According to UNCTAD's 2022 World Investment Report, FDI inflows to Colombia grew by 26% in 2021, to USD 9.4 billion, mainly led by inflows in the manufacturing sector, transport, logistics, communication services, and the mining and hydrocarbon industries. Over the same period, the stock of FDI reached USD 218.9 billion, while the number of Greenfield Investments in the country grew to 139 (compared to 111 in 2020). The US is the largest investor in the country, while the EU is the largest supplier of FDI geographically. The sectors attracting the most FDI are oil and mining, financial and professional services and manufacturing. The country's large-scale social protests and the downgrading of its investment rating have weighed heavily on FDI inflows.
According to the Economist Business Environment, Colombia ranks 53 out of the 82 countries reviewed for their investment climate. The Colombian government actively encourages FDI, and it establishes the same investment regulations on foreign investors that it does on national ones. Recently, the government introduced a special tax regime for mega-investments, providing tax breaks and other fiscal incentives. Furthermore, the government is working on implementing more measures to make doing business in Colombia easier, which include the creation of a one-stop shop for investors to centralise and speed up procedures and the strengthening of the country's tax-exempt zones. Opportunities in the infrastructure sector are numerous since the Colombian government launched in 2012 the “4G” plan, Latin America’s biggest infrastructure program, amounting to around USD 5.5 billion. The government launched in 2019 the “5G network” plan in order to developed a higher connectivity for its growing digital sector. This sector showed signs of FDI dynamism when Teleperformance (France) and Amazon (US) announced plans to increase their business operations in the country, while in the customer experience sector, Alorica (US), Transcom (Sweden) and TDCX (Singapore) announced new openings. Moreover, special taxes policies have been set up for any investment in creative and innovative activities/sectors. According to ProColombia, the government’s investment promotion agency, some of the most significant investments made in the country recently involved Chinese companies, such as the acquisition of Neo Lithium Corp by Zijin Mining for USD 380 million, and the construction of the Bogota metro system, which is being led by China Harbor Engineering Co.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Advantages for FDI in Colombia:
Among the main factors that are detrimental to foreign direct investment are:
Today the Colombian government is reaping the rewards of the policy it implemented to secure democracy, whose objective is to create favourable economic conditions in order to once again give investors confidence, especially foreign investors. In this context and after the establishment of many free trade agreements (for example the Pacific Alliance, the United States and the EU), the government continues to make efforts to consolidate, liberalise and diversify its economy. Major tax reform was introduced in 2016 aimed mainly at simplifying the tax system and at the same time increasing the tax revenues of the state. Finally, the various tax reforms passed during the decade have all tended to reduce the tax burden on companies (by lowering taxes on profits to 25% for example) as well as a considerable reduction in customs duties.
The "Commitment to Colombia" program aims to keep investments on an upswing, regardless of the disturbances caused by the COVID-19. This government strategy is based on two pillars: tax incentives for investors and the optimization of business processes.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: December 2023