International Confidence in Colombia On The Rise
The country is an increasingly attractive destination for long-term investments and tourism.
The peace process, a stable legal system and growth have increasingly made the country an attractive place for investments and tourism. During the second quarter of 2013, the Colombian economy grew 4.2% compared to the same quarter in 2012, according to the National Bureau of Statistics. The gross domestic product (GDP) was up 2.2% over the previous quarter.
The growth once again inspired confidence in investors.
The Business Confidence Index (ICCO) improved for the third consecutive month in November, reaching 18.5%, according to the most recent Survey of Business Opinion, conducted by the Center for Economic and Social Research (Fedesarrollo).
While the current ICCO level is the second highest in 2013, it’s still below the level of 22.7% seen in November 2012.
“Business owners have high expectations for the next six months, which improves the current economic situation for businesses,” said Colombian Minister of Commerce, Industry and Tourism Santiago Rojas Arroyo, referring to the Fedesarrollo survey.
The Central Bank set a 3% inflation target for 2014, with an allowable range of 2% to 4%.
“This monetary policy is based on the sustainable growth of output and employment,” Rojas said. “Low inflation and reduced unemployment [8.5% in November 2013] have contributed to an increase in the consumption capacity of households.”
Investment in the country has recovered during the past decade. There has been a large-scale increase in the number of domestic and international companies making long-term investments in the Andean nation.
Foreign direct investment (FDI) totaled US$12.677 billion as of September 2013, according to the Central Bank. Net foreign investment (gross investment minus divestments) grew 10.8% in the first nine months of 2013, from US$13.635 billion to US$15.110 billion.
The Colombian Constitution states that foreign investors are to be granted the same rights as Colombian nationals, making it possible for foreign investment in all sectors of the economy.
Under the principle of equal treatment, foreign investors have access to benefits and incentives established by the government, such as the possibility of unlimited investment and the promotion of free trade, as shown by the 13 commercial investment agreements currently in force and the three agreement negotiations currently under way.
“The entry of international companies into the market with long-term investments is a phenomenon that has been occurring since the end of the last decade,” Rojas said. “If the conditions hold, we would expect foreign direct investment into the country to continue to increase in 2014.”
Marc Hofstetter, an expert in monetary policy and productivity, said the way countries see Colombia has changed in recent years.
“The peace process is improving international confidence in Colombia,” Hofstetter added. “Another factor that might be influencing the arrival of investors in Colombia is the overall interest of the business community in Latin America.”
Improvements in the country’s international relations also have allowed for a strengthening of the different areas of exchange, which has increased confidence in Colombia, as evidenced by many trade agreements, Rojas said.
“Free trade agreements have provided stability in terms of the rules of the game for commercial relationships, establishing a transparent legal framework for investment,” Rojas said. “This helps increase confidence among business owners in their transactions with suppliers and customers.”
The confidence in Colombia also can be seen on a small scale, with the growing numbers of foreign university students.
“The phenomenal growth in the number of foreign students is not only related to the scholarships provided by the Colombian government (124 in 2013), but also … the decrease in the intensity of the armed conflict during the past eight years,” said Luis Arévalo, director of International Relations at the Colombian Institute for Educational Credit and Study Abroad (ICETEX).
The country has become an attractive destination for foreigners interested in education, science and research, according to Arévalo.
“We’re working with the German government to build a research fund to support research into sustainable biofuels,”Arévalo said. “Projects like these show the confidence that Colombia has inspired in others.”
Additionally, from January to September 2013, Colombia received 1,862,428 nonresident visitors by land, sea and air, up 8.8% from the 1,711,690 visitors it received during the same period in 2012, according to the Tourist Information Center of the Ministry of Commerce, Industry and Tourism. During the same period in 2007, 88,877 foreigners visited the country.
Article by Infosurhoy
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