Insight
Colombia - an attractive investment destination
September 2024
Colombia is now one of the most attractive destinations in Latin America for foreign direct investment (FDI). In 2022 alone, Colombia attracted foreign investment from 24 countries leading to 160 projects across diverse areas such as business services, finance, cosmetics, and food. As testimony to its success in international trade, Colombia can point to seventeen trade agreements that include the United States and European Union, providing access to markets containing 1.5 billion consumers.
According to the World Economic Forum, Colombia ranks fourth in the list of the most competitive Latin American countries. José Manuel Restrepo, Minister for Commerce, Industry and Tourism, has stated that Colombia is on track to achieve its goal of being among the top three countries by 2030.
Sustainable economic development
Colombia is committed to meeting the challenges that face global business, especially that of sustainable development, pledging to reduce greenhouse gas emissions by 51% by 2030. This marks Colombia as having one of the world’s most ambitious environmental targets.
Colombia has also distinguished itself as the first country to incorporate sustainable development goals through its national development plan, and the first country in the western hemisphere to adopt a national green taxonomy. This enables investors to identify how economic activities contribute to environmental objectives.
Regional and global connectivity
Colombia acts as a key point of connectivity through the Caribbean and Pacific routes, featuring ten port zones and direct flights that connect with major global distribution centres. This positioning also helps to provide Colombia with a platform to meet the demands of its neighbouring territories.
Bogotá – capital city and investment destination
Bogotá is the preferred destination for most direct investment in Colombia. A report produced by Invest in Bogotá, the city’s investment promotion office, showed that Bogotá hosted 64.7% of all new Colombian FDI initiatives, amounting to more than $1.5 billion and creating almost 21,000 jobs. The United States accounted for almost a third of this investment with the rest spread around Europe, Latin America, and Asia.
The report showed that the IT services sector attracted the most investment, representing 29.4% of Bogotá’s FDI projects in 2022, followed by the corporate services sector with 16.8%, and communications with 9.1%. This highlights Bogotá’s status as a successful service economy.
A survey of foreign companies published by Invest in Bogotá showed that prospects for 2023 were also promising with 75% saying they planned to invest in Bogotá in 2023.
Antioquia – regional investment destination
The Antioquia region stands out as a major opportunity for FDI initiatives in Colombia according to Medellín’s Agency for Cooperation and Investment (ACI). There are several contributing factors:
• High economic performance – in the first quarter of 2023, growth in the region of 3.3% exceeded the national growth figure of 2.9%.
• Excellent business environment – the Antioquia region has been the second most competitive region for seven consecutive years. The availability of human resources, efficient markets, and innovative ecosystems have all contributed to this success.
• Connectivity – Antioquia’s waterways and air routes make it a strategic connection point for Central, North, and South America.
• Resource pool – 61% of the population of Antioquia are of working-age. 33% are young people, making it the second highest region for graduate population.
• Infrastructure and costs – the city of Medellín offers a variety of high-quality offices and warehouses at cost-effective rents. Also, Antioquia offers extensive and stable communications coverage.
These factors were enough for Medellín to attract FDI of $148 million in 2022 leading to 3,500 new
jobs.
Colombian coastal investment
The success of the Colombian Caribbean coast as a maritime transportation hub has made cities like Cartagena, Barranquilla, and Santa Marta key recipients of foreign investment. The national government has outlined an investment policy that aims to enhance commercial integration with Latin American and Caribbean countries as well as an additional focus on establishing new trading relationships with Africa and beyond, including India.
A further goal is to create a solidarity ecosystem for small and informal businesses that provides access to working capital and investment. This aims to build a culture of solidarity guarantees and timely payments, in the process integrating many activities into the formal economic sector.
Add to this a reducing dependence on oil and coal and it becomes possible to build regional macroeconomic stability. This transition will also help the productive development of agribusiness as well as enhancing Colombia’s position as one of the main tourist hubs in Latin America, boosting growth in the hospitality industry. This in turn attracts further investment.
Colombia needs its own entrepreneurs
Despite being a country where the shadow of violence has sometimes captured the narrative, Colombia is a country that is definitely on a development path. However, for this success to continue, Colombia’s citizens need to learn how to respect each other’s differences, working together for the future of all generations. The Colombian state and entrepreneurs can work together successfully in the pursuit of productivity and economic growth.
About the authors
Luis Carlos Robayo
Higuera
Bogotá, Colombia
Luis is the Managing Partner of Russell Bedford RBG and has over 30 years’ experience in public accounting; specialising in taxes, consulting, auditing, and tax planning.
He has taught at undergraduate and postgraduate level across various universities in Colombia, on topics such as income tax, withholding at source, tax planning and audit. Adept in the directing of audit projects and the implementation of financial information systems, Luis has been a statutory auditor and tax consultant to many companies across the country.
Didier Sánchez Reinoso
Cartagena, Colombia
Didier is the founding partner and CEO of Russell Bedford DSA.
He is a public accounting professional with an emphasis on auditing and specialises in tax auditing and comptrollership. Didier has over 35 years of experience across different sectors, including: commercial and corporations, education and health, foundations and NGOs, international cooperation, and many more. He has also been a consultant and advisor to more than 500 organisations on IFRS implementation and internal and external audits.