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Colombia: Market Profile

Picture: Colombia factsheet
Picture: Colombia factsheet

1. Overview

Colombia experienced an accelerated period of growth between 2002 and 2013, mainly due to improvements in domestic security, rising commodity prices and favourable market-friendly policies. Foreign direct investment (FDI) was also further boosted as the Andean Trade Promotion and Drug Eradication Act enhanced Colombia's investment climate. Although the United States and Venezuela have been Colombia's largest trading partners, Mainland China replaced Venezuela as Colombia's number two trading partner since 2009. The government is also pursuing free trade agreements (FTAs) with European and Asian partners and Colombia continues to maintain a solid macroeconomic framework. Key components of Colombia's macroeconomic framework include the adoption of a fully-fledged, inflation-targeting regime, a flexible exchange rate, a fiscal rule (2011) for the central government and a medium-term fiscal framework. The solid macroeconomic framework also helps build buffers and strengthen resilience to external shocks. Colombia has taken a leading role in adopting an open borders policy and implementing good practices in the provision of services to migrants and support to host communities, from education to health to employment services and humanitarian aid. Growth is expected to strengthen at a moderate pace over the 2019-2021 period, as private consumption growth continues to accelerate and investment spending is boosted by lower effective corporate taxes. Accommodative monetary policy and improved confidence will also support growth. A larger number of financial closings for the 4G projects and a pickup in the execution of existing projects augurs well for investment over the 2019-2020 period.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

June 2016
The government and the Revolutionary Armed Forces of Colombia (RAFC) signed a definitive ceasefire and disarmament agreement, a precursor to a comprehensive peace deal.

September 2016
The government and RAFC signed a historic peace accord that formally ended 52 years of armed conflict.

June 2017
RAFC rebels formally ended their existence as an armed group, after a campaign lasting half a century.

October 2017
A temporary ceasefire between the government and the rebel National Liberation Army (ELN) came into effect after more than 50 years of conflict.

May 2018
Peace talks resumed between the government and the ELN rebel group.

June 2018
Iván Duque won the presidential election.

August 2018
President Iván Duque began his presidential term on August 7, 2018 and it will end on August 7, 2022.

September 2019
In early September 2019, it was announced by the Colombian government that 53 projects had been presented for consideration in the country's second long-term renewable power auction to be held on October 22, 2019. The proposals were provided by 27 different firms including a number of large-scale international renewables developers such as Acciona, Enel, Trina, Canadian Solar and EDF.

October 2019
On October 4, bids were received for the USD4 billion Bogota Metro Line 1 project. Bids were received from consortium Metro de Bogotá (made up of FCC Concesion de Infraestructura, Carso Infraestructura y Construcción and Promotora de Desarrollo de América Latina) and consortium Transmimetro (made up of China Harbour Engineering Company and Xi'An Metro). Following the receipt of bids, municipal company Metro de Bogotá plans to sign the contract in December 2019. Under the terms of the tender, the winning consortium will be responsible for the construction of the 23.9km elevated metro line, the provision of rolling stock and equipment for the project as well as the operation of the metro line for a period of 20 years.

Sources: BBC Country Profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Colombia real GDP and inflation
Graph: Colombia real GDP and inflation
Graph: Colombia GDP by sector (2018)
Graph: Colombia GDP by sector (2018)
Graph: Colombia unemployment rate
Graph: Colombia unemployment rate
Graph: Colombia current account balance
Graph: Colombia current account balance

f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: November 11, 2019

4. External Trade

4.1 Merchandise Trade

Graph: Colombia merchandise trade
Graph: Colombia merchandise trade

Source: WTO
Date last reviewed: November 11, 2019

Graph: Colombia major export commodities (2018)
Graph: Colombia major export commodities (2018)
Graph: Colombia major export markets (2018)
Graph: Colombia major export markets (2018)
Graph: Colombia major import commodities (2018)
Graph: Colombia major import commodities (2018)
Graph: Colombia major import markets (2018)
Graph: Colombia major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: November 11, 2019

4.2 Trade in Services

Graph: Colombia trade in services
Graph: Colombia trade in services

e = estimate
Source: WTO
Date last reviewed: November 11, 2019

5. Trade Policies

  • Colombia has been a member of the World Trade Organization (WTO) since April 30, 1995 and a member of the General Agreement on Tariffs and Trade since October 3, 1981. Every Colombian importer must be registered with the Ministry of Commerce, Industry and Trade.

  • Colombia has a broad range of FTAs in place, which helps to facilitate international trade and reduces the cost of importing and exporting products. One of the most important FTAs is with the United States, Colombia's biggest trading partner for both imports and exports. The FTA was agreed to in 2006 and implemented in 2012, thereby reducing tariffs on a range of key products (such as metals, machinery and auto parts) to zero. Colombia also has FTAs with the European Union (EU), the European Free Trade Association, Canada, the Northern Triangle (El Salvador, Guatemala and Honduras), Mexico, Costa Rica, South Korea and Chile. This gives Colombia access to a wider range of import and export markets. Regionally, Colombia is also a member of the Pacific Alliance trade bloc, along with Chile, Mexico and Peru. Colombia signed an FTA with South Korea in February 2013, with Costa Rica in May 2013, with Panama in June 2013 and with Israel in September 2013. These FTAs have not entered into force yet. Colombia is currently negotiating trade agreements with Turkey and Japan.

  • Colombia's duties have been consolidated into three tariff levels: 0% to 5% on capital goods, industrial goods and raw materials not produced in Colombia; 10% on manufactured goods, with some exceptions, and 15% to 20% on consumer and 'sensitive' goods.

  • Most agricultural product import licences issued by the Ministry of Commerce are issued automatically and are free. However, there are a number of agricultural products that need pre-approval before the Ministry of Commerce will issue an import permit. These pre-approvals are regulated by the Ministry of Agriculture and Rural Development and the Ministry of Health and Social Protection through the issuance of a sanitary or phytosanitary certificate for imports.

  • As a general rule, the importation processes before the Colombian Internal Revenue and Customs Service (DIAN) can be carried out only by users registered in the Customs Information System. According to the Harmonized System of Designation and Coding of Goods approved by the WTO, imported goods are classified into subentries consisting of six digits. Two digits are also added, which are for exclusive use of the Andean Community (CAN) and two final digits, which correspond to the digits for use in Colombia. The customs subentry or harmonized tariff schedule (HTS) code, which is the ten-digit result, is exposed in the Colombian Customs Tariff, which is governed by Decree 2153 of 2016 and its amendments, which also reflects the applicable tariff of each duty. Value Added Tax (VAT) , which is also part of the customs duties, is regulated in the Colombian Tax Code. The general VAT rate for the importation of goods is 19%, and the customs duties range between 0% and 20%. However, in some cases, they may be higher, depending on the HTS code.

  • The Colombian government is, however, continuing to work on improving its trade liberalisation, and a further reduction of tariffs and the easing of non-tariff barriers could provide a boost to both imports and exports.

  • In June 2018, the Colombian government announced the temporary suspension of import duties on certain agricultural supplies, such as fertilisers and pesticides.

  • Colombia imposes strict rules and controls on the importation of machinery and parts for use in the mining industry.

  • Numerous registration obligations and technical requirements on imported machinery are imposed, making it more costly for businesses in the mining industry.

  • Colombia has relatively inefficient import and export lead times, as well as a burdensome trade bureaucracy, which lowers its competitiveness as a location for trade in Central and South America.

  • In April 2018, Colombia pledged an anti-dumping investigation on imports of carbon-welded steel tubes from Mainland China, with a provisional duty imposed in July 2018.

  • In November 2018, Colombia imposed a definitive anti-dumping duty on imports of certain steel cables from Mainland China.

  • Colombia has imposed the most anti-dumping duties against Mainland China and the Asian giant has the highest number of harmful measures against it imposed by Colombia, with a total of 60.

  • Colombia imposes an export tax on hydrocarbon and mining products, where exporters have to transfer the equivalent of 1% of gross revenue exports to the government.

Sources: WTO – Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Multinational Trade Agreements

Active

  1. Pacific Alliance (FTA and economic integration agreement): The Pacific Alliance (PA) trade bloc, consisting of Chile, Colombia, Mexico and Peru, is an important trade agreement for Colombia and further assists with promoting regional growth. The PA focuses on boosting external trade with strategic partners, including those in Asia, as well as adopting a business-friendly agenda aimed at incentivising investment into the region to enable companies to better access Latin American markets and create intra-regional supply chains. In February 2014, PA members reached an agreement to eliminate tariffs on 92% of goods traded within the bloc by 2015, while the remaining 8% would be dropped progressively and steadily in the following years. The agreement facilitates regional trade and is especially beneficial for trade with Mexico, one of Colombia's top import and export partners. PA members represent nearly 36% of Latin American GDP and export over USD1 trillion worth of goods annually.

  2. Colombia-United States: The bilateral FTA and economic integration agreement between the United States and Colombia covers trade in both goods and services and entered into force in May 2012. About 80% of United States exports of consumer and industrial products to Colombia became duty free immediately on May 15, 2012 when the FTA entered into force. For remaining products the tariffs have been phased out over 10 years. This has substantially increased bilateral trade as United States exports to Colombia increased by over 30% in the three years after the FTA entered into force. The United States is Colombia's biggest trading partner for imports and exports. The agreement reduces tariffs for key products such as metals, machinery and auto parts.

  3. CAN: This is a free trade area with the objective of creating a customs union comprising the South American countries of Bolivia, Colombia, Ecuador and Peru. In recent years, with the new cooperation agreement with Mercosur, the CAN gained four new associate members: Argentina, Brazil, Paraguay and Uruguay. These four Mercosur members were granted associate membership and this reciprocates the actions of Mercosur which granted associate membership to all the CAN members by virtue of the economic complementarity agreements signed between the CAN and individual Mercosur members.

  4. EU-Colombia (Andean Community): The EU has a comprehensive trade agreement with Colombia and Peru, which has been provisionally applied. The agreement has been in place since March 2013 with Peru and since August 2013 with Colombia. On January 1, 2017, Ecuador joined the trade agreement. The agreement gradually opens up markets on both sides and increases the stability and predictability of the trade and investment environment. The EU is the third-largest trade partner and a major investor in the Andean countries. In 2017, total trade of the EU with the Andean countries was worth around EUR25.7 billion. The Andean countries export agricultural products (47%) and fuels and mining products (38.1%) to the EU. The EU exports manufactured goods, notably machinery and transport equipment (41.8%) and chemical products (22.1%), to the Andean countries.

Sources: WTO Regional Trade Agreements Database, Fitch Solutions

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Colombia FDI stock
Graph: Colombia FDI stock
Graph: Colombia FDI flow
Graph: Colombia FDI flow

Source: UNCTAD
Date last reviewed: November 11, 2019

7.2 Foreign Direct Investment Policy

  1. Colombia is open to FDI and the process of market liberalisation in recent years has helped to attract investors to a wide range of sectors in the country. There are few restrictions on foreign ownership and extensive privatisation of key industries and a reduction in violence in the country has helped to make Colombia one of the largest foreign investment markets in Central and South America. The opening up of Colombia's hydrocarbons market, for example, has driven growth in this sector and private sector companies are now able to compete alongside state-owned Ecopetrol for exploration and production rights.

  2. Colombia experienced an accelerated period of growth between 2002 and 2013, mainly due to improvements in domestic security, rising commodity prices and favourable economic market policies. FDI reached a record USD16.8 billion in 2013, as the Andean Trade Promotion and Drug Eradication Act enhanced Colombia's investment climate. The oil and mining sectors traditionally receive the bulk of foreign investment, accounting for almost a third of inward FDI.

  3. Colombia has bilateral investment treaties (BITs) with Switzerland, Peru and Spain. Colombia has included investment protection chapters in FTAs with Chile, Mexico, Canada, European Free Trade Association countries, El Salvador, Honduras, Guatemala and the United States. Additional BITs have been negotiated with Mainland China, India and the United Kingdom.

  4. Investors in Colombia benefit from a lack of foreign ownership limits. With the exception of industries related to national security and hazardous waste disposal, foreign investment is allowed in all sectors of the economy.

  5. Foreign investment in the financial, hydrocarbon and mining sectors is subject to special regimes, such as investment registration and concession agreements with the Colombian government, but is not restricted in the amount of foreign capital. Only Colombian nationals or legally constituted entities may provide radio or subscription-based television services.

  6. Barriers to entry in the telecommunications sector include high licence fees, commercial presence requirements and economic needs tests. Colombia allows 100% foreign ownership of telecommunication providers, but it prohibits 'callback' services.

  7. Foreign businesses in travel and tourism agency services, money order operations and customs brokerage must have a legal local representative and/or a commercial presence in Colombia.

  8. Colombia operates under a reciprocity system (meaning that Colombian investors must be allowed to operate in the corresponding sector in the country of investment origin). Foreign investors can own up to 100% of a company in Colombia, though there are some exceptions, such as in the television broadcasting industry. Registration and authorisation by various government bodies may be required for investment in certain industries, including the banking sector. Authorisation from the Financial Superintendence is also necessary for portfolio investments, which must be channelled through the stock exchange.

  9. There are some regulations in place regarding foreign exchange, which must be registered with the central bank in order for foreign investors to withdraw profits from the country.

  10. There are no restrictions on foreign ownership of property in Colombia and foreigners have the same ownership rights as Colombians.

  11. Colombia currently lags behind some of its regional peers in terms of the sophistication of industrial clusters; however, ongoing cluster development is benefitting the country by introducing more extensive economies of scale and by concentrating and pooling best business practices. There are around 80 clusters in Colombia, ranging from sectors such as agriculture and agroindustry to energy and ICT. Jewellery, leather, dairy, furniture and construction are other sectors developing clusters. One key area of growth is tourism, which the government has identified as a key potential driver of economic diversification.

  12. The acceptable price for sales of goods and rendering of services cannot be less than 15% (down from 25% in the case of goods, and non-existent before for services) of fair market value on the date of the transaction. When it comes to shares in unlisted resident companies, the sale price is presumed to be the book value plus 30% (up from 15%). This rule does not apply to transactions subject to transfer pricing. For the sale of real estate property, the appraisal constitutes the minimum sale price, with the possibility of the sale price to be determined according to price lists, offers, or other methods. It is now necessary to include a sworn statement of the sale price in the public deed at the time of the sale.

  13. National companies (ie, incorporated in Colombia under Colombian law) are taxed on worldwide income. Foreign non-resident entities are taxed on their Colombian-source income only. The current general corporate income tax (CIT) rate is 33% for 2019, and it will decrease up to 30% in 2022 in a progressive way (32% for 2020 and 31% for 2021). This rate is applied on taxable income. Qualifying businesses located in free trade zones (FTZs) enjoy a reduced rate of 20% (while subject to capital gains tax at 10%, where applicable).

  14. Investors stand to benefit from the range of FTZs in Colombia. Colombia is highly competitive due to the introduction of comprehensive legislation in 2005, under which FTZs were opened up to foreign investment. In Colombia, FTZs can be as small as one company, including pre-existing plants, under single enterprise FTZs, or can be permanent FTZs covering a minimum of 20 hectares. Following this legislation, the number of FTZs in Colombia increased to more than 100. These account for around USD10 billion in investments. Within an FTZ, companies benefit from a lower rate of corporate profit tax (20% compared to the standard 33%). There are, however, investment and job creation requirements for setting up FTZs.

  15. Special economic zones for exports (ZEEEs) are areas which have special legal conditions in order to encourage investment and strengthen national export processes through incentives that facilitate the export of goods and services produced in national territory.

Sources: ProColombia, Fitch Solutions

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
FTZs: 106 FTZs, of which 67 are special permanent single-company zones- No customs taxes are triggered when raw materials are introduced to an FTZ from abroad.

- Exports made from FTZs to foreign countries can benefit from international trade agreements signed by Colombia.

- Partial processing outside the FTZ for up to nine months is permitted, but processing may not exceed 40% of the cost of the total production of goods or services.

- Industrial users benefit from a special CIT rate. The industrial goods users and industrial service users pay CIT at a reduced rate of 20% on income earned from their operations within the FTZ and no surcharge is applied.

- Capital gains are taxed at 10%, which is the standard capital gains tax rate.

- For commercial users the general CIT rate of 33% will apply and income tax surcharge will apply.
ZEEEs: ZEEEs are geographical areas in the cities of Cúcuta, Buenaventura, Valledupar, Ipiales and Tumaco- Special regulations established for industrial users of goods and services of FTZs apply for customs matters. This applies to exemptions from duties and VAT when equipment or raw materials from abroad are used.

- Users are allowed to generate working hours without night, dominical or holiday surcharges and can deduct 50% of their payroll taxes. Users can also use labour contracts that apply the integral salary regime for workers with income of three minimum wages.

- Withholding tax or income or remittance taxes do not apply to payments, account deposits and transfers abroad of interest and technical services by commercial companies as long as such payments are directly and exclusively linked to industrial activities that are needed for the execution of projects.

- Infrastructure projects are exempt from income tax and supplementary over the revenue achieved in the development of activities that are authorised within the respective zone (eg, urban infrastructure, specialised human resource training, transportation system facilities, public utilities and road systems).
Special CIT rates- A special CIT rate of 9% applies in the following cases: from 2019-2029 for hotels in cities with less than 200,000 inhabitants for a term of 20 years. And from 2019-2023 for hotels in cities with more than 200,000 inhabitants for a term of 10 years.

- This rate also applies to the construction of new theme parks, ecotourism and agro-tourism parks and boat docks.
Preferential regime for creative industries (orange economy)Orange economy start-ups registered and operating before the end of 2021 qualify for a seven-year income tax exemption (this is only available for select business purposes related to technology and cultural industries). This exemption is applicable when a minimum number of jobs are created (at least three, but government may decide on a different number according to each industry), a minimum investment is made (at least USD50,000 for three years) and the project is approved by the Ministry of Culture.
Massive investments benefits (Mega-inversiones)- Taxpayers that create at least 250 jobs and make investments in property, plant or equipment for more than USD320 million benefit from a preferential tax regime.

- Eligible taxpayers also benefit from the following exemptions:
  • Reduced income tax rate of 27%
  • Ability to depreciate over two years
  • No presumptive taxable income (this system will disappear in 2021)
  • No dividend tax (equalisation tax, where applicable, of 27%)
  • No equity tax
- Permanent establishments or Colombia-based entities benefit from the following rules regarding tax on dividends:
  • No additional taxation will apply if the dividends arise from profit that already had taxes paid by the entity that plans to distribute them.
  • Income tax at a 27% rate will apply if the dividends arise from profit that has not had any taxes paid yet.
- The preferential tax regime will apply for over 20 years for investments made before 2024.

- The project must be recognised by the government.

- Extractive industries, infrastructure projects and projects for construction and operation of FTZs do not qualify for massive investments benefits.

Sources: ProColombia, Fitch Solutions

8. Taxation – 2019

  • Value Added Tax: 19%
  • Corporate Income Tax: 33%

Sources: Government websites, Fitch Solutions

8.1 Important Updates to Taxation Information

  • National companies are taxed on worldwide income. Foreign non-resident entities are taxed on their Colombian-source income only. The current general coporate income tax rate is 33% for the 2019 financial year; it will decrease up to 30% in 2022 progressively (32% for 2020 and 31% for 2021). This rate is applied on taxable income. Qualifying businesses located in free trade zones enjoy a reduced rate of 20% (while subject to capital gains tax at 10%, where applicable).

  • CIT payers are required to pay a minimum amount of income tax, which is determined based on the presumptive income method. Under this method, presumptive taxable income is measured at 1.5% of net equity as of December 31 of the previous year, in accordance with the information provided by the taxpayer on such year’s tax return. The presumptive tax is, however, phasing out, as the 1.5% rate will be applied in FY2020, but the rate will be 0% as of 2021.

  • Section 616-1 of the Colombian Tax Code, amended by Law 1943 of 2018, provides that taxpayers required to file and pay VAT and or excise tax are expected to use electronic invoices as of January 1, 2020 to support deductible expenses. A progressive regime for recognition of deductible expenses is established as follows: 30% for 2020, 20% for 2021 and 10% for 2022.

8.2 Business Taxes

Type of TaxTax Rate and Base
CIT33% on profits
Capital Gains Tax Rate10%
Branch Tax Rate33%
Withholding Tax- Dividends: 33%+7.5%
- Interest: 20%
- Royalties: 20%
- Technical services: 20%
VAT
19% (general rate); 0/5% (only for certain essential good and services)
Property TaxRanges from 0.5% to 1.2% depending on the nature and usage of the property
Financial Transactions Tax0.4% on carrying out of financial transactions that involve the disposal of resources deposited in checking or savings accounts as well as in deposit accounts with Banco de la República and the issuance of cashier’s checks.
Industry and Trade TaxThe industry and trade tax rates are determined by each municipality, and they range between 0.2% and 1%
National Consumption Tax- Mobile phone services at 4%
- Certain vehicles, aircraft and other goods at 8% or at 16%
- Restaurant and catering services at 8%
- Consumption tax cannot be credited against VAT. Consequently, the tax will be treated as a higher cost of the acquired asset or product and will be treated as a deductible cost for income tax purposes.

Sources: Government websites, Fitch Solutions
Date last reviewed:November 11, 2019

9. Foreign Worker Requirements

9.1 Foreign Workers

Visa types vary from temporary, known as TP, which last up to three years, and long-term visas, known as NE. The most important types of long-term visas are the NE1 and the NE4. The NE1 is intended for investors looking to set up a company, is valid for three years and costs USD379. The NE4 is intended for the head or CEO of a multinational company looking to invest in Colombia, is valid for five years and costs USD275.

9.2 Localisation Requirements

According to Law 1429, 100% of the workforce of any business can be foreign nationals. As of 2010, there is no mandatory proportion requirement for foreign and local workers and foreign employees have the same rights as Colombian employees.

9.3 Visa/Travel Restrictions

Effective from May 26, 2015, Decree 1067 of 2015 unifies all immigration rules in Colombia. Under this decree, foreigners who wish to work or carry on business in Colombia must apply for an appropriate visa. Resolution 6045 of August 2, 2017, establishes the immigration requirements for each type of visa, replacing former Resolution 5512 of September 2015. The Ministry of Foreign Affairs or consular offices abroad may grant any type of visa.

The Migrant Visa may be granted to a foreigner who intends to enter Colombia under an employment relationship or civil contract to provide services to an individual or corporation domiciled in Colombia or to arts, sports or cultural groups entering Colombia for the purpose of providing public performances. For regulated professions (for example, engineering, accounting and business administration), foreigners must request special permits or licences from the competent Professional Councils.

This type of visa is granted for the entire term of the contractual relationship. Therefore, the validity of the visa depends on this relationship and its duration cannot exceed three years; however, it can be renewed. It allows multiple entries and the holder is permitted to study while in the country. The visa is cancelled if the holder leaves Colombia for more than 180 consecutive days. The holder can stay in Colombia for the entire term of the visa. The relatives of a holder of this visa may apply for a beneficiary visa.

The Visitor Visa for temporary services is issued to foreigners who wish to enter the country in order to provide temporary services such as specialised technical assistance, with or without an employment contract. The validity of this visa is 180 days, with multiple entries. An individual can request a visa for a shorter period if his or her activity in Colombia will be for a shorter period. It can be renewed. The relatives of a holder of this type of visa may apply for a beneficiary visa.

The Visitor Visa for business purposes is granted to a foreigner who intends to enter Colombia to conduct trade and business, promote economic exchange, make investments and create business. This visa is valid for up to three years with multiple entries, but the holder of this type of visa can only stay up to 180 continuous or discontinuous days per year in Colombia. An individual can request a visa for a shorter period if his or her activity in Colombia will be for a shorter period and the visa can be renewed. The individual's activities cannot generate the payment of wages in Colombia. The relatives of a holder of this type of visa may not apply for a beneficiary visa.

Contractors and employers of foreigners must notify Migración Colombia of the beginning and termination of activities through the Sistema de Información y Reporte de Extranjeros (SIRE) system within 15 calendar days after the beginning or termination of the activities. SIRE is an online platform, which was created by Migración Colombia to facilitate the reporting of foreigners generating benefits for Colombian companies, hotels and education entities. In addition, the employer must pay for the visa holder and his or her family's travel expenses back to their country or their last residence within 30 days after the end of his or her professional activities. If the visa holder decides not to use this benefit from the Colombian company, this company must report this to Migración Colombia. This needs to be reported within five working days after the holder's departure.

Visa registration and a Foreign Identification Card request are mandatory for visas with a validity of longer than three months. The Foreign Identification Card is the document of identification in Colombia. It is needed to open bank accounts or to become affiliated with the social security system.

9.4 Other Requirements

A Colombian company must file a Report of Initiation of Activities with the Migración Colombia SIRE system within 15 calendar days after a foreigner's initiation of activities in Colombia. A foreigner who intends to engage in a regulated profession such as engineering, medicine or economics in Colombia must present a professional permit granted by the competent authority in addition to the visa.

Sources: National sources, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
Baa2 (Stable)23/05/2019
Standard & Poor'sBBB- (Stable)11/12/2017
Fitch Ratings
BBB (Negative)20/11/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators


World Ranking
201820192020
Ease of Doing Business Index
59/19065/19067/190
Ease of Paying Taxes Index
142/190146/190148/190
Logistics Performance Index
58/160N/AN/A
Corruption Perception Index
99/180N/AN/A
IMD World Competitiveness58/6352/63N/A

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World Ranking
201720182019
Economic Risk Index RankN/A54/20258/201
Short-Term Economic Risk Score
61.364.263.3
Long-Term Economic Risk Score63.964.162.5
Political Risk Index RankN/A109/20298/201
Short-Term Political Risk Score
66.564.462.9
Long-Term Political Risk Score62.460.461.7
Operational Risk Index RankN/A100/20189/201
Operational Risk Score48.549.051.2

Source: Fitch Solutions
Date last reviewed: November 11, 2019

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
While the economy is still recovering against the backdrop of global oil price volatility, the Colombian government has taken steps to strengthen its monetary policy framework, narrow its fiscal deficit and ease regulations on businesses in recent years. Nevertheless, high levels of income inequality, elevated unemployment and negative fiscal and external accounts continue to pose headwinds to the economy. Growth is seen sustaining solid momentum in the short-to-medium term as lower corporate taxes and fiscal exemptions enable a healthy expansion in fixed investment, while lower inflation should allow for solid private consumption growth. Nevertheless, delays to amend the tax scheme pose downside risks to the investment and fiscal outlook, at a time of heightened external risks.

OPERATIONAL RISK
Colombia currently provides investors with a large, urban workforce that is particularly suited for low-skilled sectors, as well as high levels of foreign economic participation and trade. Colombia holds significant advantages over peers such as Brazil and Uruguay because of its limited government intervention, low profit taxes and strong access to financial markets. Although the United States and Venezuela have been Colombia's largest trading partners, Mainland China replaced Venezuela as Colombia's number two trading partner since 2009. The government is pursuing FTAs with European and Asian partners. Nevertheless, businesses will continue to face high security costs due to the prevalence of organised crime. That said, Colombia offers an environment conducive to investment when it comes to bureaucratic procedures, as it offers streamlined processes of opening, registering and closing businesses. Furthermore, the country's logistics profile will benefit from a strong project pipeline in the years ahead. Transport infrastructure will be a major focus of investment in Colombia over the next five years supported by the advance of a number of large-scale projects including over 20 road construction projects tendered through the 4G road concessions programme as well as the over USD4 billion Bogota Metro Line 1 urban rail project.

Source: Fitch Solutions
Data last reviewed: November 11, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Colombia short term political risk index
Graph: Colombia short term political risk index
Graph: Colombia long term political risk index
Graph: Colombia long term political risk index
Graph: Colombia short term economic risk index
Graph: Colombia short term economic risk index
Graph: Colombia long term economic risk index
Graph: Colombia long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Political and Economic Risk Indices
Date last reviewed: November 11, 2019

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Colombia Score51.255.454.751.7
43.1
Central and South America Average46.049.545.246.243.0
Central and South America Position (out of 20)6
45
77
Latin America Average48.450.748.9
44.649.3
Latin America Position (out of 42)16
1014825
Global Average49.750.349.8
49.349.2
Global Position (out of 201)89
698386
121

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Colombia vs global and regional averages
Graph: Colombia vs global and regional averages
Country/Region
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Chile64.863.868.662.963.8
Costa Rica56.353.660.352.0
59.3
Panama55.447.656.467.050.6
Uruguay54.451.1
52.153.361.3
Mexico52.960.058.257.335.9
Colombia51.2
55.454.751.743.1
Brazil
50.146.748.4

53.8

51.5
Argentina49.052.842.450.450.4
Peru48.157.851.542.740.5
Ecuador46.254.137.650.842.4
El Salvador42.6
44.944.547.8
33.0
Suriname42.350.135.641.0
42.5
Belize42.151.938.140.737.8
Paraguay40.842.644.039.037.6
Guatemala40.743.844.7
40.933.5
Honduras39.839.846.939.932.7
Nicaragua39.741.639.136.9
41.1
Bolivia
37.442.128.738.140.6
Guyana36.342.838.3
29.534.6
Venezuela29.047.7
13.128.326.8
Regional Averages46.049.545.246.243.0
Emerging Markets Averages46.948.547.445.845.9
Global Markets Averages49.750.349.8
49.349.2

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: November 11, 2019

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Colombia

Graph: Major export commodities to Colombia (2018)
Graph: Major export commodities to Colombia (2018)
Graph: Major import commodities from Colombia (2018)
Graph: Major import commodities from Colombia (2018)

Note: Graph shows Hong Kong imports from/exports to Colombia (by consignment)
Date last reviewed: November 11, 2019

Graph: Merchandise exports to Colombia
Graph: Merchandise exports to Colombia
Graph: Merchandise imports from Colombia
Graph: Merchandise imports from Colombia

Note: Graph shows Hong Kong imports from/exports to Colombia (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: November 11, 2019


2018
Growth rate (%)
Number of Colombian residents visiting Hong Kong17,422
-13.4
Number of Latin American residents visiting Hong Kong190,316-2.8

Source: Hong Kong Tourism Board
Date last reviewed: November 11, 2019

11.2 Commercial Presence in Hong Kong


2018
Growth rate (%)
Number of Colombian companies in Hong KongN/A
N/A
- Regional headquarters
- Regional offices
- Local offices


11.3 Chamber of Commerce or Related Organisations

Consulate General of Colombia
Address: Unit 1215, 12/F, China Merchants Tower, Shun Tak Centre, 200 Connaught Road Central, Sheung Wan, Hong Kong
Email: info@consuladocolombiahk.com / chongkong@cancilleria.gov.co
Tel: (852) 2545 8547 / 2541 2217
Fax: (852) 3743 5769 / 2544 8347

Source: Consulate General of Colombia

11.4 Visa Requirements for Hong Kong Residents

Entry is visa-free for HKSAR passport holders for up to 90 days.

Source: Visa on Demand
Date last reviewed: November 11, 2019

Content provided by Picture: Fitch Solutions – BMI Research
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