Why invest in Colombia?
In the past decade, Colombia’s economy has proven to be fairly stable and expanding. Historically, Colombia has been an agrarian economy but with the advancing 20th century, it has urbanized quickly. During the past century, Colombia’s market economy grew steadily with an average rate of 4% per year between 1970 and 1988; after the recession of 1999, it took long to recover. In recent years, the economic growth was one of the highest growth rates in Latin America. Its main exports are mineral fuels, oils, distillation products, precious stones including emeralds among other products.
Furthermore, Colombia is developing its renewable energy market.
There are four major reasons why businesses should invest in Colombia. Firstly, there is neither value added tax (VAT) nor tariff. Secondly, there is a possibility to participate in the local marketplace. Thirdly, there is a tax deduction of up to 175% for firms investing in Research and Development projects. Lastly, Colombia has signed 11 trade agreements with 47 countries.
Where there is no tax or a very low tax on internally-produced products and imports, the prices of the goods and services are much lower than when a tax is required to be paid. In addition, people will have a higher disposable income and they could either buy or invest more which usually brings a positive economic growth.
As a foreigner, one could invest in Colombia and participate in the local marketplace. This is because Colombia does not have restrictions on nationality and everyone who wants to trade could join the market. Therefore, the country supports new companies. Furthermore, when a new company is opened in a developing country, more jobs are created and thus more Colombians would be hired. This will again lead to economic growth because more people will have jobs, thus more money to spend. Not to mention that it is the 23rd largest population in the world; this means that the local market is quite large.
With a tax deduction of up to 175% for firms investing in R&D projects, Colombia wants to encourage innovation of their existing products and services and creating new ones. This will not only create new jobs but will also improve Colombia’s image. By following such policy, Colombia aims to become a leader in innovation and project development. This is why Colombia has Productive Transformation Program.
Because the country has signed 11 free trade agreements, it facilitates trade. By doing this, Colombia gained free access to many consumers of the world’s market. This policy for any business is helpful since a business can trade not only in the local market but also in the foreigner market.
Interesting links:
http://www.latia.org/why-invest-in-colombia
http://www.colombiainvesting.com/why-invest-in-colombia.html
http://www.procolombia.co/en/invest
https://en.santandertrade.com/establish-overseas/colombia/investing
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