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FDI flows in Colombia grew 81.7%


Bogota D.C. - April 13, 2023 ( Newswire) 2022 was a year of immense challenges. The war in Ukraine, inflation and increases in interest rates, as well as the country's electoral climate that brought uncertainty due to the change of government, caused investments in the country to weaken. However, according to the estimates on the balance of Foreign Direct Investment for 2022 for the Bogota Region, carried out by the investment promotion and world-class event attraction agency, Invest in Bogota, the capital continues to be the preferred destination for investments made in Colombia.

The same balance reveals that the Bogota Region hosted 64.7% of the new and expansion FDI projects that arrived in the country. Likewise, the city concentrated 62% of the investment amounts and 64.5% of the jobs last year.

"In 2022, 143 new and expansion foreign direct investment projects were carried out in the Bogota Region, valued at USD 1.5 billions, which generated 20,952 quality jobs" says Isabella Muñoz, executive director of Invest in Bogota. "Over 30 different countries invested in the city last year. The diversity of interested markets shows the potential and confidence of foreign companies to expand their operations in Bogota and its metropolitan area" she adds.

The balance also shows that most of the investment projects that the city received come from countries such as the United States (30.8%), Spain (9.1%), Mexico (6.3%) and Argentina (6.3%). However, other Latin American countries stand out, such as Brazil (4.9%) and Chile (4.2%); European countries such as Germany (4.9%) and Switzerland (3.5%), and finally Japan (3, 5%), which was the main Asian investor, surpassing China.

Regarding the sectors where FDI projects were allocated, software and IT services is positioned as the leader in attracting investment in the Bogota Region. During the last five years, this industry represented 20.2% of the city's FDI projects, and in line with global investment growth trends from the technology industry, in 2022 it came to represent 29.4 % of FDI projects in the Colombian capital.

For its part, with a participation of 16.8%, corporate services is positioned as the second sector with the highest number of completed FDI projects. These figures show the vocation of Bogota as a city of services. The availability, quality and cost of labor, advances in terms of bilingualism and the strategic position of the capital, have contributed to investors perceiving the city as an ideal destination for the development of their services and programming activities.

Investment in the communications industry is also gaining relevance. In 2022, this was the sector with the third highest number of investment projects, concentrating 9.1%. The pandemic also increased the demand for digital services, which requires greater investment in data processing and hosting services such as data centers, as well as investment in ICT and internet infrastructure.

Finally, other important sectors in attracting FDI in the Bogota Region in 2022 were financial services (7.7%), textiles (4.2%), automotive (3.5%) and consumer products (3.5%).

Foreign Direct Investment prospects for 2023

The prospects for world FDI in 2023 appear to be downward since the main economies of the world would enter recession or present low growth. Under this scenario, many companies contemplate strengthening their current operations instead of expanding into new markets.

Despite this projection, the outlook for Latin America would be different, since FDI trends indicate that, during 2023, the relocation of operations by multinationals near their headquarters will boost investment projects. 30% of the companies that developed FDI projects in Latin America during the last two years indicated that proximity to markets and consumers was the main reason for expanding in the region.

In this sense, the prospects for investment in the city during 2023 are also positive. According to a survey carried out by Invest in Bogota to 56 foreign companies, 75% of them have contemplated investment projects in the Bogota Region for this year. This figure reflects a high level of optimism regarding the city's business environment for this year, particularly in industries such as IT, BPO and creative industries.

However, at the national level, it should not be ignored that the fluctuation of the exchange rate and inflation are factors that could affect investment projects this year. Additionally, in relation to the reforms of the new government, 64% and 56% of the companies surveyed stated that the tax and labor reforms would have a negative impact on their investment decisions in the city, respectively.

Although 2023 is shaping up to be a year of significant challenges to attract relevant investment, there are also immense opportunities from the expansion and reinvestment of already established foreign companies.

"In 2023, a moderate increase in the number of FDI projects arriving in Bogota and Cundinamarca can be expected, which may be greater if good macroeconomic results are consolidated at the country level," says Muñoz. "In fact, Invest in Bogota has identified 73 investment opportunities, which would generate an estimated investment of USD 1.3 billion and approximately 20,500 jobs," she concludes.

More Info: Newswire

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