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Sign and Billboard Manufacturing Industry Reports

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									Colombia: A Golden Opportunity
      For the Textile Industry
     Agenda

1. Colombia Outlook

2. Why to invest in Textile and Apparel Industry

3. Industry Dynamics

4. Proexport Services
     Agenda

1. Colombia Outlook

2. Why invest in the Textile and Apparel Indsutry

3. Industry Dynamics

4. Proexport Services
              Colombia’s economic growth has
              outpaced that of the Latin American region

                       GDP Growth: Colombia vs. Latin America (2000 – 2007)
                                               %

      8                                                                                              7,52
                                                                                        6,80
      7
      6                                                        4,87        4,72
      5                                           3,86
      4      2,92
      3                               1,93
      2                   1,47
      1
      0
     -1      2000        2001         2002        2003         2004        2005        2006          2007
                                             Colombia             Latin America



Source: Economic Commission for Latin America and the Caribbean (ECLAC), DANE, Forecasts ECLAC and
National Planning Department, and World Economic Forum for Latin America in 2007
                 Colombia’s significant market potential
               GDP in Latin America (2007)                      Population in Latin America (2007)
               Current Prices, USD Billion                            Million of inhabitants

        Brazil                                   1.296         Brazil                                       190
       Mexico                          879                   Mexico                             108
                                                           Colombia                  44
     Argentina             244
                                                           Argentina                39
    Venezuela              223
                                                                Peru              28
    Colombia              172                             Venezuela               27
         Chile            157                                  Chile           16
         Peru         107                                   Ecuador            13
      Ecuador        43                                      Bolivia          10
                                                           Paraguay          6
   Costa Rica        26
                                                          Costa Rica        4
      Uruguay        22
                                                            Uruguay         3
                 0               500   1000        1500                 0          50     100         150   200

Source: International Monetary Fund and World Bank 2007
                      FDI increased 323% since 2002


                                                    FDI Flows (1994-2007 )
                                                          USD Million


                                    Foreign Direct Investment inflows (1998-2007) US$ millions          Sab Miller´s
                                                                                                        investment
                                                                                                        USD 4,715 M
              12.000                                                                 10.240
              10.000                                                                                    9.028

               8.000
                                                                                               6.464
               6.000                                                            5.661
               4.000      2.829             2.436   2.542                   3.016
                                    1.508                   2.134   1.758
               2.000

                  -
                          1998      1999    2000     2001    2002    2003    2004       2005     2006    2007



Source: Balance of Payments, Central Bank
           Exports increased 150% since 2002


                                            Exports (1995 – 2007)
                                                USD Million

                                                                                       29,991
      30000
                                                                              24,391
                                                                     21,188
      20000                                                 16,730
               13,158     12,330   11,975        13,128

      10000


          0
                2000      2001      2002         2003        2004    2005     2006     2007


                                   Traditional     Non Traditional


Source: DANE, Proexport
               Second Country with Qualified Human Resource
      Availability of qualified labor (0= not                        Availability of qualified engineers (0= not
       available, 10= readily available)                                 available, 10= readily available)
      Colombia                                         7,19
                                                                   Chile                                          7,26



          Chile                                 5,43           Colombia                                          7,00



                                                                  Brazil                                  6,36
          Brazil                              5,03

                                                              Venezuela                            5,51

        Mexico                                4,98
                                                                 Mexico                            5,47


      Argentina                               4,96
                                                               Argentina                          5,25


                   0        2          4          6      8                 0     2        4          6                  8


                                                              Ranking (55 countries)
Source: The World Competitiveness Yearbook 2007-IMD
Access to global markets (2010 plan)
             Negotiation agenda through 2010
Agreements to facilitate investments (2010 plan)
Double Taxation Agreements – DTSs –                 Investment
                              Agreements – BITs –
     Agenda

1. Colombia Outlook

2. Why invest in the Colombian Textile and Apparel Industry

3. Industry Dynamics

4. Proexport Services
                 Colombia has access to markets for more than US$ 220
                 Billions per year
    Thanks to the commercial agreements that Colombia has with different countries from
    America and Europe and to its geographic position, the country has become a center of
    production, distribution and exports hub for markets of South America, North America
    and Europe.
                                                                             Average tariff   Average tariffs for
                Trade Agreement s                                Countries
                                                                                 rates            Colombia
                                                                   Bolivia
                                                                  Ecuador         20%                 0%
                 Andean Community
                                                                 Venezuela
                                                                    Peru
                                                                 Argentina
                 Andean Community                                  Brazil         20%              0% -12%
                     - Mercosur                                  Paraguay
                                                                  Uruguay
                        FTA G2                                    Mexico       20% - 35%              0%
                      SGP - PLUS                                  Europe       6 %– 12%               0%
                       FTA- Chile                                  Chile          6%                  0%
                       FTA - USA                                    USA         0% - 38%              0%
Source: World Tariff, Ministry of Commerce, Industry and Tourism, USITC
         Colombia represents a internal captive market of more than
         US$ 800 millions per year
Currently, imports of textiles, fibers and
threads add more of US$ 847 million                           Consumption / Tons / Year
annually.
An investment opportunity exists to                    Cellulose

strengthen the national fiber and textiles                 Wool
production for internal consumption and
                                                      Polyester
apparel exports. Although Colombia has a
consolidated and integrated chain of                      Nylon
supplying, investment in new technologies ,              Acrylic
both hardware and software would
                                               Polyester Cotton
generate improvements and increase the
local production of certain type of weaves    Polyester Filament
like rayon, tweeds, viscose, denim and
                                                         Cotton
polyester and to favor the competitiveness
of the chain completely.                                           0   20.000 40.000 60.000 80.000 100.000 120.000
            Because Colombia has one of the lower labor costs of
            South America for the Industry
                                                       Colombia has a
                                                        qualified and
                                                     competitive human
                                                    resource in terms of
                                                     costs, confections.

                                                      In this sense SENA’s
                                                     ( National Education
                                                    Service Organization)
                                                        work stands out
                                                    because its in charge
                                                      of encouraging the
                                                          technical and
                                                   technological education
                                                     through free learning
                                                      programs in diverse
                                                           disciplines.

Source: Werner International, 2007
       Colombia has the most competitive FTZ’s in Latin America: 15%
       income tax and allows sales to the local market
 Single 15% income tax rate.
Any goods entered to the Free Trade Zones are considered to be outside the
  national territory when it comes to taxes related to imports and exports.
No customs taxes (VAT or CUSTOMS DUTIES)
VAT exemption for raw materials, inputs and finished goods sold from the national
  customs territory to industrial Free Trade Zone users.
Exports made from Free Trade Zones to foreign countries benefit from international
  trade agreements. (Except Peru)
No customs taxes for any machinery directly related with the business’ operation
  which is imported for abroad and entered to the Free Trade Zone
Quick and simplified customs procedures
                A company may benefit from the FTZ’s without being
                located in one
   Companies not physically located inside a FTZ are entitled to benefit from
   the FTZ regime

     Requirements to get the Single Enterprise Free Trade Zone Status:

     Goods
                                                                                                    Each additional
                                                                                                    investment of U$
             Investment in                              And Direct
                                                                                                    5.9 MM reduces
                millions                                  Jobs                                      the number of jobs
               USD 38.4                                    150                                      required by 15; in
                                                                                                    any case 50 job
                                                                                                    must be created.



Exchange rate used: USD 1= COP 1800.
Minimum Monthly Legal Wage for 2008 is COP$ 461.500. The M.M.L.W, as well as the exchange rate is subject to variations   .
                 Colombia also offers Legal Stability Contracts
                            Guaranteeing the legislation and administrative interpretation considered as a
       Objective            determining factor for the investment project.


                            Investments over U$1,900.000

       Conditions           Investor must pay a premium to the Government equivalent to 1% of the
                            investment made.


            Period          From 3 to 20 years maximum.


                                                                                     Evaluation and
                                                                                                                             Final
              Admission                           Technical report                      approval of
                                                                                                                           evaluation
                                                                                    the application


* These contracts exclude rules regarding the social security system, the obligation to report and pay taxes levied by the government under a state
of emergency, indirect taxes (i.e., the VAT or the tax on banking transactions), prudential regulations of the financial system and the utility rate
system.
        And other favorable Tax Incentives

 100% of the amount paid for industry & commerce, sign and billboard, and
  property taxes during the corresponding taxable year, as long as they are
  directly related to the taxpayer’s economic activity.

 40% of the amount invested in productive real assets acquired. (No limit in
  time)

 25% of the tax paid on financial transactions may be deducted, regardless of
  their relationship to the taxpayer’s economic activity.

 Deduction of 125% of the Income tax paid in science and technological projects

 VAT exemption on the sales contract (services export exemption).

 Plan Vallejo: VAT exemption for the temporary imports of raw materials and
  inputs exclusively and totally used by the producer to produce goods to be
  exported
      Also, special foreign trade regimes like Warehousing
      for Industrial Processing
Allow the producers to import raw material and inputs without paying the VAT
and customs duties.

Objective: warehouses authorized by the National customs and tax office (DIAN)
to store raw materials and inputs scheduled to undergo industrial transformation,
processing or manufacturing

Users: Highly exporting users (ALTEX) or Permanent Customs Users (UAP).



This regime applies only for the manufacturing of goods devoted exclusively and
totally to be exported.

    Metalmechanic and Textile companies are the most frequent users
        And The Vallejo Plan for Raw Materials and Inputs

Applies to the imports of raw materials and inputs devoted exclusively and
totally to the production of a determined volume of final goods to be exported.

Benefits: imports are totally exempt from tariff VAT and any other import
duties.

Requirements: The total exportation of the manufactured goods must be
done within the following eighteen months.

Users: Any company admitted by the DIAN
         The Vallejo Plan for Replacement
Gives the exporter of goods the right to replenish or replace, through a new tax-exempt
import, the raw materials or inputs he used to produce goods when the initial import was
subject to the payment of taxes in full (customs duties and VAT).

Benefit: Imports of raw material without VAT Tariff and other custom duties

Users: any company that exports manufactured products

Requirements: The exportation of all the final products manufactured with the imported
raw materials.

Difference with the raw materials plan: This program does not requires the
presentation of Demonstration Studies, only: the declaration of exportation a importation
of final products and the input products square.



              This plan is mostly used for small and medium size companies
         The Plan Vallejo for Maquila
Allows foreign contracting party to provide the national producer 100% of the raw
    materials or
inputs required to manufacture the good to be exported, national labor and services are
incorporated into the final product.

Benefits:
1. Raw materials and inputs that are delivered by the foreign client or supplier and
   which may enter the country’s national customs territory provisionally without paying
   customs duties and VAT.
2. Non payment is caused for the importation of the raw materials and inputs. (Non
   reimbursable import).
3. VAT exemption on the sales contract (services export exemption).

Users: National producers

This regime applies only for the manufacturing of goods devoted exclusively and totally
to exports.
         For Permanent Customs Users (UAP)
Imported merchandise is automatically released.
An increase in the cash flow and administrative efficiency: Possibility of differ the tax
And customs payments for a month.
Possibility of being recognized as a warehouse for industrial processing and
International distribution.

Requirements:

During the previous 12 months the company must have conducted foreign trade
operations for a FOB price of US$3 m.
Have processed at least 2,000 import or export reports during the immediately twelve
(12) preceding months.
Vallejo plan users that during the last 3 years had exported an amount equal to or
greater than US$2 million.
        And for Highly Exporting Users (ALTEX)
Non-accrual of the VAT for ordinary imports of industrial machinery not produced in
the country and destined to the transformation of raw materials.
Possibility of DIAN ( National Customs Office) allowing the importer to use a bonded
warehouse for industrial processing and of acquire the status as Permanent Customs
Users.
Consolildate in one single export document all the partial dispatches abroad of
the same product, abolishment of the physical customs inspections of imported or
Exported merchandise (except for exceptional cases).

Requirements:
Exports during the 12 months prior to the application date must have been for a FOB
Amount equal to or greater than US$2 m.
The price of the merchandise exported either directly or through an intermediary must
represent at least 30% of the amount of their local sales during that same period.
     Agenda

1. Colombia Outlook

2. Why invest in the Colombian Textile and Apparel Industry

3. Industry Dynamics

4. Proexport Services
       Over 100 years of experience in this industry and worldwide
       recognition: sophisticated and mature industry

•    The production of the Industry has grown by 47 percent (US$ 1,206
million) between 2002 and 2006.

•    Colombia has nearly 500 textile mills and 10.000 apparel companies. Most
of them are small and medium sized companies of which 50% have between
20 and 60 machines.

•   Creates more than 800.000 direct and indirect jobs and therefore
represents 12% of the total labor force provided by the manufacturing Industry.

•    Accounts for 10.3 percent of manufacturing GDP and 1.6 percent of
national GDP.

•   Accounts for 12 percent of the total non traditional exports. In 2007, total
exports grew 47 percent from US$ 1,330 million, in 2006 to US$ 1,957
million, in 2007.
        Fashion Center for Latin America

•    Industry trade sources have estimated that cotton textile production
    represents approximately 43 percent; yarns and woven fabrics, 21
    percent; knit products, 19 percent; and man-made fiber products, 8
    percent.

•    The textile industry produces annually approximately 950 million square
    meters of cotton, polyester, nylon, viscose and wool fabrics, as well as
    twill, satin, cotton poplin and polyester blends.

•   Colombia has become one of the main fashion centers in Latin America,
    featuring trade shows such as Colombiatex and Colombiamoda which
    bring together recognized companies from many countries around the
    world.

•    Currently, Colombia accounts for 0.31% and 0.17% world’s textile and
    clothing exports, and is responsible for 0.25% of world’s fashion market.
            Constantly growing industry
                                  National Textile and Apparel production U$ Million
                                                     2000 – 2006
                          4.000


                          3.000


                          2.000

                          1.000


                             0
                                     2000     2001      2002     2003      2004        2005    2006
        Total Production             2.567    2.570     2.422    2.485     2.938       3.498   3.773
        Textile Production           1.404    1.350     1.239    1.263     1.539       1.805   1.958
        Apparel Production           1.163    1.220     1.183    1.222     1.399       1.693   1.815


Production of the Industry has grown by 47 percent (US$ 1,206 million) between 2002 and 2006
Source: DANE – ASCOLTEX
              Exports oriented industry
                                               Exports US$ Million
               2500

               2000

               1500

               1000

                 500

                    0
                           2000   2001   2002      2003    2004      2005   2006   2007

            Clothing       581    630    576       691      930      966    1028   1500
            Textiles       211    212    161       173      248      292    302    457
            Total          792    842    737       864     1178      1258   1330   1957

        In 2007, Textile and Clothing exports accounted for 12 percent of the total non-
    traditional exports and 7 percent of total external sales. Mostly knits, denim, jeans and
                                          cotton t-shirts
Source: DANE - PROEXPORT
               Exports are mainly concentrated on value added
               garmets
                       Textiles and Apparel’s – Categories 2007
                               9%
                                    4%


                                         14%                      Fibers
                                                                  Threads
                                                                  Wovens
                                                                  Confections


                 73%

                                               Total Exports 2007:
                                                U$ 1.957 Million
Source: DANE
            Main textile exports
Colombia’s Principal Textile Exports                                    Principal Textile Exporters
                                          15%
                                                                             Company               U$ FOB 2007
                                                   8%        Textiles Fabricato Tejicondor S.A.   51.424.123

                                                             Manufacturas Eliot Ltda Y Cia        49.825.922
                                                    7%
                                                             Enka De Colombia S.A.                37.016.992
         60%
                                                  5%         Protela S.A.                         27.018.786

                                               5%            Cia. Colombiana De Tejidos S.A.      25.591.329

Knitted or crocheted fabrics.                                Textiles Miratex S A                 22.134.138

                                                             Toptex S.A.                          21.984.427
Woven fabrics of cotton.
                                                             Null                                 18.240.273
Dyed knitted or crocheted fabrics of synthetic fibers        Fabrica Lafayette S A                16.623.407

                                                             Fibrexa Ltda                         16.276.730
Woven fabrics of cotton, mixed mainly with manmade fibers,
denim.                                                       Subtotal                             286.136.127
The others yarns
                                                             Others                               172.213.185

Others                                                       Total                                458.349.312
           Main Apparel Exports
                      Main Exporters                                      Main Exports 2007
                                                                                               11%
               Company                   U$ FOB 2007
                                                                                                      9%
Comercializadora Internacional             118.192.820
El Globo S.A.
C.I. Braytex S.A.                           75.422.883                                                  7%

Comercializadora Internacional              62.097.362                                                  7%
Jeans S.A.                                                          61%

Dugotex S A                                 57.321.676                                               5%

Permoda S.A.                                44.140.607   Men's or boys' trousers, bib and brace overalls, breeches and
                                            38.307.443   shorts of cotton.
Industrias Cannon De Colombia S.A.
C.I. Expofaro S.A.                          37.316.676   T-shirts, singlets, tank tops and similar garments of cotton,
                                                         knitted or crocheted
Manufacturas Eliot Ltda Y Cia               36.461.092
                                                         Women's or girls' trousers, bib and brace overalls, breeches
Null                                        32.507.447   and shorts of cotton
Industrias E Inversiones Cid C.I. S.A.      30.161.008
                                                         Brassieres, whether or not knitted or crocheted
                 Subtotal                 531.929.015

Others                                     968.568.806   Toilet and kitchen linen of cotton terry toweling or similar
                                                         cotton terry fabrics.
                     Total               1.500.497.821
                                                         Other
                Main export markets
                                Textiles and Clothing Exports - Destination 2007
                               1% 1%
                           1%
                                     6%
                    2%     2%                                         Venezuela
                                                                      United States
                      2%
                                                                      Mexico
                     6%
                                                                      Ecuador
                                                                      Peru
                    7%                                                Cucuta Free Trade Zone
                                                          55%         Costa Rica
                                                                      Chile
                                                                      Panama
                         17%                                          Brazil
                                                                      Others


               Venezuela appears as the principal destiny receiving 55% of total Textile
Source: DANE
                      and Clothing exports, followed by United States with 17%.
              Imports have also increased to strengthen the supply
              chain for the apparel industry
                                                Imports U$ Million

             1400
             1200
             1000
               800
               600
               400
               200
                  0
                           2000   2001   2002      2003      2004    2005   2006   2007
          Clothing          88     88     88        103      125     163    206    318
          Textiles         659    628    586        553      690     713    853    957
          Total            747    716    674        655      816     876    1060   1275



                  Total imports grew 20 percent from US$ 1,060 million, in 2006
                                   to US$ 1,275 million, in 2007.
Source: DANE - PROEXPORT
                Main imported products
                                   Textiles and Apparel 2007

                         27%
                                                    31%

                                                                            Fibers
                                                                            Threads
                                                                            Wovens
                                                                            Confections
                                                     5%

                                                               Total Imports 2007:
                                 37%
                                                                U$ 1.275 million
                  Colombia imports synthetic fibers and plain cotton woven's.

Sourcee: DANE
                 Textile Imports
               Main Textile Imports                                                    Main Textile Importers
                                    10%
                                                                                        Company                 CIF 2007
                                             5%
                                                                       Manfucturas Eliot S A                    56.155.319
                                                      4%
                                                                       Idustrias Cannon De Colombia S A         27.643.613
                                                      4%
                                                                       Bonlam Andina Limitada                   25.409.423
                                                      3%                                                        20.702.930
                                                                       Du Pont Textiles And Interiors Colom

                                                                       C I Jeans S A                            18.327.406
                   73%
                                                                       Suertex S A                              15.930.051

Woven fabrics of cotton, 85% or more cotton by weight, denim.          Kaltex Sudamerica S.A                    15.057.724

Cotton yarn nesoi, 85% or more by weight of cotton.                    Arturo Calle                             15.035.772

                                                                       Colmetex C.I. Ltda.                      14.468.608
Woven fabrics of cotton.
                                                                       Extiles Fabricato Tejicondor S A         13.929.790
Synthetic staple fiber yarn.
                                                                       Subtotal                               222.660.638
Nonwovens, whether or not impregnated, coated, covered or laminated.
                                                                       Other                                  734.728.850
Otherrs                                                                Total                                  957.389.488
               Apparel Imports
                    Main Importers                                      Main Apparel Imports
                                                                                              6%
                Company               CIF 2007                                                         5%
                                                                                                         4%
Pemoda S.A. U.A.P.                   12.376.196
                                                                                                               4%
Almacenes Ecito S A U A P            11.407.241

Compania De Inversiones                                               77%                                        4%
Textiles De Moda - Texmoda S.A.      10.948.368
Falabella De Colombia S A             8.859.156
Mercadeo Y Moda S A                   8.322.310
                                      7.485.080    Blankets (other than electric blankets) and traveling rugs, of synthetic fibers
Arturo Calle
Anditextiles Ltda                     5.770.550
                                                   T-shirts, singlets, tank tops and similar garments of cotton, knitted or crocheted
Sonopreinter S.A.                     5.279.052
Arulla Vivero S A                     5.256.056    Women's or girls' trousers, bib and brace overalls, breeches and shorts of cotton,
                                                   not knitted or crocheted
Tennis S A                            4.938.068
                                                   Safety (including sports) headgear, whether or not lined or trimmed
Subtotal                             80.642.078
Others                               237.015.783   Parts of slide fasteners
Total                                317.657.861
                                                   Others
               Main suppliers
                           Textiles and Clothing imports - Origin % 2007
                                                                     China
                                                                     United States
                                        23%
                 29%                                                 Mexico
                                                                     India
                                                                     Brazil
                                                                     Taiwan
                                                                     Peru
                3%                           14%
                                                                     Pakistan
                 3%
                  3%                                                 South Korea
                    4%                 8%                            Ecuador
                         4% 4% 5%
                                                                     Others

         China is the main country from which Colombia imports textiles and clothing
                with 23% of the total imports, followed by United States with 14%.
Source: DANE
       Important multinational companies have operations
       in Colombia
DuPont de Colombia S.A.                   •This company started direct operations in Colombia
                                           in 1963 with diverse commercial activities,
                                           including textile and nylon products, advanced
                                           fiber, polymer and packing systems, lycra,
                                           photopolymer plates for packaging printing and
                                           security holograms, among others.


                                          •During all these years in Colombia, DuPont has
                                           established important alliances.
 "Colombia has a privileged geographic
 location that makes it a central
 cornerstone for all regional markets"    •Besides DuPont de Colombia S.A., the corporation
 Guillermo A. Heins, President & CEO of    and affiliates in the country have other investments
 DuPont for Colombia, Ecuador, Peru and    in automobiles, textiles, housing, paints and
 Venezuela                                 national industries.
         Important multinational companies have operations
         in Colombia
  Adidas                                       •The company owns eight points-of-sale: four in
                                                Cali, three in Bogota and one in Medellin.
                                               •The goal of the company is to have 12 points-of-
                                                sale by the end of 2007 and open six additional
                                                points in 2008..
                                               •In 2007, the company invested about $ 3 million in
                                                Colombia and it is expected to invest $ 1 million in
                                                2008. This company employs more than 120
“The Colombian consumer has already             people in Colombia.
learned that you should not wear the same
                                               •“The Colombian consumer should know that what
type of shoes for running, playing tennis,      we offer here is the same that he/she can find in
or dressing casually . This mature              Germany or Argentina and at competitive prices,"
approach shows that there is a large            Sarmiento said and added that the company will
potential market to tap into by diversifying    start producing high-quality products targeting local
the supply options“ –                           and Latin American markets.
Federico Sarmiento, Manager of Adidas
Colombia.
   Important multinational companies have operations
   in Colombia
Coats Cadena S.A.   •Coats is the world's largest manufacturer and supplier
                     of industrial sewing and embroidery threads.


                    •Coats' wide product range delivers solutions for every
                     conceivable application - be it jeans and trainers, or
                     automotive airbags and bullet-proof vests.


                    •Coats delivers consistently superior products and
                     services conforming to global specifications and is
                     easily available in 67 countries worldwide. This offer
                     is supported by Coats Sewing Solutions - value
                     added services to assist the sewing process, enabling
                     to deliver sewn products with better quality with
                     shorter lead times
     Agenda

1. Colombia Outlook

2. Why invest in the Colombian Textile and Apparel Industry

3. Industry Dynamics

4. Proexport Services
    Proexport: Entity that will provide you world-class services


Customer Information

Contacts with private and public Industry

Agendas: Organization and accompanying when you visit Colombia

Attention to the installed investor

 For free and Confidential: All services are for free and any information given
in the process is confidential.
Proexport offices around the world

								
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