Colombia 2017 Country Commercial Guide
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Colombia Table of Contents Doing Business in Colombia __________________________ 6 Market Overview ___________________________________ 6 Market Challenges __________________________________ 8 Market Opportunities ________________________________ 10 Market Entry Strategy ________________________________ 11 Political and Economic Environment ____________________ 12 Political Environment ________________________________ 12 Selling U.S. Products & Services _______________________ 13 Using an Agent to Sell U.S. Products and Services ________________ 13 Establishing an Office ________________________________ 13 Franchising ______________________________________ 15 Direct Marketing ___________________________________ 17 Joint Ventures/Licensing ______________________________ 18 Selling to the Government ______________________________ 18 Distribution & Sales Channels____________________________ 21 Express Delivery ___________________________________ 22 Selling Factors and Techniques ___________________________ 23 eCommerce ______________________________________ 24 Trade Promotion and Advertising _________________________ 28 Pricing _________________________________________ 30 Sales Service/Customer Support __________________________ 30 Protecting Intellectual Property __________________________ 31 Due Diligence _____________________________________ 36 Local Professional Services _____________________________ 37 Principle Business Associations __________________________ 38 Limitations on Selling U.S. Products and Services ________________ 42 Web Resources ____________________________________44 Leading Sectors for U.S. Exports & Investments ______________ 45 Agricultural Sector __________________________________ 45 2 Automotive_______________________________________49 Defense _________________________________________ 57 Education _______________________________________64 Electrical Power and Renewable Energy Systems ________________69 Information and Communication Technology (ICT) _______________ 72 Infrastructure _____________________________________ 79 Medical Equipment __________________________________ 84 Processed Foods and Beverages ___________________________ 90 Travel and Tourism _________________________________ 102 Water Treatment Systems _____________________________ 107 Customs, Regulations & Standards _____________________ 110 Trade Barriers ____________________________________ 110 Import Tariffs ____________________________________ 115 Import Requirements and Documentation ___________________ 116 U.S. Export Controls ________________________________ 118 Temporary Entry __________________________________ 119 Labeling/Marking Requirements _________________________ 120 Prohibited & Restricted Imports _________________________ 121 Customs Regulations ________________________________ 121 Standards for Trade ________________________________ 122 Trade Agreements _________________________________ 127 Licensing Requirements for Professional Services _______________ 128 Web Resources ___________________________________ 130 Investment Climate Statement ________________________ 131 Executive Summary _________________________________ 131 Openness to, and Restrictions Upon, Foreign Investment __________ 133 Policies Toward Foreign Direct Investment _________________________ 133 Limits on Foreign Control and Right to Private Ownership and Establishment _____ 134 Other Investment Policy Reviews _______________________________ 136 Business Facilitation _______________________________________ 136 Outward Investment _______________________________________ 137 Bilateral Investment Agreement and Taxation Treaties ____________ 137 3 Legal Regime ____________________________________ 138 Transparency of the Regulatory System ___________________________ 138 International Regulatory Considerations ___________________________ 139 Legal System and Judicial Independence ___________________________ 139 Laws and Regulations on Foreign Direct Investment ____________________ 139 Competition and Anti-Trust Laws _______________________________ 140 Expropriation and Compensation _______________________________ 140 Dispute Settlement ________________________________________ 141 Bankruptcy Regulations _____________________________________ 143 Industrial Policies__________________________________ 144 Investment Incentives ______________________________________ 144 Foreign Trade Zones/Free Ports/Trade Facilitation _____________________ 145 Performance and Data Localization Requirements _____________________ 146 Protection of Property Rights ___________________________ 147 Real Property ___________________________________________ 147 Intellectual Property Rights __________________________________ 148 Financial Sector ___________________________________ 151 Capital Markets and Portfolio Investment __________________________ 151 Money and Banking System __________________________________ 152 Foreign Exchange and Remittances ______________________________ 152 Sovereign Wealth Funds _____________________________________ 153 State-Owned Enterprises _____________________________ 153 Privatization Program ______________________________________ 153 Responsible Business Conduct __________________________ 154 Corruption ______________________________________ 155 Political and Security Environment _______________________ 156 Labor Policies and Practices ____________________________ 157 OPIC and Other Investment Insurance Programs _______________ 159 Foreign Direct Investment and Foreign Portfolio Investment Statistics __ 159 Contact for More Information on the Investment Climate Statement ____ 161 Trade and Project Financing ________________________ 163 Methods of Payment ________________________________ 163 Banking Systems __________________________________ 163 Foreign Exchange Controls ____________________________ 164 U.S. Banks and Local Correspondent Banks ___________________ 165 Project Financing __________________________________ 167 Financing Web Resources _____________________________ 169 4 Business Travel ________________________________ 170 Business Customs __________________________________ 170 Travel Advisory ___________________________________ 171 Visa Requirements _________________________________ 172 Currency _______________________________________ 174 Telecommunications/Electric ___________________________ 174 Transportation ___________________________________ 175 Language _______________________________________ 176 Health ________________________________________ 176 Local Time, Business Hours, & Holidays ____________________ 176 Temporary Entry of Materials and Personal Belongings ___________ 178 Travel Related Web Resources __________________________ 179 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2017. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 5 Doing Business in Colombia Market Overview The Republic of Colombia is the fourth largest economy in Latin America, after Brazil, Mexico, and Argentina, and has the third largest population with approximately 49 million inhabitants. Aided by major security improvements and steady economic growth in recent years, Colombia has increased its commercial and investment ties to the United States, Europe, Asia and the rest of Latin America. Since the implementation of the U.S.-Colombia Trade Promotion Agreement (TPA) in May 2012, U.S. exports to Colombia initially increased substantially but have decreased over the last two years due to a combination of factors, with the main contributor being a depreciation of the Colombian currency that resulted from lower global oil prices (the county’s principal export), a drought, and a national strike by transportation workers. Nonetheless, certain U.S. exports to Colombia continue to see strong growth, especially agricultural products like pork, chicken, seafood, soy products, dairy, and beans. Colombia’s ranking as an export market for U.S. agricultural products jumped from 24th place in 2011 to 12th place in 2016. Agriculture exports to Colombia from the United States were valued at USD 2.38 billion in 2016, more than double their 2011 value. Cereals, especially corn, saw the greatest gain in real terms. Other U.S. exports to Colombia that have enjoyed significant growth since the implementation of the TPA include aircraft and aircraft parts, which benefited from the elimination of a five percent tariff. These exports surged to an average of nearly USD 700 million per year over the period 2012-2016, up from USD 334 million in 2011. Exports of pharmaceutical products, which amounted to USD 200 million in 2011, have averaged USD 270 million per year under the TPA. Political stability, a growing middle class, the signing of the peace accord between the government and the Revolutionary Armed Forces of Colombia (FARC) guerrillas, and a vastly improved safety and security environment have supported an optimistic outlook and moderate economic growth in recent years in Colombia. The drop in commodity prices, adverse weather conditions, and labor strikes slowed economic output in 2016. Gross Domestic Product (GDP) growth slowed to two percent in 2016 and foreign direct investment is estimated to have decreased slightly to USD 11.6 billion. Over half of Colombia’s global exports are petroleum products and lower oil prices are expected to continue taking a toll on the country’s economy in 2017, with annual GDP growth projected at 1.8 percent and foreign direct investment expected to slow to USD 9.8 billion. Colombia’s inflation