Optimism high for Colombia, post Uribe
When Juan Manuel Santos takes over as Colombia’s president in August, the Harvard-educated economist will continue many of the same pro-business, pro-U.S. policies of President Alvaro Uribe that helped transform their South America country into a magnet for foreign investment.
But Santos, 58, plans to boost emphasis on creating jobs and modernizing the economy, now that the two-term Uribe has wrestled down Colombia’s once severe security problems — with Santos’ input as his former defense minister.
Those are among the upbeat conclusions from participants at WorldCity’s Global Connections event held June 25 on the topic, “Colombia Post Uribe: Predicting the Impact on Business.”
“I’m very optimistic,” said attorney Michael Diaz, summing up the mood at the breakfast. Miami-based law firm Diaz Reus & Targ has opened an affiliate office in Colombia and sees growing interest in business here from companies in China, the Middle East and beyond.
Just how much Colombia has improved in eight years under Uribe was clearly illustrated by Carlos Garcia, a Colombian who is president for Latin America of healthcare products company Novartis.
A decade ago, two top managers of Novartis were kidnapped by the FARC guerillas and held for more than a year, Garcia said. But this year, the Swiss company opened a new “green” office building in Colombia and flew in the company’s chairman of the board for the debut.
“For him to go to Colombia would have been absolutely unthinkable eight, seven or five years ago,” describing the hard-working Uribe as “perhaps the greatest president the country has ever had.”
Santos inherits challenges in his nation of 44 million people, of course.
Political tensions with Venezuela’s socialistic President Hugo Chavez have prompted a dramatic decline in Colombia’s vital trade with its eastern neighbor. As a former trade minister, Santos likely will accelerate efforts to diversify Colombia’s trade, said economist Manuel Lasaga, president and co-founder of business consulting group StratInfo of Miami.
“Unfortunately, the United States has not been paying much attention to this hemisphere and isn’t signing the free-trade agreement with Colombia” already pending for years, Lasaga said. “So, the U.S. is not leaving Colombia much option but to pursue free trade agreements with other countries.”
The U.S. Congress is not likely to approve the Colombia accord this year, amid concerns over labor union rights in Colombia and over U.S. trade policy in general, Lasaga and other participants said.
In contrast, Canada this month approved its pending free-trade agreement with Colombia, potentially giving Canadian exporters more access to Colombia’s market than U.S. sellers get. Canada’s Senate gave approval, after adding a provision that the administration report yearly to lawmakers on human rights and the environment in Colombia, said Canada’s Consul in Miami Louise Leger.
“The way to a better tomorrow is to open up markets and not to hide behind protectionism,” Leger told the group of more than 60 people gathered for the breakfast event in Coral Gables.
Already under Uribe, Colombia has become more aggressive about sales to the United States. It now ranks as Miami’s second largest trade partner, taking a spot recently held by Venezuela, said Ken Roberts, president of WorldCity. Last year, Colombia traded $5.6 billion in goods with South Florida, buying mainly high-tech goods and sending Miami more than $1 billion worth of gold. Gold became Miami’s No. 1 import from any nation last year, trade data shows — as investors sought security in a global recession.
Through April this year, Colombia’s trade with South Florida rose even more — up 21 percent from last year to top $2 billion. And the trade outlook seems promising, if the new president can fulfill plans to attract more foreign investment in mining and other export activities, Roberts said.
Santos is keen on foreign investment and on exports largely to create jobs. Colombia reported 12 percent unemployment in April, the highest rate in Latin America.
Jobs and trade could grow faster with improved infrastructure, especially more modern highways connecting major cities, said Michael Aleles, director of business development at PriceSmart. It costs more to transport a container from Colombia’s coast to major cities inland than it does to ship it from Miami to Colombia, Aleles said.
A Santos government can afford to spend more on infrastructure, economist Lasaga said. Colombia’s budget deficit is reasonable — at roughly 2-4 percent of economic output – and its currency is strong, its financial muscle improving and the economy is growing, said Lasaga.
Times are so good — in security, business and even cultural life — that many Colombians are now returning to their homeland from South Florida and elsewhere. And Novartis has no trouble recruiting from nationalities worldwide for its manager jobs in Colombia nowadays, said Garcia.
“Venezuela is a different issue,” Garcia said. “I can’t find anyone who wants to go to Venezuela.”
Global Connections is one of six event series hosted by WorldCity that bring together executives to discuss international business topics. The series is sponsored by Florida International University’s College of Business Administration and office park developer Waterford at Blue Lagoon.
The next Global Connections event is set for July 30. The focus is corporate social responsibility.