Why Colombia?

Are you considering expanding to Colombia, or are you already established there?

Contact the Erasmus Consultancy Project to find out exactly what we can offer you!

Why Colombia?

Colombia has been a vastly growing economy and has recently booked great improvements regarding peace with the FARC. Its biggest cities are nowadays considered just as safe as Western European cities. On top of that it is also listed as one of the “new BRIC” countries called the CIVETS.

Colombia and the Netherlands have well-established trade relationships. Also, the Netherlands is one of the largest European investors in the country and there are already several Dutch organizations established in Colombia that facilitate trade between these two countries. The country’s richness in natural resources combined with a population of 49 million and an increasing middle class enhance attractiveness for expansion to Colombia.

Unfortunately, Colombia is sometimes still suffering from an outdated negative reputation that is fueled by stories from years ago. Lately, however, Colombia has been in the news on a regular basis regarding peace with the FARC, which has positive prospects. When one takes a closer look at Colombia’s current state, he or she will find out that Colombia’s safety in general has improved significantly over the last years. Therefore, in order to be a step ahead of your competitors, we advice you to start thinking about expansion to Colombia, if you have not already done so. We are here to find out what opportunities lie ahead for your company.

The video below shows what Colombia has to offer.

Credits: Diego Gallon and About Colombia

Click here to see which sectors we have identified as promising.

Economy

According to the World Bank, Colombia is the third largest economy in Latin America. Housing a population of 48 million it is also the second largest in terms of population. Reporting a GDP of 292 billion USD in 2015 with an expected growth in 2016 of 2.5%. Moreover, this is expected to increase towards an annual GDP growth of 3.5% by 2018. As can be seen from the graph, this is far higher than the Latin American of global average.

Colombia is considered a CIVET country, which is a group of emerging economies that is expected to experience significant growth. Several factors are fuelling this growth potential. Firstly, Colombia’s exceptional biodiversity, as it is one of the world’s megadiverse countries housing almost 10% of the world’s biodiversity in less than 1% of the global surface. Moreover, its strategic location is a factor contributing to growth. As Colombia is situated on the coast of the Pacific Ocean as well as the Caribbean Sea, its port have grown to become fierce competitors of the ports of Panama. Moreover this facilitates import and export and makes Colombia the gateway to South America.

The government fulfils a crucial role in Colombia’s development. By continuously investing in infrastructure, providing attractive tax incentives and by crafting a peace agreement with the Marxist guerrilla group FARC. Moreover, several Free Trade Agreements are in place with amongst others The United States of America, the Pacific Alliance and the European Union.

Doing business in Colombia

Currently, the World Bank ranked Colombia 53rd globally and 3rd of Latin America in their ease of doing business ranking. To put this into perspective, the Netherlands is ranked 28th, Italy is ranked 50th and Chile is ranked 57th.

Like in most Latin American countries, Spanish is the official language in Colombia. There are only a few small differences between the European Spanish and the Spanish being spoken in Colombia. Although an increasing number of Colombians are comfortable with speaking English, it is highly appreciated when people make an effort to speak the language.

As Colombia is rather large, it is not surprising that it is very diverse with regard to culture. Business in the two largest cities Bogotá and Medellin is more formal and similar to Europe. In more remote or coastal areas the way of conducting business is less formal. However keep in mind that in general the way of conducting business in Colombia is less formal and a higher importance is placed on personal relationships.

As we will conduct field research in Colombia, we can use these characteristics to our advantage. We will have face to face meetings with prospective partners, suppliers or retailers and can set up the foundation of your business network. A more detailed description of what we can offer you can be found here.

Investment climate

The investment climate in Colombia is favourable. As mentioned before, the country is more stable, has an abundance of resources and a strategic location. The Colombian government provides attractive incentives to stimulate foreign investors. These initiatives include tax exemptions, VAT exemptions and treating foreign investors similar to domestic investors. Moreover, the Colombian government has a strong focus on sustainability, aiming at decreasing its carbon emissions.

As the Colombian economy is developing, the middle class is growing as well. This middle class increased by 16% in the past 15 years. As Colombians have more to spend, consumer preferences will change and demand will increase. This means that there exists need for different products and services. Moreover, as the country is developing itself, a need exists for knowledge. As the Dutch economy is highly developed, Dutch firms produce products and services suitable for a more developed market as well as have the know-how needed in order to correctly provide these.