Miguel Gómez, executive director Bogotá Amcham
“We are surrounded by a region that is hostile to the private sector”

The biggest promoters of foreign investment in Colombia are called Chávez, Correa, Ortega y Evo Morales. The FTA with the United States may serve as an instance to resolve controversies and as a platform to promote investment

Hugo Prieto

The globalization of the economy has turned countries into commodities for investors. The power of attraction they have on business results from a combination of factors that end up becoming keys for decision making. Miguel Gómez, executive director of the Colombian-Venezuelan Chamber of Commerce (Amcham Bogotá), affirms that “the respect for the rules of the game and the stability of legal provisions” are fundamental pieces, just like “the alliances that governments may make with the private sector”. It is about creating a climate that favors economic stability and the development of corporate capacity”.
 
Colombia has become a magnet for foreign investment, because – among other things – its neighboring countries, mainly Venezuela and Ecuador, apply economic policies that are perceived as hostile to foreign investment. But, how competitive is the Colombian economy? The access of the private sector to the government is fluent and alliances are a growing reality, but the decisions of the judicial power and the infrastructure of the country, particularly in transportation, is 30 years behind. In practical terms, due to tax and other facilities, Colombia currently has a free trade agreement with the United States. But it wants the FTA as a way to promote long term investment and a space to resolve controversies that generate trust and contribute to the strengthening of the countries’ competitiveness.

–How important is the existence of a state of Law in the viability and development of a country?
–The institutional frame is vital for the development of a country and for its business climate. There are, at least, three elements that are fundamental in such institutional frame. The first is stability of the law, which includes justice transparency and efficiency, respect for the law. The second is the access of the private sector to the government; how easy, fluent, trustworthy, is the relationship of one with the other? How far can alliances be made? How much does the government listen and sees to its recommendations?   The third has to do with pure competitiveness and there lies a difficult factor: tax competitiveness. The profitability of investment projects is calculated before taxes and if those taxes are very high then, at the end, the net profitability for the investors becomes unattractive.

–What are the results achieved by Colombia?
–In reference to this tripod, I would believe that we stand well in government access; I believe the government has been particularly open to the private sector and this is a rule coming from President Uribe downwards. The President receives and listens to entrepreneurs; he pays attentions to what they say. It is not difficult to talk to the government, in any of its levels. I believe that, with respect to competitiveness, we have improved, particularly in telecommunications and a little in labor flexibility, but we are way behind in infrastructure (roads, ports, airports), where the country is probably 30 years behind. I would say that the balance is mixed. The tax rules are flexible and offer investment possibilities. But we are in a bad place with respect to legal stability. We are really, in an alert situation, because there is a skew between the economic world and the legal world. The Colombian judicial system fails and operates as if the economic rules were inexistent.

–If the judicial area is so skewed within that tripod, how can that situation be improved?
–One of Colombia’s challenges is how to achieve a structural reform of our judicial system, to guarantee not only more timely and agile justice, but more stable and transparent justice. There are times when the Court rules one way and then, months afterwards, it rules in the exact opposite direction. The jurisprudence has practically no value. The rules are interpreted capriciously by the different levels of justice. Thus, it is expensive, slow and generates a certain level of uncertainty which is disliked by entrepreneurs. But all of this is comparative. The biggest promoters of investment in Colombia are called Chávez, Nicaragua’s president Ortega and Evo Morales. We are surrounded by a hostile region that is hostile to the private sector. Colombia shines as the only one that says: I am interested in foreign investment. We have achieved a record in the past years, in part because there is nowhere else to go nearby. Many good things have been done, but there is still a lot to do.
  
–Has the boom been a mere matter of opportunity?
–Of course. I do believe that the Colombian situation would have been different if, let’s say, this populist and demagogic wave had not befallen on our neighbors. It would have been much harder for Colombia to have the investment levels it has achieved. Competitiveness depends on a word that is today seen through a very narrow lens, but has a much wider range, which is security. Security means not only ending muggings, robberies and kidnappings. Security is the decrease of risks. If the laws are stable, then there will be less risk and more security for business.  

–Wouldn’t a government that is open to the concerns of entrepreneurs have the mechanisms to update the physical infrastructure of the country in a plan that the Colombian society can additionally, perceive and evaluate as positive?
–That is one of the few visible spots of President Alvaro Uribe’s government. There was delay in the design of an infrastructure policy. In that, I believe there is wide consensus in the country. We lost time; we lost years when the money was cheap. There was much liquidity worldwide and probably, it would have been easy to finance some macro infrastructure projects that may have helped modernize the country. 
 
– Will the projects be costlier now?
–It will be much more difficult. But the other element to be taken into account is that Colombia, its priority and its concern has been the security issue. Investment in security is expensive, it is not an investment that can be made in a year; it has to be kept updated and all that has been done for security in the past years has required very significant public resources. Then the physical space was not ideal. But nevertheless, I believe that Uribe was late in making those decisions.

–To which projects are pending investments headed?
–Colombia is a country dominated by mountains and therefore, roads have been made from north to south. The idea is to communicate the country from east to west, where communications are very bad. Part of the national integration includes that we stop having, let’s say, an Andean economic structure so that we have one that takes into account getting to the Pacific. That we focus more on the Pacific, having been a country that has looked to the Atlantic. Another issue is to achieve the integration of the eastern plains and the Amazonia to the national development. More than half of the country is completely abandoned and does not have any economic development.  

–Take advantage of the geo-strategic position of the country?
–Our problem is that this is in the geography books. Colombia could not have a better location. But the truth is that the Pacific coast has not been much exploited. We are, economically speaking, a Caribe country. We do business with the Caribbean.

–Has bilateral trade with the United States decreased? Has it fallen 25%?
–Exports have fallen, in part because of the global economic situation.
 
–Are these exports of raw materials?
–Colombia exports to the United States, basically, basic products: carbon, oil; some light manufacturing (textiles and confection); it has two important sectors in the agricultural area: bananas and flowers, and all those sectors have been hit by the crisis. The decline of the North American economy has demanded less oil, less carbon and less nickel, which are important products in the commercial balance. The crisis of the textile sector is prior to and has become aggravated with the fall of the orders placed by large U.S. stores. Additionally, it has been further aggravated by the crisis with Ecuador, more for political reasons.

–How to incorporate other productive chains to the trade with the United States?