Your Next Big Client Could Be in Colombia

Slashed tariffs, juicy economic incentives, and billions in government investments. Why Canadian businesses should take notice of South America's newest powerhouse

Written by John Lorinc

Two years after Canada and Colombia signed a trade agreement that slashed Colombia’s export tariffs by as much as 20% on a range of goods and commodities, Colombian trade officials say the business exchange appears to be thriving, especially in resource sectors like mining, oil and gas exploration and forestry.

But in recent months, there’s been a hitch in Colombia’s efforts to entice more Canadian firms to set up shop in the country’s free trade zones or establish supplier relationships with Colombian companies. A strike by Canadian consular officials has prevented Colombians and others from getting visas to Canada, forcing a “business mix-match” event, scheduled for September 4, to re-locate from Toronto to Chicago. According to representatives for ProExport, the Colombian government’s trade promotion organization, the show will allow about 300 Colombian exporters and suppliers to meet some 200 North American firms, including several Canadian apparel companies.

In fact, ProExport Canadian trade commissioner Alvaro Concha says that 24 Canadian businesses showed up for a recent Colombian fashion industry trade show, including uniform manufacturers and companies looking for high quality leather. “In past years, this office has never gotten more than 10 [Canadian firms]. Now we’re seeing there may be more interest.”

Concha adds that his government is also trying to encourage foreign entrepreneurs to set up shop in the country’s eight free trade zones, where investors willing to establish operations may qualify for certain incentives, such as reduced income tax rates and subsidies for employee benefits.

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ProExport officials say there are about 70 Canadian firms currently taking advantage of such inducements, such as tool and die powerhouse Exco Technologies of Newmarket, Ont. and the geotechnical testing firm ActLabs Group based in Ancaster, Ont.

The other potential opportunity, notes Concha, involves infrastructure. Colombian president Juan Manuel Santos recently pledged to increase infrastructure spending from 1.5% of GDP to the 3-4% range, and has dedicated $20 billion toward anticipated investments to modernize the country’s transportation networks. “We are presenting those projects to investors,” says Concho.

In the run-up to the 2014 FIFA World Cup and the 2016 summer Olympics, Brazil is also making multi-billion-dollar investments in infrastructure, often through public-private partnerships. While those deals typically involve huge firms, many downstream opportunities will be created for suppliers of goods, equipment and services.

Colombia is South America’s third largest economy, with low unemployment rates, a growing middle class and thriving urban centres like Bogota. Foreign direct investment in 2012 was US$12.8 billion, including $1.8 billion from Canadian firms, most in the mining sector. In the wake of the violent drug cartel wars in the 1980s and 1990s, the Colombian government has worked hard to remake the country’s image by aggressively promoting trade and tourism.

Related: 5 Powerful Reasons to Sell Your Product Overseas

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