INDIRA SCHOOL OF BUSINESS STUDIES

PROJECT

ON

KNOW YOUR GLOBE -2

COLOMBIA

Submitted by:

Meenal Jain

Roll no: 32

PGDM(IB)

ACKNOWLEDGEMENT

Any task done is never the accomplishment of one individual. Rather it is an amalgamation of the efforts, ideas and cooperation of a number of people. It gives us immense pleasure to take this opportunity to thank all those who helped us in successfully completing this project. This is to acknowledge our sincere thanks and gratitude to all those concerned, who have contributed in significant or small measures towards this project. I Would like to thanks to our deputy director Raheja sir for giving us the platform to know about different countries

We would like to sincerely thanks to our mentor Prof.. Zohra Zabeen for providing us with the wonderful opportunity to work under her able guidance and her endless support throughout our project work. We would also like to express our gratitude to her for her continued involvement with the project.

COLUMBIA

INTRODUCTION

The word "Colombia" comes from Christopher Columbus . It was conceived by the Venezuelan revolutionary Francisco de Miranda as a reference to all the New World, but especially to those territories and colonies under Spanish and Portuguese rule. The name was later adopted by the Republic of Colombia of 1819, formed out of the territories of the old Viceroyalty of New Granada

Colombia , officially the Republic of Colombia , is a constitutional republic in northwestern South America. Colombia is bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the CarWith a population of over 45 million people, Colombia has the 29th largest population in the world and the second largest in South America, after Brazil. Colombia has the third largest population of any Spanish speaking country in the world after Mexico and Spain.

Environmental issues in Colombia

The environmental challenges faced by Colombia are caused by both natural and human hazards. Many natural hazards result from Colombia's position along the Pacific Ring of Fire and the consequent geological instability. Colombia has 15 major volcanoes, the eruptions of which have on occasion resulted in substantial loss of life, such as at Armero in 1985, and geological faults that have caused numerous devastating earthquakes, such as the 1999 Armenia earthquake. Heavy floods both in mountainous areas and in low-lying watersheds and coastal regions regularly cause deaths and considerable damage to property during the rainy seasons. Rainfall intensities vary with the El Niño-Southern Oscillation which occurs in unpredictable cycles, at times causing especially severe flooding.

Human induced deforestation has substantially changed the Andean landscape and has started to creep into the rainforests of Amazonia and the Pacific coast. Deforestation is also linked to the conversion of lowland tropical forests to oil palm plantations. However, compared to neighbouring countries rates of deforestation in Colombia are still relatively low. In urban areas, the use of fossil fuels, and other human produced waste have contaminated the local environment. Demand from rapidly expanding cities has placed increasing stress on the water supply as watersheds are affected and ground water tables fall. Nonetheless, Colombia has large reserves of freshwater and is the fourth country in the world by magnitude of total freshwater supply.

Participants in the country's armed conflict have also contributed to the pollution of the environment. Illegal armed groups have deforested large areas of land to plant illegal crops, with an estimated 99,000 hectares used for the cultivation of coca in 2007, while in response the government has fumigated these crops using hazardous chemicals. Insurgents have also destroyed oil pipelines creating major ecological disasters

MACRO ECONOMIC

PERSPECTIVE

ECONOMIC REFORMS AND GROWTH

Colombia is a standing middle power with the fourth largest economy in Latin America. However, inequality and unequal distribution of wealth are still widespread.In 1990, the ratio of income between the poorest and richest 10 per cent was 40-to-one. Following a decade of economic restructuring and a recession, this ratio had climbed to 80-to-one in the year 2000. By 2009, Colombia had reached a Gini coefficient of 0.587, which was the highest in Latin America. According to the Office of the United Nations High Commissioner for Human Rights, "there has been a decrease in the poverty rate in recent years, [but] around half of the population continues to live under the poverty line" as of 2008-2009.Official figures for 2009 indicate that about 46% of Colombians lived below the poverty line and some 17% in "extreme poverty".

In spite of the difficulties presented by serious internal armed conflict, Colombia's market economy grew steadily in the latter part of the twentieth century, with gross domestic product (GDP) increasing at an average rate of over 4% per year between 1970 and 1998. The country suffered a recession in 1999 (the first full year of negative growth since the Great Depression), and the recovery from that recession was long and painful. However, in recent years growth has been impressive, reaching 8.2% in 2007, one of the highest rates of growth in Latin America. Meanwhile the Colombian stock exchange climbed from 1,000 points at its creation in July 2001 to over 7,300 points by November 2008.

According to International Monetary Fund estimates, in 2010 Colombia's GDP (PPP) was US$429.866 billion (28th in the world and third in South America). Adjusted for purchasing power parity, GDP per capita stands at $7,968, placing Colombia 82nd in the world. However, in practice this is relatively unevenly distributed among the population, and, in common with much of Latin America, Colombia scores poorly according to the Gini coefficient, with UN figures placing it 119th out of 126 countries. In 2003 the richest 20% of the population had a 62.7% share of income/consumption and the poorest 20% just 2.5%, and 17.8% of Colombians live on less than $2 a day.

Macroeconomic Indicators 2001–2010.

Government spending is 37.9% of GDP. Almost a quarter of this goes towards servicing the country's relatively high government debt, estimated at 52.8% of GDP in 2007. Other problems facing the economy include weak domestic and foreign demand, the funding of the country's pension system, and unemployment (10.8% in November 2008). Inflation has remained relatively low in recent years, standing at 5.5% in 2007.

Historically an agrarian economy, Colombia urbanised rapidly in the twentieth century, by the end of which just 22.7% of the workforce were employed in agriculture, generating just 11.5% of GDP. 18.7% of the workforce are employed in industry and 58.5% in services, responsible for 36% and 52.5% of GDP respectively. Colombia is rich in natural resources, and its main exports include petroleum, coal, coffee and other agricultural produce, and gold. Colombia is also known as the world's leading source of emeralds, while over 70% of cut flowers imported by the United States are Colombian.Principal trading partners are the United States (a controversial free trade agreement with the United States is currently awaiting approval by the United States Congress), Venezuela and China. All imports, exports, and the overall balance of trade are at record levels, and the inflow of export dollars has resulted in a substantial re-valuation of the Colombian peso.

Economic performance has been aided by liberal reforms introduced in the early 1990s and continued during the presidency of Álvaro Uribe, whose policies included measures designed to bring the public sector deficit below 2.5% of GDP. In 2008, The Heritage Foundation assessed the Colombian economy to be 61.9% free, an increase of 2.3% since 2007, placing it 67th in the world and 15th out of 29 countries within the region.

Meanwhile the improvements in security resulting from President Uribe's controversial "democratic security" strategy have engendered an increased sense of confidence in the economy. On 28 May 2007 the American magazine BusinessWeek published an article naming Colombia "the most extreme emerging market on Earth". Colombia's economy has improved in recent years. Investment soared, from 15% of GDP in 2002 to 26% in 2008. private business has retooled. However unemployment at 12 % and the poverty rate at 46% in 2009 are above the regional average.

According to a recent World Bank report, doing business is easiest in Manizales, Ibagué and Pereira, and more difficult in Cali and Cartagena. Reforms in custom administration have helped reduce the amount of time it takes to prepare documentation by over 60% for exports and 40% for imports compared to the previous report. Colombia has taken measures to address the backlog in civil municipal courts. The most important result was the dismissal of 12.2% of inactive claims in civil courts thanks to the application of Law 1194 of 2008 .

OVERALL INVESTMENT SCENARIO (DOMESTIC AND FORREIGN)

fter the serious crisis in Colombia's capital markets in the 1980s, the Gaviria Administration implemented an aggressive economic liberalization program known as apertura, or opening, in the early 1990s, including increased promotion of foreign investment. Under Law 9 of 1991, together with administrative resolutions from the Council on Economic and Social Policy (CONPES) and Resolution 21 of the Board of Directors of the Central Bank, foreign companies were put on an equal legal footing with local ones and most sectors were opened to foreign investment, barring only investments touching on security and the disposal of hazardous wastes.

In order to continue boosting the economy, the government has negotiated free trade agreements with several countries. A free trade pact among Colombia, Venezuela, and Central America (except Costa Rica) came into operation on 1 July 1993. In addition, an agreement was signed between Colombia, Venezuela, and Mexico (G-3) on establishing a free trade zone in 1994. In 1993, Colombia, Venezuela, Ecuador, and Bolivia achieved a customs union, with free trade between the four countries under the auspices of the Andean Pact. Effective 1 January 1994, pact members implemented a common external tariff (CET) based on a four-tier tariff range. In June 1999, the clause in the Colombian constitution permitting expropriation without indemnification was repealed opening the way for ratification by Colombia of bilateral investment agreements (BITS) with Peru, the United Kingdom, Spain, Cuba, and France. Negotiations on a BIT with the United States were still ongoing in 2003. Columbia ended its monopoly over telecommunications in 1998, limiting foreign ownership to 70%. In 2003, the US Trade Representative (USTR) was raising objections that restrictions on foreign entry into Colombia's telecommunications sector violated its obligations under the World Trade Organization.

The industry most heavily invested in by foreigners is the petroleum industry, which saw international investment grow from $458 million in 1993 to $890 million in 1997. In 1996, CONPES eliminated the requirement of government authorization for investment in public services, mining, and hydrocarbons. Despite this allowance, investment in the hydrocarbons sector requires an association contract with the state-owned oil company ECOPETROL. Due to the apertura program, the sectors that have seen the largest growth in international investment have been infrastructural. Investment in the utilities sector (electricity, gas, and water) leapt from $145 million in 1996 to $2.3 billion in 1998. The transportation and communications sectors, which have been mostly privatized in recent years, grew from $5.7 million in 1993 to $360 million in 1997. The increased foreign investment coincided with increased borrowing in foreign

financial markets (enabled by the opening of the financial sector in 1991) and a large inflow of capital from increased petroleum exports. The excess liquidity led to a credit boom and a sharp increase in interest rates, which rose yet further as the Central Bank tried to support the peso's exchange rate. Aggravated by political uncertainty, the economy was in another financial crisis by 1998.

Annual direct foreign investment (DFI) inflow reached a peak of $5.56 billion in 1997 and then fell to $2.83 billion in 1998 and to $1.47 billion in 1999. For 2000 to 2002, average annual FDI inflow was about $2.2 billion. FDI inflow from the United States in 2002 was $317 million.

Security concerns remained a major deterrent to foreign investment in 2003 as the government continued its 40-year fight against two major leftist guerilla groups that had come to control about half of the country. In 2003, hostage taking and hostage execution involving increasingly prominent individuals and a bombing in a Bogotá nightclub indicated the penetration of guerilla activity into major urban centers. In June 2003, as part of a $98 million military aid package, the United States sent about 60 Special Forces members to train local soldiers to guard the Occidental Petroleum pipeline; the Cano Limon pipeline, which had been bombed 40 times in 2002; and 170 times in prior years.

In terms of portfolio investment, the total market valuation of companies listed on the Colombia Stock Exchange peaked in 1997 at $19.5 billion (189 listed companies) and had fallen to $9.56 billion in 2000 (126 listed companies). In 2001, total market valuation had risen to $13.2 billion with 123 listed companies, but turnover was at a record low of 3.2%.

COMPOSITION OF ECONOMY

GDP - composition by sector: agriculture: 9.3%

industry: 38%

services: 52.7%

Definition: This entry gives the percentage contribution of agriculture, industry, and services to total GDP. The distribution will total less than 100 percent if the data are incomplete.

INTERNATIONAL TRADE AND TRADING PARTNERS

Colombia is one of the largest economies in South America. The country holds great potential for traders, who can get maximum returns from their investments in the Colombian market. The Colombian economy has long been inflicted by high debts and internal conflicts. However, despite these obstacles, Colombia has witnessed several improvements in the past decade (2000-2009). Colombia also actively engages in import and export activities; however, its poor economy is a challenge to traders. A factor that goes against importers’ interests is the low demand for mainstream commodities in the country. Colombia shares strong export markets with its Latin American counterparts. Being one of the largest producers of emeralds in the world, Colombia provides a good market for investors who are involved in international gem and jewelry industry.

Colombia’s primary export commodities include petroleum, coffee, coal, nickel, emeralds, bananas and apparel. The following chart shows Colombia’s exports from 2008 to 2009. All data are in USD billion.

The next chart shows the distribution of Colombia’s major export partners in 2008 (in percentages).

Colombia’s primary import commodities include industrial equipment, transportation equipment, consumer goods, chemicals, fuel and electricity. The following table shows Colombia’s imports in the year 2008 and 2009. All data are in USD billion.

The next chart shows the distribution of Colombia’s major import partners for 2008 (data in %age)

.

The official currency of Colombia is Colombian peso (COP). The following chart illustrates the exchange rates of COP against the US dollar from 2005 to 2009.

MARKET CHALLENGES

INFRASTRUCTURE (POWER,TRANSPORT,TELECOMMUNICATION)

Transport infrastructure1) Railway

Colombia has 3,034 kilometers (1,885 miles) of rail lines, 150 kilometers (93 miles) of which are 1,435 mm (4 ft 8 1⁄2 in) gauge and 3,154 kilometers (1,960 miles) of which are 914 mm (3 ft) gauge. However, only 2,611 kilometers (1,622 miles) of lines are still in use. Rail transport in Colombia remains underdeveloped. The national railroad system, once the country's main mode of transport for freight, has been neglected in favor of road development and now accounts for only about a quarter of freight transport. Passenger-rail use was suspended in 1992 and resumed at the end of the 1990s. However, fewer than 165,000 passenger journeys were made in 1999, as compared with more than 5 million in 1972, and the figure was only 160,130 in 2005. Short sections of railroad, mainly the Bogotá-Atlantic rim, are used to haul goods, mostly coal, to the Caribbean and Pacific ports. In 2005 a total of 27.5 million metric tons of cargo were transported by rail. Although the nation's rail network links seven of the country's 10 major cities, very little of it has been used regularly because of security concerns, lack of maintenance, and the power of the road transport union. During 2004–6, approximately 2,000 kilometers of the country's rail lines underwent refurbishment. This upgrade involved two main projects: the 1,484-kilometer line linking Bogotá to the Caribbean Coast and the 499-kilometer Pacific coastal network that links the industrial city of Cali and the surrounding coffee-growing region to the port of Buenaventura.

2) Roads

The three main north-south highways are the Caribbean, Eastern, and Central Trunk Highways (troncales). Estimates of the length of Colombia's road system in 2004 ranged from 115,000 kilometers to 145,000 kilometers, of which fewer than 15 percent were paved. However, according to 2005 data reported by the Colombian government, the road network totaled 163,000 kilometers, 68 percent of which were paved and in good condition. The increase may reflect some newly built roads. President Uribe has vowed to pave more than 2,500 kilometers of roads during his administration, and about 5,000 kilometers of new secondary roads were being built in the 2003–6 period. Despite serious terrain obstacles, almost three-quarters of all cross-border dry cargo is now transported by road, 105,251 metric tons in 2005.

Highways are managed by the Colombian Ministry of Transport through the National Roads Institute. The security of the highways in Colombia is managed by the Highway Police unit of the Colombian National Police. Colombia is crossed by the Panamerican Highway)

3) Ports ,waterways and merchant marine

Seaports handle around 80 percent of international cargo. In 2005 a total of 105,251 metric tons of cargo were transported by water. Colombia's most important ocean terminals are Barranquilla, Cartagena, and Santa Marta on the Caribbean Coast and Buenaventura and Tumaco on the Pacific Coast. Exports mostly pass through the Caribbean ports of Cartagena and Santa Marta, while 65 percent of imports arrive at the port of Buenaventura. Other important ports and harbors are Bahía de Portete, Leticia, Puerto Bolívar, San Andrés, Santa Marta, and Turbo. Since privatization was implemented in 1993, the efficiency of port handling has increased greatly. There are plans to construct a deep-water port at Bahía Solano.The main inland waterways total about 18,200 kilometers, 11,000 kilometers of which are navigable by riverboats. A well-developed and important form of transport for both cargo and passengers, inland waterways transport approximately 3.8 million metric tons of freight and more than 5.5 million passengers annually. Main inland waterways are the Magdalena–Cauca River system, which is navigable for 1,500 kilometers; the Atrato, which is navigable for 687 kilometers; the Orinoco system of more than five navigable rivers, which total more than 4,000 kilometers of potential navigation (mainly through Venezuela); and the Amazonas system, which has four main rivers totaling 3,000 navigable kilometers (mainly through Brazil). The government is planning an ambitious program to more fully utilize the main rivers for transport. In addition, the navy's riverine brigade has been patrolling waterways more aggressively in order to establish safer river transport in the more remote areas in the south and east of the country that are controlled by rebel groups.The merchant marine totals 17 ships (1,000 gross registered tons or more), including four bulk, 13 cargo, one container, one liquefied gas, and three petroleum tanker ships. Colombia also has seven ships registered in other countries (Antigua and Barbuda, two; Panama, five)

4) AviationAll public airports in Colombia are managed and controlled by the Special Administrative Unit of Civil Aeronautics. The customs/immigration issues are controlled by the Departamento Administrativo de Seguridad (DAS).Colombia has well-developed air routes and an estimated total of 984 airports, 100 of which have paved runways, plus two heliports. Of the 74 main airports, 20 can

accommodate jet aircraft. Two airports are more than 3,047 meters in length, nine are 2,438–3,047 meters, 39 are 1,524–2,437 meters, 38 are 914–1,523 meters, 12 are shorter than 914 meters, and 880 have unpaved runways. The government has been selling its stake in local airports in order to allow their privatization. The country has 40 regional airports, and the cities of Bogotá, Medellín, Cali, Barranquilla, Bucaramanga, Cartagena, Cucutá, Letícia, Pereira, San Andrés, and Santa Marta have international airports. Bogotá's El Dorado International Airport handles 350 million metric tons of cargo and 8 million passengers a year, making it the largest airport in Latin America in terms of cargo and the third largest in passenger numbers

Power and telecommunication

Electrical power capacity in Colombia falls short of current and projected needs. Electricity production was 45.02 billion kilowatt hours (kWh) in 1998, with 69 percent of production coming from hydroelectric sources, 30.11 percent from fossil fuel, and the rest from other sources. According to World Bank sources, electricity use decreased from 904 kWh per capita in 1996 to 885 kWh per person in 1998. It is also very decentralized, with 37 companies providing power. Among these firms are Interconexion Electrica ISA, Generadora Union, Codensa, Transelca, Genercauca, Centrales Electricos del Norte de Santander, Electrocost, Electromag, Conelca, and EEPP.

Electricity became a lagging sector during the 1990s. Programmed cuts during the mid-1990s ran for several hours a day in the main cities for as long as 2 years. As a result, by 1999 imports of electricity jumped to 94 million kWh. These shortcomings, however, have not affected exploitation of new natural resources such as oil and coal, since investment in those areas usually involve their own infrastructure requirements, like pipelines, integrated camps, and airfields.

Colombia has a relatively modern telephone system represented by a nation-wide relay system, a domestic satellite system with 41 earth stations, and a fiber optic network linking 50 cities. The telecommunications business in Colombia is experiencing a major boom: there were 75 telephone lines per 1,000 people in 1990, doubling in 1998 to 173 lines per 1,000 persons. Cellular subscribers have also increased substantially. In 1990 cell phones were nonexistent, while in 1998 there were 49 subscribers per 1,000 people. Among the many telecommunications companies are Globalnet Telecom, Energia Integral Andina, Skytel, Intelsa, Americatel, Metrotel, Andicel, Cetell ISP, and Colomsat.

According to the CIA World Factbook 2000, Colombia had 5,433,565 telephones main lines in use by 1997 and 1,800,229 cellular telephones in 1998. By 1999 Colombia had

13 Internet service providers. Thus Colombia is moving towards greater connectivity, higher density in mass media, and dynamism in the telecommunications sector.

LEGAL,EXECUTIVE AND JUDICIAL SYSTEM OF COLUMBIA

1. Executive2. Legislative3. Judicial

The Colombian Constitution 1991 is the source of all legislation and overrides all other forms of judge-made law etc. It is based on the Spanish law and follows a criminal code based on US procedures.

The Colombian court system is headed by four roughly coequal, supreme judicial organs: • The Supreme Court of Justice (Corte Suprema de Justicia) decides appeals on errors of law and for that purpose funcions as a court of cassation to quash lower court decisions through three chambers (specializing respectively in civil, criminal, and labor matters). It also has original jurisdiction in certain proceedings against high functionaries, in certain admiralty matters, in controversies between departments and in controversies relating to government contracts; it is also the highest court having jurisdiction over civil, family, labor, agrarian, commercial and criminal cases. Its 23 judges are selected by their peers from nominees of the Superior Judicial Council for eight-year terms. • The Council of State (Consejo de Estado) is the highest court of administrative law. The Council has original jurisdiction over certain admiralty cases and river navigation matters; jurisdictional conflicts between the departments and the municipalities and between any of them and the national government; public lands concessions; cancellation of naturalization papers; appeals from certain decisions of the national government; etc. It also takes appeals from departmental administrative courts and some national officials. The 27 judges forming the Council are selected by their peers from nominees of the Superior Judicial Council for eight-year terms. • The Constitutional Court (Corte Constitutional) reviews the constitutional validity of laws approved by the legislative branch and some decrees issued by the executive branch; and it is also responsible for procedures related to actions created to protect the rights of those accused of criminal offenses, or actions against abuses of public administration officials, including members of the judiciary. The Court thus guards the integrity and supremacy of the constitution; and rules on amendments to its text, and on the enforcement of international treaties. The 9 judges forming the Court are selected by the Senate from nominees of the President, the Supreme Court, and the Council of State for eight-year terms. • The Superior Judicial Council (Consejo Superior de la Judicatura) has 2 chambers: administrative (which administers the civilian judiciary); and jurisdictional&disciplinary (which resolves jurisdictional conflicts arising between other

courts and disciplines judges). Its 13 members are selected by the three sister highest courts and by Congress from nominees of the Executive for eight-year terms. The lower court system consists of: (1) ordinary courts with jurisdiction over civil, family, labor, land, commercial and criminal cases; (2) administrative courts with jurisdiction over administrative matters; (3) courts with peace jurisdiction (over minor criminal and civil matters); and (4) authorities of indigenous territories with jurisdiction on indigenous communities. The ordinary courts include trial courts with jurisdiction in civil, criminal, labor, family, land among other specialized areas; and superior district courts, which decide appeals from judges of judicial districts and circuit judges, and have original jurisdiction over special matters in which the Government and the departments are parties. The departmental administrative courts hear cases regarding departmental ordinances, municipal resolutions, decisions of departmental and municipal executives; tax matters; etc.

Other Important Government InstitutionsFour entities have a crucial role to play vis-à-vis adherence to the rule of law by governmental officials at all levels and, for that purpose, are charged with preventing, investigating, and punishing administrative irregularities. The Office of the Prosecutor General (Fiscalia General de la Nacion) is an autonomous and hierarchical organization. Although it belongs to the judicial branch, the 1991 Constitution confers upon it an independent role so that it can better perform its functions. It is headed by the Prosecutor General of the Republic ("Fiscal General"), who is charged mainly with prosecuting crimes and representing the people's interests in those cases in which no initiative on the part of a party is required to start or continue such prosecution. The Prosecutor General is designated for a four-year term by the Supreme Court which selects one of the three candidates presented by the President The Office of the Attorney General (Procuraduria General de la Nacion) is appointed by the Senate from a list of candidates selected by the President and the highest courts, the Attorney General acts as guardian of constitutional rights and liberties, democratic principles, public interests, and the rule of law in general. The Attorney General shall also file any appropriate action to hold liable public officials who have incurred civil, labor, military, criminal, administrative or disciplinary liability in the course of their official duties.

The Office of the Defender of the People (Defensoria del Pueblo) is an independent body whose mission is to defend and protect human rights and other liberties and interests protected under the Constitution and the laws, in the face of deeds, acts or omissions of the administration. The Defender of the People is appointed for a four-year term by Congress which selects one of the three candidates presented by the President. The Office of the Comptroller General (Contraloria General de la Republica) is headed by a Comptroller General appointed for a four-year period at the beginning of each presidential term by Congress, which selects one of the three candidates presented by the highest courts. This officer shall be in charge of supervising the management and auditing of revenues, expenses, public and national property and transactions of the centralized and decentralized public entities, whatever its forms of organization may be, as well as of other branches of government. It enjoys operating, administrative and functional autonomy. It does not co-administer the public sector; it assesses facts, acts, and documents only after the organizations to be audited have finished their accounting exercises. Its main task is the approval or rejection of the revenue and investment accounts of public funds, the opening of investigations into irregularities, and the application of measures and administrative penalties as appropriate. The Comptroller General shall call on the Prosecutor General to file the legal actions that may apply.

BANKING SYSTEM OF COLUMBIA

Industry Regional Banks Revenue (ttm) : $201.19MSIC: State Commercial Banks (6022) Employees: 715NAICS: Commercial Banking (522110) Description: Columbia Banking System, Inc. is a bank holding company whose wholly owned banking subsidiary, Columbia State Bank (Columbia Bank) also does business under the Bank of Astoria name and conducts service commercial banking business in the states of Washington and Oregon. At December 31, 2009, Columbia Bank had 52 branch locations in the Seattle/Tacoma metropolitan area and contiguous parts of the Puget Sound region of Washington State, as well as the Longview, Woodland and Vancouver communities in southwestern Washington State, the Portland, Oregon metropolitan area and the northern Oregon coast. On January 22, 2010, Columbia State Bank acquired all of the deposits and certain assets of Columbia River Bank from the Federal Deposit Insurance Corporation (FDIC). On January 29, 2010 Columbia State Bank acquired all of the deposits and assets of American Marine Bank from the FDIC.

MARKET OPPORTUNITIES

OverviewColombia is a country with a unique culture influenced by a fusion of its indigenous Indian, Spanish and African origins. A diverse geography and warm climate makes Colombia home to some of South America’s richest natural resources such as petroleum, coffee and fruit. Though the country struggles with historical class differences, political conflict and illegal drug cartels, improvements have recently been made socially and economically making Colombia a more inviting country to international investments and business opportunities. For those wanting to conduct business in this emerging market, a thorough understanding of Colombian heritage and culture must be achieved in order to secure your future business success.

Fact File o Official name – Republic of Colombia o Population – 45,644,023* o Official Languages – Spanish o Currency – Colombian peso (COP) o Capital city – Bogotáo GDP – purchasing power parity $399.4 billion* o GDP Per Capita – purchasing power parity $8,900 *

Business opportunity in Colombia Following centuries of Spanish rule, Colombia finally gained independence in the late nineteenth century. Years of violent political conflict ensued as parties and governments fought to be the ruling power and insurgent groups became more prevalent. Meanwhile an extensive illegal drug trade developed and Colombians were increasingly accused of human rights abuses against captured guerrillas and members of insurgent groups. The 90s were a period of social economic and political improvement during which time a new constitution was introduced. However, the violence present in Colombian society as a result of the existence of insurgencies and this illegal drug trade did not improve. Today, despite a turbulent past, Colombia's efforts to improve current economic policy and democratic security strategies have given rise to an increased confidence in the economy

and business sector. The fourth largest country in South America and one of the continent's most populous nations, Colombia’s substantial oil reserves and natural resources provide numerous business and trade opportunities for foreign investors. Understanding Colombian business etiquette is essential to successfully doing business in Colombia.

INVESTMENT CLIMATE

OPENNESS TO FOREIGN INVESTMENT

This paper sheds lights the on the performance of Latin American governments in attracting foreign direct investment (FDI) through trade policies -- specifically by signing free trade agreements with other countries. The relationship between FDI and trade for Latin America has previously been analyzed. According to these studies, the relationship between the degree of “openness” (imports plus exports divided by the domestic product) and FDI has not been conclusive. At the same time, the effect of specific trade policies on the behavior of FDI inflows has not been extensively studied. Some state policies on trade could produce a significant impact in attracting FDI inflows. Specifically, through the implementation of several free trade agreements, several Latin American countries have been able to attract greater inflows of foreign direct investment. The implementation of these free trade agreements was part of a more general plan of economic reforms that Latin American countries launched since the mid-1980s. Those countries that signed more free trade agreements – or signed them with the largest economies in the world –increased their effectiveness in attracting FDI inflows. I test the impact of this policy on the behavior of FDI inflows through a panel data model (with feasible generalized least squares estimators) for seventeen Latin American countries and for the period ranging from 1985 to 2003.

PROTECTION OF PROPERTY RIGHTS

The establishment of the Spanish Empire and its government in South America resulted in the conquest of what is now Colombia. Spain used its military supremacy to generate economic rent to the crown and in part to impose Catholicism on the natives. The Spanish also generated a new concept, private property. In his seminal book, Manual de Historia Colombiana, Fernando Ayala(2005) states, ìEuropeans transferred to America its race, its language and its religionÖEqually,they transmittedÖsciences, technology, civil freedom and critical solutions to face problemsdistinctive to the Conquest and the Colony. Öther colonial society then organized lordly landconcentration over time...î (Ayala, 2005, p. 20).Towards the end of 1858, Colombia was named ìCofederaciÛn Granadinaî (1858 -1863).Officially, the stately confederation followed a general free market policy called ìlibrecambio.

During this period land owned and administrated by the church was reassign to laity, although ownership was not. Essentially, natives could farm the land reassigned to them, but they could not own it. Colombiaís name again changed to ìEstados Unidos de Colombiaî from 1863-1885. Witha new constitution and economic system based on capitalism, several new freedoms where granted,including private property laws, see Kalmanovitz (2001) for details. In 1886, with the creation of a new Constitution, the country took its actual name ofìRep˙blica de Colombiaî. Over the next 120 years the initial property laws of the librecambio have been weakened by several laws and executive orders. For example, when the conservative party took over power (i.e. 1886 -1930), they denied democratic guarantees including some ownership liberties. They also refused to pass additional private property reforms. RincÛn (1973) argues that laws in Colombia are made without any specific principle except to protect vested interests that cause much of the corruption and inefficiencies with the State. Montenegro and Posada (2001) cite different analysts that observed higher violence in distant regions where economic growth is basedon exploitation of cocaine, petroleum, emeralds and gold. They also show that the increase inviolence and illegal activity within the country are associated with the justice system collapse andotherwise weakness within institutions, namely property rights. Today, Colombian private property rights remain fairly weak relative to most developed countries.

POLITICAL STABILITY OF COUNTRY

The very political system of any country forms the backbone of the nation and in the due course plays a guiding force in determining the growth and development of the country in every aspect. The political system of Columbia has grown from strength to strength and has played a decisive role in true sense of the term.

Constitution of Columbia---

The judicial system of Columbia is divided into categories such as a Constitutional Court, Supreme Court of Justice, the Higher Judiciary Council, Council of State and municipal courts. However, the Supreme Court which is situated in Bogotá is actually a bench comprising of 24 magistrates who continue to be a part of this office till their death. The Supreme Court undertakes various responsibilities such as reviewing the state laws, bills and suggests reforms in case of any. It also acts as an advisory panel to the government in hours of need. Other parts of the constitution include - original jurisdiction and appellate jurisdiction. In the last part of the 20th century, the constitution has made certain changes, keeping in mind the changing necessity of the society.

Functioning of the Columbian Government----

Since the achievement of independence from the Spanish rulers, the country of Columbia has witnessed great political turmoil which has rocked the country. In 1821 and 1830, unitary constitutions were established under the aegis of Simon Bolivar who was then the President of Columbia. Since then a number of reform measures were initiated by the subsequent governments. The government of Columbia follows the democratic republic framework headed by the president, whereby he is both head of state and head of government, accompanied by galaxy of political parties. Executive power of the country is wrested in the hands of the government. The Senate of Columbia and the House of Representatives of Columbia looks into the functioning of the legislative organ and takes due part in its functioning. Major political parties of Columbia include-- Columbian Liberal Party, Social National Unity Party, Columbian Conservative Party, United People's Movement etc.

In The Present times---

When Virgilio Barco Vargas took over the charge over the administration of Columbia in 1990 against the background of great crises, however in mid 90's military activity created a horrific spell with the lives of people being killed every now and then in small wars. On August 7, 1998, Andrés Pastrana Arang became the President and initiated a series of reform measures to bring about a rapid phase of economic development. In May 2002, Álvaro Uribe Vélez, belonging to Liberal party attained the position of President and launched wide attempts to remove political instability and economic crisis. This has helped Columbia to become one of the fastest growing economies of South America.

FREE TRADE ZONES IN COLUMBIA

Free Trade Zones in Colombia

Colombia has 66 Free Trade Zones of which 23 of them are Permanent Free Trade Zone, 40 are Single Enterprise Free Trade Zone and 3 are enlargements of Free Trade Zone; of Permanent Free Trade Zone four are located in the coastal territory with easy access to main ports around the country, such as: Barranquilla, Cartagena, Santa Marta and Pacifico Free Trade Zones. Others are located at strategic points to meet the needs of each sector.

TRADE REGULATION AND STANANDARDS

Import Climate:

Colombia has signed several multilateral and bilateral free trade agreements. The most important of these are: a) the Andean Community (ANCOM) with Venezuela, Ecuador, and Bolivia (Peru withdrew in April 1997); b) the Latin American Integration Association (LAIA) with Argentina, Brazil, Mexico, Chile, Paraguay, Uruguay, El Salvador, Costa Rica, Guatemala, Nicaragua, Honduras and Cuba, which was later renegotiated country by country on a bilateral basis; c) the G-3 (Colombia, Mexico, and Venezuela); and d) the Colombia-Chile bilateral agreements. Full implementation will take several years, but once achieved, would give Colombia access to a free market of over 200 million people. Colombia has also requested admission to NAFTA.

Under the ANCOM agreement, the signatory countries must assign a common external tariff (CET) for imports coming from third countries and, at the same time, eliminate duties for products manufactured and traded within the region. There are four tariff levels in the CET: 5, 10, 15, and 20 percent. As these member countries grow and modernize, foreign firms may consider the expanded ANCOM market attractive enough to initiate local production for the regional market.

Due to a number of integration agreements with various countries, a complex system of tariffs are applied according to the different treaties. The prior import-licensing requirement has been virtually eliminated. Approximately 97 percent of the 5,162 items in the Colombian Harmonized Tariff Schedule are now on the free import list (i.e., no license required). Import prices are now undergoing closer scrutiny (for duty collection purposes), as is the entry of foreign currency. U.S. dollars can be exchanged freely through banks and financial corporations.

Import regime:

Imports may be classified as ordinary, under franchise, temporary, re-importation, guaranteed import, temporary import for re-exportation, special import-export systems, for assembly or transformation, postal, express and courier, and travelers.

Free import list:

The majority of HS tariff categories do not require prior import license approval by the Ministry of Foreign Trade (MINCOMEX). However, customs duties and all other taxes must be paid. An import request or registration form is still required.

Prior import list:

The prior import-licensing requirement has been virtually eliminated; import registrations are common for most imports. Import licenses are valid for six months; twelve months for capital goods. Requests for extensions are complicated and are permitted only for official imports and capital goods with valid justifications, for successive periods of three months per extension.

Tariffs:

Import duties are ad valorem and are assessed on the CIF value of shipments. Colombia's tariffs conform to the 5-20 percent Common External Tariff (CET) in effect for the Andean Community. Government entities are no longer exempt from import duties.

Special taxes, fees and/or surcharges: Most imports of consumer goods, consumer electronics, and apparel (in addition to a 15 percent estimate for freight and insurance FOB costs), are subject to a 1.2 percent surcharge on the FOB value of products for a so-called "Customs Services Fund" which was introduced recently under Article 56 of Law 633 of December 29, 2000.

VAT: A 16 percent VAT (value-added tax) is levied on the CIF duty-paid value of imports, with only a few exceptions.

Courier or express shipments: Courier or express shipments not exceeding US$1,000 in value and 20 kilograms in weight are freely imported into Colombia. These shipments are classified under HS 98.08.00.00.00, and are subject to a 10 percent CIF tariff and 16 percent value-added tax assessed on the CIF-duty-paid value of most merchandise shipments, plus 1.2 percent FOB surcharge for Customs services. Rules apply to either air or surface courier shipments contemplated under the new Customs Code that entered into effect on July 1, 2000.

Subsidies/bounties: Export incentives include the "Plan Vallejo" (drawback) or "Maquila", "Plan Vallejo, Jr.", and the CERT (Tax Reimbursement Certificate), soft credit lines, and export credit insurance policy.

Under the "Plan Vallejo" or "Maquila", imports of raw materials, inputs, and semi-finished items, as well as machinery, equipment and parts for the production, transformation, or assembly of exportable goods are exempt from any prior import license requirement, customs duties, taxes, surcharges, or fees (provided they are later re-exported in the form of finished products). Imports under these plans should be authorized by the DIAN (Internal Revenue & Customs Service) and must enter into a special arrangement with MINCOMEX, the government entity that establishes the minimum local content and export percentage requirement on a case-by-case basis.

The "Vallejo, Jr." plan allows for duty-free importation of raw materials used in the production of exportable goods, as well as the replenishment of foreign-origin raw materials.

The CERT is a tax-reimbursement certificate which can be applied to taxes on income, customs duties, and certain other taxes. The amount of the CERT is calculated as a percentage of the value of the exported goods, and varies by product and country of destination. CERT values range from 2.25 percent to 2.50 percent. Exports from designated free-trade zones now qualify for the CERT program, depending on percentages of national content.

Legislation in effect encourages the establishment, operation, and maintenance of free industrial and commercial trade zones (most of which are located by seaports) so as to increase assembly operations (U.S. 807/807A), transformation or manufacturing of exportable goods, and bonded warehousing.

Bans/prohibitions:

No tariff categories appear on the prohibited import list, except for used bags and sacks of vegetable fibers. Items previously prohibited are now permitted under license. However, no import licenses are approved for used automotive vehicles of any kind, used parts and accessories for tractors and automotive vehicles, or used tires, which in practice are all considered as prohibited items for import into Colombia. Furthermore, imports of old or used clothing, closeouts, irregulars, rags, and scrap cordage of textile material wastes are subject to prior import license approval which, in practice, is not granted.

Certificate of Origin requirement: Only imports from countries with trade preferences are required to have certificates of origin.

Language requirements on documents: Import registrations, license forms, and accompanying documents must be in Spanish.

Import procedures and documents: The following documentation is required by MINCOMEX to register imports and/or for the approval of an import application:

(1) completed import registration or license form, with a complete description of the goods including the commercial, technical, or scientific designations, marks, model, size, contents, end-use, etc., for proper identification and tariff classification (a tariff classification decision and price lists certified by a chamber of commerce and notarized by the Colombian Consulate in the country of origin may be required for proper identification of goods and tariff classification);

(2) proforma invoice;

(3) catalogs, sketches, and diagrams;

(4) foreign exchange declaration, proof of payment abroad and/or valid letter of credit;

(5) proof of a down payment or prior import deposit, which is required in the case of payments that will be made abroad against loans of foreign origin or import financing.

Customs procedures:

A new Customs Code, which entered into effect on July 1, 2000, has introduced a few changes, the penalties chapter being the most important one. The Code is still subject to different interpretations and complaints from affected parties, which may lead to additional changes. For nationalization, or customs clearance, the following documents and procedures are required for ordinary or common imports:

(1) import registration or license form approved by MINCOMEX, when required;

(2) import declaration accompanied by the bill of lading or air waybill and the commercial or proforma invoice;

(3) proof of payment of import duties, value-added tax, surcharges and other fees collected through commercial banks;

(4) phytosanitary, mercerization and other certificates, when required;

(5) packing list;

(6) customs valuation and inspection, if necessary;

(7) an Andean declaration for all imports (with few exceptions) with an FOB value of US$5,000 and over; and,

(8) certificate of origin, when required.

Customs procedures have been simplified significantly; fewer forms are required, as import/export procedures and customs clearance have become practically virtual - import, export and custom transit declarations are to be presented to Customs through electronic or magnetic media and passwords are assigned to users.

- The SIAs or Customs Intermediary Entities have been established to act on behalf of importers, exporters and custom transit operators. However, anyone may also act without a SIA directly before Customs, in the cases outlined in the Customs Code, i.e, foreign trade operations under US$1,000, diplomatic possessions, international organizations' shipments, travelers' possessions, etc. The SIAs must meet numerous legal and capital requisites to become operative.

- The Permanent Customs Users, as well as the High-Volume Exporters, are those organizations and/or private firms so identified for their large import and export volumes. They both enjoy some benefits that help expedite their shipments through Customs.

All incoming shipments shall be transferred to either bonded warehouses or free trade zones (or accredited private warehouses for product transformation, processing or industrial manufacture), under Customs custody. This transfer must be done within two days from airport arrival or five days from seaport arrival. The goods may remain for a maximum of two months from the arrival date, while undergoing customs clearance. This initial period may be extended for two additional months, but after that extension expires, merchandise shall be declared as abandoned by Customs authorities if goods are not cleared for consumption. Merchandise rescue procedures are time-consuming and expensive considering warehousing and handling charges, in addition to a 15 percent penalty charge on the custom value of goods.

Importers are responsible for placing a correct value on imported merchandise and paying corresponding duties and fees through commercial banks. The drastic reduction in paperwork has simplified and accelerated the customs clearance process from weeks to a matter of hours. However, pilferage in customs warehouses continues to be a problem. Certificates of conformity may be required for sensitive imports and other categories of products suspected of being imported through smuggling and/or fraud.

Warehousing charges: Imported goods stored in customs warehouses are subject to fines if an import manifest is not presented within two working days from their arrival.

Samples:

Samples usually require the same documents as commercial shipments; they may be imported without an import license, registration form, or payment of import duties if they are consigned to a designated free trade zone, bonded warehouse, or imported on a temporary basis in-bond.

Prior authorization requirements:

Phytosanitary clearance, as well as permits or proof of compliance, are required by government entities when importing raw cotton, cotton yarns, and other vegetable fibers.

Labeling:

Textile care, percentages of fiber content, and country of origin or manufacture must be listed on the labels of apparel and other textiles imported into Colombia. Name of product and contents, warnings, date of manufacture, expiration dates, and country of origin are to be shown on all other imported articles.

Sizing/metrification

: The metric system is used in Colombia. Sizes may be identified as small, medium, large, extra-large, etc., and/or by European size numbers.

Financing/payment:

Most products are imported through letters of credit and/or time drafts. Soft and long-term financing is an important sales tool, especially for government imports or public tenders. Imports may be financed by foreign suppliers, financial intermediaries in Colombia, and/or foreign financial institutions.

Colombian importers may freely negotiate payment terms with their suppliers, but importers must list the agreed-upon payment terms on the import documents and may not subsequently change them. These are generally between one and six months for imported products for immediate consumption, including raw materials, intermediate goods, and consumer goods, with almost no term limitations for capital goods, which are payable within the timetables set on the import documentation, plus a grace period of three additional months. Foreign payments may be authorized in installments, but in no case can the original terms listed on the import documents be changed. Often changes on monetary measures may limit amounts, advance deposits, and payback timetables for direct external loans.

U.S. exporters should be alert to financial market competition and be prepared to offer soft and long-term financing after verifying the customer's credit status and the guarantees offered. Local importers usually obtain trade financing from commercial banks or credit agencies. Colombian exporters have access to credit offered by the Colombian Foreign Trade Bank (Banco de Comercio Exterior - BANCOLDEX), which replaced the former Export Promotion Fund -

PROEXPO. This credit is granted at competitive commercial rates and may be requested at any stage of a foreign trade transaction (including raw material purchase, technical assistance, marketing and promotion, shipment, etc.). This credit is now being extended to Colombian importers--namely for industrial imports.

Prior import and foreign financing deposits: Loans of foreign origin and/or foreign financing of imports are permitted, but are subject to a prior import deposit (with a few exceptions, i.e. capital goods) of ten percent for six months from the date of the bill of lading or air waybill and registration with the Central Bank (Banco de la Republica). The Central Bank may also establish other limitations and/or conditions, i.e., interest rates, end-uses, quantity limits, terms and other pertinent conditions to avoid undue pressures on and/or inconveniences to the Colombian exchange market.

Direct Import Costs:

Consumer articles including, electronics, audio/video equipment, data processing, communications items, storage devices, electric/electronic household appliances, etc., from around the world now appear in Colombian stores. Although an increasing percentage of these products is legally imported, a significant amount comes in through contraband, which is a major problem, especially for consumer goods. Over US$5.0 billion in all kinds of products (mainly consumer goods) is estimated to enter the country illegally.

One of the causes for so much contraband is the fact that most imports of consumer goods, consumer electronics, and apparel (in addition to a 15 percent estimate for freight and insurance FOB costs), are subject to an FOB 1.2 percent surcharge, plus a 20 percent CIF import duty and a 16 percent value-added tax (VAT) assessed on the CIF-duty-paid value of imported products. This approximate 62 percent margin over the basic FOB price of legally imported goods encourages contraband.

U.S. exporters should note that consumers in Colombia usually end up paying an additional 80 to 120 percent over the FOB price of imports. Final retail prices usually depend on profit margins agreed on between U.S. suppliers and their Colombian representatives

MARKETING OF PRODUCT AND SERVICES

MODES OF ENTERING THE MARKET

There are different modes availaible to enter the market. They are as follows:

1) AGENT:

Agent may refer to one who acts for, or in the place of, another, by authority from him; one entrusted with the business of another.

In international trade an agent can be appointed to the country where trade is to be done.this agent can take complete information .(about culture ,government rules and regulation,import tariff and duties etc) and give the information to his principal so that the person doing trade there can have an idea that how the things to be done. Agent also helps in marketing the product.

2) ESTABLISHING AN OFFICE AND FRANCHISE

One can also establish an office after having complete information about the market or can open a franchise to further market their product or services.

3) DIRECT MARKETING

Direct marketing is a sometimes controversial sales method by which advertisers approach potential customers directly with products or services. The most common forms of direct marketing are telephone sales, solicited or unsolicited emails, catalogs, leaflets, brochures and coupons. Successful direct marketing also involves compiling and maintaining a large database of personal information about potential customers and clients. These databases are often sold or shared with other direct marketing companies.

For many companies or service providers with a specific market, the traditional forms of advertising (radio, newspapers, television, etc.) may not be the best use of their promotional budgets. For example, a company which sells a hair loss prevention product would have to find a radio station whose format appealed to older male listeners who might be experiencing this problem. There would be no guarantee that this group would be listening to that particular station at the exact time the company's ads were broadcast. Money spent on a radio spot (or television commercial or newspaper ad) may or may not reach the type of consumer who would be interested in a hair restoring product.

This is where direct marketing becomes very appealing. Instead of investing in a scattershot means of advertising, companies with a specific type of potential customer can send out literature directly to a list of pre-screened individuals. Direct marketing firms may also keep email addresses of those who match a certain age group or income level or special interest. Manufacturers of a new dog shampoo might benefit from having the phone numbers and mailing addresses of pet store owners or dog show participants. Direct marketing works best when the recipients accept the fact that their personal information might be used for this purpose. Some customers prefer to receive targeted catalogs which offer more variety than a general mailing.

4) JOINT VENTUREA joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares.The venture can be for one specific project only - when the JV is referred more correctly as a consortium (as the building of the Channel Tunnel) - or a continuing business relationship. The consortium JV (also known as a cooperative agreement) is formed where one party seeks technological expertise or technical service arrangements, franchise and brand use agreements, management contracts, rental agreements, for ‘‘one-time agreement”.

5) DISTRIBUTION CHANNELSIt is defined as a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

ChannelsA number of alternate 'channels' of distribution may be available:Distributor, who sells to retailers, Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for consumption goods Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc

If we mention in a single sentence the distribution channel is nothing but it is a process of transfer the products or services from Producer to Customer or end user.

BUSINESS TRAVEL, CUSTOMS AND TRADITIONS

Facts and Statistics

Location: Northern South America, bordering the Caribbean Sea, between Panama and Venezuela, and bordering the North Pacific Ocean, between Ecuador and Panama

Capital: Bogota

Population: 42,954,279 (July 2005 est.)

Ethnic Groups: mestizo 58%, white 20%, mulatto 14%, black 4%, mixed black-Amerindian 3%, Amerindian 1%

Language in Colombia

The official language of Colombia is Spanish and spoken by around 43 million people. In addition there are approximately 500,000 speakers of American Indian languages.

Columbian society and culture

* Most Colombians would consider themselves to be Roman Catholics.

* The Church has historically been a very important influence over personal affairs such as marriage and family life.

* The parish church is often seen as the centre of a community, with the local priest representing divine authority and leadership.

* The church also has some influence in areas such as education, social welfare and union organization.

The Role of the Family

* The family takes centre stage in the social structure.

* It acts as a source of support and advice and therefore great loyalty is shown to families. Although extended families rarely live under one roof, apart from in rural areas, many are still live very close and frequent one another's houses often.

* It is still common for children remain at home until they marry.

* The elderly are generally revered for their age and experience.

Hierarchies

* Colombia can be termed a hierarchical society.

* People earn respect due to age and position.

* Older people are naturally perceived as being wise and as a result are afforded great respect. You will always see the oldest person in a group served their food and drinks first.

* With this position also comes responsibility - Colombians expect the most senior person, whether at home or at work, to make decisions.

Etiquette and Customs in Colombia

Meeting and Greeting

* Men shake hands with direct eye contact.

* While shaking hands, use the appropriate greeting for the time of day: "buenos dias" (good day), "buenas tardes" (good afternoon), or "buenas noches" (good evening/night). Women often grasp forearms rather than shaking hands.

* Once a friendship has developed, greetings become warmer and a lot more hands on - men will embrace and pat each other on the shoulder (known as an "abrazo") and women kiss once on the right cheek.

* Most Colombians have both a maternal and paternal surname and will use both.

* The father's surname is listed first and is the one used in conversation.

* Always refer to people by the appropriate honorific title and their surname.

Gift Giving Etiquette

Gifts are given for birthdays and Christmas or the Epiphany (January 6th). In Colombia a girl's 15th birthday is considered an important milestone.

If you plan to give gifts in Colombia, here are some handy tips:

* When going to a Colombian's home, bring fruit, a potted plant, or quality chocolates for the hostess.

* Flowers should be sent in advance.

* Do not give lilies or marigolds as they are used at funerals. Roses are liked.

* If you are going to a girls 15th birthday, gold is the usual gift.

* Imported alcohol (especially spirits) are very expensive and make excellent gifts.

* Wrapped gifts are not opened when received.

Dining Etiquette

Dining etiquette is quite formal in Colombia as they tend to give importance to decorum and presentation.

Below are some basic tips - if you are ever unsure the general rule is "observe and follow":

* Wait to be seated by the host.

* Hands should be kept visible when eating.

* Do not rest elbows on the table.

* The host will say "buen provecho" (enjoy or have a good meal) as an invitation to start eating.

* It is polite to try everything you are given.

* Unusually all food is eaten with utensils - even fruit is cut into pieces with a knife and fork.

* It is considered polite to leave a small amount of food on your plate when you have finished eating.

* Do not use a toothpick at the table.

BUSINESS ATIQUATES AND PROTOCOL

* It is courteous to shake hands both upon meeting and departing.

* Men should wait for a woman to extend her hand.

* Greetings should take some time - ensure you engage in some small talk, i.e. ask about family, health and business.

* Eye contact is viewed positively.

* Wait for the other party to initiate a change to first names.

Business Cards

* It is a good idea to try and have one side of your business card translated into Spanish.

* Include any university degrees or qualifications as this is valued.

* Treat business cards with respect.

Business Meetings

* Although there may be an agenda, meetings do not always follow a linear path.

* An agenda will serve as a starting point and after that issues are addressed as an when.

* Relationship building is crucial - it may be a good idea to invest time in establishing trust for the first few meetings.

* Time is not an issue in meetings - they will last as long as they need to last. Do not try and rush proceedings.

* Colombians are termed as 'indirect communicators' - this means there is more information within body language and context rather than the words, i.e. if you ask someone to do something and they reply 'I will have to see', it would be up to you to read between the lines and realise that they can not do it.

* The reason for this way of communicating it to protect relationships and face.

* This means people that are used to speaking directly and openly must tame their communication style as it could cause offense.

* Although they can be indirect, Colombians can also become very animated. This should not be mistaken for aggression.

* Avoid confrontation at all cost. If someone has made a mistake do not expose it publicly as this will lead to a loss of face and a ruined relationship

BUSINESS VISA:

Once the person accredits it’s condition as a businessperson, merchant, industrial, executive and wants to enter the Colombian territory with the purpose of doing business or perform marketing studies, it must apply for a Business visa.

Characteristics of the visa: Valid for a maximum of three (3) years; multiple entrances; it doesn’t allow the person to reside in the country; it doesn’t allow the production of salaries Commissions or fees in Colombia. The limited time per enter could not exceed six (6) months.

REQUIREMENTS TO OBTAIN A BUSINESS VISA - NE

1. Three passport pictures.

2. Valid passport or Document of Travel.

3. Fill in application form.

4. Photocopy of Passport or Travel Document.

5.1 Letter of the company introducing its employee and explaining the activity to be develop by the

foreigner while in Colombia. The company must assume the financial responsibility on the travel expenses of the foreigner to the country of origin.

5.2 Letter from the applicant (self-employed) introducing himself and explaining the incentives and

purposes of his visa request. The foreigner must submit proof of his financial capacity to do

business in Colombia.

Ó / OR

5.3 Letter from the Colombian Company (private or public entity) inviting the foreigner and informing

that they are responsible for him during his stay in Colombia.

6. Certificate of incorporation and legal representation issued within a maximum precedence of 3 months.

7. Police report. It must be translated into Spanish.

TRADE ALLIANCE

MAP

COLUMBIA

TRADING PARTNERS OF COLUMBIA

BIBLIOGRAPHY

http://www.mongabay.com/reference/country_profiles/2004-2005/Colombia.html

http://www.buyusa.gov/colombia/en/doing_business_in_colombia.html

http://www.investincolombia.com.co/operational-costs/free-trade-zones.html