October 25, 2013, Luis Alberto Moreno (from BID- Banco Interamericano de Desarollo, a.k.a. Interamerican Development Bank)), Gustavo Petro (Bogota Mayor), and Andres Forero Linares (Manager of Transmilenio System) announced the launch of the “Policy of Clean Mobility of Integrated Public Transport System” (SITP), by inaugurating the Corredor Verde (green corridor) where new Euro 4 Volvo diesel engine buses were being Introduced into the city mass transport system.
This project is Bogota’s first step in building the new SITP, where the implementation of electrified corridors and zero or near zero emissions buses/trolleybuses will be implemented, depending on the operators. It involves the systematic renovation of over 13,000 buses, along with improvements and inclusion of GPS technology, formal hiring conditions for drivers and integration of payment collection systems. Currently, Bogota’s Public Transport scheme boasts a fleet of roughly 15,600 buses; however, the implementation of the new SITP will decrease these fleet requiring only 13,332 buses for its operation. Although the System initially will incorporate the existing buses, it is estimated that there will be a renewal of 9,000 buses in the coming two years, according to the new bus specifications.
The SITP will be complemented with a light rail system (currently under feasibility studies), which will bring passengers from the surrounding areas of Bogota as well as the use of cable cars/gondola lifts in Bogota’s zones of San Cristobal and Ciudad Bolivar. The tender for the gondolas will be ready for Q2 of 2014, at an estimated cost of USD150 million per line. A metro system is also planned, with an estimated cost of USD160 million per mile built, with a total of 17 miles.
Opportunities for U.S. Companies
Various opportunities for American companies have been identified by Commercial Service Bogota, Colombia, especially in the financing of these projects, which have a total cost of over USD 3 billion. In terms of construction opportunities, American companies should find associations/partnerships with local construction companies who will be bidding on these projects and provide them with services as contractors. Opportunities can range from providing geo- engineering services, to material sourcing, to heavy machinery rental. The opportunities exist, and the most practical way to enter this new market (which will be investing over USD26 billion in road infrastructure over the next 5 years) is by partnering with a local player.
For complete information, including bus models specifications requested by Transmilenio – please visit http://bit.ly/1juo4oh
Transmilenio – Transmilenio Contract Plans in English.
For More Information please contact:
Colombian Government Tackles Bottlenecks for Projects
On November 22, President Santos signed a new law that seeks to expedite the process for developing infrastructure projects. The law will allow infrastructure projects to move forward in areas with mining titles and provides new rules on the content and scope of environmental impact studies that must be submitted to authorities. The government also issued Decree 2613 on November 20, which will attempt to strengthen interagency coordination on the prior consultation process with indigenous and Afro-Colombian communities. Prior consultation with affected communities is required for the approval of infrastructure and other projects and more coordinated implementation could remove a potential bottleneck for the development of future projects.
Central Bank Sets Inflation Goal for 2014
The Colombian Central Bank set the inflation target for 2014 at 3%. The inflation rate through October 2013 was 1.89%. The government expects to comply with its fiscal deficit goal of 2.4% for 2013.
Unemployment at its Lowest Point Since 2001
October’s unemployment rate was 7.8%, a decrease from the 8.9% seen in October 2012. This is the sixth straight month with a one digit unemployment rate and the lowest of the past 12 years. The cities with highest unemployment rates are Pereira (18.1%), Armenia (13.9%), and Cali (13.3%).
President Santos Runs for Re-election
President Juan Manuel Santos announced he will seek a second term in Colombia’s May 2014 presidential elections. Priorities during a second term will likely include continuing peace negotiations with the FARC, moving forward Colombia’s OECD accession, reducing unemployment, and improving internal infrastructure. Independent studies have concluded that a peace agreement with the FARC could increase Colombia’s GDP growth by 1%. According to Minister of Finance Cardenas, 4G infrastructure projects could improve Colombia’s competitiveness and increase GDP growth by 1.5%.
Industrial Production Fell 1.8% in September
Industrial production in September 2013 fell 1.8% compared to September 2012. The auto industry showed the greatest decrease. In the first 9 months of the year, industrial production fell 2.7% compared to the same period in 2012. In March 2013, President Santos announced measures to address this economic challenge, including the availability of special financing for industry.
Colombian Imports Increase 10% in September
In September 2013, Colombian imports totaled USD 5.1 billion, a 10% increase compared to September 2012. Manufacturing accounted for 73.6% of total imports, fuel and extractive industry products for 16.7%, and agricultural products, food, and beverages for 9.6%.
Colombian Exports Decrease 1.2% in September
In September 2013, Colombian exports totaled USD 4.8 billion, a 1.2% decrease compared to September 2012. A 50.5% decrease in gold exports during the period could partially explain the reduction, although the extractive sector overall had the greatest increase in exports at 3.1%. The United States was the main destination for Colombian exports with a 33.6% share of the total volume, followed by China (7.9%), Panama (5.3%), India (4.8%), Spain (4.7%), and the Netherlands (3.9%).
Colombia’s Domestic Air Travel Takes Off
A total of 21.1 million passengers flew domestically in Colombia from January to September 2013, a 19.6% increase compared to the same period in 2012. Bogota continued to have the highest volume of passengers (18 million), but major cities such as Medellin,Cartagena, Cali and Barranquilla showed the largest gainss. An increase in flights offered by budget airlines such as Viva Colombia and Easy Fly may explain the higher volume. Avianca remains the principal domestic carrier with 55% of total passengers in the local market.
Colombian Government Boosts Investment in Agriculture for 2014
The Colombian government will invest approximately USD 2.5 billion in the agricultural sector in 2014, an increase from the planned USD 1.7 billion. A recently-extended tax on financial transactions will provide 80% of the budget. The increased investment is largely due to demands stemming from recent strikes, such as requests for financial assistance from several agricultural sectors. The government will host a National Agricultural Pact meeting in December with agricultural associations and farmers to discuss how to manage the budget for 2014. Goals include increasing the sector’s competitiveness and reducing the rural poverty rate of 50%.
Grupo de Energía de Bogotá, a multinational corporation in the power sector, is one of the main electric power corporations in Colombia and in the region. It has focused on a Global Responsibility growth model, which supports sustainable development in its markets, and was ratified in 2013 as one of the companies included in the Dow Jones Sustainability Index.
The Group will carry out its first business roundtable among its member companies, affiliates, and supply chain providers. This business roundtable seeks to drive business opportunities and facilitate new linkages among its member companies as well as current and potential supply chain providers. The meeting will be on November 25th 2013 through the Group’s web platform www.ruedagrupoenergiadebogota.com and is an opportunity for companies interested in becoming supply chain providers or affiliates of the Group, particularly in the sectors of power generation, power transmission and distribution, and natural gas distribution.
Agenda and enrolment adviser: Juliana Martheyn – Cel: 57-3115391937
Peace and the Economy
Colombian Minister of Finance Mauricio Cardenas stated this week that the Colombian economy is expected to grow approximately 4.5% this year, led by the construction, services, coffee, and hydrocarbon sectors. According to Minister Cardenas, pending infrastructure improvements and a possible negotiated peace agreement with the FARC could allow the economy to grow at more than 6% per year. The Colombian government has started its fourth generation road concession program with 47 projects requiring investments of approximately USD 25 billion. The peace process with the FARC is currently ongoing in Havana, Cuba, and agreements have been reached on two of the five agenda items.
Avianca Debuts on Wall Street
Avianca, Colombia’s national airline, debuted this week on the New York Stock Exchange, selling USD 408.5 million in shares through 27.2 million American depositary receipts. The company will use these funds to finance its regional expansion and the acquisition of 98 new airplanes to add to its existing fleet of 130 planes. Only nine years ago the company was battling bankruptcy in New York’s south district court. Brazilian businessman German Efromovich acquired and restructured the company in 2004, turning it into a Multilatina with hubs in San Salvador, Lima, and Bogota. Avianca expanded its presence with the acquisition of El Salvador-based TACA Airlines in 2010 and Ecuador-based Aerogal Airlines in 2011.
Inflation in October -0.26%
October’s overall inflation rate was -0.26%, with housing (0.15%), health (0.09%), and apparel (0.07%) showing the greatest price increases. For the first 10 months of 2013, the accumulated inflation rate reached 1.89%. Jose Dario Uribe, Chairman of the Colombian Central Bank, stated this week that the inflation rate for 2013 will likely be around 2.4%.
Colombia Drops Slightly in 2014 Doing Business Report Ranking
Colombia was ranked 43 among 189 countries in the World Bank’s 2014 Doing Business Report, which measures how easy it is to do business in countries worldwide. Colombia was ranked number 42 in last year’s report. The report noted that implementation of 27 economic reforms since 2005 had led to improvements in Colombia’s business climate. Colombia was ranked third among South American countries, after Chile (34) and Peru (42). The report judged Pacific Alliance countries to be well ahead of their Mercosur counterparts, which were ranked as follows: Uruguay (88), Paraguay (109), Brazil (116), Argentina, (126) and Venezuela (181).
September Unemployment Rate 9.0%
The unemployment rate for September 2013 was 0.9 points lower than the rate for September 2012 and the lowest rate in the month of September over the past 12 years. Bogota’s economic activity and the creation of jobs in the retail sector were the main reasons for the decrease.
Colombia’s Internet Coverage to Reach 95.5% in 2014
The Colombian government aims to have 95.5% broadband internet coverage in Colombia by 2014, an increase from 27.2% coverage in 2010. According to the National Fiber Optics association, the government has completed 60% of its target, with broadband internet access currently provided to approximately 2,200,000 inhabitants in 452 municipalities and 1,052 educational institutions of the country.
Colombian Imports and Exports Fell in the First Eight Months of 2013
As reported by the Colombian National Statistics Department, DANE, Colombian imports from January to August totaled USD $37 billion, which was a 1.6% decrease in comparison to the same period last year. From January to August, Colombian exports totaled USD $38.9 billion, which was a 3.6% decrease compared to the same period last year. This means that Colombia had a commercial surplus of USD $1.8 billion in the first eight months of 2013. Colombian’s largest trade partners during this time, in order, were the United States, China and Mexico.
Colombia Presents Road Map to Enter the OECD
On October 25th, Secretary General of the OECD Jose Angel Gurria and Colombian President Juan Manuel Santos presented the road map for Colombia’s accession to the OECD. The current Presidential Advisor and future Colombian representative to the OECD in Paris, Catalina Crane, believes that the process will take approximately three years. To be accepted into OECD, Colombia will need unanimous approval from the organization’s 23 thematic committees.
Bruce Mac Master Elected as New President of ANDI
Bruce Mac Master was elected as president of the Colombian Industry Association (ANDI), Colombia’s most important private sector organization. He is the former head of the Department of Social Prosperity in the Santos administration and a well-known economist. Mr. Mac Master is replacing Luis Carlos Villegas, who resigned after 17 years to become the new Colombian ambassador to the United States.
Colombian Congress Approves 2014 Budget
Colombia’s congress approved the 2014 national budget at approximately USD 108 billion, a 7.3 percent increase over the 2013 budget. The government increased its initial budget proposal by 2 percent in response to demands stemming from recent strikes, such as requests for financial assistance from several agricultural sectors. The budget increase will be funded by deferring the planned elimination of a financial transaction tax that charges 2 cents for every 50 cents involved in any financial transaction. The budget is based on a fiscal deficit target of 2.3 percent of GDP.
Industrial Activity Decreased 1.2% in the First Eight Months of 2013
According to an Industrial Opinion Survey conducted by the National Business Association of Colombia (ANDI), industrial activity decreased 1.2% during the first eight months of the year. The following industrial sectors had the largest declines in production: textiles (22.8%), auto parts (21%), and vehicles (4.3%). Businesses view low demand, the strong peso, the cost and supply of raw materials, and infrastructure and logistics costs as the biggest obstacles to increased production.
FDI Decreased 0.92 Percent for First Nine Months of 2013
According to the Colombian Central Bank, foreign direct investment (FDI) into Colombia for the first 9 months of the year totaled USD 2.7 billion, a 9.2 percent decrease over the same period in 2012. The decline can be attributed to lower oil and mining investments, which decreased 1.1 percent. 2012 FDI into Colombia totaled USD 16.7 billion, which the Central Bank believes will not be matched in 2013 due to a weaker international economy and lower commodity prices.
Exports Grew 8.9% in August
According to the Colombian National Statistics Department, DANE, Colombian exports totaled US $4.97 billion in August, an 8.9% increase over August 2012. This increase was mainly due to a 28% year-on-year growth in exports of products from the oil and mining sectors. In the same period, industrial exports decreased 17.4%. The United States continues to be the top importer of Colombian goods, receiving 34% of total Colombian exports from January to August 2013.
FDI in Colombia Grows but Lags Regional Average
In the second quarter of 2013, FDI into Colombia totaled US $4.5 billion, bringing FDI for the first half of 2013 to US $8.2 billion. This represents a 5.2% increase year-on-year. Over the same time period, total FDI into Latin America grew 6%, totaling US $102.9 billion. The largest recipients of FDI were: Brazil (US $39 billion), Mexico (US $23 billion) and Chile (US $10 billion).
Inflation in September 0.29%
The 0.29% inflation rate was stable compared to September 2012. The accumulated inflation rate for the first nine months of 2013 is 2.16%, which is consistent with the Colombian Central Bank’s projected inflation for 2013 of 2 to 4 percent. The sectors that presented the highest price increases in September were housing (0.40%) and food (0.38%).