Medellín, Colombia — Foreign Direct Investment (FDI) into Colombia fell by 15.2% according to Banco de la República, the country’s central bank.
According to newspaper El Tiempo, this represents about $2.5 billion fewer dollars invested in Colombia last year as compared to 2023.
The decline in FDI primarily affected key industries such as mining and oil extraction, agriculture, manufacturing, transport, and communications, among others.
On the other hand, foreign investment increased in some sectors such as construction, electricity, gas, water, retail as well as hospitality, including restaurants and hotels.
Pundits weighed in on factors that contributed to the fall in FDI last year.
Jaime Alberto Cabal, President of business association Fenalco, attributed the drop in investment to a lack of confidence from the business community toward Colombia’s government’s policies.
Speaking to El Tiempo, he argued that President Gustavo Petro has failed to provide stability for investors, “Since the government started, Petro has not governed.” He also noted that many Colombians are choosing to invest outside of the country, rather than domestically.
Beyond concerns about political stability, according to Cabal, other factors influencing the decline include elevated interest rates as well as high tax burdens for investors. Additionally, El Colombiano notes that the changing regulations and uncertainty in policy making is a reason for the lack of investment flow.
Within his first 100 days in office, President Petro in November 2022 passed a historic tax reform in Colombia, one of the countries with the highest income inequality in the world. The reforms were meant to alleviate the burden on the lower and middle classes and increase taxes for the wealthy and corporations — including Colombia’s oil sector.
Since taking office, the minimum wage has been raised three times, according to Petro, and unemployment sits at around 10%, down from 12.1% when his predecessor Ivan Duque left office.
According to data from Colombia’s central bank, reported by El Tiempo, the country took in around USD $14 billion in foreign investment in 2024, down from $16.7 billion the year before, and $17 billion in 2022.
Despite Colombia’s “comprehensive legal framework for business and FDI,” which aims to encourage investment into the country, according to his critics such as Cabal, President Petro has induced uncertainty within the private sector, due to his policy changes.
El Colombiano also reports that 2025 has the potential to increase FDI in Colombia, turning around the recent downturn. They use the recent announcements from Ecopetrol, citing that they are expecting investments between $24 and $28 billion dollars.
“Colombia still has great potential to attract investment, but it is essential to ensure legal security, improve infrastructure, and eliminate bureaucratic barriers to become a more competitive country,” Ricardo Triana, director of the Council of American Enterprises, which promotes US private investment into Colombia, told El Colombiano.
Featured image credit: momentcaptured1 via Flickr, https://creativecommons.org/licenses/by/2.0/
