Thomas White Global Investing
Colombia
Colombia Stamp
June 25, 2010
A Postcard from the Americas
Colombia: Chilean Companies Eager to Invest

View of Bogota city

Doing business is easiest in Manizales, Ibague and Pereira according to a World Bank report. The capital, Bogota, is ranked 12.

Last month in May, one of Chile’s most prominent operators, LAN Airlines, confirmed that it was entering into a partnership with Colombia’s Aeroasis, in a move that would help Aeroasis begin operating in Colombia. The same month, a Chilean investment bank called Celfin Capital announced that it would venture forth to begin brokerage operations in Colombia, as part of its broader plan to expand into the U.S. Both LAN and Celfin form part of a group of Chilean companies that are rapidly realizing Columbia’s immense untapped potential.

In fact, the Colombia success story is one that is often obscured by other countries in Latin America, given Brazil’s spectacular success over the past few years. But Colombia is fast gaining recognition, especially from savvy Chilean investors who understand that outgoing President Alvaro Uribe’s phenomenal reforms have transformed a country that was once known more for its cocaine trade than regulatory reform. But as a World Bank Doing Business report showed, the country has made surprising progress in initiating reforms, making Colombia more investor-friendly. “Colombia, represented by Bogotá, has been one of the top 10 reforming economies for three consecutive years according to Doing Business 2008, 2009 and 2010,” the World Bank gushed. So impressed was the World Bank that it ranked Colombia number one in Latin America for its ease of doing business. Adding to that, Uribe’s sound leadership over the past eight years has given Colombia the sort of political stability that countries like Argentina, Venezuela or Bolivia lack. Little wonder then that Chilean companies are eager to invest in a country that promises so much more. The Colombian economy is forecasted to expand 3.5% this year, and sustained 5% growth from 2002 to 2007, before slipping 2.5% with the economic crisis of 2008.

Apart from LAN and Celfin, other Chilean companies such as Copec, Gasco, Falabella and Linzor Capital have all entered the Colombian market. With this, Colombia was the recipient of 12% of Chile’s $4.22 billion in foreign direct investment outflows in 2009. Falabella, one of the Chilean supermarket giants, has ambitious plans for Colombia, having already opened nine stores across the country. Planning to spend $47 million, the retailer hopes to open three new department stores this year alone.

It is apparent that a series of reforms initiated by the Colombian government is starting to pay off. At one point, it took 40 days to start a business in Bogota, the nation’s capital; now it takes only 20 days to do so. It is also easier now to obtain construction permits in Bogota, and Colombia has taken steps to modernize its tax system as well as social security contributions. Customs declarations can even be submitted online just like income and value-added tax receipts. These and other reforms have made Colombia an attractive investment and business destination.

Not so long ago, Colombia had the highest rate of homicides. Add a spiraling drug trade, and insurgency, and its reputation was seedy to say the least. Now, that homicide rate has been halved, although drug-related violence continues to haunt the country’s present and future. Without question, there is a lot to be done for Colombia to gain a foothold on the global economic stage. But these reforms have shown that it intends to get there. Someday. And judging by the confidence of these Chilean companies, it may very well do so.

Postcards from Around the World

Indonesia: Remarkable Indonesia Powers Ahead

Learn More 

Russia: A New Silicon Valley

Learn More 

Egypt: The New Outsourcing Hub

Learn More 





Subscribe to get our global publications by email.



Use of this site signifies that you have read Terms & Conditions
© Thomas White International, Ltd. 2018