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Colombia: INDUSTRY SECTOR ANALYSIS
Building Materials
Julio Acero
July 09
Summary
During the last two years, the government of Colombia has increased its efforts to reactivate the
construction industry which has attracted new investment in this key sector. Construction activity has
increased in urban areas, including new shopping centers, industrial plants and road infrastructure. This
offers favorable conditions for U.S. companies exporting building products and equipment.
The total market of Building Materials has grown steadily during the last three years. In 2008, the market
reached US$872.2 million representing 13.4% growth over 2007. Imports from the United States
represent 17.9% of the total imports.
Some of the best prospects for building products imports into Colombia include: glazed ceramic; nonwired glass; unglazed ceramic; cooper tubes and pipes. The key players for building imports into
Colombia are: China with 26.8% of the total imports (cheaper products), followed by the U.S. with 17.9%.
To a large extent, the Colombian economy's growth and development has been powered by the
infrastructure segment. With considerable expenditure by both public and private players, the Colombian
infrastructure, particularly the transportation and water infrastructure segments, has seen tremendous
growth in recent years. Major infrastructure ventures in the country include the planned modernization of
the El Dorado airport at a cost of US$500-600mm; an investment of US$180mm for the development of
the Buenaventura port; and construction of the La Linea tunnel, valued at US$262mm.
Given these planned projects, the Colombian economy is still expected to grow – though at a declining
rate – at an average of 3.9% during 2008-2012. Colombian Construction Chamber (CAMACOL) expects
the country's construction sector to reach a value of US$ 19.5bn by 2013, which will contribute a sizeable
6.5% to the total GDP.
The construction sector reflects the growth of the Colombian economy which peaked in 2007 at 7.7%,
showing steady increases in 2005 of 4.7% and 6.8% in 2006. This positive growth was due to improved
security conditions and high commodity prices for principal exports, such as oil and coal, which attracted
greater Foreign Direct Investment (FDI) and stimulated internal demand for goods and services. The
global financial crisis began to affect the Colombian economy in 2008 when GDP growth dropped to 2.5%
despite FDI reaching a record level of US$10.5 billion dollars. The outlook for GDP growth in 2009 is flat
or even a negative one percent and FDI is expected to decline sharply as well.
The implementation of the U.S.-Colombia Trade Promotion Agreement (CTPA) will have a positive effect
on the industry as costs related to U.S. imports will decline and thereby make building products even
more competitive internally and externally. According to local trade sources, the CTPA, pending
ratification from U.S. congress will likely result in a measurable increase in U.S. exports of building
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products to Colombia. The elimination of the five to 15 percent Colombian tariff on U.S. imports with the
free trade agreement will be a major catalyst to this anticipated increase in exports.
For building products, 58 percent of U.S. industrial exports will receive duty-free treatment immediately
upon implementation of the Agreement. Tariffs on another 26 percent of exports will be eliminated over
five years. Duties on the remaining 16 percent of U.S. exports will be eliminated over ten years.
Therefore, given passage of this agreement, there is a significant opportunity for investment of U.S.
companies interested in exporting building products to Colombia.
Market Demand
The demand for building materials will continue. Colombia’s statistics office (Dane) reported that permits, by
construction area in 2008 totaled 16.9 million of square meters (1 meter = 3.28 feet). Such a figure represents
a slowdown with respect to 2007 but still represents a strong growth in this key sector.
President Uribe has increased his efforts to reactivate the construction industry in Colombia with the
implementation of a new subsidy for credits directed to low–income housing construction programs which has
increase the demand for this segment of construction.
Construction activity has increased in urban areas, including new shopping centers, new industry plants and
new road transportation system offering favorable conditions for importing building products and equipment.
Market Data
To better understand the dynamics of the building materials sector in Colombia, this report includes
relevant data related to imports and exports building materials and the countries of origin. This data
allows the reader to estimate the size of the market of this sector.
During the period of 2007 to 2008, Colombian imports of building products worldwide grew approximately 15.1
percent; imports from the US grew 25.4 percent and local production grew approximately five percent.
Building products accounted for less than one percent of total U.S. industrial exports to Colombia in 2008,
totaling $84.6 million. The top U.S. exports to Colombia in this sector were refractory bricks, float glass,
certain stone articles, and prefabricated buildings.
The United States has traditionally been one of the major suppliers of building materials and products to
Colombia, accounting for approximately 17.9 percent of the total imports market in 2008.
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Colombian Imports of Building Materials
Millions of US Dollars
%
Share
Country
--World-China
United
States
Mexico
Brazil
Ecuador
Venezuela
Chile
%
Change
2006
2007
2008
2006
2007
2008
- 08/07
-
389.53
71.82
410.85
107.46
472.98
126.98
100
18.44
100
26.16
100
26.85
15.12
18.16
48.04
44.21
40.76
39.56
42.87
29.96
67.48
57.47
30.78
30.02
20.15
20.67
84.67
68.27
25.89
25.48
24.53
18.42
12.33
11.35
10.46
10.16
11.01
7.69
16.42
13.99
7.49
7.31
4.9
5.03
17.9
14.43
5.48
5.39
5.19
3.9
25.47
18.79
-15.86
-15.12
21.75
-10.85
Source: DANE, WORLD TRADE ATLAS
Imports of Building Materials
The dynamism of the Colombian economy spurred growth in the import of building materials. Building
products imported from the United States concentrated on: Other nonwired glass in sheets (12.3%); Concrete
pumps (9.3%); Nonwired glass, colored throughout the mass (body tinted), opacified, flashed or merely
surface ground (7.8%); Non-refractory Surfacing Preparations for Facades, Indoor Walls, Floors, Ceilings or
the Like (7.2%); Other Glass Fibers and Articles Thereof (5.4%). The United States, China and Mexico are the
largest exporters to Colombia.
During the period of 2007 to 2008, Colombian exports slowed down due to the world financial situation and
the uncertain economic future. Colombian exports to the United States in this sector totaled $147.2 million in
2008. The major Colombian exports to the United States were cement, ceramic tiles, and porcelain fixtures.
All Colombian exports of building products enter the United States duty-free under the Andean Trade
Preference Act (ATPA) and Andean Trade Promotion and Drug Eradication Act (ATPDEA) tariff preferences.
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Colombian Exports of Building Materials
Millions of US Dollars
%
Share
Country
--World-Venezuela
United States
Ecuador
Panama
Peru
Mexico
Chile
Puerto Rico (U.S.)
2006
2007
2008
2006
2007
2008
%
Change
- 08/07
-
462.62
64.37
222.27
35.68
18.90
11.48
12.84
5.33
13.42
572.91
152.41
217.68
38.17
17.61
16.74
9.58
7.13
9.71
563.10
187.06
147.22
47.99
35.57
18.68
12.70
8.63
8.32
100
13.91
48.05
7.71
4.09
2.48
2.78
1.15
2.9
100
26.6
38
6.66
3.07
2.92
1.67
1.25
1.7
100
33.22
26.14
8.52
6.32
3.32
2.26
1.53
1.48
-1.71
22.74
-32.37
25.73
102
11.55
32.53
20.98
-14.27
Source: DANE, WORLD TRADE ATLAS
Exports of Building Materials
Colombian building products exports are concentrated in: Portland cement (36%); ceramic sinks, washbasins,
washbasin pedestals, baths, similar sanitary fixtures of porcelain (15.5%); doors, windows and frames and
thresholds for doors, of aluminum (15.4%); glazed ceramic flags (11.1%) and other hollow profiles of
aluminum alloys (9.2%). The United States, Venezuela and Ecuador are key export markets for Colombia.
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TOTAL MARKET OVERVIEW
(The above statistics are unofficial estimates in millions of USD)
Source: DIAN, DANE, ACOPLASTICOS, WORLD TRADE ATLAS.
The total market of Building Materials has grown steadily during the last three years. In 2008, the market
reached US$872.2 million representing 13.4% growth over 2007. Imports from the United States represent
17.9% of the total imports. In fact, in 2006, U.S. exports represented 12.3% of total imports and in 2008, U.S.
products reached 17.9% of the total value imported. On the other hand, exports are associated with materials
significantly produced in the country and not totally consumed by the local demand.
Best Prospects
Best prospects for building products imports for Colombia are:
PRODUCT
Glazed Ceramic
Other Nonwired glass
Copper tubes and pipes
Unglazed Ceramic
Nonwired glass, Colored throughout the mass
(body tinted), opacified, flashed or merely surface
ground
Other Structures and Parts of Structures, of Iron or
Steel
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HARMONIZED SYSTEM CODE (HSC)
690890
700529
7411
690790
700521
730890
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Key Suppliers
In 2008, China dominated the import market for building products (26.8%), followed by United States (17.9%),
Mexico (14.4%) and Brazil (5.4%). China has the lead because their products are cheaper. The need for adequate
after sales service are factors that currently and will continue to affect future sales for these countries. In Colombia
there is local production/extraction of cement, sand, gravel and aggregates, PVC piping and fittings, asphalt, and
lumber.
Source: World Trade Atlas, DANE
Prospective Buyers
Colombia has a relatively open investment climate, which makes it a lucrative foreign investment destination.
Furthermore, if the free-trade agreement signed with the US is approved by the legislature, the Colombian
economy will benefit a lot from the increased trade between the two countries.
The Colombian construction industry's growth is likely to be stimulated by government-subsidized housing and
commercial projects in conjunction with renewed investment in transportation infrastructure. The nation is currently
ranked fifth on Its Business Environment Rankings matrix for the Americas region. The industry is expected to be
worth about US$12.4bn by 2010, contributing over 7.5% to the nation's Gross Domestic product (GDP).
As mentioned before there is still an attractive market in Colombia for building materials since local industry does
not have enough installed capacity to produce sufficient material for local consumption.
The country's estimated shortage of 1.5mn housing units, also represents a key opportunity for imports of building
products.
The following are the main infrastructure and non-residential projects underway or still in the drawing board stage:
•
•
•
•
•
the US$2.2bn Bogota-Cienaga road project
the US$1.2bn modernization of the Cartagena refinery
the US$1bn El Descanso coalmine development
the US$650mn expansion of the El Dorado airport.
In addition, there are a host of other projects planned such as oil pipelines, airport expansion, new
ports, port expansion projects, hotels, shopping malls, etc.
Although most public work is carried out by subcontractors, some government institutions still purchase a
significant amount of building materials.
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Main end-users in the private sector include architectural and engineering firms, builders, developers, and the
international construction companies involved in the major infrastructure projects.
Market Entry
Disclaimer: This information is derived from public sources and is current to the best of our knowledge. For
detailed and definitive information about a country's laws and policies, the government of the country
concerned should be consulted.
Distribution: A reliable distributor or representative is crucial to entering the Colombian market. Colombian
law does not require foreign firms to secure local representation for private sector sales. However,
Colombians prefer to deal with companies that have a local representative to ensure access to after-sales
services. The one exception to this law is for sales to the government, which does require foreign bidders to
have legal representation in Colombia. Payments are usually in Colombian pesos at the referential exchange
rate of the day of payment and companies can pay vendors and distributors directly. Representative or
distributors work with loans and letters of credit and other financial guarantees. Privately owned institutions
buy from national distributors and representatives but also send their buyers abroad to buy from
manufacturers and vendors, taking care of all imports procedures through a Colombian agent.
Entering in the Colombian market with new technology or new products requires advertising and promotion
including the following: market exposure at national and international trade shows and expositions; publication
in specialized magazines; accurate and complete information provided to specialized and related
association(s) and advertising.
Regulatory Agency: The regulatory agency is the Industrial and Commerce Superintendence which is the
government entity that controls and regulates all the activities of the industries and commerce in general. The
Direction of Tariffs and Taxes (Direccion de Impuestos y Aduanas Nacionales-DIAN) is another government
institution in charge of controlling imports and exports and enforcing regulations.
Import Process: Since 1990, Colombia has lowered and simplified its import tariffs. Import duties are quoted
ad-valorem on the Cost Insurance Freight value of shipments. For building materials not produced in the
country the tariff applied is five percent, for those produced by the local industry the tariff used usually is 15 to
20 percent plus a 16% value-added tax which apply for all building products imports.
For the import of Building Materials to Colombia it is necessary to be aware of the following general steps:
•
•
•
•
•
•
Buy and fill out the Import Registration form. File the Import Registration form with
MINCOMERCIO (Ministry of Commerce Agency). The form requires a complete product
description and tariff classification.
Obtain approval from MINCOMERCIO for the Import Registration Form or Import License (in the
few cases when this is required).
Make arrangements with a financial entity for payment of the importation.
Ask the exporter to ship goods to a Colombian port.
Request the Cargo Manifest from the transportation firm.
Make arrangements with its SIAs (customs intermediaries Sociedades de Intermediación
Aduanera or SIA) to receive the merchandise and get it out of customs. The following are the
main steps to be followed:
•
•
•
Fill out the “Import Declaration” (Declaración de Importación). When the importation
value is equal or more than USD 1,000, SIA should do all the paperwork and get the
shipment out of Customs.
Fill out the “Andean Custom Value Declaration” (Declaración Andina de Valor en
Aduana) when the importation value is equal or more than USD 5,000 FOB.
Go to an authorized financial entity and pay the import duties, VAT (Valued Added Tax),
surcharges, and other fees.
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•
•
Present all documents to customs.
Comply with customs inspections. Customs inspects the merchandise, when they
consider it necessary, and then authorizes withdrawal of goods.
The importer must keep import documents for a period of not less than five years.
Market Issues & Obstacles
There are no major issues or obstacles concerning importation of building materials into Colombia. In general,
products that are accepted in major markets such as the United States, Europe and Latin American countries can
be marketed in Colombia, which has adopted many U.S. building code and safety standards and requirements.
Project financing is available from multilateral funding entities such as the Inter-American Development Bank
(IDB), the U.S. Overseas Private Investment Corporation (OPIC) and the U.S. Export-Import Bank, which offers
credit guarantees and insurance.
Other common payment options are letters of credit and advance payment via wire transfers or bank drafts. Credit
information companies such as Byington (Dun & Bradstreet Colombian representative) provide updated ratings of
major distributors.
Purchasing is performed through different payment/lease terms including 30 to 90 days credit. All major credit
cards are widely accepted in the retail trade.
Trade Events
Some industry related events are:
•
•
Expocamacol 2010: August 25-28, 2010 Medellín, Colombia http://www.expocamacol.com/
ExpoConstruccion y ExpoDiseño: Next event May 2011, Bogota, Colombia
http://www.expoconstruccionyexpodiseno.com/
Resources and Contacts
•
•
•
•
•
•
Banco de la República (Central Bank): www.banrep.gov.co. Tel: 1-334 7128,
[email protected]
Colombian Customs and Income Tax Offices (DIAN): Tel: 1-546 2200,
[email protected]
World Trade Atlas / National Administrative Department (DANE): www.dane.gov.co
Cámara Colombiana de la Construcción: Tel. 571 – 743-0265
http://www.camacol.org.co/inicio/inicio.html
Ministry of Environmental, Housing and Urban Development www.minanbiente.gov.co
United States Department of Commerce: www.export.gov/
For More Information
The U.S. Commercial Service in Bogota, Colombia can be contacted via e-mail at: [email protected];
Phone: (571) 383 2635; Fax: (571) 315 2190; or visit our website: www.buyusa.gov/colombia/en
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companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the
U.S. nearest you by visiting http://www.export.gov/eac.
Comments and Suggestions: We welcome your comments and suggestions regarding this market research.
You can e-mail us your comments/suggestions to: [email protected]. Please include the name of
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Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every
effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the
accuracy or completeness of information in this or any other United States government document. Readers are advised to
independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal
advice.
International copyright, U.S. Department of Commerce, 2008. All rights reserved outside of the United States.
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