Colombia's tech sector a growth area to tap

Bogotá July 27, 2011

International Enterprise Singapore's centre director based in Latin America, Jocelyn Cai, talks about the opportunities for Singapore firms in one of Latin America's fastest-growing countries, Colombia.

Why should companies give Colombia a shot?

Colombia can be a comfortable starting point for Singapore-based companies that are new to Latin America. It recorded growth of 4.3 per cent last year and has a rapidly growing middle-class population. As a mid-sized economy, it may be easier to navigate than the larger economies, and is of the right market size to launch and/or market-test products.


What is the outlook for the economy?

As the fifth largest economy in Latin America, Colombia's trade and exports are still largely tied to the United States.

But it has also made efforts to tap regional growth. Earlier this year, the Chilean, Colombian and Peru stock markets were integrated and renamed the Mercado Integrado Latinoamerica (Mila). The stock exchange is the largest in the region for the number of issuers, the second largest in market capitalisation and third in terms of trading volume after Brazil and Mexico.

The President is still pushing for the markets of Chile, Colombia, Mexico and Peru. The four countries signed a formal alliance named 'Pacific Arc' in April to tap the growth of the Asian markets and in President Juan Manuel Santos' words, as 'a way to counterbalance Brazil'.

Colombia aims to diversify its trading partners. It announced plans in May this year to open trade offices in various Asian cities including Singapore. President Santos is scheduled to visit China in September.

The World Bank has ranked Colombia as the third best place to do business in Latin America after Chile and Peru. Colombia is ranked the fifth best place in the world for investor protection and top in Latin America.


Should I be worried about a lack of security and political stability?

Colombia has enjoyed economic stability and improved security in the last eight years. The country's previous president Alvaro Uribe drastically improved security against the drugs trade, Farc (Revolutionary Armed Forces of Colombia) and left-wing rebel groups, achieving economic growth during his eight-year term that ended in August last year.

His government was very effective in combating the Farc movement and confined it to the Amazon region, far from main Colombian cities. In Bogota, Colombia's capital city, the current security situation is no different to that in major developed cities like Washington and Philadelphia.

President Santos comes from the same party, making Colombia one of the few countries in the region with political continuity of more than 10 years in recent times.


Where are some of the business opportunities?

Technology services: The government has recently launched a National Info-communications Technology Masterplan known as 'Colombia Vive Digital' (or Colombia Lives Digitally). The masterplan aims to increase the availability and usage of connectivity throughout Colombia.

E-government solutions will be developed for traffic management, postal services/mobile value-added services; e-government systems will be implemented to digitally connect government institutions; and government officials will improve their capabilities in this area.

Stock markets: The integrated stock market presents opportunities for companies that have auxiliary products and services in the financial sector. This will represent a major IT integration effort - opportunities for financial software solutions, exchange related products, clearing houses, risk management tools.


Any tips for businesses?

A company hoping to tap the technology services growth should bear in mind that bids for government projects need to be fronted by a Colombia-based entity and tender documents are submitted in Spanish. Since the masterplan was released only last year, the government may make adjustments later.

Companies looking to expand into Colombia can work closely with IE Singapore to navigate the market and seek like-minded English-speaking local partners who can help you gain access into the market.

Tailor strategies to take into account the different regional differences: In Colombia, economic plans are largely driven by individual regions or 'departments'.

Generally, the capital city of Bogota is the seat of government, financial centre and hub for industries.

Medellin is seen as a strategic point for manufacturing and distribution of goods throughout the country. Many large home-grown firms, which are headquartered in Medellin, are now increasing their presence in the Atlantic coastal cities of Barranquilla and/or Cartagena, to gain access to the ports for imports and exports.

Cali, which is the closest major city to the main Pacific port, is home to the coffee growers and other agricultural and industrial products.

This is a weekly series brought to you by International Enterprise Singapore.

Fuente: www.straitstimes.com