COLOMBIA: land of opportunities
SERGIO DIAZ-GRANADOS GUIDA
Ministry of Trade, Industry, and Tourism
March 2012
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Contents
▪
Latin America, a promising region
▪
Colombia, in Latin America
▪
Colombia - Italy Relationship
| 2
Latin America & Caribbean Region: separating fact from fiction
Most of the world tends to see Latin America & the Caribbean
as a small, stagnant region, underdeveloped and largely
irrelevant in the global context. A region that is prone to
dictatorships, tangled in the tentacles of drug trafficking, and
fragmented into numerous countries that are very different
from each other.*
“Our Time: Latin America in the Twenty-first Century,” by Raul Rivera
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This is how Latin America and the Caribbean are usually portrayed in world maps.
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It would seem as if Greenland were larger.
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…or as if North America were larger.
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…or as if Russia were larger.
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The Region has a vast, young, and dynamic population.
The Latin American and Caribbean
region it is the third largest continent
after Asia and Africa.
It has a population of nearly 600 million
people, twice that of the United States,
but with very important characteristics:
the population is mainly young, with an
average age of 27 years, and composed
of a dynamic and growing middle class.
| 8
The Region’s per capita income is similar to the world average.
Over 300 million Latin Americans have achieved a middle class standard of living, with an
income of twenty thousand dollars a year. This emerging middle class represents 50% and
60% of the regional population (Our Time, Raul Rivera, p. 135).
World Poverty
Source: Worldmapper
© Copyright SASI Group (University of Sheffield) and Mark Newman (University of Michigan).
| 9
The Region has the highest biological production capacity in the world.
Biological production capacity: crops, pastures, forests, and fisheries.
Bio-capacity
Source: Worldmapper
© Copyright SASI Group (University of Sheffield) and Mark Newman (University of Michigan).
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The Region has the richest water resources.
Water Resources
Source: Worldmapper
© Copyright SASI Group (University of Sheffield) and Mark Newman (University of Michigan).
| 11
The Region is growing in net flows of Foreign Direct Investment.
Foreign Direct Investment 1971 - 2011 (US$ Billions)
250
US$ Billons
200
150
100
50
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
0
Source: Unctad
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The world is beginning to see Latin America and the Caribbean from a
new perspective.
• Highlighting the Region’s reduction in
poverty and its enlargement of the
middle class, due to economic growth.
• Recognizing the growing importance
of multinationals companies in the
Region.
• Recommending that the U.S. work
more closely with the Region, given its
growing political significance, and
because Latinos form its second
largest community.
• Indicating that after 200 years of
waiting, Central and South America
are beginning to develop their full
potential.
Source : The Economist, Sept 11 – 17 2010
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Latin America and the Caribbean Region should be seen from a clear
perspective.
The region promises to play
a key role in the coming
decades, given its economic
weight, its resource wealth,
and its human capital.
From the erroneous views about
the Region’s geography to
misconceptions surrounding
issues of violence and poverty,
now more than ever, an accurate
view is necessary.
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Contents
▪
Latin America, a promising region
▪
Colombia, in Latin America
▪
Colombia - Italy Relationship
| 15
Colombia is the fourth largest economy in Latin America and the Caribbean.
Gross Domestic Product 2011 (USD Billions)
Brazil
2.518
Mexico
1.185
Argentina
435
Colombia
321
Venezuela
310
Chile
Peru
Ecuador
243
168
65
Source: IMF-World Economic
Outlook Database
16
|
Colombia has the fifth largest territory in Latin America and the Caribbean.
Land Area (Square km.)
Brazil
8.459.420
Argentina
2.736.690
Mexico
Peru
1.280.000
Colombia
1.109.500
Bolivia
1.083.300
Venezuela
Chile
Paraguay
Ecuador
Source: World Bank
1.943.950
882.050
743.530
397.300
248.360
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The Colombian territory is
1,109,500 km2,
3.8 times greater than the
size of Italy,
with coasts on the
Atlantic and Pacific oceans,
and one of the most
biologically diverse
countries in the world.
| 18
Colombia has the third largest population in Latin America and the Caribbean.
Population 2011 (Million)
Brazil
194,9
Mexico
109,7
Colombia
46,1
Argentina
Source: IMF-World Economic Outlook Database
40,9
Peru
30,0
Venezuela
29,8
Chile
17,4
Ecuador
15,0
Guatemala
14,7
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Colombia has a population of 46 million people, with 55% being
under 30 years of age.
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Colombia is the third largest recipient of foreign direct investment in Latin
America and the Caribbean.
Accumulated net flows of foreign direct investment 2005-2009 (percentages)
Brazil
26,8%
Mexico
23,5%
Others
12,5%
Colombia
9,3%
Dominican
Republic
2,6%
Chile
9,2%
Panama
2,7%
Source: ECLAC
Peru
6,5%
Argentina
6,9%
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In 2011, FDI flow reached a new record.
Foreign Direct Investment in Colombia
15.032
10.821
10.586
10.252
US$ Billion
9.049
7.137
6.056
3.016
Fuente: Banco de la República
2011 Exchange Balance
2011 Jan-Sept
2010
2009
2008
2007
2006
2005
2004
1.720
2003
2002
2.134
2001
2.542
6.760
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Total FDI shows a growing trend in Colombia.
.
Investment % of GDP
28,4
26,0
25,2
24,1
23,9
Share of GDP
22,6
20,2
18,8
17,8
16,6
15,5
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010 2011*
*2011 cumulative for the third quarter
Investment rose from 15.5% of GDP in 2001 to 28.4% in 2011 (cumulative for the
third quarter)
Source: National Statistics, calculations from Ministry of Trade
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The Colombian economy quickly recovered from the global economic crisis.
Colombia - GDP Growth
6,7
6,9
5,8
5,3
4,7
3,4
Variation (%)
4,3
3,9
2,9
2,1
3,5
2,5
1,7
1,5
0,6
2011*
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
-4,2
* 2011- cumulative Jan.-Sept.
Source: DANE
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A diversified economy
Share of GDP, by sector
(average 2001-2010)
Transport storage
and
Telecommunications
7,0% Mining
6,5%
Construction
5,7%
Utilities
4,0%
Financial , housing
19,2%
Agropecuary
7,4%
Services
15,8%
Other
8,8%
Commerce,
restaurants and
hotels
11,9%
Source: DANE - Cuentas Nacionales, calculations MCIT
Manufacturing
13,8%
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Given this, Colombia has accelerated the growth of its GDP per capita.
National Income by Inhabitant (current US$)
6.000
Medium high income
5 . 000
4.000
3.000
US$
Medium low income
2.000
1.000
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
According to international standards, Colombia has been an
upper middle income country since 2005.
Source: World Development Indicators, World Bank.
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Foreign trade has quadrupled since 2001
Exports and Imports (US$ Millions, FOB)
65.000
55.362
55.000
52.591
US$ millions
45.000
35.000
25.000
15.000
12.330
11.997
5.000
2001
2002
2003
2004
2005
Exports
Source: DANE . Calculations OEE Mincomercio
2006
2007
2008
2009
2010
2011
(p)
Imports
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Colombia is diversifying its market destinations.
Exports to the European Union have grown 402%, between 2001-2011, with and average
annual growth of 17.5%.
Colombian Exports by Major Destinations
21.705
US$ Million
18.480
8.868
5.255
4.083
4.488
1.766
United
States
Latin
America
and the
Caribbean
European
Union
2001
Source: DANE-Calculations MCIT
299
Asia
3.818
522
Others
countries
2011
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In 2011, Colombia had one of the lowest inflation rates in Latin America and the
Caribbean.
Annual inflation rate of 2011 (average)
24,5
9,5
Source: ECLAC
9,0
8,1
8,0
7,7
7,5
6,6
6,2
5,8
5,4
4,9
4,7
4,0
3,7
3,3
3,0
3,0
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…achieving the investment grade
Long Term Sovereign Debt Rating
In its first issuance, after regaining the investment grade by these rating organizations, Colombia issued
bonds worth US$ 2 billion for bonds in international markets, with a period of over 10 years and an interest
rate of 4.375%, which was only 1.3 % above that of U.S. treasuries. The demand for these bonds amounted
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to US$ 7.3 billion.
Optimizing the business environment
In the last five years, Colombia has been recognized as being among the top ten most
reformed countries.
Colombia’s Position in Doing Business - World Bank
183
178
155
104
99
86
66
66
42
2006
Number of countries
Source: Doing Business- World Bank
2008
Colombian´s position
2012
Average South and Central America
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A competitive workforce
Higher education and training,
Position among 142 countries
Source: World Economic Forum 2011-2012
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Colombia, on the global radar
Colombia is considered the second most attractive economy in the region
for investment, after only Brazil.
“Investors view Brazil and Colombia
as the most promising markets in
Latin America over the next one to
three years…”
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A country with a bright future
Top 30 economies of the world, by 2050,
GDP US$ constant 2000 Billion
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
China
US
India
Japan
Germany
UK
Brazil
Mexico
France
Canada
Italy
Turkey
S. Korea
Spain
Russia
24.617
22.270
8.165
6.429
3.714
3.576
2.960
2.810
2.750
2.287
2.194
2.149
2.056
1.954
1.878
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Indonesia
Australia
Argentina
Egypt
Malaysia
Saudi Arabia
Thailand
Netherlands
Poland
Iran
Colombia
Switzerland
Hong Kong
Venezuela
South africa
•
19 of the top 30 will be emerging economies.
•
Colombia will be the top economy in Latin America for
growth in GDP per capita.
•
Per capita income will triple in the 40 years.
1.504
1.480
1.477
1.165
1.160
1.128
856
798
786
732
725
711
657
558
529
http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=ej73gSSJVj
&n=282364.PDF
Source: The World in 2050, Quantifying the shift in the global economy, HSBC, Global Research. 2011.
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Contents
▪
Latin America, a promising region
▪
Colombia, in Latin America
▪
Colombia - Italy Relationship
| 35
Trade and investment is the answer
Strengthening trade is the
antidote in times of uncertainty.
“Dominoes: The collapse of Greece and Ireland's economies
could have a knock-on effect on other nations. Britain's public
sector net debt is £845.8 billion, the equivalent to 57.1 per cent
of gross domestic product.” Daily Mail, November 2010
| 36
Colombia’s Free Trade Agreements - 2014
By 2014: 13 FTAs in force, with 50 countries
North America
Rusia
EFTA
Canadá
Unión Europea
Estados Unidos
Japón
Turquía
Corea
del Sur
México
Asia
Rep. Dominicana
Triángulo Norte
Panamá
Costa Rica
Colombia
Golfo
Pérsico
Venezuela
Singapur
Malasia
Indonesia
CAN
Africa
Mercosur
Latin America
Chile
Suráfrica
In Force: CAN, Mexico, Chile, Mercosur, Northern Triangle,
Canada, EFTA, Turkey, Panama, Venezuela, South Korea
Source: OEE-MCIT
Signed: Japan, Singapore, Gulf Community,
Dominican Republic, Costa Rica
Initiated / MOU: Australia, Indonesia,
Malaysia, Russia, South Africa, other African
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nations
Opportunities for Italy
…and given the FTAs with the U.S. and Canada,
Colombia can be a hub for Italian goods, services, and investment.
Rusia
EFTA
Canadá
Unión Europea
Estados Unidos
México
Rep. Dominicana
Triángulo Norte
Panamá
Costa Rica
Colombia
Venezuela
CAN
Mercosur
Chile
Source: MCIT.
| 38
Colombia – European Union FTA
Benefits to EU businesses will come with the entry into force of the FTA, in late 2012.
The agreement opens up market
opportunities for key EU industries, which
will benefit from the elimination of tariffs.
These include the sectors of Automobiles
and Auto parts, which pay over 33 million
euros, Chemicals, which pay over 16
million euros, and Textiles, which pay over
60 million euros, annually, in taxes on
imports into Colombia.
The FTA also provides for the immediate
liberalization of fishery products, as well
as major concessions in agriculture.
| 39
Trade between Colombia and the European Union
1993-2011 (US$ million FOB)
10.000
8.868
9.000
8.000
7.161
US$ Million
7.000
6.000
5.000
4.000
3.000
2.000
1.738
1.000
Exportaciones
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
Importaciones (FOB)
Colombia's trade with the European Union surpasses US$ 16 billion, annually
Source: Dane.
| 40
The productive structures of Italy and Colombia are different. This
favors the complementarity of the economies.
Composition of output (value added) in Colombia and Italy, 2010
Sector
Italy
Colombia
Agriculture, hunting, forestry, and fishing
1,9
7,0
Mining and quarrying
0,4
8,9
Manufacturing Industries
16,0
14,9
Electricity, gas, and water
4,4
Construction
6,1
8,1
Trade, repairs, restaurants, and hotels
14,9
12,8
Transport, storage and communications
9,8
6,9
Finance, insurance, real estate and business services
27,7
20,3
Social work activities, community and personal
20,9
16,8
Source: DANE-Eurostat
| 41
The production of the industrial sectors of each country also have
differences.
Composition of industrial added value of Colombia and Italy, 2010
Sector
Italy
Colombia
Foods, beverages, and tobacco
11,3
25,4
Textiles, garments, leather, and leather products
10,9
10,5
Wood, paper, publishing, and printing
6,5
7,4
Oil Refining
1,0
18,4
Chemicals and chemical products
6,9
10,8
Plastic, rubber, and nonmetallic minerals
8,5
10,6
Basic Metallurgy
17,0
7,3
Machinery and equipment
13,2
2,4
Electrical machinery, appliances and electronics
8,4
2,3
Transport equipment
6,4
1,2
Furniture and other goods
10,0
3,7
Source: DANE-Eurostat
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Trade Opportunities for Italy
Colombia: Imports by country of origin in 2010
(% of total)
24,9
Estados…
15,0
China
11,1
México
5,0
Brasil
4,1
Alemania
Argentina
3,4
Francia
3,3
2,6
Japón
Corea
2,3
Ecuador
1,9
Perú
1,9
India
1,8
Canada
1,8
Chile
1,6
Italia
1,5
España
1,1
Trinidad Y…
1,1
Venezuela
1,0
Israel
0,3
Source: DANE-DIAN –Calculations OEE- Ministry of Trade
| 43
Italy-Colombia economic relations
Bilateral trade, Colombia - Italy
Export-Import FOB - Balance
1.000
800
753
745
US$ Million
600
400
254
200
114
0
-8
-200 -140
Balanza Comercial
Exportaciones
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
-400
Importaciones (FOB)
…approximately US$ 1.4 billion in bilateral trade between Colombia and Italy.
Source: DANE
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It is important to boost Italian FDI to Colombia
Colombia: Foreign Direct Investment by
Country of Origin *, 2000-2010
Italy
0,2%
France
1,6%
Mexico
2,0%
Brazil
2,4%
Israel
0,1%
United States
28,9%
Otros
8,7%
Canada
3,6%
Bermudas
5,5%
Virgin Isles
6,0%
Great Britain
15,6%
Spain
7,9%
Anguilla
7,9%
* Excluding petroleum
Source: Bank of the Republic
Panama
9,5%
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…with trade complementarities and much room for growth.
Colombian exports to Italy, 2011
Coal
Petroleum
Basic Chemicals
Bananas
Ferronickle
Coffee
Machinery and equipment
Agribusiness
Mining
Products of plastic
Other
A total of 1.3% of Colombian
exports go to Italy.
27,4%
21,2%
13,7%
11,3%
7,4%
6,0%
2,7%
1,2%
1,1%
0,6%
7,5%
Italian exports to Colombia, 2011
Machinery and equipment
Basic Chemicals
Metalurgy
Textiles
Automotive industry
Products of plastic
Paper
Soaps, cosmetics, other
Apparel
Footwear
Other
50,0%
21,0%
5,6%
3,9%
3,1%
2,0%
1,8%
1,3%
0,9%
0,5%
9,9%
A total of 1.4% of Colombian
imports are from Italy.
Source: DANE – Calculations OEE- Ministry of Trade
| 46
Opportunities for Colombia
Colombia has new sectors with potential in the Italian market.
US$ millions
Products
Italian imports
from world
Colombian
exports to Italy
Fuels and their
products
5.225.255
362.163
Pharmaceuticals
3.036.586
24
409.120
1.012.828
-
30.445
930.304
2
52.193
706.474
55.140
979.859
683.513
593.894
576.517
8.123
132
38
1.502.081
169.004
160.401
Tobacco and its
products
Footwear and its
accessories
Products of iron and
steel
Plastics and their
products
Medical appliances
Fish and crustaceans
Source: Comtrade y DANE.
Colombian
exports to world
36.126.980
| 47
Opportunities for Italy
Italy has significant sales opportunities in the Colombian market.
US$ million
Products
Machinery and parts
Colombian
imports from
world
Italian exports to
Colombia
Italian exports to
world
297.873,26
2.934
1.098.405
85.834,72
5.295
2.578.161
52.475,10
887
646.378
38.470,19
872
317.401
36.488,70
398
153.796
30.740,77
1.076
775.955
Medical appliances
26.051,78
2.136
2.352.327
Vehicles
24.037,09
1.692
2.315.669
Pharmaceuticals
Electrical machinery
Scientific instruments
and machinery
Organic chemical
products
Products of iron and
steel
Source: Commtrade and DANE.
| 48
A long way to go, but for Colombia...
• 12 million people moved into the middle class over the past
10 years.
• 1.5 million jobs created in the last 18 months and
unemployment has dropped to 9.8%, as of December 2011.
• Among the Top Ten Reformers in the Doing Business
ranking, four times and counting.
• Moved from 5th economy in Latin America to the 4th.
And in 2011,
• Ranked the 4th economy, worldwide, for greatest dynamism
in exports,
• Received investment grade from the three most important
ratings agencies,
• Ranked the 4th largest destination for FDI to Latin America.
Moreover, many opportunities for Italy in Colombia: good
prognosis, business climate and incentives.
| 49
COLOMBIA – ITALY
SERGIO DIAZ-GRANADOS GUIDA
Ministry of Trade, Industry, and Tourism
March 2012
| 50