The growth of FTZs in Colombia has been possible thanks to a change in the government's policies, as they became strategic and an essential part of a nationwide project to attract more FDI and strengthen national investment. In this regard, the bureaucratic processes for the establishment of FTZs were shortened and made easier, while setting the perfect regulatory and tax framework for their establishment in the regions of Colombia. Therefore, today we have permanent and special FTZs in Colombia in between 15 and 20 regions, which contributes to the development of these regions. Some changes in Law 105 brought income tax benefits of up to 15% for enterprises establishing operations in FTZs, as well as special customs tariff regimes. These areas are considered foreign production zones when it comes to customs tariffs for imports. Today, FTZs are large production areas with great logistics services. Zona Franca Parque Central has 116 hectares of FTZ planned, of which 64 have already been approved, while the remaining are part of our first expansion plan.
Bernard Gilchrist B.
Manager, Zona Franca Parque Central
Juan Pablo Rivera Cabal
President & CEO, Zona Franca Bogotá
The law of 2005 gave an opportunity for companies to clarify how the FTZs would work and function. Until that time, our FTZs ran on World Trade Organization (WTO) regulations and requirements. The only FTZs that were available to develop in Colombia were the permanent FTZs, and special FTZs weren't allowed until that point. Not all of those 113 FTZs are operating yet, with 13 or 14 awaiting approval by the resolution of the Taxes and Customs National Bureau (DIAN). Of those FTZs, 36 are permanent FTZs, and the rest are Special FTZs. The factor that led to the boom was the government's enabling of the development of these Special FTZs. Special FTZs are very important because they have enabled certain projects to be done in the country, projects that would've been done elsewhere or a much smaller scale otherwise. They have created jobs, and brought in investment and new technologies. One example is the Cartagena Refinery. That particular project with the FTZ program became a huge investment of almost $5 billion thanks to the fact that it could be done in a Special FTZ.
Álvaro Moreno Santana
President, Zona Franca La Candelaria
We are making an effort to attract more companies through the internet because the world is online. In order to plan our operations, we work to keep in touch with other companies online. The internet is very important to us, especially in terms of handling the way other regimes feel about monetary and customs facilities. The free zone received feedback from at least one important entity that was opposed to the way we were operating because we were totally tax exempt for the purposes of international trade. The International Commerce Association considered it illegal because it encouraged exports exclusively. The bill was amended recently, and since then we are taxed 15%, the same percentage that China enforces. This 15% is not designed to push exports forward, but is instead geared toward selling at a fairer price locally and abroad. Now, anything made at La Candelaria can be exported or sold in Colombia. La Candelaria and other free zones here in Cartagena and this region are additional areas for industrial and development purposes.
Bertha Cecilia Rojas
General Manager, Zona Franca del Pacífico
FTZs were envisaged as industrial elements that would contribute to company product diversification and capacity expansion. At the same time, FTZs are a great source of new employment opportunities for regions that previously lacked labor opportunities. In this context, some FTZs attracted large amounts of investment and became major industrial hubs, such as Reficar, near the coast. Many companies strengthened their production facilities and capacities, while contributing to the development of certain regions in the country. In addition, these areas also provide competitive advantages to Colombia in such a global and competitive world, especially after the free trade agreements (FTAs) signed by the government recently. Some long-existing FTZs, like ours, which were established some 20 years ago, also received a boost, for they had become stagnant over the years, especially after the recession period in the late 1990s and early 2000s.