Yes it’s true. Latin America is perceived as a high-risk destination, with too much corruption and government oversight that falls short when measured against the United States, Europe, and other more developed economies.
Just a few days ago, the Telegraph said, “Despite its progress, Colombia is not without its flaws. Poverty is too high, education standards too low. Bribery in the public sector has been reduced, but not eliminated.”
Corruption hasn’t been eliminated? That’s true for every country on the planet. But what’s important is that the situation in Colombia is improving.
We still have a lot to learn. But today Colombia has laws against bribery that reflect global standards set by the FCPA and the UK Bribery Act. Local AML policy for the financial sector is one of the strictest and most admired in the world. And at the start of this year, a new anti-corruption initiative began that promotes cooperation between the government and the private sector to improve compliance standards.
Colombia isn’t alone in battling against entrenched corruption. Graft has become a worldwide issue and countries on every continent are joining the fight. The international community is just starting to recognize that collaboration is a key to bringing awareness to the problem.
In Colombia today, we’re seeing new levels of awareness. Civil society is finally on board. More and more people are rejecting corruption and reporting it. They finally have the mechanisms to do so in a safe way.
But there’s still plenty of room for improvement. That’s in part what it means to be a developing economy. Yet this very fact is what makes Colombia such an attractive destination. Because there is room for improvement and growth, there is also ample opportunity for high rewards.
Investors are catching on. For the first time ever, global corporations invested more in emerging markets than the core economies of the U.S., Europe, and Japan, according to a report by the United Nations Conference on Trade & Development (available here in pdf). In 2014, there was a 12% increase in FDI in South America.
As FDI enters developing economies, risks and challenges need to be mitigated. In Colombia and across Latin America, the best way to do that is by finding local business partners who share the same values and views about compliance and risk aversion.
The role of clean, knowledgeable local partners is essential. They provide gateways between cultures and business practices. That cooperative approach is what I have been working to promote. That, I believe, is how North American and European companies eyeing the rich investment opportunities in Colombia and other Latin American destinations can navigate the risks and reap the rewards.
José Da Silva is the founder and CEO of Vantech Group. From offices in Latin America and Miami, Vantech combines specialized consulting, tailored outsourcing, compliance systems and enhanced due diligence, and cutting-edge technology to help companies entering and operating in Latin America. He can be contacted here.