10 Questions With Luis German: ProColombia’s Exec. Dir. of the U.S.
ProColombia’s Executive Director of the United States
GLOBAL TRADE: Why should a US company consider Colombia over Panama as their gateway to South America?
GERMAN: I am glad you asked that. In the past 10 years the economy has grown to the third largest in the region and it is now able to reach 1.3 billion consumers. Colombia has had a stable economy throughout the years and has recently made a concerted effort to grow their middle class dramatically. So much so, that the middle class is almost 5x in size as it used to be.
GLOBAL TRADE: When US executives think of Colombia, they may still think of the drug warlord problem and the danger of doing business is Colombia. Has this been cleaned up? Is it no longer an issue?
GERMAN: The stories of the drug warlord problems are stories that we grew up with…but it’s the story of the 80s. And while that issue certainly still exists in the region, there are bigger trends spanning Colombia, like the country’s growing business appeal.
GLOBAL TRADE: In the US there’s a shortage of technically trained factory workers who are able to handle the sophistication of factories today. Are Colombian factory workers able to handle high tech manufacturing?
GERMAN: Yes…there has been growth in multiple sectors in the past few years. One of the largest growth sectors has been the IT industry where Colombia has a value added product to show. Additionally, the manufacturing industry has grown…more specifically, the auto part industry. The amount of cars in Colombia has grown and the manufacturers and products have also grown in unison. They are now competing in Colombia as well as abroad.
Also I might add, the free trade agreement has brought more U.S. production technology into Colombia. Sixty percent of Colombia’s raw technology materials come from the U.S.as a result of the free trade agreement, and Colombia is using those imports for further production, which we then export.
GLOBAL TRADE: How are the roads and rail systems for facilitating exports?
GERMAN: Colombia’s infrastructure is growing dramatically. In the last decade, infrastructure investment has been more than $2 billion per year, and the difference is noticeable. In years past, Bogota to Cartagena used to take an entire day, but with investment efforts, Colombia will have the capability to become 33% more effective in both speed and price. Additionally, the airport infrastructure has greatly improved connectivity with more than 848 weekly directly international flights.
This marks a big difference from years past, when the war on drugs forced the government to reduce spending on roads and rail systems.
With previous efforts already making improvements, there are plans for even further expansion and improvement. In the next four years, Colombia has an investment plan of up to $25 billion for roads, airports and railroads. This plan is set to be one of Colombia’s largest and most aggressive programs.
GLOBAL TRADE: One of the issues US companies have with investing in for example, France, is that while there is a large pool of workers to hire from, if you make the wrong hire it can be next to impossible to fire somebody. What are the labor laws like in Colombia?
GERMAN: Colombia has a young and thriving population with 55% of its population being under 30 years old. And like any other country, if employees are not performing and production isn’t up to standards, then companies have the right to let an employee go. Of course there is a process and labor laws are in existence, but as an employer you have the right to fire someone in Colombia if they don’t meet your standards.
GLOBAL TRADE: Does Colombia offer any kind of site selection assistance for opening a new manufacturing facility and if so, what office should they contact?
GERMAN: ProColombia is in existence to promote tourism, exports and investments, and to provide assistance and knowledge to all manufacturers and companies alike who want to come to Colombia.
In order to provide knowledge and assistance from A-Z of the market, training, exports demands etc, ProColombia works with the local ministry to help with the requirements and acquisitions.
GLOBAL TRADE: What kinds of tax rates and fees can a US company expect to pay in Colombia?
GERMAN: There are incentives in place to promote job creation and formalization. There is a gradual application of escalation for payment of income tax, payment of levies and other contributions from payroll as well as the business registration and renewal period and process. Companies are starting to become aware of the benefits of Colombia as a new FDI record was set in 2013 at $16,354 million.
GLOBAL TRADE: Your website says that GDP per capita is expected to grow by 36% by 2018…what do you attribute this to?
GERMAN: There are a few factors in the past years, that have helped Colombia’s GDP, the most notable being, the oil industry with close to 1 million barrels per day of production. Additionally, the political factor and infrastructure investments have also help add to the additional 2.5% growth.
Colombia stands out above the rest with a GDP of 4.7% in 2013, which was higher than the Latin American average growth at 3.2%.
GLOBAL TRADE: Colombia seems to have a good handle on inflation. Will this be the case for the foreseeable future?
GERMAN: Good question. Currently with a controlled inflation at 1.94%, Colombia tries to manage inflation so that it becomes and stays a stable number.
GLOBAL TRADE: We know Colombia has great coffee…how’s the food?!
GERMAN: Incredible! The varying cities throughout Colombia offer different local dishes and cuisine. North Colombia offers Caribbean inspired dishes, the middle of the country focuses on coffees because of the mountain terrain, the south offers sweeter cuisine due to the sugar production and the major cities are able to offer everything. The different regions of Colombia offer diversified city atmospheres with different cultures and flavors to accompany it.