Over the course of 60 years of diplomatic ties, the bilateral relationship between Colombia and Canada has never been as strong as it is now, nor has it had as extensive an agenda. Yet, there are still many new opportunities, such as in large infrastructure projects, that shouldn’t be missed.
When it comes to economics, the numbers are impressive. Bilateral trade reached an all-time high of more than US$1.5 billion for 2012. Indeed, Canadian exports to Colombia rose by more than 19 percent in 2012, bringing the total to more than US$1 billion. Canada imports mainly coffee, oils, coal, roses and other cut flowers, cane sugar and beet sugar and chemically pure sucrose and fungicides. From Canada, Colombia’s main imports include wheat, potassium chloride, newsprint, lentils, aircraft, medication, motor vehicles, barley and machinery.
In addition, Canadian investments in Colombia are now present in all of its provinces, covering oil and gas, mining, banking and many other services. Canadian companies keep coming because they find a country with many similar priorities for business: Free enterprise, free trade, respect for the rule of law and predictable rules.
The fact that Colombia has been applying sound macro-economic policies, including keeping inflation under control, honouring public debt obligations and having an independent Central Bank is one strong reason. The fact that the country is a much safer place than it was is another compelling one.
President Juan Manuel Santos, who, as minister of defence in the previous government, delivered the hardest blows to the guerrillas, has, since becoming president, implemented a security agenda that has reduced the number of homicides and serious crimes to levels not seen in decades. His government’s historic land restitution and victims compensation law, along with the peace process he began with the guerrillas to end the armed conflict, has put Colombia on a new path towards prosperity.
Besides the opportunities that exist in the mining, energy, tourism and finance sectors, there are new opportunities arising in Colombia’s infrastructure sector due to recent changes in the regulatory framework of public-private partnerships.
The 2010-2014 National Development Plan identifies transportation infrastructure as a strategic engine for growth and estimates that at least US$35 billion is required in private investment in infrastructure between 2010 and 2014.
President Santos’s national development plan identifies public-private alliances as a key element for the country to be competitive. Currently, there is a wide gap in public, economic and social infrastructure due mainly to previous: (a) deficient structuring of projects (b) weakness in the legislative framework for infrastructure projects, and (c) lack of adequate incentives allowing long-term investors to offer quality services.
The Santos’s government has implemented a new framework for projects, based on public-private partnerships (PPPs) for construction, operation and maintenance of the economic and social infrastructure of the country. That includes transportation, energy, water and solid-waste management, hospitals, schools, jails and public libraries and buildings.
The first public initiative for PPP scheme projects was announced in February 2013. As of this date, the relevant Colombian agencies have tendered invitations to prequalify for five large public initiative PPP transportation projects. The first four projects involve transportation concessions that are divided into four groups of highway areas: centre-south; centre-west; centre-east and north. The fifth PPP project is the recovery of the Magdalena River for navigation of larger vessels. Just in transportation alone, the estimated total investment required is $24.4 billion in order to improve or build more than 8,000 kilometres of national roads, nearly half the current total of 17,000 kilometres.
An additional large number of major projects will be launched during 2013 and 2014 for highways, airports, rail, urban mobility, real estate, large penitentiaries, urban developments and social infrastructure.
As Colombia strives to diversify its exports and improve its competitiveness, under President Santos, the country has finally made a long-term commitment to develop its infrastructure. The PPP mechanism was chosen as the ideal public contracting system that, on one hand opens opportunities for investors who have expertise in large infrastructure, and, on the other, provides the government with a financially sound mechanism to pay for the required investments.
The Colombian governmental agencies in charge of implementing PPPs should have solid partners in the Canadian companies that already enjoy broad and recognized experience in these kinds of projects. Colombia will develop better institutions and practices, significantly improving the country’s infrastructure, while the Canadian private sector will continue to benefit from its investments in our country. This could be the beginning of a win-win relationship in the infrastructure sector.
Nicolas Lloreda-Ricaurte is Colombia’s ambassador to Canada. Reach him at 613-230-3760 ext. 222.