An overview of Foreign Direct Investment in Colombia

29 of January of 2018

An up-to-date look at Foreign Direct Investment in Colombia

Foreign Direct Investment (FDI) in Colombia is one of the most influential factors in the country's economy and it has become a determining factor with regards to Colombia's development. Were you aware that Colombia received the second-highest flow of Foreign Direct Investment in Latin America in 2016, as a percentage of GDP, according to The Economist? It represents about 4.8% of the total, which is just one element attracting entrepreneurs on the hunt for their next investment destination in the region.

Colombia's Banco de la República figures show that Europe contributes 34% of the FDI in Colombia. The region invested USD $29.9bn in Colombia between 2011 and 2016, and 4.7bn of that was in 2016. According to the Financial Times, 314 investment projects have been identified in the past five years, which are mainly focused on the services sector: towards companies, software, IT and finance. Of Europe's investment projects in Colombia, 38% were undertaken in Bogotá, 8.6% in the department of Atlantico and 7.6% in Antioquia.

If we take a look at Asia's Foreign Direct Investment in Colombia, we can see that Asian countries invested USD $737m, between 2011 and 2016, and $105m of that was in 2016 alone. Asia's investment in Colombia in the past five years was focused on the business services, chemicals and communications sectors.

Click here for sectors with opportunities for investment in Colombia)

Countries with the chance to invest in Colombia

Another factor that has drawn attention to Colombia is the fact the country was named one of the 25 top Foreign Direct Investment destinations, according to the United Nations Conference on Trade and Development (UNCTAD 2017) However, there are still plenty of business opportunities for investors from certain countries who have shown an interest in taking their capital abroad.

It's important to mention the intensity of Foreign Direct Investment in Colombia. An investment intensity index allows us to measure the degree to which a country is likely to invest in Colombia. The index is measured from 0 to 1. If the index is equal to the unit (1) then that country's participation in FDI in Colombia is proportional to its FDI worldwide. If the number is lower, the country makes a significant global FDI, but its investment in Colombia is not proportional.

Countries that recorded an investment intensity index of below 1, between 2010 and 2015 (that is to say, countries that are missing out on business opportunities in Colombia) include: Germany, Japan, Italy, Norway, Sweden, Ireland, South Korea, China, Denmark, Belgium, Singapore, Portugal, Israel and India.

Germany invested USD $94.3bn in Foreign Direct Investment worldwide in 2015, but only 0.2% of that was in Colombia. Germany has a high investment potential in the region for sectors such as automotives, auto parts and renewable energy.

Sweden, on the other hand, has a high investment potential in Latin America in sectors such as metals and consumer appliances, as well as in the automotive industry. Sweden issued USD $23.7bn in 2015, but only 0.6% of that was Foreign Direct Investment in Colombia.

And finally, Norway issued USD $19.4bn of FDI worldwide in 2015 and just 0.5% was invested in Colombia, Norway's opportunities for FDI in the region are in sectors such as renewable energy, metals and financial services.

Here PROCOLOMBIA presents three countries that have huge opportunities to invest in Colombia. Would you like to invest in Colombia? Remember that we're here to accompany every step of the way and we have a portfolio of services for investors that you can find here.

Would you like to know why to invest in Colombia? Find out more here and remember that at PROCOLOMBIA, we'll accompany you every step of the way.