Colombia Focus
Why Colombia?
Colombia’s thriving investment scene
Nestled between the Caribbean Sea to the north and the Pacific Ocean to the west, Colombia stands as Latin America’s fourth largest economy. It is anticipated to expand by 1.8 per cent in 2024 and 3 per cent in 2025. Forecasts for the next five years indicate that Colombia’s GDP growth rate will outpace that of its neighbours – Brazil, Mexico, and Argentina.
With around 52 million inhabitants, Colombia is the third most populous nation in the region. A distinctive characteristic of Colombia’s population is its large proportion of young people. This demographic trend has sparked growth within the labour force and the domestic consumer market. Investors can tap into a growing young consumer base, which exhibits a higher marginal tendency to consume and actively participates in building a more productive and innovative economy.
Colombia is home to various burgeoning regions and business hubs, each with its unique economic dynamics and sectoral needs. Whether it is the colourful urban centres of Bogotá, Cali, and Medellin, or the ecological treasure troves tucked away in regions, such as Antioquia, Cundinamarca, and Valle del Cauca, investors are spoilt for choice.
Flourishing China-Colombia ties
The Growing Economic and Diplomatic Partnership between China and Colombia
According to insights from the Colombia-China Chamber of Investment and Commerce, bilateral trade between the two countries has seen a marked increase in recent years.
In 2022, Colombian exports earmarked for China totalled USD7 billion, marking nearly a 20-per-cent jump compared to the figures recorded five years prior. The breadth of exports has also diversified – now encompassing a wider array of products – including petroleum goods, chemicals, coffee, electronics, food items, and textiles.
China and Colombia Elevate Relations to Strategic Partnership and Forge New Agreements in Science, Technology, and Energy
During a visit by the Colombian president to Beijing in October 2023, China upgraded its diplomatic ties with Colombia, which had been established since 1980, to a strategic partnership. Additionally, the two nations signed a clutch of cooperation deals to allow more shipments of Colombian exports to China. They also pledged to form working groups to strengthen commercial relations. Further, they committed to joining hands on developing key fields, including science, technology, and renewable energy.
Anticipated Surge in Chinese Investments Boosts Colombia’s Infrastructure and Agriculture Amid Positive Public Perception
It is anticipated that China will ramp up its investments in Colombia’s industries and national infrastructure, with a focus on improving railway transportation networks. At the same time, China will play a supporting role in Colombia’s five-year development plan for the agricultural sector, as part of the latter’s broader agrarian reform initiative.
China enjoys a largely favourable perception among the Colombian population. In a survey conducted by Colombia Risk Analysis in 2023, 67 per cent of respondents agreed that Colombia should enhance its economic ties with China. Similarly, nearly two-thirds of respondents viewed Chinese investments as important for Colombia’s economic development and the creation of new employment opportunities.
Favourable foreign investment framework
Colombia's Equitable Investment Climate and Initiatives to Streamline Business Processes
Under automaticity, foreign investors are generally free to pursue any business purpose without prior authorisation, except in the finance, insurance, hydrocarbon, and mining sectors.
Under stability, foreign investors can expect the conditions governing their investments and the remittance of profits to remain constant. More importantly, the conditions will not be amended to their disadvantage. This commitment provides for continuity and stability, thereby ensuring a predictable environment for investment.
Under universality, foreign investors are generally allowed to engage with most sectors of the economy. Several exceptions, however, apply. Notably, these include industries related to national defence and security, the processing and disposal of toxic, hazardous, or non-domestically originated radioactive waste. Colombia also operates entry restrictions to the fishing industry, radio and television broadcasting services, and maritime transportation.
On a related front, efforts by the government are underway to enhance the ease of doing business in Colombia. These include establishing a centralised one-stop shop to expedite procedures and streamline requirements for investors as well as consolidating Colombia’s tax-exempt zones.
No capital controls in Colombia
As a general rule, foreign investors have the freedom to decide where to allocate their investments, whether that be repatriating profits to their home country, reinvesting in Colombia, or divesting from their investments as they see fit. As such, no capital controls that might otherwise restrict the movement of funds are imposed in Colombia. However, the government reserves the right to implement capital control mechanisms if the country’s international reserves fall below a certain threshold. This policy affords a high degree of freedom and flexibility to foreign investors and facilitates efficient capital flows.
Getting to know Colombia
Overview of Colombia's departments
Colombia’s Free Trade Zones
In Colombia, there are 120 Free Trade Zones (“FTZs”) in total: 42 permanent FTZs and 78 special permanent FTZs. They are situated across the Andean, Caribbean, Western, and Pacific Regions, with the Caribbean Region boasting the highest density of FTZs.
Permanent FTZs or multi-user FTZs refer to zones overseen by a single operator, which accommodate multiple newly established companies benefitting from preferential tax and customs treatment.
Special permanent FTZs or single-company FTZs refer to zones that are established to facilitate investment by a single new company in a project with substantial social and economic implications. The same benefits are conferred on entities operating in these zones.
Businesses operating in Colombia’s FTZs can leverage a range of tax benefits compared to those in the national customs territory. For instance, they benefit from a lower income tax rate of 20 per cent – in contrast to the standard 34 per cent elsewhere in the country. In addition, goods entering FTZs are exempt from value-added tax (“VAT”) and customs duties. No VAT is imposed on intermediate inputs, parts, raw materials, and finished products sold within Colombia to those operating in FTZs. Moreover, customs procedures have been considerably simplified or, in some cases, eliminated entirely. Goods from abroad entering FTZs can remain on an indefinite basis.
Exploring Colombia
Popular Investment Destinations
Perched high up on the Bogotá savanna in the heart of Colombia, Bogotá is the capital and largest city of Colombia, and it forms the Capital District. Home to approximately 21.7 per cent of the national population, Bogotá and its adjacent metro area feature an extensive market. Over the past five years, the Bogotá region has attracted around USD 9,862 million in new and consolidated foreign direct investments (“FDI”).
- IT and business services
The IT services sector stands out as the primary recipient of investment inflows in the region. In the last five years, the industry has represented around 20.2 per cent of FDI projects in the capital city. Following closely, business services rank as the second-largest sector, capturing a 14.2-per-cent share of FDI initiatives. These statistics underscore Bogotá’s status as a hub for service-oriented industries. Factors, such as the availability, quality, and affordability of labour as well as the presence of bilingual professionals, combined with Bogotá’s strategic location, have collectively contributed to the region’s appeal among investors.
- Energy technology
As Colombia’s leading economic, industrial, and business hub, the Bogotá region accounts for a quarter of the country’s energy consumption. The region’s dynamic economic growth and increasing electricity needs have spurred a significant demand for energy technology. According to estimates by the Inter-American Development Bank, Colombia would require substantial investments to cater to planned capacity expansions and upgrades to the electricity network through to 2040 – to the tune of billions of dollars. Opportunities are bound to open up in the realms of energy efficiency solutions, power electronics, self-generation technologies, and devices for renewable energy integration and storage.
Capital District – Bogotá
Characterised by its predominantly mountainous terrain and traversed by the Cordillera Central and the Cordillera Occidental of the Andes, Antioquia is Colombia’s sixth-largest department. Its capital, Medellín, is Colombia’s second most important economic centre following Bogotá. Medellín has cultivated a diverse industrial base that revolves around sectors, such as automotive, chemicals, food processing, metallurgy, rubber products, and woodworking. Dubbed “Colombia’s Manchester” – the manufacturing powerhouse in northern England – the city has established itself as a prominent manufacturing centre. Additionally, Medellín has historically served as a major commercial hub for Colombia’s coffee industry.
- Business Process Outsourcing (“BPO”)
BPO involves delegating noncore business functions or processes to external service providers. Such functions or processes can include accounting and finance, data processing, compliance and regulation, document management, human resources management, IT services, and quality assurance.
Colombia, particularly Medellín, has emerged as an epicentre for call centres and BPO services. This growth has been driven by the near- and offshoring phenomenon, where businesses relocate their operations to leverage various advantages, such as cost savings, access to specialised skills, and expanded market opportunities. With a highly qualified and bilingual workforce, lower operating costs, and a strategic geographical location, Medellín is the natural home for the flourishing BPO industry. The local BPO industry continues to evolve at a rapid pace, offering effective solutions to meet the different needs of business all around the globe.
- Innovation and technology (“I&T”)
Medellín shines as an attractive investment destination for the I&T sector. With over 2,500 tech companies, I&T serve as a cornerstone of the city’s economy. In addition, the city is recognised as having the third most qualified workforce in Latin America. Furthermore, Medellín is committed to fostering a vibrant innovation ecosystem, as evidenced by the establishment of Colombia’s only Science, Technology, and Innovation District in the city, its active role in propelling the fourth Industrial Revolution, and substantial investments in R&D. Finally, the city hosts many digitally innovative companies and industry associations. This, once again, affirms its undisputed position as a thriving hotspot for digital innovation and smart city initiatives.
Antioquia - Medellín
Located in western Colombia, Valle del Cauca extends from the Pacific lowlands up to the Andean Cordillera Occidental, enveloping the valley of the upper Cauca River. Renowned for its agricultural productivity, Colombia’s third-largest department by gross domestic product (“GDP”) is a major producer of sugar, rice, tobacco, and coffee. In particular, Valle del Cauca stands out for its thriving sugar industry, supplying sugar to both domestic markets and neighbouring countries. Its capital, Cali, is the third most populous city after Bogotá and Medellín. As the sole major Colombian city with access to the Pacific Coast, Cali stands as the primary urban and economic hub in the southern region.
- Agribusiness
Valle del Cauca is the biggest agricultural producer in Colombia, so it unsurprising that there are abundant opportunities in agribusiness. In particular, Valle del Cauca ranks as Colombia’s second department with the largest expanse of land suitable for Hass avocado production – totalling over 123,000 hectares. Hass avocado is one of the most sought-after varieties in the global marketplace. Valle del Cauca’s ample avocado cultivation contributes to the notable rise in avocado production in Colombia over the past decade, which has experienced a 174-per-cent increase.
- Logistics
Valle del Cauca serves as a strategic gateway to Colombia’s “golden triangle” comprising the key cities of Bogotá, Medellín, and Cali. It is positioned as the region’s main entry and exit point to the Pacific Ocean via the port of Buenaventura. Thanks to its advantageous location, Valle del Cauca provides effective logistics solutions for domestic market activities and boasts strong supply chain linkages with Asia. In addition, it possesses a competitive edge in cargo consolidation, input processing, and final product distribution to serve the Andean and Latin American Pacific regions effectively.
Furthermore, with access to over 70% of Colombia’s domestic market within a 500-kilometre radius via land transportation, coupled with top-tier highway infrastructure and favourable terrain for heavy load transportation, the department is the go-to destination for setting up logistics operations with a global impact.
Valle del Cauca - Cali
Located in the northeast of Colombia, Santander has the fourth largest economy in the country. The department ranks second nationally for its education standards, following Bogotá, and boasts the highest proportion of technology graduates in Colombia. With 17 higher education institutes offering undergraduate and postgraduate studies, Santander is dedicated to nurturing talent in engineering and science disciplines.
Santander’s capital, Bucaramanga, has Colombia’s lowest unemployment rate and has consistently been one of the country’s best-performing economies. It has also clocked up significant growth since the 1960s, mostly expanding into neighbouring areas within the metropolitan region.
- Agribusiness
The agribusiness and food processing industries play an essential role in bolstering Bucaramanga’s economy. The fertile lands of the surrounding region support the cultivation of a wide range of agricultural products, including cacao, guava, honey, pineapple, and sugar cane. Accounting for roughly 75% of the sector’s total exports, unroasted and decaffeinated coffee represents the highest value segment. In addition, there are promising investment prospects in sustainable and organic farming practices, which dovetail with global trends favouring environmentally friendly and eco-conscious methods of food production.
- I&T
The I&T sector in Bucaramanga is evolving by leaps and bounds. The city has transformed into a fertile ground for tech start-ups to take off, with a particular emphasis on big data, biotechnology, and software development. This expansion is facilitated by the presence of academic institutions and research centres, which supply a continuous flow of talented professionals. There are ample investment opportunities in the development of tech parks and incubators to give birth to ground-breaking innovations and cultivate a lively tech ecosystem.
Santander – Bucaramanga
How CW Can Help You
Our Affiliates in Colombia
CW provides services in Colombia through our affiliate partners based in the country. Our extensive network in Colombia encompasses a diverse array of organizations. Among these, we have chosen to highlight key partners known for their unique services, designed to meet the varied requirements of companies looking to expand their operations in Colombia.
Alfredo López y Cia
Alfredo López y Cia is a Colombia-based professional services firm in the field of advisory, consulting and auditing, with more than 38 years of uninterrupted work.
AsiaBcosulting
AsiaBcosulting is a consulting company specialized in supporting companies, governments, institutions and organizations interested in exploring, starting and consolidating commercial, educational, cultural and investment relationships in Asia and Latin American countries.
Expand Your Business in Colombia with CW’s Business Network
Seamless Market Entry and Growth Solutions
CW’s local partners offer a comprehensive suite of services designed to guide your business through the complexities of establishing and expanding in Colombia. Our affiliate firms of experts specializes in market entry strategy, legal compliance, operational setup, and ongoing support, ensuring a smooth transition and sustainable growth.
Colombia Market Entry Consulting Services
Business Structure Analysis
- Optimal Entity Setup: Evaluation of the best business structure suited for your needs, including branch offices or formal subsidiaries. We assess tax efficiency and operational flexibility to recommend the most advantageous setup.
Business Startup Services
- Entity Registration: Assistance with the entire registration process of your new business entity in Colombia.
- Legal Documentation: Drafting crucial legal documents such as company bylaws, shareholder agreements, and more.
- Regulatory Compliance: Guidance on obtaining necessary licenses, permits, and navigating local regulations.
- Intellectual Property: Support in filing patents, trademarks, and copyrights to protect your business interests.
Business Management Solutions
- Operational Support: Providing ongoing services in bookkeeping, accounting, payroll, and HR management to ensure your business runs smoothly.
- Regulatory Filings: Assistance with monthly, quarterly, and annual compliance requirements, ensuring you meet all local obligations.
Operational Setup Services
- Bank Account Opening: Assist in the opening of corporate bank accounts, ensuring smooth financial operations from the start.
- Site Selection: Provide expert advice and support in selecting the ideal location for the business, considering logistical, economic, and strategic factors.
- Recruiting and Payroll: Offer comprehensive services in recruiting personnel and managing payroll to ensure that the business is staffed with qualified local talent and operates efficiently.
- Accounting Services: Set up and manage accounting systems that comply with Mexican financial regulations.
Ongoing Support and Consultation
- Regular Updates and Legal Changes: Keep clients informed about relevant legal updates and regulatory changes that might affect their business.
- Continuous Legal and Administrative Support: Provide ongoing support for any legal or administrative challenges encountered during operations in Colombia.
