With a free trade agreement between Canada and Colombia now in place, there are more reasons than ever to consider this fast growing country with the world’s third-largest Spanish-speaking population.
Although it has had a troubled past Colombia is very different from its fellow Andean nations of Venezuela, Ecuador and Bolivia with their populist and sometimes erratic governments. It is closer to another Andean nation, Peru, which is forging ahead with pro-business, pro-development policies and is leaving the recent era of disorder behind it.
Don’t expect that the cost of doing business in Colombia will be a big advantage even if it is a developing nation. The cost of fuel is only slightly lower than in Canada and office rents are only 20% lower there. Monthly housing costs are very close to those in Canada and industrial space is almost on par. A recent article in The Economist magazine noted that the costs of Colombia’s deficient infrastructure – which came 79th of 139 countries’ networks ranked by the World Economic Forum – are massive. Moving goods from inland cities to a port can sometimes be more expensive than shipping them from the port to a market halfway around the world.
As for taxes, the nation has slashed its business and personal tax rates and steps have been taken to simplify the tax code but recent governments have failed to restrain spending and differential rates and loopholes continue to complicate paying taxes. You can get more information on taxation from the World Bank Group’s Doing Business site.
Export Development Canada publishes a useful guide to Colombia and other Andean nations. It outlines industrial sectors where there are opportunities for Canadian businesses, including mining, oil and gas, power generation, construction, environmental equipment and services, and government sales.
Colombia maintains 40 free-trade zones which attract overseas investors with 15% tax rates and a 40% tax deduction for fixed assets as well as exemption from customs duties and value-added taxes on imported materials. In addition there are investment incentives for hotel and ecotourism services; late-yield crops; medical and software products; Aeolian, biomass and agricultural energy generation; and publishing. Get more information from the Colombian government.
Importers should know whether their products need to conform to technical standards laid down by the Colombian Technical Standards Institute. Obtain a “certificate of conformity” from an accredited testing laboratory before selling goods in Colombia.
For more detailed information on doing business in Colombia, a comprehensive and up-to-date guidebook published by Deloitte Touche Tohmatsu can be downloaded here.