LATAM FDI: Welcome to another episode of the LATAM FDI podcast. Today, Joe Novitski is with us. Joe is in Medellin, Colombia, and he is the head of business development for a company called Ongresso. Joe, I’m not going to say much more. I will let you introduce yourself and briefly introduce your company to begin discussing doing business in Medellin.
Joe Novitzki: Steve, thanks a lot for having me. I’m happy to be here. A little bit about me: I’m originally from the Minneapolis, Minnesota, area. Back in 2015, I got an idea about helping connect US businesses to Latin America. Four years later, that became a reality after traveling through the region and founding a company called Ongresso. We help US and European businesses expand to the region. I’ve spent a few years working in sales and business development, specifically with US companies looking to enter the region with an interest in doing business in Medellin. So Ongresso is a company specializing in international expansion, specifically focusing on the Latin American region. We help companies expand their presence to Latin America and then within the region if they’re already there.
LATAM FDI: Joe, we’ll look at your company and its service offerings more in-depth and specifically toward the end of this podcast. But first, let’s concentrate on giving our audience some information. What is important for them to know about doing business in Medellin, and what does Medellin have to offer? So, the first question that I have for you is a question about the strategic geographical location of the city and how that makes Medellin a hub for business and trade.
Joe Novitzki: Yeah, this is, I think this is a big issue, actually, the geographical location. I’d start by referencing the country of Colombia as a whole and just some of the advantages that all of the major cities will enjoy within the country. Some of those things are like, we’ve seen many companies from the US and Europe set up nearshoring teams and BPO operations across Bogota, Medellin, Cali, and Baranquilla. Those are for a couple of main reasons primarily related to that geographical location. One is proximity to the US. There are flights to Miami that are just three to three and a half hours almost directly north, which makes it really easily accessible for some of those corporate visits, maybe some training sessions, transfer of equipment for teams, or even incentive trips for employees who get to go visit the US. Then the second thing is being within the same region are those shared time zones that make communication between the US and Colombian teams very easy during those business hours. This is opposed to some of those outsourced teams you see in the Philippines or India, which makes the communication aspect tricky. So, Colombia falls into either the eastern time zone or the central time zone, depending on daylight savings, and it can be a really convenient place to do business.
Regarding imports and exports, Colombia has major ports on both the Pacific, with the port of Buenaventura and then also on the Caribbean side, with Cartagena and Barranquilla. Those major shipping lanes make it easily accessible for imports and exports. Also, being centrally located within Latin America, it is a great hub to access any other region’s other countries. From Mexico up north down to Chile and Argentina in the southern cone, it can be a really good place to establish a hub for trade. Now, specifically, regarding doing business in Medellin, I’d say one of the things, due to a number of factors, it is actually the top exporting region in all of Colombia. And so geographical location and infrastructure are among some of the positive factors. But the biggest geographical draws aside from that access to major ports and land transportation routes are one. It has very fertile land, providing a base for its strong agricultural sector. Medellin actually has a really massive flower industry, making Colombia the world’s second-largest exporter of flowers, only behind the Netherlands. Then, as many people already know, it’s very popular for its coffee.
There’s a lot of coffee here in Medellin and the state of Antioquia region, and Colombia is the fourth largest exporter in the world of coffee. Having lived here in Medellin, I’d like to mention that we’re close to the equator. You might think it would be pretty hot and humid, but it has a pretty Goldilocks climate at almost 5000ft above sea level. This makes it an attractive place to live and do business in Medellin. The temperatures lately, on average, have been highs of 80 during the day and lows of the 60s at night. It has earned its nickname of the city of Eternal Spring, and it attracts a lot of talent interested in doing business in Colombia.
LATAM FDI: Speaking specifically about doing business in Medellin, as we continue here, what incentives does the city offer in terms of establishing enterprises? What does the government of Medellin do to encourage companies like yours to set up operations?
Joe Novitzki: Yeah, such a good question. There have been historical plans that have come and gone periodically. One of them, with the former mayor, Daniel Quintero, set up a policy encouraging technology companies to do business in Medellin. We’ve seen this particular scheme in several initiatives over the years. Still, it has a progressive tax scheme that says the first year of operation, no income tax liability whatsoever, and then the next year, 80%, 60%, and 40% off. This gives you a soft landing to get your business up and running. Aside from that, a progressive tax scheme in the surrounding municipalities offers those same tax breaks on certain types of property, industry, and commerce investments. Businesses have to meet certain criteria and whatnot. But again, the tax exemption can be as much as 100% in the first years of operation to get businesses up and running. Aside from that, there are the free trade zones, which offer tax incentives on sales, duties, and income tax, and then also free trade agreements that connect Colombia to roughly 60 countries.
LATAM FDI: How do local infrastructure and the network it has for doing business in Medellin contribute to the ease of operating for companies working in the city?
Joe Novitzki: A number of things come to mind, one being a project that I suppose I personally have benefited from over the years of living here. But Medellin’s international airport is actually just outside the city in a city called Rio Negro. Historically, there were only mountain passes as the access roads. About five years ago, they opened the tunnel of the Orient, which cut the time it takes to get to and from the airport. Travel time to the free trade zone that is out there has been cut in half. Access to the airport has become much easier for individuals and businesses. Another project that’s currently going on right now is that they’re constructing a new port out at the coast of the Antioquia, the state that Medellin is in. They’re constructing a port out there called the Port of Antioquia. Also, a highway system will accompany that to better connect the land and port out to Medellin and then to Antioquia as a whole. That’s scheduled to be completed in 2025. I hope it runs on schedule, but that’s something that we should see in the next year or two.
Aside from that, I would also say that another thing that promotes doing business in Medellin is that it has a convention center with a pretty large capacity. It hosts several large international conventions yearly, including Colombia Moda, the largest fashion show in all of LATAM. There’s also Expo Belleza for the beauty industry and Expo Agro Futuro, which is a very big agricultural trade show. Those are just a few examples, but I think ten to 15 major expos come through each year, making it a destination for networking, doing business in Medellin, and creating new connections. Finally, Medellin, located in a mountain valley, has little room to expand its road networks. That being the case, it still has a pretty solid public transportation system to get people around the city. It has an above-ground metro line that runs the entire valley length, and some feeder lines connect to buses. There’s a tram that connects to it, and then there are even gondolas that run up the side of the mountain. For those businesses that need to be close to public transport, there are access lines to get workers into an office and whatnot; it provides that infrastructure.
LATAM FDI: I’ve read about and know from a couple of people involved that Medellin has become a very attractive place for digital nomads. Can you tell our listeners a little bit about that phenomenon?
Joe Novitzki: Yes. With digital nomads, again, I think that it began just with people hearing travel bloggers talking about the nice environment, the nightlife, and the other expats who have come here. It’s really easy to meet and connect with other digital nomads and people who are on that kind of like-minded path and want to share experiences with others who are going through the same things that they are. On top of that, again, I mentioned the weather and the climate. It’s a beautiful place to pass through. Another thing that happened just a couple of years ago was the creation of digital nomad visas. Before, people would have to only up to 180 days a year in Colombia, and you’d have to break that up every 90 days. You can stay up to two years, depending on how long they grant you. A number of reasons have made it very attractive to do business in Medellin as a digital nomad location.
LATAM FDI: It looks like they’ve taken some measures to attract technologically adept people to Medellin. Can you tell me about specific things that perhaps the government has done to encourage technological advancement in research and development in the city?
Joe Novitzki: Yeah, absolutely. The first thing that comes to mind is an initiative introduced by President Duque in 2017. It was called the Orange Economy, a policy he launched to foster investment in the creative and cultural sectors and technology. This was another initiative that offered a soft landing or starting point for businesses that met certain criteria. Some of those technological companies would receive land and, again, have the tax benefit of no income tax for five years and then certain VAT exemptions as well. And then even access to seed capital in some cases, depending on what type of project they were trying to get up and running. That policy has since expired, but in its place, others have arisen. For example, there’s one that came up, I want to say, a few years ago, the regulatory sandbox, and that specifically relates to the fintech sector. And so essentially, it’s just a framework that encourages fintech businesses to enter the market, to test and develop their new products and services. This happens while the government supervises and develops needed regulations simultaneously and keeps an eye on the financial consumers, ensuring that they’re not getting hurt by some of the new products and services being tested.
Aside from that, many tech companies have shown up to be doing business in Medellin as well. Because of the human capital available that is available here, companies come. Medellin is home to over 30 universities. The stream of talent for companies to hire is pretty constant, and a lot of solid talent is available. Then finally, last but certainly not least is Ruta N, a government corporation that aims to drive investment and development in the specific areas of science, technology, and innovation. The organization has really played an integral role in creating Medellin’s rich business environment, especially in those areas. So, along with ProColombia, the National Investment Agency, and ACI Medellin, which is the local investment agency, Ruta N has done a great job launching programs that attract talent, capital, and international businesses to the city, offering things like financing assistance. They help recruit and train skilled workers if companies looking at doing business in Medellin can’t find them. They’ll provide physical office space at favorable rates as well. Many different things are going on that have attracted tech talent and companies.
LATAM FDI: We talked a little bit about Colombia as a whole and Medellin specifically. Let’s look a little bit at what Ongresso can do for companies that want to do business in the region. Can you give us a little bit of information with regard to that as well?
Joe Novitzki: Regarding the types of companies that Ongresso looks to serve, our client base is basically Western-based companies, US and European companies, that are looking to expand their presence to or within the region. We focus on two main client profiles. Those are, number one, the companies looking to establish nearshoring or outsourcing operations to access their teams or clients in the US and provide service there. For those companies looking at doing business in Medellin and the region, we recruit and help them find talent, hiring that talent as their employer of record in the countries where we have our own legal entities. If they reach a critical point or companies who just want to get started with the company right off the bat, we will do the company formation. We’ll run their taxes, accounting, legal, payroll, all of that back office work and so that they can focus on their core activities training their people, and then we’ll take care of the rest. The second profile that we typically work with is those companies that want to sell their products or services on the local markets. These are companies that typically need information and market research.
They need to know who their competitors are, the price points for their products or services, and the history of the markets there, and then determine if they want to enter. If they do, a lot of the time, they’ll need to find a distributor. Then, we’ll do a partner search for them. We’ll set up the site visit and arrange those meetings so that they can take over the negotiations from there. And then, while we don’t offer these services in particular services in-house, we also have partners who provide assistance with sanitary registrations, title holders, and things like that. Importer of record for those companies that are medical device companies or pharmaceutical or agricultural companies that need that. Our partner network can take care of those clients as well.
LATAM FDI: Joe, we’ve gone over some pretty good information in a short period of time. One thing that we find as a result of doing these podcasts is that listeners approach us with questions about the topic we’ve discussed. What we like to do in that case is point people to those that we do the podcasts with for information. So, is there any way that people can contact you if they have any questions resulting from having heard what we’ve discussed?
Joe Novitzki: Yeah, absolutely. I’d say the best place to find out more about Ongresso and what we do is on our website, which is www.ongresso.com. The other place is you can also reach me by email, which is my name: firstname.lastname@example.org. I’d say those are the two places.
LATAM FDI: Joe, one thing that we find that people like, too, is a link to a LinkedIn profile. Do you have one we can link to and put it on our page for the podcast?
Joe Novitzki: Yeah, of course. I’ll send that over to you.
LATAM FDI: Okay, so we’ll have Joe’s email address and a link to his website. We’ll have a link to his profile. Joe, I want to thank you for joining me today. And we want to wish you the best of luck with your company, and I hope that you enjoy that wonderful, perpetual springtime weather in Medellin.
Joe Novitzski: Awesome. Well, thanks to all the listeners for tuning in. And Steve, I really appreciate you having me on your show to talk about doing business in Medellin. Let’s definitely keep in touch.