The exporter of the week: this is how Bogota’s Free Trade Zone wants to empower SMEs with internationalization laboratory

The Bogota’s Free Trade Zone develops industrial, goods and services activities, generating more than 30 thousand jobs, with a cluster of almost 400 national and international companies, supporting industry, logistics, commerce, services and technology sectors.

Free trade zones are ideal sites for the operation of the so-called merchandise distribution centers (CEDI). Their efficiency derives from their neutrality in customs matters, which allows them to store goods for unlimited time, without import taxes, which favors the international traffic circuit of Cross-Border e-commerce.

On the other hand, the option of combining the free zone regime with the customs modality of postal traffic and express deliveries presents competitive advantages for producers and marketers to manage their different sales channels much more efficiently.

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In this interview we delve into the subject of free trade zones, with a special focus on Bogota, a city that brings together almost 400 companies from different economic sectors, which can enjoy tax, customs and foreign trade incentives.

At the same time, these companies work in the construction of competitive environments that help reactivate the economy.

We invited the general manager of the Bogota Free Trade Zone Group, Diego Vargas Triana, who expanded this horizon of free trade zones.

Below, we transcribe part of the interview, which you can watch in full in the video located at the top of the page.

What is the Bogota’s Free Trade Zone and what services does it offer?

The Bogota’s Free Trade Zone is a business park with more than 30 years of experience in the country. This business park enjoys the tax, customs and foreign trade incentives granted by the free trade zone regime in Colombia.

In this period of time, we have developed logistics and industrial activities of goods and services, generating almost 22,000 direct jobs in a cluster of companies that are currently qualified within our park.

What is the benefit that these companies have, and is there a special profile that they must meet?

There are several competitiveness factors that a company from Colombia or abroad receives when it is located within a free trade zone, and particularly in the Bogota’s Free Trade Zone.

In legal matters, the free trade regime in Colombia grants us a single income tax rate of 20% on income obtained from sales to foreign markets, i.e. exports.

This regime also grants free zone entrepreneurs a VAT exemption on the sale of goods from Colombia; in addition, these same industrialists are not taxed on imports of inputs that arrive to the free zone, which are transformed inside our park and help to reactivate the Colombian economy.

As for the profile of the companies, half of them are of a logistic nature, which is not unusual because the Bogota Region concentrates the largest consumption site in the country.

These companies are dedicated to facilitating domestic supply and are mostly SMEs (small and medium-sized enterprises). The other half is distributed among manufacturing, technology and services.

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What role does the Bogota’s Free Trade Zone play, especially in the export promotion of these companies?

The free zone regime is in itself an incentive to exports, since it allows the development of both industrial and commercial activities under special regulations.

If these activities are used you can have a new condition, in customs and tax and foreign trade matters, that is to say, there is a regime that simplifies the international trade cycles of the companies and that makes us very efficient to promote exports, to attract foreign direct investment that is located in our country and, therefore, to reactivate the economy.

From the point of view of the Bogota’s Free Trade Zone, we have decided to influence the key aspects of the international trade cycle of companies and to be very specific we have identified three very specific variables.

The first one is the exporting culture: we have decided to work with exporters, with the businessmen located within the free trade zones that we manage in technical training to develop exporters, a situation that the country suffers from.

We have a network of companies mostly made up of SMEs that if we do not support them in this training they will never put their products on the international markets.

The second aspect is to articulate the offer of the public sector with private companies. We have to get the public sector to unifiedly facilitate the foreign trade cycle, and that is why we have dedicated ourselves to attract those entities such as the Dian, ProColombia, the Ministry of Commerce, the ICA and the Invima to our facilities, so that they can facilitate all the dynamics of exports and become potential to reactivate the economy.

Tell us about the internationalization laboratory, what is the objective of its creation?

The internationalization laboratory is a name that coincides with all this new dynamic that the National Government wants, that the free trade zones be a platform for exports. This has been part of the strategy to articulate the public sector with the needs of private companies.

Basically, it is a place where we intend to bring together all the public offer necessary for Colombian goods to go to third countries in an easy way in their customs and international trade processes.

In practice, they are offices that are within the facilities of the Bogota’s Free Trade Zone, where the authorities will be located to serve entrepreneurs, removing any obstacles to the export process.

In other words, the Bogota’s Free Trade Zone is a facilitator that avoids problems when exporting?

Exactly. Basically, if one were to survey Colombian businessmen on what they need to export, I think they would say two things: one, facilitation issues and two, the development of international markets.

On the issue of facilitation, undoubtedly, the only ones that can do that are the agencies that regulate customs procedures and phytosanitary standards to get a Colombian product to international markets.

Today this is in different public entities throughout the country. What we have done, through the internationalization laboratory, is to concentrate them in a single point.

Obviously with the acquiescence of the authorities, where the DIAN has played a very important role, with the Sub-Directorate of Foreign Trade Facilitation.

They are also committed to creating exporters and facilitating international trade, and have welcomed this initiative.

Thinking about this, what are the difficulties that companies are facing to be able to sell their products?

We have a country with a population of 50 million inhabitants, where domestic consumption is significant, which means that SMEs initially concentrate their commercial efforts on supplying the domestic market.

Exporting means knowing the trade routes, it means having to learn about logistics and it also means positioning a product under quality standards so that international markets absorb it.

This undoubtedly implies significant efforts on the part of the companies. This is the first challenge we face, which is what I call export culture. Learning to export, learning to reach a market.

The second challenge is to develop those international markets, which implies knowing the free trade agreements that, so far, the country has signed with 17 economies, which we must take advantage of to reactivate the economy.

But it also implies knowing the rules. The techniques for product access to these third countries. This is a complex situation that requires assistance and accompaniment.

The first ones called to advise this cycle are the big businessmen of free zones and the authorities. This is where the efforts we are making through the internationalization laboratory, whose initiative began three or four months ago and is underway, are converging.

Does the laboratory have the training and personnel prepared to help these companies to export?

Of the 400 companies I mentioned at the beginning, we have identified an initial export census of 78 industrial entrepreneurs with great export potential.

In the first outing to the internationalization laboratory, 21 of these entrepreneurs took part. We have offered them a training program to develop exporters, in alliance with the Bogota Chamber of Commerce.

This training consists of providing them with technical knowledge on export culture, product and service development, as well as international markets, so that they are familiar with the whole cycle.

Subsequently, when they are already prepared and with their goods ready to enter the international circuit, the idea is that the Bogota’s Free Trade Zone advises them on the export customs cycle, and we also work with the authorities in case there is any obstacle in the respective process.

In recent years, has Bogota become more industrialized?

I think that we are still the consumption center of the country in the Bogota Region, and that means that industrialization processes continue to be intensively manifested in the region, which helps to reactivate the economy. However, what has happened to us in the business park is that foreign investment associated with very important technology processes has arrived. In the Bogota’s Free Trade Zone, five data centers have already been installed, which are these global infrastructures used to host data in the cloud, with significant foreign investment, and this is an example of the deindustrialization of Bogota.

Are these new companies generating employment for young people?

Given the qualities we have in terms of academic positioning, of profiles of people who are in their first quartile of employment, young people are starting to work in these companies, without this implying abandoning the other manufacturing industry, which is the one that has been used vigorously within the free trade zones we operate.

We are an important point in the labor circuit of the Bogota Region.

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