News
Booming Colombian tech sector driving demand for
M&A and tax advice
Law firms training lawyers to
give them the technical and
legal skills to cope with the
demand being generated by
the $6.8bn industry
Colombia’s booming technology
sector is generating a substantial
increase in M&A, regulatory, tax
employment and competition
work for the nation’s law firms.
Statistics from the International
Data Corporation showed that
the country’s IT industry grew
five-fold during the period
2003-15 and is now valued at
$6.8 billion, according to some
estimates. Initiatives such as
the government’s Vive Digital
programme – which aims to
increase access to broadband
internet services – have led to
law firms providing lawyers with
additional training to meet the
demands of the digital economy.
“Internet penetration in
Colombia has substantially
increased, largely thanks to
Vive Digital”, according to
Enrique Gómez Pinzón, a
partner at Holland & Knight in
Bogotá. Indeed the Colombian
government is committed to
using technology to unite the
country’s disparate communities,
says Sergio Michelsen, partner at
Brigard Urrutia. “The Colombian
government recently reaffirmed
its commitment to promoting
technology as an instrument for
bridging the digital gap between
urban and rural populations,
Sergio Michelsen, Brigard Urrutia
6
Diego Cardona, Philippi
Prietocarrizosa Ferrero DU & Uría
(PPU)
and the wealthiest and poorest
citizens,” he says.
In addition the Colombian
Free Trade Zone regime (which,
includes ‘Special Economic Zones
for Exports’ in the cities of Cúcuta,
Buenaventura, Valledupar,
Ipiales and Tumaco) has played
a large part in attracting foreign
investment to the country’s IT
sector, says Michelsen. He adds
that Colombia’s technology sector
is also attractive because there
are few barriers to entering the
market, as well as incentives
for companies that establish
operations in the country and
“tax benefits for those adopting
digital technologies”. Michelsen
adds that such an environment
is exemplified by the Colombian
Free Trade Zone regime,
which is “the most successful
mechanism in attracting foreign
direct investment for IT services
projects”. He also says that
Colombia’s highly qualified
workforce is another factor that
is encouraging foreign investors.
“Colombia has been ranked
as having the highest skilled
workforce in South America for
IT services,” Michelsen says,
which has resulted in significant
investment from tech giants
including Microsoft, Facebook,
Amazon, Apple and Google.
There is significant interest
from investors in Mexico, Peru,
Chile, China, Japan, as well as a
number of European countries,
according to Gómez Pinzón. He
• THE LATIN AMERICAN LAWYER • December 2018
adds that this trend is generating
a wide range of opportunities for
law firms in different practice
areas. “There are companies
looking to invest directly in the
country, which generates M&A,
regulatory, corporate, taxation,
labour, intellectual property
and competition work,” says
Gómez Pinzón. “Companies
are also increasing their exports
to Colombia, which generates
international trade work.”
Unsuitable regulatory framework
Meanwhile, Diego Cardona,
partner at law firm Philippi
Prietocarrizosa Ferrero DU
& Uría (PPU), says that,
in addition to traditional
businesses undergoing digital
transformation, new business
models, products and services
are being developed that operate
exclusively on a technological
basis and the implications,
from a legal standpoint, can be
complex. “These new business
models and digital interactions
present legal challenges that
traditional regulations may not
be fully equipped to address,”
Cardona explains. “Regulations
in Colombia are progressing and
adapting to the digital economy,
but clients still face many legal
challenges in adapting to the
digital landscape.”
In addition, law firms
are undergoing a process of
digital transformation, and are
consequently devoting resources
to training lawyers in the
technical and legal skills required
to respond to the challenges
presented by the digital economy,
says Cardona.
Michelsen adds: “Law firms
are not just strengthening their
capabilities, but also forming
task forces by industry – such as
fintech, intermediation platforms,
social networks and OTT services
– to meet specific client needs
– they are integrating different
practice areas so that knowledge
can be combined and leveraged in
a more efficient manner.”
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