Colombia Seeking New Friends

Special Advertising Supplement Colombia Seeking new friends As Washington moves closer to ratifying the long-stalled free trade agreement with Colombia, the Latin American nation — buoyed by peace and a resurgent economy — is looking further afield for additional commercial links. Huge opportunities in energy, tourism, ITC, natural resources and infrastructure are attracting record investment from around the world. Special Advertising Supplement Spreading the good news Colombia, named in honor of the European discoverer of the New World but for many years shunned by investors, is today emerging as one of the brightest development hubs in Latin America. Gradual victory in the long struggle against Marxist-Leninist guerillas turned murderous drug lords has led to a dramatic improvement in security, just when several years of sound economic policy are fueling a business boom. The International Monetary Fund, in its latest “World Economic Outlook” report, predicted that Colombia will enjoy economic growth of 4.6 percent this year, to the now-peaceful city streets, and ser- try’s most important commercial part- followed by 4.5 percent a year through vice sectors like finance, communications ner. Officially dubbed the U.S.–Colombia 2016. Not eye-popping by Chinese levels, and ICT are exceptionally vigorous. Trade Promotion Agreement, the deal was perhaps, but twice the average for ad- Little of this would have happened signed by both governments in November vanced economies and slightly better than without Colombia’s significant progress 2006 and ratified by Colombian legislators regional powerhouse Brazil. And in Co- in countering the FARC guerillas. As de- the following year. However, it stalled in lombia, inflation is firmly under control. fense minister under President Álvaro Washington, where some legislators com- “We are the third-most business- Uribe, Santos led a crackdown whose plained of human rights abuses, including friendly country in the region and the success and popularity helped him win violence against trade unionists. first in terms of investor protection,” said the presidency. Current Defense Minis- Colombian Vice President Angelino President Juan Manuel Santos Calderón, ter Rodrigo Rivera Salazar said the coun- Garzón, himself a prominent former la- a Harvard-educated economist, citing try had achieved a “truly outstanding bor leader, called such complaints “an the World Bank’s “Doing Business 2011” decade” in confronting its problems, in excuse, because Colombia now has a very report. “Our foreign direct investment in particular the guerillas. strong policy with respect to the promo- the first three months of 2011 was around “We haven’t finished yet, but today the tion and protection of human rights. It US$3.7 billion, the best ever for the first security challenge from narco-terrorists includes labor rights and environmental quarter, giving us grounds to expect a is concentrated in very rugged jungle rights, protection for the lives of union record year, and exports through May areas a long way from major population members, and the defense of trade union- were up 36 percent in the same period centers,” Rivera said. Cocaine produc- ism as an institution of democracy.” last year.” tion has been cut by half; homicides are at Colombia was not paying lip service in Stalwarts like coffee, natural gas, coal a 32-year low. a bid to win U.S. congressional support, and other minerals are doing well; sub- One of the biggest unknowns has been a he said: “We have defined this as a per- stantial long-needed investment is flowing long-awaited free trade agreement (FTA) manent policy of state; it will not change into infrastructure; tourists are returning with the United States, by far the coun- even if the FTA does not go ahead.” 2 Colombia Special Advertising Supplement Q&A Juan Manuel Santos “Colombia is a shining star in Latin America, and Latin America is a shining star in the world.” There’s a feeling these days that at last Colombia has damage. Recently we have been dedicating time to a positive international image, that the “Colombia doing what few countries have accomplished, which brand” carries connotations of economic growth and is enacting reforms that will ensure prudent financial competitive business. People say that “Colombia’s management, preventing the federal government Garzón has been one of Colombia’s time has come.” Would you agree? from increasing the public debt above certain pre- point men in Washington, arguing the Yes, I would, and I think the great number of foreign established limits and requiring the government to case with lawmakers: “The U.S. isn’t analysts and businessmen who come here every day, save so that we are prepared for possible crises. doing Colombia any kind of unilateral interested in learning more about our country and favor,” he said. “The FTA is a win-win investing in it, would also agree. In a way, we could say What is the status of relations with the United States, that the stars are aligned over Colombia. which is Colombia’s main trading partner? agreement, although I would almost dare Regardless of the FTA (U.S.–Colombia Trade Promotion to say that given the current state of both To what do you attribute this change Agreement) process, relations are excellent. I have our economies, it is probably even better in international perception? spoken several times with President Obama and we for the United States.” Well, to a number of things. Obviously the have broadened our agenda; it’s not just drugs, it The U.S. International Trade Com- improvements in security and our democratic stability, includes issues of mutual interest like environmental mission calculated that the FTA could but also our track record of honoring our international protection, sustainable development, education, boost U.S. exports by US$1.1 billion a year. obligations, the laws we have adopted to ensure technology transfer, disaster prevention, and the Sergio Díaz-Granados Guida, Colom- accountability in the management of public finances, promotion of democracy and human rights. Today bia’s minister responsible for commerce our good relations with our neighbors and the positive we have the broadest agenda in our history with and industry, said the U.S. FTA was a top role we play in the international community. the United States. priority, but Bogotá would not wait for- What are your concerns as you lead the country Why should investors consider Colombia rather than ever. The country already has preferential at this excellent moment? Are there any pitfalls elsewhere in the region? access to markets containing 450 million you must avoid? Because Colombia offers a stable and growing people; the target is 1.5 billion. Free trade The key is to remember long-term goals and not focus economy, a strong and vibrant democracy, excellent and investment protection deals are at exclusively on the immediate situation. We learned human resources, natural resources of all kinds, various stages of negotiation with Can- our lessons with the economic crisis at the end of and the legal security and business environment to ada, Switzerland, Turkey, South Korea, the 20th century, with the result that when the latest ensure the safety of their investments. And we have a Chile, Mexico, Peru, India, China and the crisis hit us, we had a very robust financial system that characteristic that may be very boring in people, but is Mercosur trade bloc, Díaz-Granados said. withstood the international turmoil almost without very attractive for investors: we are predictable. Colombia 3 Special Advertising Supplement Coal, offshore hydrocarbons, electricity and gas — Colombia has an abundance of energy sources, and there’s plenty of opportunity for additional investment. Colombia in numbers Energy and natural resources Company comments: Colombia wants to develop its natural • “There will be a lot of offshore gas • Full name resources, so it’s playing catch-up after years prospection between 2012 and 2014. Republic of Colombia; independent since 1810 of underinvestment in basic infrastructure. We’re talking about new high-risk • POPulatiOn “We are attracting the interest of ma- areas, but Colombia has great poten- 44.7 million; third biggest in Latin America jor national and international investors to tial.” — Abilio Ramos, general manager of • area carry out studies and prepare major proj- Petrobas Colombia 2 1.14 million km ; fifth largest in Latin America ects,” said Transport Minister Germán Car- • “Colombia has huge hydroelectric • CaPital dona Gutiérrez. “There’s a huge backlog.” potential; just 9 percent has been de- Bogotá; pop. 7.4 million Among the government’s top priorities are veloped so far. We are evaluating stock • GDP a second airport for Bogotá, concession of the markets in the U.S., Canada, Peru and US$285 billion (2010 official exchange rate); Barranquilla airport, dredging the access to Chile to raise capital, via debt or equity.” fifth largest in Latin America Buenaventura Port, and a railroad between — Luis Fernando Rico Pinzón, general Buenaventura and the Magdalena River. manager of Isagen 4 Colombia Special Advertising Supplement Case Colombia has a thriving private sector with several large, family-controlled multi-sectoral conglomerates, but there are also successful foreign 5 Studies investors. Following are brief pen-pictures of some leading players. Avianca 2 Germán Efromovich Bogotá-based Avianca is one of Latin America’s largest airlines, with a fleet of more than 60 planes. Now in the process of joining Star Alliance, it flies throughout Latin America with connecting service to Miami, Fort Lauderdale, Houston, Washington, D.C., New York and Barcelona. Germán Efromovich, a Bolivian-born Brazilian entrepreneur, bought the struggling company in 2004 and turned it around, merging with Central American carrier TACA and OceanAir, a regional Brazilian airline that he had started earlier. Now rebranded as Avianca, 1 OceanAir is a growing player in the region’s largest airline market.

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