The United States Department of State recently presented the update of the report on the investment climate in Colombia for 2024, which is a roadmap for companies and investors in that country that want to enter the local market in the face of the risks and opportunities that must be taken into account, reviewing aspects such as the state of the economy, current regulations and the social and governmental context.
On this occasion, the US government assured that although the conditions are acceptable, there are six obstacles or risk points that cannot be overlooked when looking at this Nation, among which stand out issues such as the investment grade, the slowdown that has been experienced for months, corruption and the noise that has been generated lately with the regulatory changes that the Petro Government is seeking.
USA
The challenges raised in this document also touch on points such as the reforms that have been announced and the lack of incentives for foreign investment, as well as persistent bureaucratic barriers. It is worth remembering that beyond a criticism or reason for not coming to the country, the United States sees these problems as opportunities for improvement.
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Slowdown and reversal
One of the first aspects that the State Department addressesor in its report is the investment grade, highlighting that the country remains at low levels since 2021 and that this may influence investors’ risk perception, despite the fact that it is a market with more than 52 million citizens since the arrival of external capital has remained strong in recent years.
White House
“The Colombian economy expanded by only 0.6% in 2023, marking a substantial slowdown after two years of strong post-pandemic recovery. A 25 percent decline in investment, high interest rates and a weak business climate deteriorating conditions contributed to the marked slowdown in growth,” he said.
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They also indicated that “according to the Fedesarrollo Financial Opinion survey and the Colombian Stock Exchange, economic analysts forecast a median GDP growth of 1.4% for 2024” and that foreign investment grew by just 1.5% between 2022 and 2023, while “approximately half of the Colombian workforce in metropolitan areas is employed in the informal economy, a figure that increases to four-fifths in rural areas.”
Dollars.
The United States, in agreement with what was said by the centers analysis in the country, maintains that the sectors that are not doing well have already been identified, such as construction, manufacturing and commerce, while public administration and the subsectors associated with it are those that are keeping the country’s economy afloat in recent months.
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Although this report makes it clear that the conditions for investing in Colombia are good, the United States warns that in the recent context, with the announcements of the National Government and the reforms that are and will be moved in Congress, an atmosphere of concern has arisen among companies, since it is not known how these projects will end.
Digital investment
“The Colombian government approved a tax reform that came into effect in January 2023, seeking to reactivate the economy, generate employment and contribute to the country’s fiscal stability. It also seeks to reform the health, labor and pension systems, which has generated concern among investors,” he began by saying.
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At this point, he also put the spotlight on the fact that “immediately after Petro’s health reform was shelved in early April 2024, the National Health Superintendency (Supersalud) in Colombia took control of four health insurance providers, including the two largest in Colombia, for one year,” leaving almost half of the health system users under its tutelage (25.1 million people).
Foreign direct investment
The analysis also indicates that the private sector has denouncedor that “ministries do not consult with all relevant stakeholders when drafting regulations” and that proposed laws and regulations, including those related to investment, are often published as drafts for public comment, although often with limited notice, while there is no “centralized online site where key regulatory actions are published.”
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Regulations and corruption
In another chapter on the country’s investment climate, the State Department recalls that Colombia has a solid legal framework for managing the arrival of foreign capital and that the Trade Promotion Agreement between the U.S. and Colombia, signed in 2012, has strengthened bilateral trade and investment, although there are still several points that have not been implemented.
Investment in Colombia.
In this sense, beyond protecting intellectual property rights, They claim that local authorities are interested in “pursuing the granting of compulsory licenses for some pharmaceutical products,” while other fronts such as smuggling are advancing and are a threat in this regard.
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“Corruption remains a significant challenge. U.S. and other investors voice complaints about non-tariff, regulatory, and bureaucratic barriers to trade, investment, and market access at the national, regional, and municipal levels. Stakeholders express concern about more limited access to some ministries and agencies in the Colombian government during the Petro administration,” they said.
Gustavo Petro
On the other hand, taking note of what investors in Colombia have said, the United States says that points such as the lack of effective and timely consultation with regulatory agencies, staff turnover and the loss of technical experience in government agencies must be improved. the absence of leadership in key regulatory agencies for almost two years and the slowness of processes in authorities such as Invima.
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“Despite the announcement of support for foreign investors, the Petro administration has not announced new tax incentives and approved a tax reform in 2022 that increased costs for most companies. Potential investors report that the structural reforms proposed by Petro in sectors such as labor, pensions, electricity and health have generated additional uncertainty,” they said.
Colombian pesos
Finally, while the United States Government does not make recommendations,s on how Colombia can address these threats, since it is a report for companies that want to come to the country, with this data on the table it makes clear which are the points that need to be worked on urgently if we want to strengthen one of the indicators that has hurt the economy the most these days: investment.
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