At ESPACIO, we recognize the need to create a clear and comprehensive source of resources for entrepreneurs in Colombia. This report contains information for domestic and international entrepreneurs, financial funding, legal matters, and marketing options.
A Glimpse of Colombia
Colombia is shredding its violence-ridden past and transforming into a leading economic player in Latin America. With improved security and open trade policies, Colombia has drawn in investments from abroad to spur its entrepreneurial ecosystem. Increasing network of investors and entrepreneurs allows start-ups to access resources and acquire assistance. As an emerging market, Colombia continues to enhance its business environment to foster innovations and entrepreneurial activities—the key to further economic growth.
|Capital:BogotaPopulation:45,745,783Literacy Rate:90.4% of total populationGDP: 366 billion USD (2012)GDP Growth: 4% (2012)
Investment: 23.9% of GDP (2012)
Revenues: 107.6 billion USD
Expenditures: 107.1 billion USD
Export: 59.96 billion USD (2012)
Import: 53.77 billion USD (2012)
Inflation Rate (Consumer Prices): 3.2% (2012)
Labor Force: 23.09 million (2012)
By occupation (2012):
Currency: Colombian peso (COP)
Exchange Rate (August 2013):
1 USD = 1876.59 COP
1 Euro = 2512.75 COP
Along with its impressive economic performance, Colombia has other aspects to be proud of:
1. World’s second most bio-diverse country
2. World’s largest producer of emeralds (60%)
3. World’s third largest producer of coffee; second largest in Latin America
4. Second largest Spanish-speaking country
5. The only country in Latin America that has access to both the Pacific Ocean and the Caribbean Sea
6. Medellin, Colombia’s second largest metropolitan, named “Most Innovative City of the Year” by Wall Street Journal in 2012
Improved Investment Environment
“The new BRIC countries are Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa (CIVETS). These are countries with large populations and dynamic and diverse economies, political stability and each with a bright future. Any company with global ambitions has to act immediately in these markets.” -Michael Geoghegan, former President of HSBC
“Colombia has been highlighted in recent years as a safe country for foreign investment with great potential both because of the size of its population and the amount of resources it has.” -Irene Mia, Regional Director for Latin America & The Caribbean of The Economist Intelligence Unit (EIU)
Since the early 1990’s, Colombia has underwent economic liberalization reforms, which aim at enticing foreign direct investment (FDI). The reforms call for “national treatment of foreign investors, lifted controls on remittance of profits and capital, and [access to] foreign investment in most sectors” (US Department of State). Telecommunications, accounting/auditing, energy, and tourism are among the sectors that greatly benefited from the liberalization.
The Colombian government continues to attract FDI into these sectors by providing greater investor protection. Currently, Colombia is ranked 6th in the world for Investor Protection, compared to Chile at 32nd and Brazil at 82nd. Major risk-rating agencies such as Standard & Poor’s and Moody’s have provided positive feedbacks on Colombia’s investment grading, which ranges from Baa3 to BBB in 2013. These measures are based on the country’s resistance against external shocks, fulfillment of financial obligations, macroeconomic prospects, and advancement in national security.
The country’s global outlook and endeavors are reflected in the expansion of its International Investment Agreements, which included the bilateral investment treaties (BIT) and the free trade agreements (FTA). These International Investment Agreements create investment incentives by ensuring investors of Colombia’s commitment and openness to international trade.
Entrepreneurship on the Rise
According to the World Bank’s Doing Business in Colombia, Colombia has seen a steady raise in entrepreneurial activities. With support from the government and a large community of entrepreneurs, new ventures are blossoming in cities like Medellin and Bogota. A large pool of FDI also helps generate innovations and drives confidence in entrepreneurs looking to start their business in Colombia.
From the Global Entrepreneurship Monitor’s report on Colombia in 2012, the country’s rate of entrepreneurship has experienced the highest growth in three years.
Colombia provides one of the most business friendly environments in Latin America. It is ranked alongside with Chile and Peru for the best environment for women entrepreneurs. Due to “well-developed SME training programs and broad access to university-level education”, women in Colombia receive greater support and reception for their entrepreneurial endeavors (Multilateral Investment Fund). This further reduces the barriers that entrepreneurs face in Colombia.
The national government also plays a crucial role in shaping the entrepreneurial ecosystem. Organizations such as INNpulsa and ProExports provide free access to publications and other resources to inform and encourage entrepreneurship. Grants are available to improve business competitiveness and assist in market entry by financing equipment and machinery, purchase of raw and intermediate materials, and other related expenses. Similar to FDI, these government initiatives and funding attract entrepreneurs to Colombia.
|Investment Environment||Entrepreneurial Environment|