FOREIGN INVESTMENT FLOWS INTO LIBERALIZED ECONOMY
The 1991 law kick-started a new era of increasingly open business

LUIS CARLOS VILLEGAS President of ANDI

Colombia has historically been a stable investment environment with major commercial ties to the U.S., and foreign investment flows in 2001 were up to $4.3 billion. The recovery of investor confidence in the country is based on a strong government leadership that also allows for input from the private sector, according to Mr. Luis Carlos Villegas, president of the National Association of Industries (ANDI).

“We can certainly refer to 2003 as a recovery consolidation year. This is partly due to the implementation of serious economic policies since 1998 and also the leadership of the President, which represents a vision where the private sector and the government both take part in policy making,” he explains.

Colombia’s successful transition from a highly regulated economy to economic liberalization began when Law 9 was passed in 1991, which included tariff reductions, financial deregulation, privatization of state-owned enterprises, and adoption of a more liberal foreign exchange rate. As a result, almost all sectors are now open to foreign investment. Mr. Santiago Montenegro Trujillo, President of D.N.P., the National Planning Authority, says that investment has been further boosted by the government’s tough stance on national security issues, which has managed to decrease the cultivation of coca crops -the principal source of funding for rebel groups, by 30% in the past year.

MARTHA PINTO DE DE HART Minister of Communications

One of the top sectors for investment at the moment is telecommunications, which has been growing at a higher rate than the overall economy. In February 2003, the Colombian government issued a Personal Communications Services (PCS) license, effectively ending Colombia's mobile duopoly and opening the door for future competition. Furthermore, a new telecommunications law is expected to be passed soon. Minister of Communications Martha Pinto de De Hart comments, “Above all, the new law will offer complete juridical stability and equal conditions for all investors, while abolishing fiscal criteria.”

Enormous energy potential powers international presence
Energy is one of the largest and most dynamic sectors of the Colombian economy, accounting for nearly 50% of the country’s total exports. Large untapped reserves of petrol-eum, an abundance of low-sulfur coal and proven natural gas reserves of 7 trillion cubic feet (Tcf), with potential for 70 Tcf, make the country strategically important for the United States, currently Colombia’s largest market for oil and coal exports. New investment conditions in the oil sector have increased the international presence in the country over the last few years and continue to attract new players. President of the state-owned oil company Empresa Colombiana de Pet-roleos (Ecopetrol), Mr. Isaac Yanovich, says that the company is eager to create a competitive market and is urging further deregulations in the sector. Mr. Luis Ernesto Mejía Castro, Minister of Energy and Mines, is hoping that the new regulations will lead to more active exploration and production in the country. He states, “Members of the government and the industry are reviewing measures to increase exploration. During the next four years, we want to explore 4,350 new miles and add one billion barrels to Colombian reserves.”

SEGUNDO ANTONIO GONZÁLEZ General Manager of Omimex Colombia INTERVIEW

Omimex, a Texas-based petroleum company that has been operating in Colombia since 1994, has agreements with Ecopetrol for fields in the middle Magdalena and operates a pipeline between these fields and the Barrancabermeja refinery. The company is currently producing 14,000 barrels per day and is set to invest US$150 million in a new platform at the Nare site. General Manager Segundo Antonio González (INTERVIEW) says that the government’s new scaling regulation, which makes the production of heavier oils more feasible, has been the driving force behind this new development. He adds, “This new policy makes the hydrocarbon business in Colombia very competitive and the result has been the creation of more than 40 new joint venture contracts. The climate that has been generated is very favorable and positive for the sector, and I am convinced that in the next few years we will have new discoveries.”

Tourism makes wide inroads in paradise investment initiatives
Tourism is currently registering some of the highest foreign investment growth levels in Colombia. Pacific and Caribbean coasts and islands give way to lush interiors that include the Andes Mountains and parts of the Amazon jungle. A vast river network irrigates and floods the country’s valleys and tropical plains, and the country rates third in the world for diversity of living species.

According to the director of the National Tourism Agency (NTA), Mr. Gustavo Adolfo Toro, the success of President Uribe’s national security program is the driving force behind the sector’s sudden revitalization. ‘Vive Colombia’ was the slogan for the recent successful campaign by the NTA to encourage local tourism, increase road safety, and prove to Colombians that they can once again move about freely within their own country. The success of the project now has industry leaders looking to expand to regional markets in Venezuela and Ecuador. Mr. Toro believes that the outlook for the future is bright. He states, “Tourism is a very promising sector in Colombia, especially as we succeed in strengthening the security issue.”

ARMAND VARGAS Colombian Operations Manager of Accor Group

WALTER STRUB Resident Manager of Hotel Santa Clara

One of the largest international presences in the sector is the French group Accor. The company operates various hotels throughout Colombia and Mr. Armand Vargas, Accor’s operations manager for Colombia, agrees that government efforts are paying off. He explains, “The fact that the roads were opened through the ‘Vive Colombia’ campaign has had a tremendous impact on our occupancy rates and has also improved coastal tourism.” The crowning jewel in Accor’s Colombian acquisitions is the magnificent Hotel Santa Clara in Cartagena de Indias. A restored Clarist convent provides the magnificent setting for this luxurious hotel that offers its guests the utmost in personal comfort. Hotel manager, Mr. Walter Strub, says that Santa Clara’s attractions only pale in the face of those of the city itself. “Cartagena is a unique destination in the Caribbean. Its historic beauty, gastronomy, Caribbean rhythms, and the warmth of its people are unforgettable.”