Colombia’s government is attempting to pivot away from its reliance on oil for economic stimulus towards the creative industries, also known as the ‘orange economy’.
The country’s new agenda, backed by president Ivan Duque, is drumming up investment from foreign companies attracted by the country’s economic growth, sociopolitical stability, investment-driving reforms and skilled workforce.
Colombia recorded a record amount of greenfield foreign investment in 2018, welcoming more than $4.8bn in capital investment from 165 projects, according to fDi Markets, a Financial Times data service monitoring crossborder greenfield investment.
Within this, Colombia’s creative industries gathered significant foreign interest, attracting 16 FDI projects valued at an estimated $127.7m. Data available up to August 2019 indicates that FDI project numbers in the creative industries are on course to exceed last year’s figure, if the sector continues to attract tangible investments throughout the remaining months of the year.
According to the World Bank, the Colombian economy has grown at a 3.2% average since 2012, progressing faster than Argentina, Brazil, Mexico or Chile. Even though Colombia’s economic growth decelerated from 4.7% in 2014 to 1.4% in 2017 following the oil price shock of 2014, it accelerated by 2.7% in 2018. A contributing factor towards the country’s economic fortunes was the signing of a historic peace accord in 2016, which has somewhat stabilised Colombia socially and politically.
Aside from Colombia’s economic growth, a driving factor in the rise of FDI projects in the creative industries has been the country’s reformist agenda.
In early 2017 the Congress of Colombia approved the Orange Law, improving financing mechanisms and establishing a policy of incentives to promote and encourage the creative industries, and introducing zero income tax for seven years for start-ups in the technology and creative industries. It also expanded benefits for the movie and audio-visual sectors to attract foreign investment and establish Colombia as a beacon of original content for over-the-top media services.
The 2019 Financing Law, approved in late 2018, will encourage investment through the gradual reduction of corporate income tax from 2020 onwards and the deduction of VAT for investment in capital goods. Additionally, the bill targets creative companies with tax incentives, new lines of credit and seed funding.
Data from fDi Markets reveals that Colombia’s orange economy has attracted more than 30 greenfield FDI projects since the start of 2017. The investment monitor shows a sharp increase across FDI project numbers, capital investment and job creation in 2018. In fact, Colombia was the biggest recipient of creative industries FDI in Latin America, winning more FDI projects in 2018 than any other country in the region. Bogotá, for example, recorded more FDI projects in creative industries than cities such as Buenos Aires, Mexico City and São Paulo.
US-based Hubspot, a marketing software provider, is among the recent foreign investors in the Colombian creative industries. In May 2018, it announced the opening of a new Latin American headquarters in Bogotá. The company’s vice president of international strategy and operations cited the country’s “great talent” as a motive for investment.
Likewise, Grupo Secuoya, a Spain-based television production and services company, established a regional headquarters in the capital, creating 300 new jobs.
According to fDi Markets data from 2014 to August 2019, advertising, PR and related industries was the top sub-sector, accounting for more than a quarter of creative industry FDI projects into Colombia. Internet publishing and broadcasting and web search was the second most active sub-sector by number of FDI projects. The radio & TV broadcasting sub-sector was the top sub-sector by capital investment and job creation, securing about $94.7m and generated more than 350 new jobs. Meanwhile, the video games, applications and digital content sub-sector received two projects during this period, which accounted for more than 230 jobs and an estimated $14m capital investment.
Earlier this year, Tondero Distribución, an international distribution arm of Peru-based production company Tondero Films, announced a new office in Colombia, responsible for commissioning new productions. Mexico-based Labodigital, another investor in the motion picture and sound recording industries, selected to expands its operations in Bogota to take advantage of its “strategic location, capacity of its professionals, the audio-visual tradition of the country and our experience in developing projects,” according to CEO Charles Barthe.