On October 2, 2016, the world appeared stunned to learn that the Colombian people voted NO to a referendum to approve the Peace Agreement negotiated and signed by the Colombian Government and the Revolutionary Armed Forces of Colombia (the FARC). What many people may not know is that on November 30, 2016, Colombia’s Congress ratified a modified version of the Peace Agreement without a referendum vote. But what does Colombia’s Peace Agreement mean for investors?
As Colombia’s Ambassador to the U.S., Juan Carlos Pinzón, commented: “Colombia is already a popular place for foreign investment in South America, and there is no doubt that the peace agreement will make it even more attractive by bringing greater stability along with increased consumer confidence and national consumption.” He further explained that both “the government and the private sector will make large investments in the development of rural areas” and that “with this increased development will come expanded opportunities for foreign investment in areas that do not exist today.” Those in the private sector seem to agree.
Joaquin Idoyaga, Vice President of Legal & Compliance at SURA Asset Management (the No. 1 Pension Management firm in Latin America, as well as a major player in the region´s savings and investment sectors), explained:
“We hope that Colombia’s peace news – travelling around the world – might create new opportunities for the country’s economic development and boost foreign and domestic investment in strategic sectors of the economy, such as infrastructure and agriculture. There are vast lands in Colombia that – with investments contributing to sustainable development – can produce tons of good quality products to feed a lot of people in the world. We expect that the current tax reform can improve the necessary tax incentives to promote even more the creation of savings by common people, for their future and the future of Colombia.”
The Peace Agreement and the international support it has received indicates that Colombia’s future looks brighter. Those looking to invest in Latin America should seriously consider the new opportunities that a post-conflict Colombia can present.
Note: U.S. Vice President Joe Biden congratulated President Juan Manuel Santos in-person on December 2 and reiterated the commitment of the United States to support the agreement’s implementation. Nevertheless, it is unknown whether President-Elect Trump will continue to prioritize U.S. assistance to Colombia. This and other potential policy shifts by the new Administration will continue to be closely monitored by our Washington office.