The Columbian economy began to slow considerably in the last quarter of 1998. Unemployment reached 15.9%. The country's financial sector reported losses of about $780 million in 1998, due mostly to high interest rates. Colombia's external debt reached $33.7 billion in September 1998, an increase of 7.4%; the private sector's portion was $15.7 billion.

A new five-year automotive policy under the Andean Automotive Regime that takes effect this year will eliminate the 33% duty for passenger cars, four-wheel drive vehicles, certain passenger vans, light trucks with cargo capacity of 4 t or less, and chassis with cabins. Colombia's average tariff is 10.9% on most products and its customs system still has much corruption and government bureaucracy.

The World Bank classifies Colombia as a "lower-middle-income emerging economy." Coffee is the number one export. Colombia's income tax tops off at 30% while the average level is around 5%. The top corporate rate is 35% while its capital gains tax is 35% and value added tax is 16%. The Colombian government consumes 13.8% of GDP while the public sector produces only a small portion.

The government permits 100% foreign ownership in almost all sectors. Transparency International's Corruption Perception Index rates Colombia 79th out of 85. There are political and economic risks as well. The Index for Economic Freedom places Colombia 81st out of 160 countries and classifies Colombia as "mostly unfree."

Vehicle sales took a nosedive by 4,950 units in January 1999 to 11,649. The Colombia motor industry has four CKD local car assemblers: Colmotores, a wholly owned subsidiary of General Motors; CCA, a joint venture between Mazda (70%) and Sumitomo Bank (30%); Sofasa, owned by Santo Domingo with a Toyota affiliation; and AvtoVaz/Lada.

50% of cars are imported. Regulations call for 50% local content, with plans for a reduction to 25%.

Domestic sales reached 71,000 units last year and are forecast to reach 115,000 by 2005. Columbia's fleet numbers 2.2 million units and the average vehicle is 15 years old.

Motor Vehicle Fleet

Type of vehicle number of units Automobiles 1.4 million SUV type vehicles 320,000 Pick-ups 251,000 Vans, small trucks 64,000 Trucks, buses 152,000 Total vehicles 2,187,000

Passenger Car Production

Company 1998 2000 Colmotores GM 17,000 27,500 CCA Mazda 14,500 25,000 Sofasa Renault 14,200 22,500 Total 45,700 75,000

Imports of parts and accessories reached $920 million, and local production of 134 manufactured products reached $550 million. The United States accounted for 37%, or $337 million, of imports, and is forecast to reach 40% by 2000.

Colombia is a member of the Andean Pact, is made up of Bolivia, Ecuador, Peru, Venezuela, and associate member Panama.

Country profiles were provided by Raymond Champagne