Starting a Business in Colombia
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What are the primary considerations for establishing a North America sales and business development presence?
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Why Start a Business in Colombia?
Colombia is often listed as having one of the fastest growing economies in Latin America with huge potential in terms of economic growth. This is based on its resources, clear governance and a unified vision by both public and private sector leaders.
President Santos of Colombia has been quoted as saying:
"This is the decade of Latin America, a time when our continent is ready to offer the world what it most needs: food, water, biodiversity, alternative energy and young and talented labour."
"Colombia is an excellent choice. Colombia is work, commitment and ingenuity. Colombia is the future for those who want to benefit from it today. "
The current situation has been a dramatic change of fortunes. Up until 2002 Colombia had been in a downward spiral with negative indicators for personal security, inward investment, welfare and people development. The government and society itself spent all its energy battling guerrillas and drug traffickers. Yet Colombia still managed to maintain a sustainable economic structure and sound economic management, despite the difficulties of the situation leading to a lack of foreign investment, a low rate of internal reinvestment and moderate growth.
Then, in 2002, and accelerating from 2006 onwards, the Government of Colombia started the recovery process under three mandates: countrywide involvement in security matters, social cohesion and investor confidence. And the economy has responded in kind following a steep upward spiral and showing the world its resilience and its potential for development. With the recovery under way the following are just some of the key reasons to consider Colombia as an important business destination:
⦁ Economic stability:
Colombia is one of the most stable economies in Latin America with an economic growth above the regional average. The inflation rate remains low, dropping to below 2% in October 2013. External debt has been leveling off and stood at 24% OF Gross National Income (GNI)in 2011. Also, the Central Bank has accumulated a large stock of international reserves.
⦁ Low risk :
Colombia has never defaulted on its international financial responsibilities, and it is one of the few Latin American countries with a good track record of managing debt.
⦁ Skilled labour and competitive and flexible working arrangements:
Colombia has the second highest availability of skilled labour, the least onerous labour regulations and the most flexible workforce in Latin America.
⦁ Important strategic location:
Colombia is strategically located at a midpoint between North and South America. The country has 1,800 miles of coastline and has ports on both the Pacific and Atlantic Oceans , which connect to 3,710 routes worldwide and which are close to the two entrances of the Panama Canal. Colombia therefore is well placed to service the markets of Central, South and North America.
⦁ Business Incentives:
There are benefits available for companies with operations established in free-trade zones with special tax and exchange schemes that allow companies to better compete internationally. The government also provides special grants in several growth sectors, specifically where there is an impact on wider economic development (i.e. agribusiness).
⦁ Investor Confidence:
The improvement in investors’ confidence is reflected in the value of foreign direct investment, which rose from U.S. $ 1,720 billion in 2004 to U.S. $ 15,823 billion in 2012. Several agreements on legal stability have been signed and nationals and foreigners now have the same conditions and assurances to protect their investments. Furthermore, this resurgence has resulted in improved export figures, which have recently surpassed Colombia’s self-imposed target of U.S. $ 1,000 in exports per capita.
⦁ Large Home Market:
The current population of 48 million inhabitants (2012) makes it the third largest market in Latin America, with GDP per capita rising from U.S. $ 1,720 in 2001 to U.S. $7,752 in 2012, and with a continuing, projected rapid growth expected until 2020.
⦁ Significant improvements in safety:
The Government of Colombia and local authorities are planning an investment of over 4.5 billion pesos ($ 2,300 million) on personal security issues between 2012 and 2015. 25,000 new police officers will be recruited.
⦁ International Platform:
Colombia is engaged in 11 Free Trade Agreement negotiations spanning 48 markets, which are expected to provide preferential access to 1.5 billion consumers. It is also closing 18 investment agreements with 50 countries and 16 double taxation agreements. This enables Colombia to provide an ideal platform for exports to the wider Latin American region.
⦁ Future Growth:
Colombia is one of the CIVETS countries (together with Indonesia, Vietnam, Egypt, Turkey, and South Africa), which are predicted to be the next leading emerging markets to rise in economic prominence over the coming decades.
In summary, Colombia has followed a path of growth, development and strong economic performance in the past ten years. As a result of the concerted efforts of all segments of society and the government’s clear strategy to continue the development process, Colombia has become one of the most promising trade and investment locations now and for the future.
Organisations that can assist with Starting a Business
Simplified Global Payroll Companies with global employees often find that managing payroll in multiple countries is complicated - different systems, laws, and languages in each country, lack of reporting, and constantly changing laws and regulations each year. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, aggregated reporting, and a hybrid service model in 135+ countries around the world.
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
Finding office space abroad poses one of the most difficult changes that many start-ups face. Location, costs, and transport all need to be considered. And, more crucially of all, what office will allow a new business to attract and retain the best staff?