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Free Trade Zones

The boom of Colombia's free trade zones has led to an increasingly specialized and attractive portfolio of locations nationwide.

An impressive 91 free zones (FZs) have submitted comprehensive solicited information to the chamber in the 2014 fourth quarter investment report of the Cámara de Usuarios de Zonas Francas (Chamber of Free Zone Users) of the ANDI – Asociación Nacional de Empresarios de Colombia (Colombian Association for Entrepreneurs) out of the 102 FZs in the country.

The statistics are divided into ZFP (multiple industry permitting free zones) and ZFPE (specialized free zones). The ratio has gradually changed over the years in favor of the latter. At the end of 2014, the ratio stood at 61% versus 39% of ZFP, that is to say, 62 and 40 respectively.

Total investment in Colombia’s FZs last year stood at $1.13 billion, up from $820 million in 2013, and $615 million in 2012. At the end of 2014 the regional departments of the capital district, Cundinamarca, and the Caribbean district of Bolivar, had the largest amount of free trade zones (FTZs) at 19 and 16 respectively. The Cundinamarca region received total investments of $86 million and Bolivar garnered $794 million.
The Bolivar region’s foreign investment records are a reflection of the attraction of processing and logistics of primary materials, particularly carbon and various types of coal, copper, and zinc. In other Caribbean departments such as Magdalena, ports such as Zona Franca Brisa near the port of Santa Marta saw mammoth investments in their port infrastructure of almost $200 million.

The Zona Franca Brisa is a ZFPE focused on a variety of large industries, though predominantly cement and iron. The zone also intends to focus on other other industries, including power generation, petrochemicals, oil and gas, and logistics services. According to the FZ’s president. Fabio Ramirez Acuña, the zone could also, “focus on other sectors, but given the current downturn in the coal and iron markets, we think we should shift our focus toward other industries.”

The Valle de Cauca region boasts 10 FTZs. The most ambitious FTZ project in 2015 is the expansion of the Uruguayan FTZ Zonamerica. In early 2015, the group talked to TBY about the process of laying down a $33 million infrastructural investment scheduled to commence in February 2015.

The project is exclusively focused on service industries and the initial phase of construction includes everything from parking to the electrical wiring, telecoms, and a data centre housed in its own building. The master plan involves the construction of a complex of 30 buildings, constructed at a rate of one to two buildings per year, and by 2030 the FZ aspires to have employed 20,000 people. If all goes according to plan Calí­ will become a Colombian business process outsourcing (BPO) services powerhouse.

The FZs have a stellar reputation. The project in Uruguay has won regional recognition and prestigious awards as the best free zone in the Americas — today accounting for almost 1.5% of Uruguay’s GDP. It was awarded best FZ for small businesses by FDI Magazine, published by the Financial Times.

Other departments located strategically between ports and in human capital hotspots, near leading universities are likely to see a steady increase in FZ activity over the coming years. One such department is Tolima, which has yet to have an operational FZ. The first, currently under development, is located in Tolima’s capital city Ibague. The 23-acre plot will have state of the art infrastructure, including connection to an electric power grid of 115,000V, and rigid concrete roads of 17m width.

The city is strategically located in what is referred to as the Golden Triangle of logistics between Bogotá, Medellí­n, and Cali. This positions the FZ as an effective location for large logistics companies with clients in Colombia’s three key cities. The city is only a six hour drive from Buenaventura port, which moves approximately 40% of the countries cargo and further positions the Zona Franca Ibague as the FZ of choice for forwarding on raw materials and other goods that come into the country. The regeneration and navigability of the Magdalena river project will also contribute to the strategic positioning of Zona Franca Ibague for reaching northern Colombian cities, and exporting to foreign markets from the Caribbean coast.

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