Foreign Direct Inv

Nombre la EntidadRepública de Colombia

Ministerio de Comercio, Industriay Turismo

República de Colombia




FOREIGN DIRECT INV. FOREIGN DIRECT INV. (2004) – BY SECTORS(2004) – BY SECTORS

Financial & Insurance

22%

Energy35%

Communications18%

Distribution8%

Chemical Industry

2%Other2%

Construction1%

Tobacco1%

Transportation2%

Metal Industry3%

Beverages6%




OUTLOOK (2): OUTLOOK (2): “THE INTERNAL “THE INTERNAL AGENDA” –AGENDA” – SECTORAL COMPONENT SECTORAL COMPONENT

GOODSTextiles, Apparel.Leather/Wear, Footwear.Forestry, Wood, Furniture.Pulp, Paper, Printing.Sanitary, Cosmetics.Automotive, Autoparts.Home Appliances.Electrical, Electronic.Metal Industry. Coal.Jewelry.

SERVICES IT, Telecommunications. Energy. Health Care. Tourism. Transp., Logistics. Professional Services. Financial Services. Education. Software

Multiple projects and funding are expected in all or most of the following supply chains:




OUTLOOK (3): OUTLOOK (3): EXISTING INCENTIVESEXISTING INCENTIVES

Foreign investors in Colombia may also benefit from additional, existing incentives:

Access to Free Zones with tax, duty and exchange incentives.

Access to Special Economic Zones: similar incentives for new, export-oriented projects.

Special financing facilities. Availability of “Large Exporter” preferential

treatment. Import-Export duty-free treatment programs.




Source: World Economic Forum

Despite recent improvements, a large group of countries still out-ranks us.

COLOMBIA`S COLOMBIA`S COMPETITIVENESS COMPETITIVENESS

61

7173

80

75

87

90

86

85

69

61

95

90

85

80

75

70

65

60

55

50

94 95 96 97 98 99 00 01 02 03 04Año

%




SELECT COUNTRY SELECT COUNTRY ADVANTAGESADVANTAGES

Growth Competitiveness Index Ranking

Macroeconomic EnvironmentReal Effective Exchange Rate 2003 10Recession Expectations 28Access to Credit 33Public InstitutionsIrregular Payments in exports and Imports 36Irregular Payments in Public Utilities 46Irregular Payments in tax collection 46TechnologyUniversity/Industry Research Collaboration 46Source: The Global Competitiveness Report 2004-2005




10 Leading Reforming Countries (2003)

REDUCTION OF RED TAPEREDUCTION OF RED TAPE

PuestoPaís

Apertura de una

empresa

Contratación y despido

Cumplimiento de los

contratos

Obtención de crédito

Liquidación de una

empresa1 Eslovaquia Ok Ok Ok Ok2 Colombia Ok Ok Ok3 Bélgica Ok Ok Ok4 Finlandia Ok Ok Ok5 India 6 Lituania Ok Ok Ok7 Noruega Ok Ok Ok8 Polonia Ok Ok Ok Ok9 Portugal Ok Ok Ok

10 España Ok Ok Ok

Source: World Bank, International Financial Corporation




RISING EXPORT TRENDRISING EXPORT TREND

6.000

8.000

10.000

12.000

14.000

16.000

18.000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

US

$ M

illone

s

Fuente:DANE




HISTORICAL FIXEDHISTORICAL FIXEDCAPITAL FORMATION CAPITAL FORMATION

-50

-40

-30

-20

-10

0

10

20

30

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Va

ria

ció

n %

Fuente: DANE




FINANCIAL FACTSFINANCIAL FACTS

Colombia is not a major exporter of financial services. However, its financial sector’s current solidity and profit

potential bode well for a renewed inflow of private capital, a precondition to any export strategy.

Colombia’s financial sector overcame its 1998-2000 crisis, and is currently back on the track of soundness and

growth:

• Demand for credit is on the rise: following annual average decline rates nearing 10% during the crisis, demand grew 10% in 2004 (13,3% recorded on April 2005).




FINANCIAL FACTS FINANCIAL FACTS (CONT.) (CONT.)

• Financial asset quality has improved significantly.• Sustained increase of profitability.• Reversal of negative growth rates in the returns on

equity: after falling 30% in 1998-2000, they grew 22% in 2004.




Total Asset Quality and CoverageTotal Asset Quality and Coverage

Source: Superintendency of Banking

Quality Indicator =

Past due/Total loans

Coverage Inicator =

Loss reserves/Past due loans

COLOMBIA’S FINANCIAL COLOMBIA’S FINANCIAL SYSTEMSYSTEM

16.3

3.42

4

6

8

10

12

14

16

18

Ab

r-95

Oct

-95

Ab

r-96

Oct

-96

Ab

r-97

Oct

-97

Ab

r-98

Oct

-98

Ab

r-99

Oct

-99

Ab

r-00

Oct

-00

Ab

r-01

Oct

-01

Ab

r-02

Oct

-02

Ab

r-03

Oct

-03

Ab

r-04

Oct

-04

Ab

r-05

Pe

rce

nta

ge 138.5

20

40

60

80

100

120

140

160

Ab

r-95

Oct

-95

Ab

r-96

Oct

-96

Ab

r-97

Oct

-97

Ab

r-98

Oct

-98

Ab

r-99

Oct

-99

Ab

r-00

Oct

-00

Ab

r-01

Oct

-01

Ab

r-02

Oct

-02

Ab

r-03

Oct

-03

Ab

r-04

Oct

-04

Ab

r-05

Pe

rce

nta

ge




Capital Adequacy IndexCapital Adequacy Index



8

9

10

11

12

13

14

15

16

En

e-0

0

Ab

r-0

0

Jul-

00

Oct-

00

En

e-0

1

Ab

r-0

1

Jul-

01

Oct-

01

En

e-0

2

Ab

r-0

2

Jul-

02

Oct-

02

En

e-0

3

Ab

r-0

3

Jul-

03

Oct-

03

En

e-0

4

Ab

r-0

4

Jul-

04

Oct-

04

En

e-0

5

Perc

en

tag

e

Solvencia con RM Mínimo: 9%




Public Participation as % of Total Assets

* April 2005Source: Superintendency of Banking


16.2

33.0

14

17

20

23

26

29

32

3519

94

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

*

Per

cen

tag

e




Profitability and Efficiency (ROE) Return on Equity: Net Earnings/Equity (ROA) Return on Assets: Net Earnings/Assets



-4

-3

-2

-1

0

1

2

3

419

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

RO

A (

Per

cen

tag

e)

-40

-30

-20

-10

0

10

20

30

RO

E (P

ercentag

e)

ROA ROE




TOURISM – TOURISM – A BUSINESS OPPORTUNITY A BUSINESS OPPORTUNITY

There is a great potential for tourism to increase its share in Colombian economy

Source: National Tourist Registry

Country Comparison Share of GDP (2003)

0 3 6 9

Colombia

Ecuador*

Costa Rica

Argentina

México

%




TOURISM – TOURISM – LODGING CAPACITYLODGING CAPACITY

Source: National Security Department

Yearly upturns in the amount of incoming tourists point to the adequacy of lodging capacities.

520.000

600.000

680.000

760.000

1996 1997 1998 1999 2000 2001 2002 2003 2004

To

tal

inc

om

ing

to

uri

sts




TOURISM DIVERSITYTOURISM DIVERSITY

A world leader in destination diversity: EcologicalSun and beachesSports and adventureRuralAgrarian




PRODUCT DISTRIBUTIONPRODUCT DISTRIBUTION

84,98

26,19

20,56

14,85

8,53

5,89

0 20 40 60 80 100

%

Sun and Beaches

Ecotourism

Conventions

Other

None

Health Care

Prod

ucts

Leading Products Sold by Travel Agencies (2003)

Source: National Tourism Registry




TOURISM IN NUMBERS TOURISM IN NUMBERS

INDICATORS 2001 2002 2003

Total Sales (millons of US$)

1209 1350 1363

Incoming Colombians (thousands)

1381 1277 1061

Incoming Foreigners (thousands)

590 551 624

Hotels and Restaurants / GDP

2.11% 2.08%2.12%

% of Hotel Occupation 43.20% 43.4% 50%

Source: Central Bank, National Planning Department, Tourism Police




GUESTS – GUESTS – COUNTRY OF ORIGIN (2003)COUNTRY OF ORIGIN (2003)

Source: National Tourist Registry

22,59

2,74

3,64 4,01 4,43 4,7 5,49

11,13 11,2411,77

18,26

0

5

10

15

20

25

Others Brazil France Germany Italy Peru Mexico Spain Ecuador Venezuela UnitedStates

%




INVESTMENT INCENTIVES INVESTMENT INCENTIVES

Income tax exemption for ecotourist services providers

30 – year income tax exemption for new hotel developments and refurbishing to be conducted in the next 15 years.

Tourist Duty Free Zones

Duty free treatment on imports for lodging facilities




SELECT INVESTMENT PROJECTSSELECT INVESTMENT PROJECTS

Pereira – Natural theme park (Design and Construction)

Barú Island – Tourism developmentArmenia – Cultural Center (Construction)La Virginia – Turistical Promenade (Construction)

San Andrés, Cali and Popayán – Convention Centers




COLOMBIA’S COLOMBIA’S SOFTWARE INDUSTRY SOFTWARE INDUSTRY - OVERVIEW- OVERVIEW

2004 Cross-Border IT Exports: US$ 13 mill.

65 companies registered IT services contracts in 2003, totalling US$ 14.086.000.

82 companies totalling US$10.001.905 (Jan.-Jul. 2004).

Source: Central Bank, World Bank, Ministry of Trade, Industry and Tourism.

1995 2001

PCs / 1,000 people 16.3 42.1

Internet users (thousands) 68.6 1,154.0

Infrastructure




INTERNATIONAL STANDINGINTERNATIONAL STANDING

Source: Chudnovsky, D., López A. y Melitsko S., (2001)

Country Comparison – Software Industry Growth Rate 1992-1999

0 4 8 12 16 20

Spain

Mexico

India

Brazil

Argentina

Colombia

%




MORE FACTS ABOUT MORE FACTS ABOUT THE INDUSTRYTHE INDUSTRY

Source: DANE: EAM. EAC, Encuesta anual de serviciosSource: DANE: EAM. EAC, Encuesta anual de servicios

Constant innovation and accelerated development yield state-of-the-art solutions

Sectoral Growth Rate – Annual Average 2000-2002

-1

3

7

11

Added Value Employment

%Software

Trade

Industry




Source: Conectivity Agenda

A MULTI – FUNCTIONAL A MULTI – FUNCTIONAL INDUSTRY INDUSTRY

Software Demand by Economic Activity

0 16 32 48 64 80

Trade and services

Industry

Government

Financial

Education

Health and Social Security

Public Services

Construction

Transportation

Agriculture

Communications

Others

%




EXPORT EXPORT PRODUCTS POTENTIALPRODUCTS POTENTIAL

Development of software for the following sectors: Telecomunications and domestic public services Fixed and mobile telephone network, Cable television and

Internet Financial institutions Personnel Management.

Customer service mobile and wireless solutions Information systems:

Financial management and administration of physical resources

Accounting for the financial sector Management of mutual, investment and retirement funds Geographical information systems - GIS Management evaluation systems

Consulting services in: IT Project management, IT infraestructure diagnosis, computer

centers. SAP implementation in the education sector

Software manufacturing services, transfer of physical information contained in documents to electronic media

Content managers, intranets and extranetsSource: Proexport -

Colombia




ANTI – PIRACY LAW ANTI – PIRACY LAW ENFORCEMENTENFORCEMENT

Colombia reduced software piracy from 74% in 1994 to 53% in 2003. (International Data Corporation (IDC))

Piracy rate is below the average in Latin America - 63%. (Business Software Alliance)

Only country in Latin America featuring a network of software development clusters (Parquesoft), where highly innovative technological projects are being pursued. Each regional cluster is composed by companies exclusively engaged in software development for different economic sectors.

BucaramangaCaliTulúaBogotáEje Cafetero




Companies licensing software products with high national research content may benefit from a 10 year income tax exemption. (Law 788 of 2002)

INCENTIVES FOR INCENTIVES FOR INVESTORSINVESTORS




The country’s health care system was ranked first in Latin America and 22nd in the world (World Health Organization, 2000).

The industry is also credited by its Latin American peers as a leading regional provider.

Competitive costs and quality excellence.

COLOMBIA’S PRIVILEGEDCOLOMBIA’S PRIVILEGEDSTANDINGSTANDING




HEALTH CARE - HEALTH CARE - ADVANTAGESADVANTAGES

Solid physical/ technological infrastructure

Highly Qualified Human Capital Advantage

s

Longstanding experience and

prestige

Low costs in highly complex

treatments

Diversified portfolio of export

services




Recipient

Markets Costa Rica

Panama

Dominican

Republic

Aruba and

Curacao

Venezuela

Ecuador

Peru

A PROMISING A PROMISING POTENTIAL POTENTIAL

Areas of Expertise Kidney transplant

Bone marrow transplant

Endovascular transplant

Pediatrics

Obstetrics

Cardiovascular

Plastic surgery

Aesthetic dental practice

Fertilization

Ophthalmology

Cardiology




LOW COMPARATIVE COSTS FOR HIGHLY COMPLEX TREATMENTS AND INTERVENTIONS.

ELECTRONIC TRANSMISSION OF DIAGNOSES AND MEDICAL OPINIONS.

SIZABLE REGIONAL DEMAND FOR HEALTHCARE SERVICES

SPECIAL DUTY TREATMENT FOR IMPORTS OF HEALTH-RELATED GOODS AND INPUTS

OP

P ORTUNITIES

OPPORTUNITIESOPPORTUNITIES




ENGINEERING ENGINEERING SERVICESSERVICES

Advantages

Availability of highly

qualified personnel

(Master and PhD holders)

Quality management expertise that

meet or supersede

international standards

Technological and physical expertise

necessary to undertake very

demanding projects

Ability to maximize the use

of available resources.

Reasonable compensation

fees

Extensive experience in overcoming

topographical hardships

HIGHLY COMPETITIVE ENGINEERING SERVICES




The industry’s abilities - in brief

Development of Infrastructure projects

Study and design preparation; supervision of construction projects; quality management of energy, transportation, irrigation, mining and manufacturing projects.

Tariff estimation for specific projects, e.g., public services and toll systems.

Variable size-scale development of telecommunications projects.

Air photography, geodesy and topography, photogram try, cartography, photo interpretation, propriety surveys, evaluation and cadastre.

ENGINEERING ENGINEERING ABILITIESABILITIES




FACTSFACTS

The development of strategic domestic projects over the past years has put to test Colombia’s engineering abilities, while strongly positioning its industry to compete internationally. A 180-kilometer long highway (US $50,3 million) connecting several cities in the Colombian plainlands is only one example.

Participation in foreign high-tech projects adds on to this record:

Costa Rica: Hydroelectric projects, feasibility studies.

Peru: Roads design and rehabilitation, transmission lines and basic sanitation.

Dominican Republic: Roads concessions, environmental studies

Mexico: Design of transmission lines systems.

Venezuela: Hydrocarbon and gas transportation networks.

Puerto Rico: Electrical installation designing.




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Foreign Direct Inv

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