Official Government PPT-2010

1. December 2009

2. AGENDA
¿Where are we coming from?
¿What are we doing?
¿Where are we going next?

3. PERSPECTIVES ON COLOMBIAN ECONOMIC GROWTH
ARE ABOVE OF THOSE OF LATIN AMERICA

4. COLOMBIA AND LATIN AMERICA: GDP GROWTH, 1999 – 2009(Q III)
(%)
10%
8% 7.50%
6.80%
5.70%
6%
4.60% 4.70%
4% 2.92%
2.20% 2.50% 2.53%
2%
0.30% 0.70%
0.20%
0%
-2%
-4%
-4.20%
-6%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009 2009
(Q I)* (Q II)* (Q III)*
Colombia Latin America
Source: DANE (National Accounts), DNP, EIU (Market Indicators & Forecasts)
Note: Last update December 23rd, 2009
Note: *% of GDP growth compared to previous quarter
% of GDP growth in Latin America 2009 is taken from EIU forecast
4

6. FDI IN COLOMBIA IS FIVE TIMES
GREATER THAN FIVE YEARS AGO
FDI
US$ Million
12000 10.600
10,252
8000 5,417
4,896
4000 2,134
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Sem I Sem
(pr) (pr) (pr) (pr) 08 09
Source: Banco de la República

7. EXPORTS TRIPLED
US$ Million Exports
45000 37,626
30000
19,062
15,480
11,975
15000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Half I Half
08 09
Source: DANE (Departamento Nacional de Estadísticas)
7

8. INTERNATIONAL VISITORS IN COLOMBIA
DOUBLED
Thousand Visitors Tourism
1600 1,451.0
1200 842.7
706.2
661.1
800
400
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Half I Half
08 09
Source: DAS
8

9. SO FAR THIS YEAR, COLOMBIA HAS BEEN ONE OF THE BEST ECONOMIC
PERFORMERS IN THE REGION
Exports FDI
-18.8% Colombia -10.0% Colombia
-22.0% Chile
-22.8% Brazil
-23.7% Mexico
-29.6% Peru
-24.1% Brazil
-30.2% Argentina
-50.8% Peru*
-30.2% Mexico
-51.6% Argentina*
-36.9% Chile
-74.0% Venezuela
-53.6% Venezuela
Tourism
Colombia 10.3%
Chile 0.3%
Peru 0.1%
Mexico -6.7%
Argentina -8.1% Source: Official sources of each country and World Tourism
Organization. Actual variations in FOB exports and inward
Brazil* -8.3% FDI flows between I Half 2008 and I Half 2009 and number of
foreign visitors between Jan-Agu 2008 and Jan-Agu 2009.
Venezuela -17.5% Note: * Data compared between I Quarter 2008 and I
Quarter 2009
9

10. IMPORTANT RESULTS IN SOCIAL INDICATORS

11. IMPORTANT RESULTS IN SOCIAL INDICATORS
UNEMPLOYMENT RATE FELL
BY 4.2 POINTS BETWEEN 02/08
Unemployment
20 19.4
16
13.6
12.2
11.2 11.3
12
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
Note: * Average January - October
Source: DANE
11

12. IMPORTANT RESULTS IN SOCIAL INDICATORS
POVERTY FELL BY 7,7 POINTS
BETWEEN 02/08
Poverty (%)
57
53.7
53
51.2
51 50.3
49
46
45
2002 2003 2004 2005 2006* 2007* 2008
*No data for 2006 and 2007
Source: DANE-DNP

13. IMPORTANT RESULTS IN SOCIAL INDICATORS
COLOMBIA: RANKED 2ND IN LATIN
AMERICA BY ITS PROGRESS IN
HUMAN DEVELOPMENT INDEX 02/09
Human Development Index Ranking Variation 02/09
Venezuela 0.042
Colombia 0.035
Peru 0.035
Mexico 0.029
Chile 0.029
Argentina 0.027
Brazil 0.023
0.000 0.010 0.020 0.030 0.040 0.050
Source: PNUD

14. VIOLENCE LEVELS ARE DECREASING
SURPRISINGLY

15. HOMICIDES HAVE BEEN REDUCED TO A
HALF IN SIX YEARS
Total Homicides
33,000 26,540 28,837
28,000
23,000 20,167 16,140
18,000
9,591
13,000 9,321
8,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Sem I Sem
08 09
Source: Ministtry of Defens
15

16. KIDNAPPINGS REDUCED FIVE TIMES IN
THE LAST SIX YEARS AGO
4,000 Kidnappings
3,572
3,000 2,882
2,000 1,440
1,000 437 299 110
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Sem I Sem
08 09
Source: Ministtry of Defens
16

17. HOMICIDE RATE PER 100 THOUSAND
HABITANTS REDUCED TO A HALF
Homicides per 100.000 habitants per year
62.7 65.8
70
60
50
40 33.0
30 21.5 20.7
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 I Sem I Sem
08 09
Source: Ministtry of Defens
17

18. ¿Where are we coming from?
¿What are we doing?
¿Where are we going next?

19. COLOMBIA EXPORT PLATFORM

20. FROM PREFERENTIAL ACCESS TO 233 MILLION
CONSUMERS IN 2002 TO ACCESS TO 1.4 BILLION
CONSUMERS IN 2010
2002
2010
20

21. IN 2010, COLOMBIA WILL BE NEGOTIATING 19
INTERNATIONAL INVESTMENT AGREEMENTS (IIA)
WITH 39 COUNTRIES AND 21 DOUBLE TAXATION
AGREEMENTS (DTA) WITH 22 COUNTRIES

22. 2002
2010

23. COLOMBIA: THE MOST “BUSINESS FRIENDLY”
COUNTRY IN LATIN AMERICA, ACCORDING TO
THE WORLD BANK (2010)

24. World Country
Doing Business Ranking Variation, 2007-2010* Ranking (2010)
(Change in positions)
37 Colombia
Colombia 42 49 Chile
Peru 9 51 Mexico
Panama 4
Mexico -8
56 Peru
Brazil -8 77 Panama
Paraguay -12 114 Uruguay
Venezuela -13
Ecuador -15 118 Argentina
Costa Rica -16 121 Costa Rica
Argentina -17
124 Paraguay
Chile -21
Uruguay -50 129 Brazil
138 Ecuador
-60 -40 -20 0 20 40 60
177 Venezuela
Colombia has been named as a Top 10 reformer for the last 4 years
Source: Top Reformers Report, World Bank
*Positive figures show improvements in business
environment

25. Strength of Investor Protection, 2010
Colombia
Peru
Chile
Mexico
Brazil
Argentina
Panama
Ecuador
Venezuela
0 1 2 3 4 5 6 7 8 9
Position
ACCORDING TO THE WORLD BANK ON “DOING BUSINESS, 2010" COLOMBIA IS THE FIRST
COUNTRY IN LATIN AMERICA THAT BEST PROTECTS INVESTORS
Source: World Bank

26. Global Competitiveness Index Ranking
Variation, 2007-2009
(Change in positions)
Brazil 16
Peru 8
Colombia 0
Panama 0
Argentina 0
Chile -4
Mexico -8
Venezuela -15
-20 -15 -10 -5 0 5 10 15 20
ACCORDING TO THE WORLD ECONOMIC FORUM ON “GLOBAL COMPETITIVENESS
REPORT, 2009" DURING THE WORLD CRISIS COLOMBIA HAS REMAINED STABLE
Source: World Economic Forum

27. THE MOST COMPETITIVE FTZ’S IN LATIN
AMERICA: 15% INCOME TAX AND ALLOWS
SALES TO THE LOCAL MARKET

28. 15% income tax.
No import duties.
Benefit from international trade agreements.
Can also sell in domestic market.
Permanent (PFTZ)
Free Trade Zones
Single-Company
(SCFTZ)

29. 66 FREE TRADE ZONES
Zonas Francas Number of Approved Free Trade
Uniempresariales
50 Zones
Zonas Francas Permanentes
40
30
55
20
10
11
0
1958 - 2007 2007 - 2009
New FTZs in Figures
Total New Investment (US$
5.869
Million)
Direct Jobs 43.355
Indirect Jobs 93.046
Source: Ministry of Trade, Industry and Tourism. The investment amounts
required to obtain the Free Trade Zone status are calculated in Minimum
Monthly Legal Wages (M.M.L.W). This information is presented in dollars
using a US$1 = COP 2,000 exchange rate. For 2009, the M.M.L.W is COP
496.900. The M.M.L.W, as well as the exchange rate are subject to variations..29

30. PERMANENT FREE TRADE ZONES (PFTZ)

31. 1. PERMANENT FREE TRADE
ZONES (PFTZ) Several firms installed in a FTZ already established.
Requirements for industrial firms of goods and services
Total Assets Investment Ammount
Minimum direct jobs generation
(US$) (US$ Million)
0 – 124,225 0 0
124,225 – 1.24 Million 0 20
1.24 – 7.45 Million 1.24 30
More than 7.45 Million 2.85 50
Source: Ministry of Trade, Industry and Tourism. The investment amounts required to obtain the Free Trade Zone status are
calculated in Minimum Monthly Legal Wages (M.M.L.W). This information is presented in dollars using a US$1 = COP 2,000
exchange rate. For 2009, the M.M.L.W is COP 496.900. The M.M.L.W, as well as the exchange rate are subject to variations..
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32. SINGLE-COMPANY FREE TRADE ZONES (SCFTZ)

33. 2. SINGLE-COMPANY
A single firm can get all FTZ advantages by
FREE TRADE ZONES
installing itself in any place in Colombia.
(SCFTZ)
Investment (US$
FTZ type AND direct jobs
Million)
Goods (1) 37.26 150
2.48 – 11.42 500
Services (2) 11.42 – 22.85 350
22.85 or more 150
Services – Ports (3) 37.26 20
SCFTZ Agribusiness
(1) Each additional investment of US$ 5.9 million reduces 15 jobs of requirement. In any case, there must be generated at
least 50 jobs.
(2) For health services companies, 50% of jobs may be vinculated, not direct.
(3) 50 indirect jobs can replace 20 direct jobs.
Exchange rate: US$ 1 = COP 2,000. Minimum Monthly Legal Wages (M.M.L.W.) for 2009 is COP 496,900. Back
M.M.L.W. and Exchange Rate are subject to changes.

34. 2. SINGLE-COMPANY
A single firm can get all FTZ advantages by
FREE TRADE ZONES
installing itself in any place in Colombia.
(SCFTZ)
Investment (US$
FTZ type Or related jobs to de production
Million)
Agribusiness 18,63 500
Subsectors which are eligible for FTZ status under agribusiness requirements
Biofuels
Meat and Fish
Oil and grease products from vegetables and animals
Dairy products
Legume and fruits, prepared or preserved, tea, soup, vinegar, sauces and yeast*
Coffee
* According to the national statistics this products classification is called “products not
SCFTZ in classified previously”.
Southern Exchange rate: US$ 1 = COP 2,000. Minimum Monthly Legal Wages
Colombia (M.M.L.W.) for 2009 is COP 496,900. M.M.L.W. and Exchange Rate are Back
subject to changes.

35. NEW SCFTZ REGIME IN FIVE PROVINCES OF
SOUTHERN COLOMBIA

36. Characteristics
•Huila, Caquetá, Putumayo, Nariño and
Cauca
•No distinction between types of SCFTZs
•Benefits are valid until April 30, 2010
•Time limit to execution of 100% of
investment is 2 years.
Requirements
Investment Ans Direct Jobs
US$ 1 Million 50
Back

37. COLOMBIA OFFERS LEGAL STABILITY CONTRACTS TO
GUARANTEE INVESTMENT PROJECTS

38. Investments over US$1.78 million* (150.000 T.U)**
Conditions Investor pays 1% premium based on the amount of the
investment. 0.5% in unproductive periods.
Period Up to 20 years maximum.
Signed 61 legal stability contracts approved, 48 legal stability
contracts contracts signed
*The investment requirement is calculated with an exchange rate of COP $ 2000 = 1 USD. It is responsibility of
the investor to calculate the investment requirement at the moment of submitting the application for the
Legal Stability Agreement.
** One Tax Unit equivalent COP$ 23.763 or US$ 11,8
38

39. OTHER INCENTIVES BY SECTOR: INCOME TAX
EXEMPTION FOR UP TO 20 YEARS

40. • Exemption for 30 years for companies that build or restyle hotels
Tourism before 2018.
Eco-
Eco-tourism • Exemption for 20 years starting from 2003.
Late yield • Exemption for 10 years after the start of production in crops planted
between 2003 and 2013.
crops
• Permanent exemption for investment in new forest plantations,
Forestry sawmilling and timber plantations.
• Publishing of books, magazines, booklets or collections of scientific
Editorial or cultural characteristics are exempt until 2013.
New medicinal • Exemption for 10 years for products manufactured in
products and Colombia with high scientific and technological
software research content, starting from 2003.
Renewable • Exemption for 15 years for sale (by the generators) of
electricity based on wind resources, biomass or
energy agricultural waste.
• Exemption for 15 years starting from 2003 to provide
River transport services in slabs and boats with net weight below 25
tons.

41. ¿Where are we coming from?
¿What are we doing?
¿Where are we going next?

42. TO IDENTIFY POTENTIAL WORLD CLASS SECTOR, WE ANALYZED
THE GLOBAL OPPORTUNITIES AND LOCAL STRENGTHS

43. POTENTIAL WORLD CLASS SECTORS
Encourage and improve production of Promote development of
competitive products & services NEW & EMERGING
ESTABLISHED SECTORES SECTORS
43

44. BPO&O

45. Competitive
• Call center agent cost: USD 441/month
Operational Cost
• 27,000 biz grads and 13,000 engineers per year.
Human Resource • Seven cities > 500,000 inhabitants.
• Neutral Spanish accent
• USD 1 billion market, growing 42% in the last
High growing market three years.
• Reliable & redundant internet infrastructure: 5
Infrastructure submarine cables 212.5 Gbps capacity.
• Free Trade Zone regime: 50% off Income Tax
Business Environment and sales to the local market.
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46. IT SERVICE &
SOFTWARE

47. Competitive • The lowest labor cost in LATAM: up to 284% for
Operational Cost System Engineering careers.
Human Resource • 13,000 engineering and technical graduates
from IT-related fields per year.
• A growing market of US$ 270 billion: almost
12,5% in 3 years.
High growing market
• Datamonitor considers Colombia to be a Tier 2
country in L.A.
• US$ 4 billion expected investment in
Infrastructure telecommunications for 2010.
• Computer prices under US$1,000 without VAT
• National Government programs to enhance
Business Environment competitiveness and development in this
specific industry.
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48. HEALTH TOURISM

49. • Eye laser surgery Innovation
Innovation • Pioneer Program in reproduction immunology
• 1st pacemaker of the world
Business • First Latin American country to do business, according to Doing
Business 2010 ranking - World Bank
Environment • 4 consecutive years as one of the top 10 reformers in the world
• Health system is the best in Latin America and number 22 in the
world.
• Colombia spent 7.5% of GDP on health and 13.9% of public spending
Infrastructure • More than 600 weekly flights to Colombia connecting North, Central
and South America and Europe
Human Resources • 3,000 general doctors undergraduate per year
• Hospital San Vicente de Paul (Antioquia) 1 Free Trade Zone – status
granted
• Clinica Portoazul (Barranquilla) -1 free trade zone approved (
Free Trade Zone pending status recognition)
• Clinica Los Nogales (Bogota) , Promotora de la Laguna (Antioquia),
Sociedad Medica de Sabaneta (Antioquia) - 3 clinics (in process to
be recognized as a free trade zone)
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50. COSMETICS AND
PERSONAL CARE
PRODUCTS

51. World Leader
• The second largest country in number of species of plants
in Biodiversity
Human • More than 200.000 professionals and 30.000 technicians available
Resources to work in the sector
• In the last 6 years exports has tripled, arriving to US$735 million
Export and a positive trade balance of US$ 300 million
Platform • Trade Agreements with 44 countries reaching to cover 1.2 million
consumers.
• The highest female participation in the workforce in Latam (44.6%)
Female Labor
• Colombian women cosmetics pocket share duplicates the
Participation European women (as proportion of their income).
Fourth Market
in Latin • 2008 Production: USD 2,361 M; CAGR 4.4% in the last 6 years.
America • The masculine market is expected to grow 20% per year.
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51

52. BIO-FUELS

53. •Single enterprise Fee Trade Zone.
Tax Incentives • Income tax exemption on late yield crops during ten
years
• 16,5M ha (6.1 M acres) suitable for biofuel
Land Availability production.
• World’s fifth palm oil producer. (3,6 MT.)
Raw Materials
• Highest sugar productivity in the world. (12,78T/crop
Availability year)
• E20 B20 by 2020.
• Ethanol local consumption (490M liters), supplied only
Internal Demand in a 66% by local production
• Biodiesel local consumption (55M liters) supplied in
20%
• 34M Ha (85 M acres) available for agricultural and
Environment & livestock development. No need to cut down rain forest
Food vs. Fuel • Green seal” production (environmental and social
practices).
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53

54. FORESTRY

55. Land Availability •17 M ha (42 M acres) suitable for timberland
Diversity • More than 10 forestry species with high value added
• Photosynthesis throughout the year
Production • Higher yield species
advantage • Shorter life cycles
• Weather advantages
Biotechnology and • High quality forestry germplasm base with plant material
genetic production capacity of 52,000 ha (131,000 acres) per
development year
• High quality forestry germplasm base with plant material
Tax Incentives production capacity of 52,000 ha (131,000 acres) per
year
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55

56. AUTOMOTIVE

57. Dynamic Industry • Colombian exports of auto parts increased by 46% in (06-08)
Excellent geo-
economic position • Access to a Motor Vehicle Fleet of over 37 million units (FTAs)
Qualified and
competitive cost • Annually purchase over U$600 million in auto parts to local
for human producers
resources • The production of vehicles increased by 46%.(02-08)
Recurso Humano • Automotive industry workers salary cost : 1.73 US$ /hour (2007)
• Deposits enabled for transformation or assembly assure free
custom duties for auto parts and material
Advantages
• Well-known auto parts companies are established in Colombia
(12)
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58. Electric
Power

59. Energy • Best energy infrastructure in Latam. (IMD)
• Third country in future energy supply in Latam.
Infrastructure (IMD)
Structure of • All entities in one system. (SIM)
Energy Sector
• 2nd country with best access to water in Latam
• 742,725 watersheds
Hydro-energy • 52,075 m3 /seg per year
potential • Annual rainfall of 3,000 mm
• Precipitation of 1,313 km3
• Average yield of 58 lt/seg/ km2
• Daily Average of 4.5 Kwh/m2.
Solar-energy
• Six Colombian states are above 1,200 Kwh/m2/year
potential and 3 above 1,600 kwh/m2/year.
Geothermal • More than 300 hot springs
potential
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59

60. TEXTILES,
APPAREL,
FASHION AND
DESIGN

61. • Over 100 years of experience
Experience in • Coltejer founded in 1907
textile market • Tejicondor and Fabricato (founded in 1920)
• Colombia has the infrastructure to produce and export.
Infrastructure • fibers, yarns, wovens and apparels .
• There are more than 800,000 direct and indirect jobs .
• Textiles exports´ share is 2.8% of the total exports and 12% of non
Textile exports traditional exports.
• Imports of raw products reached 81% of the total textile and
Imports apparel products in 2008
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62. INFRASTRUCTURE

63. PUBLIC INFRASTRUCTURE PROJECTS ACCOUNT FOR US$ 21
BILLION
• Projects to the construction, operation and maintenance
Carreteras of main access roads of the country:
• “Autopista de las Américas” Road Concession: 800 km of
existing roads
• “Autopistas de la Montana” Road Concession: Total
length 1000km
Puertos y • New ports development: Aguadulce (USD 103 M) and
Aeropuertos Contecar (USD 297 Million)
• Integration and Concession of Northeast Airports (USD 107
Million)
Ferrocarriles
• "Central Railway System“ Railway Concession: 1.045 km,
estimated investment of USD 895 million
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63

64. GRAPHIC
COMMUNICATION
INDUSTRY

65. • Global production process consisting of pulp
production (U.S. $ 29,300 million), production of
Sector paper and board (U.S. $ 87,000 million), design,
printing and other graphic services (U.S. $ 582,000
million) and Marketing (NA)
• Composed by Packaging and Labels (U.S. $ 238
million), advertising and commercial ($ 419 million),
Editorial (U.S. $ 230 million), and newspapers and
periodicals (ND).
Industry in Colombia • Average annual income of $ 40 million in large
players segment.
• Annual growth above 11%, quite remarkable when
compared with global industry growth (2.7%)
• Exports grew 10% from 2006 to 2008.
• Leading exporter of books in Latin America.
International Trade • Second largest exporter in Latin America after
Mexico
• Only country in Latin America with a significant
positive trade balance
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66. CONCLUDING REMARKS
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.

67. CONCLUDING REMARKS
Colombia has achieved a solid structural growth, based on an
increase in the investment rate and higher productivity
levels

68. CONCLUDING REMARKS
The country has guaranteed its external funding for 2009
trough multilateral institutions such as IADB, WB and CAF.

69. CONCLUDING REMARKS
Colombia is aggressively negotiating trade and investment
agreements expanding its markets and becoming more
attractive to investors.

70. CONCLUDING REMARKS
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.

71. www.inviertaencolombia.com.co · www.colombiaespasion.com · www.mincomercio.gov.co