During the last two years, the Colombian government attempted to reinvigorate the construction industry. Bold initiatives, mostly concessions, attracted multiple new investments in this critical economic sector. Construction activity increased significantly in urban areas which now boast new shopping centers, industrial plants, roads, toll booths, and apartment complexes. U.S. exporters will find a good market for their products and services in Colombia.
Infrastructure has been a key driver of Colombia’s economic growth in recent years. Public and private sector organizations have made considerable investments in the infrastructure sector, particularly in transportation, water treatment plants and new port projects. Major concessions and infrastructure ventures also include the modernization of airports, mass transit systems, roads, tunnels, railroads and housing.
The total market for building materials grew steadily during the last three years. In 2008, the market reached USD 872.2 million representing 13.4 percent growth over 2007. U.S. products represented 17.9 percent of the total imports. In 2009, the market increased 11.2 percent to USD 970.2 million, despite the global economic crisis, and is projected to grow 12.7 percent in 2010. Driven by these initiatives and a growing population, Colombian total imports of building products grew approximately 5.5 percent between 2007 and 2008; imports from the United States grew 19.5 percent and local production grew approximately 13.2 percent. This growth is expected to continue in 2010 at a rate of seven percent.
Chinese imports dominate with 26.8 percent market share due to their lower price, followed by U.S. products with 17.9 percent market share. Standards are becoming a differentiator for Colombian buyers seeking quality and value. In 2009, Colombia formally adopted UL standards for electrical products. Although, it is important to highlight the significant growth of Chinese imports during the last five years, the lower quality and reliability of Chinese products are considerable disadvantages.
If the U.S.-Colombia Free Trade Agreement (CTPA) is approved by the United States Congress will result in a measurable increase in U.S. exports of building products to Colombia. The CTPA will eliminate the current five to 15 percent Colombian tariffs on U.S. products.
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, the passage of the CTPA presents a significant opportunity for U.S. companies interested in exporting building products to Colombia.
The top U.S. exports to Colombia in this sector were refractory bricks, float glass, certain stone articles, and prefabricated buildings.
Other best products include:
• Glazed and unglazed ceramic
• Non-wired glass in sheets
• Non-wired glass colored
• Pipes of cast iron
• Structures and parts of iron or steel
• Parquet panels of wood
• Ceramic sanitary fixtures
• Instantaneous gas water heaters
• Articles of asphalt or similar materials in rolls
• Glass fibers and articles
• Sinks and wash basins of stainless steel and aluminum structures and parts.
Medium term opportunities will be determined by the continued growth of the construction sector. Local production of building products will grow depending on the local market demand. Imports of building products will continue to grow at around seven percent annually during the next two years when most of the government financed construction programs are anticipated to take place.
The following are the main infrastructure and non-residential projects underway or still on the drawing board:
• The USD 2.2 billion Bogotá-Cienaga road project
• The USD 1.2 billion modernization of the Cartagena refinery
• The USD 1 billion Drummond El Descanso coal mine project
• The USD 650 million expansion of the El Dorado airport
• The USD 344 million upgrade of the Barrancabermeja refinery
• The multi-billion dollar Transmileneo mass transit system in Bogota and similar projects in Cali, Cartagena, Pereira and Bucaramanga
• An investment of USD 180 million to further develop of the Port of Buenaventura on the Pacific coast
• The construction of the La Linea tunnel, valued at USD 262 million and
• USD 140 million for the construction of 36.000 new houses for the low and middle class population, project which will be developed in the next 10 years in Bogota.
In addition, there are a host of other projects planned such as oil pipelines, hotels, shopping malls, etc.