Colombia – United States FTA Turns 1 Year Old
The U.S. – Colombia Free Trade Agreement (FTA) turned 1 year old on May 15. There were numerous events to commemorate the date including the visit by the Acting Secretary of Commerce, Dr. Rebecca Blank, leading an infrastructure mission of 20 U.S. companies. President Santos celebrated the FTA’s first birthday in Cartagena, where he had welcomed the FTA’s entry into force with the first shipment of Colombian products the year before. Over 114,000 containers passed through the Cartagena Port since the FTA entered into force – over 5,000 containers more than the previous year. U.S. exports to Colombia have increased 20% from May 15, 2012 through February 2013 relative to 2011.
Colombia Third Destination of FDI in Latin America
According to the United Nations Economic Commission for Latin America and the Caribbean, ECLAC, Colombia ranked third in the region last year as an FDI destination, attracting US$15.8 billion. Brazil was the principal destination with US$ 65.2 billion and Chile ranked second with US$ 30.2 billion.
Coal Production Declined
During the 1Q of the year, coal production in Colombia declined to 18.4 million tons, or 21.4% less than during the same period of the previous year.
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Colombia Produces More Than 1 Million Barrels of Oil per Day
The Colombian government announced that during January 2013, the country reached an average daily oil production of 1,011,992 barrels.
Inflation Rate for January 0.30 %
This rate is 0.43 points less than the January 2012 inflation rate of 0.73%.
Record Trade Results between the U.S. and Colombia
Assistant Secretary for the Bureau of Economic and Business Affairs of the Department of State, José Fernandez, declared that according to preliminary data, bilateral trade between the U.S. and Colombia registered a historic record during 2012 upon the implementation of the Free Trade agreement in May. In comparison to 2011, U.S. experts assert that U.S. exports to Colombia rose more than US $1 billion.
South Korea – Colombia Free Trade Agreement
South Korea’s government approved the Free Trade Agreement with Colombia negotiated since 2009. The governments will sign the agreement on February 21, 2013, and then submit it to their respective legislatures for approval.
For complete information please visit -http://bit.ly/VPzxkv
Inflation Rate for 2012 at 2.44%
The 2012 rate is 1.29% less than the inflation rate for 2011(3.73%). The education sector had the greatest inflation rate (4.59%), and entertainment the lowest (0.53%). The 2012 inflation goal for the Colombian Central Bank was 2 to 4%. For 2013, the Central Bank expects an inflation rate near 3%.
2012 Foreign Direct Investment in Hydrocarbons and Mining More than US $13 Billion
According to the Colombian Central Bank, FDI in this sector will surpass US $13 billion in 2012, an 8.38% increase over 2011. Some economic think tanks have expressed concern about the concentration of resources in sectors that do not generate industrial growth and employment. In 2011, non-oil and mining FDI represented only 14% of total FDI.
2012 Key Year for Colombian Trade Negotiations
In 2012, the U.S.-Colombia Free Trade Agreement entered into force, Colombia signed a trade agreement with the EU, concluded negotiations with South Korea, and began negotiations with Israel, Costa Rica, and Japan. It has ongoing negotiations with Panama and Turkey. Colombia has eight trade agreements with fifteen countries with the goal of reaching sixteen trade agreements in force with a total of over 50 countries (including the 27 EU members) by 2014.
Colombia to Host the Largest Cruise Conference and Trade Show
The twentieth Annual Florida-Caribbean Cruise Association (FCCA) Cruise Conference and Trade Show will take place in Cartagena from September 30-October 4, 2013. The FCCA conference is considered the premier industry event of the year. Approximately 192 port calls in Cartagena, two in Santa Marta, and about 400,000 passengers are expected before the end of the cruise season in May 2013. This represents an increase of over 17% compared to the previous season. Colombia expects to receive ships from cruise lines such as Disney Cruise Lines, Carnival Cruise Line Residensea, Phoenix-Reisen, Paul Gaugin, and Kristina Cruises.
Colombian Minimum Wage Increase Set at 4.02% for 2013
The Colombian government did not reach an agreement with labor unions and the private sector in negotiations on the minimum wage increase for 2013. President Santos issued a decree that unilaterally set the increase at 4.02%.
Oil Production Hits 1 Million Barrels Per Day
President Juan Manuel Santos announced that Colombia hit one million barrels per day of oil production for the first time. On December 29, 2012, the country produced 1,015,000 barrels of oil. Of note, however, is that the one million barrels was oil production for one day, not the administration’s goal of one million barrels as an average daily production for the month.
Unemployment Rate in November 2012 reached 9.2%
The 9.2% unemployment rate was the same as November 2011. According to the Colombian National Statistics Department, DANE, there were approximately 2,140,000 people unemployed in November 2012.
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In an effort to foster private investment in large-scale infrastructure projects, which are much needed in Colombia, Law 1508/2012 has been passed to regulate public-private partnerships (PPPs). The law applies to all contracts whereby state-owned entities assign to a private investor the right to design and build an infrastructure project and its related services, or to carry out the construction, repair, improvement or conditioning of such a project.
See the full document here: http://bit.ly/Mx9OdJ
Analysts’ Views on Colombian Central Bank’s Forecast of 4%-6% GDP Growth in 2012
President Santos Rings the Opening Bell Today at the New York Stock Exchange (NYSE)
AngloGold to invest $400 million in Colombia 2013-2015
Strong Management to head the new National Mining Agency
See the full document here: Week in Review May 21-25
Our take: Colombia’s Energy Minister Cardenas highlighted the need to increase coal loading capacity at the coal ports in Colombia as well as expand Colombia’s railroad network to manage the increase in coal production that is expected over the coming years, from 86 million tons in 2011 to 138 million tons in a few years.
U.S. businesses should look to companies like Cerrejon, Drummond Ltd., Glencore and Brazil’s MPX to determine what services and equipment are needed to expand their port and rail operations in Colombia.
53% More Capacity Is Needed At Coal Ports
During the VIII International Congress of Mines and Energy, the official [Colombia’s Minister of Mines and Energy Cardenas] said that the current capacity [at the ports] is 90 million tons, but the objective is to raise it in the medium term to 138 million tons.
The expansion will come from the huge investments that are planned by companies like Cerrejon, Drummond Ltd., Glencore and Brazil’s MPX, seeking to expand their operations.
Today, Colombia has 13 ports, divided into five departments [i.e. states], but an expansion and construction of new [coal port] terminals must be accompanied by modernizing [and expanding] the rail system.
Additionally, the Government has shown interest in moving forward the project of “Train Carare” that would provide a transport capacity of 20 million tons from within the country [to the ports].
Our take: At the recent VIII Petroleum and Mining Congress, Colombia’s Energy Minister Cardenas made a plea to the private sector to increase oil exploration instead of only oil production. Cardenas has a valid concern as Colombia’s proven reserves stand at around 2 billion, or probably less. A major find has not been in the cards for Colombia for many years, and the goal of producing 1 million barrels is very close (951k bbl/d as of March), but the extended of goal of producing 1.5 mn bbl/d has been pushed back from 2015 to an uncertain date, maybe 2018 due to the lack of new and larger finds and limited exploration.
There is opportunity here for more exploration, but the delays in environmental licensing compounded by poor infrastructure are key impediments to Cardenas’ plea.
Minminas, Dissatisfied with Low Oil Reserves
Colombia’s Minister of Mines and Energy, Mauricio Cardenas Santamaria, asked the companies to invest more in exploration and not just focus on trying to produce more oil. “Ecopetrol has reserves for 8.3 years and in a country considered as oil, the figure is around ten years,” he said.
At the end of 2010 the country had 2 billion barrels in proven oil reserves, but the annual variation is very low, since the incorporation of reserves is approximately 300 million barrels annually.
At the 10th Annual Latin American Leadership Forum, (LALF) in Lima, Peru (May 23-25), there will be a presentation on the region’s top strategic infrastructure projects, Top 100 Infrastructure Projects. Also highlighted will be 10 infrastructure projects in Colombia, which include the Highway Corridors to External Markets ($15 billion), the Autopistas de la Montaña Highway Program ($8.5 billion), the Ituango Hydroelectric ($6 billion), Bicentenario Oil Pipeline ($4.2 billion) and the Central Railway System ($3.3 billion). Check out the 10 highlighted projects for Colombia.
- On May 15th, the Colombia – U.S. Free Trade Agreement Enters Into Force
- Colombian Exports are on a Record Breaking Track (again)
- Colombia Extends Ban on Mining Permit Requests to August 2012
- President Santos visits China and Signs Nine Agreements
See the full document here: Week in Review May 7-11: http://bit.ly/IYOAGw