This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/31/2017
Overview
The last few years have been times of uncertainty for the Colombian armed forces. Although the peace agreement negotiated between the Government of Colombian and the FARC guerrillas at the end of 2016 is currently being implemented, the real challenge is making peace sustainable and  leaving behind years of violence that were fueled by illicit drug trade and insurgency groups. Security risks will remain for the foreseeable future in Colombia and will buoy strong demand for defense products.

The Peace Agreement with FARC and Post-Conflict
After nearly six decades of war with the narco-terrorist group FARC, a peace agreement was reached in 2016 that put an end to the armed conflict. The agreement is still in its initial stages and the sustainability of the agreement remains uncertain. There is the risk that factions of the FARC will return to drug production and kidnapping instead of reintegrating into society. The government is investing significant resources in the reintegration process but has also warned that FARC dissidents who do not join the program will be treated as criminals and will forfeit all benefits.

Record Levels of Coca Production
2016 was a record year for production of coca and cocaine and the trend does not show signs of reversal in 2017. There are many reasons for the increase, but the recent prohibition of aerial spraying of coca crops is seen by many as the main contributor. The Colombian Government banned aerial eradication over concerns that the chemical agent used in spraying was carcinogenic. Now eradication is carried out manually, which is labor-intensive, dangerous, and slow. Colombia’s rugged and mountainous geography makes manual eradication difficult and the landscape is riddled with landmines and IEDs. The Colombian armed forces are being tasked with clearing landmines, manual eradication of coca, and the protection of the eradicators.

ELN Peace Negotiations
After concluding the peace agreement with the FARC, the government turned its attention to peace negotiations with the country’s smaller guerrilla insurgency, the National Liberation Army, or ELN. As of the end of 2016 an agreement remained elusive and the Army continues to bomb ELN encampments while the ELN assassinates police officers, detonates bombs in populated areas, and sabotages oil pipelines.

The Rise of the “BACRIM” (Criminal Organizations)
Colombia’s main criminal groups are challenging local authorities by occupying many of the FARC’s former areas of control in order to run cocaine labs and illegal mining operations of gold and emeralds. Many of these organizations emerged from the remnants of former paramilitary groups and do not espouse any particular ideology. Some of the most notable are the Clan del Golfo, Los Pelusos, Los Urabeños, and Los Rastrojos, among others. One of the priorities of the Colombian armed forces is to take control of the remote parts of the country where these groups operate and establish a government presence to thwart further advances by the BACRIMs. Many of these areas have not had a government presence for decades and have been under the control of the FARC and other criminal elements. 

Security in Urban Areas
As life in rural Colombia is experiencing a moment of relative calm, the cities have suffered a surge in violence, mostly caused by the demobilization of paramilitaries and guerilla groups. This violence is often focused on drug-related vendettas and is a major challenge for the National Police. In some cities, such as Buenaventura, violent crime has reached the point where the military has assumed many responsibilities of the police force.

Regional Issues: Venezuela and Nicaragua
In early 2017 the Venezuelan armed forces occupied a small area of Colombia for a period of four days under the pretense that the Arauca River, which acts as a natural border, had changed its course and had thus changed the border between the two countries. The act was seen by many as an attempt by the Government of Venezuelan to shift attention from a deteriorating domestic situation, where food shortages and an increasingly autocratic President Maduro are leading to social unrest, massive street protests, and violence. The Government of Colombian was able to resolve the issue through diplomatic channels but the incident has exacerbated already tense relations between the two countries. In another border dispute, Nicaragua and Colombia are in disagreement over maritime boundaries in the Caribbean Sea, where Colombia exercises sovereignty over the islands of San Andres and Providencia. The International Court in The Hague has sided with Colombia’s claim of sovereignty over the San Andres Archipelago but not with Colombia’s claim that the 82nd meridian west is the maritime border between the two nations. The issue continues to fuel tensions and sabre-rattling.
 
The purpose of the sections below is to make the readers understand where the opportunities in the Defense and Security sector are, its challenges, and how to approach the market to successfully increase the probabilities of American companies doing business in Colombia.

The Government of Colombia’s 2017 Defense and Police budget reinforces it commitment to modernization of the armed forces. Ongoing armed conflicts will sustain spending of approximately 3.6 percent of annual economic output on training and equipment for the military and police. Overall, the 2017 defense budget received a two percent annual increase (approximately USD 120 million). According to Colombia’s Defense Minister Luis Carlos Villegas, the increase in the budget will prepare the country for any threat and fully support the peace process with the FARC. The budget will allow for the replacement and maintenance of ageing equipment, the building of new police stations (battalions and commandos), upgrades to communication equipment, and support for demining brigades. Villegas added that part of the resources will be used to maintain the number of active personnel currently enlisted as well as upgrade the main military hospital and military housing.

The Colombian armed forces have a budget of USD 10.2 billion, which is equivalent to 13.1 percent of the total Colombian budget for 2017. As happened in the past, the vast majority of the defense budget (over 97 percent), will be designated for operational activities, such as payroll, procurement of goods and services, and pensions. Only USD 222.3 million (about three percent) will be invested in strengthening the security and strategic capacity of the armed forces through the procurement of new systems.

The internal and external defense and security structure is composed of the Army, Navy (includes Marines and Coast Guard), Air Force, and the National Police. Under Plan Colombia, significant U.S. funding, technical assistance, and equipment support had been provided to Colombian-led counter narcotics programs for drug eradication and interdiction. It encouraged the expansion of the capacity of the Colombian military and police. Plan Colombia expired in 2012, but American support remains critical to Colombia’s armed forces.

Despite the peace accord with the FARC, the Colombian government continues military actions and spending to fight narco-terrorism, trade in contraband, and to secure at-risk areas using the police force. Colombia is especially committed to developing security surveillance and enforcement in remote regions of the country such as La Guajira, Arauca, Choco, Putumayo, Nariño and Meta, areas where the government has exercised little to no presence, giving leeway for criminal activity to flourish.
 
Through the Foreign Military Sales Trust Fund, the U.S. Department of Defense provides equipment and training to the Colombian military and police through military assistance programs. Other sources of funding include the U.S. State Department and programs that it administers, such as the International Narcotics Control program (INL). The Bureau of International Narcotics and Law Enforcement Affairs has been the main source of funding for equipment acquisition in Colombia since 1990 through private military consulting firms. These firms operate through an open market competitive bidding system, mainly focused on supporting the police force for drug eradication/interdiction operations.

The Colombian congress approved Law 80 in 1993, under which preferential treatment is given to goods and services for security and national defense made in Colombia by local manufacturers over goods made by foreign manufacturers. However, under Chapter 9 of the National Treatment Caveat of the United States-Colombia Trade Promotion Agreement, U.S. companies must be treated as locals when they participate in public bids, eliminating the disadvantage they used to face prior to implementation of the agreement. Typically, some non-sensitive equipment may be procured through
Colombia Buy Efficient’s website, but most sensitive hardware is purchased through private invitations. American companies should inform the U.S. Embassy in Bogotá of their intentions to bid on an RFP so, if possible, the different entities at the Embassy can advocate on their behalf.

The United States enjoys a privileged relationship with Colombia with regards to military equipment acquisitions. However, competitors from Israel, Russia, France and Germany are also important players and are increasingly gaining market share. The Colombian military tends to use standardized equipment and values relationships, quality/warranty, trust, and familiarity with equipment. According to unofficial estimates, U.S. imports make up close to 50 percent of Colombia’s total imports of military equipment.

The Colombian military maintains high standards for its equipment, which has historically been a great opportunity for U.S. exporters. However, the United States could lose market share in the future due to pricing and more competitive bidding from foreign manufacturers, and possible corruption in the procurement process. U.S. manufactured equipment is already losing market share in the area of personal arms, with more rifles currently being bought from Australia, Belgium, and Russia.
Colombia has persistent corruption issues across many different sectors which can make participating in the procurement process difficult. It is essential for American companies to find a local representative to support their in-country dealings.

Leading Sub-Sectors
In 2017, Colombia will remain an important defense equipment importer, regardless of government intentions to jumpstart local production of equipment via companies like Indumil (arms and ammo), CIAC (aviation), CODALTEC (digital), and COTECMAR (naval). These entities can be key partners for American companies that are capable of doing technology transfers.

Colombia has ongoing plans to upgrade all branches of the military in 2017, making it an attractive market for a variety of products and services:
  • All types of tactical equipment as well as bomb disarming gear;
  • Construction of Command and Control Centers in Bogotá and other cities;
  • Demining equipment, especially light hand held devices to be used in rugged terrains;
  • Equipment for manual eradication of illicit crops.
  • Regular armament and survival equipment;
  • Transport trucks, including regular (troop and cargo carrier), armored and tactical;
  • Upgrades to fixed wing aircrafts;
  • Upgrades, parts and support for the Blackhawk and Huey helicopter fleets;
 
American companies can also consider providing materials and machinery to local manufacturing facilities:
  • CIAC (Manufacturer of aviation parts and the T-90 Calima)
  • CODALTEC (simulator manufacturer and software developer)
  • COTECMAR (currently manufacturing patrol vessels under Fassmer’s license and LPR 40’s)
  • Indumil (manufacturer of Galil rifles, Cordoba pistol, ammunition and explosives)
Opportunities
Military equipment trends have remained relatively constant in the post-Plan Colombia period since the government continues to fight drug interdiction and conduct manual coca eradication operations. Due to the improvement of the general security environment, the Colombian Air Force has been more involved with military and civilian rescue operations. In 2010, the Air Force created a new rescue unit that has increased purchases of rescue equipment and life support systems. The National Police is expanding its activity in civilian and urban surveillance, adapting its force and upgrading its equipment to this environment. Recent Navy purchases and investment in COTECTMAR indicate the government’s interest in increasing the protection of the Caribbean coast, especially around the islands of San Andres and Providencia. There has been ongoing interest from the Ministry of Defense to purchase close to 15 fighter jets, with possible candidates including the F-16. However, this project is on hold until further notice due to budget issues, mainly related to low oil prices. The Cavalry (army) has also shown considerable interest in upgrading its armored, lightly armored, and tactical vehicles to better control national territory and sensitive border areas.
 
In 1990 the United States Government provided Colombia with 18 UH-1N helicopters and Colombia has since bought 36 more. In 2010, the Colombian military had 280 helicopters and 200 fixed-wing aircraft with no new major purchases projected through 2016, with the exception of a possible purchase of helicopters with higher capacity to transport troops and equipment. Due to recent aircraft acquisitions, there are significant opportunities for training, parts, and maintenance for these aircraft, especially Blackhawk rotor blades repair services and erosion-resistant coating systems. Other opportunities include: parameter security protection systems (convoy security, security walls and fences, and video surveillance systems), safety and survival accessories, search and rescue equipment, protective clothing, emergency medical equipment, and trauma-life support systems.
 
Colombia’s armed forces personnel total 496,275 people, 291,518 being part of the military and 181,699 with the police. The rest are with the justice system and civilian forces. In recent years key needs have been armament and personal arms (up to USD one million a year), night vision goggles (up to USD one million a year), anti-ballistic missiles (up USD one million a year), survival equipment and kits (up to USD 400,000 a year), flight suits, footwear (up to USD 200,000 a year), personal arms (M4 rifles, M9 pistols), grenades, binoculars, and medical equipment. The Colombian army is upgrading its equipment and uniforms with engineered textile solutions, smart textile materials, as well as integrated communication aircraft helmets.


The majority of defense and military equipment have no tariffs since the implementation of the U.S.-Colombian Trade Promotion Agreement in May 2012. Prior to the agreement, tariffs ranged between five and 20 percent. Companies are encouraged to check the Harmonized Code (Schedule B) to better understand the tariffs and taxes that they would have to pay in order to sell to Colombia.
 
Trade Events
Expodefensa
December 4-6, 2017
Bogotá, Colombia  
 
F-Air (International Aeronautics Fair)
July 13-15, 2017
Medellin, Colombia
 
ColombiaMar (Naval industry conference and trade show)
March 2018
Cartagena, Colombia
Web Resources

Camilo Gonzalez
U.S. Commercial Service Bogotá
Phone: 571-275-2764
Email: camilo.gonzalez@trade.gov

Key Contacts
Colombian Government
Infodefensa Magazine
Ministry of National Defense
Portafolio newspaper
Revista Semana

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Colombia Aerospace and Defense Trade Development and Promotion