Colombia’s post-pandemic economic reactivation began in earnest this week at the Colombia Investment Summit 2021, as a host of ministers and private business leaders, including President Iván Duque, asserted the safety, prosperity and opportunity that the South American nation offers foreign investors.
“The appetite to be in Colombia, to generate wealth in Colombia and to generate employment in Colombia, says it all,” said Duque, during his opening words to investors and media gathered at the Bogotá event, which began October 20 and will run for six days. (Nearshore Americas participated in the mission, organized by ProColombia).
“Colombia is a country founded on the principles of private property […] and private initiative,” he added.
“Friendshoring” Leads the Way
Colombia is seeking to attract some US$8 billion in foreign investment during 2021 as it attempts to steer into calmer waters following the economic impact of the pandemic that pushed the country, like the rest of the world, into recession.
In 2022 the country wants to increase foreign investment inflows to US$11.5 billion, and is pushing the idea of ‘Friendshoring’ – in which the country’s business-friendly character is demonstrated with tax breaks and incentives to companies able to create formal employment in a sustainable manner. So far, this approach has attracted projects from 20 nations including the US, India, UK and Canada, bringing US$848 million to the country.
A mixture of prime location as a connection point between North America and South America, a well-educated and young talent pool, and an assortment of incentives has made the country one of the region’s best performing Nearshore locations.
“The BPO sector in the country is growing at an exponential rate … whereas 10 years ago the companies here focused on customer service, the market is now moving towards becoming a provider of more value-adding services” — Paola Garcia
The IT services and BPO sector is collectively one of the most important sources of FDI in Colombia, María Ximena Lombana, the Minister of Commerce, Industry and Tourism told the summit. It represents the third-highest source of investment into Colombia after the agroindustrial and metal working industries.
Paola Garcia, Vice President of Investment at ProColombia, the investment promotion agency that helped organize the event, underscored Nearshore’s maturing role in Colombia’s economy.
“The BPO sector in the country is growing at an exponential rate. It has become a very important part of the country’s GDP. Whereas 10 years ago the companies here focused on customer service, the market is now moving towards becoming a provider of more value-adding services,” she said.
Garcia added that the country’s regional diversity and strong population figures in multiple regions is a differentiator that helps attract incoming companies.
“Colombia has a lot of regions where BPO services can be provided, unlike other regional markets. We have more than five cities with a population over one million and more than 10 others with populations over 500,000. This provides diversification and reduces the cannibalization of companies,” she said.
At the center of efforts, however, is Bogotá, which generates one-third of the country’s GDP. The economy of Colombia’s capital is larger than several Latin American countries, including Uruguay and Costa Rica, said Monica Sanchez, Investment Advisor at Invest in Bogotá.
Obstacles for further growth remain, however. A fundamental pillar of the Nearshore is English language proficiency, and though the country offers strong English abilities, it is eager to improve in order to build on and sustain the sector’s recent strong growth.
“We have a very deep pool of talent, and one of the challenges we face right now is to improve bilingual skills. We’re working very closely with local authorities to do that,” said Vice Minister of Commerce, Andrés Cárdenas.
Vaccination Efforts Spur Recovery
Among the reasons for foreign investors to choose the South American country is its strong vaccination rate. With around 45% of the population doubled jabbed, Colombia is far ahead of some neighbors, while it lags behind regional leaders like Costa Rica (60.7%) and Ecuador (61.4%).
“We have a very deep pool of talent, and one of the challenges we face right now is to improve bilingual skills” — Andrés Cárdenas
ProColombia President Flavia Santoro Trujillo explained that the investment promotion agency had moved quickly to make links with major pharmaceutical companies producing the vaccines. The ‘fill and finish’ (whereby vials are loaded with vaccines and then packaged) parts of the production process are already being carried out in the country, and this has added to interest in related customer service possibilities. Telemedicine services are growing in the country, she said.
ProColombia’s efforts are paying off. From September 2018 to September 2021, the investment promotion agency has helped bring 609 projects to the country, which are expected to generate around 271,000 jobs across 25 regions when fully operational. According to Invest in Colombia, in 2019 the BPO sector already represented 583,000 job positions, while the BPO and IT services sectors were considered essential services during the pandemic.