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Country Risk: Colombia

Flag of Colombia

Table of Contents

Introduction Location and Size Government
Legal System Interesting Facts Economy
Comparative Indicators Credit and Collections Risk Assessment
Business Climate Business Protocol Other Sources of Info



Official Name: Republic of Colombia

National Symbol: Andean Condor

Coat of Arms: features a condor and the words “Libertad y Orden” (Freedom and Order atop a shield surrounded by two Columbian flags on either side.

Internet Domain: .co

International Dialing Code: +57

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Location and Size

Colombia is located in Northern South America. It is bordered by the Caribbean Sea and Panama to the north, the North Pacific Ocean to the west, Venezuela and Brazil to the east, and Peru and Ecuador to the South.

Bogota, its capital is in the central part of the country, which covers an area of 1,138,910 sq km, slightly less than twice the size of Texas.

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Colombia’s government is a presidential republic comprised of 32 departments and one capital district.


  • Executive: Chief of State and Head of Government – President Juan Manuel SANTOS Calderon (since 7 August 2010);  Vice President Angelino GARZON; cabinet appointed by the president
  • Legislative: bicameral Congress consists of the Senate (102 seats; members elected by popular vote to serve four-year terms) and the Chamber of Representatives (166 seats; members elected by popular vote to serve four-year terms)
  • Judicial: four roughly coequal, supreme judicial organs: Supreme Court of Justice; Council of State; Constitutional Court; Superior Judicial Council.

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Legal System

Colombia has a civil law legal system influenced by the Spanish and French civil codes.

The country has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?) It does, however, accept International Criminal Court (ICCt) jurisdiction.

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Interesting Facts About Country

  1. Colombia is the only South American country with coastlines on both the North Pacific Ocean and Caribbean Sea.
  2. It is part of the Pacific Ring of Fire and therefore subject to frequent earthquakes and volcanic eruptions.
  3. Colombia is the most bio diverse country in the world.
  4. It is the second largest fresh cut flower exporter in the world.
  5. It is habitat to more than 1,754 species of bird, the largest in the world. It has the second biggest variety of amphibians and the third largest variety of reptiles in the world.
  6. Quindio Wax palm, the tallest palm tree in the world, is the National Tree of Colombia.
  7. Colombia does not have seasons; because it is near the equator, it has sunlight throughout the year.
  8. Colombia produces 60% of the world’s most expensive emeralds.
  9. Although it is the second largest coffee producer in the world, per capita consumption in Colombia is relatively low.

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Map of Colombia



Colombia’s substantial market size of 45 million inhabitants, natural resources and reputation as an exemplary debtor has allowed the country to experience relatively strong growth for a number of years. The government’s consistent adoption of sound economic policies, together with aggressive promotion of free trade agreements has bolstered the country’s ability to face external shocks. As a result, Colombia has continued to make progress as an emerging country since 2011.

The climate and the topography of the country allows for extensive and varied agriculture, which plays a major role in Colombia’s economy, contributing to 75% of its export revenues.

Foreign trade, however, continues to have a negative impact on economic growth. Trade in manufactured goods is currently outpaced by the import of capital goods, transport equipment and consumer goods. In response, Colombia’s current foreign policy has focused on improving commercial ties, as well as boosting investment at home.

Additional challenges currently facing economic growth include sensitivity to raw materials prices, fluctuation in oil prices (it relies heavily on its oil exporting industry), vulnerability to the health of the American economy (a major market for its imports), and the need for major improvements to its infrastructure.

Leading Markets (2011): US 42%, Netherlands 4.7%, China 4.2%

Leading Exports-commodities: petroleum, coal, emeralds, coffee, nickel, cut flowers, bananas, apparel

Leading Suppliers (2011): US 29.2%, China 11.9%, Mexico 11.5%, Brazil 5.3%

Leading Imports-commodities: industrial equipment, transportation equipment, consumer goods, chemicals, paper products, fuels, electricity

Top Industries: textiles, food processing, oil, clothing and footwear, beverages, chemicals, cement; gold, coal, emeralds

Top Agricultural Products: coffee, cut flowers, bananas, rice, tobacco, corn, sugarcane, cocoa beans, oilseed, vegetables; shrimp; forest products

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Comparative Economic Indicators ” 2012 (est.)

Colombia Brazil Ecuador Panama Peru Venezuela
Population (millions) 45.2 199.3 15.2 3.5 29.5 28.0
Population growth rate (%) 1.1 0.9 1.4 1.4 1.0 1.5
Age Structure (%)
(15 to 64 years old)
67.0 68.2 65.0 64.5 65.4 65.4
Age Structure (%)
(65+ years old)
6.3 7.1 6.6 7.4 6.5 5.6
Literacy (%) 90.4 88.6 91.0 91.9 92.9 93.0
Unemployment rate (%) 10.3 6.2 5.9 4.4 7.7 8.0
Inflation (%) 3.2 5.5 5.3 6.1 3.6 20.9
Population below poverty line (%) (estimates) 37.2
GDP** (USD billions) 500.0 2.362.0 134.7 55.8 325.4 402.1
GDP real growth rate (%) 4.3 1.3 4.0 8.5 6.0 5.7
GDP per capita** (USD) 10,700.0 12,000.0 8.800.0 15,300.0 10,700.0 13,200.0
Public debt (% of GDP) 40.2 54.9 23.3 37.0 18.3 49.0
Industrial production growth rate (%) (estimates) 4.8
-0.3 10.1
Exports (USD billions) 60.0 256.0 23.8 18.0 47.4 96.9
Imports (USD billions) 55.5 238.8 24.7 24.0 41.2 56.7
Reserves of foreign exchange and gold (USD billions) 34.7 371.1 3.2 3.3 61.3 25.2
Currency Peso
Nuevo Sol
Bolivar Fuerte
Exchange rates (per USD) 02/13/2013 1.8 2.0 24.1 1.0 2.5 4.3
Exchange rates (per EUR) 02/13/2013 2.4 2.6 32.3 1.3 3.43 5.8
Rating in 2012 Corruption Perceptions Index*** 36 43 32 38 38 19
Rating in 2013 Index of Economic Freedom**** 69.6 57.7 46.9 62.5 68.2 36.1

** PPP ” Purchasing Power Parity
*** 2012 Corruption Index: 80-100=Clean; 0-39=Corrupt
**** 2013 Index of Economic Freedom: 100-80 = Free; 49.9-0 = Repressed

Economic Data from CIA World Factbook

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Credit and Collections

Collecting in Colombia

Colombian Statues of Limitations:

  • Open Account:  3 years
  • Promissory Note:  3 years
  • Written Contracts:  3 years
  • Oral Agreements:  n/a

A 2006 law allows creditors of a company to request Judicial Liquidation, which replaces the forced auctioning of the company’s assets

Dispute Resolution

Colombia is a member of the New York Convention on Investment Disputes, the International Centre for the Settlement of Investment Disputes (ICSID), and the Multilateral Investment Guarantee Agency (MIGA).

By law, Colombia allows for the inclusion of an international binding arbitration clause in contracts between foreign investors and the GOC when certain conditions are met. Contracting parties may submit disputes to international arbitration when:  the parties are domiciled in different countries, the place of arbitration agreed to by the parties is a country other than the one where they are domiciled, the subject matter of the arbitration involves the interests of more than one country, and the dispute has a direct impact on international trade. The law further allows the parties to set their own arbitration terms including location, procedures, and the nationality of rules and arbiters. International arbitration is not allowed for the settlement of investor-state disputes arising from the Legal Stability Contracts, even for foreign investors.

In spite of the country’s commitment to international arbitral conventions and its domestic legal framework for arbitration and resolution of disputes, foreign companies have found the arbitration process in Colombia complex and slow-moving, especially with regard to the enforcement of awards. Following free trade agreements recently signed by Colombia, however, legislation has been proposed aimed at reforming their arbitration process.

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Risk Assessment

Coface Country Rating: A4 — A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.

Coface Business Climate Rating: A4 — see above

The debt profile is good and growth will remain strong in 2013. The robust pace of activity will, however, continue to depend on consumption and investment in 2013. President Santos has begun negotiations with the FARC, who despite being weakened still have the capacity to be a nuisance. Whether he is re-elected in March 2014 will in part be linked to their outcome.

Credendo Political Risk Rating: 1 — low risk
Credendo Commercial Risk Rating: B — moderate risk

The Belgian Export Credit Agency (ONDD): Risks on Export Transactions

  • Political Risk – Short Term <2 years: 1 — low risk
  • Political Risk – Medium-Long Term >2 years: 4 — moderate risk
  • Commercial Risk: B — moderate

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Business Climate

Colombia’s government has actively encouraged foreign direct investment with the initiation of economic liberalization reforms. These reforms provided for national treatment of foreign investors, lifted controls on remittance of profits and capital, and allowed foreign investment in most sectors. The current administration has continued efforts to open up the economy. Progress in this regard is particularly evident in the area of telecommunications, accounting/auditing, energy, mining, and tourism, and to a lesser extent in legal services, insurance, distribution services, advertising, and data processing.

Colombia has a comprehensive legal framework for business. Its judicial system defines the legal rights of commercial entities, reviews regulatory enforcement procedures, and adjudicates contract disputes in the business community. The judicial process, however, is hampered by time-consuming bureaucratic requirements and corruption.

Economic Freedom: Colombia’s economic freedom score is 69.6, making its economy the 37th freest in the 2013 Index, which encompasses 177 countries. Colombia is ranked 5th out of 29 countries in the South and Central America/Caribbean region.

Market Access: The US-Colombia Free Trade Agreement (FTA) was ratified by the US Congress in October 2011 and implemented in 2012. Colombia has signed or is negotiating FTAs with a number of other countries, including Canada, Chile, Mexico, Switzerland, the EU, Venezuela, South Korea, Turkey, Japan, and Israel. The Colombian government has also instituted a number of drawback and duty deferral programs, such as the creation of Free Trade Zones, in order to attract foreign investment and promote the importation of capital goods.

Regulatory System: Colombian legal and regulatory systems are generally transparent and consistent with international norms. The commercial code and other laws cover such broad areas as banking and credit, bankruptcy/reorganization, business establishment/conduct, commercial contracts, credit, corporate organization, fiduciary obligations, insurance, industrial property, and real property law. The civil code contains provisions relating to contracts, mortgages, liens, notary functions, and registries. Enforcement mechanisms exist, but historically the judicial system has not taken an active role in adjudicating commercial cases.

Intellectual Property Rights: Colombia has been on the Special 301 “Watch List” every year since 1991, as piracy continues to threaten legitimate intellectual property markets in that country.  Contributing factors include a lack of uniformity and consistency in IPR registration and oversight procedures which limits the transparency and predictability of the IPR enforcement regime. The United States and Colombia Trade Promotion Agreement (U.S.” CTPA) of 2012 does, however, provide improved standards for the protection and enforcement of a broad range of intellectual property rights, including  state-of-the-art protections for digital products such as software, music, text, and videos, stronger protection for U.S. patents, trademarks, and test data.

Exchange Control: No restrictions apply to transferring funds associated with foreign direct investment. However, foreign investment into Colombia must be registered with the Central Bank to secure the right to repatriate capital and profits.

Corruption: According to the World Economic Forum’s Global Competitiveness Index (2011-2012), corruption is the biggest problem for doing business in Colombia. In keeping with a commitment to deal with the problem of corruption, the current administration enacted the Anti-Corruption Statute in 2011. The law provides a comprehensive policy that gives the government new tools to crack down on corruption and provides stiffer penalties for those found guilty.

Political Violence: Violence, including political violence, has diminished in recent years. Membership in illegal armed groups, including the Revolutionary Armed Forces of Colombia (FARC), has dwindled and together with that the abuses and violence associated with them. However, violence perpetrated by organized criminal groups that included some former paramilitary members remains a serious problem.

For more detailed information on these topics, visit the 2013 Investment Climate Statement – Colombia, U.S. Department of State

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Business Protocol in Colombia

  • Most Colombians have both a maternal and paternal surname and will use both. The father’s surname is listed first and is the one used in conversation.
  • Always refer to people by the appropriate honorific title and their surname.
  • Relationship building is crucial. Engaging in small talk before and after meetings is vital towards building a sense of trust and goodwill.
  • Time is not an issue in meetings – they will last as long as they need to last. Do not try to rush proceedings.
  • Colombians are termed as ‘indirect communicators’ – this means there is more information within body language and context rather than the words. For example, if you ask someone to do something and they reply ‘I will have to see’, it would be up to you to read between the lines and understand that they cannot do it.
  • Avoid confrontation at all cost. If someone has made a mistake do not expose it publicly as this will lead to a loss of face and a ruined relationship.
  • Colombians judge people by the quality of their clothes and have a somewhat conservative taste. Dark-colored suits are preferable, especially dark gray and dark blue.
  • As a foreigner, always be punctual for your business meetings. Colombians may arrive 15 minutes late for the meeting, but expect you to be on time.
  • Most business people speak English. However, when presenting materials and documentation, use visual aids as much as possible. To avoid causing discomfort, it is best to check if a translator is required prior to presenting and if materials need to be written in Spanish as well as English.

More information on Business Protocol: Kwintessential, Executive Planet

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Sources for further information on doing business in Colombia

Amcham Colombia

Doing Business in Colombia, 2012 Country Commercial Guide for U.S. Companies, U.S. Commercial Service

Doing Business in Colombia, U.S.

Doing Business in Colombia 2012, Baker & McKenzie

Embassy of Colombia, Washington, DC

Embassy of United States Bogota, Colombia


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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Colombia. For further information, contact [email protected].

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating, Credendo and Political Risk Insurance Center.

Exchange Rates: The Currency Site.