The creation of Foreign-Trade zones in Colombia has not generated the promised investment and jobs, a report written for Colombia’s central bank concludes.
The report “Foreign-Trade zones in Colombia: benefits in income tax” found that in terms of generation of investment and employment the results were poor.
In terms of employment, the FTZs created since 2007, promised to create 115,952 new jobs of which 33,521 would be direct jobs and 82,431 from indirect employment. However by the end of 2010 only 18.5% of the direct jobs and 31.2% of the indirect jobs had been created. In terms of investment $6.66 billion was promised but by the end of 2010, only $3.08 billion or 46.3% had been invested.
FTZs have long been the target of criticism firstly for the cost in terms of lost tax income and secondly for the unequal treatment for those companies operating outside the zones. Former President Alvaro Uribe was accused of creating a FTZ to stimulate businesses owned by his sons, who allegedly saw a previous investment in such a zone multiply in value by 100.
Companies in these zones, located at seaports, airports and national borders get preferential treatment in terms of taxes and customs. In these zones, products such as textiles toys and electronics are produced.