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3D"U.S.=   Doing Business In <= st1:place w:st=3D"on">Colombia:  A Country Comm= ercial Guide for U.S. Companies

INTERNATIONAL COPYR= IGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2007. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES= .

 

 

Chapte= r 1: Doing Business In Colombia=

 

 

Market Overview        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;        Return to top

Colombia ranks solidly wi= th the group of progressive, industrializing countries worldwide that have well-diversified agriculture, resources, and productive capacities.  Currently, Colombia is the fourth largest U.S. market in the region, after Mexico, Brazil and Venezuela, and is ranked as the 31st marke= t for U.S. ex= ports globally.  Since the election = of President Uribe in May 2002 (and subsequent re-election in 2006), Colombia has become one of the most stable economies in the region.  Good government policies, steady g= rowth, low inflation and plenty of opportunities make it more than worthwhile for investors to take a serious look at Colombia. 

Facts to consider= :

·         Economic growth for 2006 was a healthy 6.6%. GDP per capita has increased to over USD 2,000, aided by the appreciation of the Colombian peso in the last year (approximately 2%).

·         For 2006, the exchange rate closed at COP 2,200 per $1.

·         Net Foreign Direct Investment in Colombia for the period of January – September 2006 reached US $4.35 billion. = US FDI = in 2005 was $1.3 billion (2006 figures not yet available). US investment is particularly strong in the mining and oil and gas sectors.

·         During 2006, US imports from Colombia reached $9.2 billion, and exports from the = United States to Colombia totaled $6.2 billion.  Colombia is currently the 33rd largest tra= ding partner for U.S. goods.

·         Consumer price inflation fell from 4.9 percent in 2005 to 4.48% in 2006.<= /span>

·         Unemployment in Colombia was 11.8% in 2006, an increase over 2005’s figure of 10.4%=

·         Although security concerns continue to stem from the 40-year-old guerrilla war, the Uribe Administration’s policies have dramatically reduced terrorist attacks, kidnappings and crime. Consequently, US businesses are coming to <= st1:country-region w:st=3D"on">Colombia in record numbers to seek opportunities in a myriad of sectors.

·         On November 22, 2006, the United States and Colombia signed a bilateral trade agreement, the U.S./Colombia Trade Promotion Agreement. As of this writing, the Agreement has not been approved by Congresses in either country. However, the prospect of free trade has been a factor in the renewed US business interest in Colombia.

 

 

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  • In December 2005, the Colombian government attempted to stem speculative = capital flows by mandating that foreign portfolio investment should remain in = the country for at least one year. However, the government revoked this measure in June 2006, allowing all foreign portfolio investment and proceeds to be freely remitted abroad without restrictions.=
  • The provision of legal services is limited to law firms licensed under Colombian law.  Foreign law firms can operate= in Colombia only by forming a joint venture with a Colombian law firm and operating under the licenses of the Colombian lawyers in the firm.
  • Economic needs tests are required= when foreign providers of professional services operate temporarily; and residency requirements restrict trans-border trade of certain professional servi= ces, such as accounting, bookkeeping, auditing, architecture, engineering, urban planning, and medical and dental services.  
  • A commercial presence is required= to provide information processing services.
  • Telecommunications barriers to entry include cross subsidies, commercial presence in Colombia and economic needs tests. 
  • For firms with more than ten empl= oyees, no more than ten percent of the general workforce and 20 percent of specialists may be foreign nationals.
  • International banking institutions are required to maintain commercial presence in Colombia through subsidiary offices. 
  • Colombia has been on the Special 301 “Watch List” every year since 1991.
  • Customs duties have been consolidated into four tariff le= vels: zero to five percent on capital goods, industrial goods and raw materi= als not produced in Colombia, ten percent on manufactured goods with some exemptions, and fifteen to twenty percent on consumer and “sensitive” goods.  A group of agricu= ltural products is protected by a price band mechanism that offers variable duties as high as 100 percent.
  • Colombia<= /st1:place> has struggled with the requirements of Law 80 governing government procurement, which calls for open bidding in public tenders.  Attempts are be= ing made to amend the law to clarify procedures. Despite the law, transpar= ency, fairness, and truly competitive bidding conditions in many tenders rem= ain uncertain. This remains a significant market access barrier. US companies interested in public sec= tor contracts should obtain legal counsel in Colombia.

 

 

Market Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;            Return to top

 

  • Companies interested in pursuing = new opportunities should review U.S. Commercial Service quarterly reports = of major projects in Colombia.
  • C= olombia's upcoming infrastr= ucture projects are extensive and will require a local agent or legal representative for all government contracts.  Areas of interest are project financing, public works subcontracting, logistics, equipment procureme= nt, construction of public roads, ports, and airports (see below), rehabilitation of river navigation, water treatment, water supply, electric power generation, oil and gas exploration, air navigational a= ids, railways, machinery leasing, transportation equipment and parts, secur= ity and defense items and services, and mass transit systems.
  • Colombia is engaged in a maj= or privatization program of its airports, including Bogota’s International Airpo= rt El Dorado, which under a recently awarded contract will be managed by a g= roup of Colombian and European investors under a 20-year concession. Major opportunities for US businesses are expected, particularly in the area= s of security, baggage handling and numerous other airport related products= and services.
  • U.S. export opportunities include: telecommunications equipment and services, industrial chemicals, air c= argo services, financial services, automotive parts and accessories, comput= er hardware and software services, oil and gas machinery and services, petrochemicals, plastics materials and resins, electrical power system= s, safety and security technologies and equipment, food and beverage processing and packaging equipment, medical equipment, construction and mining equipment and pollution control equipment.       &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;              &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;          <= /o:p>

 

 

Market Entry Strategy=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           Return to top

 

  • Secure an agent, representative, = or distributor in = Colombia, which requires a contract that meets the provisions of the Colombian Commercial Code.
  • Focus on formality, personal relationships and trust when negotiating agreements and contracts.
  • Communicate with the U.S. Commerc= ial Service of the U.S. Embassy in Bogotá for specific concerns. 
  • Keep good after-sales service arrangements, not only in the original buying decision, but also in maintaining the sales relationship. Warranties on imports are important factors that support after sales service in Colombia.
  • Products and/or service quality, financing, and price supported by extensive advertising campaigns play= an important role in Colombians’ buying decision.=
  • Knowledge of Spanish is essential= .

 

 

Return to table of contents

Chapte= r 2: Political and Economic Environment

For bac= kground information on the political and economic environment of the country, please click on t= he link below to the U.S. Department of State Background Notes.

&n= bsp;

http://www.state.gov/r/pa/= ei/bgn

 

 =

Return to table of contents

Return to table of contents

Chapter 3: Selling <= st1:place w:st=3D"on">U.S. Products and Services

Using an Agent or Distributor     &n= bsp;            = ;            &n= bsp;            = ;             <= /span>Return to top

Foreign firms interested in exporting to Colombia’s private sect= or are not required by law to secure local representation. However, Colombians pre= fer to deal with those companies with local representation to secure after-sales servicing. Additionally, for sales to the government, whether direct or thr= ough international tenders, Colombian law requires that foreign bidders have leg= al representation in Co= lombia.

 

Securing an agent, representative, or distributor in Colombia requires a contract = that meets the provisions of the Colombian Commercial Code.  This contract must be registered w= ith the chamber of commerce where the agent/representative is located.  Agency or representation agreement= s do not require government approval.

 

 An agent or representative differs = from an appointed distributor.  The former is legally associated with the principal and may enter into legal agreements on the principal's behalf, while the latter may act totally independently from the principal. Distributors may purchase items from a foreign supplier, wholesaler or jobber, and then sell them locally at their= own discretion and risk.

 

When negotiating agreements and contracts, one should focus on formality, person= al relationships and trust.  Colo= mbians want to know their supplier or partner personally before deciding whether h= e or she is trustworthy.  U.S. companies seeking agents, distributors or representativ= es in Colombia should consider the broad range of CS-offered services developed to help U.S. firms enter new markets.=

 

Establishing an Office  = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;     Return to top

The most common forms of business in Colombia are corporations, limited liability partnerships, and branches or subsidiar= ies of foreign corporations. The process of establishing a business in Colombia has been simplified considerably by a new program of the Bogota Chamber of Commerce, with the sponsorship of the Inter Americ= an Development Bank/IDB and several Colombian public and private entities. CS Bogota advises U.S.<= /st1:place> firms to obtain legal advice from a Colombian law firm or accounting firm.<= span style=3D'mso-spacerun:yes'>  A list of attorneys and accountant= s is available from the U.S. Commercial Service of the Embassy.

 

A Branch of a Foreign Corporation oper= ates under the rules applicable to Colombian corporations.  Its liability is limited to assign= ed capital.  It must be registere= d with a Notary Public in its place of domicile.&= nbsp; The following documents also must be registered with the Notary Publ= ic: copies of its incorporation document, its bylaws, the resolution or act agreeing to the establishment of the branch, and documents evidencing its existence and legal representation.

 

All companies (including branches of foreign companies domiciled in Colombia) must register themselves and their accounting books, minutes, and other required documents by law in the Commercial Register of the chamber of commerce in t= he cities where they are located.

 

A few steps should be followed in establishing a business in Colombia= :

 

-  Appointing a legal representative = in Colombia who will be responsible for preparing documents and carrying all necessary steps with a Notary Public and Chambers of Commerce.  There should be a corresponding Ac= t for this appointment and duly registered with a Notary Public.

 

-  By-laws (Escritura Publica) should be prepared and registered with t= he Notary Public, stating the purpose of the firm, capital, legal rep, etc. Th= is step would take two to three days and about 0.0027 percent fee (fees in gen= eral will depend on the amount of capital being registered) plus a 16% Value-Add= ed tax will be charged.

 

-  Registration and legalization with a Chamber of Commerce may take ab= out four days including the time for obtaining an Income Tax Identification Num= ber (NIT), and subject to a 0.7 % fee on the capital registered plus other minor charges. 

 

- There will be forms and other paperwork with minimum charges and processing time, opening of bank accounts, transfer of foreign currency, etc.  In tot= al, it should not take more than three weeks to incorporate in Colombia.

Franchisi= ng        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;   Return to top

 

Franchising is slowly gaining importance in Colombia as a marketing system.  The Colombian market, which encourages foreign investment and international tra= de, offers good business opportunities for U.S. companies in the franchi= sing sector

 

Relationships between franchisers and franchisees are regulated by the terms of freely ne= gotiated contracts, provided that they are consistent with the Colombian Commercial = Code and the applicable legal framework.  Emphasis is given to the clear description of the parties’ mut= ual rights and responsibilities. Competent legal advice is essential during all steps of a franchising negotiation.

 

In 2005 (2006 date not available), there were approximately 297franchises in Colombia, of which fifty-two percent are Colombian.   The United States is the foreign franchise leader in Colombia with an estimated forty-six percent market share of all foreign franchises. Colombian and foreign franchising companies generate approximately 34,000 direct and 14,000 indirect jobs through approximately 6,000 outlets.=

 

Direct Marketing     &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;          <= span lang=3DEN style=3D'font-weight:normal'>Return to top

 

Direct marketing is rapidly gaining popularity in = Colombia.  Its growth has been fueled by such factors as technological advances in printing and distribution, an increased use of credit cards and changing lifestyles.  Also, more women are entering the = job market and seeking ways to save time in making household purchases. Many st= ores and large distributors are producing their own catalogs for phone, mail ord= ers, e-mail or the web with products that can be paid for with cash, check, debi= t or credit cards.

 

E-commerce is a potential marketing alternative. CS Bogota suggests that U.S. co= mpanies obtain legal advice before entering into e-commerce sales or contractual agreements.  Internet users, Internet and catalog sales in Colombia are rapidly growing.  Although on-line shopping has not spread as quickly as in other countries, courier services are available for legal credit card purchases in the U.S. to be shipped to addresses in Florida and then on to Colombia.  Direct shipping to Colombia is also being done.

 

The popularity of international direct marketing is growing in Colombia. U.S. fi= rms can take advantage of improved legislation on postal, express or courier shipments.  The Colombia Custo= ms Code contains Postal and courier shipping rules.  Certain postal shipments (correspondence, postcards, and printed materials) are exempt from licensing requirements and payment of duties.  Courier or express shipments with a value of less than $1,000 and a weight of under 20 kilograms are freely imported and classified under HS 98.03.00.00.00, but are subject to a 10 percent CIF tariff and 16 percent VAT on the CIF-duty-paid value of shipments.  Rules apply to both air and surface shipments.

 

Joint Ventures/Licensing    &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;          <= span lang=3DEN style=3D'font-weight:normal'>Return to top

 

Globalization has created a pressing need for a range of new technologies in Colombia.  Although joint ventures and licens= ing agreements have been important business practices in Colombia, they have become ev= en more important recently as businesses strive to become more competitive.

 

Leasing is playing an important role in developing and modernizing domestic industr= y, including several joint export-oriented units. Colombian industry urgently needs to modernize many of its processes (which imply product diversificati= on for alternative markets through changes in production facilities) and to upgrade obsolete equipment.  To reach these goals, C= olombia needs to acquire new capital equipment and state-of-the-art technology.

 

Leasing is also an important mechanism utilized in = Colombia for productive finan= cing One of the essential characteristics of leasing, as a financial service wit= hin the framework of the Colombian economy, is that it is an adequate tool for investment financing under industrial re-conversion policies.

 

Sellin= g to the Government     &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

Government entities, institutes, industrial and commercial enterprises must follow the provisions of Law 80 of October 31, 1993 which regulates purchases made and contracts entered into by the government and state industrial and commercial enterprises.

 

Under Law 80, Colombian government contracting agencies must select contractors through a public competitive bidding process.  There are a few exceptions to this= rule, which are clearly established in Article 24 of Law 80.  Some of the exceptions under which= a direct contracting procedure are:

 

(1) Contracts for minor amounts: minor amounts are expressed in multiples of the established Colombian legal minimum monthly salary (currently about $196 – without the additional benefits and/or compensation pay).  A minor amount may range from 25 mi= nimum monthly salaries to 1,000 minimum monthly salaries, depending on the annual budget of the contracting entity.  For instance:

 

(a) If the annual budget of the contracting entity is less than or equal to 6,000 minimum monthly salaries, it is allowed to acquire goods and services under direct contract that do not exceed 25 minimum monthly salaries in value;

 

(b) If the annual budget of the contracting agency is equal to or exceeds 1,200,000 minimum monthly salaries, under direct contracts it may purchase goods and services that do not exceed 1,000 monthly salaries in value;

 

(2) Loan agreements:  inter-agency administrative contracts; professional, scientific and technological servic= es; and evident emergencies and;

 

(3) Non-award: Whenever bidding is not awarded for reasons such as: lack of proposals submitted; when the bids do not meet the terms of reference or specifications; when there is only one bidder; when products originating in= or destined to agriculture or livestock breeding are offered through legally organized commodities exchanges; and in contracts executed by state (government) entities for the rendering of health services.

 

Foreign individuals not domiciled in Colombia or foreign private legal entities wit= hout a branch in Colombia that are interested in government contracts must provi= de a copy of their registration with the corresponding registry in their country= of origin.  They must also submit documents proving their constitution or incumbency whichever is the case.  In addition, they must appoint an = agent or legal representative, domiciled in Colombia, who is duly authori= zed to bid on and execute the contracts as well as to represent the foreign enterp= rise in and out of court.

 

Under Law 80, Colombian bidders enjoy preferential treatment.  Given equal contracting conditions, domestic goods and services are preferred.=   The Colombian government has strongly recommended that all-official = entities, and decentralized government industrial and commercial organizations “= ;buy Colombian.” Under similar conditions, for all Colombian government acquisitions, preference must be given to Colombian products and services whenever competitive prices and quality are found versus “foreignR= 21; products and services. The same procedures must be followed in connection w= ith concession and association contracts signed with Colombian government entities.  When foreign firms = bid under equal conditions, the contract is awarded to the firm that includes a greater number of domestic workers in its workforce, more domestic content = in its products, and better technology transfer conditions.<= /p>

 

As a general rule, all individuals and legal entities wishing to enter into cont= racts with state entities must register with the chamber of commerce in their jurisdiction in order to be qualified, classified, and rated in accordance = with the provisions of Law 80.  For= eign bidders and/or suppliers of equipment and services are also required to register with a Colombian chamber of commerce under the so-called “Registro Unico de Proponentes” (Bidders Register) and, in most instances, must be pre-classified and pre-qualified by the chamber and, in = some cases, by the Colombian government contracting agency.

 

The requirement for both the "Bidders Register" and the "Merchan= ts Register" with a local chamber of commerce is to be replaced by a "Sole Entrepreneurial Register" (Registro Unico Empresarial/RUE), which comprises a more complete profile on all business people, businesses, enterprises, contractors and bidders for qualifying for executing contracts with government entities.

 

SICE/Sistema de Información de Contratación Estatal (State Contracting Information System) is a database introduced on May 1st, 2002.  Its purpose is to register and pro= vide certificates for foreign and domestic suppliers of all types of commodities= and services, their products and prices in order to be able to enter into contr= acts with state agencies and industrial and commercial enterprises.  One can also register via Internet= in accordance with CUBS/Catalogo Unico de Bienes y Servicios (The Sole Catalog= of Goods and Services) which is a listing of goods and services classified, standardized and codified with the products that may be acquired by governm= ent entities.  Registration is sub= ject to a minimal fee.  SICE is exp= ected to become a database with 3,000 municipal, state and national entities and = more than 100,000 suppliers.  For additional information on SICE and on registering, interested parties can access the following web sites: ww= w.sice-cgr.gov.co; www.contraloriagen.gov.co; and www.= telecom.com.co.

 

Although Law 80 has made the government contrac= ting system more dynamic, Colombia is still not a signatory (it acts as an observer) to the WTO (World Trade Organization) government procurement code. There have been frequent complaints of a lack of transparency in the letting of major government contracts. The RUE and SICE systems explained a= bove are expected to become useful tools for better transparency in the process = of contracting with government entities.

 

Colombia is still struggling with the requirements of Law 80 governing government procurement, which calls for open bidding in public tenders.  Attempts are being made to amend t= he law to clarify procedures. Despite the law, transparency, fairness, and truly competitive bidding conditions in many tenders remain uncertain. This remai= ns a significant market access barrier. US companies interested in public sector contracts should obtain legal counsel= in Colombia.

 

 <= /span>

Certificate of Reciprocity: The Colombian Government procurement statute seeks to establish simple procedur= es based on the principles of transparency and objective selection; it provides equal treatment to foreign companies on a reciprocal basis. The procurement statute impedes complete access by US firms since it requires a certificate= of reciprocity.  The principle of reciprocity embodied in Laws 80 and 816 ensure national treatment under the same conditions for Colombian bidders in other countries.  The U.S. Government is unable to p= rovide such a certificate, as each of the fifty U.S. states acts as a separate commercial jurisdiction.  The Department of State, however, provides a certificate that U.S. co= mpanies may offer in lieu of a statement certifying reciprocity.  Certificates can be obtained from = the Economic section of the U.S. Embassy in Bogota.  Companies requiring this document = should be prepared to provide the following information: their company name, tender name, tender number, name of the Colombian entity letting the tender and the general purpose of the tender.

 

Distribution and Sales Channels    &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;          Return to top

 

Colombia offers a full range of s= ales channels to consumers, with various distribution methods depending on the t= ype of product offered. These methods range from traditional ones in which wholesalers sell to traditional shops which then sell to the public, to more sophisticated methods, such as large department stores and hypermarkets, wh= ich have rapidly gained popularity.

 

While most imported items, especially capital equipment and raw materials, are st= ill purchased through agents and distributors, some large domestic manufacturing companies import most of these items directly.  Furthermore, some major distributo= rs, wholesalers and end-users are opening purchasing offices and warehouses in = the United States and contacting suppliers and manufacturers via the Internet, thus avoiding intermediaries in Colombia.

 

Consumer products from countries worldwide are available in Colombia at acceptable price levels. Contraband articles sold at deep discounts remain a problem for legitimate retailers. The Colombian government has attained encouraging res= ults in its effort to reduce contraband.  Free trade zones and bonded warehouses are commonly used for imported merchandise and processing of export-oriented goods.

 

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The United States traditionally has been Colombia's main trading partner as it is a “natural” market for U.S. products and services. W= ith the possibility of free trade, this tendency will only increase.  Among the factors favoring U.S. exports are: the geographic proximity= of the two countries; most Colombians who study abroad prefer to study in the = U.S.; the large number of U.S. firms operating in Colombia; and the technological leadership= that the U.S.= maintains in many key industrial sectors.

 

U.S. suppliers should be awar= e, however, that their ability to compete in <= st1:place w:st=3D"on">Colombia could be hampered by unfair business practices such as contraband, counterfeiting, intellectual property rights violations, under-invoicing, money laundering, and dumping.  If a company has spe= cific concerns, it should check with the U.S. Commercial Service of the U.S. Emba= ssy in Bogotá.

 

Quality, profitability, functions, financing, and price play an important role in the buying decision.  The after-sa= les service arrangement is significant, not only in the original buying decisio= n, but also in maintaining the sales relationship.  U.S. suppliers must either ha= ve their own representative with adequate operations or obtain a Colombian representative who can offer sufficient after-sales service.

 

To obtain better prices, guarantees, parts, and after-sales servicing, Colombi= ans prefer to deal directly with manufacturers rather than through outside repr= esentatives, jobbers, or trading companies.

 

U.S.= firms desiring to compet= e for major infrastructure contracts should begin early in the contracting cycle.= U.S. manufacturers and construction, service and engineering companies should initiate contact as soon as possible with government entities and private firms, which have indicated plans, or even just interest, in developing projects.  Once a project has = gone to tender, it is usually too late to be competitive if the supplier company= has not already in some way become involved.&n= bsp; As mentioned in the section “Selling to the Government”,= a local agent or legal representative is required for all government contracts.  Therefore, U.S. co= mpanies interested in government procurement or contracts should appoint an agent or representative as quickly as possible.

 

Electronic Commerce      = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp; Return to top

E-commerce development prospects are promising in Colombia since the Colombian Congress provided the legal framework. The = U.S. and Colombia also have signed an e-commerce agreement that emphasizes open and fair e-tr= ade. E-commerce has reached a stage in which it is critically important to agree= on international standards in the areas of electronic signatures and authentication to avoid the emergence of discordant standards as to what constitutes a "digital signature" or what constitutes valid certificates in different jurisdictions.&n= bsp; Decree 1747 of 2000 regulates Law 527 of 1999 and establishes rules = on certification entities, certification and/or certificates, and digital signatures.  The Superintenden= t of Industry and Commerce has been given full responsibility on authorizing certification entities, carrying out their inspection and control, and on imposing necessary penalties. It also oversees that they comply with the law.  Guaranteed security is a critical factor for consumers considering an on line transactions.

 

Several institutional and societal factors have combined to restrain more rapid gro= wth of e-commerce in Col= ombia. However, U.S. e-commerce companies should note the overall potential offered by the Colom= bian market. Colombia’= ;s B2B (about 90 percent of the E-Commerce market) will likely offer U.S. co= mpanies the greatest opportunities for export sales. Most Colombian e-commerce will take place through North American vendors, and great opportunities exist for large and small U.S.= companies and the home office community that can efficiently utilize e-comm= erce technology to their benefit.

 

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The introduction of new consumer products to the Colombian market usually requi= res an extensive advertising campaign.  Companies’ marketing strategies frequently include media ads, = and printed technical and sales articles in a combination of media -- radio, television, cable TV, newspapers, periodicals, trade magazines, and the Internet-- announcing sales and special offers. As a major entertainment fo= rm for Colombians, television is also one of the most effective media for advertising in Colom= bia.

 

Some companies also are effectively using a variety of marketing techniques to promote consumer products, including raffles, discount coupons, and accrual= of points to exchange for a variety of products and/or services.  Credit card holders are also entit= led to market promotions and discounts, as well as subscribers to some newspapers, magazines or cellular services.  Promotional seasonal “sales” have also become popular in= Colombia throughout the year, usually on s= pecial holidays such as Valentine’s Day (in = Colombia it’s the entire month of September), Father’s Day, Mother’s Day, etc.  Overnight shopping in most malls d= uring long weekends is being introduced in major urban centers.=

 

Colombia has about thirty importa= nt daily newspapers (the three principal daily papers are in Bogotá), a large number of trade and business papers and magazines, nationwide and regional television networks, AM and FM radio stations, and private local cable TV companies.  Also available is a great variety of business, industrial and trade publications from most Colombian industrial and trade associations and private publishers.  Most publications have web sites.<= o:p>

 

Newspapers and Periodicals:

EL TIEMPO:  www.eltiempo.terra.com.co

EL ESPECTADOR:  www.elespectador.com

LA REPUBLICA:  www.larepublica.com.co

PORTAFOLIO:  www.portafolio.com.co=

 =

Magazines:

LA NOTA ECONOMICA:  www.lanota.com.co/economia

CAMBIO:  www.revistacambio.com=

DINERO:  www.dinero.com/dinero<= /span>

SEMANA:  www.semana.com

BUSINESS COLOMBIA:  www.amchamcolombia.com.co

 

Fair Authorities:

CORFERIAS:  www.corferias.com=

 

Radio Networks:

CARACOL:  www.caracol.com.co

RCN:  www.rcn.com.co

TODELAR:  www.todelar.com

SUPER:  www.cadenasuper.com

 

TV Networks:

Caracol:  www.canalcaracol.com

RCN:  www.canalrcn.com

 

Cable TV networks:

SKY:  www.sky.com.co

Direct TV: www= .directv.com

TV Cable:  <= /span>www.tvcable.com.co

Cablecentro:&nb= sp; www.cablecentro.com

Supercable:&nbs= p; www.supercabletv.net.co

Superview:  www.superview.com.co

 

CS Bogota’s Products and Services:

www.export.go= v/cs

www.= buyusa.gov/colombia/en

 

Pricing           &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;         Return to top

 

Colombian consumers buy many imported products, but the cost of importing can be high.  Consumers may pay betwe= en 80 percent and 120 percent above the FOB price of imports. The landed price of most consumer goods with local production is calculated by estimating 15 percent of the FOB price for freight & insurance, warehousing and other documentation costs, 20 percent CIF import duty, plus a 16 percent value-added-tax/VAT (assessed on the CIF-duty-paid value of most imports), = thus putting their price at an additional 60 percent over the FOB price.

 

Additional import costs for capital goods and raw materials are much less (between 33 percent and 53 percent) with import duties for these items of between zero percent and five percent for capital goods, and 10 percent to 15 percent for raw materials.

 

Department stores and supermarkets extend concession contracts to individuals and companies by permitting promotional space in their facilities to promote and sell consumer goods. These promotions include both known and unknown labels, and the goods are offered at discount prices in some cases.  If the products are unknown in the market, the department stores or supermarkets may place them in the stores = on a demonstration basis for a given period of time and will only place new orde= rs if the products are well accepted by the public and sell relatively quickly.  The largest supermar= kets also carry their own labels at discount prices.

 

Suppliers to large store chains, supermarkets, and hypermarkets must provide certain guarantees on the continuity of products offered to avoid foreign surplus s= tock or remnants entering the Colombian market (i.e., foodstuffs, textiles, appa= rel, appliances, etc.).  Imports of= old or used clothing, closeouts, irregulars, off-season or expired merchandise = are prohibited.

 

Sales Service/Customer Suppo= rt        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

 

After-sales service and customer su= pport is a decisive purchasing factor in Colombia.  Government and private firms often request that their potential suppliers provide testimonials regarding satisfaction of other clients with equipment and after-sales service.

 

Warranty imports is an important fa= ctor that supports after sales service in Colombia. Warranty imports including replacement parts and components under warranty by a foreign manufacturer or supplier are exempted from the payment of Colombian import duties.  Decree 2685 of Decemb= er 28, 1999 is the new Colombian Customs Code that took effect on July 1, 2000.  Per Section IV, Article 141 of this Code, all merchandise or goods that have been repaired abroad or new ones t= hat will replace items previously exported because they were found to be damage= d, imperfect, having malfunctions or with an unsuitable end-use, and are under warranty by a foreign manufacturer or supplier, may be imported into Colomb= ia without the payment of import duties.

 

All original import and re-export documentation should be kept and presented with replacement imports to clea= rly identify goods, together with a valid warranty document, transport documentation, etc. A warranty import process must be completed and import declaration documents presented within a maximum of one year from the date = the items subject to repair or replacement were exported.

 

In some instances, Colombian Custom= s may authorize the importation of replacement goods without the requirement of having previously exported the damaged goods or parts for replacement and/or repair. However, Customs will require a surety or warranty bond equivalent = to 100 percent of custom duties paid, valid for one year from the date replace= ment goods are being imported.  This would ensure that damaged goods would then be exported within the following month from the date replacement goods was re-imported.

 

Article 141 does not mention replac= ement parts - it refers to goods or products. However, the Customer Services Divi= sion of Colombian Customs has confirmed that this article covers all procedures = for warranty imports including replacement parts and components. When processing damaged parts exports and replacement parts imports, the parts must be precisely identified, i.e. description of the items, their serial numbers, reference, etc.

 

Protecting Your Intellectual Property      = ;            &n= bsp;            = ;             <= /span>Return to top

 

Economic liberalization (a process known as “Apertura”) opened the Colom= bian economy to international trade and capital inflows by slashing tariff dutie= s, eliminating non-tariff barriers, actively negotiating free trade agreements, and reforming foreign exchange and tax legislation, labor regulations and t= he foreign investment regime. 

 

The “Apertura” has led to the privatization of state enterprises, ports, railroads, and banks.  = Liberalization has progressed furthest in telecommunications, accounting/auditing, energy,= and tourism.  It has occurred to a lesser extent in legal services, insurance, distribution services, advertis= ing, and data processing. There is a constant, if gradual, attempt underway to liberalize areas where restrictions remain in force.

 

See Chapter 6: Investment Climate - Protection of Property Rights for a detailed discussion of these issues.

 

Due Diligence            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;         Return to top

 

US companies should take care in selecting their Colombian partners. U.S. sm= all and
medium-sized businesses can save time and money by contracting the U.S.
Commercial Service’s International Partner Search (IPS) to find pre-qualified
global partners who are already interested in their products and services. = The U.S. Commercial Service can generate a customized International Company
Profile (ICP) on your potential business partners. Researched and prepared = by
our trade specialists, ICPs enable U.S. small and medium-sized businesses to more effectively evaluate overseas companies.  To contract for an IPS or an ICP, = visit www.export.gov/cs to find the U.S. Commercial Service office nearest you.

 

Prohibition against doing business with Specially Designated Narcotics Traffickers (SDNTs):  On October 21, 1995, Pres= ident Clinton signed Executive Order 12978 entitled "Blocking Assets and Prohibiting Transactions with Significant Narcotics Traffickers,” whi= ch blocks all property subject to U.S. jurisdiction in which there is any inte= rest of members of the various Colombian drug cartels.  In addition, the order blocks the property and interest in property of persons who have been determined to pl= ay a significant role in international narcotics trafficking centered in Colombi= a or determined to materially assist in or provide financial or technological support for, or goods or services in support of, the narcotics trafficking activities of persons designated in the Order.  It is illegal for U.S. citizens to= buy, sell, trade, give away or otherwise engage in transactions involving persons and companies designated pursuant to the Order, who are referred to as SDNT= 's (Specially Designated Narcotics Traffickers).

 

A list of the names of such persons and companies is available from the Office of Foreign Assets Control (OFAC), Department of the Treasury, Washington, D.C. 27220, Tel: (202) 622-2520, or via Internet: http://www.treas.gov/= offices/eotffc/ofac/sdn

 

U.S. companies and individuals doing business in Colombia should be aware of the above Executive Order aimed at curtailing the money laundering operations of the Colombian drug cartels.  S= DNTs include entities or individuals directly involved in the drug trade, compan= ies or front companies they own, and companies or individuals, which supply or = do business with any of the preceding. U.S. companies found doing business with SDNTs will be notified by OFAC to cease and desist.  Failure to do so can result in fin= ancial penalties and criminal prosecution. Most established Colombian companies are not involved in the drug trade. Nonetheless, in addition to doing financial background checks on potential business partners, U.S. companies should also contact OFAC to obtain the most current listing of SDNTs.

 

Local Professio= nal Services      = ;            &n= bsp;            = ;            &n= bsp;            = ;    Return to top

U.S. companies bidding on major government, or even private sector, projects/procurement and those entering into joint ventures or other long-t= erm contractual arrangements should seek local legal advice.  Also, companies that are concerned= about the protection of intellectual property such as trademarks, copyrights and patents should also seek legal counsel before entering the Colombian market= .

 

There are a number of good Colombian law firms that specialize in various aspects= of commercial law.  A number of m= ajor U.S. firms who operate internationally have affiliate arrangements in Colom= bia.    Several legal and busi= ness services providers in Colombia are found in CS Bogotá’s website:  www.export.gov/cs.<= /p>

 

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

Andean Development Corp. (CAF) :&= nbsp; www.caf.com  &  www.comunidadandina.org

ANDI (National Industries Association):  www.andi.com.co

ANIF (Financial Entities Association):  www.anif.org

Banco de la Republica (Central Bank):&= nbsp; www.banrep.gov.co

Banking Association:  www.asobancaria.com

Banking Superintendent: www.superbanca= ria.gov.co

Bogotá Chamber of Commerce:  www.ccb.org.co

Colombian= Customs and Income Tax Offices:  www.dian.gov.co

Colombian Government :  www.gobiernoenlinea.gov.co<= o:p>

CREG (En= ergy and Gas Regulatory Commission):  www.creg.gov.co

DANE (Statistics Bureau) :  www.dane.gov.co

EXIMBANK :  www.exim.gov

FENALCO (Merchants Association):  www.fenalco.com.co

Inter American Development Bank:   www.iadb.org

National Planning Department:  www.dnp.gov.co

OPIC:  www.opic.gov

Presidencia de la Republica and/or Palacio de Nariño (President’s Office):=   www.sne.gov.co and www.presidencia.gov.co

State Comptroller’s:  www.contraloriagen.gov.co

State Contracting Information System/SICE:  www.sice.gov.co

Superintendent of Corporations:  www.supersociedades.gov.co<= o:p>

Superintendent of Industry and Commerce:  www.sic.gov.co

World Bank:  www.worldbank.org<= /p>

Telecommunications Enterprise:  www.= telecom.com.co.

 

Return to table of contents

Chapter 4: Leading Sectors for U.S. Export and Inves= tment

&= nbsp;

&= nbsp;

Com= mercial Sectors

 

 

 

INDUSTRIAL CHEMICALS=

&= nbsp;

Overview            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =      Return to top

 

 

2004

2005

2006 (estimated)

Total Market Size

6,365.70

6,637.76

6,940.18

Total Local Production

4,860.51

4,950.02

5,073.77

Total Exports

991.90

998.69

1,023.66

Total Imports

2,497.10

2,686.43

2,890.06

Imports from the U.S.

827.83

886.52

953.72

(In millions of USD)

 

The overall chemical products market in Colombia is estimated at $6.94 b= illion. This sector is one of the largest and most complex in Colombia. The chemical sector accounts for approximately 10.1 percent of industrial employment. It also represents 3.5 percent of all facilities and 15.1 percent of gross manufacturing production.

Demand for= basic chemicals for all industries, and especially active ingredients for the pharmaceutical, cosmetics, and food and beverage processing industries is expected to maintain steady growth of about two percent yearly. The chemical sector grew an average of three percent annually between 1995 – 2005.=   However, during this year, it is expected that the sector will grow at a rate of 4.5 percent.

The entire chemical sector was particularly favored by the open economy measures of 19= 91 with free licensing and minimum import requirements for about 85 percent of chemical product tariff classifications. Furthermore, Andean Community provisions provide patent protection for basic chemicals, active ingredients and several substances ordinarily imported by the majority of industry sect= ors. Industries most favored by these measures are those in the agricultural chemical, pharmaceutical, veterinarian, cosmetics and food processing secto= rs, which could then lead to new product development and investments in sectors with high consumption of industrial chemicals.

Industrial investment and research and development wi= ll enhance future prospects in this sector despite current low economic, finan= cial and trade indicators. The Colombian market should easily reach $7.0 billion= if market conditions improve in 2007. Colombia’s ability to compete in a global economy will depend on its ability to modernize and automate its industrial infrastructure.  To increase sales of industrial chemicals, industrial investment is required in the food and beverage industry, the pulp and paper industry, the chemical industry and the majority of processing industries. Investment is also requ= ired in the areas of energy, oil & gas, coal, water supply, water and wastew= ater treatment, and the application of environmental technologies.

 

Best Products/Services        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;        Return to top

 

Industrial chemicals are used in a = range of industries such as chemical processing, pulp and paper products, water treatment, oil drilling, textiles, synthetic fibers, soaps and detergents, primary metallurgy, electronics, plastics, pharmaceuticals, cosmetics, fertilizers, explosives, paints and coatings, and food and beverage product= ion. A growing demand for industrial chemicals should result from more serious implementation of Colombian environmental legislation on water treatment. O= ther positive signs for increased demand in the short term are steady growth rat= es in the soap, detergent, edible oil and margarine industries; intensive oil = and gas exploration and exploitation; and the expansion and modernization of refineries and other petrochemical facilities.

The agricultural sector has maintai= ned healthy growth due to greater efficiency in cattle and poultry raising, as = well as in the production of oil palm, sugar, rice, corn, flowers and fish/seafo= od products.  Agricultural chemic= al consumption has declined recently, however, due to heavy rains that have destroyed several crops and due to an international coffee price collapse (= with lower production and exports).

 

 

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

 

U.S. suppliers have good opportunit= ies to maintain their average share of the market for industrial chemicals if mode= rate expansion levels by some private firms in the petrochemical and chemical sectors are maintained. The two major refineries in Barrancabermeja and Cartagena will continue to be modernized, and there are plans for construct= ing at least one new refinery on Colombia's Caribbean coast.

Also contributing to opportunities = for market growth in this sector are projects in the areas of water and wastewa= ter treatment, pulp and paper, electric and gas utilities, petroleum refining, plastics production, metalworking, automotive assembly, food and beverage processing, water supply, and environmental technologies.

 

Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =   Return to top

 

CS Bogota contact: Adriana Ariza, Commercial Assistant (adriana.ariza@mail.doc.gov)

DANE: www.dane.gov.co =

Departamento Naci= onal de Planeación: www.dnp.gov.co 

Revista Producción Manufactu= rera

 

 

SAFETY AND SECURITY=

&= nbsp;

Overview            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =      Return to top

 

 

2004

2005

2006 (estimated)

Total Market Size

94.9

99.6

105.58

Total Local Production

28.0

29.7

31.48

Total Exports

26.0

27.6

29.26

Total Imports

92.8

97.5

103.35

Imports from the U.S.

53.1

55.6

60.00

(In millions of USD)

 

During 2006, the Bogota Commercial Service provided Gold Key a= nd Counseling Services to many U.S. companies seeking opportunities in this sector.  This steady activity = only re-affirms that the Safety and Security Sector is among the brightest of the best prospects in Colombia.

 

Due to the ongoing security concerns throughout the country, t= he security business in Colombia attracts many multinational companies that see Colombia as a promising and highly profitable market.  End-users in Colombia have begun to understand the benefits involved in purchasing protection technologies both= at a personal and corporate level.  Companies have also recognized that managing a business implies conducting surveillance and keeping control of people, information, and property.  Managers are also s= eeing the benefits of implementing security systems to reduce costs while helping= to generate a sense of discipline and security awareness among employees.=

 

 

Best Prospects/Services=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;      Return to top

 

Colombia offers good prospects for = U.S. exporters security equipment and services. Due to ongoing security problems= in the country, Colombian firms continue allocating a significant amount of th= eir budget to protect their facilities from internal and external attacks.  Most local companies express their preference for U.S. products over any others due to quality, state of the a= rt technology and after-sales service.

 

U.S. companies interested in pursui= ng opportunities in the safety and security field must take into consideration that Colombian law states that foreign security companies may not participa= te directly in security or security-related companies or enterprises. Joint-venture agreements with local companies are a requirement. 

 

The security products that present = the most demand are:

 

Alarm Systems and Security-System Integration:

·           In= trusion Detection

·           Pa= nic-buttons

·           Cl= osed Circuit TV (CCTV)

·           Pe= rimeter Security

·           Gu= ard Tour Administration Systems

·           So= ftware Integration Platforms

 

Access Control:

·           Pr= oximity Cards

·           Bi= ometrics

·           Au= tomated Vehicle Parking Control

 

Information Security:

·           An= ti-virus Solutions

·           Pe= rimeter Protection

·           In= trusion Detection

·           Fi= rewalls

·           Fo= rensic Tools

·           La= ptop Security

·           Au= thentication Devices (smart cards and biometrics)

 

Automatic Vehicle Location (AVL):

·           GPS Receivers

·           Co= mmunication Modems

·           GIS (Geographical Information Systems) Software

 

Ionization Detection Devices:<= /p>

·           Ex= plosives

·           Na= rcotics

·           Fi= xed and Portable

 

Armoring:

·           Pe= rsonal Protection Garments

·           Ve= hicle Armoring

·           Ar= chitectural Armoring (doors and windows)

·           Se= curity Film (for windows of vehicles and facilities)

 

Safety Equipment:

·           Br= eathing Masks and Apparatus

·           Sa= fety Accessories

·           Fi= re Protection (Detection and Extinction Systems)

 

Surveillance and Counter-surveil= lance equipment:

·           Di= gital Cameras

·           Zo= om Lenses

·           Hi= gh-sensitivity Microphones

·           Co= mmunications Monitoring Equipment

·           In= vestigations Software and Tools

 

Polygraph Equipment:<= /span>

“Lie detectors”<= /p>

 

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

 

The demand for perimeter protection, intrusion detection, and panic button systems has grown to the point of becoming a priority for middle to upper class families, and also for a wide range of businesses.  <= /p>

 

Biometrics are being used increasin= gly. Silent panic-button systems in residences and offices have also become more common as they provide the option of discretely connecting to an emergency response service that will deploy a trained reaction team to the victim's location in coordination with the local police force.

 

Thefts at banks and commercial inst= itutions remain a problem.  This situat= ion accounts for the fact that electronic surveillance systems such as Closed C= ircuit Television (CCTV) are among the most sought-after solutions for preventing = and recording criminal actions against personnel and property in Colombia. 

 

The other major threat faced by com= panies in Colombia is the possibility of a fire starting at or near a facility or installation.  Consequently, f= ire alarm/protection systems appear as the logical complement to a perimeter-protection and intrusion-detection system.  The ongoing trend seeks the integr= ation of all of the above-mentioned systems under common platforms provided by PCs and associated operating systems that allow for the centralization and optimization of security administration.

 

With the Internet reaching a larger= segment of the population on a daily basis, companies and individuals have also bec= ome focused on protecting their information.&n= bsp; This sub-sector is promising, as there exists a continually increasi= ng demand for information security.  Companies dedicated to this special niche of the security industry o= ffer solutions that range from software programs (firewalls and anti-virus) to intelligent cards and devices that offer physical and logic protection for laptops and PCs, which preclude their unauthorized removal from company installations.

 

Also in the mid-1990s, satellite lo= cation technology (GPS - Global Positioning System) emerged as the principal tool = for managing and securing vehicle fleets.  Several companies in Colombia began to develop different types of solutions with the same purpose--providing automatic vehicle location.  Transportation companies gradually became more and more interested, particularly as highway piracy became a serious threat.  Independent u= sers have also become interested in this technology since some insurance compani= es offer discounts if vehicles are equipped with some type of vehicle location system.

 

Another sub-sector that has been traditionally productive and prosperous is that of vehicle and architectural armoring. Personal protection items such as armored vests also have a high demand in the Colombian market.  This sub-sector relies extensively on the importation of materials s= uch as “Kevlar,” but once the materials arrive in country, the production process is handled almost entirely by Colombian personnel. There= are also good business opportunities for law enforcement equipment and accessor= ies as indicated by recent visits from U.S. company representatives.

 

Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =   Return to top

 

CS Bogota contact: Adriana Ariza, Commercial Assistant (adriana= .ariza@mail.doc.gov)

 

Superintendencia = de Vigilancia y Seguridad Privada

www.supervigilanciaprivada.gov.co=  

 =

Instituto Colombi= ano de Normas Técnicas – ICONTEC

www.icontec.gov.co

 

 

TELECOMMUNICATIONS SERVIC= ES

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Overview            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =      Return to top

 

(Service figures are not available)=

 

In Colombia, the telecommunications= sector has grown at a higher rate than the overall economy. Still this sector need= s to develop more to compete globally. Greater broadband access must be the major focus to drive technological development in communications and connectivity. This telecommunications area provides attractive opportunities for U.S. telecommunications companies.

 

In Colombia, 70 percent of the popu= lation lives around a few big cities, mainly Bogota, Medellin, Cali and Barranquil= la, and most of Internet users in the country access the web through telephone lines. Approximately 4.5 percent of Colombians have access to broadband. Ca= ble and xDSL technologies have been adopted mostly by corporate clients and are available mostly in major cities.

 

Colombia had approximately 6.9 mill= ion main lines in service at the end of third quarter of 2006, a decrease of 7.24% f= rom 2004, equating to a penetration rate of just over 15.46%.  Currently, Colombia has over 7 mil= lion fixed lines in service, for a fixed line teledensity rate of about 17% and = approximately 28 million mobile subscribers, for a mobile penetration rate of 64%.  There are 4.4 million public phone lines, or a penetration rate of 1.5%.  The personal computer rate is 41 per 100 inhabitants, and Internet u= ser density is about 8.2%.

 

In mobile telephony, the preferred technology has migrated to GSM, and there will be only three cellular telep= hone companies and one trunking company by the end of 2006. To generate new sour= ces of revenue, these carriers must introduce enhanced services to compete for attractive business and consumer customers.  Companies must offer differentiati= ng, value added services such as text messages and access to the Internet to compete for the largest portion of the market. The number of mobile phone subscribers has increased 3.93 percent with respect to 2005, reaching 29.1 million subscribers, a penetration of 64.49 percent.  Comcel still has the most subscrib= ers at 17.36 million and a 62 percent share of the market, Movistar accounts for 7= .84 million of users and Colombia Movil only has 2.8 million subscribers.

 

Latin America is considered one of = the world’s fastest growing regions in terms of broadband uptake.  However, it still accounts for onl= y 3.9% of the world’s broadband pie.  In Colombia, broadband grew at an annual rate of around 100% in 2005= .

 

Despite the significant growth in b= roadband subscriptions across Colombia, broadband penetration rates are extremely lo= w as a result of low per-capita incomes, relatively high broadband prices and po= or availability of broadband services.  The Colombian broadband customer base is expected to increase over 1= 00% in 2006.

 

 

 

Best Prospects/Services=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;      Return to top

 

The telecommunications industries t= hat will benefit most from expansion of broadband access in Colombia will be: cable operators, long distance companies, local exchange carriers, TV broadcaster= s, satellite companies, software developers, and Internet service providers.  Broadband deployment is a top prio= rity because it will increase revenues for telecom carriers, as well as other in= dustries, which should translate in significant investment in and growth of the Colom= bian economy.

 

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

 

New regulations for the television = industry are under consideration.  Depe= nding on the decisions the government makes, this sector will be either a favorab= le or unfavorable area for future investments. Although the telecommunications authorities have debated digital TV, it is still a very undeveloped area in Colombia. U.S. investors should be aware of whether the technology to be adopted in Colombia will be that used in the U.S. (ATSC) or that used in Eu= rope (DVB).

 

Among the top exports if Colombia a= dopts the U.S. standard are broadcast transmission equipment; components for digi= tal television consumer products; and programming and other content.

 

Resources             =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            = Return to top

 

CS Bogota contact: Adriana Ariza, Commercial Assistant (adriana= .ariza@mail.doc.gov)

DANE: www.dane.gov.co =

Ministerio de Comunicaciones: www.mincomunicaciones.goc.co 

Comisión Reguladora de Telecomunicaciones: www.crt.gov.co


 =

PLASTIC MATERIALS AND RESIN= S

 

Overview            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =      Return to top

 

 

2004

2005

2006 (Estimated)

Total Market Size

1,109.1

1,148.0

1,239.1

Total Local Production

       &nbs= p; 769.0

   805.6

853.9

Total Exports

449.6

   471.0

485.1

Total Imports

   789.7

813.4

870.3 

Imports from the U.S.

      710.7

&nb= sp; 732.0

761.2

(In millions of USD)

 

The plastics industry played a very= active role in the Colombian economy in 2006, boosted by significant growth in the construction, food processing and automotive sectors, which are major end-u= sers of locally produced plastic products.  The continuous development of the petrochemical industry and the expansion of the Cartagena Refinery are positive factors influencing the fu= ture growth of this sector.  2007 h= as created great expectations among local importers of plastics materials and resins and plastic processors, as the possibility of a U.S./Colombia Trade Promotion Agreement will bring new opportunities for their product.  According to the National Plastics Association (Acoplasticos), the growth in the plastics sector averaged six percent annually during the 2005-2006 period.  As the Colombian economy and local demand for plastic products grow, the increased market created by internati= onal trade agreements will attract new investment to the region and lead to grea= ter imports of plastic materials.

 

Best Prospects/Services=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;      Return to top

 

The local demand for plastic materi= als and resins is estimated at 623,000 tons per year, assuming a consumption of 14.6 kilos of plastic products per capita. 

 

Polyethylene of 0.94 weight or more, polyethylene of less than 0.94 weight, linear low-density, polypropylene, polyvinyl chloride emulsions and suspensions, and polyesters are the best p= rospects for imports into Colombia.

 

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

 

The bottling and packaging industri= es serving the food processing, health, cosmetics, home cleaning, industrial products, and lubricating products markets are the major clients for plasti= cs materials and resins, followed by the construction and automotive sectors.<= span style=3D'mso-spacerun:yes'> 

 

Manufacturing, another important pl= astic products’ end-user, grew by six percent in 2006. The above industries= use approximately seventy-two percent of the total imported and locally manufactured plastics materials and resins.  Extrusion has the largest demand accounting for 63 percent of the market.&n= bsp; Injection accounts for 16 percent, blowing 11 percent, and calendari= ng, thermoforming, and molding accounting for ten percent.

 

Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =   Return to top

 

CS Bogota contact :  Soledad Salguero, Commercial Speci= alist. Email : soledad.salguero@m= ail.doc.gov 

National Statistics Department-Dane= : www.dane.gov.co

Plastics Industries Association: www.acoplasticos.org

Banco de Comercio Exterior de Colombia – Bancoldex: Bancoldex.com

 =

AUTOMOTIVE PARTS AND ACCE= SSORIES

 

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2004

2005

2006 (estimated)

Total Market Size

1,056.1 

1,334.4  

1.418.4

Total Local Production

     378.2

832.1     

   869.5

Total Exports

     169.6

 591.6    

621.6  

Total Imports

847.5    

1,093.9     

1.170.5 

Imports from the U.S.

305.1    

393.8     

421.3  

(In millions of USD)

 

In 2006, the Colombian automotive s= ector experienced a second record year of significant growth.  This sector continues to be strong= and solid.  As a result of the modernization of the economy and the new challenges imposed by the global economy, the automotive sector has become more dynamic.  It is the fourth most important in= dustry in Colombia.  In the 2004-2006 period, imports of automotive parts and accessories grew approximately 20 percent and local production approximately 54 percent due to the large dema= nd created by the local manufacturing plants (GM, Mazda, and Renault which have doubled their yearly manufacturing capacity) and the aftermarket that also showed significant signs of recovery in the 2004-2006 period.  Local carmakers have ambitious pla= ns and have captured the market by increasing the variety of models produced in co= untry and for export to Venezuela, Ecuador and other Andean countries.

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The United States has traditionally= been Colombia’s major supplier of automotive parts and accessories, accoun= ting for approximately 36 percent of total imports in the 2005-2006 period.  According to local trade sources, = the U.S.-Colombia Trade Promotion Agreement pending ratification from both U.S.= and Colombian congresses will likely result in a measurable increase in U.S. exports of motor-vehicles, parts and accessories to Colombia.   The possible elimination of = the 5-15 percent Colombian tariff on U.S. imports with the free trade agreement will be a major catalyst to this anticipated increase in exports.

 

The development and growth of the automotive parts and accessories sector depends directly on the sale of mot= or vehicles in Colombia.  The lar= ge quantity of old vehicles in circulation and the public’s long-term us= e of them are driving a growing demand for automotive parts and accessories.  Currently, Colombia has about 3.4 million motor vehicles in circulation; many are more than 15 years old and require a broad range of replacement parts.  Another factor favoring the automo= tive parts and accessories market is that approximately 80 percent of cargo and passengers’ transportation in Colombia is performed by land.  Thus, transportation companies nee= d to keep their vehicles in optimum condition to perform efficiently. 

 

Motor vehicles imports increased 37= .2 percent during 2006.  Therefor= e, imports of automotive parts and accessories and maintenance equipment are expected to grow as a result of the large number of vehicles imported and produced during the last five years, which are beginning to demand replacem= ent parts and maintenance.  Additionally, the Bogota mass transportation system  “Transmilenio,” and si= milar systems that are being developed for Cali, Barranquilla, Medellin, and other major cities will also create a permanent demand for parts and accessories = and maintenance and repair equipment.

 

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Best sales prospects over the short= and medium term will be determined very much by the continued demand of the aftermarket and by the demand for parts generated by the equipment already = in operation.  According to indus= try and trade sources, local manufacturers plan to manufacture those automotive parts and accessories that will have the largest demand in the local market.  Demand for imported equipment will continue the same trend, but the growth brought on by expand= ed markets created by international trade agreements (such as the CAN-Mercosur, G-3, ALADI, and the U.S. etc.) could mean more opportunities for U.S. impor= ts.

 

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U.S. product opportunities include = tires for small vehicles, trucks and buses, gasoline and diesel engines, piston rings, cast-iron engine parts, carburetors, engine valves, other cast-iron engine parts, fuel-injection pumps, parts of fans, ventilating hoods, air conditioning and parts for motor vehicles, filters, ball bearings, tapered roller bearings, roller bearings, gaskets and similar joints of metal sheet= ing, electric storage, batteries, nickel-cadmium storage batteries, electrical distribution parts, terminals, electrical splices and electrical couplings, boards, panels, consoles, cabinets for motor vehicles, bodies for passenger automobiles, body stampings, gear boxes, drive axles with differential, suspension shock absorbers, radiators, clutches, suspension systems, parts = for power trains, and brake parts.

 

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CS Bogota contact :  Soledad Salguero, Commercial Speci= alist. Email : soledad.salguero@m= ail.doc.gov

National Statistics Department-Dane= : www.dane.gov.co

Colombian Association of Automotive= Parts Manufacturers-Acolfa: www.acolfa.com.= co


 

AIR CARGO SERVICES (AVS)

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2004=

2005=

2006= Est

Total Market Size

631.9

678.3

732.5

Total Local Air Cargo

130.0

134.7

141.4

Total Outbound  Air Cargo

331.8

345.1

372.7

Total Inbound Air Cargo

170.1

198.5

218.2

Air  Cargo from the U.S.A.=

85.7

110.0

123.2

Data Table (in thousand of tons)

 

After the slide experienced by the Colombian economy during 1998-2001, the Colombian air cargo market started = to recover along with the economy and total cargo moved by air (local and international) increased from 506,618 tons in 2002 to 678,335 tons in 2005 = (a 34 percent increase in three years).  This recovery was especially significant in the outbound internation= al air cargo that grew from 257,292 tons transported in 2002 to 345,118 tons m= oved in 2005 as a result of the growth in Colombian exports that increased by 76 percent (from US$12 billion in 2002 to US$21.2 billion in 2005).

Ninety-nine percent of internationa= l air cargo transported in 2005 was handled through the  country’s four main airports= as follows: Bogota, 75.0%; Medellin (Rionegro), 19.0%; Cali, 4.0% and Barranqu= illa, 1.3%.

 

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Airport security and safety equipme= nt

Material handling equipment<= /p>

Inspection equipment security devic= es

Forklifts

Cold storage facilities for flowers= and perishable products

Telecommunications equipment and ai= rport related software

Aircraft for expanded air cargo ope= rations

Leasing, insurance and finance

Information technology and related = products

Cargo Services (brokers, customs, e= tc.)

 

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Based on preliminary statistics pub= lished by the Colombian Civil Aeronautics, the total Colombian market for air carg= o is expected to expand by 8 percent during 2006.  At the same time, inbound air carg= o from the United States would grow by 12 percent, while outbound cargo would incr= ease by 8 percent.  The expectation= s for growth of air cargo services in Colombia rely on: (a) favorable local econo= mic growth that has been predicted to reach a six percent increase at the end of 2006 after having attained a 5.2 growth during 2005; (b) increase in demand= for international transport of local goods (flowers, fruits, textiles, etc.); (= c) the open skies policy, which allows airlines to enter the country and provi= des freedom in routes and timetables; &nb= sp; (d) other trade agreements that are being negotiated with the Europe= an Community, Mercosur, and various Central American countries; and (f) the security and economic plans of the government that have fostered investor confidence. Also, on November 22, 2006 Colombia and the United States signe= d a Trade Promotion Agreement that will be implemented if it is ratified by U.S. and Colombian Congresses. This will foster a very significant expansion of trade between the two countries.

 

There are numerous opportunities for products and services of U.S. companies in the air cargo sector over the ne= xt few years.  This includes ever= ything from strategic alliances between airlines to equipment sales, such as that mentioned above.  U.S. service= firms can also offer strategic planning and consulting services, technical advice, technology-transfer services, solutions and hardware for merging and consolidating airfreight operations.  Financial firms can offer services for security/risk management.

 

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Rebeca Rueda, Commercial Assistant:= rebeca.rueda@mail.doc.gov

 

-Colombian Association Of Air Transportation: www.atac.aero =

-Colombian Association Of Flower Gr= owers – ASOCOLFLORES:

www.colombianflowers.com

-National Industrialists Association – ANDI: www.andi.com.co

-Association Of International Airli= nes In Colombia – ALAICO:

= www.alaico.org

-Colombian Special Administrative U= nit For Civil Aeronautics  – UAE= AC: www.aerocivil.gov.co

-National Association Of Exporters = – ANALDEX: www.analdex.org

-Colombian Freight Forwarders, Cust= oms Brokers And Warehousing Federation – FITAC: www.fitac.net

 

 

TRAVEL AND TOURISM (TRA)

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Expenditures of Colombian Travelers to Other Countries

 

 

2004=

2005=

2006 Est

Total Market Size

1,977

2,163

2,487

Expenditures of Colombian travelers in the USA

 

818

 

911

 

1,002

Expenditures of Colombian travelers in the rest of the world

 

1,159

 

1,252

 

1,485

(In millions of USD)

 

During 2005 the total number of Col= ombians traveling by air to foreign destinations (1.94 million) increased by 15 per= cent when compared with 2004 while passengers going to the United States (757,00= 0) increased by 13 percent. One of the main reasons for this significant incre= ase was the devaluation of the dollar vis-à-vis the Colombian peso that continued to depreciate during 2005 and by year-end reached its lowest leve= l in several years.

 

The U.S. share of the 1.94 million passengers traveling abroad from Colombia was approximately 39 percent, followed by South America with a 28 percent share, Central America (includi= ng Mexico and the Caribbean) with 17 percent, Europe with 13 percent, and othe= r destinations with 3 percent.

 

Around 757,000 passengers traveled = from Colombia to the United States, of which an estimated 80 percent (605,600) w= ere Colombians.   In 2005, th= ese 605,600 Colombian visitors spent an estimated $911 million in the U.S., exc= luding airfares.  The average expendi= ture of a Colombian who travels to the United States is $215 per person/day (excluding airfare), and the traveler spends an average of seven nights in = the U.S.

 

Currently, 80% of Colombians travel= to the U.S. on a repeated basis.  Col= ombia ranks 17th in the world on the list of top arrival-generating countries for= the United States, and third among Latin American countries after Brazil and Venezuela.  

 

Partial available statistics for 20= 06 show that the market has maintained its growing tendency and that the total numb= er of passengers to all outbound destinations will most likely increase by 15 percent while the number of air travelers to North America will show a tota= l 10 percent growth.

 

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Air Transportation Services<= /p>

Hotels, Motels, Lodging facilities<= /span>

Passenger Car Rental

Restaurants

Sightseeing tours

Amusement: theme parks, natural par= ks and natural wonders

Shopping

Special interest (like sports, arts= , entertainment)

Major beaches

Cruises

Health insurance cards

 

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The Colombian market offers excelle= nt opportunities for promoting travel to the United States.  During the last twelve years the t= otal number of Colombian travelers to foreign countries showed a marked turnarou= nd, increasing from 785,000 in 1992 to 1.3 million in 1997, 1.4 million in 2002, 1.7 million in 2004, 1.9 million in 2005, and an estimated 2.4 million in 2= 006.  Although the United States is the = main overseas destination of the Colombian tourist traveler, many of them, howev= er, are selecting other countries for their vacation plans.  South America, specially Argentina= and Brazil, have become increasingly popular destinations for Colombians.  The fact that no visa is required = and promotions with very good rates offering all-inclusive packages are readily available, make these areas an attractive alternative.

 

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Rebeca Rueda, Commercial Assistant:= rebeca.rueda@mail.doc.gov

Colombian Association Of Airlines &= #8211; ALAICO: www.alaico.org

Colombian Association Of Travel And= Tourism AgenciES – ANATO:

www.anato.com.co

Colombian Hotels Association – COTELCO: www.cotelco.co 

Colombian Special Administrative Un= it For Civil Aeronautics  – UAE= AC: www.aerocivil.gov.co

Ministry Of Trade, Industry And Tourism:  www.mincomex.gov.co

Visit Usa Committee Colombia: www.visit@epm.net.co  

 

 

SOFTWARE SERVICES

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Overview (Figures not available)       

 

As the fourth largest information technology (IT) market in Latin America, Colombia offers significant opportunities for U.S. suppliers of software products and services. =

In Colombia, the total number of co= mpanies in the software sector is approximately 570 of which there are approximatel= y 20 international companies with sales of US$190 million and 550 local software developer companies with sales of US$150 million. The software market was valued at around US$340 million at the end of 2005 and it is estimated that= the sector grew at a 16% rate to be valued at approximately US$395 during 2006. Estimated trade losses due to business software piracy are over US$100 mill= ion in 2006, with an estimated 57% piracy level.

 

The software industry is one of the= most rapidly growing information technology sectors in Colombia. Growth in this sector is estimated at 16% annually.

 

The software industry in Colombia is fiercely competitive. While most American companies target key accounts with government bids and the biggest local companies, the rest of the companies satisfy internal demand and also export to neighboring countries. One advan= tage for American software companies is that they have the needed capital and know-how to reach mature targets.

 

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There is a growing demand for softw= are products and the most promising sectors are government, financial and oil.<= span style=3D'mso-spacerun:yes'>  Computer and network products for = these sectors tend to be imported. There is no local production for software in t= hese sectors, except for the customization of software to fit local requirements= .

Colombia presents a mixture of firs= t and third world technology, depending on the industry.  Innovative software developments h= ave been identified as one of the key drivers for the improvement of Colombian industries.  Furthermore, loca= l and foreign software companies are focused mainly on financial, billing, busine= ss resource plan, inventory and human resources applications.

 

Colombia has a well-developed communications and banking system in urban areas but there is still plenty = of room to implement new software developments in most rural areas.

 

U.S. suppliers of software should k= eep in mind that local companies expect foreign software companies to be able to w= ork with their specific needs and requirements in a solution-driven rather than product-driven environment.  M= ost Colombian manufacturing companies will need software solutions to improve t= heir existing procedures leading to higher efficiency and therefore increasing t= heir revenues.

 

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The Colombian software and computer industry is a strong market for U.S. firms because of its importance to the Colombian economy, the large number of industries the sector can serve, the interest in these sectors to keep up-to-date with the technical development= s in the sector, and the considerable number of executives that attend the most important international software and computer events. 

Also, significant opportunities exi= st in the Colombian market, due in part to the government’s efforts to enfo= rce software copyrights. This enforcement has stimulated sales of legitimate so= ftware and will create opportunities in the following niches:

 

·           So= ftware for data security solutions for transactions over the Internet

·           So= ftware that improves internal communications throughout company’s networks

·           So= ftware tailor-made for communicating different platform languages

·           So= ftware for data mining and data conversion

·           So= ftware for financial and management solutions

·           So= ftware for transportation logistics

 

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CS Bogota contact: Adriana Ariza, C= ommercial Assistant (adriana.ariza@mail= .doc.gov)

 

FEDESOFT (Software Federation)

www.fedesoft.org

 

ACIEM (Colombian Engineers Associat= ion)

w= ww.aciem.org


 

OIL AND GAS MACHINERY AND = SERVICES

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2004

2005

2006 (estimated)

Total Market Size

846.0

902.9

978.0

Total Local Production

65.2

70.0

100.0

Total Exports

69.2

72.8

80.0

Total Imports

850.0

900.1

958.0

Imports from the U.S.

600.0

650.0

670.0

(In millions of USD)

 

Colombia has estimated reserves of = between 12 to 47 billion barrels of crude and natural gas distributed in eighteen sedimentary basins covering over 1,036,400 square kilometers. Seven of these basins have ongoing commercial production activity. The total area under exploration and production is estimated at 30 percent of the territory, lea= ving most of the country available for exploration activities. The prospectivity index in Colombia is approximately two wells per 1,000 square kilometers, o= ne of the lowest in the world.

As of the end of 2005, Colombia had= some 1.5 billion barrels in remaining oil reserves, and with an annual oil production rate of about 198 million barrels per year, reserves could last = for seven years, at which time Colombia would be a net importer of crude. Total natural gas reserves at the end of 2005 were 6.5 tera cubic feet and could = last more than 20 years given the country’s annual consumption of 209 giga cubic feet, and there are indications that demand is expected to increase a= bove these levels. The government estimates that by the end of 2006, reserves co= uld reach 1.4 billion barrels in remaining oil reserves, and 6.7 TCF of natural= gas reserves.

As a result, the Colombian governme= nt has made oil & gas exploration a top priority, and one of the main challeng= es of the country is to achieve an average production level of around 900,000 barrels per day by the end of the decade. To reach this target, upstream investment levels should reach US $2 to 4 billion, which should translate i= nto the drilling of approximately 190 exploratory wells (most of them between 5= ,000 to 10,000 feet deep), in order to discover net reserves of approximately 2,= 400 million barrels of oil by 2010.

On December 14, 2006, the Colombian Congress approved a stock capitalization program for up to 20 percent of Colombia’s national oil company, Ecopetrol. With these funds the comp= any will embark on an ambitious investment campaign for up to US $12.5 billion (until 2011) to develop new exploration and production projects, improve li= quid fuels quality (reducing sulfur content by modernizing the Cartagena and Barrancabermeja refineries), build a biodiesel facility to produce some 2,0= 00 barrels per day, increase efforts for compressed natural gas in vehicles, a= nd implement plans for natural gas export to Panama and eventually Central America, among other projects.

Ecopetrol is also looking for poten= tial exploration and production opportunities in Brazil, Ecuador, and Peru as we= ll as increase production of heavy crude (to 160,000 barrels per day in 2011) = to locate new sources of crude oil reserves while reducing its exploration ris= k in Colombia.

Large independent and major oil &am= p; gas companies such as ConocoPhillips, ExxonMobil, BHP Billiton, Shell, Apache, Petrobras, among others have been approaching Ecopetrol and ANH to explore business opportunities in Colombia, while others are expanding their exploration and production activities.

The National Hydrocarbons Agency (A= NH) has signed a record 54 exploration and production, and technical evaluation contracts that are expected to increase the country’s crude and natur= al gas reserves.  With the contra= cts, industry specialists project a need for new exploration and production dril= ling rigs (including offshore exploration and production platforms and ancillary equipment) that are currently unavailable in the Colombian market. <= /p>

To attract needed investment, the A= NH is developing new incentives, and is improving a comprehensive data bank that interested firms can consult to determine the best areas for conducting exploration activities. Regulatory modifications introduced include reducti= on of royalty payments from a flat 20 percent of total production to a percent= age that varies according to the volume of production and current international oil/gas prices. Other changes aim to reduce the government’s current = 50 percent participation in profits after deducting royalties and costs.  This participation now fluctuates according to the size of the reserves discovered.

 

In 2005, the government approved the elimination of import duties for equipment, spare parts and accessories destined for various oil & gas activities (exploration, production, tra= nsportation, and refining). The measure also covers minerals exploration, production, processing, transformation and transportation. This benefit will expire on October 2010, and will allow for enhanced market access for U.S. exporters given a favorable exchange rate, better product quality and relative proxim= ity to Colombia.

 

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The best oil and gas equipment and = service prospects for U.S. firms lie in seismic activity services (both two- or thr= ee dimensional); improved analytical seismic computer codes; drilling equipment (including directional drilling); drilling fluids; wellhead equipment (such= as Christmas trees, valves, compressors, pumps, piping equipment, safety equipment, well completion, casing and cementing equipment); improved production stimulation, and enhanced oil recovery for selected fields in wh= ich production is dwindling. There are several fields with crude oil with less = than 15 degrees API, which could require thermal recovery to pump it out. Eventually, if offshore exploration proves successful, Colombia would need offshore oil and gas production equipment (floating or fixed drilling rigs), particularly if the ongoing Caribbean-basin exploration contracts yields results.

 

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Any U.S. company interested in purs= uing oil & gas exploration and production contracts must approach the ANH. If interested in providing services or supplying equipment, then the companies must approach Ecopetrol or local petroleum companies directly. U.S. supplie= rs must contact relevant U.S. petroleum companies directly in their respective headquarters.

 

Other potential opportunities invol= ve petrochemical projects estimated at US $2 billion that could be very attrac= tive to U.S. firms. These projects include a US $1 billion expansion of the Cartagena Refinery to increase daily capacity to 140,000 barrels, a US $730= to US $1.2 billion Olefins Cracking Plant, and the US $350 million for the Barrancabermeja refinery products hydrotreatment plant. Other investments include ethanol producing plants to comply with Colombian law which require= s a 10 percent mixture with gasoline to improve air pollution conditions in the country.

 

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CS Bogota contact: Julio Carb&oacut= e;, Commercial Specialist (Julio.Ca= rbo@mail.doc.gov)

National Hydrocarbons Agency (ANH):= www.anh.gov.co 

Ministry of Mines and Energy: www.minminas.gov.co 

Coinvertir (Invest in Colombia Corporation):  www.coinvertir.org

Colombian Oil Company (Ecopetrol): = www.ecopetrol.com.co 

Colombian Government:  www.gobiernoenlinea.gov.co =

Inter-American Development Bank (ID= B): http://www.iadb.org/= exr/country/eng/colombia/ 

National Planning Department:  www.dnp.gov.co

The World Bank: www.worldbank.org


 

POLLUTION CONTROL  EQUIPMENT

 

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2004

2005

2006 (estimated)

Total Market Size

108.5

130.9

138.0

Total Local Production

12.0

12.0

13.0

Total Exports

13.0

11.7

15.0

Total Imports

109.5

128.9

140.0

Imports from the U.S.

71.3

75.9

82.0

(In millions of USD)

 

It is anticipated that with the pos= sible approval of the U.S.-Colombia Trade Promotion Agreement, compliance with the country’s environmental regulations will be enforced, and industries = will need to invest more in pollution control equipment and reduce current pollu= tion levels.

Nearly 25 percent of Colombia’= ;s population (10.5 million) lacks aqueduct services, and 40 percent lacks sewerage (16 million), especially in the rural areas. 97.4 percent of the u= rban population has potable water and 90.2 percent of the population has sewerag= e. For the country’s rural areas the situation is different: aqueduct service coverage reaches 66.0 percent and sewerage coverage only reaches 57= .9 percent.  Colombia’s Wat= er Regulatory Agency (CRA) estimates that nearly 45 percent of the treated wat= er (by the country’s 1,800 water utilities) is not accounted for; it is produced but not paid for by the users or through losses in piping systems, therefore creating a large problem for utilities and users, hurting future = investments.

Government sources estimate that the country needs to make environmental investments in the range of US $3.3 to = US $3.4 billion per year to maintain an adequate level. The World Bank estimat= es annual investment needs in aqueduct and sewerage systems to be US $700 mill= ion, or about US $1.0 billion if wastewater treatment plant needs are included.<= /span>

The Ministry of Environment, Housin= g and Territorial Development (MMA) considers that close to 80 percent of Colombi= an municipalities dispose of untreated wastewater into rivers or lakes. Colomb= ia is a regional leader in the development and implementation of a wastewater pollution charge (tasa retributiva) but only a few environmental agencies h= ave established regional funds to finance wastewater treatment facilities. Citi= es such as Bogota and Medellin own wastewater treatment plants, and other citi= es such as Cartagena are developing an underwater outfall system with World Ba= nk funding or are developing plans for other treatment systems, but funding remains a central concern.  Me= dellin is developing plans for a new wastewater treatment plant that could cost so= me US $300 million.

A major obstacle to the sector̵= 7;s growth is the current fiscal deficit that affects the availability of resou= rces from the government budget and smaller investments from private entities. M= ost public sector funds are expected to come from transfers from the electric p= ower sector, and the collection of royalties, taxes, and other contributions from the so-called “green markets”. New financing arrangements for t= he private sector include new credit and tax incentives such as sales and inco= me tax exemptions for environmentally sound technologies, new economic instrum= ents and pollution charges, carbon dioxide sequestration options, and other stock market alternatives.

 

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Best prospects include water and wa= stewater treatment plants, water pollution monitoring and control equipment, pumps, valves, solid waste hauling and disposal equipment, air pollution monitoring and control equipment, and environmental services (consulting). The operati= on and management of municipal services such as providing potable water and collecting, hauling and disposing of solid waste also offer good market opp= ortunities for U.S firms.

 

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The CRA is developing new regulatory methodologies to incorporate the cost of “unaccounted for” wate= r, and the cost of sewage collection into end-user fees to allow for financing= of large infrastructure developments needed throughout the country. In additio= n, the MMA is working on the incorporation of pollution charges to fund the co= st of wastewater treatment plants. There are several projects with partial multi-lateral banks funding. Regulations regarding air pollution and solid = and hazardous wastes are being developed at a time when public financing is alm= ost non-existent, and enforcement has traditionally been lacking.

 

Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =   Return to top

 

CS Bogota contact: Julio Carb&oacut= e;, Commercial Specialist (Julio.Ca= rbo@mail.doc.gov )

Ministry of Environment, Housing, a= nd Territorial Development: www.min= ambiente.gov.co

Coinvertir (Invest in Colombia Corporation):  www.coinvertir.org

Colombian Hydrology, Meteorology and Environmental Research Institute: www.= ideam.gov.co 

Colombian Government:  www.gobiernoenlinea.gov.co =

Water and Basic Sanitation Regulato= ry Comission (CRA): www.cra.gov.co 

Inter-American Development Bank (ID= B): http://www.iadb.org/= exr/country/eng/colombia/  

National Planning Department:  www.dnp.gov.co

The World Bank: www.worldbank.org

 

CONSTRUCTION AND MINING E= QUIPMENT

 

Overview  =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;  Return to top

 

 

2004

2005

2006 (estimated)

Total Market Size

259.6

350.2

380.0

Total Local Production

13.0

13.5

15.0

Total Exports

8.2

4.4

10.0

Total Imports

254.8

341.1

375.0

Imports from the U.S.

163.0

226.0

240.0

(In millions of USD)

 

The Colombian government continues = its efforts to improve the condition of its road network, facing challenges suc= h as a high degree of deterioration, a lack of maintenance, and insufficient geographic coverage. Major investments in this area are needed to reduce the current excess costs in transportation expenses and vehicle deterioration, since roads are used to transport the vast majority of the country’s cargo. At the same time, the government intends to develop an important pro= gram to promote navigation on the 1,600-kilometer Magdalena River running through the heart of the country.

During 2005, President Uribe contin= ued his efforts to reduce the critical highway system’s deterioration by brin= ging in new private sector investment and by allocating collected tolls to highw= ay maintenance and rehabilitation efforts.

The National Highway Institute expe= cts to accelerate the development of several concession projects (affected by corr= uption problems, lack of adequate funding, and lower-than-expected toll collection= s) to maintain its 16,500-kilometer road network. The Ministry of Transportati= on estimates that Colombia has more than 70,400 kilometer of roads that fall u= nder the jurisdiction of state and municipal entities, many of which have not met their required maintenance and rehabilitation investment levels.

Additional construction projects in= volve state and city road networks, especially for mass-transportation networks w= ith the use of articulated-buses such as the internationally-acclaimed Bogota Transmilenio mass-transport system. This innovative bus system will soon re= ach the industrial area of Soacha and additional new routes within the city. Ot= her Colombian cities that are implementing mass-transport systems include Cali, Barranquilla, Cartagena, and the urban areas of Pereira and Dos Quebradas. = The government announced investment plans for US $2.9 billion (including private sector investment) up to 2010 to improve the country’s infrastructure towards the U.S.-Colombia Free Trade Agreement, and reduce existing transportation bottlenecks that impact exporter’s competitiveness.

The government is also developing m= easures to reactivate the housing sector. The priority is to enhance buyer credit rating to allow them easier access to credit lines (with lower interest rat= es), thus attracting new investment in this key industry sector, and helping red= uce current levels of unemployment. Announcement of these government measures h= as resulted in improved market conditions, such as the revaluation of existing housing units, an increase in construction activity in large urban areas, a= nd favorable conditions to acquire new or used housing, among others.

Coal reserves in Colombia are estim= ated at 6.6 billion metric tons (about 40 percent of Latin American coal reserves) maki= ng the country the fourth largest coal exporter in the world with 42 million t= ons in 2005, and by 2010 the government expects to produce some 70 million tons. Coal continues to the second most exported product after crude oil. The cou= ntry also produces large amounts of nickel, gold, platinum, silver, emeralds, ni= ckel and other resources.

The Colombian mining sector continu= es to be an attractive investment market and companies are undergoing major producti= on expansions (especially coal and nickel), and several large foreign firms are setting up their branches in Colombia and are applying for exploration righ= ts to develop new coal, gold and copper mines. This investment is also attract= ing new smaller firms into the country.

The national mining code and the re= vision of the national mining development plan (PNDM) are leading to faster development of new mining projects and helping the government achieve its g= oal to increase Colombian exports. The government is developing an exploration = plan to cover more than 120,000 square kilometers of promising areas, including geophysical and geo-chemical prospecting that could allow a better understanding of mineral potential and attract private partners.

 

In 2005, the government approved the elimination of import duties for equipment, spare parts, and accessories destined for various mining activities (production, processing, transformat= ion and transportation). This benefit will expire in October 2010, and will all= ow for enhanced market access for U.S. exporters given a favorable exchange ra= te, better product quality and relative proximity to Colombia.

 

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Most Colombian mines are open-pit m= ines, although there are some smaller underground mining operations. Best prospec= ts for mining equipment include shovels, excavators, front loaders, tracked tractors, off-road hauling trucks, and related equipment and parts.<= /p>

 

Best opportunities for construction equipment include excavators, backhoes, concrete pumping equipment, pavement equipment, pavement recycling equipment, tamping and compacting equipment, = and other public works equipment and spare parts.

 

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Coal Expansion Projects: Drummond L= td., Carbones del Cerrejon, and Glencore International are involved in major expansion projects that involve equipment fleet upgrades (mainly shovels, loaders, hauling trucks), and infrastructure development (including the construction of new railroad tracks, locomotives and other transportation equipment).

 

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CS Bogota contact: Julio Carb&oacut= e;, Commercial Specialist (Julio.Ca= rbo@mail.doc.gov)

National Highway Institute (Invias)= : www.invias.gov.co

Coinvertir (Invest in Colombia Corporation):  www.coinvertir.org

Colombian Government:  www.gobiernoenlinea.gov.co =

Ministry of Transportation: www.mintransporte.gov.co

Ministry of Mines and Energy: www.minminas.gov.co 

Mining and Energy Planning Unit: www.upme.gov.co 

National Concessions Institute (INC= O): www.mintransporte.gov.co/inco=  

National Planning Department:  www.dnp.gov.co

Drummond Ltd.: www.drummondltd.com

Carbones del Cerr= ejon: www.cerrejoncoal.com

Colombian Geological and Mining Ser= vice: www.ingeominas.gov.co   

Inter-American Development Bank (ID= B): http://www.iadb.org/= exr/country/eng/colombia/ 

The World Bank (WB): www.worldbank.org  

 

 

ELECTRICAL POWER SYSTEMS<= /span>

 

Overview  =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;  Return to top

 

 

2004

2005

2006 (estimated)

Total Market Size

368.5

448.3

492.0

Total Local Production

   122.4

   120.1

132.0  

Total Exports

85.3

134.2

140.0

Total Imports

331.4

462.4

500.0

Imports from the U.S.

142.5

217.9

240.0

(In millions of USD)

 

The current Colombian electric powe= r market is a direct result of the provisions set forth in various laws and decrees enacted since 1994.  Public utilities and private generators are developing projects to accommodate the increasing power demand and are investing more in thermal and wind power generation than in hydro power plants, to reduce the power availability uncertainty related to potential droughts.

 

Electric power generation is a mixe= d public and private activity, with most of the assets owned by private firms. At the end of 2005, Colombia’s installed electric power capacity reached 13,= 399 MW, with 63.7 percent hydro-based, and the remaining thermal-based (gas and coal-fueled).  Power generatio= n has been growing at more than 4.1 percent due to internal demand growth and electricity exports to Ecuador, creating incentives for the construction of= new power plants.

 

Several large utilities and transmi= ssion companies, including Interconexión Eléctrica (ISA), Empresas Públicas de Medellín (EPM), ISAGEN, and Empresa de Energ&iacu= te;a de Bogotá (EEB) are evaluating expansion projects to other Andean (Bolivia, Ecuador, Perú) and Central American countries, especially = the power interconnection with Panama, which could lead to other projects in Central America.

The government is also promoting th= e use of renewable energy sources, especially for non-grid, isolated areas. Efforts = are underway to promote private ventures in the areas of solar, wind, and small-hydro systems. If successful, this would allow the use of energy in sustainable community projects. EPM owns the country’s sole wind power plant (Jepírachi), a 19.5 MW facility, with financial support from t= he World Bank’s Prototype Carbon Fund’s greenhouse gas reduction credits. Other electric utilities are interested in pursuing renewable ener= gy projects (mainly wind).  Anoth= er non-traditional project is the Amoyá run-of-river hydro project whic= h is expected to produce some 80 MW of electricity and additional environmental benefits aimed at protecting the surrounding paramo areas.

Also, the government is looking to = develop a regulatory framework to expand the use of energy efficient systems and cr= eate awareness for the rational use of energy, including more cogeneration facilities.

 

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The electric power market is transi= tioning from large-scale infrastructure project construction to the optimization of power systems already in place. However, the government’s projected demand scenarios call for new generation projects.  Market potential depends largely o= n the increase of public and private sector industrial power demand, which would = lead to the final implementation of some of the projects planned through the end= of the decade.

Electrical power equipment opportun= ities primarily include power, distribution, and specialty transformers; switchge= ars; motors and generators; industrial controls; and steam, gas, and hydraulic turbines and turbine generator sets. 

 

Opportunities &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;       Return to top

 

The outlook for the Colombian elect= ricity sector is promising since the government is planning the development of sev= eral new generation projects to accommodate the expanded demand (over the estima= ted demand growth rates), as well as the prospects of becoming a major exporter= of electricity (including goods and services) to the Andean region and Central America.

Some solid business prospects exist= as a result of the trend in the market to continue complementing hydroelectric plants with gas-fueled thermal energy generators, including cogeneration systems.  Also, trade and distribution companies are focusing on reducing losses by acquiring leading-edge management and control systems technologies.

Another promising business perspect= ive is the Rural Energy Program aimed at providing electrical power to off-grid ar= eas using renewable energy systems such as solar, wind and small & medium h= ydro plants. This program calls for new generation systems and the recovering of existing ones.  The government= has taken steps to secure funding for the program.  This consolidation trend will also= take place in the energy power systems sector.

 

Resources  = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;            = ;            = Return to top

 

CS Bogota contact:  Julio Carbó, Commercial Specialist (Julio.Carbo@mail.do= c.gov)

ACOLGEN (Association of Power Gener= ation Companies): www.acolgen.org.co <= /span>

CREG (Energy and Gas Regulatory Commission):  www.creg.gov.co

Empresas Pú= ;blicas de Medellín (EPM):  www.eeppm.com

Interconexi&oacut= e;n Eléctrica S.A. (ISA): www.isa.com.co

ISAGEN: www.isagen.com.co

Mining and Energy Planning Unit (UP= ME): www.upme.gov.co

National Planning Department (DNP):=   www.dnp.gov.co

Superintendent of Public Services: = www.superservicios.gov.co

The Ministry of Mines and Energy (M= ME): www.minminas.gov.co

Transelca:  www.transelca.com.co

 =

FINA= NCIAL SERVICES

 =

Overview  =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;  Return to top

 

(Service figures are not available)

 

During the period 1993-1997, the Co= lombian financial system registered a credit boom despite the fact that a deviant speculative bubble was in evolution.  This resulted in the financial crisis of 1998-1999. Emergency measur= es and capitalization were implemented to cope with the crisis and stabilize t= he financial system.  A significa= nt number of financial institutions were closed, forced to merge or taken over.  The major characteristi= cs of the period 2005-2006 were the multiple mergers and acquisitions of financial institutions lead by local as well as foreign investors.  All of the banks taken by the Gove= rnment as result of the crisis were re-structured and have been successfully privatized in public auctions.

 

The presence of foreign banks has stimulated healthy competition in the financial sector.  The restored national economic gro= wth and stability, low inflation, high liquidity, and the industry's drive towa= rd greater efficiency and competitiveness have contributed to minimize the cri= sis after-effects.  This consolida= tion has led to the strengthening of the domestic banking system, creating the corresponding need for credit and investment, low interest rates, a decline= in non-performing loans, and an increase in provisions.   All these factors have resul= ted in the consolidation of the Colombian financial sector and a remarkable performance during 2005-2006.  Additional consolidation is expected during 2007, most likely among existing niche players or specialized non-banking financial institutions.  The Colombian banking sector’= ;s major players are Bancolombia, Banco de Bogotá, Davivienda, and BBVA Colombia, the largest foreign-owned bank.&= nbsp;

 

Currently, the government is in the= process of studying and drafting a general reform of the Colombian financial system= .  Affected institutions are expressi= ng their opinions on which are the most important issues to be included, such = as the elimination of the four per thousand tax levied on all financial transactions paid by the end-users (a tax that restrains savings growth and increases cash transactions in detriment of banking operations), or the liberalization of interest rates to encourage free competition.

 

One of the major governmental short= and medium term goals is the expansion of financial services to cover the entire Colombian population.  Current= ly, only 29 percent of the population is part of the financial system, leaving about 12 million people who do not use it at all, specially those in the low income segment who do not meet the banking requirements and are forced to u= se informal credit services at very high costs.

 

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Colombia has made serious efforts t= o become competitive in the area of financial services.  The quality of the country’s technological resources and the infrastructure of public services have impr= oved significantly, including mass use of computers, expanded Internet access, a= nd the capacity of telecommunication channels.  Corporate Internet transactions, a= s well as the payment of utilities, taxes, and payroll through the banking system = has increased significantly, forcing employees, even in the low economic segmen= ts to enter or expand their participation in the financial system.  However, the use of cash is still = high mainly as a result of the four per thousand tax levied on banking transacti= ons.

 

Personal banking transactions repre= sent aproximately 70 percent of total transactions while about 80 percent of the total value corresponds to corporate banking. The outlook is very positive = for financial services beyond traditional operations.  The acceptance of credit/debit car= ds is growing.  American Express, Di= ners, Master Card, and Visa are the most widely accepted cards in Colombia.  American Express and Diners operate independently, but Visa and Master Card operate through banks, which manage= the cards issuance and clients’ payments.  Debit cards are part of the portfo= lio offered by banks to accounts’ holders and are the ones with higher ma= rket penetration; 24 percent of the population has one or more, while only six percent has a credit card.  In general terms, debit cards are used more to access cash and credit cards for payment of expensive products such as hotels, airline tickets, jewelry, etc= .   High commissions and interes= ts charged by the banking system for the use of credit cards has been an issue among banks, retailers and clients that has tampered the growth of credit c= ard end-users.

 

The trend is for local companies, particularly wholesale and retail hypermarket and supermarket chains, to is= sue their own credit cards to avoid the high margins charged by the credit/debit cards, and also because fierce competition among hyper and supermarkets has forced them to offer additional incentives to clients.  A good example is the Chilean CMR = credit card, which attracted 128,000 clients in less than a year and is accepted by Falabella, Homecenter (Sodimac Colombia) and Carrefour.

 

The Automatic Clearinghouse (ACH), = an electronic network of financial entities with credit/debit operations, is growing continuously.  Transac= tions mostly include payroll payments, government payments, and suppliers operati= ons, among others. The sector’s goal is to expand its financial services to turn the market into a more efficient and competitive industry that will of= fer better and cheaper products to the final consumer.

 

Opportunities &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;       Return to top

 

The Colombian financial sector has = become stronger over the last four years and the sector’s entities have experienced a remarkable recovery.

 

Currently, Colombia has not reached= the banking standards of developed countries, but its progress is noteworthy.  Almost all of the financial entiti= es are implementing plans to expand the infrastructure and coverage of their e-ban= king products/services, and access to financial services through virtual banking. The outlook for sophisticated financial services is very positive as these programs are completed and end-users become more familiar with the new syst= ems. 

 

Market demand calls for locally cha= rtered full-service commercial banks able to operate through a network of branches around the country. These banks should have a flexible approach to supply custom-made solutions to the diverse needs of domestic and international customers, and should be able to offer them a wide variety of products and services in private, correspondent and corporate banking as well as in investment banking.

 

Colombian banks need a range of inf= ormation technology and expertise, electronic banking equipment to support new produ= cts, and e-banking solutions & hardware. Security and risk management soluti= ons & hardware are a must.

 

The Manufacturing and transportation sectors have been the main users of leasing services. Leasing has taken a number of forms, including temporary importation of assets, cross-border leasing and sale and leaseback operations. Leasing companies have been gradually converting into finance companies.

 

Factoring and international credit insurance also offer opportunities. Transactional financing is more associa= ted with consumer goods trade, while equity-based financing is more related to project financing.

 

The prospective Trade Promotion Agr= eement between the United States and Colombia may open new opportunities, especial= ly in the insurance sector, where the most successful products are life and automotive insurance policies.

 

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 =

Superintendencia Financiera de Colombia:  www.superfinanciera.gov.co<= /a>

Asociacion Nacional de Instituciones Financieras (ANIF):  www.anif.com.co<= span style=3D'mso-bidi-font-family:Arial;mso-ansi-language:ES'>

Asociacion Bancaria:  www.asobancaria.com

Bancoldex:&nbs= p; www.bancoldex.com.co

Banco de la Republica:  = www.banrep.gov.co

Bancolombia:&n= bsp; www.bancolombia.com.co

Grupo Aval:&nb= sp; www.grupoaval.com

Davivicenda: www.davivienda.com

 

FOOD & BEVERAGE PROCE= SSING & PACKAGING EQUIPMENT

 

Overview  =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;  Return to top

 

 

2004

2005

2006 (estimated)

Total Market Size

131.4

141.9

153.3

Total Local Production

43.7

49.0

55.0

Total Exports

18.2

24.9

29.2

Total Imports

105.9

117.8

127.5

Imports from the U.S.

20.0

25.5

31.3

(In millions of USD)

 

In Colombia, the food and beverage processing and packaging equipment industry is privately owned, except for a few government distilleries.  = Sector companies range from small family-owned enterprises to large Colombian, U.S. and third country multinationals such as Kelloggs, Nestle, Compania Naciona= l de Chocolates, Noel, etc.  The se= ctor is an important component of the national economy that contributes approximately 10 percent to the GDP, and generates about 120,000 direct jobs.  The sector is ranked as= one of Colombia's lowest risk sectors.

 

National and international competit= ion has influenced the sector, which is recognized by its high dynamism, permanent efforts to maintain state-of-the-art technology, continuous product innovat= ion and their retail presentation.  The most developed sub-sectors are those that process: dairy; sugar; poultry; edible oils and greases; cacao, chocolate and confectionary; and non-alcoho= lic beverages.

 

Company mergers to improve the effi= cient use of installed capacity are common, and many companies are investing in expansion plans. Investing and expansion plans along with the sector’s dynamism and the cyclic equipment update of every industry will result in an increase of at least eight percent in the imports of industrial food proces= sing and packaging equipment. 

 

In 2006, imports from the United St= ates are expected to grow around 22 percent as a result of good positioning of equip= ment in the market, but could be higher if U.S. manufacturers become active in an almost unexplored niche.  Colo= mbian processed food exports are showing a growth trend and, to some extent, this= growth is the result of the governmental support programs for the technological advancement and export preparedness of small and medium companies, known in Colombia as PYMES (by their acronym in Spanish).  These companies, with the support = of the Colombian Government offer good opportunities for U.S. exports of equipment with small/medium production capacity.&nbs= p;

 

Best Products/Services            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;    Return to top

 

Food and Beverage Processing:

-&n= bsp;          Vegetable processing machinery

-&n= bsp;          Dairy processing equipment

-&n= bsp;          Brewery equipment

-&n= bsp;          Mixing and grading apparatus

-&n= bsp;          Filtering apparatus

-&n= bsp;          Heat exchangers

 

Packaging machinery:

-&n= bsp;          Feeling, sealing, capping machinery

 

 

Opportunities &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;       Return to top

 

As globalization and free trade agr= eements force companies to be more internationally competitive, the purchase of advanced technology and equipment becomes a priority.

 

The Colombian Food and Beverages Pr= ocessing and Packaging sector is highly diversified.  The end-users of equipment and tec= hnology in most of the sub-sectors have a wide range of sizes.  Market opportunities for U.S. manufacturers present a similar variety in terms of equipment production capacity.  The significant num= ber of large food processors demand large production capacity, but the largest seg= ment of the sector’s companies are small and medium sized that require less installed capacity.

 

There is little competition from lo= cal producers of industrial Food and Beverage Processing and Packaging equipment.  The quality of loc= al technology has improved from basic equipment and spare parts manufacturing,= but it still has to go a long way before comparing with the latest technologies= and electronic/robotics based equipment and production/packaging lines. =

 

Project financing is not a major pr= oblem because major market players generate project funding through their own successful operations and/or strategic alliances.  During the last decade, in an effo= rt to encourage higher technical and competitiveness levels, the medium and small companies known in Colombia as PYMEs (Spanish acronym for Small and Medium Enterprises) have been the target for special credit programs.  The prospective free trade agreeme= nt with the United States will only re-inforce the importance of improving com= petitiveness of these firms and the sales opportunities for U.S. manufacturers of equipm= ent for this sector.

 

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CS Bogotá Contact: Maria Ter= esa Pena:  maria.teresa.pen@mail.doc.gov=

InterBev:  www.interbev.com

International Exposition for Food Processors (IEFP): http://www.proce= ssfood.com 

PackExpo: www.packexpo.com 

XXIV Bogotá International In= dustrial Trade Fair and Alimentec: www.corferi= as.com

The VII ANDINAPACK International Tr= ade Fair: www.andinapack.com =

ANDI (National Industries Association):  www.andi.com.co

Bancoldex (Foreign Trade Bank):  www.bancoldex.com/gener= al/index.php

Byington Colombia= S.A. (D&B correspondent):  www.byington.net=

Colombian Customs and Income Tax Offices:  www.dian.gov.co

Colombian Government :  www.gobiernoenlinea.gov.co =

FENALCO (Merchants Association):  www.fenalco.com.co

National Planning Department:  www.dnp.gov.co

Presidencia de la Republica and/or Palacio de Nariño (President’s Office):  www.sne.gov.co and www.presidencia.gov.co

 =

 =


 =

Agricultural Sectors      =             &nb= sp;            =             &nb= sp;            =             &nb= sp;    Return to top

Processed Food Products=

Overview        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;        Return to top

 

(In millions of USD)

 

2005

2006

2007 (estimated)

Total Market Size

       &nbs= p;   3,220

3,270

3,415

Total Local Production

       &nbs= p;   3,370

3,420

3,460

Total Exports

       &nbs= p;      890

   900

&nb= sp;  910

Total Imports

       &nbs= p;      740

   750   

   765  

Imports from the U.S.

       &nbs= p;      190

   198       &nbs= p;            &= nbsp;    

   225       &nbs= p;            &= nbsp;    

 

If approved by Congress, the Colombia Trade Promotion Agreement (CTPA) signed between Colombia and the United States in late 2006 will certainly improve import conditions and facilitate trade for agricultural products.  Some of the main agricultural raw materials imported from the U.S. such as corn, wheat, soybeans and soy prod= ucts will enjoy a zero import duty or will achieve that level in a given period,= and in the meantime will have access to duty-free tariff rate quotas.

 

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Demand in Colombia for processed fo= ods and other high-value food products has grown steadily since the early 1990̵= 7;s. Specific products showing an increase in sales since then are poultry meat, beef offal, fresh/frozen pork, mechanically de-boned chicken meat, hatching= and table eggs, fresh fruits, breakfast cereals, beer, pet food, and assorted s= nack foods.  In 2005, Colombia experienced economic growth of five percent, which aided a 14 percent incre= ase in U.S. imported agricultural products. A similar growth rate in economic activity is projected for 2006, which should again have a favorable effect = on U.S. agricultural trade to Colombia.  The Colombian peso has revaluated 14 percent in 2004 and 2005.  It is likely that the trend will continue despite the GOC’s efforts to stem the revaluation.   This phenomenon is expected = to favor growth in demand for imported products, including the U.S. agricultur= al processed products.

 

Historically, Chile is the principal supplier of imported fresh fruits to Colombia.  Foreign competition in good-qualit= y wine primarily comes from Chile, Argentina, Peru, and European countries.  Marketing efforts continue to try = and introduce quality California wines into the Colombian market, but success h= as been limited due to high import duties.&nb= sp; Several Latin American countries receive preferential duty rates, because they are members of the Latin American Integration Association (LAIA.  LAIA is made up of 11 countries:  Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela).  The Andean Commun= ity of Nations (Bolivia, Colombia, Ecuador, and Peru) also receives preferential duties.  Venezuela is no longe= r a member of the Andean Community of Nations.

 

Although the production of domestic processed foods is growing, imports play an increasingly important role in meeting consumer demand for these products.  The Colombian market for processed= foods and other high-value food products is growing as a result of urbanization, which has also resulted in a dynamic fast-food industry and drastic changes= in food marketing.  Strong compet= ition in the supermarket sector has also had an important impact on imports. The United States is the principal foreign supplier of consumer-ready food prod= ucts to Colombia.  U.S. food produc= ts are highly regarded in the Colombian market for their quality and price as well= as for their wide variety of products.

 

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U.S. food companies looking to break into the Colombian market for processed food should consider joint ventures with local companies and/or new investors.  The business environment provided = by a free trade agreement with the United States will expand opportunities in lo= cal and neighboring markets.

 

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Trade Shows:  Agroexpo is an exhibition with emp= hasis on food processing equipment that takes place every two years.  Agroexpo will occur in Bogota in J= uly, 2007. Information on www.Corferias.co= m

 

Alimentec is a trade show specializ= ed in food products.  It takes place= in Bogotá every two years.  The last version of Alimentec took place from August 16-19, 2005.  Information at www.corferias.com

&n= bsp;

Information on the processed food s= ector in Colombia can be obtained from Mr. Octavio Campo, Executive Director of Food Industry Chamber at the National Association of Industrialists (ANDI for its Spanish initials):  Calle 73 N= o. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia.

Telephone (57-1) 326 8521/40 or (57= -1) 326 8500 Ext 2420, fax (57-1) 347-3196/98,

E-mail: ocampo@andi.com.co.  Web site: www.andi.com.co.

 

INVIMA is the Colombian government agency regulating processed food products.  INVIMA stands for the National Ins= titute for the Controlof Food and Drugs and is under the umbrella of the Ministry = of Social Protection.  The contac= t is Mr. Carlos A. Robles, Deputy Director for Food and Alcoholic Beverages, Inv= ima, Carrera 68D No. 17-11 or 17-21, Bogotá, Colombia.  Telephone (57-1) 294-8700 Ext. 392= 2; fax (57-1) 294-8700, Ext. 3920.  E= -mail:  invimasal@invima.gov.co, or crobles@invima.gov.co   Web site: www.invima.gov.co<= /p>

 

Agricultural Specialist at the American Embassy – Bogotá is Alberto Restrep= o at FAS, E-mail: agbogota@usda.gov Tel= ephone (57-1) 383-2801, 315-4147 or 315-2138, fax (57-1) 315-2181.   

 

 

COTTON<= /span>

 

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(In thousands of metric tons.  Cot= ton marketing year is August-July).

 

       &nbs= p;    2004/5

2005/6

2006/7 (estimated)=

Total Market Size

       &nbs= p;      81

       &nbs= p;      102

       &nbs= p;            &= nbsp;  101

Total Local Production

       &nbs= p;        52

       &nbs= p;        47

       &nbs= p;            &= nbsp;    46

Total Exports

       &nbs= p;          1       &nbs= p;  

0

       &nbs= p;            &= nbsp;      0

Total Imports

       &nbs= p;        30       &nbs= p; 

55

       &nbs= p;              &nbs= p;   55

Imports from the U.S.

       &nbs= p;        29

       &nbs= p;        50

       &nbs= p;            &= nbsp;     50

 

 

Duty free access for textiles and garments to the United States under the Andean Trade Preference and Drug Enforcement Act (ATPDEA) boosted Colombia’s cotton demand. The increased consumption is being filled by increased imports.  Colombian production= is expected to decline to 46,000 tons in the current 2006/07 marketing year.  The lack= of increased production is mainly due to smaller planted areas in those regions that are considered marginal for cotton production, due to high production costs and low yields.  Area pl= anted with cotton have been declining despite government guarantees of a high min= imum price to growers and debt forgiveness up to 40 percent on credit granted to local producer associations.  = Imports are expected to r= each 55,000 metric tons in  2006/20= 07 and the United States will likely continue to be the largest supplier. Colombia mainly imports short-length fiber from the United States, which is not prod= uced locally. The Government of Colombia is strongly encouraging cotton producti= on by guaranteeing a minimum price paid to growers and has added a guarantee f= or producers against appreciation of the peso.  The mandatory requirement for impo= rters to purchase local production (absorption mechanism) was replaced by a new tariff-rate quota system that  lowers the import duty if importers/mills purchase local production.=

 

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The expansion of Colombia’s textile industry triggered by duty free access to U.S. markets for garments and textiles under the Andean Trade Preference and Drug Enforcement Act (ATPDEA) has resulted in larger cotton demand. The high quality of Colombian products and the well-developed garme= nt industry give Colombia a competitive advantage among other Central and South American countries. U.S. companies have also started direct investments in Colombia to take advantage of the expected market openings under the CTPA.

 

 

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The U.S. cotton export continues to grow due to quality and a preference for short-length fiber cotton not available from other sources.  Colombia is a large producer of de= nim, which uses short-fiber cotton imported from the United States.  Cotton from the United States has = the additional advantage of lower freight costs to Colombia due to its geograph= ical proximity.

 

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The U.S. cotton and yarn industry is locally represented by the regional Andean offi= ce of the Cotton Council International and the Cotton USA Sourcing Program.  This office organizes the particip= ation of the US cotton and yarn industry in the largest regional textile trade sh= ow called COLOMBIATEX.  The conta= ct person is Ms. Nina Maldonado, Andean Regional Manager, Carrera 14 No. 94A-4= 4, Of 402, Bogotá 8, D.C.,Colombia.

Telephone (57-1) 623-3132, fax (57-1) 623-3076, E-mail: sourcingusaandeanreg@cabl= e.net.co  or  nmoffice@cable.net.co

 

Agricultural Specialist at the American Embassy – Bogotá is Leonardo Pinzon= at FAS, E-mail: Agoffice@usda.gov  Telephone (57-1) 383-2807, 315-414= 7 or 315-2138, fax (57-1) 315-2181.  =  

 

 

WHEAT <= /span>

 

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(In thousands of metric tons.  Whe= at marketing year is July-June).

 

       &nbs= p;   2004/5

  2005/6<= o:p>

2006/7(estimated)

Total Market Size

       &nbs= p;   1,351

      1,363

       &nbs= p;            &= nbsp; 1,375

Total Local Production

       &nbs= p;        32    

       &nbs= p;   33

       &nbs= p;            &= nbsp;      33

Total Exports

       &nbs= p;          0       &nbs= p;    

       &nbs= p;        0

       &nbs= p;            &= nbsp;        0

Total Imports

       &nbs= p;   1,319

    1,330

       &nbs= p;            &= nbsp; 1,340

Imports from the U.S.

       &nbs= p;      797

     810=

       &nbs= p;            &= nbsp;    815

 

 

Wheat production is marginal in Colombia and is expected to maintain the leve= l of 33,000 tons in the 2006/07 marketing year.=   Low quality wheat and limited areas to expand production mean that little increase in area is expected in the future.  The industry has been encouraging producers to move to alternative crops. The wheat import duty has been zero percent during most of calendar year 2006, so there is little incentive to plant new areas.

 

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Wheat imports continue to supply 98= percent of milling needs.  Imports for marketing year 2006/2007 are expected to be 1.34 million metric tons.  Imports from U.S. will likely be 8= 15,000 metric tons (60 percent share) due to more competitive prices and lower shipping costs.  Canada is the= next largest supplier. However, imports have started to increase from Argentina = due to the lower duty paid by Argentina under the Andean Community – Merc= osur trade agreement.  

 

The U.S. share could benefit from new investments locally in technology and addition= al training in grain handling.  As mentioned, the trade agreement between the Andean Community and Mercosur has resulted in lower duties for imports from Argentina starting February 2005.= The duty for wheat imports under the variable Andean price band duty has been z= ero percent in 2006 due to high world prices. The CTPA between Colombia and the United States, if approved, will result in an immediate and permanent zero = duty for imports of U.S. wheat.  Th= is fact and the proximity to U.S. Gulf ports will give an advantage to U.S. wh= eat over other origins.

 

  

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There has been a restructuring of the wheat milling industry in Colombia since the early 1990’s after the dismantling of the Government of Colombia̵= 7;s agency in charge of agricultural imports (IDEMA).  The increase in wheat imports is t= he result of Colombia’s consolidation of milling activity and better-prepared millers.  Some millers are opening operations near the ports of entry, which reduce transportation costs for wheat flour instead of transporting wheat to be mi= lled in the interior.  This focus o= n new wheat milling products could provide a venue for U.S. investors.=

 

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The U.S. Wheat Associates, Inc. from its regional office in Santiago, Chile, serves = the wheat trade in South America.  Information on the wheat market can be obtained from Mr. Miguel Gald= os, Marketing Specialist, U.S. Wheat Associates, Inc., La Concepción 177/32B, Casilla 16616, Santiago 9, Chile.=   Telephone (562) 235-7137, fax (562)235-7371, E-mail: mgaldos@uswheat.org  Website:  www.uswheat.org

 

The local wheat milling industry is represented by the National Federation of W= heat Millers, FEDEMOL, whose General Manager is Mr. Jaime Jimenez, Carrera 13 No= .

28-01, Of. 402, Bogotá 1, D.C. – Colombia, telephone (57-1) 285-8337,= fax (57-1) 561-2598, E-mail: fedemol@etb.= net.co

 

Agricultural Specialists at the American Embassy – Bogotá are Leonardo Pinz= on and Alberto Restrepo at FAS, E-mail: A= gbogota@usda.gov Telephone (57-1) 383-2807, 315-4147 or 315-2138, fax (57-1) 315-2181.   

CORN

 

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(In thousands of metric tons. Corn marketing year is October-September).

 

 

      2004/5

    2005/6

2006/7 (estimated)=

Total Market Size

       &nbs= p;   3,345

3,475

       &nbs= p;            &= nbsp; 3,600

Total Local Production

       &nbs= p;   1,240            &nbs= p;

1,230

       &nbs= p;            &= nbsp; 1,200

Total Exports

       &nbs= p;          0

       &nbs= p;          0

       &nbs= p;            &= nbsp;        0

Total Imports

       &nbs= p;   2,266

       &nbs= p;  2,310

2,450       &nbs= p;            &= nbsp;

Imports from the U.S.

       &nbs= p;   2,014

       &nbs= p;   2,050

       &nbs= p;            &= nbsp; 2,150

 

Corn imports are increasing to meet growing demand by Colombia’s feed industry.  Local corn producti= on is declining despite government efforts to encourage increased production by planting new areas.  The Colom= bian Government has encouraged planting corn in the coffee region as a cover crop during the replanting and pruning of coffee plantations.  Corn pro= duction is estimated at 1.23 million tons in 2005/6, with a slight decrease to 1.20 million tons expected in 2006/7.  Government incentives resulted in increases in planted areas and production in some mechanized agriculture areas.  However, some of this area is now leaving production due to high production costs, bad weather and greater pest problems.  Furthermore, these areas are highly sensitive to price fluctuations.  Increased competition under the CTPA will reinforce the trend for so= me areas of low productivity to move to other activities.   

 

Corn consumption is expected to gro= w 1.7 percent during 2006/07. The growth in corn consumption is due to increases = in production of poultry, livestock (dairy and swine), and a relatively recent growth in fish and shrimp production. In addition, stronger economic growth h= as resulted in an increase in demand for use for human consumption (the main market for the local crop due to high quality and better prices).

 

Corn imports are expected to grow t= o 2.45 million metric tons in marketing year 2006/2007. This represents a 6.1 perc= ent growth from the 2.31 million tons estimated for 2005/2006. The United States increased its market share to 89 percent (2.014 million tons) during 2004/2= 005, as lower shipping costs offset the lower duty for imports from Argentina.  The duty advantage for Argentine c= orn increased from 3.9 percentage points to 4.6 percentage points in 2006, whic= h is not expected to significantly undermine the freight advantage of U.S. corn.  As part of the United S= tates and Colombia Trade Promotion Agreement, a tariff-rate quota for U.S. yellow corn was negotiated at 2.1 million tons for the first year, and will increa= se over a 12-year period before being eliminated.

&n= bsp; =

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Over the longer run, imports of corn, wheat and rice are expected to grow significan= tly under the CTPA.  Preliminary estimates indicate that imports of corn could grow to as much as 4 to 5 mil= lion tons over the next ten years under the CTPA.

 

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Similar to the Colombian wheat milling industry, corn processing could offer a set = of investment opportunities to U.S. investors, especially if U.S. corn enters Colombia with a zero import duty under a the CTPA.

 

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Trade Shows:  Agroexpo is an exhibit= ion with emphasis on food processing equipment that takes place every two years.  The next version of Ag= roexpo will occurred in Bogota in July, 2007. Information on www.Corferias.com<= /p>

 

Alimentec is a trade show specialized in food products.  It takes place in Bogotá ev= ery two years.  The next version of Alimentec took place on August 23-26, 2006.  Information on www.corferias.com =

 

The U.S. Grains Council has maintained a regional consultant for trade servicing in different grain commodities in Colombia and the Andean region.  The consultant is Mr. Jaime Cuella= r, Calle 92 No. 10-40, Apto. 503, Bogotá, D.C.  Telephone (57-1) 236-7532, 864-869= 5, mobile phone (57-3) 315-383-3288, fax (57-1) 236-7532 or 864-8704, E-mail: = jacuellar@epm.net.co      Website: www.grains.org

 

The local feed industry, the primary user of imported feed corn, is represented= by the Feed Chamber at the National Association of Industrialists (ANDI for its Spanish initials):  Calle 73 N= o. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia.  Information on the feed sector in Colombia can be obtained from Ms. Luz S. Kuratomi, Executive Director of Fe= ed Industry Chamber at the telephone (57-1) 326-8500 Ext. 2419, fax (57-1) 347-3198, E-mail: lkuratomi@andi.c= om.co  Web site: www.andi.com.co

 

Another feed manufacturers association is Federal:=   Ms. Maria L. Losada, Executive President, Diagonal 145 No. 35-03 ofi= c. 305A, Bogotá, D.C.-Colombia.  Telephone (57-1) 274-6134= , fax (57-1) 258-0491, E-mail: federal@ca= ble.net.co

 

Agricultural Specialist at the American Embassy – Bogotá is Leonardo Pinzón at FAS, E-mail: Agbogota= @usda.gov Telephone (57-1) 383-2807, 315-4147 or 315-2138, fax (57-1) 315-2181.<= /o:p>

 

 

SOYBEAN MEAL<= /o:p>

 

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(In thousands of metric tons. Soybean meal marketing year is October-September). 

 

       &nbs= p;    2004/5

       &nbs= p; 2005/6

2006/7 (estimated)=

Total Market Size

       &nbs= p;     695

       &nbs= p;     713

       &nbs= p;          747=

Total Local Production

       &nbs= p;     119

       &nbs= p;     123

       &nbs= p;          127

Total Exports

       &nbs= p;         0

       &nbs= p;         0

       &nbs= p;            &= nbsp; 0

Total Imports

       &nbs= p;     576

       &nbs= p;     590

       &nbs= p;           620

Imports from the U.S.

       &nbs= p;       209    

230    

260

 

 <= /p>

The oilseed meal supply in Colombia is composed mainly of soybean meal, cottonseed meal, palm kernel m= eal, and sesame seed meal.  All fis= hmeal used in the country is imported from Peru, Chile, and Ecuador. <= /span>

 <= /p>

The United States-Colombia Trade Promotion Agreement signed in February 2006, if implemented, will provide for more stable price movement = for U.S. soybeans and soybean meal.  The CTPA is expected to shift soybean and soybean meal imports from Bolivia and Paraguay to imports from the U.S. as the tariff advantages of those countri= es are reduced and shipping costs become a more important factor in purchases.=

 <= /p>

 <= /p>

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 <= /p>

Total domestic consumptio= n of soybean meal and palm kernel meal is forecast to grow four percent in the 2005/2006 crop year. Palm kernel meal and soybean meal usage is expected to rise five percent in the next year. Soybean meal accounts for roughly 85 percent of total vegetable meal usage by the feed sector.

 <= /p>

The United States has inc= reased its market share in the last two marketing years representing 36 and 39 per= cent of total soybean imports, respectively, in 2004/5 and 2005/6.  The rest has been imported mainly = from Bolivia, which as a member of the Andean Community of Nations pays no import tariff.

 

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The free trade agreement will open up opportunities for U.S. investors in establishi= ng new oilseed crushing facilities and feed manufacturing in Colombia.  Also, there may be investment opportunities in transportation and port infrastructure.<= /p>

  

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Trade Shows:  Agroexpo is an exhibit= ion with emphasis on food processing equipment that takes place every two years.  The next version of Ag= roexpo will occur in Bogota in July, 2007. Information on www.Corferias.com<= /p>

 

Alimentec is a trade show specialized in food products.  It takes place in Bogotá ev= ery two years.  The last version of Alimentec took place on August 23-26, 2006.  Information on www.corferias.com<= /p>

 

The American Soybean Association (ASA) maintains a regional consultant for trade servicing in different grain commodities in Caracas, Venezuela, for the And= ean region.  The consultant is Ms. Belinda Pignotti, Program Coordinator, Edif. Banco del Or= inoco, Of. 7-D, Piso 7.  Ave. Francis= co de Miranda, La Floresta.  = Telephone (58212) 285-769= 7,  mobile phone (58414) 308-7705, fax (58212) 285-7697, E-mail: asacar@cantv.= net    Website: www.soygrowers.com

 

The local feed industry, a main user of imported feed corn, is represented by t= he Feed Chamber at the National Association of Industrialists (ANDI for its Spanish initials):  Calle 73 N= o. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia.  Information on the feed sector in Colombia can be obtained from Ms. Luz S. Kuratomi, Executive Director of Fe= ed Industry Chamber at the telephone (57-1) 326-8500 Ext. 2419, fax (57-1) 347-3198, E-mail: lkuratomi@andi.c= om.co  Web site: www.andi.com.co

 

Agricultural Specialists at the American Embassy – Bogotá are Leonardo Pinz= on and Alberto Restrepo at FAS, E-mail: A= gbogota@usda.gov  Telephone (57-1) 315-4147 or 315-2= 138, fax (57-1) 315-2181.     

SOYBEANS

 

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(In thousands of metric tons. Soybeans marketing year is October-September).

 

       &nbs= p;    2004/5

       &nbs= p; 2005/6

2006/7 (estimated)=

Total Market Size

       &nbs= p;     523

       &nbs= p;     534

       &nbs= p;            549

Total Local Production

       &nbs= p;       63

       &nbs= p;       64

       &nbs= p;            &= nbsp; 64

Total Exports

       &nbs= p;         0

       &nbs= p;         0

       &nbs= p;            &= nbsp;   0

Total Imports

       &nbs= p;     460

       &nbs= p;     470

       &nbs= p;            490

Imports from the U.S.

             126

       &nbs= p;     160

       &nbs= p;            180

 

 =

Colombian soybean production is exp= ected to decline to 53,000 tons in 2005/2006, from 56,000 tons the previous year.  Soybean rust caused a reduction in= local production due to a longer than expected rainy season.  In the eastern plains, where 90 pe= rcent of soybeans are produced, yields fell from 2.5 to 2.2 tons per hectare and = in the Cauca valley from 2.1 to 1.5 tons per hectare. The government of Colomb= ia continues to be committed to support production of soybeans and has launched a progra= m to purchase subsidized options at the National Agricultural Commodity Exchange. The government will pay 90 percent of the cost of the coverage purchased by= the growers and buyers that use this new option mechanism.

 

Variable weather, lack of appropria= te infrastructure, needed capital investments, and pest risk result in high production costs, which have kept production at levels below the GOC expectations. The approval of biotech soybeans is under way and work on new soybean varieties is being undertaken by CORPOICA (the official agricultural research institute). We do not, however, expect a significant increase in production.

 

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Oilseeds and products consumption is expected to continue to grow by three percent p= er year.  Close to 95 percent of Colombia’s full-fat soybean meal (FFSBM) production utilizes an extru= sion or roasting process.  Accordin= g to the industry, usage of FFSBM in Colombia is expanding and accounts for as m= uch as 50 percent of the country’s total protein requirements.  The government banned the use of a= nimal protein in livestock feeds in Colombia due to BSE concerns. This situation = is helping to fuel the steady growth in oilseed meal consumption.  Soybean meal accounts for roughly = 85 percent of total vegetable meal usage by the feed sector.=

 

The long-term impact of the CTPA with the United States is expected to shift soybeans and soybean product imports from Bolivia and Paraguay to imports f= rom the United States as tariff advantages for those countries are reduced and shipping costs become a more important factor in purchases. 

 

 

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

 

The free trade agreement will open opportunities for U.S. investors in establishing = new oilseed crushing facilities in Colombia.&n= bsp; Also, there may be investment opportunities in feed manufacturing, transportation and port infrastructure.

 

Resources         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;    Return to top

 

Trade Shows:  Agroexpo is an exhibit= ion with emphasis on food processing equipment that takes place every two years.  The next version of Ag= roexpo will occur in Bogota in July, 2007. Information on www.Corferias.com<= /p>

 

Alimentec is a trade show specialized in food products.  It takes place in Bogotá ev= ery two years.  The last version of Alimentec took place on August 23-26, 2006.  Information on www.corferias.com<= /p>

 

The American Soybean Association (ASA) maintains a regional consultant for trade servicing in different grain commodities in Caracas, Venezuela, for the And= ean region.  The consultant is Ms. Belinda Pignotti, Program Coordinator, Edif. Banco del Or= inoco, Of. 7-D, Piso 7.  Ave. Francis= co de Miranda, La Floresta.  = Telephone (58212) 285-769= 7,  mobile phone (58414) 308-7705, fax (58212) 285-7697, E-mail: asacar@cantv.= net    Website: www.soygrowers.com

 

The local oilseed crushing industry, a main user of imported soybeans, is represented by the Chamber of Food Products at the National Association of Industrialists (ANDI for its Spanish initials).  Information on the oilcrushing sec= tor in Colombia can be obtained from Mr. Octavio Campo, Executive Director of Food Industry Chamber at the National Association of Industrialists (ANDI for its Spanish initials):  Calle 73 No. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia.  Telephone (57-1) 326 8521/40 or (57-1) 326 8500 Ext 2420, fax (57-1) 347-3196/98, E-mail: ocampo@andi.com.= co.  Web site: www.andi.com.co.

 

Agricultural Specialists at the American Embassy – Bogotá are Leonardo Pinz= on and Alberto Restrepo at FAS, E-mail:  Agbogota@usda.gov  Telephone (57-1) 315-4147 or 315-2= 138, fax (57-1) 315-2181.     

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Return to table of contents

Return to table of contents

Chapter 5: Trade Regulations and Standards

Import Tariffs            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =          Return to top

Most duties have been consolidated into four tariff levels: zero percent on capi= tal goods, five percent on industrial goods and raw materials, ten percent on manufactured goods with some exceptions, and twenty percent on “sensitive” goods.  An important exemption cover agricultural products, which fall under a variable “price band” import duty system.  The price band system includes 14 = marker products and 140 substitutes and derivatives, and results in duties approac= hing or exceeding 100 percent for important U.S. exports to Colombia, including corn, wheat, rice, soybeans, pork, poultry, cheeses, and powdered milk, and negatively affects U.S. access for products such as dry pet food, which contains corn.

 

In 2005, the government approved the eliminatio= n of import duties for equipment, spare parts and accessories destined for vario= us oil & gas activities (exploration, production, transportation, and refining). The measure also covers minerals exploration, production, processing, transformation and transportation. This benefit will expire in October 2010, and will allow for enhanced market access for U.S. exporters given a favorable exchange rate, better product quality and relative proxim= ity to Colombia.

 

Trade Barriers            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;        Return to top

 

Durin= g the 1990's, Colombia began lowering and simplifying its import tariffs.  Import duties are quoted ad-valore= m on the CIF value of shipments.  A= ll duties (with few exceptions) have been consolidated into four tariff levels= : a) 5 percent for raw materials, intermediate and capital goods not produced in Colombia; b) 10 percent and 15 percent for goods in the above categories but with produced and registered in Colombia; c) 20 percent for finished consum= er goods; and d) the exceptions, such as import duties for motor vehicles which remain at 35 percent, and some agricultural products which fall under a variable import duty system (price band).

 

These tariff levels are in line with Decision 370 of the Andean Community (former= ly “Andean Pact”) Agreement, which the governments of Bolivia, Colombia, Ecuador, Peru, and Venezuela approved in November 1994.  This Decision is known as the Comm= on External Tariff (CET) and was adopted by Colombia in January 1995 through Decree 205.  The Andean Commun= ity (ANCOM) countries are reviewing the CET to determine if they should elimina= te the 15 percent tariff.   &nb= sp;       

 

Under Decision 370, Andean Community countries assign a Common External Tariff (CET) for imports coming from thi= rd countries and, while gradually eliminating duties on products manufactured = and imported from within the region.  On the other hand, Colombia has been facing increasing trade problems with Venezuela and Ecuador on some agricultural commodities, such as corn and wh= eat, as those countries negotiated World Trade Organization (WTO) trade rate quo= tas and import duties lower than Colombia’s.  The Andean Community’s Board= of Directors has analyzed this situation on several occasions, but the results have been below Colombia’s expectations.

 

The large number of integration agreements that Colombia is party to, has creat= ed a complex system of tariffs that are applied according to the different treaties.  For example, a prod= uct may be subject to more than 10 different duties depending on whether it com= es from the Andean Community, Group of Three (G-3), Latin American Integration Association (LAIA), or from Caribbean Community countries.  The prior import license requireme= nt has been almost eliminated. Approximately 97 percent of the 5,162 products of t= he Colombian Harmonized Tariff Schedule (CHTS) can be freely imported (no impo= rt license necessary, but applicable import tariffs and value-added tax (VAT) = must be paid).  This Colombian harm= onized tariff schedule book shows all import duties that apply.  U.S. exporters can obtain copy of = the CHTS at:

 

Lecomex Ltda.

Legis S.A.

Calle 98 # 11B-48<= /p>

Ave. El Dorado No. 81-10

Tel.   (571) 610-9312<= /span>

Tel.  (571) 425-5255 / 425-5200

Fax.  (571) 610-7673=

Fax. (571) 425-5317

Bogota D.C., Colombia

Bogota D.C., Colombia

lecomex@lecomex.com

www.legis.com.co

 

Colombia together with Bolivia, Ecuado= r, and Peru formed the Andean Trade Initiative (ATI), which resulted in the ATPA (Andean Trade Preference Act) of December 1991.  This U.S. unilateral tariff exempt= ion, similar to the Caribbean Basin Initiative (CBI), was designed to promote economic development through private sector initiatives in the four Andean countries.  Exports of agricul= tural items were encouraged as part of the strategy to create alternative income sources for drug producers. The Government of Colombia expects to increase exports of more than 6,500 products covered by this preferential treatment, which include textiles, textile made-up products, shoes, and tuna fish, upon compliance with certain requirements.

 

Non-Tariff Barriers:  Although significant progress has = been achieved in this area, the Colombian government bureaucracy still constitut= es a barrier to trade for both local and foreign companies.  In addition, pilferage in Customs warehouses and robberies of trucks is frequent. The absence of clear proced= ures to solve the problem of incorrect import documentation continues to be a barrier of sorts. For example, shipments are detained indefinitely by Colom= bian Customs because of improper tariff schedule classification, incorrect addre= ss, or typing errors.  When mistak= es are made by the exporter/importer, the goods may be refused entry into Colombia= and be returned at considerable expense to the exporter or importer.  The new Colombian Customs Statute, Decree 2685 of 1999, along with Resolution 4240 of 2000 and Decree 1198 of 2000, further clarified procedures and requisites, and describes stronger f= ines and penalties for light infringement of procedures and errors in freight forwarding documents by customs intermediaries (known as Sociedades de Intermediación Aduanera – SIA).  U.S. freight forwarders and intermediaries will be subject to the same sanctions and penalties as Colombia’s agents and brokers.

 =

Non-Tariff Barriers to Agricultural Trade

 

Import licenses issued by the Ministry= of Commerce, Industry and Tourism (MINCOMEX):  Most agricultural pro= ducts are issued automatic or "free" import licenses by the MINCOMEX.  However, if the Ministry of Agricu= lture (MOA) determines that imports are not needed and will cause damage to relat= ed domestic production, it can prohibit the imports.

 

Resolution 04 of June 12, 1998, issued by MINCOMEX, placed seasoned poultry parts (chicken, turkeys, and other birds) under the “previous” licens= ing system.  Prior to this, season= ed poultry parts were under the “free” import regime, which result= ed in automatic issuance of import licenses by MINCOMEX. Since 1994, import licenses for raw unprocessed chicken/turkey parts have been routinely denie= d.

 

Import License Approval Requirement by= the Ministry of Agriculture:  The requirement to re= ceive prior approval from the Ministry of Agriculture and purchase local producti= on for imports of feed grains and rice expired on December 31, 2003 and the replacement system was put in place on February 16, 2004.  The prior system was maintained un= der a WTO waiver that expired at the end of 2003.  The new system is a tariff-rate qu= ota, with the in-quota amount auctioned off based on the commitment of importers= to purchase local production. The out-of-quota duty is the higher of either 5 percent or the Andean price band duty.&nbs= p; See next section on the Andean Price Band System.  The Colombian Trade Promotion Agre= ement, signed between the Governments of Colombia and the United States in Februar= y, 2006, will drastically simplify some of the import requirements when it is implemented in late 2007 or early 2008.

 

Price Bands: On April 1, 1995, Colombia implemente= d the common Andean Community price band (variable import duty system).  It covers 14 basic commodities (wh= ite rice, malting barley, yellow corn, white corn, soybeans, wheat, crude palm = oil, crude soybean oil, white sugar, raw sugar, powdered milk, chicken parts, po= rk meat, and sorghum) and 140 additional commodities that are considered substitutes. The system covers domestic producers and consumers from volati= le world prices by raising import duties when import prices are low and loweri= ng duties when prices are high.

 

Under the Colombian interpretation of = the Andean Community price band system, import duties are based on Andean Commu= nity Board determined ceiling, floor and reference prices adjusted to a CIF basis.  Import duties are levi= ed on calculated reference prices not on actual invoice prices.  If the applicable reference price = is within the floor and ceiling price band, the import duty is calculated using the applied tariff rate and the reference price.  When the reference price falls bel= ow the floor price, a variable duty (or surcharge) is applied, which is the differ= ence between the floor and reference prices. This surcharge is levied in additio= n to the applied duty.  Conversely,= when the reference price exceeds the ceiling price a reduction based on the difference between the reference and ceiling prices is applied.<= /span>

 

The Andean Community price band system lacks transparency and can be manipulate= d to provide arbitrary levels of import protection.  For example, adjustment factors for freight, insurance and other unspecified costs are not transparent and prov= ide latitude for manipulation of ceiling, floor and reference prices.  In many cases, it is impossible for= an exporter to estimate the final import duty.

 

Often the appropriate reference price is not used to assess the import duty.  For instance, the ceiling and floor prices for chicken parts are based on U.S. whole broiler prices and the reference price is based on U.S. leg quarter prices.  This method increases the likeliho= od that the reference price will fall below the floor price and the additional surcharge will be added to the import duty.  For soft wheat, the floor and ceil= ing prices are based on hard red winter wheat, which tends to result in a higher import duty for soft wheat, since hard wheat is generally more expensive th= an soft wheat.

 

The U.S. government considers the application of this system to be inconsistent with Colombia's WTO obligations.  It often appears= that the reference price used to calculate the import duty does not accurately m= atch the imported product, which results in the assessment of an inflated surcha= rge.  The Trade Promotion Agreement betw= een the United States and Colombia will eliminate the Andean Price Band system for = the above mentioned products and by-products.&= nbsp; However, there will be Tariff Rate Quotas (TRQ) for some sensitive commodities and a period of several years for a gradual reduction in import duties, depending on each commodity.  See text of the Colombian Trade Promotion Agreement (CTPA) on the U.= S. Trade Representative’s web site www.= ustr.gov

 = ;

Sanitary and Phyto-sanitary Measures:<= /span>  All processed retail food items, including those imported in bulk for repackaging and retail, must be regist= ered and approved by the National Institute for the Control of Food and Medicines (INVIMA), which is part of the Ministry of Social Protection (Decree 3075/9= 7, enacted by the former Ministry of Health).=   Products that have not undergone transformation, such as fresh or fr= ozen produce and meat, do not need INVIMA registration.  A transformed product is defined b= y the GOC as having been subjected to processing that resulted in a change in its internal structure.

 

Non‑transformed products that are fresh or frozen (meat and produce) do not need an INVIMA registration, but they do need a sanitary permit from the MOA’s Agricultural Institute (ICA).  ICA issues import health permits for animal products, vegetables, fruits, and grains.  This permit details t= he sanitary import requirements for these products.  The Colombian importer must first = obtain the import permit from ICA, before requesting an import license from MINCOM= EX.  The ICA sanitary import permit is supplied by the importer to the exporter for submission to the U.S. Departm= ent of Agriculture (USDA), which will then issue a sanitary export certificate referencing the requirements in ICA's import permit. No product should be loaded before USDA issues a sanitary export certificate. APHIS of the US Department of Agriculture issue sanitary certificates for products that are= not processed, while AMS of the US Department of Agriculture and State Departme= nts of Agriculture issue sanitary export certificates for dairy products.<= /o:p>

 =

Sanitary Registration:  U.S. exporters should be aware that sa= nitary registration must be obtained for pharmaceuticals, cosmetics, processed food products, and household insecticides and similar products. The registration must be obtained before exporting the products to Colombia.  It is issued by the Instituto Naci= onal de Vigilancia de Medicamentos y Alimentos - INVIMA (National Institute for = the Surveillance of  Medicines and= Food Products) and the procedure usually takes between three to six months. Sani= tary registration is required for both locally manufactured and imported products.  Processed food prod= ucts in institutional presentations do not required a sanitary registration.  For more information contact: INVI= MA, Deputy Directorate for Licenses and Registry, Carrera 68D # 17-21, Bogota D= C, Colombia, Tel. (57-1) 294-8700; Fax (57-1) 294-8700 Ext. 3930. <= /span>

 

Sanitary and Phyto-sanitary Measures:<= /span>  All processed retail food items, including those imported in bulk for repackaging and retail, must be regist= ered and approved by the National Institute for the Surveillance of Food and Medicines (INVIMA), which is part of the Ministry of Social Protection (Dec= ree 3075 of 1997, enacted by the former Ministry of Health).  Products that have not undergone transformation, such as fresh or frozen produce and meat, do not need INVIMA registration.  A transformed p= roduct is defined by the GOC as having been subjected to processing that resulted = in a change in its internal structure.

 

Non‑transformed products that are fresh or frozen (meat and produce) do not need an INVIMA registration, but they do need a sanitary permit from the MOA’s Agricultural Institute (ICA).  ICA issues import health permits for animal products, vegetables, fruits, and grains.  This permit details t= he sanitary import requirements for these products.  The Colombian importer must first = obtain the import permit from ICA, before requesting an import license from MINCOMEX.  The ICA sanitary im= port permit is supplied by the importer to the exporter for submission to the U.= S. Department of Agriculture (USDA), which will then issue a sanitary export certificate referencing the requirements in ICA's import permit. No product should be loaded before USDA issues a sanitary export certificate. APHIS of= the US Department of Agriculture issue sanitary certificates for products that = are not processed, while AMS of the US Department of Agriculture and State Departments of Agriculture issue sanitary export certificates for dairy products.

 =

Sanitary Registration:  U.S. exporters should be aware that sa= nitary registration must be obtained for pharmaceuticals, cosmetics, processed food products, and household insecticides and similar products. The registration must be obtained before exporting the products to Colombia.  It is issued by the Instituto Naci= onal de Vigilancia de Medicamentos y Alimentos - INVIMA (National Institute for = the Surveillance of  Medicines and= Food Products) and the procedure usually takes between three to six months. Sani= tary registration is required for both locally manufactured and imported products.  Processed food prod= ucts in institutional presentations do not required a sanitary registration.  For more information contact: INVI= MA, Deputy Directorate for Licenses and Registry, Carrera 68D # 17-21, Bogota D= C, Colombia, Tel. (57-1) 294-8700; Fax (57-1) 294-8700 Ext. 3930, web page: http://www.invima.gov.co/

Import Requirements and Documen= tation        &= nbsp;           &nbs= p;            &= nbsp;  Return to top

U.S. exporters must be aware that their importers in Colombia must follow eight basic steps to complete an import transaction into Colombia:

 <= /p>

1)&n= bsp;       When required, obtain import permits from pertinent government agencies.  For example:  Ministry of Social Protection (for medicines), Ministry of Agriculture (for certain food products); Civil Avia= tion Department (for aircraft).

&nbs= p;

2)         Buy and fill out= the Import Registration form.  Fil= e the Import Registration form with MINCOMEX.&nb= sp; The form requires a complete product description and tariff classification.

 

3)         Obtain approval = from MINCOMEX for the Import Registration Form or Import License (in the few cas= es when this is required)

 <= /p>

5)         Make arrangements with a financial entity for payment of the importation.

 <= /p>

6)         Ask the exporter= to ship goods to a Colombian port.

 <= /p>

7)         Request the Cargo Manifest from the transportation firm.

 <= /p>

8)         = Make arrangements with its customs intermediaries (or Sociedades de Intermediación Aduanera – SIA) to receive the merchandise and = get it out of customs.  The follow= ing are the main steps to be followed:

 

a.    Fill out the “Import Declaration” (Declaración de Importación).  When the importation value is equa= l or more than $1,000.  A SIA shoul= d do all the paperwork and get the shipment out of Customs.

b.    Fill out the “Andea= n Custom Value Declaration” (Declaración Andina de Valor en Aduana) when the importation value is equal or more than $5,000 FOB.

c.    Go to an authorized finan= cial entity and pay the import duties, value-added tax, surcharges and other fee= s.

d.    Present all documents to = Customs.

e.    Customs inspects the merc= handise, when they consider it necessary, and then authorizes withdrawal of goods.

 

The importer must keep import documents for a period of not less than five (5) years.

 

Import Decl= aration:  The importer must submit an import declaration to the Colombian Customs and Tax Authority (DIAN).  This declaration includes the same information contained on the import registration form and other information such as the duty and sales tax paid, and the bank where these payments were made.  This declaration may be presented up to 15 days prior to the arrival of the merchandise to Colombia= or up to two months after the shipment's arrival.  Once the import declaration is pre= sented and import duties are paid, customs will authorize the delivery of the merchandise. 

 

Customs officials are responsible for inspecting merchandise to verify that the description and classification are consistent with the importer's declarati= on. A customs inspection group has been trained to perform after-clearance rand= om investigations to detect fraud, foreign exchange irregularities, and tax evasion. Major customhouse brokers have a customs office in their own bonded warehouses where most clearance procedures are completed before the merchan= dise is delivered to the customers.

 

To carry out an export, the exporter must: 1) remit the proforma invoice; 2) obtain acceptance of conditions from the client (letter of credit, draft bill); 3) negotiate (through a local financial institution) the letter of credit/draft bill from the endorsing foreign bank; 4) present (to MINCOMEX) a form known= as “Registration as National (local) Producer, Export Offer and Determination of Origin”; 5) present the certificate of origin (when necessary) with copy of the commercial invoice, and other certificates requ= ired by the country of destination (textile visa, phytosanitary certificates, et= c.); and 6) complete and present the export declaration (ED) form, also known as shipping authorization of final export declaration, with all attachments as required.

 

Products that require special documentation include: vegetables, plants, fruits, animals, gold, emeralds, oil, coal, nickel, platinum, textiles, products exported through the General System of Preferences (GSP), products exported through the Andean Trade Preferences and Drug Eradication Act (ATPDEA), products exported through any Free Trade Agreement, and products exported through the Colombian draw back system known as "Plan Vallejo".

 

U.S. Export Controls        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

U.S. exporters should be aware that the U.S. Government may prohibit the export = of certain products to Colombia or require export licenses. The Department of Commerce’s Bureau of Industry and Security Export Enforcement (BIS) licenses most controlled product and technology exports. Licenses are requi= red for certain high technology items or technology transfers and items with du= al use potential (commercial items which could have military applications).  In recent years, there have been increasing restrictions on the export of precursor chemicals to Colombia, d= ue to the Drug Enforcement Agency’s (DEA) concern that they may be utili= zed by narco-traffickers to produce drugs. For more information on U.S. export compliance and enforcement licensing issues contact the Commerce Department’s Bureau of Industry and Security (BIS): Tel: (202) 482-12= 08; (800) 424-2980 or web site - http://www.bis.doc.gov/.  For information on the export of d= efense articles, weapons and firearms contact the State Department’s Defense Trade Controls Directorate (DDTC), Tel: (202) 663-2700; Fax. (202) 261-8264= , http://www.= pmdtc.org/.

 

Temporary Entry            =             &nb= sp;            =              &= nbsp;           &nbs= p;            &= nbsp;  Return to top

<= span lang=3DEN-US style=3D'mso-bidi-font-family:Arial'>Non-fungible merchandise = that can be thoroughly identified by marks, serial numbers, or other symbols can be temporarily brought into Colombian territory for specific purposes.  The merchandise must be re-exporte= d immediately after the pre-authorized period, without being subject to any alteration or modification, except for the normal deterioration caused by use.

 

There are two categories for temporary imports.&= nbsp; The DIAN decides which of the two systems has to be applied to a specific case:

 

Short Term: This allows the importation of mercha= ndise for a specific purpose during a period of time that should not exceed six months; one three-month extension can be requested and approval must be obtained before expiration of the initial authorization.  Short-term imports are not subject= to import duties, but a guarantee equivalent to 10 percent of the corresponding import duties must be presented to obtain approval.

 

Demonstrati= on Equipment: The international carnet system for temporary imports of demonstration equipment (to be used in promotional campaigns or trade shows) is not in effect in Colombia.  The DIAN has implem= ented an alternative system.  Visito= rs bringing in equipment for demonstration purposes are requested to fill out a special form provided by the DIAN upon their arrival at an international airport.  The equipment may st= ay in the country up to 90 days.  Th= ere is no deposit requirement.

 

Long-Term: =  Colombian Customs regulations also = allow for long-term temporary importation of equipment for a period of up to five years.  Under this regulation,= the Government allows importation of machinery and equipment as well as related accessories and spare parts if they are included in the same one-time-only shipment.  This system is appl= ied to equipment to be used in public works projects and other activities that are important for national economic and social development.  Long-term temporary imports are al= so approved for machinery and equipment brought into the country under leasing contracts within a term of six months to five years.

 

Long-term customs declarations for temporary imports must include the U.S. dollar calculation of duties and taxes in accordance with the tariff schedule effective on the submission date.  The total amount may be divided into equal quotas to be paid semi-annually, during the temporary import period.  The importer may be requested to establish a guarantee equivalent to 100 percent of the import duties.  Import duties are non-refundable.<= /span>

Labeling and Marking Requiremen= ts        &= nbsp;           &nbs= p;            &= nbsp;           Return to top

Specific marks or labels are not required, except for food, pharmaceutical products and textiles. Labels on processed food products must indicate: the specific name of the product, ingredients in order of predominance, name and address of manufacturer and importer, number of unit= s, instructions for storage and usage (when required), expiration date, and ot= her instructions as required by the Ministry of Health or the Industry and Comm= erce Superintendency.  Labels and illustrations cannot be inaccurate or misleading.

 

Labels on pharmaceutical products must indicate in Spanish:  "for sale under medical, dent= al or veterinary prescription,” with the generic name, commercial name, net weight or volume, weight or quantity of active ingredients, license number = and the lot control number.  For t= hose products having limited shelf life, the date of expiration should be includ= ed.

 

Insecticides and other toxic products should display the skull and crossbones, the word "poison" in Spanish, and information regarding usage and antidotes.  Products for which= there are no antidotes cannot be licensed and can only be used in programs under = the direct control of public health authorities.

 

Food Labeling Requirements

 

The Government of Colombia (GOC) requires country-of-origin labeling for proces= sed foods.  The GOC, however, does= not classify frozen vegetables as a processed food and, therefore, no country of origin labeling is required.  = Also, fresh fruit and vegetables do not require country of origin labeling.<= /o:p>

 

The GOC issued Resolution 0485 of February 25, 2005 through the Ministry of the Soc= ial Protection (previously known as Ministry of Health) establishing labeling r= equirements for canned food and food raw materials.&nb= sp; The regulation will be in force beginning on September 15, 2005.   Recently the GOC advised WTO= of upcoming modifications of labeling requirements for pre-packaged food for h= uman consumption.

 

Imported processed food products that are not destined for further processing must comply with the labeling requirements mentioned in the previous paragraph.<= span style=3D'mso-spacerun:yes'>  GOC labeling requirements for proc= essed foods do not address the question of ingredient origin.  Therefore, if an imported food item contains ingredients from more than one country, for example, U.S. and Cana= dian peas in the same frozen package, the label must only identify the processor’s name and address and the country where the product was produced.  <= /p>

 

Product labeling information on imported processed products must be present at the point of retail sale.  The responsibility for this labeling information rests with the importer, not t= he retailer.  Many Colombian impo= rters arrange for this information to be placed on the product by the exporting f= irm, before it enters Colombia.

 

For processed products shipped with Spanish labels, the following information m= ust be shown: product name, name and address of importer, name and address of producer, net contents in metric units, list of ingredients, Ministry of So= cial Protection (INVIMA) registration number, any recommended method of storage/conservation, and product expiration date, if appropriate.

 

Imports that are destined for further processing, such as mechanically deboned chic= ken, do require country-of-origin labeling.&nbs= p; The GOC also does not require country-of-origin labeling for imported bulk-packed or consumer-packed fresh fruits and vegetables.  The GOC does not require a sticker= /label indicating country of origin on individual pieces of fresh fruit.  Colombian consumers, therefore, se= ldom are aware of the origin of imported fruit and vegetables.=

 

= Labeling for Food Products.   Food products that are canned, bottled, filled or packed by (marketing agents) s= uch as chain stores, supermarkets, delicatessen, etc for further commercialization must be labeled in accordance to this resolution and must contain at least = the following information:

=  

1.    Name

2.    Ingredients list

3.    Net content

4.    Name and address of producer or importer

5.    Origin country

6.    Lot identification

7.    Expiration date

Preservation method or system

 

 

 

Prohibited and Restricted Imp= orts        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;   Return to top

 

The importation of the following products has been specifically prohibited: dieldrin, aldrin, chlordane, endosulfan, heptachlor, lindane and any preparations containing these products; gasoline containing lead tetraethyl= ene; and weapon-type toys.

 

An import license is required for 101 sub-classifications of the Colombian Tar= iff Schedule.  No import licenses = are being approved for the following: used vehicles and parts, used tires, used= or irregular clothing, clothing closeouts, used bags and sacks, sacks of veget= able fibers, rags, and scrap cordage of textile material wastes.  Only the Military Industry Institu= te (Colombia’s government-owned arms and explosives manufacturer) may im= port weapons, explosives, and related raw materials.

 

Customs Regulations and Contact Information     &n= bsp;            = ;         Return to top

Colombian Tax and Customs Department: www.dian.gov.co

 

Standards            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =    Return to top

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            Overview        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;         Return to top

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= The Colombian standards regime’s legal framework is based on Decree 2153 = of 1992 which modified the structure of the Industry and Commerce Superintende= ncy -- SIC), and Decree 2269 of 1993 which created the National Standardization, Certification and Metrology System (SNNCM), under which the Colombian Techn= ical Standards Institute (ICONTEC), the main standards-development organization,= and SIC becomes the national accreditation organization.

 

= The standards regime received another impulse after Colombia’s entered the World Trade Organization (by Law 170 of 1994), joined the Group of Three (G= -3) Trade Agreement between Colombia, Mexico and Venezuela (Law 172 of 1994) and when the Andean Community enacted Decision 376 of 1995, which created the Andean Standardization, Accreditation, Assays, Certification, Technical Regulations and Metrology System.

 

 

 

            Standards Organizations     =             &nb= sp;            =             &nb= sp;         Return to top

 

= The Colombian Technical Standards and Certification Institute (ICONTEC), is a private-sector organization created in 1963. Their 1,400 members include government officials, and private firms from different industry sectors. The institute’s main focus is to promote the development of technical standards, quality assurance and product certification. They are members of= the International Standards Organization (ISO), the International Electro-Techn= ical Commission (IEC).

 

ICONT= EC is founding member of the Pan-American Technical Standards Commission (COPANT)= and is also member of the Pacific Area Standards Congress (PASC). In 1996, ICON= TEC received recognition from the German Association for Accreditation (TGA) to carry out ISO 9000 quality management certification and is also a member of= the International Accreditation Forum (IAF), and IQNet, an international association of national quality assurance certification entities. The Indus= try and Commerce Superintendency (SIC) has also accredited ICONTEC as a product certifier, quality assurance and environmental systems certifier. For more information on ICONTEC’s activities please consult: http://www.icon= tec.org.co/

 

ICONTEC’s technical standards development committees cover a wide range of issues and topics on metrology, occupational health, air, soil and water quality, solid waste, bar codes, conformity assessment, geographic information, environmen= tal assessments, food and vegetable standards, construction products, among oth= ers. For a complete standards development committee list, please check: www.icontec.org.co/normalizacion.asp  under “Ambitos Comités Técnicos”.

 

NIST Notify U.S. Service

Member countr= ies of the World Trade Organization (WTO) are required under the Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all proposed technic= al regulations that could affect trade with other Member countries. = Notify U.S. is a free, web-based e-mail subscription service that offers an opportunity to review and comment on proposed foreign technical regulations that can affect your access to international markets. Register online at Internet URL: http://www.nist.gov/= notifyus/=

&= nbsp;

 

Conformi= ty Assessment     &nb= sp;            =             &nb= sp;            =            Return to top

 

The Industry and Commerce Superinte= ndency (SIC) through the Delegated Superintendant for Consumer Protection (SDPC) organizes and coordinates the National Certification System, establishes, coordinates, and supervises national quality assurance programs, metrology-related activities, accredit and supervise certification entities, testing and calibration laboratories that are incorporated in the National Standardization, Certification and Metrology System. The SDPC is composed of the technical standards, metrology and consumer protection divisions.

 

Conformity assessment certificates = can be obtained from accredited organizations, recognized organizations with which there is a recognition agreement, or by laboratory tests performed by an accredited laboratory. For a listing of accredited organizations, please consult: ht= tp://www.sic.gov.co/Informacion_Interes/Entidades  acreditadas/Directorio - Listado1.= php

Product Certification     =             &nb= sp;            =             &nb= sp;            =      Return to top

 

Manufacturers and importers of prod= ucts regulated by official mandatory technical standards or technical regulations need to inscribe themselves in SIC’s Mandatory Registry prior to the = sale of such product. Products can be tested in accredited laboratories to obtain the certificate of conformity and SIC would also accept certificates issued= by an accredited certification entity, such as members of the International Accreditation Forum (IAF) multilateral agreement.

 

MINCOMEX eliminated the mandatory s= tatus for the majority of products previously covered, since most refer to outdated technical standards. SIC is working with other government agencies in the development of technical regulations for products that present threats to health, safety, environment or national security. Development of technical regulations should adhere to internationally accepted practices, and the Colombian Government needs to notify the World Trade Organization, and other relevant organizations, for comments, prior to the new regulation’s e= ntry into force.  You can find more information about technical regulations under development (awaiting public comment), valid technical regulations, and on Colombian technical standards referenced in technical regulations. You can find them in the following web page: www.mincomercio.gov.co=    and select “Vice Minis= terio de Desarrollo Empresarial – Regulación”.

 

Accreditation        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;  Return to top

&nb= sp;          

Colombia has 12 accredited certific= ation entities on quality assurance systems, electrical products, certification f= or fruits, vegetables, and other food products, occupational health administra= tion system and environmental management systems, Codex Alimentarius, and e-commerce. Also there are many accredited inspection entities for household gas installations, and food products, as well as over 60 testing, and 40 metrology (calibration) laboratories operating in public and private institutions.

 

The following is partial listing of specialized accredited entities:

 

Quality Management Systems (ISO 9000)=

S.G.S. Colombia, S.A.

Corporation Center for Technological Research and Development (CIDET)

International Certification and Tra= ining S.A. - IC & T

Instituto Colombiano de Normas T&ea= cute;cnicas y Certificación - ICONTEC

B.V.Q.I. Colombia Ltda.

Cotecna Certificadora Services Ltda= .

Intertek Systems Certification Colo= mbia

 

Environmental Management Systems (ISO 14000)

S.G.S. Colombia S.A.

B.V.Q.I. Colombia Ltda.

Instituto Colombiano de Normas Técnicas y Certificación - ICONTEC

 

(HACCP)

Instituto Colombiano de Normas Técnicas y Certificación - ICONTEC

S.G.S. Colombia S.A.

 

Occupational Health and Safety Management (OHSAS 18000)

B.V.Q.I. Colombia Ltda.

Colombian Security Council - Consej= o Colombiano de Seguridad

Instituto Colombiano de Normas Técnicas y Certificación - ICONTEC

S.G.S. Colombia, Ltda.

 

<= span lang=3DEN-US style=3D'mso-bidi-font-size:12.0pt;text-transform:none;layout-= grid-mode: both;mso-bidi-font-weight:bold'>Personnel

Centro de Capacitación y Des= arrollo Tecnológico para la Industria del Papel (CENPAPEL)

Instituto Colombiano de Normas Técnicas y Certificación - ICONTEC

S.G.S. Colombia, Ltda.

 

<= span lang=3DEN-US style=3D'mso-bidi-font-size:12.0pt;text-transform:none;layout-= grid-mode: both;mso-bidi-font-weight:bold'>Products

Instituto Colombiano de Normas Técnicas y Certificación - ICONTEC

Corporation Center for Technological Research and Development (CIDET)

Corporación Colombia Interna= cional

S.G.S. Colombia S.A.

BVQI Colombia Ltda.

Cotecna Certificadora Services Ltda= .

Biotrópico, Ltda.

BCS ŐKO Garantie Colombia, Ltd= a.

 

For a complete listing of product certification entities, inspection entities, metrology and testing laboratories, please access: http://www.= sic.gov.co  - and check under “Servicios= en Línea – Acreditación y Metrología - Entidades Acreditadas”.

 

The National Institute for Food and Medicine Surveillance (INVIMA) is the responsible organization regarding sanitary, medicines, biological products, food, beverage, cosmetics, and medical devices and products related to human health. For more information, please check: www.invima.gov.co

 

 

Publication of Technical Regulations   &= nbsp;           &nbs= p;            &= nbsp;   Return to top

 

The Ministry of Foreign Trade, Indu= stry and Tourism (Regulations Directorate) is the World Trade Organization’s  (WTO) point of contact for Technic= al Barriers to Trade (TBT), draft technical regulations, and upcoming Colombian notifications on TBT and Sanitary and Phyto Sanitary (SPS) regulations. This group verifies compliance (and coordinates) with the WTO TBT Agreement, the= SPS Agreement, and compliance with conformity assessment procedures, maintains = the national information system about national or foreign technical regulations, among other related matters.  =

 

Interested U.S. firms can review di= fferent draft technical regulations and can comment on them before the review period expires.

 

For more information, please check:= www.mincomercio.gov.co  and look for “Vice Ministeri= o de Desarrollo Empresarial – Regulación”.

 

 

 

 

Labeling a= nd Marking      =             &nb= sp;            =             &nb= sp;            =   Return to top

 

The SIC oversees compliance to labe= ling and marking requirements of all products (imported or produced locally). These requirements include display the unit of measure (using the international system of measurements - SI). ICONTEC has developed several Colombian techn= ical standards on labeling and marking requirements for different products.

 

In addition, SIC develops metrologi= cal controls for measuring instruments to assure its calibration, following recommendations from the International Legal Metrology Organization (OIML).=

 

SIC operates a Metrology Laboratory= where the national standard for the main physical properties (weight, volume, temperature, etc.) serves as reference to the Colombian industry. SIC has b= een working closely with the U.S. National Institute of Standards and Technology (NIST) in this and other areas of mutual interest.

 

Contacts        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;         Return to top

 

Ministry of Foreign Trade, Industry= and Tourism (Mincomercio)

Mr. Daniel Rico, Point of Contact O= TC/MSF

Tel.      (571) 606-7676 ext. 1690 – 241-0478

Fax .    (571) 241-0480 or 241-0493

 

ICONTEC

Mr. Fabio Tobón, Executive D= irector

Carrera 37 # 52-95

Bogotá DC, Colombia

Tel.      (571)    607-88-88 PBX x 1200 / 221-38-00

Fax.     (571)    222-14-35

ftobon@icontec.org.co

 

Superintendencia de Industria y Com= ercio (SIC)

Ms.  Alba Luz Quintero – Manager, Technical Standards and

Accreditation Division

Avenida Carrera 50 # 27-55, Int. 2<= /span>

Bogotá DC, Colombia

Tel.      (571)    315-32-65 thorough 315-= 32-69

aquintero@correo.sic.gov.co

 

Trade Agreements        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

 

The Uribe Administration has energetic= ally pursued measures to promote trade.  The U.S. and Colombia began negotiations for a free trade agreement = in May 2004, and both countries signed the U.S.-Colombia Trade Promotion Agree= ment (CTPA) on November 22, 2006 in Washington DC.  The agreement is undergoing a ratification process in both congresses.

 

For additional information on the final texts of the CTPA agreement please check: http://www.ustr.gov/Trade_Agreements/Bilateral/C= olombia_FTA/Final_Text/Section_Index.html 

 

Colombia signed another free trade agr= eement with Chile on November 27, 2006, and is currently negotiating another one w= ith several Central American countries including El Salvador, Guatemala and Honduras.

 

The Andean T= rade Preferences and Drug Eradication Act (ATPDEA), announced on August 6, 2002, retroactively renewed and built upon the expired Andean Trade Preferences A= ct (ATPA) to further open U.S. markets to Colombian products, as well as incre= ase opportunities for U.S. exporters in the Colombian market.  On December 20, 2006, President Bu= sh extended ATPDEA until June 2007, but may be extended again until the end of= the year, for those countries with an approved FTA with the U.S.

 <= /o:p>

Duty-free ac= cess is based upon meeting a requirement that products be substantially transfor= med into a product of a beneficiary country, must be imported into the U. S. directly from the beneficiary country, and meet the value-added requirement= of 35 percent, up to 15 percent of which may be accounted for by U.S. content = in terms of cost or value.

 

Colombia entered the Andean Community since 1969 and besides Colombia its members currently include Bolivia, Ecuador, and Peru since Venezuela announced its intention to withdraw in April 2006.  Later, on September 2006, Chile formally received the status of associated member (after they withdrew in 1976).

 

In April 1998, the Andean Community entered into negotiations for a free trade agree= ment with the countries of MERCOSUR (Argentina, Brazil, Paraguay and Uruguay). In August 1999, a trade preference agreement between Brazil and the Andean Community was signed.  In June= 2000, a similar agreement was signed between the Andean Community and Argentina. =

 

Colom= bia is party of the Group of Three (G-3) along with Mexico and Venezuela (the G= 209;3 Agreement), in effect since January 1995, under which most tariffs are to be eliminated by the year 2007. Colombia also has a partial free trade agreeme= nt with Chile.  This agreement pr= ovided for the gradual elimination of all bilateral tariff and non-tariff barriers= .  All of Colombia’s bilateral = and regional trade agreements are based on Latin American Integration Associati= on (ALADI) regulations and procedures.

 

There are other ALADI partial agreements with Paraguay, Uruguay and the Central American Common Market (CACM) countries (Costa Rica, Guatemala, El Salvador, and Honduras) as well as with Panama, Cuba and CARICOM. <= /p>

 

Colombia has signed other bilateral agreements to stimulate trade and ensure most favored nation treatment with Hungary, the Czech Republic, Rumania, Russia, Malaysia, Indonesia, India, China, South Korea, Algeria, Kenya, Egypt, Moro= cco, Israel, and the Ivory Coast.  Colombia has been an active participant in the Free Trade Area of the Americas (FTAA) negotiations.

 

 

 

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

Office of the U.S. Tr= ade Representative (USTR): http://www.ustr.gov/Trade_Agreements/Bilateral/Colombia_FTA/Section_= Index.html

Ministry of Foreign Trade: www.mincomercio.gov.co <= /span>

Industry and Commerce Superintendency (SIC): www.sic.gov.co

National Customs and Tax Directorate (DIAN): www.dian.gov.co 

Corporation Center for Technological Research and Development (CIDET): www.cide= t.org.co

Colombian Technical Standards and Certification Institute (ICONTEC): www.ic= ontec.org.co

National Institute for Food and Medicine Surveillance (INVIMA) – equivalent to the U.S. Food and Drug Administration (FDA):= www.inv= ima.gov.co

Ministry of Social Protection (formerly Ministry of Health): www.minproteccionsocial.= gov.co<= /p>

Ministry of Communications: www.mincomunicaciones.gov.co

Colombian Agricultural Institute (ICA): www.ica.go= v.co

Colombia International Corporation: http://www.cci.org.co

 

Return to table of contents<= /a>

Return to table of contents

Chapter 6: Investment Climate

Openness to Foreign Investmen= t        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

Colombia = began an economic liberalization reform in the early 1990s, which provided for natio= nal treatment of foreign investors, lifted controls on remittance of profits and capital, and allowed foreign investment in every sector except for defense, national security, and the processing and disposal of toxic, radioactive, or hazardous waste products.  This reform also eliminated the authorization that foreign investors required pr= ior to investing in most sectors of the Colombian economy, except for portfolio investment, financial, hydrocarbon and mining sectors, which are subject to special regimes.  Foreign inve= stments in these sectors require sector-specific procedures, such as investment registration and concession agreements with the Colombian government, but a= re not restricted in the amount of foreign capital permitted.

 

The Ministry of Trade, Industry and= Tourism formulates foreign investment policy in coordination with the Ministry of Finance and Public Credit, taking into account the guidelines of the Counci= l on Economic and Social Policy (CONPES). 

 

The primary regulations governing f= oreign investment in Colombia are Law 9 of 1991, Decree 2080 of 2000, Resolutions = 51, 52, and 53 of the Economic and Social Policy Council (CONPES) and Resolutio= n 21 of the Board of Directors of the Central Bank.  Generally, foreign investors may participate in privatization of state-owned enterprises without restrictions.  Colombia impose= s the same investment restrictions on foreign investors that it does on national investors.  A commercial prese= nce in the country (defined as a registered place of business, a branch, or an age= nt) is a standard requirement for conducting business in Colombia.  Foreign investors can participate without discrimination in government-subsidized research programs.  In fact, most Colombian government research has been done in connection with foreign institutions.

 

Investment screening has been elimi= nated, and the registration requirements that still exist are generally just formalities.  Decree 1844/2003 established that the type of investment, its ultimate destination, and the = type of currency determines the registration requirements.  Foreign investments must be regist= ered with the Central Bank’s foreign exchange office within three months of the transaction date to ensure repatriation of profits and remittances and = to access official foreign exchange.  All foreign investors, like domestic investors, must obtain a license from the Commission of Companies and register with the local Chamber of Commerce.

 

The Uribe administration stepped up= the economic liberalization of the early 1990’s and is committed to an op= en investment regime.  Liberaliza= tion has progressed furthest in telecommunications, accounting/auditing, energy,= and tourism and to a lesser extent in legal services, insurance, distribution services, advertising, and data processing.  Colombian law restricts the moveme= nt of personnel in several professional areas, such as architecture, engineering, law, and construction.  For fi= rms with more than ten employees, no more than 10 percent of the general workfo= rce and 20 percent of specialists can be foreign nationals.  Nevertheless, attempts are underwa= y to liberalize areas where restrictions remain in force.

 

Since 1995, investors have been abl= e to take out tax stability contracts with the government.  The rate of the income tax, the ta= x on occasional earnings and the remittance tax payable by investors opting for = this regime is two percent points higher than the tax rate applying at the time = of conducting the contract.  In r= eturn, under such contracts, the state guarantees that certain provisions, regardl= ess of any amendments, will be applied to investors for a specified period.

 

Colombia has a comprehensive legal framework for business.  Colombia’s judicial system defines the legal rights of commerc= ial entities, reviews regulatory enforcement procedures and adjudicates contract disputes in the business community.  The judicial framework includes the Council of State, the Constituti= onal Court, the Supreme Court of Justice and the various departmental and distri= ct courts, which are also overseen for administrative matters by the Superior Judicial Council.  The 1991 constitution provided the judiciary with greater administrative and financi= al independence from the executive branch.&nb= sp; But the judicial system remains relatively weak with non-substantive= procedural requirements, time-consuming practices and frequent instances of corruption= .

 

According to the UNCTAD, a major di= fficulty for foreign investors in Colombia is the high level of legal instability arising from the frequent issuing of regulations and administrative rulings affecting day-to-day business.  To improve legal stability and reduce administrative procedures and requiremen= ts that are not backed up by law, Congress passed Laws 962 and 963 in 2005.  Law 962 simplified current administrative procedures and provided for the continual review of any new procedure in line with the spirit of simplicity of this norm.  Law 963 concerns legal stability agreements.  This is expected = to increase the openness of the regulatory framework and to improve law enforc= ement.

 

Law 963 guarantees investors that t= he laws applicable to the investment at the time the investment is entered into will remain in effect for a period between 3 and 20 years depending on the type = and amount of the investment.  The minimum dollar value of the investment is USD 1.2 million and those seeking= to benefit from this law are required to pay a fee based on the progress of the investment.  This law benefits investments in manufacturing, agriculture, tourism, mining, petroleum, telecommunications, construction, electricity production and transmission, = port and railroad development, and other activities approved by a special committee.  Portfolio investme= nt is specifically excluded from benefiting from Law 963 and the investment stabi= lity guarantee does not include taxes, labor and social security laws, financial services laws and the tariff system.

 

Colombia’s current Foreign Di= rect Investment (FDI) legal framework also incorporates binding norms (Decisions= 291 and 292) resulting from its membership since 1991 in the Andean Community of Nations (CAN), which aims to establish a common market.  It also reflects the Treaty on Free Trade between Colombia, Mexico, and Venezuela (G-3 Treaty), which entered i= nto force in 1995, the Trade Complementarity Agreement with Chile, under which = 95 percent of bilateral trade enjoys duty-free status, and the free trade agreement between the Andean Community and the member nations of Mercosur, which entered into force in 2003.

 

On November 22, 2006, the United St= ates and Colombian Governments signed a bilateral trade agreement, the U.S.-Colombia Trade Promotion Agreement (CTPA).  At this writing, the Agreement has not been approved by the Congress= in either country.  Overall, the agreement should improve legal security and the investment environment.  If approved, it would eliminate ta= riffs and other barriers in goods and services trade between the United States and Colombia.  The agreement inclu= des investment provisions intended to establish a stable legal framework for U.= S. investors operating in Colombia.  The agreement grants investors the right to establish, acquire and operate investments in Colombia on an equal footing with local investors and investors of other countries.  It draws from U.S. legal principles and practices to provide U.S. investors in Colombia substantive and procedural protections that foreign investors have under the U.S. legal system, including due process protections and the righ= t to receive fair market value for property in the event of an expropriation.  Protections for U.S. investments w= ould be backed by a transparent, binding international arbitration mechanism.  Investor-state arbitration would be available for claims by investors of breaches of investment agreements.

 

The United States already has trade agreements with several important competitors, including Chile, Mexico, the Central American countries and the Dominican Republic.  In addition, the Andean Trade Prom= otion and Drug Eradication Act ATPDEA), tied to drug eradication programs (expire= d at the end of 2006 and renewed until June 30, 2007), provides duty-free entry = of approximately 6,500 product categories from Colombia into the U.S. Previous= ly excluded products such as vacuum-packed tuna fish and certain textile and apparel products now enjoy duty-free access to the U.S. market, conditioned= on compliance with government requirements.&n= bsp; The President can expand the list of included products with approval from an advisory committee and concurrence from the U.S. International Trade Commission.  Goods must meet a value-added requirement of 35 percent, up to 15 percent of which may be accounted for by U.S. content in terms of cost or value.  The CTPA would expand access.

 

Colombia exported goods worth USD 3= .8 billion under ATPDEA in 2005, versus USD 3.1 billion in 2004.  Between January and November 2006, Colombia exported USD 3.6 billion, an increase of 9.1 percent over the same period during the previous year.  Total Colombian exports to the U.S. were USD 8.6 billion between Jan= uary and November 2006. Colombian exports under the ATPDEA program during this period were 42 percent of total Colombian exports.  US exports, which totaled USD 6 bi= llion between January and November 2006, have also grown by almost two billion dollars since ATPDEA entered into effect in late 2002.

 

The following sectors have been ide= ntified as having restrictions to foreign investment:

 

Accounting, Auditing and Data Processing:

 

Providers of accounting and auditing services must register in Colombia.  No restrictions apply to services offered by consulting firms or individuals.  A legal commerci= al presence is required to provide data processing and information services in Colombia.

 

Advertising, Radio and Television Services:=

 

There are no local-content advertis= ing requirements for advertising on Colombian television, but the National Television Commission charges foreign-made ads double the national rate for airtime.  Colombian television broadcast laws (Law 182/95 and Law 375/96) require foreign investors to be actively engaged in television operations in their country of origin.  National broadcasters are required= to dedicate at least 70 percent of prime time to locally produced programming.=   Outside of prime time, at least 50 percent of programming must be locally produced except between the hours of midnight and 10:00 am when no locally produced programming is required.

 

Television, radio broadcasting, mov= ie production, and movie reproduction fall under national-treatment limits.  Foreign investment in television n= etwork and programming companies is limited to 40 percent.  Foreign operators are limited by l= aw to 25 percent ownership of radio broadcast programs.  A maximum of 10 percent foreign participation in local TV productions is allowed and the participation of foreign artists in local TV productions is dependent upon the reciprocity requirement.  National TV prog= rams can be directed by foreign directors, in which case the screen writers and starring actors must be Colombian nationals (if the director is Colombian t= hen some writers and/or starring actors may be foreign nationals).  Bidding concessions for programmin= g in public television channels are only open to Colombian nationals, and Colomb= ian nationals are required to direct and manage newspapers covering domestic politics.

 

Banking: 

 

Foreign companies are permitted to = own 100 percent of financial institutions in Colombia, but they are required to obt= ain approval from the Banking Commission before making a direct investment of t= en percent or more in any one entity.  Portfolio investments that will be used to acquire more than five percent of an entity also require authorization.  The use of foreign personnel in fi= nancial institutions is limited to administrators, legal representatives, and technicians.  The CTPA elimina= tes this restriction by providing for the prohibiting a party from requiring financial institutions of another party to engage individuals of any partic= ular nationality as senior managerial or other essential personnel, and limiting= the number of foreigners that may be employed in a particular financial service sector.

 

Foreign banks seeking to operate in Colombia must establish a local commercial presence and comply with the same capital and other requirements as local financial institutions.  Colombian legislation limits the operation of banks and other financial institutions by separating fiduciary, investment banking, commercial loans, leasing, and insurance services from banking services.  Current legislation (Law 389/1997) permits banking institutions to develop such activities in the same office/building, but the management of such services must be separate.

 

Since 1999, banks operating in Colo= mbia have been subject to a minimum capital requirement, promulgated through Law 510/1999.  This law grants the government the right to intervene in institutions that fail to meet minimum performance requirements.  Institutions are required to register with the Financial Institutions Guarantee Fund, FOGAFIN (a FDIC-equivalent), and Law 510/1999 extended the terms and time to liquidate a failing bank from 6 to 18 months.

 

Other regulations of interest to th= is sector appear in Decree 2951/2004.  This decree establishes that institutions must create a commercial presence if their promotions target Colombian residents.  A banking relationship with a Colo= mbian resident and a financial entity abroad is permitted if the relationship was initiated by the Colombian resident without any publicity or promotion in Colombian territory.  The CTPA= seeks to eliminate these restrictions by providing for each party to permit perso= ns located in its territory without restrictions, and its nationals wherever located, to purchase financial services from cross-border financial service suppliers of another party.  

 

Hydrocarbons:

 

The Colombian government is current= ly seeking to increase exploration and investment in the hydrocarbons sector.<= span style=3D'mso-spacerun:yes'>  In 2003 the Colombian government separated regulatory responsibilities from Ecopetrol, the state owned oil company, to a government entity called the National Hydrocarbons Agency (ANH).  The ANH administers Colombia’s competitive process, allowing Ecopetrol to compete side-by-side with foreign firms for hydrocarbon contracts.  Foreign companies may assume up to= 100 percent of investment and risk activities in all exploration and production contracts.  Oil companies may = obtain the right to exploit fields for 30-years or until depleted, as well as exte= nd previous association contracts.

 

A new sliding-scale royalty rate on= oil projects establishes a five percent royalty rate on the smallest oil fields= and an upper limit of 25 percent on larger fields.  The lower royalty rate has encoura= ged investments by small- and medium-sized operators, since more than 80 percen= t of Colombia’s fields contain less than 50 million barrels.  The reforms have helped to renew interest in Colombia’s oil exploration sector, with the government signing a record number of contracts (59) with foreign oil companies during 2005. As of December 31, 2006, a total of 44 exploration, production and technical evaluation contracts had been signed between the ANH and foreign investors.

 

Insurance:

 

Colombia permits 100 percent foreign ownership of insurance firm subsidiaries.&= nbsp; Firms must have a commercial presence locally to sell policies other than those for international travel or reinsurance.  In addition, Colombia denies market access to foreign marine insurers.  The CTPA permits trans-border trading of insurance (except for some types of insurance, such as the mandatory vehicle insurance or pension insurance) and the possibility for foreign insurance and financial institut= ions to establish branch offices in Colombia.&n= bsp; The U.S. and Colombia have agreed to give Colombian companies four y= ears to restructure and adapt to the new business conditions before U.S. compani= es are allowed to enter the market.

 

Legal:

 

Provision of legal services is limi= ted to those firms licensed under Colombian law. Foreign law firms can enter the market by forming joint ventures with local law firms. 

 

Telecommunications:

 

Colombia currently permits 100 perc= ent foreign ownership of telecommunication providers.  In WTO negotiations, Colombia made fairly liberal commitments on basic telecommunications services and adopted= the WTO reference paper.  However, Colombia specifically prohibited “callback” services and exclud= ed fixed and mobile satellite systems.  The license or concession for the supply of telecommunications servi= ces is only granted to enterprises legally established in Colombia. 

 

Significant barriers to entry inclu= de cross subsidies, commercial presence in Colombia and economic needs tests.  The Ministry of Communications may require an economic needs test for the approval of licenses in voice, facsimile, e-mail, and other value-added services.  The parameters that determine R= 20;an economic needs test” are not clearly established in Colombian legislation.  CRT also maintai= ns a system of crossed subsidies where, for example, long-distance telephony subsidizes local telephony.  L= ow (subsidized) prices of local telephony and high restrictive costs in the provision of long-distance telephony limit the entry of new competitors. The CTPA has sought to further liberalize this sector by prohibiting anti-competitive cross-subsidization; by requiring licensing procedures be transparent; and by providing for parties to ensure that suppliers of telecommunications services in their territories provide interconnection at reasonable rates, taking steps to protect the confidentiality of commercial= ly sensitive information obtained as a result of interconnection arrangements.=

 

Transportation:

 

Article 1458 of the Commercial Code= of 1971 prohibits any foreign ownership interest in commercial ships licensed in Colombia.  Article 1490 of the Commercial Code restricts the percentage of FDI in maritime agencies to 30 percent, and Article 1426 restricts foreign ownership in national airline or shipping companies to 40 percent.

 

Trans-border transportation service= s are also restricted in Colombia.  = Land cargo transportation must be provided by natural or legal persons with commercial presence in the country and licensed by the Ministry of Transportation.  Colombia̵= 7;s law permits international cabotage companies to provide cabotage services “only when there is no national capacity to provide the service.”  Cargo reserve requirements in transport have been eliminated.  However, the Ministry of Foreign T= rade reserves the right to impose restrictions on foreign vessels of those natio= ns that impose reserve requirements on Colombian vessels.

 

Other factors which may impact investment: =

 

Law 145/1999 provides the Colombian government with the power of “economic intervention” in the operation of all companies (public, private, local, or foreign) permanently located in Colombia.  This law promotes solutions along the lines of U.S.’s “Chapter 11” bailouts for companies with financial problems which face possible liquidat= ion or bankruptcy.  Restructuring agreements impose strict regulations on companies (e.g., financial operatio= ns unrelated to the company’s activity may not be performed without prev= ious authorization from all the parties involved in the transactions.)

 

Since the passing of this law in De= cember 2004, the Colombian government has intervened in 914 enterprises.  These companies registered assets totaling approximately USD 4.8 billion and liabilities totaling approximate= ly USD 3.4 billion and employed approximately 65,000 workers.  Of the companies involved, 665 rea= ched restructuring agreements, which called for restructuring of corporate governance practices and outlined payment programs to meet their obligations and avoid insolvency.  The rem= aining companies were found bankrupt and are currently being liquidated.

 

Privatization regime:

 

In recent years, Colombia has conti= nued with the privatization of State-owned enterprises.  The legal framework for the dispos= al (privatization) processes is derived from Article 60 of the Constitution and Law No. 226 of 1995.  This Law stipulates that the sale of the State holdings in an enterprise should be completed in two phases, the first for the "solidarity" sector (comprised of cooperatives and workers associations) and the second for the general public.  During the fi= rst phase, special conditions with regard to term and credit have to be granted to the "solidarity" sector.  In the second phase, the general public may participate, including foreign investors. 

 

The main privatizations have been i= n the electricity, mining and hydrocarbons and financial sectors.  For foreign direct investment, the privatization program has been especially important in providing opportunit= ies in electricity generation and banking.&nbs= p; In addition, the government hopes to generate USD 6.5 billion over t= he next years by encouraging private sector investment in roads, ports, electricity and gas infrastructure concessions.  Such models of public-private partnerships are increasingly the government’s favored option for infrastructure development.

 

In Colombia, municipal enterprises = run many public utilities and infrastructure services.  These municipal enterprises have s= ought to engage private sector investment through concessions.  There are successful cases in road= s (the urban transportation integrated system for the Pereira - Dosquebradas - La Virginia metropolitan area), water, sanitation, ports (port of Cartagena) a= nd airport services (El Dorado airport, Bogotà).  These kinds of partnerships have h= elped to develop a gradual and selective approach to reforms and have been genera= lly successful as a way of creating an attractive environment for private natio= nal and foreign investment.

Conversion and Transfer Policie= s        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

 

No restrictions apply to transferri= ng funds associated with foreign investment.  Foreign investment into Colombia must be registered with the Central Bank within three months of the transaction date.  The government permits full remitt= ance of all net profits regardless of the type or amount of investment (previous= ly limited to 100 percent of the registered capital).  There are no restrictions to the expatriation of revenues generated from 1) the sale or closure of a busines= s, 2) a reduction of investment, or 3) transfer of a portfolio.  Colombian law authorizes the gover= nment to restrict remittances in the event that international reserves fall below three months’ worth of imports.  Reserves have been consistently at least double that level for decad= es.

 

In December 2005, the Colombian gov= ernment attempted to stem speculative capital flows by mandating that foreign portf= olio investment should remain in the country for at least one year.  However, the government revoked th= is measure in June 2006, allowing all foreign portfolio investment and proceed= s to be freely remitted abroad without restrictions.

 

Colombia maintains conventional for= eign exchange controls.  Companies = must convert proceeds from their sales in foreign exchange into Colombian pesos.  However, the peso is convertible and investors report no untoward restrictions on access to hard currency.  The peso is reasona= bly stable against major currencies.  There are special provisions for companies in the oil, coal and natu= ral gas sectors, including exploration, production and technical services.  Where sales are in foreign currenc= y, operators are not required to convert foreign currency except to pay obligations in local currency.  This is a welcome provision for investors in the natural resources sector who undertake very large investments and depend on hard currency loans for a substantial part of project financing.

Expropriation and Compensatio= n        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

Colombian law guarantees indemnific= ation in expropriation cases.  The Colo= mbian Constitution guarantees the rights of property that has been legally acquir= ed, although it does allow for assets to be taken by eminent domain.  A provision in the Constitution al= lowing for expropriation without compensation was removed in 1999.  There is now a right of appeal bot= h on the basis of the decision itself and on the level of compensation.  However, the constitution does not specify how to proceed in compensation cases.  According to a 2006 UNCTAD survey = and interviews with foreign investors, these matters appear to be of some conce= rn to investors.  Now that the constitutional impediment to payment of compensation has been removed, these matters can be taken up by treaty, as was the case with the Colombia-Spain Bilateral Investment Treaty (BIT).  Foreign investors perceive the current government’s effort to negotiate BITs as an improvement, particularly with regard to compensation issues.

 

 

 

Dispute Settlement        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

 

Law 315 of 1996 authorizes the incl= usion of an international binding arbitration clause in contracts between foreign investors and the GOC and Decree 1818 of 1998 allows for alternative dispute resolution.  The law allows contracting parties to agree to submit disputes to international arbitratio= n, provided that the parties are domiciled in different countries; the place of arbitration agreed by the parties is a country other than the one where they are domiciled; the subject matter of the arbitration involves the interests= of more than one country, and the dispute has a direct impact on international trade.  The law allows the par= ties to set their own arbitration terms including location, procedures, and the nationality of rules and arbiters.  International arbitration is not allowed for the settlement of investor-state disputes arising from the Legal Stability Contracts (Law 963= /05) mentioned above, even for foreign investors.

 

Foreign investors find the arbitrat= ion process in Colombia complex and dilatory, especially with regard to enforce= ment of awards.  Despite Colombia&#= 8217;s commitment to international arbitral conventions and its domestic legal framework for arbitration and resolution of disputes, foreign companies have continued to endure lengthy dispute settlement processes.  Consequently, there have been case= s in which foreign investors have won arbitrations, only to have the losing party seek their annulment by the Council of State, a judicial body.  The Council has ruled that until it decides on such requests, arbitration awards are not final, and do not need= to be paid.  Colombia is a member= of the New York Convention on Investment Disputes, the International Center for the Settlement of Investment Disputes (ICSID), and the Multilateral Investm= ent Guarantee Agency (MIGA).

 

= Performance Requirements and Incentives  &nbs= p;            &= nbsp;           &nbs= p;      Return to top

 

There are no performance requiremen= ts explicitly applicable to FDI entry and establishment.  However, there are export incentiv= es relating to the operation of special or free zones.

 

Incentives:

 

Based on Colombian notifications to= the WTO, the WTO Committee on Subsidies identified the following Colombian prog= rams as export subsidies: (1) Plan Vallejo and (2) the CERT program.  Plan Vallejo allows duty-free entr= y of capital goods and materials to be used in the production of export goods.  In order to qualify, the producer = must show that at least 70 percent of the product produced by the newly acquired capital good is exported.  In = the case of raw or partially finished materials, the producer must export in va= lue, 1.5 times that of the imported materials.&= nbsp; The government announced that it would phase out these export-related incentives by 31 December 2006 and announced that they would be replaced by incentives for employment generation and investment in new technologies.  Decree 1811 of 2003 excluded capit= al goods used to produce exports from enjoying these incentives as of 2007.  However, at this writing, the other incentives had not been eliminated.

 

In December 2002, Colombia accepted= the WTO Committee on Subsidies and Countervailing Measures’ decision to phase= out all export subsidies in free trade zones by December 31, 2006.  However, free trade zones and spec= ial import-export zones will maintain their special customs and foreign exchange regimes.  In December 2005, th= e GOC issued Law 1004 which imposed a 15 percent income tax on free zones (lower = than the normal 35 percent tax) after December 31, 2006, and maintained the exemption on the 7 percent remittance tax for free zones in the country (see chapter on free trade zones below).

 

The tax reimbursement certificate (= CERT) program has been frozen since 2002.  The program, intended to promote non-traditional export products, provided negotiable certificates to exporters based on the level of exports.  Since 2002, however,= the program has not been operational, but remains on the tax books.

 

Faced with a revaluation of the pes= o that affected flower and banana exports, the Uribe Administration enacted a prog= ram to help these exporters purchase mechanisms that would counter potential exchange risk.  The program offers  banana and flower expo= rters 200 pesos for every dollar of goods exported to the United States to purcha= se either options or dollars in the futures market to hedge against future exchange rate fluctuations.  T= he eligibility period for this subsidy expired in September 2006.  However, in January 2007 the Minis= ter of Agriculture announced that the government would appropriate approximately U= SD 4.2 million for continuing with this type of export subsidy in 2007.

 

Export credit:

 

The foreign trade bank (BANCOLDEX) = provides funds for working capital and equipment purchases dedicated to the producti= on of exported goods. BANCOLDEX also provides discount loan rates to foreign importers of Colombian goods.

 

Import Licenses:

 

Colombia has two import licenses.  All importers are required to comp= lete a standard import registration form known locally as the “Registro de Importación”.  Th= ese forms are for record keeping/statistical purposes and are available at the Ministry of Foreign Trade.  The other license applies to closely monitored, sensitive products such as precursor chemicals and weaponry.

 

Colombia imposes discretionary impo= rt licensing to ban imports of milk powder and poultry parts.  The Colombian Government also has = local purchase requirements for rice, yellow corn, white corn, and cotton. The CT= PA would reduce or eliminate these requirements for U.S. exports.

 

The majority of “used” = goods, such as personal computers, cars, tires, and clothing, are effectively prohibited from import, and those that are allowed (e.g., used medical equipment), are subject to prior licensing.  The CTPA would permit entry of use= d and remanufactured goods.

 

Promotion:

 

PROEXPORT is the Government’s= foreign investment and export promotion agency.&nb= sp; It provides information on market access and business opportunities = and organizes international trade shows and missions.  During the last few years, PROEXPO= RT has been making efforts to diversify Colombian exports, which have been traditionally concentrated in coffee, petroleum, coal and flowers.  PROEXPORT is much like the United = State Foreign Commercial Service in that it provides planning and training strate= gies for medium and small companies to overcome obstacles of exporting goods and services.  There are fourteen PROEXPORT offices abroad and four commercial representatives domestically provide information about 36 different countries.  These offices attend and organize events, fairs, and provide commercial guides to enter foreign markets.  In January 2005, Proexport took ov= er foreign investment promotion, formerly the responsibility of Coinvertir.

 

Taxes:

 

The main types of tax incentives of= fered include preferential import tariffs, tax exemptions and credit or risk capi= tal from the government.  One exam= ple of a tax incentive offered by the Colombian Government is the deductibility of income from new investments in agricultural businesses dedicated to the cultivation of fruits, anchovies, rubber, and cacao.  Another deduction available is inc= ome from new investments in environmental enhancements and controls once these investments are accredited by the environmental authority.  Some fiscal incentives are availab= le for investments created to generate new employment or production in areas impac= ted by recent natural disasters.  =

 

Tax and fiscal incentives are often= based on regional considerations.  F= or example, border areas have certain protections because currency movements in neighboring countries can severely harm local economies.  Likewise, export-oriented companie= s and other industrial firms are provided fiscal and tax incentives where the gen= eral reduction in tariffs have hurt their businesses.  Local governments also offer speci= al incentives, such as tax holidays, to attract industry from other areas.  Most applications for fiscal incen= tives are made directly to the agency involved.&= nbsp; Tax incentives do not require special application; companies need on= ly to qualify under the rules indicated in the process of filing a tax return.=

 

Colombia also has numerous incentiv= es that are not export-related.  Decre= e 2755 of 2003 provides tax holidays for approved projects or for desired outcomes= in many industries including software development; electric energy sales gener= ated from wind resources, biomass, or agricultural waste; forestry use of new plantations, investment in sawmills related to such plantations, and planti= ng of wood-use trees; hydrocarbons seismic services; infrastructure, sale of properties dedicated to the public interest; pharmaceuticals exploitation of new medicinal products; public utilities, water, electricity, local telecommunications, natural gas; tourism services of new hotels built betwe= en 2003 and 2018; and shallow draft river transportation.

 

Non-Tariff Barriers:

 

As mentioned above, the provision o= f legal services is limited to law firms licensed under Colombian law. Foreign law firms can operate in Colombia only by forming a joint venture with a Colomb= ian law firm and operating under the licenses of the Colombian lawyers in the f= irm. Colombia permits 100 percent foreign ownership of insurance firm subsidiari= es. Insurance companies must maintain a commercial presence in order to sell policies other than those for international travel or reinsurance.  Economic needs tests are required = when foreign providers of professional services operate temporarily in Colombia. Moreover, residency requirements restrict trans-border trade of certain professional services, such as accounting, bookkeeping, auditing, architect= ure, engineering, urban planning, and medical and dental services. For firms wit= h more than ten employees, no more than ten percent of the general workforce and 20 percent of specialists may be foreign nationals.  Companies seeking to sell informat= ion provision services must establish a commercial presence in Colombia. Foreign educational institutions must have resident status in Colombia in order to receive operational authority from the Ministry of Education. 

 

Tariff Barriers:

 

Many customs duties and most non-ta= riff barriers have been eliminated.  The CTPA will dismantle the remaining barriers immediately upon entry into forc= e, or after a brief transition period.  Current duties have been consolidated into three tariff levels:

 -- Level 1 – 0 to 5 percent f= or capital goods, industrial goods and raw materials not produced in Colombia,=

 -- Level 2 – 10 percent on manufactured goods with some exemptions,

 -- Level 3 – 15 to 20 percent= on consumer and “sensitive” goods, where international prices surp= ass the price-band ceiling, tariffs are reduced; when prices drop below the price-band floor, tariffs are raised.  The price-band has affected local competitiveness and has dampened consumption via higher local prices.  Andean Community variable duties have become an important barrier to imports of U.S. products into Colombia, but should be eliminated or mitigat= ed in the CTPA. Processed food imports from Chile and country members of the Andean Community (Peru, Ecuador, Bolivia, Venezuela) enter duty-free.

 

Colombia assesses a discriminatory value-added tax (VAT) of 35 percent on whiskey aged for less than 12 years, which is more characteristic of U.S. whiskey, compared to a rate of 20 perc= ent for whiskey aged for 12 or more years, most of which comes from Europe.

 =

Right to Private Ownership and Establishment     =             &nb= sp;         Return to top

 

Colombia’s Constitution expli= citly protects individual rights against state actions and upholds the right to private property.

 

Protection of Property Rights        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;           Return to top

 

Colombia has been on the Special 301 “Watch List” every year since 1991.  Key concerns include lax customs enforcement and the inability to conclude legal cases against traffickers or counterfeiters.  Colombia, a W= TO member, has legislation to meet its obligations under the Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property Rights.  Colombia is a member of the World Intellectual Property Organization (WIPO), the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection = of Literary and Artistic Works, the Treaty on the International Registration of Audiovisual Works, and the 1978 Union for the Protection of New Plant Varieties, and is a signatory to the Patent Cooperation Treaty. 

 

In Colombia, the granting, registra= tion, and administration of intellectual property rights (industrial property and copyright) are carried out by four separate government entities.  Colombia currently lacks a unified= IPR registration system.  The Comm= ission of Industry and Commerce (SIC) acts as the Colombian patent and trademark office.  The Colombian Agricul= tural Institute (ICA) is in charge of the issuance of plant variety protection-related and agro-chemical patents.  The Ministry of Social Protection = is in charge of the issuance of pharmaceutical patents, while the Ministry of Jus= tice is in charge of the issuance of literary copyrights.  Each of these entities suffers from significant financial and technical resource constraints.  Moreover, the lack of uniformity a= nd consistency in IPR registration and oversight procedures limits the transparency and predictability of the IPR enforcement regime. 

 

The CTPA provides for improved stan= dards for the protection and enforcement of a broad range of intellectual property rights, which are consistent with U.S. standards of protection and enforcem= ent and with emerging international standards.=   Such improvements include state-of-the-art protections for digital products such as U.S. software, music, text, and videos; stronger protection for U.S. patents, trademarks and test data, including an electronic system = for the registration and maintenance of trademarks; and further deterrence of piracy and counterfeiting by criminalizing end-use piracy.

 

Patents and Trademarks:

 

The patent regime in Colombia curre= ntly provides for a 20-year protection for patents and a 10-year term for indust= rial designs.  Provisions covering protection of trade secrets and new plant varieties have improved Colombia’s compliance with its TRIPS obligations.  However, U.S. companies are concer= ned that the Colombian government does not provide patent protection for new us= es of previously known or patented products.&= nbsp; In 2002, the Colombian government issued Decree 2085, which improved= the protection of confidential data for pharmaceutical products.  Colombia remains the only Andean c= ountry with such protection.

 

Colombia is a member of the Inter-A= merican Convention for Trademark and Commercial Protection.  Enforcement of trademark legislati= on in Colombia is showing some progress, but contraband and counterfeiting are widespread.  The Commission of Industry and Commerce acts as the local patent and trademark office in Colombia.  This agency was giv= en the control of the government’s IPR policy.  However, the agency suffers from inadequate financing and personnel, having only 16 patent examiners for the whole country.  The staff has = a high turnover rate, resulting in a large backlog of trademark and patent applications.  This has led to= a large number of appeals.  The = patent office at the Commission believes that the number of new patent and tradema= rk applications (currently 1,600 patent and 15,000 trademark requests per year) will double in the next years, particularly considering the increase in applications that the implementation of the CTPA would likely produce.

 

Copyrights:

 

Andean Community Decision 351 on the protection of copyrights has been in effect in Colombia since January 1, 1994.  Law 44/1993 extends protection for computer software to 50 years but does not classify it as a literary work.  Law 44 and Colombia’s civil code include some provisions for IPR enforcement and have been used to combat infringement and protect rights.  Colombia is a member of the Berne = and Universal Copyright Conventions, the Buenos Aires and Washington Convention= s, the Rome Convention for the Protection of Performers, Producers of Phonogra= ms and Broadcasting Organizations, the Geneva Convention for Phonograms, the W= IPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.  It is not a member of the Brussels= Convention relating to the Distribution of Program-Carrying Signals Transmitted by Satellite.

 

In January 2005, Law 890 and Law 90= 6 took effect, and included positive amendments to the Colombian criminal code of = 2001 and the Colombian criminal procedures code, in regard to copyright enforcement.  First, article 14 increased the prison sentences for all crimes in the criminal code.  Second, Article 5 modified article= 64 of the criminal code, mandating that judges may only grant parole if the convi= ct has completed two-thirds of the prison term and shows good behavior.  Granting parole is subject to the = full payment of fines imposed and indemnification of the victim.  Finally, Article 313 of the Colomb= ian procedures code imposes preventive incarceration in piracy cases where the value of the seized merchandise exceeds 150 times a set salary rate (approximately $20,000).  The = code also contains provisions regarding the violation of technological protection measures and rights management information, both key obligations of the WIPO treaty. 

 

Colombia has also created a Special Investigative Unit within the Prosecutor General’s Office dedicated to intellectual property rights issues.  This unit began functioning in November 1999 and has several cases u= nder investigation on different issues including usurped trademarks, counterfeit pharmaceuticals, pirated books, CD’s, and movies, violations to industrial secrecy, and cases against pirate television programming broadcasters.

 

The International Intellectual Prop= erty Alliance (IIPA) estimates that in 2005 piracy levels in Colombia for recorded music reached 71 percent, with damage to U.S. industry estimated at about USD 48 million.  Motion picture piracy represented 75 percent of the market, with an estimated loss of USD 40 million.  Piracy in both busin= ess software and book publishing continued to grow in 2005.  According to the Business Software Alliance (BSA), losses due to piracy in business software amounted to USD 4= 4.8 million in 2005, with a 55 percent piracy level while book piracy left loss= es of USD 60 million (piracy level in books is uncertain).  Although Colombia has made some pr= ogress toward strengthening its IPR regime, it still needs to make further improvements by addressing copyright piracy, conducting effective prosecuti= ons, imposing deterrent sentences by courts and strengthening border enforcement initiatives.

 

Transparency of Regulatory Syste= m        &= nbsp;           &nbs= p;            &= nbsp;           Return to top

Colombian legal and regulatory syst= ems are generally transparent and consistent with international norms.  The commercial code and freestandi= ng laws incorporated by reference into it, cover such broad areas as agency, banking and credit, bankruptcy/reorganization, business establishment/condu= ct, commercial contracts, credit, corporate organization, fiduciary obligations, insurance, industrial property and real property law.  The civil code, in addition to cov= ering civil status, inheritance and other matters, also contains provisions relat= ing to contracts, mortgages, liens, notary functions and registries.  In Colombia the tendency has been = to address new areas of legal and regulatory reach (like e-commerce) through separate statutory enactments that can extend integrated regulation to all = of these new areas, rather than amending the various codes which often results= in a complex body of law.

 

Enforcement mechanisms exist, but historically the judicial system has not taken an active role in adjudicati= ng commercial cases.  The 1991 Constitution provided the judiciary with greater administrative and financi= al independence from the executive branch, and Colombian courts have tended to behave more independently and unpredictably.  The Colombian judicial system cont= inues to be clogged and cumbersome.

 

In 2004, Colombia began moving to a= n oral accusatory system.  The legal reforms seek to reduce impunity by making criminal investigations and trials more efficient.  The new system separates the investigative functions assigned to the Office of the Attorney General from trial functions.

 

The U.S. Department of Justice has = provided USD 80 million dollars under the Justice Sector Reform Program (JSRP) to as= sist Colombia in the design and implementation of the criminal judicial system reforms.  More than 2,400 human rights prosecutors and technical experts have been trained and state-of-the= -art criminal forensic equipment has been provided to support their investigations.  In addition, = more than 17,000 prosecutors, police investigators and judges have been trained = on the criminal judicial system reform with U.S. Government assistance.=

 

Efficient Capital Markets and Po= rtfolio Investment     &nb= sp;            =    Return to top

 

Colombia’s financial system i= s well developed by regional standards.  Between 2003 and 2006, the banking sector went from being comprised = of 27 commercial banks to 17, most of them privately owned.  As of December 2006, two financial groups own almost one-half of all bank assets: the Sarmiento Group controls about one-quarter, and the Sindicato Antioqueño Group about one fift= h.  Two state-owned banks account for = around one-fifth while foreign-owned banks also account for one-fifth.  In 2005, Colombia placed the super= vision of the banking and securities sectors under the same entity, the Financial Superintendency.  This Superin= tendency now oversees the four types of Colombia’s credit institutions: commer= cial banks, provide short- and medium-term lending for business and individuals; mortgage banks, finance housing construction projects and purchases; the financial corporations (corporaciones financieras), lend for long-term industrial projects; and, the commercial financing companies (compañías de financiamiento commercial), finance the purchas= e of equipment and durable consumption goods through commercial loans or leasing.  Non-credit financial institutions include private pension and severance funds, trust funds, stockbrokerage houses and insurance companies. 

 

As of November 2006, the estimated = total assets of the country’s main banks amounted to approximately USD 38.8 billion; past-due loans accounted for 3.5 percent of the total portfolio, compared with 4.5 percent in November 2005; and banks’ return on equi= ty dropped from 22.6 percent in November 2005 to 18 percent in November 2006.<= span style=3D'mso-spacerun:yes'>  Provisioning for past-due loans ha= s increased and is above the regional average.  Banks in general are being conservative, thus provisioning additional resources for past-due loans.  Nevertheless, as of November 2006, the Colombian financial system had registered profits of approximately USD 1.4 billion, 13 percent higher than= the profits registered between January and November 2005.

 

Since the 1998-99 financial crisis,= the number of financial institutions in the country decreased from 109 to 60 by November 2006, mainly due to mergers and acquisitions and efforts to provide universal banking services.  In 2006, there were four mergers of banking institutions.  As a direct result of these merger= s and acquisitions, the new institutions are expected to broaden their distributi= on structures and offer clients more flexible schedules and more branch offices.  The financial sector= as a whole is investing in new methodologies for risk assessment and portfolio management.

 

Following the crisis of 1998-99, ba= ilouts for failing banks were partially financed through a controversial tax on financial transactions.  The t= ax was originally set at 0.2 percent but has since been increased to 0.4 percent.<= span style=3D'mso-spacerun:yes'>  The tax on financial transactions = is applied to all withdrawals from checking and savings accounts, including ac= counts with the Central Bank.  Savings accounts for the purchase of low-income housing, transactions on the inter-= bank market, and the sale or purchase of foreign currency are exempt from the ta= x.  Electronic securities transactions, including stock market transactions are also exempt from the tax.

 

Colombia’s capital market is underdeveloped, but it continues to grow.&= nbsp; Only the largest of Colombia’s companies participate in the lo= cal stock or bond markets, with the majority meeting their financing needs thro= ugh the banking system, by reinvesting their profits, and through suppliersR= 17; credit.  Corporate bond issues= began to surge in 2004, although remain small and limited to blue-chip companies.=   Institutional investors, particula= rly the private pension funds that mobilize the largest share of national savin= gs (accounting for 9% of GDP), concentrate their holdings in government paper = and AAA-rated commercial paper.  T= he government also envisions revising the regulation of private pension funds = to allow them to participate more actively in the capital markets.  Stock market transactions are domi= nated (75%) by public debt instruments.  In 2001, stock exchanges in Bogotá, Cali and Medellín = were merged to create the Bolsa de Valores Colombia (BVC, Colombia Stock Exchang= e) located in Bogota.  The BVC an= d all its affiliates are regulated by the Superintendency of Finance, a division = of the Ministry of Finance and Public Credit.=   The Colombian Securities Commission and Exchange oversees the exchan= ge, regulates market intermediaries, broker’s fees, and the financial disclosure of listed companies.

 

Market capitalization rose from USD= 13 billion in July 2003, equivalent to 16% of GDP, to USD 47.5 billion (35%) in September 2006.  The principal source of long-term corporate and project finance are financial corporations and, sometimes, commercial banks, but loans with a maturity in excess of fi= ve years are scarce.  Unofficial private lenders play a major role in meeting the working capital needs of s= mall and medium-sized companies.  L= arge corporations have recently relied on reinvested earnings and leasing in ord= er to take advantage of tax incentives in force from January 2004.  New capital markets legislation was enacted in mid-2005.  Measures= to improve corporate governance, to protect the rights of minority shareholders and introduce more transparent information standard help to deepen the capi= tal market.

 

Political Violence        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;       Return to top

Violence, including political viole= nce, has diminished in recent years.  Government of Colombia figures show the number of homicides in Colom= bia in 2006 (17,281) was the lowest in 20 years, and that the number of kidnapp= ings in 2006 (687) was 14% lower than the number for 2005, and substantially less than the 2,885 kidnappings reported in 2002.

&n= bsp;

Most violence characterized as poli= tical is attributed to one of three terrorist groups, all of whom the U.S. has designated as Foreign Terrorist Organizations.  The trend line here is also positi= ve.  The Revolutionary Armed Forces of Colombia (FARC) killed 590 people in 2006, down from 761 in 2005.  The National Liberation Army (ELN)= was responsible for the murder of 41 people, down from 42 the previous year.  The United Self-Defense Forces (AU= C) killed 25, down from 190 in 2005.  In 2006, the AUC completed its demobilization of 32,000 former paramilitaries.

 

The long-running internal conflict = has caused significant population displacement.  Between 2 and 3 million people (ou= t of a population of 42 million) have been displaced since 1985, although both the Government and respected NGOs show that the rate of new displacements has slowed.

 

Corruption            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =   Return to top

The government’s Comptroller = General estimates that corrupt activity drains USD 6 billion per year from Colombia’s economy.

 

“Transparencia por Colombia&#= 8221;, the local chapter of Transparency International (TI), has implemented a num= ber of anti-corruption measures, including ethics and entrepreneurial programs = in an effort to reverse these trends.  The ethics program seeks to develop a managerial development tool for small and medium enterprises to promote ethical practices and transparency.  The entrepreneu= rial program seeks to build methodologies for the effective implementation of et= hics strategies via leadership, entrepreneurial ethics training and the creation= of reporting and consulting systems.  A program has been created titled Integrity Islands, which consists of the curtailment and prevention of corruption risks in specific organizational processes.

 

USAID has also sponsored several anti-corruption programs in Colombia.  The current USAID-funded anti-corruption project is a three-year, $8 million contract aimed at increasing transparency, efficiency, and public management within Colombia’s government institutions at the national, departmental, and municipal levels as well as more fully engaging citizens = as partners in overseeing the performance of their government.

 

 

 

Bilateral Investment Agreements=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

 

Colombia has negotiated and signed = five bilateral investment treaties: Cuba (1994), Great Britain (1994), Peru (199= 4), Spain (1995), and Chile (2000).  Of these, only the Peru BIT has entered into force.  The agreement with Chile has not b= een ratified by the Chilean Congress.  The agreement with Spain is in the process of being ratified.  The other two did not enter into e= ffect because the Colombian Constitutional Court declared certain provisions rela= ting to expropriation unenforceable.  Colombia is currently negotiating other bilateral investment treaties with Switzerland and Guatemala.  By the end of 2006, negotiations were also under way with China, Finland, Fran= ce and Japan.

OPIC and Other Investment Insura= nce Programs      = ;            &n= bsp;     Return to top

 

I In Colombia, the Overseas Private Investment Corporation (OPIC) maintains a portfolio of USD 1.7 billion. More than 3,137 jobs and close to USD 1 billion in government revenues are expec= ted to result from current OPIC-supported projects.  Examples of the type and scale of investment projects handled by OPIC in Colombia include construction of pow= er plants, natural gas pipelines, and gold mining operations.  OPIC joined Chase Manhattan Bank a= nd other lending institutions to support K & M Engineering and Consulting Corporation in the Mamonal project (now owned by KMR Power Corporation), a natural gas-fired generation facility being built in Cartagena.  This project received USD 35 milli= on in OPIC financing and more than USD 56 million in political risk insurance.  Other examples of projects current= ly supported are two Citibank projects on financial and telecommunication serv= ices worth more than USD 67.4 million in insurance, a Chase Manhattan Bank telecommunications project with USD 200 million in insurance, one Energy Initiatives Inc. gas-fired power generation project worth USD 150 million, = and another gas-fired power generation project by Los Amigos Leasing Company, L= td. worth USD 200 million.  In Sep= tember 2002, OPIC’s board approved a USD 200 million loan guaranty for Citib= ank to establish a lending facility for Latin America, with initial focus on Colombia, Bolivia, Ecuador, Paraguay, Peru and Uruguay.  In June 2003, OPIC provided a USD = 2.2 million loan to Etek International Corporation for the establishment of security network management and monitoring infrastructure in Colombia and other Latin American countries (Argentina, Brazil, and Chile).  In April 2006, OPIC’s board = of directors approved establishment of the Darby ProBanco Fund II, a private equity investment fund, supported by USD 45 million in OPIC financing, which will support investments in companies in Central America, Mexico and Colombia.  The total size of t= he fund is USD 90 million, with a minimum of USD 54 million to be invested in CAFTA countries.

 

Labor           &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;           Return to top

 

Colombia has abundant unskilled and semi-skilled labor availability for work throughout the country.  It has equally abundant skilled and managerial level employees, in many cases bilingual.

 

Labor permits are not required in C= olombia, except for under-aged.  Minors between 14 and 17 years are entitled to work in non-dangerous occupations if they are authorized by a labor inspector from the Ministry of Social Protection, upon request by their parents.

 

Pursuant to Colombian Labor Law, an= y group of 25 or more workers, regardless of whether they are employees of the same company or not, may constitute a labor union.  Employees of companies with fewer = than 25 employees may affiliate themselves to other labor unions.  There is no strong labor union cul= ture in Colombia.  Less than 20 per= cent of the country’s labor force is unionized.  The largest and most influential u= nions in the country are controlled by public employees, particularly in the state-owned oil industry.  The Constitution protects the right to constitute labor unions, and union membe= rs have a special legal protection that prevents them from being fired and, in some cases, allows them to dedicate all their working time to union issues.  Strikes are recognize= d as legal instruments to obtain better working conditions.  Strikes in sectors considered Esse= ntial Public Services, such as the Central Bank and some Social Security-related activities, are illegal.

 

Foreign companies operating in Colo= mbia must follow the same hiring rules as national companies, regardless of the origin of the employer and the place of execution of the contract.

 

Colombian Companies may hire foreign employees after certifying compliance with the legal national-foreign emplo= yee ratio (pursuant to Colombian Labor Law, in companies with more than 10 employees, Colombian nationals must occupy at least 80 percent of all managerial level positions and 90 percent of non-managerial positions), whi= ch will allow the employee to obtain a Temporary Work Visa.  Foreign employees have the same ri= ghts as Colombian employees.

 

Pursuant to Colombian Labor Law, tr= ial periods may not exceed two months for indefinite term contracts and no more than 1/5 of the total term of fixed term contracts.  During the trial period, an employ= ee may be dismissed by the employer without the payment of the legal indemnificati= on.

 

Labor contracts may be terminated w= ithout previous notice.  The effects = of termination vary depending on cause for termination and type of contract.  A contract might be terminated wit= h just cause by the employer in the case of an employee’s violation of legal= and contractual obligations or internal regulations.  In any other event, the contract c= an be terminated without just cause but the employer must pay legally specified indemnification.

 

Working hours are limited to 48 hou= rs per week, distributed in a maximum of 6 days per week.  With the proper authorization, gra= nted by the Ministry of Social Protection, an employee may work up to 12 hours of overtime per week.  Employees = in management positions are not subject to such restriction.

 

Foreign-Trade Zones/Free Ports=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;      Return to top

 

The Colombian government provides incentives for importers of capital goods using a number of drawback and du= ty deferral programs.  Examples of these programs are the “free trade zones” and “special import-export systems” located throughout the country.  Using these zones provides importe= rs with duty-free entrance of capital goods and materials to be used in produc= tion of export goods.  The Colombian government regards duty-free zones as poles of industrial, commercial, tour= ist and technological development, focused largely on overseas markets.  There are currently 12 duty-free z= ones in Colombia, where more than 350 companies operate. These zones generate exports of approximately USD 1.5 billion annually.  The state does not participate in = the operation of duty-free zones, but there are special tariffs established for duty-free zones that finance operations.&n= bsp; Most companies operating in duty-free zones manage operations with large-scale production and a high degree of labor specialization.

 

Foreign capital investments in duty= -free zones are entitled to unrestricted repatriation of capital and profits.  Investors are exempt from paying s= ales tax from the sale of goods and services on the official exchange market, and from income and remittance taxes related to foreign sales.  Goods traded within duty-free zone= s are considered outside of Colombian territory for import-export tariff purposes.  Colombia has made commitments to abide by the provisions of the GATT Subsidies Code by phasing out any inconsistent export subsidies.&nbs= p; In compliance with WTO standards, Colombia committed to eliminate several of the free trade zone tax benefits as of January 2007.  In that regard, the Government iss= ued Law 1004 in December 2005, providing for a 15 percent income tax on industr= ial users operating in free trade zones (lower than the usual 35 percent tax) b= ut maintaining the 35 percent tax for commercial users, from January 2007.  Under Law 1004, businesses operati= ng in the free trade zones maintained their exemption from the 7 percent remittan= ce tax, tariffs and the value-added tax.  Foreign currency exchange will remain unrestricted.  The Government believes that Law 1= 004 may create an improved framework for attracting investment and generating employment in the country’s duty-free zones.

Foreign Direct Investment Statistics<= span style=3D'mso-tab-count:4'>        &= nbsp;           &nbs= p;            &= nbsp;            Return to top

 

The total stock of foreign investme= nt increased seven fold from 1996 to 2005, reaching USD 37.5 billion in Decemb= er 2005.  Average annual net fore= ign direct investment (FDI) flows from 1997 to 2005 amounted to USD 3.5 billion= .  The trend in foreign investment was relatively stable in this period with the exception of 1997, when major privatizations were undertaken and 2005, when the acquisition of several pu= blic and private companies by foreign firms was completed.  The manufacturing and mining secto= rs have been the main recipients of FDI, followed by the financial sector and = the transportation and communications sector.&= nbsp; The recent increase in investment in the mining sector partly reflec= ts the sale of a number of mines belonging to the state-owned company Carbocol.  The share of FDI in= the manufacturing sector recorded a sharp increase in 2005 as a result of the purchase by the British-South African consortium, SAB Miller, of the Colomb= ian beer company Bavaria.

 

In 2005, FDI grew 227 per cent year= -on-year to USD 10.2 billion.  Even exc= luding SABMiller’s purchase of Bavaria, which accounted for USD 4.7 billion,= FDI reached USD 5.5 billion, the second largest amount recorded after 1997.  These figures are encouraging and = can be linked to economic recovery, improved security and policy reforms of the FDI regulatory framework that have increased investor confidence.

 

The United States is the single lar= gest source of foreign investment, accounting for approximately 17 percent of the total stock of FDI throughout the period 1997-2005.  The European Union has been traditionally Colombia’s main source of FDI, representing around 37 percent of the total stock in the same period.  Total FDI is expected to reach USD= 6 billion in 2006.

 

 

 

TABLE 1

 

Forei= gn Investment Flow in Colombia by Country

(Millions of US dollars)

(Excludes Reinvestment of P= rofits and Petroleum)

 

        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;    2003        &= nbsp;          2004        &= nbsp;           &nbs= p; 2005

 

United States<= span style=3D'mso-tab-count:1'>        &= nbsp;           &nbs= p;            &= nbsp;      273.8        &= nbsp;         874.2        &= nbsp;           &nbs= p;       1,398.8        &= nbsp;

Canada        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;   147.0        &= nbsp;           &nbs= p; 7.3        &= nbsp;           &nbs= p;    2.5

Mexico        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    19.0        &= nbsp;           16= .4        &= nbsp;           &nbs= p;       1,062.8       

Andean Communi= ty        &= nbsp;           &nbs= p;         17.6        &= nbsp;           74= .0        &= nbsp;           &nbs= p;  31.5

Mercosur        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p; 11.7        &= nbsp;           13= .5        &= nbsp;           &nbs= p;  47.4

Rest of South = America        &= nbsp;           &nbs= p;        0.7        &= nbsp;           &nbs= p; 0.7        &= nbsp;           &nbs= p;    6.3

Caribbean Comm= unity        &= nbsp;           &nbs= p;        3.0        &= nbsp;           &nbs= p; 1.5        &= nbsp;           &nbs= p;    3.0

Rest of Central America      =             &nb= sp;   172.0        &= nbsp;           78= .7        &= nbsp;            223.1        &= nbsp;        

Antilles        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;  170.1        &= nbsp;         740.7        &= nbsp;            591.2

European Union=         &= nbsp;           &nbs= p;             = 483.5        &= nbsp;         207.6        &= nbsp;           &nbs= p;       4,764.6

Rest of Europe=         &= nbsp;           &nbs= p;            &= nbsp;       0.3        &= nbsp;           &nbs= p; 0.6        &= nbsp;           &nbs= p;    0.0        &= nbsp;        

Asia        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;         46.3        &= nbsp;           10= .7        &= nbsp;           &nbs= p;    3.5        &= nbsp;           &nbs= p;        

Others        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;        22.6        &= nbsp;           &nbs= p;    8.9        &= nbsp;         8.1       =

=  

Total,  without petroleum and

Reinvestment of profits      =             &nb= sp;           1,23= 5.4        &= nbsp;      2,034.8        &= nbsp;         8,142.9

 

Reinvestment of Profits      =             &nb= sp;    244.4        &= nbsp;         554.2        &= nbsp;            987.5

Petroleum        &= nbsp;           &nbs= p;            &= nbsp;          277.9        &= nbsp;         494.9        &= nbsp;           &nbs= p;       1,124.6

 

Total        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = 1,757.7        &= nbsp;      3,083.8        &= nbsp;       10,225.0       

=  

Source:  Central Bank

Note:    Statistics for 2006 are not yet available by t= his source

 

 

 

 

 

 

TABLE 2

=  

Forei= gn Investment flow in Colombia by Activity

(Thousands of US dollars)

<= span lang=3DEN-US style=3D'font-family:"Times New Roman","serif"'> 

Activity        &= nbsp;           &nbs= p;      2003        &= nbsp;          2004        &= nbsp;           &nbs= p; 2005        &= nbsp;           &nbs= p;  2006

 

Petroleum        &= nbsp;           &nbs= p;  278        &= nbsp;           49= 5        &= nbsp;           &nbs= p;          1,125        &= nbsp;      1,290

Manufacturing<= span style=3D'mso-tab-count:1'>        &= nbsp;       326        &= nbsp;           25= 6        &= nbsp;           &nbs= p;          5,532        &= nbsp;         529        &= nbsp;

Mining        &= nbsp;           &nbs= p;           8        &= nbsp;           &nbs= p;   3        &= nbsp;           &nbs= p;          6        &= nbsp;           &nbs= p;      17        &= nbsp;

Financial        &= nbsp;           &nbs= p;    243        &= nbsp;           24= 4        &= nbsp;           &nbs= p;      244        &= nbsp;           &nbs= p;    227        &= nbsp;

Commerce        &= nbsp;           &nbs= p; 222        &= nbsp;           20= 2        &= nbsp;           &nbs= p;      303        &= nbsp;           &nbs= p;    350        &= nbsp;

Construction        &= nbsp;           &nbs= p; -8        &= nbsp;           &nbs= p; 74        &= nbsp;           &nbs= p;      146        &= nbsp;           &nbs= p;    152        &= nbsp;

Transp/Commun.=         &= nbsp;    -47        &= nbsp;           48= 1        &= nbsp;           &nbs= p;          1,011        &= nbsp;         414        &= nbsp;

Agriculture        &= nbsp;           &nbs= p;     8        &= nbsp;           &nbs= p;   3        &= nbsp;           &nbs= p;          6        &= nbsp;           &nbs= p;      17        &= nbsp;

Social Service= s        &= nbsp;         40        &= nbsp;           &nbs= p;  -5        &= nbsp;           &nbs= p;       -18        &= nbsp;           &nbs= p;      22        &= nbsp;

Electricity/Ga= s/Water        68        &= nbsp;           &nbs= p; 88        &= nbsp;           &nbs= p;     -251        &= nbsp;           &nbs= p;     -46        &= nbsp;

        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           

Total        &= nbsp;           &nbs= p;            &= nbsp; 1,758        &= nbsp;        3,084        &= nbsp;           &nbs= p; 10,255        &= nbsp;           &nbs= p; 4,343

        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           

Portfolio        &= nbsp;           &nbs= p;    104        &= nbsp;           74= 3        &= nbsp;           &nbs= p;     -167        &= nbsp;           &nbs= p;    137

 

Source:  Proexport

Note: Statistics for 2006 correspond to the period between January and September<= /span>

 

 

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

Andean Development Corp. (CAF) :&= nbsp; www.caf.com  &  www.comunidadandina.org

ANDI (National Industries Association):  www.andi.com.co

ANIF (Financial Entities Association):=   www.anif.org<= /p>

Banco de la Republica (Central Bank):&= nbsp; www.banrep.gov.co

Banking Association:  www.asobancaria.com

Banking Superintendent: www.superbanca= ria.gov.co

Bogotá Chamber of Commerce:  www.ccb.org.co

Coinvertir (Foreign Investment Promoter):  www.coinvertir.org

Colombian Customs and I= ncome Tax Offices:&nbs= p; www.dian.gov.co

Colombian Government :  www.gobiernoenlinea.gov.co<= o:p>

CREG (En= ergy and Gas Regulatory Commission):  www.creg.gov.co

DANE (Statistics Bureau) :  www.dane.gov.co

EXIMBANK :  www.exim.gov

FENALCO (Merchants Association):  www.fenalco.com.co

Inter American Development Bank:   www.iadb.org

National Planning Department:  www.dnp.gov.co

OPIC:  www.opic.gov

Presidencia de la Republica and/or Palacio de Nariño (President&= #8217;s Office):  www.sne.gov.co and www.presidencia.gov.co

State Comptroller’s:  www.contraloriagen.gov.co

State Contracting Information System/SICE:  www.sice.gov.co

Superintendent of Corporations:  www.supersociedades.gov.co<= o:p>

Superintendent of Industry and Commerce:  www.sic.gov.co

World Bank:  www.worldbank.org

 

Return to table of contents<= /a>

Return to table of contents

Chapter 7: Trade and Project Financing

How Do I Get Paid (Methods of Payme= nt)        &= nbsp;           &nbs= p;            &= nbsp;   Return to top

 

Most products are imported through letters of credit or time drafts. Soft and long-term financing is an important sales tool, especially for government imports or public tenders. Foreign suppliers, financial intermediaries in Colombia, or foreign financial institutions, may finance Colombian Imports.=

 

Colombian importers may freely negotiate payment terms with their suppliers, but importers must list the agreed payment terms on the import documents and may not subsequently change them. These are generally between one and six months for imported products for immediate consumption, including raw materials, intermediate goods, and consumer goods, with almost no term limitations for capital goods, which are payable within the timetables set on the import documentation, plus a grace period of three additional months. Foreign paym= ents may be authorized in installments, but in no case can the original terms li= sted on the import documents be changed.

 

General trade finance is freely available and letters of credit are widely used in Colombia.  Methods, terms, and conditions of payment vary with the type of credit.  Most imports of equipment are paid= via irrevocable 180-day letter of credit (L/C), payable on sight against shippi= ng documents.  The L/C replaces t= he U. S. exporters' credit risks with that of the issuing bank.=

 

Normal payment term is 60 days.  Ther= e are transactional cases in which suppliers may extend terms to 120 days by time draft, but this is not common practice.&nb= sp; When a satisfactory trading relationship has been established, terms= are those generally applied in international trade.  Short-term is considered any term = less than one year; medium-term is from one to four years; and, long-term ranges from five years up to twenty years

 

How Does the Banking System Oper= ate        &= nbsp;           &nbs= p;            &= nbsp;     Return to top

 

The Colombian financial system operates under the supervision of the Financial Superintendence, recently created as a res= ult of the merge of the Banking Superintendence and the Stock Exchange Superintendence.  The financia= l system is relatively large in comparison with the nation’s gross domestic product. It has many highly sophisticated institutions with state-of-the-art technology. However, financial services are still very costly and intermediation remains, by far, the most important financial activity.  

 

From 1993-1997, the system registered a credit boom despite the fact that a deviant speculative bubble was in evolution.  This resulted in the financial cri= sis of 1998-2000. New reforms, which have fostered the conversion of mortgage banks into commercial banks, have been implemented to cope with this crisis.  About one-third of banking and non-banking institutions were closed, taken over, or forced to merge. Many of the w= eaker financial institutions merged or are now affiliated with more experienced a= nd financially sound owners.  The presence of foreign banks has intensified competition and investment in advanced technologies and government authorities have made significant effo= rts to improve the health of the financial sector.  The most outstanding recent operat= ions include the creation of the Grupo Colombia by the Grupo Empresarial Antioqueno (GEA).  Grupo Co= lombia is the result of the merging of Bancolombia and Conavi (banks= ), Corfinsura and Fiduciaria Colombia (fiduciaries), Suleasing and L= easing Colombia (leasing), and Suvalor (stock brokerage firm).  The Grupo Bolivar, owner of several entities in the banking insurance, construction and financial secto= rs, through its wholly owned bank Davivienda, bought  Banco Superior and Bancafe/Granbanco. Bancafe was one of the banks that had been taken ove= r by the government during the 1998-2000 crisis and the last one to be privatized.  Banco Colmena<= /i> and Banco Caja Social merged into the new Banco BCSC.  The largest foreign investment in = the sector was the Spanish BBVA Bank’s acquisition of Granahorr= ar (this also was the privatization of one of the banks take over by the government).  Granahorrar was one the institutions that had been taken over by the government during the crisis of 1998-2000.

 

Still, experts consider that the Colombian financi= al system has neither reached its ideal size, nor attained the multi-banking scheme. However, the Colombian financial sector has become stronger over the last four years.  Most financi= al entities have experienced a remarkable recovery. Several factors played a k= ey role: restored economic growth and stability creating a corresponding need = for credit and investment; low interest rates; a decline in non-performing loans and an increase in provisions.  

 

The financial industry has benefited from the transfer of technology and increa= sed efficiency brought by foreign investors and upgrading is becoming a common practice.  Currently, Colombia= has not reached the banking standards and coverage of developed countries, but = the sector's goal is to expand its financial services to make the market more efficient and competitive.  Al= most all financial entities are implementing plans to expand the infrastructure = and coverage of their e-banking products/services, and access to financial serv= ices such as virtual banking has improved significantly. The outlook for sophisticated financial services is very positive as these programs are completed and end-users become more familiar with the new systems. 

 

Commercial Banks perform the broadest scope of financial services. They are allowed to complete all authorized credit operations, wi= th the exception of leasing operations and real sector investments.  Only commercial banks provide chec= king accounts.  Within this group, = some institutions specialize in housing and construction financing (mortgage banks).  Commercial ban= ks dominate the financial market, accounting for over 80 percent of the financ= ial system’s assets.

 

 

The Government is drafting a reform of the financi= al sector to consolidate the sector’s recovery and good performance.  The reform will also include the c= hanges and measures that may be required by the proposed Trade Promotion Agreement between Colombia and the United States.

 

Foreign-Exchange Controls        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp; Return to top

 

Colombia imposes no foreign exchange controls on trade.  However, exchange regulations requ= ire that the following transactions be channeled through intermediaries (i.e. b= anks or other recognized financial institutions) authorized for such purposes:

 

-        &= nbsp;  Imports and exports of goods;

-        &= nbsp;  External loans and related financing costs;

-        &= nbsp;  Investment of capital from abroad and remittances of profits thereon;

-        &= nbsp;  Investment of Colombian capital abroad, as well as remittances of yields;

-        &= nbsp;  Investment in foreign securities and assets and their associated profits;

-        &= nbsp;  Endorsements and guarantees in foreign currency; and

-           Derivative or secondary financial operations, e.g. forwards, swaps, caps, floors or collars.

 

External Resolution No. 6 of 2000 abolished prior deposit requirements with the Cent= ral Bank for public and private external loans as well as for foreign financing= of imports into Colombia. Also, Resolution 11 allo= wed residents to make payments to other residents in US dollars through checking accounts held abroad, and Resolution 8 authorized stock brokerage firms to = act as intermediaries in the foreign exchange market.

 

U.S. Banks and Local Correspond= ent Banks       &= nbsp;           &nbs= p;           Return to top

 

Virtually all-Colombian banks have correspondent banks in the United States.  The following are some major Colomb= ian and U.S. banks with correspondent relationships:

 

Banco Cafetero:<= /p>

Banco Cafetero Internacional Corporation

JP Morgan Chase

Dutch Bankers Trust

Citibank

Wachovia Bank of Philadelphia

Standard Chartered Bank

Bank of New York

 

ABN Amro Bank, Colombia

ABN Amro Bank

 

BanColombia:

Citibank

Bank Of New York

Wachovia Bank

Deutsche Bank

Bank of America

Cobank

JP Morgan Chase

American Express Bank

Commerce Bank New York

Lloyds TSB Bank

Union Planters Bank

International Bank Of Miami

Regions Bank

 =

Banco de Occident= e:

Citibank

Wachovia Bank of Philadelphia

Standard Chartered Bank

Bank of America

Bank of New York

American Express Bank

 

Banco Popular:=

Bank of America

Dressner Bank

Commerce Bank

Bayerische Hypound-Vereins Bank

Citibank

Standard Chartered

Bank of New York

Toronto Dominion Bank

HCBC Bank

ING Bank

Regions Bank

Wachovia Bank of Philadelphia

 =

Project Financing        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;      Return to top

 

The government and the Central Bank (Banco de la Republica/BOR) are = important sources of funding for the financial system.  The Central Bank, in addition to providing the usual discount facilities to support system liquidity, manages several special government funds to promote lending into a number of sectors that have been determined to be important to national development or economically essential.

 

The funding resources come from government capital, bonds (a portion of which the financial institutions are required to buy and, to that extent, may be funding themselves) and current fiscal appropriations, if needed to cover deficits.  Accessibility to the funds tends to require considerable paperwork; applicants must qualify, and margins are limited.  Their importance as funding resources has been diminishing rapidly.  The decline in usage is due to the relatively unattractive margins involved and the rapid increase in bank liquidity over the last two years.

 

Leasing, domestic and international (both operating and capital) financing are becom= ing popular, mainly because of the tax benefit it provides.  Factoring is also available as wel= l as international credit insurance.  Transactional financing is more associated to consumer goods trade, = while equity-based financing is more commonly used for project financing.

 

Colombian exporters have access to credit offered by the Colombian Foreign Trade Bank (Banco de Comercio Exterior/BANCOLDEX). This credit is also being extended = to Colombian importers--namely for industrial imports.

 

Foreign investors have full access to local credit.  While the Colombian Government still directs credit to some areas (notably agriculture), credit is, for the most part, allocated by the private financial market.

 

Loans of foreign origin or foreign financing of imports are permitted. The Central B= ank may also establish some conditions, i.e., interest rates, end-uses, quantity limits, terms and other pertinent conditions to avoid undue pressures on inconveniences to the Colombian exchange market.

EXIM:  The Export-Import Bank of the U.S. (Eximbank) provides a full range = of services in Colombia.  Eximbank offers a range of loan, insurance and loan guarantee programs to facilitate exports of U.S. goods and services to Colombian governmental and private companies. For additional information on Eximbank programs, please contact:= www.exim.gov<= /o:p>

 

OPIC:  OPIC is a U.S. government agency t= hat supports, finances and insures projects that have a positive effect on U.S. employment, are financially sound and promise benefits to the social and economic development of the host country.&= nbsp; OPIC assistance is available for new investments, privatization, and= for expansion and modernization of existing plants sponsored by U.S. investors.=   Please access OPIC programs at:  www.opic.gov=

 

Multilateral Funding Agencies and Fina= ncial Markets:=   Multilateral agencies such as the = World Bank through IFC, the Inter American Development Bank/IDB, the Andean Development Corporation/ADC, the Export‑Import Bank of Japan, the Age= ncy for International Development of the U.S./USAID (and also those of Japan and Canada) are active in providing financing for projects in Latin America and= the Caribbean.

 

The Andean Development Corporation/ADC (Corporacion Andina de Fomento) is the o= nly organization to provide major direct financing for Greenfield projects in Colombia. The ADC has provided direct financing to the private sector for t= he development of Greenfield projects in various infrastructure sectors. =

 

IADC: = ;  The Inter-American Development Corporation/IADC provides development capital to export oriented companies in the agricultural business through Corfisura Fondo de Desarrollo de Empresas (Colombia's first development cap= ital fund), manufacturing, mining, and emerging technology sectors.

 

World Bank: In 1994, Colombia approved through La= w 149, its adherence to the Multilateral Investment Guarantee Agency (MIGA), creat= ed in 1985 by the World Bank, to stimulate the flow of resources for productive ends between member countries and in particular toward developing countries= .

 

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

Export-Import Bank of the United St= ates: http://www.exim.gov

 

Country Limitation Schedule: http://www.e= xim.gov/tools/country/country_limits.html

 

OPIC: http://www.opic.gov

 

Trade and Development Agency: http://www.tda.gov/

 

SBA's Office of International Trade= : http://www.sba.gov/oit/

 

USDA Commodity Credit Corporation: = http://www.fsa.usda.gov/cc= c/default.htm

 

U.S. Agency for International Devel= opment: http://www.usaid.gov

 

Information on yellow fever, see http://www.cdc.gov/travel/diseases/yellowfever.htm.<= /span>

 

Banking Association:  www.asobancaria.com

 

Colombian Customs and Income Tax Offices:  www.dian.gov.co

 

U.S. Embassy Website in Bogota, Colombia: http://b= ogota.usembassy.gov 

 

Colombian Ministry for Foreign Affairs: (www.minrelext.gov.co)<= /span>

 

Colombian Hotels Association:  www.cotelco.org

 

Return to table of= contents

Return to table of contents

Chapter 8: Business Travel

 

Busin= ess Customs      =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

 

There i= s a very vigorous international business community in Colombia, with hundreds of well-established companies committed to a long-term presence. Most companies know their risk profiles and take appropriate measures.  In terms of natural and human reso= urces, Colombia offers a strategic location, a well-developed industrial and infrastructure capacity, and a modern business environment.

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First t= ime business visitors are usually pleasantly surprised at the high level of development and sophistication of the Colombian private sector.  Most business visitors never leave= the modern urban cities.  Those wh= o do (to oilfields and mines) do so under controlled conditions.  As with anything in business, the = key is be aware and prepared.

 

Colombi= ans tend to be friendly, straightforward and direct in their business dealings.   They are serious, hardworking= , and share many of the same work habits and ethics of business people in the Uni= ted States.  This is one of the ma= ny reasons that, despite Colombia’s security and social problems, knowledgeable U.S. business people have for many years come to Colombia to = do business.

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Given t= he relative proximity of the two countries and the long-term presence of U.S. firms in the market, Colombians are used to doing business with the U.S.  Many of them have traveled or stud= ied in the United States and have family members or friends there.  Colombian executives and technicia= ns, as well as government officials, travel frequently to the U.S. for meetings, conferences, trade fairs, training and tourism.

&n= bsp;

Working breakfasts and lunches at h= otels and private clubs have become common practice in most Colombian cities.  Business attire is the norm.    Dinner meetings tend t= o be less formal.  Colombian trade associations, government entities, and private firms are hosting an increas= ing number of national and regional conventions, conferences, and seminars in t= he country.  These events present excellent opportunities for meeting Colombian business people and key government officials, as well as for assessing market potential.

 

Travel Advisory        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;         Return to top

 

There is currently a State Department travel warning in effect for U.S. citizens planning travel to Colombia (last update January 18, 2006).  For the latest security informatio= n, U.S. citizens traveling abroad should regularly monitor the Department̵= 7;s Internet site at

http://travel.state.gov/ where the cu= rrent Worldwide Caution Public Announcement, Travel Warnings, Consular Informa= tion Sheet for Colombia and Public Announcements can be found. 

&n= bsp;

The tra= vel warning is due to the violence that continues to affect all parts of the country, and the fact that citizens of the United States and other countries continue to be victims of kidnappings, threats and other violence.   For more information on a particular business travel plan, companies are urged to contact the Commerc= ial Service, American Embassy, Bogota for customized advice.  (See Section VII “Investment Climate - Political Violence” for additional background information).=

&n= bsp;

Most business persons who visit Colombia travel primarily to t= he major cities and commercial centers of Bogota, Cali, Medellín, Barranquilla and Cartagena, where caution should be taken against common large-city crimes such as pick pocketing, jewelry and purse-snatching, and currency scams.  Selecting a g= ood hotel, keeping valuables in a hotel safe, using authorized taxis and hired = car services, and using common sense in avoiding certain areas of town will hel= p to reduce the risk of falling victim to these crimes.  At airports, care should be taken = with hand luggage and travel documents.

&n= bsp;

Travel = between cities should be by air in order to avoid rural areas controlled by terrori= st groups and common criminals.  = Road travel outside of the major cities is not recommended. 

&n= bsp;

Those w= ho absolutely must travel to facilities in outlying areas, (most commonly oil = and mining professionals and technicians), are advised to adhere strictly to the security regulations and guidelines established by their companies.<= /p>

&n= bsp;

The Ove= rseas Citizens Services call center at 1-888-407-4747 (toll free) can answer gene= ral inquiries on safety and security overseas. This number is available from 8:= 00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays). Callers who are unable to use toll-free numbers, such as those calling from overseas, may obtain information and assistance during these h= ours by calling 1-202-501-4444.

 

U.S. citizens living in or visiting Colombia are encouraged to register their trip online at http://travelregistration= .state.gov/ibrs.  U.S. citizens may also visit the U= .S. Embassy to register and/or obtain updated information on travel and securit= y in Colombia either at the Consular Section or by e-mail at ACSBogota@state.gov . The Consular Section is open for U.S. Citizens Services, including registration, from 8:= 30 a.m. to 12:00 noon, Monday through Thursday, excluding Fridays, except for emergency services, and U.S. and Colombian holidays.  Telephone contact may be made Mond= ay through Friday between 2:00 p.m. and 4:45 p.m. at telephone (011-57-1) 315-1566.  The U.S. Embassy is located at Avenida El Dorado and Carrera 50; telephone (011-57-1) 315-0811.  This number is avai= lable 24 hours.  In case of a serious emergency involving a U.S. citizen, you may call the Embassy 24 hours a day, seven days a week at the number (011-57-1- 383-2701).  The Consular Agency in Barranquill= a, which provides some limited consular services, is located at Calle 77B, No. 57-141, Piso 5, Centro Empresarial Las Americas, Barranquilla, Atlantico, Colombia; telephone (011-57-5) 353-2001; fax (011-57-5) 353-5216; e-mail: conagent@metrotel.net.co.

 

Visa Requirements        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

 

U.S. Citizens  (w= ho are not also Colombian citizens) traveling to Colombia are required to carry a valid U.S. passport to enter and depart Colombia and a return/onward ticket. U.S. citizens do not need a visa for a tourist stay of 60 days or less. Sti= ff fines are imposed if passports are not stamped on arrival and if stays exceeding 60 days are not authorized by the Colombian Immigration Agency (Departamento Administrativo de Seguridad, Jefatura de Extranjeria, DAS Extranjeria).

&n= bsp;

The Colombian Government recently modified regulations regarding Business Visas in an effort to encourage for= eign investment and attract tourism to Colombia.  As of February 1, 2005, visas may = be extended for periods of six months and up to five years, depending on the category.  Following are some examples:

=  

Busin= ess Visas:  These visas may be granted for a p= eriod of up to four years, with multiple entries, and for a maximum stay of up to= six month per entry.  Business vis= as are issued to foreigners who prove their status as merchants, industrialists, executives or business representatives.

=  

Tempo= rary Managerial Visas:  Valid for multiple entries during a five-year period.  Holders of = these visas may stay in the country for a period of up to one year per entry. It expires if the foreigner leaves the country for more than 180 days.

 

Speci= al Temporary Visas:  Valid for multiple entries during = one year.  It expires if the =

foreigne= r leaves the country for more than 180 Days.

&nb= sp;

For more information on other types of Business Visas, or information concerning ent= ry and customs requirements to Colombia, immigration regulations, and other related matters please visit the web site of the Colombian Ministry for For= eign Affairs (www.minrelext.gov.co)= .  Information on these subjects is a= lso available at the Colombian Embassy located at 2118 Leroy Place NW, Washingt= on DC, 20008; Tel:  (202) 387-833= 8 (www.colombiaemb.org). Colombia has consular offices in the following U.S. cities:  Atlanta, Boston, Chicago, Houston, Miami, Los Angeles, New York City, San Francisco, and San Juan (Puerto Rico= ).

&n= bsp;

U.S. ci= tizens whose passports are lost or stolen in Colombia must obtain a new passport a= nd present it, together with a police report of the loss or theft, to the main immigration office in Bogota to obtain permission to depart. An exit tax mu= st be paid at the airport when departing Colombia.

&n= bsp;

Accordi= ng to Colombian law, any person born in Colombia must use their Colombian passpor= t to enter and leave Colombia, even if the person is also a citizen of another country. Therefore, Colombian-American citizens, should be prepared to carr= y a Colombian passport as well as a U.S. passport while visiting Colombia.

 

U.S. Non-Inmigrant Visa requirements for Colombians

 

All Colombians traveling to the U.S. need a visa.   U.S. companies that require = travel of foreign businesspersons to the United States should allow sufficient time for visa issuance. Visa applicants should go to the following link:

http://b= ogota.usembassy.gov  or in the U.S., call (1-877) 804-5401, 8:00AM to 8:00PM EST.  A credit card access fee for the U.S.-based number will be charged.

U.= S. Companies that require travel of foreign businesspersons to the United Stat= es should be advised that

Visa ap= plicants should go to the following links:

&n= bsp;

State D= epartment Visa Website: http://travel.state.gov/visa/index.html

&n= bsp;

United = States Visas: http://www.unitedstatesvisas.gov/

&n= bsp;

U.S. Companies th= at require travel of foreign businesspersons to the United States should be advised that whoever applies for a visa must understand that the visa alone does not guarantee entry to the United States. It is the U.S. Citizenship a= nd Immigration Services of the Department of Homeland Security, and not the Consular Section, which has authority to approve or deny entry, and to deci= de upon the length of stay permitted. At the port of entry to the U.S., an immigration official will stamp Form I-94 (Record of Arrival-Departure) with the date until which the visit is authorized.

Visa applicants should go to= the following links.

State Department Visa Website: http://travel.state.gov/vi= sa/index.html

 

United States Visas.gov: http://www.unitedstatesvisas.gov= /

 

U.S. Embassy Website in Bogota, Col= ombia: http://b= ogota.usembassy.gov 

 

Telecommunications        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p; Return to top

 

Colombia has a reliable domestic and international telecommunications system.&n= bsp; Cellular phones are widely used in Colombia with automatic roaming within the country; there are also roaming agreements with U.S. carriers and most other Latin American countries.  Three private companies, Movistar, Comcel and TIGO, currently provide mobile services.  Internet, tele-conferencing and video-conferencing facilities= are also available. 

Transportation        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;           Return to top

 

Airports:   Colombian air transportation= is well developed, with international airports in Bogota, Barranquilla, Cartag= ena, Cali, Cucuta, Leticia, Medellin, and San Andres Island providing regular flights to major cities abroad. Currently, ther= e are four major airlines that provide direct daily flights between Colombia and = the U.S.   Frequent do= mestic flights connect principal cities within Colombia.  Business travelers should be aware= that prior flight reservations within Colombia (even though pre-paid) are not al= ways honored, and flights may be overbooked to popular destinations such as Cartagena.  Thus, a final confirmation is advisable 24-hours before departure.

&n= bsp;

Taxis:   Taxi service is available at= all major hotels.  Given traffic conditions and security concerns, it is recommended that business travelers contract hourly taxi service or hired cars with drivers.   Ask your reservation agent t= o make arrangements with your hotel for your transportation.  The current rate is about $10.00 p= er hour. If normal yellow city taxis must be utilized, ensure the hotel/restau= rant calls a “radio taxi.” &nb= sp; Do not hail taxis in the street and never share a cab with an unknown person (including the driver's "brother, son, cousin, etc."). Tax= is fares increase 30 percent after dark.

&n= bsp;

Auto= mobile Transportation:  Car rentals are available from international companies (Budget, Avis, Dollar).   Check wi= th your travel agency for reservations and rental rates.  Visitors may drive on an Internati= onal Driver’s License.

&n= bsp;

To reduce traffic congestion, the Bogotá City Government introduced the program “Pico y Placa” (Peak and License Plate).  This program restricts circulation of public and private vehicles on city streets during peak ho= urs twice a week.<= span style=3D'mso-spacerun:yes'>  The restriction is based on the la= st digit of the license plate number.  The daily schedule applies only from 6:00 am to 9:00 am and from 4:0= 0 pm to 7:00 pm.  For information o= n days and corresponding numbers please visit http://www.bogota-dc.co= m/trans/bog-tra.htm

 

 

Language           &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;    Return to top

 

Spanish is the official language and spoken throughout the country.  It is advisable to have some knowledge of Spanish or to hire the services of a qu= alified interpreter, although many senior executives and government officials speak English.

 

Health            = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;            = ;          Return to top

 

Medical= care is adequate in major cities, but quality varies elsewhere.  In Bogota,  in particular, travelers can find = very qualified general practitioners and specialists.  Doctors and hospitals often expect immediate cash payment for health services, although many hospitals in principal cities accept major U.S. credit cards.  U.S. medical insurance is not alwa= ys valid outside the United States.  Vi= sitors with a particular medical problem may therefore wish to consider supplement= al medical insurance with specific overseas coverage, including provision for medical evacuation or other emergencies.

&n= bsp;

Yell= ow Fever Vaccine:&nbs= p; The Colombian Ministry of Environment is requiring visitors to the country's national parks (Tayrona, Salamanca, Cienaga Grande, and Flamencos) along the Atlantic coast to show proof of yellow fever vaccination at least= 10 days before travel. During 2003  through mid-March 2004, cases of yellow fever were reported from the departments of Guajira, Magdalena, Cesar, and Meta  (middle valley of the Magdalena River; ea= stern and western foothills of the Cordillera Oriental from the border with Ecuad= or to that with Venezuela; Urabá, the foothills of the Sierra Nevada; t= he eastern plains - Orinoquia; and Amazonia).=   Colombia recommends vaccination for all travelers nine months of age= or older traveling within yellow fever endemic zone (arriving from any country= ).  There is a yellow fever risk in all rural areas at altitudes less than 800 meters (2,624 ft).  There is no yellow fever risk in Bogotá and vicinity.

 

Local Time, Business Hours, and Holidays      = ;            &n= bsp;            = ;   Return to top

 

Colombi= an time is the same as U.S. Eastern Standard time, without daylight-saving adjustments, e.g. Washington in winter, Chicago time in summer.

&n= bsp;

The = workweek is Monday - Friday.  Normal wo= rking hours are either 8 a.m. - lunch (flexible between 12 noon and 2 p.m.), clos= ing at 5 p.m.; or 7:30 a.m. - 4:30 or 5:30 p.m. with an hour for lunch.  Most commercial offices follow the= first system and most manufacturing operations the second.

 

Shopping:&= nbsp; Most stores are open between 9:00 a.m. and 7:00 or 8:00 p.m. on weekdays, and between 9:00 a.m. and 8:00 p.m. or 9:00 p.m. on Saturdays.  Some food stores and restaurants (= but very few other establishments) are open on Sundays and holidays.  It is sometimes possible to negoti= ate a discount at some stores when paying in cash.  Most credit cards are accepted in = the main cities of Colombia for car rental, air tickets, in hotels, restaurants, and in virtually all commercial establishments. However, overseas visitors will prob= ably be asked to provide some kind of ID (such as a photocopy of their passport)= to allow a credit card transaction to go through.  Travelers checks are also accepted.=

&n= bsp;

ATMs (“cajeros automaticos”) are widely available with 24-hour servi= ce and are bilingual.  They are l= ocated inside most banks and modern shopping centers.  The machines accept international = credit and debit cards (such as Visa, MasterCard, American Express, among others).  Check machines for possible criminal interference since card cloning is a problem in Colombia. Visitors should be = cautious about the use of = credit or debit card at commercial establishments.  If you choose to use a credit card= or debit card to pay for a purchase, be sure to keep the credit card in sight during the entire transaction. Credit and debit card numbers and other information can be lifted by employees at the commercial establishments for further fraudulent use .  Also= , take and destroy any carbons that may have been used in the transaction.

 

Prior t= o planning business travel, it is advisable to consult the schedule of Colombian holid= ays.  It is strongly recommended that bu= siness trips be avoided during Holy Week (the week before Easter) and the Christmas holiday season (December 15 to January 12).  Visitors may also find it difficul= t to make business appointments during “puentes” (Fridays or Mondays which “bridge” the weekends with official holidays falling on Thursdays or Tuesdays.)

&n= bsp;

Colombi= a’s official holiday calendar for 2007, is as follows:

&n= bsp;

Janua= ry 1

Monda= y (New Year’s Day)

Janua= ry 8

Monday (Epiphany)

Janua= ry 15

Monda= y (Martin Luther King Jr.’s Birthday)

Febru= ary 19

Monday (Washington’s Birthday)

March= 19

Monda= y (Saint Joseph)

April= 5

Thurs= day (Holy Thursday)

April=   6

Frida= y (Good Friday)

May 1=

Tuesd= ay (Labor Day)

May 2= 1

Monday (Ascension Day)

May 2= 8

Monday (Memorial Day)

June = 11

Monda= y (Corpus Christie)

June = 18

Monda= y (Feast of The Sacred Heart)

July = 2

Monda= y  (Feast of Saint Peter and Saint = Paul)

July = 4

Wedne= sday (U. S. Independence Day)

July = 20

Friday (Colombian Independence Day)

Augus= t 7

Tuesd= ay (Battle of Boyaca)

Augus= t 20

Monda= y  (Assumption Day)

Octob= er 8

Monday (Columbus Day ) U.S.

Octob= er 15

Monday (Columbus Day) Colombia

Novem= ber 5

Monda= y (All Saints' Day)

Novem= ber 12

Monday (Veterans Day)

Novem= ber 22

Thurs= day (Thanksgiving Day)

Decem= ber 8

Satur= day  (Feast of the Immaculate Concept= ion)

Decem= ber 25

Tuesd= ay (Christmas Day)

&n= bsp;

Regional Holidays:  February 25 through February 29, (Carnival), Barranquilla.&nbs= p; December 24 through December 31, 2006 (Folklore Festival), Cali: Off= ices open only from 8:00 am - 12:00 noon.

 

Temporary Entry of Materials and Personal Belongings    =             &nb= sp;       Return to top

 

Temporary imports are goods= brought into Colombia for re-export within a specified period time.   Non-fungib= le merchandise that can be thoroughly identified by marks, serial numbers, or other symbols can be temporarily brought into Colombian territory for speci= fic purposes.  The merchandise mus= t be re-exported immediately after the pre-authorized period, without being subj= ect to any alteration or modification, except for the normal deterioration caus= ed by use.  There are two categor= ies for temporary imports: short and long term.  The DIAN decides which of the two = systems has to be applied to a specific case:

&n= bsp;

Short Term: This a= llows the importation of merchandise for a specific purpose during a period of ti= me that should not exceed six months. One three-month  extension can be requested and app= roval must be obtained before expiration of the initial authorization.  Short-term imports are not subject= to import duties, but a guarantee equivalent to ten percent of the correspondi= ng import duties must be presented to obtain approval.

 <= /span>

Long-Term: =  Colombian Customs regulations also allow for long-term temporary importation of equipment for= a period of up to five years.  U= nder this regulation, the Government allows importation of machinery and equipme= nt as well as related accessories and spare parts if they are included in the = same one-time-only shipment.  This = system is applied to equipment to be used in public works projects and other activities that are important for national economic and social development.  Long-term tempor= ary imports are also approved for machinery and equipment brought into the coun= try under leasing contracts within a term of six months to five years.  Long-term customs declarations for temporary imports must include the U.S. dollar calculation of duties and ta= xes in accordance with the tariff schedule effective on the submission date.  The total amount may be divided in= to equal quotas to be paid semi-annually, during the temporary import period.<= span style=3D'mso-spacerun:yes'>  The importer may be requested to establish a guarantee equivalent to 100 percent of the import duties.  Import duties are non-refundable.<= /span>

&n= bsp;

Demonstration Equi= pment: The international carnet system for temporary imports of demonstration equipment (to be used in promotional campaigns or trade shows= ) is not in effect in Colombia.  Th= e DIAN has implemented an alternative system.&nbs= p; Visitors bringing in equipment for demonstration purposes are reques= ted to fill out a special form provided by the DIAN upon their arrival at an international airport.  The equipment may stay in the country up to 90 days.  There is no deposit requirement.

 

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

Banking Association:  www.asoba= ncaria.com

Colombi= an Customs and Income Tax Offices:  www.dian.gov.= co

Colombian Ministry for Foreign Affairs: (www.minrelext.gov.co)

Informa= tion on yellow fever, see http://www.cdc.gov/travel/diseases/yellowfever.htm.<= /span>

U.S. Em= bassy  Website in Bogota, Colombia: http://b= ogota.usembassy.gov 

State D= epartment Visa Website: http://travel.state.gov/visa/index.html

United = States Visas: http://www.unitedstatesvisas.gov/

 

 

Return to table of contents

Return to table of contents

Chapter 9: Contacts, Market Resear= ch, and Trade Events

Contacts           &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;     Return to top

(Andean Development Corp. (CAF) :  www.caf.com  &  www.comunidadandina.org

ANDI (National Industries Association):  www.andi.com.co

ANIF (Financial Entities Association):=   www.anif.org<= /p>

Association Of Flower Exporters:  www.colombianflowers.com

Banco de la Republica (Central Bank):&= nbsp; www.banrep.gov.co

Banking Association:  www.asobancaria.com

Banking Superintendent: www.superbanca= ria.gov.co

Bivac De Colombia S.A.: www.bureauveritas.com.co

Bogotá Chamber of Commerce:  www.ccb.org.co

Cambio newspaper: = www.cambio.com.co

Colombian Agricultural Institute-Ica:  = ;www.ica.gov.co

Colombian-American Chamber Of Commerce:  www.amchamcolombia.com.co

Colombian Association Of Systems Engineers:  www.acis.org.co

Colombian Coffee Growers Federation: www.cafedecolombia.com

Colombian Construction Chamber: www.camacol.org.co

Colombian Customs and I= ncome Tax Offices:  www.dian.gov.co

Colombian Engineers Society: www.sci.org.co

Colombian Export Promotion Bureau:  www.proexport.com.co

Colombian Government :  www.gobiernoenlinea.gov.co<= o:p>

Colombian Grain Growers Federation: www.fenalce.org.co

Colombian Petroleum Association: www.acp.com

Colombian Tele-Informatic Chamber: www.ccit.org.co

CREG (En= ergy and Gas Regulatory Commission):  www.creg.gov.co

DANE (Statistics Bureau) :  www.dane.gov.co

Dinero newspaper: = www.dinero.com

El Espectador newspaper:  = www.elespectador.com

El Tiempo newspaper: www.eltiempo.com.co=

EXIMBANK :  www.exim.gov

FENALCO (Merchants Association):  www.fenalco.com.co

Industry And Commerce Superintendency: www.sic= .gov.co

Inter American Development Bank:   www.iadb.org

Intertek Testing Services (Customs validation): www.intertek.com

La Nota Economica economic magazine: www.lanot= a.co

La Republica newspaper:  www.larepublica.com.co

Medellin Chamber Of Commerce/Trade Point: www.camaramed.org.co

Ministry Of Agriculture And Rural Development:  www.minagricultura.gov.co

Ministry Of Communications: www.mincomunicaciones.gov.co<= /span>

Ministry Of The Environment, Housing And Territorial Development: www.minambiente.gov.co

Ministry Of Mines And Energy:  www.minminas.gov.co

Ministry Of Trade, Industry And Tourism: www.mincomex.gov= .co

National Association Of Exporters: www.analde= x.org

National Cattlemen’s Federation: www.fedegan.org.co=

National Planning Department:  www.dnp.gov.co

OPIC:  www.opic.gov

Plastic Industries Association: www.acopla= sticos.org

Portafolio newspaper:= www.portafolio.com.c= o

Proexport (Export & Foreign Investment Promotion Bureau):  www.proexport.com.co

Presidencia de la Republica and/or Palacio de Nariño (President’s Office):  www.sne.gov.co and www.presidencia.gov.co

Semana magazine:  www.semana.com

Small Business Association-Acopi:  <= span class=3DMsoHyperlink>www.acopi.org.co

State Comptroller’s:  www.contraloriagen.gov.co

State Contracting Information System/SICE:  www.sice.gov.co

Superintendent of Corporations:  www.supersociedades.gov.co<= o:p>

Superintendent of Industry and Commerce:  www.sic.gov.co

Superintendent of Instruments/Stock:  www.supervalores.gov.co

World Bank:  www.worldbank.org

 

Market Research        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;        Return to top

To view market research reports pro= duced by the U.S. Commercial Service please go to the following website: http://www.export.gov/ma= rketresearch.html and click on Country and Industry Market Reports.

 

Please note that these reports are = only available to U.S. citizens and U.S. companies. Registration to the site is required, but free of charge.

 

`Trade Events            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =          Return to top

 

Please click on the link below for information on upcoming trade events.

 

http://www.export.gov/trade= events.html

 

 

Return to table of= contents

 

= Return to table of contents

Chapter 10: Guide to Our Services

 

The U.S. Commercial Service offers customized solutions to help your business enter and succeed in markets worldwide.  Our global network= of trade specialists will work one-on-one with you through every step of the exporting process, helping you to:

 

  • Target the best markets with our world-class research
  • Promote your products and services to qualified buyers
  • Meet the best distributors and agents for your products a= nd services
  • Overcome potential challenges or trade barriers

 

For more information on the service= s the U.S. Commercial Service offers U.S. businesses, please click on the link be= low.

 

h= ttp://www.buyusa.gov/colombia/en/services_for_us_companies.html<= /p>

 

Return to table of contents<= /a>

 

U.S. exporters seeking general export information/assistance or country-specific commercial information should consult with their nearest Export Assistance Center or the U.S. Department of Commerce's Trade Information Center at = (800) USA-TRADE, or go to the following website: http://www.export.gov

To the best of our knowledge, the information contained in this report is accurate as of the date published. However, The Department of Commerce does not take responsibility for actions readers may take based on the information contained herein. Readers should always conduct their own due diligence before entering into business ventures or other commercial arrangements. The Department of Commerce can assist companies in the= se endeavors.

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