Invest

in

Colombia

Hard-Working, Commited, Talented

Textile & Apparel

Industry
September 2009

Contents

1. Where have we come from?

2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop production
projects in the Textile & Apparel Industry:
1.
2.
3.
4.
5.

For the access to markets

For the domestic market
For the industry track record
For the competitive human resources
For the legal incentives and special tax regimes

4. Conclusions

Contents
1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop production
projects in the Textile & Apparel Industry.
1.
2.
3.
4.
5.

For the access to markets

For the domestic market
For the industry track record
For the competitive human resources
For the legal incentives and special tax regimes

4. Conclusions

The country has shown a consistent growth

higher than that of Latin America.
GDP Growth Rate: Colombia (2000 2008) %
Projection

2009

2010

Col

L.A.

Col

L.A.

Latin Focus

2.1

1.1

3.0

2.9

EIU

-3.0

-1.2

1.5

1.7

IMF

3.5

3.2

5.0

4.1

Source: DANE (National Accounts), DNP, EIU (Market Indicators &

Forecasts)
Note: * Last Update: April 7, 2009

Huge increases in FDI, exports and foreign

visitors
Exports

2002/2008 Increases

US$
Millions

214%
US$
Millions

FDI

395%

Millions of
Visitors

Tourism

Source: DNP, Banco de la Repblica (Central Bank),

Note: * (pr) Preliminary Projection

120%

Market confidence: recovery of investment

rating (coming soon)

Foreign Currency Debt

Risk Analysis
2003

2008

STANDARD
& POORS

BB

BB+

Moodys

Ba2

Ba1

Fitch

BB

BB+

Outlook

Source: Standard & Poors, Moodys, Fitch

Violence levels have declined

dramatically
2002/2008 Decreases
-44%

-85%

-50%
Source: Ministry of
Defense

The specialized press has shared our

development with the world

Contents
1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop production
projects in the Textile & Apparel Industry.
1.
2.
3.
4.
5.

For the access to markets

For the domestic market
For the industry track record
For the competitive human resources
For the legal incentives and special tax regimes

4. Conclusions

Commercial agenda: preferential access to 1.2

billion consumers
We increased our preferencial access from 233 million consumers
in 2002 to 1.2 billion consumers in 2010
2002

2010

2011 Investment agreement agenda:

19 IPPAs with 42 countries, and DTTs with 23 countries
Double Taxation Treaties (DTT) International Investment Agreements (IIA)
Both instruments will be available to all commercial parties
2002

2010

Second most friendly country in Latin

America in the Doing Business 2007-2009
Two years as the most reforming
country in Latin America (2009)
Country

Ranking
2007

Ranking
2009

Chile

28

40

Colombia

79

53

Mexico

43

56

Peru

65

62

El Salvador

71

72

81

81

117

97

101

113

Costa Rica

105

117

Brazil

121

125

Ecuador

123

136

Venezuela

164

174

Colombia Panama
jumped 26
Dominican Republic
spots in
two years! Argentina

Source: Top Reformers Report. World Bank

Most competitive Free Trade Zones in Latin America:

15% profitability and allow sales to the local market
Goods
Investment in millions
US$ 29.81

Capital Gains Tax 15%

No Customs taxes are incurred or paid (VAT,
Tariffs)

Benefits of international trade agreements.

Share in the local market

150

Services
Investment in millions
US$ 1.99 9.94

Direct Jobs
500

AgriBusiness - BioFuels
Investment in millions
US$ 14.91

Direct Jobs

Direct Jobs
500

ZFU- Cauca Nario, Huila, Caquet, Putumayo.

Investment in millions
US$ 1

Direct Jobs
50

13

56 Free Trade Zones

Approved Free Trade Zones

Figures for New FTZs

Total Investment (USD Millions)

4,668

Direct Jobs

39,620

Indirect Jobs

86,137

14

Colombia offers legal stability contracts as a

guarantee for investment projects

Conditions

Term

Approved
Contracts

For amounts greater than US$ 1,500,000

A bonus paid to the Government of 1% of the investment.

Up to 20 years

41 legal stability contracts, as of February 2009

Contents
1. Where have we come from?
2. What are we doing now?
3. The reasons why Colombia is an attractive place to develop production
projects in the Textile & Apparel Industry.
1.
2.
3.
4.
5.

For the access to markets

For the domestic market
For the industry track record
For the competitive human resources
For the legal incentives and special tax regimes

4. Conclusions

Colombia has positioned itself in recent years as a

center for apparel production and fashion in Latin
America
The Apparel industry production grew
11.8% in real terms* from 2006 to
2007.

The Apparel and Textile Industries

generate more than 800,000 direct jobs,
which represents 12% of the total labor
force in the manufacturing industry.

Textiles and Apparel exports on average

represent 12% of non traditional exports
from Colombia, during the last five years.

*Prices from year 2000

The textile and garment production

exceeds US$ 2.5 billion annually

The production of fibers and yarns, fabrics and garments grew at a real
rate of -3.3%, 8.6% and 11.8% respectively during 2007.

Source: DANE (National Department of Statistics)

B and is especially strong in garments such

as T-shirts and Jeanswear
Total Industry Production - 2007

Garments, 72% of the total

Textile and Apparel Industry
production in 2007.
Fibers and Fabrics share the
remaining 28%

Source: DANE (National Department of Statistics)

80% of the industry activity is concentrated in the

regions of Antioquia and Bogot

Textile sales by region - 2007 - US$ millions

Region

Operating Sales

Operating Costs

Operating Profits

Share of Sales %

Bogot
Antioquia
Atlntico
Cundinamarca
Risaralda
Tolima
Valle
Cauca
Cesar
Caldas

1,060.1
974.3
109.5
75.4
66.1
26
17.3
7.9
3.9
2.8

818.2
796
92.7
57.2
48
24.2
14.4
6.9
3.5
2.2

241.9
178.2
16.8
18.2
18.1
1.8
2.8
1.0
0.4
0.6

45.2
41.6
4.7
3.2
2.8
1.1
0.7
0.3
0.2
0.1

Santander
Bolvar
Quindo
Total

0.9
0.3
0.3
2,344.7

0.6
0.3
0.2
1,864.40

0.3
0.1
0.1
480.4

0.04
0.01
0.01
100.0

Source: DANE (National Department of Statistics)

Textile & apparel export industry :

12% of non-traditional exports from Colombia
in the last five years.

Source: DANE (National Department of Statistics)

Although we export textiles, more than 65% of

industry exports are dedicated to value-added
clothing of knit fabrics: US$ 1,381 million
Main Destinations

Garment Exports 2008

Country

Weight in
Tons

FOB value
US$ million

FOB Share (%)

Venezuela

20,213

777

56.2

United States

17,096

283

20.5

Mxico

2,725

91

6.6

Ecuador

1,904

67

4.9

Costa Rica

632

21

1.5

Peru

656

19

1.4

Puerto Rico

427

14

1.0

Others

6,866

111

8.0

Total

50,518

1,382

100.0

Total : US$ 1,382 million

Source: DANE (National Department of Statistics)

Source: National Department of Statistics, DANE

Venezuela and Ecuador are the main importers of

Colombian textiles to satisfy domestic industry
demand
Textile exports - 2008

Principal destinations

Destination

FOB Value
US$ million

FOB Share (%)

Venezuela

527.2

71.0

Ecuador

73.5

9.9

Mexico

35.6

4.8

United States

22.3

3.0

Brazil

15.6

2.1

Others

68.3

9.2

Total

742.6

100.0

Total : US$ 742 million

Source: DANE (National Department of Statistics)

1. For the free market access

of more than US $207,000
million annually*

Thanks to Trade agreements signed

with countries in America and
Europe, Colombia has become a
production and distribution center for
South, Central and North America.
Additionally, transportation costs and
lead times are better when
compared to Europe or Asia.

* GDP at 2007 prices, DANE (National Department of Statistics)

0% Tariffs for textile & apparel exports to American

and European markets
Agreement

Andean Community

FTA G2
SGP - PLUS
FTA- Chile
FTA USA
FTA- EFTA*
FTA-Canada
Mercosur
FTA North triangle

Countries
Bolivia
Ecuador
Venezuela (until
2006)
Peru
Mexico
Europe
Chile
United States
Liechtenstein
Norway
Iceland
Switzerland
Canada
Brazil
Argentina
Paraguay
Uruguay
Honduras

Source: Proexport

Average Tariff

Average Tariff for

Colombia

0%

0%

20% - 35%
6% - 12%
6%
0% - 38%

0%
0%
0%
0%

6% - 12%

0%

10-20%

0%

6%-26%

0-13%

10-15%

0-5%

Colombia is a privileged site as export hub

of the Americas
5:30 New York
3:00 Miami

4:30 Mexico City

1:40 Caracas

Bogot, only a 3 hour flight

from Miami and 5 hours
from So Paulo and New
York

2:30 Lima

5:45 So Paulo
5:00 Santiago

6:10 Buenos Aires

2. For the domestic market

of more than US $900 million

During 2008, textile imports totaled

more than US $952 million and
apparel imports US $407 million.
Colombia mainly imports fibers and
synthetic filaments.
Market segments such as
Jeanswear and Lingerie are highvolume importers of raw goods and
materials for production.

The local textile production does not cover

domestic demand, therefore Colombia imports
more than 50% of textiles used in local industry

Source: DANE (National Department of Statistics)

Source: National Department of Statistics, DANE - PROEXPORT

66% of imports are fibers and synthetic

fabrics
Textile imports - 2008

Imports origin
Country

Weight in Tons

FOB value
US$ million

FOB Share (%)

China
United States
Mexico
India
Brazil
Taiwan
Pacific FTZ in Col
Peru
Pakistan
South Korea
Others
Total

43,259
20,427
22,033
29,910
9,514
13,250
20,093
5,999
8,619
6,997
52,994
43,259

191.9
125.4
83.8
80.5
49.0
42.6
40.2
35.4
31.4
29.1
242.4
951.8

20.2
13.2
8.8
8.5
5.2
4.5
4.2
3.7
3.3
3.1
25.5
100.0

Total: US$ 952 million

Source: DANE (National Department of Statistics)

Cotton fabrics, artificial fibers and

fabrics, the most demanded by the local
industry
Local Sales - Textiles - 2006 (%)

Total: US$ 3.32 billion

Source: DANE (National Department of Statistics), Manufacturing Survey.

Exchange Rate: Col$ 2,361 / US$

Colombia mostly imports Garments and Knitted

Clothing Accessories

Imports Garment - 2008

Total: US$ 407 million

Source: DANE (National Department of Statistics)

3. For the textile & apparel

industry track record

Companies such as Coltejer and

Fabricato have been producing for the
local market and abroad for over 100
years.
The textile & apparel market involves
more than 6,000 companies with sales of
more than US $4 billion in the year 2007 .

More than 100 years of experience and

development

Industrial production represents 11% of all

manufacturing activity and 1.7% of Colombian
GDP, while generating 600,000 jobs.
Shifting from 807 to Full Package production
schemes to develop the industry vertically,
Colombian companies offer the full service:
everything from design in niche markets to
Lingerie and Jeanswear.
Colombia has specialized in becoming a design
reference center for Latin America.

Medelln is the production center for textiles and

apparel in Colombia.

One of the most important fashion shows

in Latin America takes place in Medelln

Colombia is recognized in Latin America

for its fashion shows, especially for events
like Colombiatex and Colombiamoda
which attract recognized international
companies.
Colombia has a 0.31% and 0.17% share
of the world market value in textile and
apparel production
respectively, and
0.25% in the fashion show market.

4. For the competitive

human resources
Colombias labor costs are among the
the lowest in Latin America. Labor
flexibility and the availability of skilled
human capital enables production
projects in Colombia to be profitable.

Colombia, high labor productivity and

few labor disputes

According to EIU*, Colombian

workers occupy second place
in labor productivity in Latin
America, measured by:
Number of annually labor
strikes,
Labor productivity

Scale: 10: Outstanding 0: Worst.

Source: EIU * (Economist Intelligence Unit) 2009.

One of the most competitive labor forces

in Latin America.

Availability of Skilled Labor

Venezuela
Venezuela

3.52

Argentina
Argentina

3.58

Brazil
Brasil
Mexico
Mxico
Chile
Chile

Colombia
Colombia

Competitiveness - Senior Management

Venezuela
Venezuela
Argentina
Argentina
Mxico
Mexico

4.41

Colombia
Colombia

4.72
5.79
6.28

Brazil
Brasil

Chile
Chile

Source: IMD, World Competitiviness Year Book, 2008 Score /10

2.48
4.13
4.26
4.94
5.08
6.89

Labor costs in Colombia are below the

average in Latin America
US$ / month

P: Provisional
F: Estimated
Source: EIU, 2009

According to Werner International, Colombian industry

labor costs are among the lowest in Latin America

Source: Werner International

Demand for Labor and Labor Costs in the

Colombian Textile Industry 2006 - 2009
Employee Type

The Colombian Textile Industry workforce is

highly skilled, 22% of the total employed
population works in this industry.

Variable
Salary & Wages
Monthly Salary
Social contributions
Monthly Payroll
Monthly Salary Cost US$
Exchange Rate

Total

Number of
Workers
132,021

Permanent

53,097

Temporary

34,791

Others

44,133

2006 US$
2009 US$*
339.8 million
214.5
273.9
229.0 million
144.5
184.5
359.0
458.4
2,361.1
2,252

*Adjusted for inflation and exchange rate

m. monthly
Source: DANE, Banco de la Repblica (Central Bank), Colombia

The average salary for a Textile

Industry worker is US$ 274 (m) in
2009, whereas the minimum
salary is US$ 221 (m). This salary
is locally and internationally
competitive.

5. For the legal incentives and

special regimes for foreign trade.

Colombia is a country with positive

investment conditions. Not just competitively,
but also in terms of the legal framework,
which provides excellent incentives.

Types of Free-Trade Zones

PERMANENT FREE-TRADE ZONE

SPECIAL PERMANENT OR SINGLE

ENTERPRISE FREE-TRADE ZONE

Can be new or existing zones, organized as an

industrial park, wherein companies develop their
industrial goods and services for trade .

Authorized such that only one company, using its own

facilities, develops their industrial goods and services
for trade.

Most competitive Free-Trade Zones in Latin America:

15% profitability, allow sales to the local market

Goods
Investment in millions

Capital Gains Tax 15%.

US$ 29.81

No Customs taxes are incurred or paid (VAT,

Services

Tariffs).

Direct Jobs
150

Investment in millions

Direct Jobs

US$ 1.99 9.94

Benefits of international trade agreements.

Sales to the local market.

500

AgriBusiness - BioFuels
Investment in
millions
US$ 14.91

Direct Jobs
500

43

Some tax deductions

40% deduction on the value of investments made in Real Productive Fixed Assets.
100% deduction on industry, commerce, advertising & publicity, and property taxes
so long as they have been paid in the respective tax year and are coincidentally
related to the economic activity of the taxpayer.
25% deduction of the tax on financial transactions, regardless of the type of
economic activity of the taxpayer.
125% deduction on capital gains taxes for science & technology projects.
VAT exemption on products designated for export.
Vallejo Plan: VAT exemption on the temporary import of raw goods and materials
for the production of finished goods designated for export.

Special regime for foreign trade,

Vallejo Plan for raw goods and materials

Allows: the import of raw goods and materials for the production of a determined amount
of finished goods.
Benefit: imports are completely exempt from customs taxes (VAT and Tariffs) for a
determined amount of finished goods.
Obligation: to export all finished goods to third-party countries in a determined period (18
months).
User: any company that requests these privileges to the DIAN (National Customs and Tax
Administration).

The Junior Vallejo Plan or Replacement Plan

Allows: that goods exporters, whose production process has used a determined amount of
imported raw goods and materials subject to Customs taxes and VAT, may import the same
quantity of raw materials with tax exemptions.
Benefit: raw materials imported exempt from Customs taxes (VAT, Tariffs).
Users: any company exporting finished goods.
Obligation: guaranteed export of finished goods having used the imported raw materials.
Difference with the sale price of raw materials: there is no need to present additional
evidence or samples, just export and import declarations of finished goods along with
descriptions of the raw material.
Customs mechanism used mostly for SMEs

The 807 Vallejo Plan

Allows: the temporary import of raw goods and materials by an 807 type manufacturer for
s assembly only into a finished good destined for export
Benefits: 1. Import of raw goods and materials exempt from Customs taxes (VAT, Tariffs).
2. Not necessary to pay non-refundable import taxes
3. And as the goods/services are exported, they are billed without VAT.

Users: 807 type manufacturers (Assembly only plants)

Obligation: guaranteed export of 100% of the goods produced by assembly only
manufacturer.

The use of the highly exporting users

(ALTEX) framework

Requirements for recognition:

Export activity of more than FOB value of USD $2 million during the 12 months prior to
application submission.
The value of the direct exports, or value determined through the Customs
Intermediary Society, must account for at least 30% of the total sales for the year prior
to application submission.

The use of the highly exporting users

(ALTEX) framework
The following is achieved:
Efficiency in the supply chain: Presentation of global shipping applications to make
partial exportations, elimination of physical customs inspections (some exceptions) or
site inspections.
Cash Flow Increase : Single worldwide guarantee to the DIAN, on all imports and
exports.
Taxation: Exemption from VAT in the import of industrial equipment not produced in the
country destined for raw materials transformation.
In the production chain: Authorization as private deposit for industrial processing.
Joint Qualification: Possibility of being both UAP (Permanent Customs Users) and
ALTEX certified.
.

Other frameworks such as the customs deposit

authorization for industrial processing
Allows: the storage of raw goods and materials that will be submitted to
transformation, processing or industrial manufacturing.
Users: highly exporting users (ALTEX) and Permanent Customs Users (UAP).
Benefit: possibility of importing under temporary import conditions, goods intended for
industrial processing, without incurring customs or value-added taxes.
These imports are for the production of finished goods destined for export only.

Customs mechanism used mostly by textile and metalworks companies

Contents
1.

Where have we come from?

2.

What are we doing now?

3.

The reasons why Colombia is an attractive place to develop production

projects in the Textile & Apparel Industry.
1.
2.
3.
4.
5.

4.

For the access to markets

For the domestic market
For the industry track record
For the competitive human resources
For the legal incentives and special regimes

Conclusions

Recognized companies have invested in Colombia

DuPont de Colombia S.A.

In 1963, this company began operating directly in
Colombia in diverse commercial areas such as
Textile and Nylon Industry products, advanced
fiber systems, polymers and packing materials,
lycra, photopolymer sheets for marking
packages, security holograms, and much more.
Colombia has a privileged geographic
location that makes her a stepping stone,
an equidistant point for all regional markets
Guillermo A. Heins, President & General
Manager for Colombia, Ecuador, Peru and
Venezuela, DuPont

Through the years in Colombia, DuPont has

established important alliances.
In addition, DuPont de Colombia S.A., the
corporation and the associate companies in the
country, have made excellent investments in the
automotive, textile, housing, paint and other local
industries.

Recognized companies have invested in

Colombia
Coats Cadena S.A.
Coats is the largest manufacturer and provider of
industrial sewing and embroidery threads in the world.
The wide range of Coats products provide solutions for
every application for jeans, athletic shoes, airbags or
even bulletproof vests.
Our global product offering, and the availability of our
brands of the highest quality, offers the best products
and services to satisfy global specifications in 67
countries all over the world. This range of products is
backed up by Coats Sewing Solutions value-added
services to help you improve your sewing capability,
allowing you to offer better-quality sewn products in
less time.

Proexport will provide you with world class services

Customized Information
Contacts: with the public and private sectors
Agendas: Organization of, and accompaniment during visits to Colombia
On-Site Investors Service
Free and confidential: All services are free-of-charge and all information
provided in the process is treated as confidential.

Trade offices of Proexport

around the world

Trade offices
Trade agencies