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Monday, May 21, 2007
Perspectives
COUNTRY REPORT

Colombia Infrastructure Needs Attention

Colombian authorities need to confront the issue of investments in transportation infrastructure, so foreign commerce can be competitive.
Colombia needs to improve its infrastructure. Here the port of Buenaventura. (Photo: Sociedad Portuaria Regional de Buenaventura)

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Should the US Congress approve FTAs with Colombia, Panama and Peru? Results / Other Polls

BY JULIAN PALACIO

The growth of the Colombian economy is approximately 7 percent, one of the highest in Latin America.  Inflation is controlled reaching only 4 percent, one of the best figures of the region.  It has maintained the most traditional and reliable political stability of Latin America.

Security has improved considerably, which has brought large foreign investments to the country; this has resulted in an approximate 30 percent revaluation of the U.S. dollar during the last four years (although having a negative effect on exports).  In addition, an intangible, but powerful argument for Colombia: the capacity and recognized seriousness of the Colombian entrepreneur. 


Finally, something of which we must feel proud, is the presentation of an important U.S. company of macroeconomic analyses, Global Insight Inc., recently in Curacao, during the celebration of the 25th anniversary of its port authority. It showed that India and Colombia (within relevant proportions) are considered as of today the principal rising countries worldwide.

 

CHALLENGES


So what are the key challenges to Colombia?

 

Besides terminating with the guerrilla and drug traffic, fortunately greatly reduced (especially in relation to the guerrilla), the principal challenge of Colombia is to adequately prepare for the Free Trade Agreement with the United States. 

Colombian authorities and Latin American authorities, in general, are not aware of the need of confronting in the long term - in a serious and deliberate manner - the investments in transportation infrastructure so foreign commerce can be competitive. We are way behind in this sector, as has been certified by different studies prepared by important international organizations. 

If works are not developed as soon as possible and considered as a national priority, the future of Colombia and that of most countries of Latin America will be in serious difficulties. 

In the case of Colombia in particular, the situation is dramatic, as most of the industry is concentrated in the interior of the country at distances of up to 1,000 km from the ports, which requires an adequate transportation infrastructure and the use of multimodality (really behind in our country due to the deficient use of railroad and waterway systems) in order to become a fundamental factor for foreign commerce competitiveness.

 

OUTLOOK

 

Ten years ago, after the privatization of the principal ports of the country in December 1993, Colombia was a model in Latin America in relation to accomplished transformation and efficiency based on considerable investments that exceeded the most optimistic expectations of the government. However, as of today this efficiency has decreased in some of them.  In a term of six years the concessions will terminate and negotiations have not yet been reached due to the whims shown since then by the different administrations.  

Approximately ten years ago the concession of the port of Cartagena was extended for 20 more years (for a total of 40 years), thus putting in disadvantage the situation of the other ports due to the current unbalance with the initial concessions.  This has enabled Cartagena to make large investments, which added to a great efficiency, have caused this port to be considered the best port of the Caribbean, as was recently acknowledged by the Caribbean Shipping Association. 

In the meantime, the other ports (Barranquilla, Santa Marta and Buenaventura) have been forced to reschedule their funding plans, as the most costly and important investments would not be returned during the remaining term of existing concessions in 2013. 

A demonstration of the negligence of the last three administrations is that the present government is still undergoing negotiations after having completed its first four-year term and now almost one year into the second term.  This shows that if the President had not been re-elected (which was not considered in the Constitution when he was elected for the first time) the re-negotiation would have been in the hands of a different administration that would have started all over again. 

The government trying to make the best for the nation is thus causing a serious damage. The question would then be: Is the government’s business real estate or is it the development of foreign commerce?


Julian Palacio is the Latin American Coordinator for the American Association of Port Authorities (AAPA). He wrote this column for Latin Business Chronicle.

 

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