By Martin Hutchinson, Global Investing Strategist, Money Morning January 27, 2012

What's an investor to do?...

The Eurozone is about to collapse. The United States is struggling out of the deepest recession since World War II. And the IMF forecasts global growth will drop from 5% in 2011 to 2.6% in 2012.

How about investing in a safe haven far away from all of these troubles - one where you can actually watch your money grow?

I have found one in Colombia. Let me tell you why.

It is because Colombia is no longer a place controlled by drug kingpins or ripped apart by civil war. Colombia is a country on the comeback.

This revival began in 2002 when former president Alvaro Uribe decided to take on both the leftist guerillas and the drug barons. Since then, his successor Jose Santos has followed up on those policies, and they have worked.

In 2011, Colombia's homicides dropped by 5% to 14,746 and its murder rate dropped to 33 per 100,000 of population.

Admittedly, that's still five times the U.S. level, but these things are relative - it's half the level it was just four years ago.

Foreign investors have noticed, and last year, foreign investment in Colombia was up 56% to $14.8 billion.

Colombia Beats Brazil
In fact, according to the World Bank's "Doing Business" survey, Colombia ranked 42 out of 183 countries.

That was near the top spot in Latin America and far above Brazil's appalling rank of 126. Only Chile was higher with a rank of 39.

Stock market investors have noticed this, too - in the second half of 2011 Colombia had $4.9 billion of initial public offerings, the most in Latin America - and yes, again ahead of Brazil!

On the macroeconomic side, Colombia is sound, with public debt at just 45% of gross domestic product (GDP), a modest budget deficit, inflation just over 3% and the central bank base rate at 4.75% -- no Ben Bernanke nonsense of zero interest rates!

Colombia has also gotten a boost by a surge in oil production, with exploration now possible in areas that had been "no go" for foreign investors for decades.

In November 2011, oil production was 920,000 barrels/day, up 17.5% from the previous year. Oil and minerals were responsible for 82% of Colombia's 2011 foreign investment, so the potential for investors is immense.

However, the real reason why Colombia is so attractive is the "catch-up" that needs to happen with its neighbors. Fifty years of civil war have left its infrastructure badly in need of an update.

For example, there is no railroad across the Isthmus of Panama - vital for shifting exports to the West coast for on-shipment to California and China. There is not even a decent road along the northern coast - you have to make a huge detour through Medellin.

But with China's thirst for minerals, there is ample opportunity for deals to get the infrastructure built. As that begins to happen, Colombia's per capita income - currently only $9,800 (ranked 110 in the world) compared with Chile's $15,400 - will catch up fast.

How to Invest in the Colombian Comeback
That's the beauty of Colombia's emerging position, and what makes it a special opportunity for investors.

Here's why.

Colombia's people are considerably poorer than they should be, given its decent business climate. So the forces pushing its GDP upwards are strong.

Third-quarter GDP growth in 2011 was 7.7%, and the overall year's growth is expected to be 6%. Of course, another demand crisis for raw materials would hurt Colombia. But even if its worldwide growth is merely sluggish in 2012, it won't be sluggish in Colombia.

Finally, the U.S.-Colombia Free Trade Agreement finally comes into force in the first half of this year, which should boost growth even further.

With any kind of decent global economy, Colombia should see several years of growth above 5% with low inflation and no balance of payments crises. There are few places you can say that about.

If you want to invest in Colombia, the best broad fund is the Global X FTSE 20 Colombia ETF (NYSE: GXG). This is a $120 million fund, but its annual expenses are a reasonable 0.83%. However, with a price/earnings (P/E) ratio of 16 times and a yield of only 1.16% GXG isn't especially cheap.

Alternatively, you can go straight to the source of Colombia's current growth and buy Ecopetrol S.A. (NYSE: EC).

Colombia operates a much more friendly investment environment than other Latin American oil exporters like Venezuela, Mexico, and even Brazil, so foreign competition in Colombian oil exploration keeps Ecopetrol efficient. That also prevents the government from using Ecopetrol as a piggy bank.

Ecopetrol also offers investors a very nice 4.6% dividend yield. While on a trailing earnings basis that my look expensive at 22 times, you have to remember that the company's output is growing rapidly. And with oil prices around $100 per barrel, its profits are doing even better - so on an estimated prospective P/E ratio of 11.8 Ecopetrol is much more reasonably priced.

Either way, take a serious look at Colombia for its energy and mineral resources. Its emergence from darkness makes it a unique safe haven.

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