The Colombian economy has plenty of room for improvement, but it’s looking a lot more attractive than much of the rest of the world. This is the takeaway message from a comprehensive annual survey of Colombian business leaders and CEOs conducted by financial consulting firm PricewaterhouseCoopers (PwC).
The 2016 report, which was released in May, found that just 8 percent of Colombian CEOs were confident in the short-term direction of the world economy. But nearly two-fifths were confident that their own businesses were on the right track financially, a slightly higher portion than the global average.
And nearly all Colombian CEOs – a whopping 97 percent – believe that their companies’ profits will grow over the next three years. “We’d rather look at the glass half full,” said PwC Colombia President Gustavo Dreispiel.
Dreispiel calls 2016 a “year of transition” for Colombia and pointed to several factors, such as the peso’s volatility, global oil prices and the potential of a major tax reform — as causing an unusually high level of economic uncertainty. “The study shows transition,” he said. “But on the other hand, this could be a historic year if Colombia signs a peace deal.” Aside from the obvious imperative of improving national security, Colombia needs to simplify its tax system and make it more competitive, according to the survey. Ninety-three percent of Colombian CEOs saw taxes as a threat to business growth, compared to 69 percent worldwide. It was the second-most concerning factor just behind volatility in the exchange rate. “Other countries like Peru and Chile have much lower overall tax costs and are our competitors for foreign investment,” said Dreispiel.
Aside from taxes and security, physical and digital infrastructure must be priorities for the government in order to improve the economy, according to the report.
But there are still plenty of reasons for foreigners to invest in Colombia, says Dreispiel. “Colombia is a politically and economically stable country with reason- able growth and social strategies to reduce poverty and grow the middle class,” he said. “And international investors are highly valued.”
The country also offers good access to human capital, although further training the workforce for modern and tech jobs is still a priority in the near future, he explained. Colombian business leaders also tend to look beyond the bottom line more than their global colleagues. Some 87 percent of Colombian CEOs said that business success means more than just monetary profit, compared to 76 percent worldwide. “Traditionally, CEOs have focused on shareholders, but social and environmental aspects are be- coming more important,” said Dreispiel. “The key is how to communicate those impacts.”
If foreign businesses have been on the fence about jumping into the Colombian market, there’s some evidence that now is the time to do so.
“Today there are many more ‘multi-Latin’ companies with bases in Colombia than there were 10 or 15 years ago,” explained Dreispiel, referring to companies that operate throughout Latin America. “And the devaluation of the peso makes it a more viable time for foreign investment.”
In other words, strike while the iron is hot.
Colombia has many factors that are “advantageous compared to neighboring countries,” said Dreispiel. “And we’re seeing increasing opportunities.” The 2016 PwC report interviewed 1,409 CEOs in 83 countries around the world, including 61 in Colombia. Interviews were con- ducted between October 2015 and January this year. This was the 19th year that PwC conducted the survey.