Embed Size (px)
Citation preview
Colombia: 2002-2013Remarks by Alvaro Uribe November 2013
The Colombian evolution
Indicator 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Nominal GDP US$ billion
115 143 169 202 224 231 276 311 377 386
GDP Real Growth Y/y%
4.7 5.7 6.9 7.5 2.5 0.3 4.7 5.9 4.0 3.9
Nominal Fiscal Balance % GDP
-1.0 0 -0.7 0 0.2 -2.7 -3.1 -2.1 0 -1.0
Central Government Balance %GDP
-4.4 -4.7 -4.1 -3.4 -2.7 -2.3 -4.1 -3.7 -2.4 -2.4
Unemployment 12.1 10.3 11.8 9.5 9.0 12 11 10 9 9
Current Account Balance % GDP
-1.0 -1.3 -1.7 -2.8 -3.0 -2.2 -3.2 -3.2 -3.3 -3.4
Trade Balance US Million
-17 -14 -1.7 -2.9 -2.0 -45 -967 -93 781 -1614
FDI US Million 2.739 10.192 6.295 9.028 10.596 7.207 6.760 13.234 15.900 13.000
External Reserves 12.149 14.100 15.000 20.000 23.282 24.517 26.900 31.400 37.400 41.000
Government Debt % GDP
46.7 42.7 39.2 35.3 35.8 38.1 37.5 37.7 36.5 36.5
Uribe Administration Santos Administration
The triggers of the Colombian transformation
Colombia’s Picture in 2002
Security28.837 homicides
2.882 kidnappings
69 homicides per 100.000 habitants
1.645 terrorist attacks
350 mayors out of their municipalities
158 municipalities without police
EconomyAverage Economic Growth 1994-2001: 2.1%
GDP per Capita: US$2.377
Investment as % of GDP: 16.5%
Exports: US$11.975 million
FDI: US$2.100 million
Inflation: 6.99%
Fiscal balance: -3.2%
SocialUnemployment: 16.2%
Health Coverage: 25 million Colombians
Pension affiliates: 4.5 million
Poverty: 57%
Education Coverage: Primary 97%, High school: 57%, University: 24%
Mobil Phone Lines: 4.6 million
Internet coverage: 1.9 million
Eleven years ago Colombia was a fragile state…The Colombian Paradox: a long and stable democracy in a permanent threat from terrorist groups, drug dealers
and organized crime…
Colombia faced an Confidence Deficit
Confidence DeficitThe elusive quest for peace
Many governments exhausted all their political capital attempting to reach peace through political dialogue…the result was military strengthening from illegal armed
groups and a rapid growth in their criminal activities (68%
thought the country was going in a negative track)
Terrorist Groups (Guerrillas and Paramilitaries) had created a
sense of defeat in the Colombian people
Fear impacted in the Colombian people Mindset
The lack of investment
The drain of human capital
The sense of danger in Colombian roads
The expansion of massive kidnappings created an
emotional domino effect
Facing the problem
VISIONOur vision was to build a Comunitary State:
CONFIDENCE was our main goal
Without Confidence:
• No investment
• Unemployment
• Lack of opportunities
• Brain Drain (Young people wanted to leave without a return ticket)
Three main Policies:
Democratic Security
Investment with fraternity
Social cohesion
For the First Time a National Development Agenda had Security as a driver of Development (Security = Investment = Social Cohesion)
No more a debate between left and right
Policy Vision
WE INTRODUCED A COMPREHENSIVE POLICY FRAMEWORK…
Social Cohesion
Investment with
fraternity
Democratic Security
Confidence
Security as a Democratic Value
Security for allConfront all
criminal organizations
Security without
martial law
Security with freedoms and human rights
protection
Security in coordination
with the people
Investment Target
Security:
Human
Legal
Political
Sound Macroeconomics
IncentivesAccess to markets
Competitiveness factors:
•Infrastructure
•Regulation
•Connectivity
•Logistical chain
Social Cohesion
Highest quality in education
Universal healthcare
Access to Finance
Stable Jobs and entrepreneurial
spiritConnectivity
Security as a development cornerstone
Innovation in SecurityRecovering Security
1. Macro Vision and Detailed Follow up:• Daily commitment to monitor security in every region• Citizens had the President Mobile Phone Number
2. Early Victories :• Road caravans• Massive kidnappings are over
3. Strategic Force Integration• All Forces working together• Share success
4. National Informant Network• Citizens became active in denouncing criminals• Reward Mondays
5. Commander in Chief assumes responsibility• The Granda Story• Operation Fenix: Fire the Air Force Commander• Operation Jaque: The pressure for a humanitarian exchange and the final outcome
6. Smart Weapons:• The importance of strategic warfare
7. Extradition:• The decision to extradite the Paramilitary Kingpins
A viable country for long term investment
Structural Elements
Political Stability
Sound Macroeconomic Management
Human, Political and Legal Security
Competitive elements
Investment incentives
Access to markets (Canada, EU, EEUU, MERCOSUR, etc)
Free Trade Zones
Logistical advantages
Legal stability agreements
Comparative elements
Investment Grade
Stable institutions
Growing internal demand
Complementary
Human Capital
New World Class Sectors incentives
Strong financial system
We made Colombia a viable country for FDI due to a multiplicity of factors…
Social Cohesion was our ultimate objective
Social Cohesion
Education Coverage and
quality
National Learning System –SENA-
Conditional Cash Transfers
Access to Finance (Banca de
Oportunidades, Micro-Credit)
Financial Sector Downscaling
Public Utilities Coverage
Rural Development
Breaking the communication and technology
gap
Oil and gas a success case
In 2002 it was believed that by 2009 Colombia oil
production will not be able to attend national
demand
In 2003 the oil and gas sector restructuring was
designed
ECOPETROL undertook a strategy shift to become a
more competitive and professional corporation
The National Hydrocarbon Agency was created
Between 2002 and 2010 341 exploration and
production contracts were signed
In 2007 ECOPETROL was capitalized by 10%
through local capital markets. 486.000
Colombians bought shares
Between 2002 and May 2010 447 new fields were
explored
From 2002 to 2010 successful exploration
passed from 40% to 61.4%
Seismic exploration in the country (Onshore,
Offshore and 2 dimensions) increased by
more than 250%
Colombia is currently close to produce 1 million
oil barrels per day
Success triggers
Security: Investment, exploration
Government Reform: New ECOPETROL and ANH
Investment target policies: New players and new
exploration and production contracts
The case of the oil sector in Colombia: Change is possible
Results oriented administration
Indicator 2002 2010
Homicides 28.838 15.000
Kidnappings 2.882 228
Homicides per 100K Habitants
69 35
Terrorist attacks 1.645 250
Municipalitieswithout mayors
presence
350 0
Municipalities without police
158 0
Indicator 2002 2010
Average Economic Growth
2.1% 4.3%
GDP per Capita 2377 5300
Invest % GDP 16.5% 24.6%
Exports US$11.000
US$ 39.000
FDI US$2.100
US$ 7.000
Inflation 6.9% 2.5%
Indicator 2002 2010
Unemployment 16.2% 11.6%
Health Coverage 25.1 million 43.1million
Pension affiliates 4.5 million 7.1 million
Poverty 57% 38%
Education coverage (Primary, Hs, University)
97%57%24%
100%79.4%35.5%
Mobile phone users 4.6 million lines
41 million lines
• Reached the highest economic growth in more than 20 years
• The largest education, health and connectivity coverage in its history
• The largest poverty reduction in Colombian history
• The biggest FDI rates in history
• The lowest violence records in 30 years
• Expanded the middle class
• Highest exports in Colombian History
• Paramilitary groups dismantled
• FARC structure severely dismantled
• Per Capita income more than doubled
Our policy achievements generated a turning point
Colombia’s investment climate and public-private relations
Colombia has mixed results in Business Climate Indicators
Colombia in comparison to the Region best and worst performers…
Indicator Brazil Chile Mexico Colombia Peru Venezuela
Starting a Business (Proceadures)
15 8 6 9 6 17
Starting a Business (Days)
120 22 9 14 27 141
Days for Construction Permits
411 155 105 50 188 395
Hours devoted to pay taxes (Hours per year)
2.600 316 404 208 380 864
Days to enforce a contract
616 480 415 1.346 428 510
Enforcing Contracts (Cost % Claim)
16.5 28.6 32 47.9 35.7 43.7
Cost to export US$ per Container
US$1.730 US$745 US$1.420 US$1.770 US$860 US$2.590
Colombia in the Doing Business Report
Country DB 2013 DB 2012 DB2011 DB2010
Mexico 48 53 35 41
Peru 43 41 36 46
Colombia 45 42 39 38
Chile 37 39 43 53
Argentina 124 113 115 113
Uruguay 89 90 124 122
Ecuador 139 130 130 127
Brazil 130 126 127 124
Venezuela 180 177 172 170
Colombia is one of the best regional performers in the Doing Business Report. Its performance has been consistent over the last four years, although a reduction in the ranking has been the characteristic
Colombia risk perception
Colombia is perceived by the financial markets as a low risk country…
Public – Private sector relations in Colombia
Energy
Ecopetrol IPO ANH with a new partnership vision Mining Concessions
Infrastructure
Dorado Airport and others Second Generation road concessionsPort Development in Cartagena, Barranquilla
and others
Financial services
Banca de oportunidades (Corresponsales no bancarios)
Cajas de compensación Cooperatives
Security
Work with the private sector to expand telecommunication coverage
Partner with communities to denounce criminal activities.
Forest Guards Families
The Colombian government and the private sector have been working closely in strategic areas…
Characteristics of the Colombian entrepreneur
TrendsWell
educated professional
Highly prepared to
deal with adversity
Result based manager
Socially Conscious
Politically non radical
Policy awareness
Supports access to markets
through FTA’s
Colombia’s private sector leadership counts with valuable trends and principles…
Public –Private institutional governance
CharacteristicsOpen policy dialogue with representative
groups
ANDI and other representative groups actively
participate in policy discussions
Government executes market
oversight through specialized agencies
Government and private sector
discuss employment policies like
minimum wage, among others
The National training system is managed according to private
sector demand
Congress and the Judicial System have
respect towards privates sector
initiative
The relation between public and private sector has positive characteristics that favor a sustainable institutional environment…
Investor confidence policies 2002-2013
Investor Confidence
Tax Incentives
Free Trade Zones
Legal stability agreements
Human and infrastructure
security
Dialogue with investors
Constant Market development
reforms
Access to markets
Drop double taxation
agreements
Internal competitiveness
agenda
The relation between public and private sector has positive characteristics that favor a sustainable institutional environment…
Colombia’s current challenges and opportunities
Colombia’s main challenges
Security
Maintain Macro-Vision and Micro-Management
Continue dismantling all terrorist organizations
Continue dismantling drug cartels apparatus
Strengthen Citizen Security agendas with local authorities
Economic
Face new trends of currency appreciation
Maintain and increase FDI flows (Security, incentives and
stability rules)
Fiscal Policy to face new countercyclical challenges
Increase tax collections
Expand new trade markets through FTA’s
Social Cohesion
Fight labor informality and create quality jobs
Insure education and health quality
Expand vocational training coverage
Create Entrepreneurial Family Transfers program
Political
Judicial reform
Strengthen Democratic Center
Improve local institutional capacity
New law implementation (Victims and land)
Prevent the emergence of populist movements
Colombia faces challenges that will determine the future of institutional and investment climate…
Economic sectors with Growth Potential
Oil and gas: Colombia has been growing its production reaching 1 million barrels per day. New exploration will expand…
Mining: Colombia’s mining potential continues to grow expanding opportunities in sectors like
emeralds, gold, cooper, nickel, Iron, coal, among others
Agribusiness: Food demand in the world would trigger new opportunities in the Colombian rural
areas. These opportunities ought to be faced with a genuine agribusiness model that integrates small
producers and industrialized structures
Services and creative industries: The constant expansion of the middle class and the per capita income will boost the service sector and turn the
country into a larger consumer of creative content in T.V, Cinema, magazine, radio, arts, jewelry, design,
etc.
The Big Four Sectors
There are 4 sectors with a big potential among many other…
Opinions about specific sectors
Infrastructure
Requires a profound interaction with local capital markets in order to achieve long
term financing
Access to finance for infrastructure development is critical
Government Procurement must turn more expedite
The sector has a growing potential for investment, considering Colombia's growth and the need to improve logistical networks
Oil and mining
Environmental licenses must be more expedite without affecting effective
oversight.
Labor conditions and social investment are crucial for the sector to build a community in areas of operation.
Sector must become a leader in environmental standards.
Partnership agreements with the government are positive operational
conditions.
Creative sectors
Advertising services exports are 1.5 times bigger that tobacco exports
Creative services exports are bigger than natural gas exports
Arts and craft exports are bigger than electrical energy exports
Content consumption will boost advertising, music, animation and
other industries
Reflections on some market conditions…
Economic Growth
Colombia must reach a growth rate above 5% to achieve its social cohesion goals
Economic growth will require structural reforms in the taxing, investment, pension, judicial and labor system
Colombia requires and significant constant investment rate to expand markets and finance its social safety net
Certainty will be the mantra of long term investment. Certainty depends on the institutional architecture of the country
Peace talks in Colombia
1. Defining peace:
Colombian National Seal has two important concepts: Liberty and Order
A peaceful country requires the right exercise of individual liberties and a general environment of institutional and social order
In 2002 Colombia lacked both Concepts:
28.000 homicides
2.800 Kidnappings
1.645 terrorist attacks
350 Municipalities without mayors
Our Democratic Security Policy was built to restore institutional order and protect the exercise of individual liberties. It was a policy for peace not a policy for war. The great evidence is that by 2010 homicides were reduced 50%, kidnappings 80% and terrorist attacks by 90%
Peace talks in Colombia
2. Our Democratic Security Policy was based on Strong Hand and Big Heart We conceived Universal Demobilization for all members of illegal armed
groups
We confronted all illegal armed groups with the same determination and open the door for peace processes. Under clear conditions defined in the Peace, Truth and Reparation Law
The peace process with AUC was based on: Cease of illegal activities
International verification (OAS)
Incarceration
Anyone who did not cooperate or continued with illegal activities will lose the privileges and be extradited if any extradition request existed
No eligibility for those accused for crimes against humanity or crimes different than political delinquent practices
Peace talks with FARC
Prevent Big Failures today:
Negotiation without seizure of criminal activities
Negotiating Policy with weapons on the table clearly affects Colombian Democratic Values.
Allowing political participation to individuals responsible for crimes against humanity is a wrong message for our democracy
No imprisonment
Allowing dictatorial regimes that affect liberties and support FARC, as guarantors is a bad signal
Peace talks in Colombia
The Peace process that I would support:
What Colombia thinks
68% of Colombians are not willing to pardon crimes committed by
terrorist organizations
78% of Colombians are against no prison sanctions for terrorists
72% of Colombians are against political participation by terrorist
groups
My opinions
No impunity for crimes against humanity
Justice, peace and reparation
Immediate release of kidnapped people
Unilateral cease of criminal activities.
My opinions
International verification of disarmament
No policy agenda on the table
Reinsertion agenda
Colombia in the regional context
Regional opportunities
Policy Changes since 1980 match four range of opportunities
Population
Close to 600 million people
Average age between 24 and 28
Per Capita Income in PPP close to US$10.000
Poverty reduction
64% of our population is a expanding middle class
During the last decade 40 million people have left the poverty line
Life expectancy has increased from 65 to 75 years
Child mortality has been reduced by 50 per cent
Literacy rates are above 94%.
Mobile phone penetration has increased by 78 per cent
Internet access has increased by 33%
Healthcare coverage has increased by 50 percent
water and sanitation coverage has reached 80%.
Commodities in time of Demand
10 percent of the World oil reserves
6 percent of the World Gas reserves
Almost 50 percent of the World cooper reserves
50 per cent of the World silver reserves
13% of the World iron reserves
26% of the World fertile land
24% of the World beef supply
Bio Reserves
20 per cent of the World Biodiversity is concentrated in the
Amazon ring
Almost 50% of the World potable water
supply
57% of the world primary forest
The model of transformation
The strengthening of Liberal Democracy
The adoption of an institutional Framework in favor of foreign and
national investment
The construction of a sound and sustainable
social safety net
The expansion of export markets and the
commercial integration with the World (FTA’s)
A public administration driven by results
A sound Macroeconomic
Administration driven by fiscal and monetary
prudence
Better regulatory environment
Construction of strategic infrastructure
The consolidation of an innovation agenda
leaded by an improvement in
education
A well capitalized financial sector and the constant expansion of
financial services
The change process is a consequence of the consistency, congruence and sense of urgency that a group of countries have adopted as their policy cornerstone. Brazil, Mexico, Colombia, Chile, Peru and Uruguay represent 70 per cent of the region’s population and 75% of the regional GDP.
Today countries like Panama, Dominican Republic, Costa Rica, Salvador, Guatemala, Honduras, Paraguay, as well as most of the Caribbean States, are following that line of behavior
The two regions
The regional current Political Map is a “Tale of two cities” like the Charles Dickens Book… (The
ALBA and the non Alba Model)ALBA (Leaders: Venezuela,
Ecuador, Bolivia, Nicaragua and Cuba)
Anti-U.S
Anti-Free Trade
Lack of investment Confidence
Weak institutions
Political Insecurity
Ideology driven countries
Political Polarization
Modern Democratic Center Countries (Brazil, Colombia, Peru, Chile, México, Uruguay, Paraguay, Panamá, Republic Dominican,
Costa Rica, etc)
Cooperation with the U.S.
Pro Free Trade
Investment Confidence
Independent Institutions
Political Stability
State Long Term Policies and Mgt by Results
Organized Party Systems
The Democratic Center takes the lead: • Investment grade countries are in this Group: Mexico, Brazil, Chile, Colombia, Peru and Panama• Countries with more market access through FTA’S are in this group• Countries with more FDI are in this group• Countries with more Middle Class Expansion are in this group.• Better fiscally sustainable social programs: Chile, Mexico, Brasil and Colombia
Only the group of Countries in the Democratic Center will become the regional active participants of the Emerging Markets Boom…some of the ALBA Members will see some benefits, but without solid long term development agendas, they will face transitory profits…
But not all the socio-economic models are a success story…
The Alba failure
Venezuela
Inflation
Reduction in oil production
Brain drain
Social conflict
Insecurity
Private initiative in Jeopardy
Bolivia
Loss of citizen support
Quality of live deterioration
Lack of private initiative
Loss in private investment
Ecuador
Press Liberties in danger
Lack of long term private investment
Political stability at the expense of higher tensions
Oil driven political power
Nicaragua
Institutional deterioration (Reelection without
constitutional authority)
Corruption
Private initiative: Uncertainty
Shameful Chavistas
Bad policies are deteriorating the political and economic context in the ALBA Countries….
The regional challenges
Building Modern Democracies
(5 parameters)
Security
Freedoms and Private Initiative
Independent Institutions
Social Cohesion
People Participation
A dynamic Economic
transformation
Investment Target Policies
Maintaining Fiscal and Monetary transformation
Integrate commodity and knowledge based economies
Expand export markets
Create an Entrepreneurship culture (Innovation agenda)
Closing Social Gaps
Improve education (quality, coverage, vocational)
Insure Universal Healthcare
Formal Job creation
Access to Finance
Climate Change, Environment and
Energy Sustainability
Expand renewable sources
Install an energy efficiency conscience
Improve waste management
Protect the Amazon Ring
Reduce Co2 Emissions
Despite the changes that have been achieved some important challenges remain…
Colombia’s great opportunity
Institutional Stability
Political Center prevent radicalism
and populism
Economic Policy has been stable, credible and transparent
Pacific Alliance emerges as an
opportunity
Stable trade with new partners through FTA’s
Investment grade Low risk perceptionSolid financial
system
Fiscally viable social agenda
Governance guaranteed by
institutional independence
Colombia has conditions that make the country a stable, credible and profitable investment destination
Country Human Development Index - UNDP
‘02 ‘03 ‘04 ‘05 ‘06 ’07/‘08 ‘09 ‘10 ‘11 ‘12 ‘13
ARGENTINA 34 34 34 34 36 38 49 46 45 N/A 45
BRAZIL 73 65 72 63 69 70 75 73 84 N/A 85
CHILE 38 43 43 37 38 40 44 45 44 N/A 40
COLOMBIA 68 64 73 69 70 75 77 79 87 N/A 91
ECUADOR 93 97 100 82 83 89 80 77 83 N/A 89
MEXICO 54 55 53 53 53 52 53 56 57 N/A 61
PERU 82 82 85 79 82 87 78 63 63 N/A 77
VENEZUELA 69 69 68 75 72 74 58 75 75 N/A 71
2000 2001 2002 2003 2004 2005 2007 2010 2011 2012 2012
The Human Development Index for the largest economies in the region…
Country Global Competitiveness Report - WEF
‘02 ‘03 ‘04 ‘05 ‘06-‘07 ‘07-‘08 ‘08-‘09 ‘09-‘10 ‘10-‘11 ‘11-‘12 ‘12-‘13 13-14
ARGENTINA 64 78 74 76 70 85 88 85 87 85 94 104
BRAZIL 45 54 57 57 66 72 64 56 58 53 48 56
CHILE 24 28 22 27 27 26 28 30 30 31 33 34
COLOMBIA 61 63 64 58 63 69 74 69 68 68 69 69
ECUADOR 73 86 90 87 94 103 104 105 105 101 86 71
MEXICO 53 47 48 59 52 52 60 60 66 58 53 55
PERU 55 57 67 77 78 86 83 78 73 67 61 61
VENEZUELA 68 82 85 84 85 98 105 113 122 124 126 134
Colombia remains stable in the Global Competitiveness Index…
Country Doing Business – WB & IFC
‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13
ARGENTINA 93 101 102 112 118 115 116 124
BRAZIL 122 121 126 127 129 127 128 130
CHILE 24 28 36 40 49 43 33 37
COLOMBIA 76 79 66 49 37 39 44 45
ECUADOR 120 123 133 133 138 130 134 139
MEXICO 62 43 42 55 51 35 53 48
PERU 78 65 53 65 56 36 43 43
VENEZUELA 144 164 175 178 177 172 179 180
Colombia continues to be on the top 3 Latin American countries in the Doing Business Report…
www.alvarouribevelez.com
