Colombia

Bureau of Economic and Business Affairs
Report
July 5, 2016

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Executive SummaryShare    

With increased security, a market of 48 million people, an abundance of natural resources, and an educated and growing middle-class, Colombia is an attractive destination for foreign investment. The Colombian government has taken significant steps to open the country to global trade and investment. In 2015, Colombia had the fourth largest GDP in Latin America after Brazil, Mexico, and Argentina and has sustained an average growth rate over four percent for the past decade. In the World Bank’s 2016 Ease of Doing Business Report, Colombia ranked 54 out of 189 countries and fourth in the region, behind Mexico, Chile, and Peru. Colombia has weathered low world oil prices and a significant devaluation of the peso to remain among the more attractive investment destinations in South America.

Colombia’s legal and regulatory systems are generally transparent and consistent with international norms. The country has a comprehensive legal framework for business and foreign direct investment (FDI), and the U.S.-Colombia Trade Promotion Agreement (CTPA), which took effect on May 15, 2012, has strengthened bilateral trade and investment. Through the CTPA and several international conventions and treaties, Colombia’s dispute settlement mechanisms and intellectual property rights protections have improved. However, piracy and counterfeit products are a major problem and among the primary reasons Colombia remains on the U.S. Trade Representative’s Special 301 Watch List.

The Colombian government has made a concerted effort to develop efficient capital markets, attract investment, and create jobs. Sound fiscal and macroeconomic management has allowed Colombia to claim the triple crown of seeing its credit ratings increased to ‘Investment Grade’ level by Standard and Poor’s, Moody’s, and Fitch Ratings. Nevertheless, S&P recently downgraded Colombia’s long-term outlook form stable to negative. Restrictions on foreign ownership in specific sectors still exist, and FDI fell 26 percent in the first three quarters of 2015 relative to 2014, largely due to reduced investment in the extractives industry. Colombia’s average annual unemployment rate continued its downward trend in 2015 and reached 8.9 percent. However, about 47 percent of the workforce is in the informal economy according to the National Administrative Department of Statistics (DANE). Colombia enjoys a skilled workforce throughout the country, as well as managerial-level employees who are often bilingual.

Security in Colombia has improved significantly in recent years, with the percentage of kidnappings down 93 percent since 1999. Colombian government figures show that the number of terrorist acts decreased 42 percent from 2014 to 2015 and homicides continued a downward trend, decreasing five percent. Since November 2012, the Colombian government and the Revolutionary Armed Forces of Colombia (FARC) have been conducting peace negotiations in Havana, Cuba. Significant progress has been achieved in the negotiations and the Colombian government expects to conclude a comprehensive agreement in 2016. Even so, an active domestic insurgency is still taking place alongside powerful narco-criminal group operations, posing a threat to commercial activity and investment, especially in rural zones where government control is weaker.

Many majority state-owned enterprises, including Ecopetrol and ISA, are considered models of professional management, competition, and excellent corporate governance. However, corruption remains a significant challenge in Colombia. Though Colombia rose for the second consecutive year in the World Economic Forum’s Global Competitiveness Index (2015-2016), the report cited security and corruption as among the biggest challenges for doing business in Colombia. The Colombian government continues to work on improving its business climate, but over the past year U.S. and other foreign investors have voiced growing complaints about non-tariff and bureaucratic barriers to trade and investment at the national, regional, and municipal levels.

Table 1

Measure

Year Index or Rank Website Address

TI Corruption Perceptions index

2015

83 of 168

transparency.org/cpi2014/results

World Bank’s Doing Business Report “Ease of Doing Business”

2015

54 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

53 of 143

globalinnovationindex.org/content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2015

$7,085

http://bea.gov/international/factsheet/factsheet.cfm?Area=204

World Bank GNI per capita

2014

$7,970

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

The Colombian government actively encourages FDI. In the early 1990s, the country began economic liberalization reforms, which provided for national treatment of foreign investors, lifted controls on remittance of profits and capital, and allowed foreign investment in most sectors. Colombia imposes the same investment restrictions on foreign investors that it does on national investors. Generally, foreign investors may participate in the privatization of state-owned enterprises without restrictions. All FDI involving the establishment of a commercial presence in Colombia requires registration with the Superintendence of Corporations ('Superintendencia de Sociedades') and the local chamber of commerce. All conditions being equal during tender processes, national offers are preferred over foreign ones. Assuming equal conditions among foreign bidders, those with major Colombian national workforce resources, significant national capital, and /or better conditions to facilitate technology transfers are preferred.

Other Investment Policy Reviews

The Organization for Economic Cooperation and Development (OECD) last reviewed Colombia’s investment policy in April 2012 (http://www.oecd.org/countries/colombia/colombia-investmentpolicyreview-oecd.htm) and found that Colombia made significant progress promoting investment liberalization and improving its investment climate through important policy reforms. In October 2015, the OECD Investment committee approved continuing the accession process pending the March 2016 revision from the OECD Working Group on International Investment Statistics (WGIIS).

The World Trade Organization (WTO) conducted a fourth trade policy review of Colombia in June 2012 (http://www.wto.org/english/tratop_e/tpr_e/tp365_e.htm), its first in six years. It found that Colombia continued its trade policy of increased openness and emphasized greater integration with Latin America, the Caribbean, and the rest of the world by negotiating preferential agreements to increase external trade and foreign investment flows.

Laws/Regulations on Foreign Direct Investment

Colombia has a comprehensive legal framework for business and FDI which incorporates binding norms resulting from its membership in the Andean Community of Nations as well as other free trade agreements and bilateral investment treaties. Colombia’s judicial system defines the legal rights of commercial entities, reviews regulatory enforcement procedures, and adjudicates contract disputes in the business community. The judicial framework includes the Superintendence of Industry and Commerce (SIC), the Council of State, the Constitutional Court, the Supreme Court of Justice, and the various departmental and district courts, which are also overseen for administrative matters by the Superior Judicial Council. The 1991 Constitution provided the judiciary with greater administrative and financial independence from the executive branch. However, except for the SIC’s efficient exercise of judicial functions, the judicial system in general remains hampered by time-consuming bureaucratic requirements and corruption.

Business Registration

New businesses have to first register with the chamber of commerce of the city in which the company will reside. They must also obtain a tax identification number from the Colombian tax authority. Colombia fell five spots from to 84 on the 2015 Doing Business report in terms of starting a business. According to the report, starting a company in Colombia requires eight procedures and takes an average of 11 days, and there is no simplified business creation process. Information on starting a company can be found at www.ccb.org.co/en/Creating-a-company/Company-start-up/Step-by-step-company-creation and www.dian.gov.co.

Industrial Promotion

Procolombia is the Colombian government entity that promotes international tourism, foreign investment, and non-traditional exports in Colombia. Procolombia assists foreign companies that wish to enter the Colombian market and addresses specific needs, such as finding contacts in the public and private sector, organizing visit agendas, and accompanying companies during visits to Colombia. All services are free of charge and confidential. Business process outsourcing, software and IT services, cosmetics, health services, automotive manufacturing, textiles, graphic communications, and electric energy receive special priority. The Invest in Colombia web portal offers detailed information for opportunities in agribusiness, manufacturing, and services in Colombia (www.investincolombia.com.co/sectors).

The CTPA entered into force on May 15, 2012 and improves legal security and the investment environment while eliminating tariffs and other barriers to trade in goods and services. The agreement grants investors the right to establish, acquire, and operate investments on an equal footing with local investors as well as investors of other countries with bilateral investment treaties or investment chapters in free trade agreements with Colombia. It also provides U.S. investors in Colombia protections that foreign investors have under the U.S. legal system, including due process and the right to receive fair market value for property in the event of an expropriation.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment in the financial, hydrocarbon, and mining sectors is subject to special regimes, such as investment registration and concession agreements with the Colombian government, but are not restricted in the amount of foreign capital. The following sectors require that foreign investors have a legal local representative and/or commercial presence in Colombia: travel and tourism agency services; money order operator; customs brokerage; postal and courier services; merchandise warehousing; merchandise transportation under customs control; international cargo agents; public service companies including sewage and water works, waste disposal, electricity, gas and fuel distribution, and public telephone service; insurance firms; legal services; and special air services including aerial fire-fighting, sightseeing, and surveying.

Foreign investors face specific exceptions and restrictions in the following sectors:

Media: Only Colombian nationals or legally constituted entities may provide radio or subscription-based television services. For National Open Television and Nationwide Private Television Operators, only Colombian nationals or legal entities may be granted concessions to provide television services. Colombia’s national, regional, and municipal open-television channels must be provided at no extra cost to subscribers. Foreign investment in national television is limited to a maximum of 40 percent ownership of the relevant operator. Satellite television service providers are only obliged to include within their basic programming the broadcast of government-designated public interest channels. Newspapers published in Colombia covering domestic politics must be directed and managed by Colombian nationals.

Accounting, Auditing, and Data Processing: To practice in Colombia, providers of accounting services must register with the Central Accountants Board; have uninterrupted domicile in Colombia for at least three years prior to registry; and provide proof of accounting experience in Colombia of at least one year. No restrictions apply to services offered by consulting firms or individuals. A legal commercial presence is required to provide data processing and information services in Colombia.

Banking: Foreign investors may own 100 percent of financial institutions in Colombia, but are required to obtain approval from the Financial Superintendent before making a direct investment of ten percent or more in any one entity. Portfolio investments used to acquire more than five percent of an entity also require authorization. Foreign banks must establish a local commercial presence and comply with the same capital and other requirements as local financial institutions. Foreign banks may establish a subsidiary or office in Colombia, but not a branch. Every investment of foreign capital in portfolios must be through a Colombian administrator company, including brokerage firms, trust companies, and investment management companies. All foreign investments must be registered with the Central Bank.

Fishing: A foreign vessel may engage in fishing and related activities in Colombian territorial waters only through association with a Colombian company holding a valid fishing permit. If a ship’s flag corresponds to a country with which Colombia has a complementary bilateral agreement, this agreement shall determine whether the association requirement applies for the process required to obtain a fishing license. The costs of fishing permits are greater for foreign flag vessels.

Private Security and Surveillance Companies: Companies constituted with foreign capital prior to February 11, 1994 cannot increase the share of foreign capital. Those constituted after that date can only have Colombian nationals as shareholders.

Telecommunications: Barriers to entry in telecommunications services include high license fees (USD150 million for a long distance license), commercial presence requirements, and economic needs tests. While Colombia allows 100 percent foreign ownership of telecommunication providers, it prohibits “callback” services.

Transportation: Foreign companies can only provide multimodal freight services within or from Colombian territory if they have a domiciled agent or representative legally responsible for its activities in Colombia. International cabotage companies can provide cabotage services (i.e. between two points within Colombia) “only when there is no national capacity to provide the service” according to Colombian law. Colombia prohibits foreign ownership of commercial ships licensed in Colombia and restricts foreign ownership in national airlines or shipping companies to 40 percent. FDI in the maritime sector is limited to 30 percent. The owners of a concession providing port services must be legally constituted in Colombia and only Colombian ships may provide port services within Colombian maritime jurisdiction; however, vessels with foreign flags may provide those services if there are no Colombian-flag vessels capable of doing so.

Privatization Program

Colombia has privatized state-owned enterprises under article 60 of the Constitution and Law No. 226 of 1995. This law stipulates that the sale of government holdings in an enterprise should be offered to two groups: first to cooperatives and workers’ associations of the enterprise, then to the general public. During the first phase, special terms and credits have to be granted, and in the second phase, foreign investors may participate along with the general public. Colombia’s main privatizations have been in the electricity, mining, hydrocarbons, and financial sectors, and in January 2016, the government sold its majority stake in Isagen, the country’s third-largest energy generator, to Canadian firm Brookfield Asset Management for USD 2 billion. The government has attached a high priority to stimulating private sector investment in roads, ports, electricity, and gas infrastructure concessions and is increasingly utilizing public-private partnerships (PPPs) as the favored option for infrastructure development.

The Colombian government has prioritized its fourth generation infrastructure program (4G) focused on highway construction with PPP opportunities valued at USD 17 billion. In order to attract investment and promote PPPs, on November 22, 2013, the Colombian government signed a new infrastructure law clarifying provisions for frequently cited obstacles to participate in PPPs including environmental licensing, land acquisition, and the displacement of public utilities. The new law puts in place a civil procedure that facilitates land expropriation during court cases, allows for expedited environmental licensing, and clarifies that the cost to move or replace public utilities affected by infrastructure projects falls to private companies.

Municipal enterprises operate many public utilities and infrastructure services. These municipal enterprises have engaged private sector investment through concessions. There are several successful concessions involving roads. These kinds of partnerships have helped promote reforms and create a more attractive environment for private, national, and foreign investment.

Screening of FDI

According to the Constitution and foreign investment regulations, foreign investment in Colombia receives the same treatment as an investment made by Colombian nationals. Any investment made by a person who does not qualify as a resident of Colombia for foreign exchange purposes will qualify as foreign investment. Foreign investment is permitted in all sectors, except in activities related to defense, national security, and toxic waste handling and disposal. There are no performance requirements explicitly applicable to the entry and establishment of foreign investment in Colombia. However, there are export incentives relating to the operation of free trade zones.

Competition Law

The SIC is Colombia’s national competition authority and has been strengthened over the last five years with more staff, economists, and lawyers. While the SIC issued landmark fines in 2015, particularly against a sugar cartel, some experts have expressed concern with Colombia’s sliding competitiveness. Discriminatory practices in the issuing and enforcement of regulations has affected market access and created non-tariff barriers to trade, especially in the sectors of pharmaceuticals, trucks, and liquors. According to the OECD’s January 2015 Economic Survey, the competition law of 2009 improved competition policy settings, but the SIC could be even more effective if it were more politically independent.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

No restrictions apply to transferring funds associated with FDI. However, foreign investment into Colombia must be registered with the Central Bank to secure the right to repatriate capital and profits. Except for special exceptions, direct and portfolio investments are considered registered when the exchange declaration for operations channeled through the official exchange market is presented. The official exchange rate is determined by the Central Bank based on free market flows of the previous day. Colombia does not manipulate its currency to gain competitive advantages.

Remittance Policies

If investments are registered, repatriation is permitted without restriction. The government permits full remittance of all net profits regardless of the type or amount of investment. Foreign investments must be channeled through the foreign exchange market and registered with the Central Bank’s foreign exchange office within one year to be able to repatriate or reinvest the proceeds. There are no restrictions on the repatriation of revenues generated from the sale or closure of a business, reduction of investment, or transfer of a portfolio. Colombian law authorizes the government to restrict remittances in the event that international reserves fall below three months’ worth of imports, and reserves have been well above that for decades.

3. Expropriation and CompensationShare    

Article 58 of the Constitution governs indemnifications and expropriations and guarantees owners’ rights for legally-acquired property. For assets taken by eminent domain, Colombian law provides a right of appeal both on the basis of the decision itself and on the level of compensation. The Constitution does not specify how to proceed in compensation cases, which remains a concern for foreign investors. The Colombian government has sought to resolve such concerns through the negotiation of bilateral investment treaties and strong investment chapters in free trade agreements, such as the CTPA.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

The judicial system generally operates without government interference. In 2012, Law 1564 gave the SIC, National Copyrights Directorate, and Colombian Agriculture Institute authority to judge civil commercial cases about intellectual property rights (IPR). Specialized labor courts exist within the regular judicial system to hear administrative labor cases. Only courts can order the reinstatement of a worker claiming to have been unjustly fired. In accordance with local legislation, the judgment in a foreign country has force in Colombia granted by the respective international treaties existing with that country.

Bankruptcy

Colombia’s 1991 Constitution grants the government the authority to intervene directly in financial or economic affairs, and this authority provides solutions similar to U.S. Chapter 11 filings for companies facing liquidation or bankruptcy. Colombia’s bankruptcy regulations have two major objectives: to regulate proceedings to ensure creditors’ protection, and to monitor the efficient recovery and preservation of still-viable companies. This was revised in 2006 to allow creditors to request judicial liquidation, which replaces the previous forced auctioning option. Now, inventories are valued, creditors’ rights are taken into account, and either a direct sale takes place within two months or all assets are assigned to creditors based on their share of the company’s liabilities. The insolvency regime for companies was again revised in 2010 to make proceedings more agile and flexible and allow debtors to enter into a long-term payment agreement with creditors, giving the company a chance to recover and continue operating. Bankruptcy is not criminalized in Colombia. In 2013, a bankruptcy law for individuals whose debts surpass fifty percent of their assets value entered into force.

Restructuring proceedings aim to protect the debtors from bankruptcy. Once reorganization has begun, creditors cannot use collection proceedings to collect on debts owed prior to the beginning of the reorganization proceedings. All existing creditors at the moment of the reorganization are recognized during the proceedings if they present their credit. Foreign creditors, equity shareholders including foreign equity shareholders, and holders of other financial contracts, including foreign contract holders, are recognized during the proceeding. Established creditors are guaranteed a vote in the final decision. According to the Doing Business 2016 report, Colombia takes an average of 1.7 years—the same as OECD high income countries—to resolve insolvency.

Investment Disputes

There were three pending investment disputes last year. First, a case involving a U.S. fast food company operating in Colombia since 1999. The company purchased land to build a restaurant, but the government seized the property during an investigation of the prior landholder for drug trafficking and money laundering. The second case, started in 1994, involves a U.S. marine salvage company. The company has sued the Colombian government through different venues for not allowing it to access its property in Colombian territory on grounds of national patrimony protection. The last case involves a U.S plane allegedly abandoned in Colombian territory in 2010. The U.S. owner has been trying to claim his property since 2012. Colombian authorities maintain that the plane is now the property of the Colombian government, according to national regulations on abandoned aircraft.

International Arbitration

Foreign judgments are recognized and enforced in Colombia once an application is submitted to the Civil Chamber of the Supreme Court. In 2012, Colombia approved the use of the arbitration process when new legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law was adopted. The new statute stipulates that arbitral awards are governed by both domestic law as well as international conventions (New York Convention, Panama Convention, etc.). This has made the enforcement of arbitral awards easier for all parties involved. Arbitration in Colombia is completely independent from judiciary proceedings, and once arbitration has begun, the only competent authority is the arbitration tribunal itself. The CTPA protects U.S. investments by requiring a transparent and binding international arbitration mechanism and allowing investor-state arbitration for breaches of investment agreements if certain parameters are met. The judicial system is notoriously slow, leading to many foreign companies to include international arbitration clauses in their contracts.

ICSID Convention and New York Convention

Domestic law allows contracting parties to agree to submit disputes to international arbitration, provided that the parties are domiciled in different countries, the place of arbitration agreed to by the parties is a country other than the one in which 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 lets parties set their own arbitration terms including location, procedures, and the nationality of rules and arbiters. Foreign investors have found the arbitration process in Colombia complex and dilatory, especially with regard to enforcing awards. In October 2012, the new National and International Arbitration Statute, modeled after the UNCITRAL Model Law, took effect. 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 Investment Guarantee Agency.

Duration of Dispute Resolution – Local Courts

According to the Doing Business 2016 report, the time from the moment a plaintiff files the lawsuit until actual payment and enforcement of the contract averages 1288 days. Traditionally, most court proceedings are carried out in writing and only the evidence-gathering stage is carried out through hearings, including witness depositions, site inspections, and cross-examinations. The Colombian government has accelerated proceedings and reduced the backlog of court cases by allowing more verbal public hearings and creating alternative court mechanisms. The new Code of General Procedure that entered into force in June 2014 also establishes an oral proceeding which is carried out in two hearings, and there are now penalties for not ruling in the time limit set by the law. Enforcement of an arbitral award can take up to two years. According to the Doing Business report, Colombia has made enforcing contracts easier by simplifying and speeding up the proceedings for commercial disputes.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

There are no active measures inconsistent with WTO Trade Related Investment Measures (TRIMs) requirements.

Investment Incentives

The Colombian government offers investment incentives such as income tax exemptions and deductions in specific priority sectors. During the last decade, it has committed to providing more incentives and stability for investors. Investment incentives through free trade agreements between Colombia and other nations include national treatment and most favored nation treatment of investors; establishment of liability standards assumed by countries regarding the other nation’s investors, including the minimum standard of treatment and establishment of rules for investor compensation from expropriation; establishment of rules for transfer of capital relating to investment; and specific tax treatment.

The government offers tax incentives to all investors, such as preferential import tariffs, tax exemptions, and credit or risk capital. Some fiscal incentives are available for investments that generate new employment or production in areas impacted by natural disasters, and companies can apply for these directly with participating agencies. Tax and fiscal incentives are often based on regional considerations. Border areas have special protections due to currency fluctuations in neighboring countries, which can harm local economies. National and local governments also offer special incentives, such as tax holidays, to attract specific industries.

Special tax exemptions have existed since 2003 and range from ten to thirty years. Income tax exemptions in tourism cover new hotels constructed between 2003 and 2017, and remodeled and/or expanded hotels though 2017, for a period of 30 years, and for ecotourism services through 2023. New forestry plantations and sawmills also have benefitted from income tax exemptions since 2003. Late yield crops planted through 2014 are tax exempt for ten years from the beginning of the harvesting. Electricity from wind power, biomass, and agricultural waste are tax exempt until January 1, 2018, as are river-based transportation services provided with certain shallow draft vessels and barges. Certain printing and publishing companies can benefit from tax exemptions through 2033. Software developed in Colombia has been tax exempt for up to five years since 2013. To meet exemption requirements, the software must have its intellectual property rights protected, be based upon a high concentration of national scientific and technological research, and Colciencias (Colombia’s agency for promoting science, technology, and innovation) must grant its certification.

In December 2014, Congress passed a controversial tax reform expanding the “wealth tax,” creating an additional tax of 0.2 to 1.15 percent for businesses on assets with a net equity over two billion pesos (approximately USD 675,000), to be phased out by 2018. Additionally, the government added a surcharge to the already existing Income Tax for Equality (CREE), a nine percent tax on company profits over 800 million pesos (approximately USD 275,000) designed to contribute to employment generation and social investments. The additional surcharge was five percent in 2015 and will increase gradually to reach nine percent in 2018.

Research and Development

Foreign investors can participate without discrimination in government-subsidized research programs, and most Colombian government research has been conducted with foreign institutions. R&D incentives include Value-Added Tax exemptions for imported equipment or materials used in scientific, technology, or innovation projects, and qualified investments may receive tax credits up to 175 percent. A 2012 reform of Colombia’s royalty system allocates ten percent of the government’s revenue to science, technology, and innovation proposals executed by subnational governments. Although only subnational governments can submit a project, anyone, including foreigners, can partner with them. Colombia’s government R&D funding increased 40 percent to USD 840 million from 2012 to 2014.

Performance Requirements

Performance requirements are not imposed on foreigners as a condition for establishing, maintaining, or expanding investments. The Colombian government does not have performance requirements, impose local employment requirements, or require excessively difficult visa, residency, or work permit requirements for investors. Under the CTPA, Colombia grants substantial market access across its entire services sector.

Data Storage

According to the Ministry of Information Technologies, the government requires local data storage only for government entities and does so using its service contract with the private company providing the service. In Colombia, software and hardware are protected by IPR (Dirección Nacional de Derecho de Autor – DNDA – http://www.derechodeautor.gov.co/). There is no obligation to submit source code for registered software. However, if the IT provider is contracting with the Colombian government, through a clause of the service contract, the source code must be provided to the entity. The SIC launched a national database registry in November 2015 to implement Law 1581 pertaining to personal information protection and management. It requires data storage facilities that hold personal data to comply with government requirements for security and privacy, and data storage companies have one year to register.

6. Protection of Property RightsShare    

Real Property

The 1991 Constitution explicitly protects individual rights against state actions and upholds the right to private property.

Secured interests in real property, and to a lesser degree movable property, are recognized and generally enforced after the property is properly registered. In terms of protecting third party purchasers, such as one of the cases cited under investment disputes, existing law is inadequate. The concept of a mortgage, trust, deed, and other types of liens exists, as does a reliable system of recording such secured interests. Deeds, however, present some legal risk due to the prevalence of transactions that have never been registered with the Public Instruments Registry. Approximately four million hectares of land are affected by forced displacement and two million for violent usurpation. According to Amnesty International, eight million hectares have been acquired illegally, equivalent to 14 percent of the Colombian territory. Around 18 percent of land owners do not have clear title. The Colombian government is working to title these plots and has started a formalization program for land restitution, but as of April 2016, only 182,000 hectares have received restitution rulings out of the millions stolen during armed conflict. Some landowners who received their formal land titles have been threatened by illegal armed groups. Colombia ranked 54 out of 185 economies for ease of registering property, according to the Doing Business report—one position worse than its 2015 ranking.

Intellectual Property Rights

In Colombia, the granting, registration, and administration of IPR are carried out by four different government entities. The SIC acts as the Colombian patent and trademark office. The Colombian Agricultural Institute (ICA) is in charge of issuing plant variety protections and data protections for agricultural products. The Ministry of Interior administers copyrights through the National Copyright Directorate (DNDA). The Ministry of Health and Social Protection handles data protection for products registered through the National Food and Drug Institute (INVIMA). While each of these entities experiences significant financial and technical resource constraints, the SIC is well-run and the second fastest office in the world for patent applications. Colombia is subject to Andean Community Decision 486 on trade secret protection, which is fully implemented domestically by the Unfair Competition Law of 1996.

The patent regime in Colombia currently provides for a 20-year protection period for patents, a 10-year term for industrial designs, and 20- or 15-year protection for new plant varieties, depending on the species. Data protection applications take up to nine months to adjudicate. U.S. agroindustry companies have expressed concern because enforcement and implementation of Colombia's data protection regime for agrochemicals is still weak. ICA has no internal data protection regulations. The U.S. pharmaceutical industry has complained about a slow judicial process and inability of rights holders to obtain preliminary injunctions before a potentially patent-infringing product enters the market. The U.S. Patent and Trademark Office partnered with the SIC to establish a Patent Prosecution Highway (PPH) program in 2013. The PPH allows for the mutual recognition of patent examination procedures to make the patent granting process faster. The program was extended indefinitely due to the success of the pilot.

Colombia has been on the U.S. Trade Representative’s Special 301 Watch List every year since 1991 and is also listed in the notorious markets report. Both reports can be found at https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications. The CTPA improved standards for the protection and enforcement of a broad range of IPR. Such improvements include state-of-the-art protections for digital products such as software, music, text, and videos; stronger protection for U.S. patents, trademarks, and test data; and prevention of piracy and counterfeiting by criminalizing end-use piracy. Colombia is a member of the Inter-American Convention for Trademark and Commercial Protection. Various procedures associated with industrial property, patent, and trademark registration are available at http://www.sic.gov.co/es/web/guest/propiedad-industrial. In August 2012, Colombia joined the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). The Colombian government joined the World Intellectual Property Organization (WIPO) Trademark Law Treaty on January 13, 2012, which entered into force on April 12, 2013. WIPO’s 1996 Copyright Treaty has been in force since March 6, 2002, and the Performances and Phonograms Treaty since May 20, 2002. Colombia is not a member of the Patent Law Treaty.

In January 2013, the Constitutional Court declared Law 1520 of 2012 implementing several CTPA-related commitments (including copyrights, TV programming quotas, and IPR enforcement measures) unconstitutional on procedural grounds, and these remain pending. The CTPA copyright deadline to establish liability for circumventing technological protections was May 15, 2013, and the deadlines to establish liability for misuse/altering information was November 15, 2014. The CTPA deadline for screen quotas was May 15, 2012. On enforcement, a decree specifying the list of pre-established compensation for trademark counterfeiting was issued in December 2014. However, Colombia has yet to establish additional criminal procedures for counterfeiting, which were due May 15, 2013. The Internet Service Providers (ISPs) legislation, another CTPA requirement, was also due then.

In terms of investigations, Colombia’s success against counterfeiting and IPR violations is limited to specific isolated events and seizures. However, Colombian law continues to limit the ability of law enforcement (police, customs, and prosecutors) to effectively combat counterfeiting because they do not have the requisite authorities to effectively inspect, seize, and investigate smugglers and counterfeiters. On prosecutions, the Attorney Generals’ national-level IPR unit (UNPIT) was abolished and criminal IPR cases are now handled by the National Directorate for the Attorneys Office. Cases previously handled by this specialized unit are now treated as any other criminal case and distributed randomly to attorneys. Only in two situations, when there is a major crime organization involved, or is of national relevance, the specialized attorneys that previously worked for the IPR unit are designated to the cases. The anti-contraband law, approved in June 2015, increased penalties and prison time for those found guilty of contraband smuggling and customs fraud. The National Customs and Tax Directorate (DIAN), is implementing a risk management system to intelligently combat contraband, acquiring advanced software to improve performance, utilizing scanners at ports, creating a database of businesses used to launder money, and eliminating unnecessary penalties for minor errors in paperwork. In 2015, Colombia's tax and customs police (POLFA) seized nearly USD 95 million of contraband and counterfeit products, a five percent increase over 2014.

Resources for Rights Holders

Embassy point of contact:
U.S. Embassy Bogota
Economic Section
Carrera 45 #22B-45
Bogota, Colombia
(571) 275-2000
BogotaECONShared@state.gov

Country/Economy resources:

7. Transparency of the Regulatory SystemShare    

The Colombian legal and regulatory systems are generally transparent and consistent with international norms. The commercial code and other laws cover broad areas including banking and credit, bankruptcy/reorganization, business establishment/conduct, commercial contracts, credit, corporate organization, fiduciary obligations, insurance, industrial property, and real property law. The civil code contains provisions relating to contracts, mortgages, liens, notary functions, and registries. There are no identified private sector associations or nongovernmental organizations leading informal regulatory processes. The ministries generally consult with relevant actors, both foreign and national, when drafting regulations, but not always. Proposed laws are typically published as drafts for public comment, though not always, and the complexity of the subject is not necessarily taken into account.

Enforcement mechanisms exist, but historically the judicial system has not taken an active role in adjudicating commercial cases. The Constitution establishes the principle of free competition as a national right for all citizens and provides the judiciary with greater administrative and financial independence from the executive branch. Colombia has completed its transition to an oral accusatory system to make criminal investigations and trials more efficient. The new system separates the investigative functions assigned to the Office of the Attorney General from trial functions. Lack of coordination among government entities as well as insufficient resources complicate timely resolution of cases.

Colombia is a member of UNCTAD’s international network of transparent investment procedures http://www.businessfacilitation.org/ (Colombia’s website http://colombia.eregulations.org/). Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name, and contact details of the entities and people in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Market capitalization has risen from USD14 billion in 2003 to USD153 billion as of December 2014. Sound fiscal and macroeconomic management allowed Colombia to claim the triple crown of seeing its credit ratings increased to ‘Investment Grade’ level by Moody’s, Fitch, and Standard and Poor’s, though the latter just downgraded Colombia’s long-term outlook from stable to negative. Foreign investors are allowed to participate in capital markets by negotiating and acquiring shares, bonds, and other securities listed by the Foreign Investment Statute. These activities must be conducted via a local administrator, which can be a trust company or a stock brokerage firm that has been authorized to do so by the Financial Superintendence. Foreign investment capital funds are not allowed to acquire more than ten percent of the total amount of a Colombian company's outstanding shares. Foreigners can establish a bank account as long as they have a valid visa and government ID.

The market has sufficient liquidity for investors to enter and exit sizeable positions. Following the financial crisis of 1998-99, bailouts for failing banks were partially financed through a controversial tax on financial transactions. The tax was originally set at 0.2 percent but has since been increased to 0.4 percent. The tax on financial transactions is applied to all withdrawals from checking and savings accounts, including accounts 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 tax. The Central Bank respects IMF Article VIII and does not restrict payments and transfers for current international transactions.

Money and Banking System, Hostile Takeovers

In 2005, Colombia consolidated supervision of all aspects of the banking, financial, securities, and insurance sectors under the Financial Superintendence. Colombia has an effective regulatory system that encourages portfolio investment. According to the Financial Superintendent, as of December 2014, the estimated assets of the country’s main banks totaled approximately USD 184.7 billion. Sixty percent of all disbursed credits were destined for commercial credits, 28 percent for consumption, nine percent for housing, and three percent for microcredit. Past-due loans accounted for three percent of the total portfolio.

Colombia’s financial system is well-developed by regional standards. The financial sector as a whole is investing in new risk assessment and portfolio management methodologies. Two private financial groups together own over half of all bank assets: the Sarmiento Group (Grupo Aval) controls about 27 percent and the Business Group of Antioquia (Bancolombia) about 27 percent as of December 2014. Total foreign-owned bank assets account for approximately 28 percent of sector assets.

The principal source of long-term corporate and project finance in Colombia are commercial banks. Loans with a maturity in excess of five years are scarce. Unofficial private lenders play a considerable role in meeting the working capital needs of small and medium-sized companies. Only the largest of Colombia’s companies participate in the local stock or bond markets with the majority meeting their financing needs through the banking system, by reinvesting their profits, and through suppliers’ credit.

9. Competition from State-Owned Enterprises (SOEs)Share    

In principle Colombia’s SOEs do not receive preferential treatment, though in practice some issues arise such as political authorities running SOEs and conflicts of interest. In general, Colombian SOEs are subject to the general legal framework and receive special treatment in very few areas. One of these areas is bankruptcy law; SOEs are largely protected from insolvency due to the necessity of providing essential public services. Colombian SOEs are, in general, subject to private law and structured as commercial companies. However, depending on the sector, SOEs may also be subject to specific sector norms, such as the Utilities Law.

Private enterprises generally are allowed to compete with public enterprises under the same terms and conditions, although at the sub-national level, private liquor companies face licensing restrictions and other administrative barriers that prevent free competition with local SOEs. Private enterprises are allowed to compete with SOEs under the same terms and conditions with respect to access to markets, credit, and other business operations, such as licenses and supplies. State-owned banks are expected to treat SOEs without any preference. Colombian SOEs generally use the financial markets for financing and do not receive additional support from the government except in very rare cases. According to the OECD, the largest SOEs, including Ecopetrol and ISA, are good examples of professional management, competition, and excellent corporate governance. Nevertheless, Ecopetrol has been involved in a corruption probe over the last two years involving executives from a company that allegedly bribed Ecopetrol staff to secure a multi-million dollar oil-service contract.

In March 2014, Santos signed a new law requiring all SOEs to make information regarding their operations publicly available. Colombia protects the rights of minority shareholders and allows any group of shareholders with less than a ten percent stake to request the intervention of the regulator if they believe the company is taking measures detrimental to their interests. A renewed corporate governance code entered into force in January 2015 per OECD recommendations for companies issuing securities in Colombia. The new code is aimed at incorporating new trends in capital markets and elevates standards to international levels, although it preserves the voluntary approach and the principle of “comply or explain.” All companies must submit an annual report on their implementation. The code comprises best practices for shareholders’ meetings, boards of directors, disclosure of financial and non-financial information, and dispute resolution. The renewed set of guidelines includes better protection for minority investors, guidelines on fair treatment of shareholders, alternative methods to resolution of conflicts, and transit methods for shareholders to go from passivism to activism, among others.

According to the International Finance Corporation (IFC), Colombia’s OECD accession process has elevated the importance of corporate governance at all levels. The IFC has started to support a range of corporate governance-related actions, including legal and regulatory reforms and SOE governance. The project is working to establish a Colombian Corporate Governance Institute and a component to assist small and medium enterprises to increase their sustainability and competitiveness by incorporating better corporate governance practices.

OECD Guidelines on Corporate Governance of SOEs

At Colombia’s request, the OECD analyzed Colombia’s corporate governance practices of SOEs against OECD Guidelines and released a report in December 2013 (http://www.oecd-ilibrary.org/governance/colombian-soes-a-review-against-the-oecd-guidelines-on-corporate-governance-of-state-owned-enterprises_5k3v1ts5s4f6-en). The OECD found that Colombia’s legal framework is compatible with the OECD standards of corporate governance. Colombian SOEs fall into two broad categories: Industrial and Commercial State Companies that are statutory corporations wholly owned by the state and whose origin and norms are established by law, and Mixed-Ownership in which the state has a stake and which can take any legal form and are generally governed by the norms applicable to the private sector. The central government owns 70 SOEs and partial SOEs. SOEs exist in the following sectors: defense article production, regional utility companies, postal service, electricity generation and distribution, hospitals, airports, banking, television, education, regional lotteries, alcohol and spirit distillers, and oil and gas. Subnational governments have taken advantage of lax oversight to give preferential treatment to SOEs in their local markets, like for distilled spirits.

Sovereign Wealth Funds

In 2012 Colombia started operating a sovereign wealth fund, called a savings and stabilization fund, using royalties from the extractive industry. The fund can administer up to 30 percent of annual royalties. The fund’s main objective is to promote saving and economic stabilization in the country and is administrated by the Central Bank. According to the Ministry of Finance, Colombia had saved as of January 2016 around USD 3.1 billion including returns. The fund has grown continuously since its establishment with about USD 500 million. The rest of royalties’ resources are administered by other internal funds aimed to boost productivity in Colombia through new technologies and innovation.

10. Responsible Business ConductShare    

Colombia adheres to the corporate social responsibility (CSR) principles outlined in the OECD Guidelines for Multinational Enterprises. It has a long tradition of CSR across many industries and encourages public and private enterprises to follow OECD guidelines. Beneficiaries of CSR programs include students, children, populations vulnerable to Colombia's armed conflict, victims of violence, and the environment. Larger companies in particular structure CSR programs in line with generally accepted international CSR principles. On several occasions, companies in Colombia have been recognized on an international level, including by the State Department, for their CSR commitments.

Overall, Colombia has adequate environmental laws, is proactive at the federal level in enacting environmental protections, and does not waive labor or environmental regulations to attract investors. However, the Colombian government struggles with enforcement, particularly in more remote areas. Geography, lack of infrastructure, and lack of state presence all play a role, as does a general shortage of resources in its national and regional level institutions. The Environmental Chapter of the CTPA requires Colombia to maintain and enforce environmental laws, protect biodiversity, and promote opportunities for public participation. In October 2014, the Minister of Environment and Sustainable Development signed the modification to decree 2820 on environmental licensing. With this change, the Colombian government expects to streamline and optimize the issuance of permits for exploration and exploitation of natural resources in Colombia.

11. Political ViolenceShare    

Security in Colombia has improved significantly over the past 15 years. However, there is still an active domestic insurgency and powerful narco-criminal group operations that threaten commercial activity and investment, especially in rural zones where government control is weaker. The Colombian government estimates the FARC insurgent group has from 6,000 to 7,000 armed members, and the National Liberation Army (ELN) has around 1,500. Both groups attack oil pipelines, mines, roads, and electricity towers to disrupt economic activity and pressure the government. Both groups also extort businesses in their area of operation, sometimes kidnapping personnel and destroying the property of operations that refuse to pay.

Violence, including political violence, has diminished significantly in recent years. Colombian government figures show that the number of terrorist acts decreased by 42 percent from 2014 to 2015. Homicides nationally continued a downward trend, with 12,673 in 2015, compared with 13,343 in 2014. The number of kidnappings in 2015 was 210, a 27 percent decrease from 288 in 2014, and a 93 percent decrease since 1999 when there were 3,204. The extractive sector has been especially hard hit by insurgent attacks. According to the Ministry of Defense, there were 80 attacks on oil pipelines in 2015, a 43 percent decrease compared to 2014. These attacks sometimes temporarily forced oil companies to stop production while pipelines were repaired or to transport oil by more expensive alternate methods.

The Colombian government and FARC have been in peace negotiations in Havana, Cuba since November 2012. They have agreed in principle on four of the five negotiating topics – agriculture and rural development, political participation, drugs, and victims (including transitional justice) – and discussion on the last agenda item, end of conflict, is ongoing.

12. CorruptionShare    

Corruption is a significant challenge in Colombia. According to the WEF Global Competitiveness Index (2015-2016), corruption continues to be one of Colombia’s biggest problems for doing business; it ranked 126 out of 144 countries. According to the NGO Transparency International, Colombian citizens’ perception on corruption in the country has neither improved nor worsened in 2015. Colombia ties for 83 worldwide with countries such as Liberia, China, and Sri Lanka. Despite President Santos’ numerous efforts, such as the 2011 Anti-Corruption Statute, the “Colombia buys efficiently” initiative, and the anti-corruption observatory created in 2014, concrete results have been limited. High profile corruption cases continue to surface frequently. In February 2015, the president of the Constitutional Court was involved in a high profile corruption case and accused of soliciting a USD 200,000 bribe in exchange for overturning a multi-million dollar fine, resulting in his resignation.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Colombia has adopted the OECD Convention on Combating Bribery of Foreign Public Officials and is a member of the OECD Anti-Bribery Committee. It has signed and ratified the UN Anticorruption Convention. Additionally, it has adopted the OAS Convention against Corruption. The CTPA protects the integrity of procurement practices and criminalizes both offering and soliciting bribes to/from public officials. It requires both countries to make all laws, regulations, and procedures regarding any matter under the CTPA publicly available. Both countries must also establish procedures for reviews and appeals by any entities affected by actions, rulings, measures, or procedures under the CTPA.

Resources to Report Corruption

Useful resources and contact information for those concerned about combating corruption in Colombia include the following:

  • The Transparency and Anti-Corruption Observatory is an interactive tool of the Colombian government aimed at promoting transparency and combating corruption available at http://www.anticorrupcion.gov.co/.
  • The Presidential Secretariat of Transparency advises and assists the president to formulate and design public policy about transparency and anti-corruption. This office also coordinates the implementation of anti-corruption policies. http://wsp.presidencia.gov.co/secretaria-transparencia/Paginas/default.aspx/.

Gerson David Motta Chavarro
Administrative staff of the National Secretary of Transparency
Presidential Secretariat of Transparency
Carrera 8 No.7-26 Bogota, Colombia
(57 1) 562-9300 or (57 1) 5870555
gersonmotta@presidencia.gov.co

13. Bilateral Investment AgreementsShare    

Colombia has eleven free trade agreements or agreements of economic cooperation that include investment chapters with: the U.S., European Union, Canada, Chile, Mexico, Cuba, Andean Community of Nations (Bolivia, Ecuador, and Peru), European Free Trade Area (Iceland, Liechtenstein, Norway and Switzerland), Mercosur (Brazil, Argentina, Paraguay, Uruguay, and Venezuela), the Northern Triangle (El Salvador, Honduras, and Guatemala), and the Pacific Alliance (Chile, Mexico, and Peru). Colombia recently signed trade agreements with South Korea, Israel, Panama, and Costa Rica and the treaties are pending final ratification. Colombia is also conducting FTA negotiations with Japan and Turkey. Another five agreements are being explored with Australia, China, the Dominican Republic, India, and Singapore. Additionally, Colombia has stand-alone bilateral investment treaties in force with China, India, Peru, Spain, Switzerland, the United Kingdom, and Japan.

Bilateral Taxation Treaties

Colombia has double taxation treaties with Spain, Chile, Switzerland, Canada, India, Portugal, Mexico, South Korea, France and Czech Republic. Talks have concluded successfully with Belgium. Colombia is currently negotiating double taxation agreements with Germany, the Netherlands, Japan, Panama, and the United States.

14. OPIC and Other Investment Insurance ProgramsShare    

OPIC made its first investment in Colombia in 1985 and has supported 17 projects in Colombia since 2005, with a broad portfolio of loans currently totaling USD 550 million. OPIC’s largest project in Colombia was a USD 140 million loan to a U.S. company to finance the installation and deployment of a fourth generation long-term evolution (“4G LTE”) wireless and fiber-optic broadband network for high-speed data communication. Additional information can be found at www.opic.gov.

15. LaborShare    

The OECD published its report on Colombia’s labor market and social policies in January 2016. The report mentions progress on labor market reforms but cites a large income inequality and structural flaws in labor market policies, despite relatively low unemployment and high labor force participation. In 2015, the average annual unemployment rate according to official government figures was 8.9 percent. This rate is one of the highest in the region, but Colombia has steadily improved its unemployment rate over the past several years. About 65.1 percent of the working-age population actively participates in the labor force. According to DANE, 47.1 percent of the workforce was working in the informal economy at the end of 2015. Colombia has a wide range of skills in its workforce, as well as managerial-level employees who are often bilingual.

Labor rights in Colombia are set forth in its Constitution, the Labor Code, the Procedural Code of Labor and Social Security, sector-specific legislation, and ratified international conventions, which are incorporated into national legislation. Colombia’s Constitution guarantees freedom of association and provides for collective bargaining and the right to strike (with some exceptions). It also addresses forced labor, child labor, trafficking, discrimination, protections for women and children in the workplace, minimum wages, working hours, skills training, and social security. Colombia has ratified all eight of the International Labor Organization’s (ILO’s) fundamental labor conventions and all are in force, including those related to freedom of association, equal remuneration, right to organize and collectively bargain, discrimination, minimum working age, forced labor, and prohibition of the worst forms of child labor. Colombia has also ratified conventions related to hours of work, occupational health and safety, and minimum wage. In 2013, Law 1636 was passed to increase protections and opportunities for Colombia’s unemployed population.

The 1991 Constitution protects the right to constitute labor unions. Pursuant to Colombia’s labor law, any group of 25 or more workers, regardless of whether they are employees of the same company or not, may form a labor union. Employees of companies with fewer than 25 employees may affiliate themselves with other labor unions. About four percent of the country’s labor force is unionized. The largest and most influential unions are composed mostly of public-sector employees, particularly of the majority state-owned oil company and the state-run education sector. Only 6.2 percent of all salaried workers are covered by collective bargaining agreements (CBAs), according to the OECD. There is no framework for sectoral bargaining, and, in contrast to the practice in most OECD countries, a CBA does not extend to all workers of a company if the union that negotiated it represents less than one-third of the company’s workforce.

Strikes, when held in accordance with the law, are recognized as legal instruments to obtain better working conditions, and employers are prohibited from using strike-breakers at any time during the course of a strike. After 60 days of strike action, the parties are subject to compulsory arbitration. Strikes are prohibited in certain “essential public services,” as defined by law, although Colombia has been criticized for having an overly-broad interpretation of “essential.”

Foreign companies operating in Colombia must follow the same hiring rules as national companies, regardless of the origin of the employer and the place of execution of the contract. No labor laws are waived in order to attract or retain investment. In 2010, Law 1429 eliminated the mandatory proportion requirement for foreign and national personnel; 100 percent of the workforce, including the board of directors, can be foreign nationals. Labor permits are not required in Colombia, except for under-aged workers. Foreign employees have the same rights as Colombian employees. Employers may use temporary service agencies to subcontract additional workers for peaks of production. Employers must receive advance permission from the Ministry of Labor before undertaking permanent layoffs. The Ministry of Labor typically does not grant permission to lay off workers who have enhanced legal protections (those with work-related injuries or union leaders, for example). The Ministry of Labor has been cracking down on using temporary or contract workers for jobs that are not temporary in nature.

Reputational risks to investors come with a lack of effective and systematic enforcement of labor law, especially in rural sectors. The ILO notes concern on the decrease in the number of inspections between 2011 and 2014 and does not approve of the ability of labor inspectors to accept logistical assistance from employers or workers to gain access to a worksite, as granted by Law 1610 of 2013. The U.S. and Colombia announced the “Colombian Action Plan Related to Labor Rights” (LAP) in April 2011, which paved the way for approval of the CTPA. The LAP identifies five priority sectors: palm, sugar, ports, mining (including oil), and flowers. These five sectors are to receive increased scrutiny by the government to ensure adherence to labor laws. For additional information on labor law enforcement see Section 7 of Colombia’s Human Rights Report, and the Department of Labor’s Findings on the Worst Forms of Child Labor and Lists of Goods Produced with Child or Forced Labor.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

To attract foreign investment and promote the importation of capital goods, the Colombian government uses a number of drawback and duty deferral programs. One example is free trade zones (FTZ), which the government has used to attract more investment and create more jobs. In 2005, congress passed comprehensive FTZ modernization legislation that opened investment to international companies, allowed one-company/standalone FTZs, and permitted the designation of pre-existing plants as FTZs. This law was updated in 2007 to outline the requirements to be declared a FTZ. Colombia is a leader in FTZs in Latin America. As of March 2016 there were 40 FTZs (between permanent, single company and special types). There are around ten additional FTZ projects currently being explored specifically focused on ports and the oil sector, with investments of around USD 500 million. While DIAN oversees requests to establish FTZs, the Colombian government is not involved in their operation.

In 2002, Colombia accepted the WTO Committee on Subsidies and Countervailing Measures’ decision to phase out all export subsidies in FTZs by 2006. However, FTZs maintain their special customs and foreign exchange regimes, per Law 1004 passed in 2005, which also grants a preferential 15 percent corporate income tax and exemption from customs duties and value-added taxes on imported materials. In January 2013, a tax reform took effect that grandfathered benefits for existing FTZs while requiring FTZs created after 2012 to pay an additional income tax of nine percent until 2015 and eight percent beginning in 2016. In return for these and other incentives, every permanent FTZ must meet specific investment and direct job creation commitments, depending on their total assets, during the first three years of the project. Special FTZ zones are required to invest and generate more or less direct jobs depending on the economic sector.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2014

$3,786

2014

$3,777

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2014

$2,267

2014

$7,085

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2014

$280

2014

$961

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2014

7.4%

2014

25.4%

N/A

*Data from the Central Bank: banrep.gov.co.

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data*

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

16,325

100%

Total Outward

3,899

100%

Switzerland

2,817

17%

Spain

1,093

28%

Panama

2,446

15%

Bermuda

522

13%

United States

2,267

14%

Panama

517

13%

Spain

2,219

14%

United Kingdom

365

9%

United Kingdom

1,091

7%

Netherlands

317

8%

"0" reflects amounts rounded to +/- USD 500,000.

*Data from the Central Bank: banrep.gov.co. Country data not available in the IMF’s Coordinated Direct Investment Survey.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

All Countries

30,183

100%

All Countries

17,981

100%

All Countries

12,202

100%

United States

21,042

70%

United States

14,190

79%

United States

6,852

56%

Luxembourg

2,930

10%

Luxembourg

2,640

15%

Germany

732

6%

Germany

732

2%

Panama

281

2%

International Organizations

626

5%

International Organizations

627

2%

Cayman Islands

263

1%

France

462

4%

United Kingdom

503

2%

United Kingdom

147

1%

United Kingdom

356

3%

 

18. Contact for More InformationShare    

Embassy point of contact:
U.S. Embassy Bogota
Economic Section
Carrera 45 #22B-45
Bogota, Colombia
(571) 275-2000
BogotaECONShared@state.gov