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Business creation could be an indication of Colombia’s economic recovery

A few months ago, there were economic indexes that began to show signs of recovery in Colombia. One is the creation of companies that, according to the Confederation of Chambers of Commerce, suffered an increase of 11.5% in June compared to the same month of 2019.

During the third quarter of 2020 (July – September), the creation of companies in Colombia remained on the positive path, increasing by 2.9%, compared to the same period of the previous year. The creation of new companies went from 82,371 units between July and September 2019 to 84,724 between July and September 2020, according to the confederation’s recent Business Creation Dynamics report. The data is encouraging after the steep falls in both the first quarter and the second quarter of the year, and the abrupt fall in April, the latter month with a reduction of 87%.

Most of the start-ups that were created were in the field of non-specialized food and retail clothing. By sector, the fastest growing was wholesale and retail trade, with growth of 23% compared to 2019, followed by transport and industry growing respectively 0.8%.

Benefits for SMEs

SMEs generate 94% of the country’s employment. The government received a request last March from the Congressional Entrepreneurship Commission requesting aid for them. This claim was the starting point for the “Fair Installments Act” passed last June. The regulations require companies to pay their suppliers no later than 60 days in the first year of validity but will then be reduced to 45.

Another request was the delay in paying some taxes, a request that was heard by the government and resulted in changes in the fiscal calendar. It also called for greater speed in VAT refunds, and banks were urged to work more reasonably with entrepreneurs in these turbulent times with programs aimed at recovery and not usury.

Measures taken from the government, but also from the financial and productive sector, have allowed the economic rebound to arrive perhaps faster than expected. Despite the sharp fall in early years, the Government relies on the country’s economic recovery and believes that by 2021 Colombia will grow in the order of 5.5%.

Sources: National Administrative Department of Statistics (DANE); Confederation of Chambers of Commerce (Confecámaras); Ministry of Trade, Industry and Tourism (MINCIT), Best Deal (EMT), Cali Chamber of Commerce, Organization for Economic Cooperation and Development (OECD).
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