Total Market Size
Total Local Production**
Imports from the U.S.
(The above statistics include only military equipment acquisition, and are unofficial estimates in thousands of USD)
Source: U.S. Census Bureau, the Colombian Ministry of Defense
2012 data is projected to Dec 31
2013 estimates are based on the slight reduction of the budget for Defense established by the Colombian Congress1
** Total local production represents less than 2% of total market size
Colombia’s internal and external defense and security structure includes the Army, Navy (Marines and Coast Guard), Air Force, and the National Police. Real military spending increased from USD 2.6 billion in 2001 to USD 14.7 billion in 20122. On average, the total military spending is 3.5 percent of Colombia’s total GDP3. Under Plan Colombia, significant U.S. funding, technical assistance, and equipment support has been provided to Colombian-led counter narcotic programs for drug eradication and interdiction, and expansion of the capacity of Colombian military and police. The current format of Plan Colombia is due to expire in 2012, with the consequent nationalization of military programs by the Colombian government. Significant cuts on spending and a shift to mainly drug eradication are expected. However, the Colombian government will intensify military actions and spending to fight narco terrorism, and insure security gains through its police force, especially to develop security surveillance and enforcement in remote and isolated regions of the country.
Through the Foreign Military Sales Trust Fund, the U.S. Department of Defense (DOD) provides equipment and training to the Colombian military and police through military assistance programming. The Department of State (DOS), military sales, and the international narcotics control program are other sources of funding. The Office of Aviation and Narcotics Affairs has been the main source of funding for equipment acquisition in Colombia since 1990, through private military consulting firms such as DynCorp. These firms operate through an open market competitive bidding system. However, U.S. funding is expected to significantly decrease at a rate of 10% over the next five years, from USD 157 million in 2011 to USD 133 million in 20124. The Colombian congress approved Law 80 of 1993, under which procurement of goods and services for security and national defense made in Colombia by local manufacturers, must be purchased over goods made by foreign manufacturers and exporters5. However, under the National Treatment Caveat, Chapter 9 United States-Colombia bilateral trade agreement (U.S.-CTPA), U.S. companies must be treated as locals when they participate on public bids eliminating the disadvantage they used to have prior to the signing of the agreement.
In 2002, the Colombian government created a Wealth Tax to collect USD 800 million from large companies or wealthy individuals, 70% of which was used to increase 2002-2003 defense spending. A similar tax in 2007-2011 was collected close to USD 3.7 billion, of which a significant portion was founded defense spending. The Colombian Army receives 60% of funding, followed by the Air Force with 25% and the Police with 10%.
The U.S. has had a privileged relationship with Colombia in regards to military equipment acquisitions, with few competitors. The Colombian military tends to use standardized equipment and values relationship, trust and familiarity with equipment (as exemplified by their consistent use of the same type of rifles). However, other foreign manufacturers are gaining market share. Unofficial estimates indicate that Colombia imported USD 1.3 billion worth military equipment in 2012, with a 23% decrease over 2011. This reduction is due to the heavy investment in military equipment budgeted by the Colombian government on 2012 and 2011. According to the unofficial estimates, U.S.imports represents 50% on average of the total imports of military equipment.
The Colombian military keeps high standards for its equipment, which historically was a great opportunity for American products. However, U.S. could lose market share in the future due to pricing and more competitive bidding from foreign manufacturers. According to the Office of Aviation and Narcotics Affairs’ Aviation Unit (N.A.U.)’s Director, U.S. manufactured equipment is already losing market share for personal arms, with more rifles currently being bought from Australia, Belgium and Russia.
Best prospects include trucks and light armored vehicles (LAV), engines and turbine, military apparel and footwear, fixed-wing and rotary wing aircraft helmets, anti-IEDs (improvised explosive devices), IED and mine detectors, body armor and personal body armor equipment, handheld navigation systems, Unmanned Aircraft Vehicles (UAV), GPS, modern communication systems (MCS), IT-structure platforms, logistics software solutions and software applications, flight simulators, air cruise control, and marine and coastal surveillance systems.
In regards to services, there is a significant need for security assistance, maintenance and assistance to the Army, Police and Air Force. Helicopter and fixed-wing aircraft maintenance and repair services are especially in need. According to the latest official data, Colombia imported USD 157 million worth of aircraft and helicopter parts in 2010; USD 125 million from the U.S. or 87% from 98% in 2007; USD 8 million from Israel or 5.4% from 0.5% in 2007; USD 6 million from Russia and USD 4 million from the U.K.
The Colombian military has potential in the fields of specialized training for all new communications systems, medical training, and environmental training for hazardous material (HAZMAT) management, transport, process and dispose of HAZMAT, expertise in demolition, technical support for reconnaissance and analysis, and security operations.
Military equipment trends should remain the same post-Plan Colombia in order to support drugs interdiction and eradication efforts. With a switch of the Revolutionary Armed Force of Colombia (FARC by its initials in Spanish) from a military force to a terrorist organization, there will be a greater focus on anti-terrorist military equipment acquisition. Due to the significant improvement of national security, the Colombian Air Force will be more involved with military and civilian rescue operations. The Air Force created in 2010 a new rescue unit and is acquiring rescue equipment and life support systems. The National Police is going to expand its activity on civilian and urban surveillance, adapting its force and upgrading its equipment to this environment.
In 1990, the U.S. Office of Aviation and Narcotics Affairs provided 18 UH- 1N helicopters, buying 36 more over the years. In 2010, the Colombian military had 280 helicopters and 200 fixed-wing aircraft with no major new purchases projected until 2015 with the exception of some possible interest to purchase helicopters with higher capacity to transport troops and equipment. Due to recent aircraft acquisition, there are significant opportunities for training, parts and maintenance for these aircraft, especially for 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, survival accessories, search & rescue equipment, protective clothing, emergency medical equipment, trauma-life support systems.
The security forces number about 435,000 uniformed personnel: 285,000 in the military and 150,000 in the police. From 2012 to 2015, key needs will be armament and personal arms (up to USD 1 million a year), night vision goggles (up to USD 1 million a year), anti-ballistic missiles (ABM) (up USD1 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 riffles, M9 pistols), grenades, binoculars, and medical equipment. The Colombian army is looking into upgrading its equipment and uniforms, with engineered textile solutions, smart textiles materials, as well as integrated communication aircraft helmets.
Given the tremendous opportunities for U.S. exporters in Colombia, it is appropriate that on October 21, 2011, President Obama signed the United States-Colombia bilateral trade agreement (U.S.-CTPA) following its approval by the U.S. Congress. On May 15, 2012 the FTA agreement entered into effect finishing the implementation phase. 80 percent of U.S. exports of consumer and industrial products to Colombia are duty-free immediately upon entry into force, with remaining tariffs phased out over ten years. Other provisions include strong protection for U.S. investors (legal stability), expanded access to service markets, greater intellectual property rights protection, market access for remanufactured goods, increased transparency and improved dispute settlement mechanisms (arbitration). The majority of Defense and Military equipment have zero tariffs since the FTA has been implemented. Prior to the agreement the tariff ranged between 5% and 20%.
CS Bogota contact:
Senior Commercial Specialist
U.S. Commercial Service
U.S. Embassy Bogotá, Colombia
Tel: 011-571-275-2764 / fax: 011-571-315-2190/71
Colombian Ministry of National Defense: www.mindefensa.gov.co/irj/portal/Mindefensa
Colombian Government: www.gobiernolinea.gov.co
Security Fair Colombia: http://securityfaircolombia.com/
Medellin Aviation Fair: http://eiso.co/jm/fair/
Orlando Utility Helicopters International Users Conference (UHIUC)
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4 Unofficial estimates from Narcotic Affairs Section NAS
5 See chapter two of the Law 80 of 1993: http://www.alcaldiabogota.gov.co/sisjur/normas/Norma1.jsp?i=46940#0
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