Record Foreign Investment in Colombia in 2023

Colombia witnessed an unprecedented influx of foreign investment in 2023, with the country receiving US$13,069 million. This represented a 16% increase over the previous year. A significant percentage, 79.2% or US$10,105 million, of this investment was concentrated in the oil and mining sectors. The highest monthly investment was in April, reaching US$1,956 million, whereas August saw the lowest investment at US$845 million. This trend underscores the growing attraction of Colombia’s resource sectors to international investors.

Likewise, 2024 started with a remarkable increase in foreign investment too, as reported by the Central Bank of Colombia. January saw a 20% rise in the influx of international capital. Consistently, 70% of these funds were directed towards the oil and mining sectors. This occurred despite efforts by the Colombian government to shift focus towards tourism and agriculture, aiming for a transition to cleaner energy sources. The persistence of oil and mining investments underscores the challenges and ongoing reliance on these industries amidst efforts to diversify the economy.

Favorable context in Latin America

Last year’s context was very favorable for the growth of foreign investment at the continental level. In 2023, these increased in Latin America by around 55% compared to the previous year. This goes against the initial predictions of economists, who were reticent in their forecasts, especially due to the growth of the interest rate in the USA.

In theory, when this happens, what occurs is the reverse of what actually happened in 2023, as capital tends to leave Latin America and other less favorable destinations, returning to safer places, such as the USA. In addition to Colombia, Brazil, Mexico and Chile were the most benefited economies, as well as Argentina, despite its economy being one of the most vulnerable in the continent.

The reasons that would explain this unexpected case should be sought in the continent’s distance from the war in Ukraine, a destabilizing factor at the global level; the preservation of Latin America’s economic attractiveness, with a marked resistance of local currencies, despite the rise in US rates; and the decision of foreign capitalists to keep their profits in Latin American countries instead of exporting them, as has happened on other occasions. On this last point, it is worth noting that these countries pay fewer taxes on the profits generated, and at the same time provide access to cheaper credit to subsidiaries.

Political change without ruptures in Colombia

Likewise, the first left-wing government in the history of Colombia, which has been in power since August 2022, has not broken with the historical commercial relations with the economies of the USA, Canada and Mexico, nor with the private sectors of these countries, which continue with normal commercial operations in Colombia.

In this sense, the social reforms that are raising so much political noise in the country are in reality European social democratic projects, without pursuing private investment or the interests of foreign investors. Furthermore, the non-existence of a parliamentary majority of the government coalition in Colombia necessitates a political negotiation to be able to approve an important legislative package, with the support of traditional parties.

In fact, some experts point out that the formation of a new government in Colombia, as happened a year earlier in Chile, has normalized the political situation and reassured the markets, which have seen great opportunities for profits in both countries.

Commitment to new sectors

Similarly, the Colombian government has devoted significant efforts to promoting investment in sectors of the economy other than the traditional and thriving oil and mining sectors.

Under the slogan “Colombia, the country of beauty”, President Petro’s government seeks to attract investors by highlighting the country’s cultural and gastronomic wealth, ethnic diversity and the warmth of the Colombian people.

Regarding 2023, Carmen Caballero, president of the state promotion entity ProColombia, stated that “it has been a year of achievements for a future with more social, economic and environmental justice in the territories with internationalization”. Caballero added that “the key is to continue taking advantage of the opportunities that Colombia has to receive more foreign investment and international tourism, and to promote greater non-mining exports to build a more prosperous and sustainable tomorrow for all Colombians. We are the number one allies of businessmen, their eyes and ears in international markets.”

The campaign also seeks to develop sustainable tourism in its regions. During the past year, Colombia made progress in its consolidation as an accessible and connected tourist destination, which has been recognized internationally. According to Forwardkeys, for example, the country is ranked number 2 in terms of growth of international arrivals worldwide.

Foreign investment in the regions

There are several positive figures. In connectivity, 21 new air routes were announced, of which 17 are already in operation, and in cruises, calls increased by 151% and passenger arrivals by 346% compared to the 2021-2022 season. For the 2023-2024 season, an economic impact of close to US$50 million is expected for the country and its regions.

In the area of attracting foreign direct investment, ProColombia was awarded the ‘Fostering Lasting Investment’ prize at the Go Global Awards 2023, beating 50 other government entities.

With a primary focus on sustainability, led by the Ministry of Commerce, Industry and Tourism, 121 investors from 33 nations informed ProColombia of the start of 143 projects to be executed over the next three years. These initiatives aim to create 90,366 jobs, both direct and indirect.

Among the projects mentioned, 18 will contribute to the transition to sustainable energy, five to the revitalization of the health sector, and 21 to food security and agribusiness. In addition, three will be carried out in PDET municipalities (Territorial Focus Development Programs, which are carried out in areas that have suffered from violence, poverty and the proliferation of illicit economies) and 30 in municipalities with less than 200,000 inhabitants.