Growth in Foreign Entrepreneurship in Colombia
As the world becomes increasingly global and more companies choose to expand into new countries to boost their brand awareness and increase profitability, there has never been a better time to consider a country such as Colombia. Thanks to its growing economy, rich natural resources and optimal location, foreign entrepreneurs are flocking to the territory to set up new businesses, and are benefiting from low labour costs and low barriers to entry.
Below, we’ve put together some more information as to the growth of foreign entrepreneurship in Colombia, and share with you tips on how to best enter the market and maximise your return.
Colombia may not be at the top of everyone’s list when it comes to expanding into new markets, but the country has an improved business environment and is now considered one of the fastest growing economies in Latin America. Indeed, the latest reports suggest that the country will reach its growth potential of 3.5 per cent next year, with the new central bank board member Carolina Soto saying that she was optimistic and hoping the territory could expand even further.
Thanks to the country’s vast natural resources, which includes natural gas, petroleum and coal as well as gold, copper and emeralds, Colombia is one of LATAM’s healthiest economies. While the country had struggled in the 90s and early 2000s, the government has spent energy fighting against criticism and has focused on investment, both internally and from foreign investors, to create an economy that’s self-sustaining and on the up. The country also has seen its debt level drop; the Central Bank accumulated a stock of international reserves to stabilise the economy.
Home to more than 48 million people and rising, Colombia is the third-largest market in Latin America, with a higher than average GDP per capita of 6,301.59 USD when compared with El Salvador (3,889.31 USD) and Bolivia (3,393.96 USD), which means that citizens have a higher disposable income. What’s more, the country’s middle class is on the up, driving demand and consumption and allowing more businesses to thrive in the country’s growing market.
Attractive industries for foreign entrepreneurs
Whilst Colombia welcomes investments and entrepreneurs entering all industries, there are a couple particularly lucrative for international investors and entrepreneurs looking to make as much money as possible. Cattle accounts for 20% of the country’s agricultural output, which includes both meat and milk production. Thanks to the country’s location, cattle can be pastured throughout the year, and the World Organization for Animal Health (OIE) accredits the country as free of disease through vaccination, which allows products to be sold internationally.
Coffee is another popular industry in Colombia, as the country is the second-biggest producer of coffee beans in the world. Production is gaining momentum, and the region is set to produce millions of tonnes of coffee over the next several years. As an entrepreneur, you could utilise the vast supply of coffee to create a new luxury coffee brand, or sell beans to Western companies.
Finally, mining. The country is home to the largest reserve of coal in Latin America, and foreign investors spend millions of dollars extracting it from the country every year. The industry wants to reduce its ecological footprint whilst increasing productivity; as an investor with experience in the industry, you could benefit from the country’s expertise and rich natural resources here.
Colombia is ready for your investment
Whilst some countries in Latin America have strict regulations in place when looking to expand and invest, Colombia is considered to have one of the most open and relaxed attitudes towards investors, actively welcoming them into the country. The government particularly welcomes any investments in mining and agriculture, and because of the country’s low amount of bureaucratic processes, it can be easy to set up a new business within the country and start earning money.
Investors from other countries looking to invest in Colombia can enter any sector, excluding the obvious defence, national security and radioactive waste. Unlike in some countries, there is no FDI (foreign direct investment) authorisation required, but businesses must register with the Central Bank of Colombia (known locally as the Banco de la República). Once you have applied for an investment visa within the country, you can set up a new business in no time at all.
Expanding into Colombia
If you’re thinking about expanding into Colombia, then there are lots of things that you need to take into consideration. As we’ve already mentioned, it’s easy to get a visa and invest in the country, but you must think about the language and cultural barriers and have a unique selling point if you’re hoping to sell products or services in the market. If you’d like to use the country to manufacture products to sell in your home country, then you must also think about recruitment.
Forming a company and recruiting for talent within the country shouldn’t be too difficult, but it can be time-consuming and expensive. Instead, you could consider working with a Professional Employer Organisation (PEO) who will employ talent on your behalf, which means that you do not have to register a business in the country or worry about human resources or meeting the local regulations. It’s a technique that many businesses are using in the territory to lower their risk and employ top talent, without having to spend months swatting up on legislation.
As the founder of the Biz Latin Hub, says that he has “seen a huge increase in the number of foreign investors looking to utilise services such as PEO to grow their businesses in Colombia. Not only does this lower the barrier to entry and make it easier for startup businesses to get involved in expansion, but it takes away some of the pressures of learning a language and getting to grips with the different cultures and attitudes of doing business within the country.”
If you’re thinking about investing in Colombia, you should weigh up your opportunity costs and take your time. With the right strategy and some hard work, you’ll be able to make money and take your brand to the next level. We wish you the best of luck with your Colombian venture!