Once of the questions that I keep getting asked over and over in emails from potential investors and people generally interested in Colombia is, ‘Is Colombia really safe?’ My answer is always Yes, yet many (mostly those who have never been to Colombia) remain skeptical. I came across an interesting report from the U.S. State Department a few days ago that I thought might add some credibility to my claim that Colombia is indeed a safe country.

“Times have changed. The Colombian government has taken the fight to the drug traffickers and terrorists. Colombia has rebuilt its institutions and reestablished the legitimacy of its democracy. Colombians once again travel by raod without fear to visit their country homes.”

That was an excerpt from an article, written in the September issue of State Department Magazine that dedicated several pages to Colombia and how the billateral relationship formed between the two countries under Plan Colombia has been a huge success. In fact, the Director General of the U.S. State Department calls the relationship between the two countries “one of the strongest the United States has.”

The article goes on to highlight some general information on Colombia and what makes it such a beautiful country. The most important aspect of this article however is the recognition by the U.S. State Department that “Times have changed” in Colombia. This should be comforting to those investors and potential home buyers considering investing in Colombia real estate.

People interested in reading the full article can find it on the State Department’s Website.

Aside from it’s Top Reformers, the Doing Business Project also released its overall list of countries for doing business. Colombia ranked 37th out of 138 countries and moved up 12 spots from last year’s ranking of 49th. More importantly though, Colombia ranked 2nd in all of Latin America, behind only Puerto Rico.

There has never been a better time to invest in Colombia real estate or any other business venture.

Here are the Top Ten Reasons for Investing in Colombia.

10. The Colombian government has created a tax structure that rewards business and ingenuity. The income tax rate is set at 15% and can be much lower for tourist-related and environmental businesses.

9. Colombia offers the Most Competitive Free Zone Model anywhere in Latin America.

8. Colombian employees are well trained and highly skilled. In fact, Colombian managers are consistently rated as the Best Qualified in the region.

7. Last year the Colombian government enacted the most reforms to improve the overall business environment making it the Second Most Competitive country in the region.

6. Colombia has recently signed a handful of important Free Trade Agreements, giving businesses based in Colombia access to over 1.2 billion consumers.

5. Unlike many of it’s neighbors, Colombia has never experienced hyper-inflation. In fact, the inflation rate in Colombia was 2 points lower than the Latin American average in 2008.

4. Many business are starting to take note of the many advantages that doing business in Colombia offers. As a result, foreign investment has increased over 300% in the last five years.

3. According to Merril Lynch, Colombia ranks 4th in terms of countries which present the lowest investment risk during a times of crisis.

2. In terms of economic growth, Colombia has been the most stable country in Latin America for the last 30 years.

And the number one reason to invest in Colombia?

1. Colombia has over 45 year-round 18 hole golf courses! Now if that’s not a reason to come to Colombia, I don’t know what is.

In my last post I talked about and gave an example of the important role that the exchange rate plays in investing in Colombia real estate. Since the March 5, 2009 COP/USD high of 2,611 to 1, the rate has fallen sharply. Does this mean that now is not the time to buy Colombia real estate? Should a potential investor wait until the exchange rate reaches somewhere closer to the early March highs before investing? The answer to both of these questions is a resounding NO.

Obama and inflation

The major holders of U.S. debt are nervous as the reality of a weak dollar is settling in. Talks about removing the Dollar’s status as the only reserve currency are gaining mainstream recongnition and support. As a result, the Dollar will continue to weaken versus the Colombian Peso and I believe we could see exchange rate levels equal to those seen in the late 1990′s.

In short, I would recommend buying real estate in Colombia at levels down to around 1,800/1. I just read an interesting article on Bloomberg.com about the future of the strength of the U.S. Dollar. It is recommended reading for anyone looking to invest in real estate in Colombia. You can read the article here

As the world economy was on the brink of collapse earlier this year, many world governments and large institutional investors sold off their investments in equitities and other high risk financial instruments and flocked to what was at the time the world’s safest investment, U.S. Goverment-backed Treasury bonds. As more money flowed out of the world’s stock markets and into these bonds, the strength of the U.S. dollar climed to 5-year highs versus many of the world’s currencies. For example, on March 5, 2009 the exchange rate between the Colombian Peso and the U.S. Dollar was 2,611 to 1. 

Most investors knew that this quick rise in the value of the U.S. Dollar was fueled mostly by fear and would eventually retreat once the world economy recovered and investors looked to sell their U.S. Treasuries and reinvest in more high-yielding investments.  The global economy has shown signs of improvement since then and investors have reentered the world markets and, as predicted, the value of the Dollar has fallen sharly as a result.

US/COP exchange rate

This example shows the importance of the currency exchange rate and why it should be a major factor in determining whether or not to buy real estate in Colombia. I use Yahoo Finance to track the daily changes in the USD/COP exhange rate.

More importantly though, this security agreement further stregthens the relationship between the United States and Colombia and this is good for those considering retiring or investing in real estate in Colombia. I discussed in my last post, Colombia’s desire to change its image. Hiring a P.R. firm to clean up Colombia’s image with flowers is one thing. Signing a controversial security pact with the United States is quite another and shows that the Colombian government is serious about true change.

I love Colombia.  And so do thousands of other foreign retirees, investors and multi-national corporations that have chosen to call this beautiful country home. Colombia has been blessed with some of the world’s most beautiful beaches, rain forests and snow-capped peaks. Colombia is home to some of the world’s most beautiful and friendly people and it’s cities and cultural centers rival any country in Latin America. Yet the number of tourists with no family connection to Colombia remains extremely low. 

The fact is, Colombia has an image problem throughout much of the world.  And, although much of  this image may have been well deserved 15 years ago, Colombia has transformed itself from a country held hostage by narco-traffickers and a violent civil war to a stable, safe and flourishing country and one of the United States’ biggest allies in the fight against the cocaine trade and left-wing extremism in Latin America. 

The Colombian government realizes the important role that image plays in relations to tourism and has embarked on an agressive campaign to change the way foreigners see Colombia.  Here is an excerpt of an interesting article written by a site dedicated to the subject of nation re-branding.

ReBranding Colombia