January 2010

FORESTRY REFOCOSTA. Villanueva, Casanare. Especie Eucalyptus pellita. Plantación Comercial. Fotografía tomada por Guido Gasca.

Biotechnology and genetic development Land Availability 17 M ha (42 M acres) suitable for timberland Diversity More than 10 forestry species with high value added Production advantage Photosynthesis throughout the year Higher yield species Shorter life cycles Weather advantages Tax Incentives New forestry fields will be income tax exempt Biotechnology and genetic development High quality forestry germplasm base with plant material production capacity of 52,000 ha (131,000 acres) per year 3 3

17 Million Hectares (42 M acres) Suited for Timberland Department No restrictions ( Ha) With lower restrictions (Ha) Antioquia 1.477.221 2.137.309 Atlántico(*) 35.820 40.152 Bolívar(*) 355.475 94.177 Caldas 22.420 146.284 Cauca (Cuenca alta río) 90.227 182.036 Cesar 376.935 392.104 Córdoba 189.753 233.770 Cundinamarca 150.116 150.887 Huila 50.022 163.283 Magdalena(*) 500.166 194.942 Nariño 365.621 295.872 Santander 281.353 451.824 Sucre 136.263 167.934 Tolima 229.705 145.193 Quindío 32.130 17.846 Department No restrictions (Ha) With Lower Restrictions (Ha) CORPORINOQUIA (Jurisdiction) Arauca   930.025 Boyacá (jurisdic.) 2.892 2.877 Casanare 24.295 1.705.973 Meta 339.403 2.604.763 Vichada 467.834 2.128.105 Total 5.127.650 12.185.356 Total Areas Suited for Timberland 17.313.006 hectares Source: CONIF 2008 * In the Valle del Cauca Department the potential area is estimated in 200.000 ha. The Department has experience in timberland and has one of the most important ports of the Country: Buenaventura.

The Industry is Only Using 1.5% of the Forestry Potential in Colombia Colombia has 17 million hectares (42 million acres) with soil suited for forests, but today 1.5% of that potential (253.066 hectares – 625.326 acres) is in use. Source: CONIF.- MADR

Three Potential Regions for Forestry Development in Colombia Caribbean and Upper Magdalena: Altitudes 300-2500 ft Species: Teak, Melina, Ceiba, Acacia and Eucalyptus Eje Cafetero and South West Region: Altitudes 3500–7000 ft Species: Nogal, Eucalyptus and Pine.   Orinoquia Region: Altitudes 300 – 1600 ft Species: Eucalyptus and Pine. Priority Departments Municipal Districts with the largest planted area Pacific Ocean Source: MADR

Eucalytus tereticornis Schizolobium parahybum More than 10 High Value Added Commercial Timber Species In Colombia commercial timber species need less time to grow. Thus, operations can be more productive than in other countries. For example, the Eucalyptus has a yield of 25-40 m3/ha per year in an 8 years turnover. Scientific Name Commun Name Yield (m3/ha/year) Turnover (years) Eucalyptus grandis Eucalyptus 25-40 8 Acacia magnium Acacia 26 – 30 12 Pachira quinata Ceiba Tolua < 18 >20 Cordia alliodora Nogal Cafetero 8-20 20 Eucalyptus globulus 15 – 35 8 – 12 Gmelina arborea Melina 20 – 25 14 Eucalyptus pellita 15-20 Eucalytus tereticornis 8 -12 Schizolobium parahybum Brazilian Firetree 13 16 Tectona grandis Teak 7 – 10 25 – 28 Cariniana pyriformis Colombian Mahogany 7 Source: MADR

Yield- IMA (M3/ha/year) High Yields in Softwood and Hardwood Timber Species Country Turnover (years) Yield- IMA (M3/ha/year) Softwood P. tecunumanii Colombia 16 30 – 40 P. radiate Chile 20-25 10 – 25 Pinus spp. Uruguay 20 16 – 23 P. patula 12 - 22 Brasil 15 – 20 E.U.A (sureste) 25 10 – 15 Hardwood E. híbridos 7 45 E. grandis Eucalyptus spp. 8 – 10 27 – 30 E. globulus 10 – 12 20 – 30 Portugal 12 In Colombia, it is possible to obtain high yield in hardwood and softwood. In hardwood timber, Colombia followed Brazil with the second highest yield with 30 m3/ha per year for a 7 year turnover. Source: CONIF 2002, CENPAPEL 2003

In Colombia, Consumption of Raw Timber Has Increased, Supplied for the Most Part by Imports Between 2006 and 2007, consumption of lumber, wood board and paneling, and chips rose 7%. For the same period, pulp consumption rose 3%. This increase has been fueled, in large part, by imports of these materials. Colombia - Consumption [ M3 ] Colombia- Trade Balance (Exports - Imports ) [ M 3 ] Source: FAO. Cálculos - Proexport

Smurfit Kappa Cartón de Colombia Industry in Colombia Company Hectares Species Uses Smurfit Kappa Cartón de Colombia 60.000 P. patula - E. grandis Pulp Pizano S.A. 12.000 Gmelina arborea Plywood Refocosta S.A. 7.000 Tectona grandis Pino caribea Lumber Finagro 8.000 . Source: CONIF

Permanent Income Tax Exemption Legal Incentives for Sector Investors Permanent Income Tax Exemption New forestry fields will be income tax exempt. This exemption has no term. Additionally, sawmills related to new forestry projects will be income tax exempt.

Forest Incentive Certificate (CIF) Legal Incentives for Sector Investors Forest Incentive Certificate (CIF) The CIF is the monetary subsidy that recognizes 50% of the investment for an introduced species and 75% for an investment in autochthonous species to finance the establishment and maintenance (from the second to the fifth year) of new forest plantations. The CIF is neither compatible with the tax benefits nor with other subsidies from the government.

Forestry Law Legal Incentives for Sector Investors The law defines and regulates forest plantations and agro-forestry systems for commercial purposes. (The Law does not include natural forests) CIF: Ministry of Agriculture will become responsible for the regulation of the Forest Incentive Certificate. (Removes the competition that had the Autonomous Regional Corporations) Registration: Once registered the forest plantation by the Ministry of Agriculture, commercial exploitation may not be hampered by any public entity. Free Planting, management, utilization and mobilization: The mention activities do not required authorization from the environmental authorities if related with Forest plantations. Timber (unprocessed wood): Established the possibility that the "Unprocessed Wood" serve as collateral. (Eg. bank guarantee)

PROEXPORT: INVESTMENT PROMOTION AGENCY WHICH OFFERS WORLD CLASS SERVICES TO NEW FOREIGN INVESTORS AND AFTERCARE SERVICES Tailor made information request. Contacts with public and private sectors. Set up of agendas when investors decide to visit to Colombia. Aftercare services for investors that are already established in the country. Assessment and improvement of business climate. Proexport: occupied position 16th in the list of the best Investment Promotion Agencies of the World according to the World Bank

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