Colombia: Business environment at a glance

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2007-08: Privatisation of banking- and energy-sector assets, and concessions in infrastructure help tackle distortions arising from state involvement and industrial concentration.

2009-11: Competition policies and the protection of intellectual property rights further improve with the enactment of the free-trade agreement (FTA) with the US. Few price controls, gradual elimination of remaining subsidies.

Policy towards foreign investment

2007-08: Open policies prevail. Concessions and privatisation offer opportunities.

2009-11: The FTA with the US further improves the stability of the investment framework.

Foreign trade and exchange controls

2007-08: Compensatory measures for some agricultural and industrial products. Tax exemptions on capital goods imports.

2009-11: FTA with the US eliminates remaining non-tariff barriers; improved trade integration with the Mercado Comun del Sur (Mercosur, the Southern Cone customs union), Central America and Mexico.

Taxes

2007-08: Tax system suffers from complexity and distortions. Reforms focus on reducing income tax rates and simplifying value-added tax (VAT) regime. Anti-evasion measures extended.

2009-11: Some loopholes, distortions and unfairness prevail. Improved enforcement and widening of taxpayer base expected to gradually curb evasion.

Financing

2007-08: Increased competition amid consolidation. Reforms to deepen banking services and the capital market.

2009-11: Gradual narrowing of interest-rate spreads. Low availability of long-term financing persists. Increased competition under the FTA with the US.

The labour market

2007-08: Generally flexible hiring and firing practices. Labour costs in US-dollar terms fall as the currency depreciates.

2009-11: Shortages of skilled labour persist. Added flexibility to labour laws in order to comply with the FTA with the US.

Infrastructure

2007-08: Deficiencies remain a significant constraint, despite security improvements.

2009-11: Investment hampered by fiscal constraints, but private concessions gradually advance. Risk of electricity rationing.

Copyright 2006 Economist Intelligence Unit