacy Rate: 94% • #16 tourist destination in 2010 by NY Times • Fastest growing market in Latin America for oil and gas production U.S. Department of Commerce International Trade Administration

  3. Headlines Government • Democratic Republic • President approval 83% (as of Nov. 2011) • Results: Juan Manuel Santos 69% • Antanas Mockus 27.5% • Municipal Elections Held: Oct 2011 • Next Presidential Elections: May 2014 U.S. Department of Commerce International Trade Administration

  4. Why Colombia? An Economic Miracle • Next Tier Market under President Obama’s National Export Initiative • GDP growth of 5.5-6% in 2011. 7.7% in 3rd quarter of 2011.   • Emphasis on Major projects – $26B – next four years U.S. Department of Commerce International Trade Administration

  5. Why Colombia?An Economic Miracle • Logistics platform • Well managed foreign debt • Frequent travel to U.S. • U.S. products preferred • Growing population Photo: New El Dorado Airport U.S. Department of Commerce International Trade Administration

  6. Market Trends: Major Projects • TransMilenio – Bogotá • Two Refinery Modernization projects • Ports – Cartagena, Salgar, Buenaventura • Infrastructure – Roads, El Dorado Airport U.S. Department of Commerce International Trade Administration

  7. Colombian Oil & Gas Opportunities(through 2020) • Fastest growing market in Latin America – 953,000 (Barrels Per Day - BPD (goal of 1.5 million BPD by 2015) • Huge Investment program = $80 billion through Ecopetrol Procurement Process (Goods and Services) • Cartagena Refinery Modernization US $4 billion • Barrancabermeja Refinery US $3.5 billion • Crude and Gas Transport Expansions US $5 billion Equipment Needs • Drilling Equipment • Pipeline-related Equipment • Enhanced Oil Recovery • Refinery Equipment • Valves • Wellhead Equipment • Compressors U.S. Department of Commerce International Trade Administration

  8. Why Colombia? GDP Growth 1991-2010 ATPDEA Begins Asia crisis World Financial Crisis Internal political and economic crisis Source: DANE/IMF *GDP per capita (nominal value) U.S. Department of Commerce International Trade Administration

  9. Why Colombia? GDP Per Capita Growth 1991-2010 Source: DANE/IMF *GDP per capita (nominal value) U.S. Department of Commerce International Trade Administration

  10. Past vs. Present Corruption Protectionism Non- export orientation Low investment rates Informal business management practices Security concerns Economic liberalization Diversification of Exports More transparency Sustained investment in human resources and IT Improved Corporate Governance: Standards, CSR Improved Security 1990’s Today U.S. Department of Commerce International Trade Administration

  11. Challenges Social Economic • Obtain a peaceful solution to the internal conflict • Defeat corruption in official agencies • High displacement • rate • Reduce poverty • Large informal economy • Bureaucracy and red tape • Sluggish judiciary • Tax evasion • SMEs lack access to credit U.S. Department of Commerce International Trade Administration

  12. Market Trends: Colombia’s FTA Negotiations Agreements implemented: • Andean Community (CAN) (Ecuador, Peru, Bolivia) • Mercosur (Argentina, Brazil, Paraguay, Uruguay) • Mexico • Chile • Canada Ratified: • Central America Triangle (Honduras, El Salvador and Guatemala) • European Free Trade Association EFTA (Switzerland, Norway, Iceland and Liechtenstein) • USA Pending ratification: • European Union U.S. Department of Commerce International Trade Administration

  13. Market Trends:U.S.-Colombia FTA • Will help NEI but is NOT a cure-all • It can: - Increase exports to Colombia by $1.1 billion - Create/save jobs - 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 U.S. Department of Commerce International Trade Administration

  14. Market Trends:U.S.-Colombia FTA • 90% of Colombian products enter the U.S. market duty-free, while U.S. merchandise entering Colombia face tariffs averaging nearly 9%. • 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. • Largely complementary economy (grains vs. tropical fruits; textiles vs. apparel) U.S. Department of Commerce International Trade Administration

  15. Market Trends:U.S. Colombia FTA • Currently U.S. auto parts face a 17.4% tariff, building products face a 13.2% tariff and consumers goods face a 15% tariff. • Non-tariff barriers to trade are progressively eliminated as FTA enters into force. • 99% of qualifying industrial and textile goods will become duty free. • Most remaining tariffs will be phased out 15 years. • 89% of Agricultural goods will become duty free. • Largely complementary economies (grains vs. tropical fruits; textiles vs. apparel). U.S. Department of Commerce International Trade Administration

  16. Market Trends:U.S.-Colombia FTA • Liberalization of products in key sectors such as: • Construction Equipment/Building Products • Aircrafts and parts • Fertilizers • Agrochemicals • Wood • IT • Medical and scientific equipment • Improved access to financial services U.S. Department of Commerce International Trade Administration

  17. Market PracticesTips for Success in Colombia • Be informed – Read CCG • 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

  18. Market PracticesTips for Success in Colombia • 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

  19. Market PracticesTips for Success in Colombia • 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

  20. Cameron Werker Commercial Counselor Cameron.werker@trade.gov Nicole DeSilvis Commercial Attaché Nicole.desilvis@trade.gov oc.gov US Commercial Service – Unit 3030 Box 5120, DPO, AA 34004 Tel: (571) 383-2519 Fax: (571) 315-2171 www.buyusa.gov/colombia U.S. Department of Commerce International Trade Administration

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