Deforestation in Colombia
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Discover the advantages of investing in the Colombian forestry sector with Investment Group Colombia and Proexport, offering benefits and support that will enhance your investment and help make your investment a reality.
Some of the investing advantages that you will find in this report include:
- 17 million hectares for reforestation distributed at various altitudes. Currently only 1.5% of the potential of forest plantations is being used on 253,066 hectares
- Technological packages for cultivation of various species, including a variety of hearty Pines (P. maximinoi, P. tecunumanii) and Eucalyptus, for pulp production, mining and milling, construction, activated charcoal and boards. Teak, Walnut and Acacia Mangium woods can be used for saw wood, plywood and other construction materials.
- Photosynthesis throughout the year thanks to Colombia’s location in the tropics. A high biomass production creates high yields from various species in shorter biological cycles. Eucalyptus can achieve yields of up to 30 (m3/ha/year) every 8 years. The climatic advantages allow plantations of various species of Pines in the high Andes, with the Pinus caribaea in Orinoco, Eucalyptus grandis in the middle Andean zone and Teak in the Andean tropical lowlands.
- Important biotechnological and genetic development that has allowed us to consolidate production based on forestry germplasm with the capacity to produce high quantities of plant material.
- Tax benefits and incentives, among which are the tax deductibility of investments in reforestation, income tax exemption for the development of new forest plantations and the Certified Forestry Incentive (CIF).
Colombian Forest Sector Trends
Colombia has the potential of more than 17 million hectares suitable for forestry.
The land available in Colombia does not invade or compete with native forestland or with land used for agriculture. The National Corporation for Forestry Research and Development (CONIF) conducted a zoning study of forestry potential, taking into account open areas, pastures and soil that currently has other uses (excluding land covered by forests). This study estimated that in Colombia there are 17 million hectares suitable for forestry (2008) discriminating between the land without restrictions and that with minor restrictions
Currently only 1.5% of the forestry potential of Colombia is being used. Of the 114 million hectares of area of the country, there exists a potential for the development of forestry projects of 17 million hectares from which only 1.5% (253,066 ha) is being used as commercial forest plantations. Of the 17 million hectares suitable for forestry, 5.1 million are land without restrictions, meaning that it does not require any adaptations of soil for the cultivation and development of forestry projects and 12.1 million fewer restrictions. 60.7 million hectares are protected. Of the 114 million hectares that the country, 53.3% (60.7 million ha.) are covered by natural forests. These areas are not available for the development of commercial plantations.
To learn more about living, working, investing and retiring in Colombia, please request our Complimentary investors guide to Colombia CLICK HERE
The existence of the National Forest Development Plan (PNDF) provides a strategic vision of the sector by 2025. The forest sector development is a long-term state policy that seeks to incorporate in future years 1.3 million hectares of commercial crops. For 2025 the sector will have a high participation in agricultural production and employment generation based on the use and sustainable management of natural and planted forests.
Three Potential Regions for the Development of Forestry
The Ministry of Agriculture and Rural Development (MARD) has identified three regions with high potential for development of forestry projects. The regions identified are the Coffee zone, Caribbean and Orinoco.
More than 10 species are suitable, with a high potential of increasing income with biotechnology development and genetic improvement. Forest species in Colombia take less time to grow and to be productive than it would take in other countries. In the case of Eucalyptus, it can achieve yields of up to 30 (m3/ha/year) with a cycle of 8 years.
Yields per species in Colombia
In Colombia the consumption of roundwood has increased, largely supplied by imports.
Between 2006 and 2007 the aggregate apparent consumption of sawn wood, wood panels and wood chips increased by 7%. For the same period, pulp consumption increased by 3%. These increases have been mostly fueled by imported material.
This situation becomes an opportunity to encourage the implementation of forestry projects in Colombia. Given the magnitude of the national market and international market dynamism, Colombia has the necessary land (17 million hectares suitable for forestry) to develop commercial plantations and replace, in the long term, the importation of timber products.
Trade Balance and Apparent Consumption in Colombia
Timber exports and manufactures for the period 2004 – 2008 reached a cumulative of $ 548.8 million dollars, with finished furniture being item that represents the greatest value. In contrast, when watching the export volume for the same period, raw lumber is the category that represents higher a concentration.
Venezuela is now the largest trading partner, with a 42% in terms of export value and 39% in volume, wooden furniture and office furniture products being those with the highest market.
U.S. imports 21% of exports of wood, representing the second most important export market, followed by countries like China and India. China and India import from Colombia imputs for production, because these highly competitive countries want to add value in both design and manufacturing.
Existence of Potential Strategic Partners
Colombia has a group of companies engaged in production, processing and marketing of raw materials derived from the forest, according to the vocation of each business. These companies are located in different parts of the country and have great knowledge of consumption and domestic distribution networks, factors that make Colombian companies, potential strategic partners for foreign companies that decide to bring forward a business plan in our country.
Major Manufacturing Industries in the Forestry SectorListen
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COLOMBIA: AN OPPORTUNITY TO INVEST IN FORESTRY:
In Colombia you can get excellent performance in conifers, similar to that calculated for major world producers. In the case of Pinus tecunumanii in Colombia, you can get an AAI (Average Annual Increment) of 30 to 40 m3/ha/year in a cycle of 16 years compared to other conifers of the region. In broad-leaved trees, after Brazil, Colombia has the highest yield, with 30 m3/ha/year in a 7 year cycle.
To learn more about living, working, investing and retiring in Colombia, please request our Complimentary investors guide to Colombia CLICK HERE
Superior Performance in Four Species Compared to Our Competitors
Thanks to the country’s agro-ecological conditions, biotechnology and genetic improvement, there are several species recorded with higher returns than our competitors. For Acacia, yields are achieved of up to 30 m3/ha/year.
Yield per Species in Colombia Vs Other Countries
Rates of Return Average Between 10.6% and 12.6%.
In Colombia you can get rates of return in real terms (excluding inflation) before taxes on forestry investments between 10.6% and 12.6% – attractive rates compared to competitors such as Chile and Brazil.
Legal Incentives to Investors in the Sector
New legislation allows companies in the forestry sector to become established anywhere in the country and receive several exemptions in addition to the 0% income tax for the use of new forest plantations. Below are the current incentives for the forestry sector in Colombia and the free zone regime, and the requirements for forestry projects to apply for declaration as Zona Franca. Additionally find information about the Plan Vallejo, special system of import and export, along with legal stability contracts.
Tax Exemption Permanent Income
The use of new forest plantations, including bamboo, according to the classification for the purpose by the regional autonomous corporation or agency, shall be exempt from income tax, as well as new sawmills, directly linked to achievement. The exemption of this tax does not apply.
Requirements for New Plantings:
Registration of new planting to the Autonomous Regional Corporation.
Certificate of Freedom and Tradition or lease agreement or a document proving the ownership or operation of the plantation.
Certificate issued by the Regional Autonomous Corporation as establishing a new plantation.
Certificate of the auditor or accountant showing all income from the exploitation of the forest plantation and other income.
New Requirements for Sawmills:
Invoices for purchase of new sawmills and additional machinery, acquired after January 1, 2003.
Supply agreement between forestry plantation and sawmill where timber product is purchased.
Certificate of the auditor or accountant showing all income from the exploitation of the forest plantation and other income.
Forestry Incentive Certificate (CIF)
The CIF is a cash allowance which recognizes the 50% investment in introduced species and 75% of investment in native species to support the establishment and maintenance (from the second through fifth year) of new forest plantations. The CIF does not support the tax breaks or other subsidies. Available since 2009 is 15,000 million pesos (6.8 billion dollars) to subsidize reforestation in Colombia.
The Ministry of Agriculture has established the national average total net costs of establishing and maintaining one hectare of planted forest and the maximum percentage to be recognized by the concept of CIF in 2009 as follows:
Real Uni-Empresarial Free Trade Zone
These areas are designed for a single company to request the declaration of a free zone area where your company wants to be established.
Agro industrial projects can install its processing plants within a Uni-Empresarial Zone always on condition that they meet the requirements listed below.
Requirements:
Invest a sum of 33.89 million dollars.
Generate 150 direct and formal jobs.
The employment requirement may decreased by 15 jobs for every additional $ 5 million of the spending requirement in cases of less than 50 employees.
Benefits
Flat rate of tax on taxable income: 15%
Do not cause or pay customs taxes (IVA-Tariff)
VAT exemption for raw materials, imputs and finished goods that are sold from the national customs territory to industrial users of ZF.
To learn more about living, working, investing and retiring in Colombia, please request our Complimentary investors guide to Colombia CLICK HERE
Imports of Capital Goods Free of Duty: Import / Export System “Plan Vallejo”
The Plan Vallejo for capital goods is a special system of imports and exports under which the person requesting the plan to import some capital goods is exempt from customs duty and differs from the VAT payment.
Requirements:
The capital asset is within the list in Resolution 1148 of 2002.
That the person requesting the plan to export 1.5 times the FOB value of imported capital goods submit an application to the Direction of National Taxes and Customs (DIAN).
Imported Supplies and Raw Materials Without Payment of VAT and Tariff: Vallejo Plan Supplies and Raw Materials
This is a form under which the person requesting the plan can import supplies and raw materials without paying the VAT and tariff, always exporting 60% of goods produced with these raw materials.
Colombia Offers Legal Stability Contracts to Ensure Investments
Legal stability contracts are one of the tools available for foreign and domestic investors to build safe and stable investment in Colombia. The main features of these contracts can be described as follows:
Objective: Guarantee the administrative legislation and interpretation determined for investment projects.
Terms: Amounts over U.S. $ 1,700,000 *
Duration: 3 to 20 years
* The representative exchange rate used is USD 1 = COP 2,200. The requirements are estimated at current minimum wage (minimum wage of) that for 2009 is $ 496.900 COP. Both the legal minimum wage as the representative market rate are subject to change.
In return, the investor must pay a premium to the State of 1% of the investment made or planned for the project.
Legal stability contracts are excluded from the rules concerning the social security system. The obligation to report and pay taxes to the government under state of emergency declares. Indirect taxes (for example VAT or tax on financial transactions). Prudential regulation of financial system and the tariff of public services.
Our Investor Services:
The Colombian government emphasizes creating favorable conditions and providing maximum support to investors. Proexport, the Government´s Investment Development Agency offers services to foreign investors, including the following:
Requests for information (economic, legal, procedural or sector specific, etc.).
Contacts with the public and private sector.
Organization of agendas when investors decide to visit Colombia.
Care services for investors already established in the country.
Evaluation and improvement of business perspective.
Proexport services are free. The main objective is to develop new businesses through an efficient and friendly process. All information provided in the process is handled confidentially.
Proexport care has teams in 18 cities worldwide. We would be delighted to assist you.
To learn more about living, working, investing and retiring in Colombia, please request our Complimentary investors guide to Colombia CLICK HERE
This is a bad idea. Deforestation ruins the land and it is never the same. There are many unidentified species in these areas and deforestation will kill them. Timber companies are short sighted and profit driven. Why would you want to invest directly into the destruction of the Earth? There are much better investment opportunities in Colombia other than deforestation. I have seen how beautiful Colombia is and I am sure it is one of the last almost untouched parts of Earth. Please do not ruin it.
Irving,
The title is a little misleading – this article is about fixing the deforestation that has already occurred. – Planting more trees not cutting them down.
Thanks for your reply,
Tom