EXPORTING AND IMPORTING PROCESSES UNIVERSIDAD EAN FACULTY OF INTERNATIONAL BUSINESS MICHAEL TORRES FRANCO ANDRES FELIPE CIFUENTES ARCILA JUAN CAMILO ROCHA BOGOTA, 26 APRIL 2020 International Exchange Regime Task 1. According to the Colombian legislation, what operations and how can be constituted the external indebtedness?. How much is the external debt in Colombia (last 3 years)?, what percentaje is for public and for private sector? According to the definitionproposed by the World Bank and the Fund International Monetary, the external debt is understood by debt external gross amount, in a certain moment of contractual liabilities disbursed and pending reimbursement that assume the residents of a country versus not residents, with the commitment to reimburse the capital, with or without interest, or to pay the interest, with or without capital repayment. (Banco de la República, 2019) The external debt statistic includes financing obtained under the modalities of bank loans, commercial loans (from suppliers), debt securities (bonds) and financial leasing, and does not include liabilities for portfolio investments in Colombia. In general, the external debt statistics follow the compilation guidelines established by the International Monetary Fund. (Banco de la República, 2019) In 2017, the external debt in Colombia reached US $ 124,386 million, presenting a growth of US $ 4,238 million compared to that registered in the same period of the previous year. This year's report indicated that the balance of public external debt represented 58% of the total, while of the private sector was 42%. (Banco de la República, 2017) In 2018, the external debt in Colombia reached US$131.744 millions, presenting a growth of US$7.108 millons compared to that registered in the same period on 2017. This year's report indicated that the balance of public external debt represented 55% of the total, and the private sector was 45%. (Banco de la República, 2018) 2 In 2019, the external debt in Colombia reached US$138.175 millions, presenting a growth of US$6.158 millons compared to that registered in the same period on 2018. This year's report indicated that the balance of public external debt represented 53% of the total, and the private sector was 47%. (Banco de la República, 2019) 2. Find and explain the payment methods used in international trade. Source : http://trade.gov/media/publications/abstract/trade_finance_guide2008desc.html Cash-in-Advance With cash-in-advance payment terms, an exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. For international sales, wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. (Trade.gov 2020) Letters of Credit Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. (Trade.gov 2020) 3 Documentary Collections A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of the payment for a sale to its bank (remitting bank), which sends the documents that its buyer needs to the importer’s bank (collecting bank), with instructions to release the documents to the buyer for payment. (Trade.gov 2020) Open Account An open account transaction is a sale where the goods are shipped and delivered before payment is due, which in international sales is typically in 30, 60 or 90 days. Obviously, this is one of the most advantageous options to the importer in terms of cash flow and cost, but it is consequently one of the highest risk options for an exporter. (Trade.gov 2020) Consignment Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer. An international consignment transaction is based on a contractual arrangement in which the foreign distributor receives, manages, and sells the goods for the exporter who retains title to the goods until they are sold. (Trade.gov 2020) 4 3. Find at least 4 examples of FDI in Colombia in the last 5 years, show in no more than 7 lines per example how was this. The Peruvian group "Gloria" acquired five Colombian dairy production and sales firms: Incolácteos, Lechesan, Convervas California, Erwis Asociados and Enfriadora Vallenata. The investment amounted to US $ 86 million. (Procolombia, 2015) Sutherland Indian company inaugurated in Bogota its specialized support center in computer and communication technology to assist clients in the United States. It had an investment of USD $ 3 million and to date have generated more than 4,000 jobs throughout the country. (Procolombia, 2016) Decathlon, internationally recognized in the sports scene and whose mission is to make sport accessible to the greatest number of people, invested in the opening of its first specialized store in Colombia, in northwestern Bogotá in 2017. With an initial payroll of 60 Colombian collaborators, the French firm arrived in the country attracted by conditions such as a stable economy and a market with high potential. (Procolombia, 2017) Quinto Resources (Canada) completed the acquisition, from Colombian partners, the firm Conga Mining, which will later be renamed Combia Gold. In this way, he has the right to acquire the ‘Guamo’ project in Antioquia. The payment was made through an issue of stocks of Quinto Resources, for USD$2.7 million. In addition, Combia must finance at least $ 1 million for exploration, equipment purchase and project improvement work. (Procolombia, 2018) 5 BIBLIOGRAPHY 2020. Methods Of Payment. [online] Available at: <https://www.trade.gov/methodspayment> Banco de la República (banco central de Colombia). 2019. Deuda Externa (Pública Y Privada). [online] Available at: <https://www.banrep.gov.co/es/estadisticas/deudaexterna-publica-y-privada-dolares> Es.investinbogota.org. 2017. Casos De Éxito De Inversión Extranjera En Bogotá | Invest In Bogotá. [online] Available at: <https://es.investinbogota.org/casos-de-exito> Invierta en Colombia. 2016. Estadísticas De Inversión Extranjera Directa IED En Colombia. [online] Available at: <https://www.inviertaencolombia.com.co/publicaciones/estadisticas-ied-encolombia.html> 6
