Colombia’s trade minister has announced that the country will have 9.88 million extra acres of land for free trade zones by the end of 2011, Colombian media reported Friday.
Colombia currently has 27.18 million acres apt for the installation of free trade zones and are aiming to have 37.06 million acres by the end of this year. The government has indicated that the goal for the middle of 2014, when the presidency of Juan Manuel Santos‘ comes to an end, is to have an additional 49 million acres.
The chamber of free trade zones of the ANDI and the government are working on a system which will allow the increase of the level of production for export from these zones. It is hoped that the first changes will be ready by the beginning of October.
“Colombia needs this regime to be able to compete to attract foreign investment on a global level. We will make adjustments which will allow good administration in a sector that is as key for employment as it is for services. We will have more flexibility with certain aspects. In reference to this now we are working with the Finance Ministry, National Planning and DIAN [Colombia’s customs and tax agency],” said Trade Minister Sergio Diaz-Granados.
This announcement was made despite the fact that a report by Colombia’s central bank published in May 2011 found that the FTZ delivered poor results in terms of the generation of employment and investment. The report found that between 2007 and 2010 only 46.3% of the promised investment had materialized. Furthermore, just 18.5% of the direct jobs and 31.2% of indirect jobs that were promised were in fact created.
Companies operating in these zones get preferential treatment in terms of taxes and customs. The tax paid on rent is 15% rather than 33% and they are exempt from sales tax on raw materials, parts, and finished goods purchased in Colombia. Companies in these zones also do not have to pay customs tax on goods entering the country from abroad.
Friday is the second and final day of the 5th Congress of Free Trade Zones. The congress taking place in Cartagena is extolling the benefits and opportunities FTZs brings to companies and communities.