colombia and latin america - the next challenges
Post on 18-Jul-2015
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Issues to be covered
Where is Colombia today
1. From Democratic Security to Democratic
Prosperity
2. The current challenges
The regional picture
1. Opportunities, Challenges and risks
2. The Future is now
Canada's role in the Americas
Where is Colombia today? From Democratic Security to Democratic
Prosperity
Ten years ago Colombia was a fragile state…
The Colombian Paradox: a long and stable democracy in a permanent
threat from terrorist groups, drug dealers and organized crime…
Security
28.837 homicides
28882 kidnappings
69 homicides per 100.000 habitants
1645 terrorist attacks
350 mayors out of their municipalities
158 municipalities without police
EconomyAverage Economic Growth 1994-
2001: 2.1%
GDP per Capita: US$2377
Investment as % of GDP: 16.5%
Exports: US$11.975 million
FDI: US$2.100 million
Inflation: 6.99%
Fiscal balance: -3.2%
Social
Unemployment: 16.2%
Health Coverage: 25 million Colombians.
Pension affiliates: 4.5 million
Poverty: 57%
Education Coverage: Primary 97%, High school: 57%, University: 24%.
Mobil Phone Lines: 4.6 million
Internet coverage: 1.9 million
Colombia faced a Confidence Deficit
The elusive quest for peace
Many governments exhausted all their political capital
attempting to reach peace through political dialogue…the
result was military strengthening from illegal armed groups and a rapid
growth in their criminal activities (68% thought the
country was going in a negative track)
Terrorist Groups (Guerrillas and Paramilitaries) had
created a sense of defeat in the Colombian people
Fear impacted in the Colombian people Mindset
The lack of investment
The drain of human capital
The sense of danger in Colombian roads
The expansion of massive kidnappings created an emotional domino effect
1. From Democratic
Security to Democratic
Prosperity
Building Confidence became our priority
Our vision was to build a Comunitary State:
CONFIDENCE was our main goal
Without Confidence:
• No investment
• Unemployment
• Lack of opportunities
• Brain Drain (Young people wanted to leave without a return ticket)
Three main Policies:
Democratic Security
Investment with fraternity
Social cohesion
For the First Time a National Development Agenda had Security as a driver of Development (Security = Investment = Social Cohesion)
No more a debate between left and right
1. From Democratic
Security to Democratic
Prosperity
Democratic Security
Security for All
Fight all forms of crime
Security without Martial Law
Security with liberties and Human Rights
Victims recognition
Investment with Social
ResponsibilityInvestor Security (Human, Legal and
Political)
Sound Macroeconomics
Incentives
Access to markets
Competitiveness Factors (Infrastructure, Connectivity,
Banking,)
Social Cohesion
Education Revolution
Health with coverage and quality
Access to credit (Banca de oportunidades)
Vocational Training
Conditional Cash Transfers
1. From Democratic
Security to Democratic
Prosperity
The strategy was clearly oriented towards results in each of the main policy pillars
Indicator 2002 2010
Homicides 28838 7400
Kidnappings 2882 123
Homicides per
100K Habitants
69 16.3
Terrorist attacks 1645 250
Municipalities
without mayors
presence
350 0
Municipalities
without police
158 0
Security Economy
Indicator 2002 2010
Average
Economic
Growth
2.1% 4.3%
GDP per
Capita
2377 5300
Invest % GDP 16.5% 24.6%
Exports US$11.
000
US$
39.000
FDI US$2.1
00
US$ 5.000
Inflation 6.9% 2.5%
Social
Indicator 2002 2010
Unemployment 16.2% 11.6%
Health
Coverage
25.1 million 43.1
million
Pension
affiliates
4.5 million 7.1
million
Poverty 53% 43%
Education
coverage (Primary,
Hs, University)
97%
57%
24%
100%
79.4%
35.5%
Mobile phone
users
4.6 million
lines
41
million
lines
The combination of our Policies produced significant results: Lowest violence levels in
two decades, highest levels of social coverage in Colombian History and highest levels
of Exports and FDI in more than 5 decades
1. From Democratic
Security to Democratic
Prosperity
Country Conditions
Matter
Colombia
Democratic Tradition
Professional Armed Forces
Vibrant Private Sector
Active and courageous middle class
Rule of law
1. From Democratic Security to
Democratic Prosperity
Historical country conditions were crucial to achieve results…
2. The current challenges
Security
Maintain Macro-Vision and Micro-Management
Continue dismantling all terrorist organizations
Continue dismantling drug cartels apparatus.
Strengthen Citizen Security agendas with local
authorities
Economic
Face new trends of currency appreciation
Maintain and increase FDI flows (Security, incentives
and stability rules)
Fiscal Policy to face new countercyclical challenges
Increase tax collections
Expand new trade markets through FTA’s
Social Cohesion
Fight labor informality and create quality jobs
Insure education and health quality
Expand vocational training coverage
Create Entrepreneurial Family Transfers program
Political
Judicial reform
Strengthen Democratic Center
Improve local institutional capacity
New law implementation (Victims and land)
Prevent the emergence of populist movements
Colombia has improved significantly and it must face new challenges
Structural Elements
Political Stability
Sound Macroeconomic Management
Human, Political and Legal Security
Competitive elements
Investment incentives
Access to markets (Canada, EU, EEUU, MERCOSUR, etc)
Free Trade Zones
Logistical advantages
Comparative elements
Investment Grade
Stable institutions
Growing internal demand
Complementary
Human Capital
New World Class Sectors incentives.
Strong financial system
2. The current challenges
Colombia is an attractive investment destination due to multiple reasons
2. The current challenges
In 2002 it was believed that by 2009 Colombia oil
production will not be able to attend national demand
In 2003 the oil and gas sector restructuring was
designed
ECOPETROL undertook a strategy shift to become a
more competitive and professional corporation
The National Hydrocarbon Agency was created
Between 2002 and 2010 341 exploration and
production contracts were signed
In 2007 ECOPETROL was capitalized by 10% through
local capital markets. 486.000 Colombians
bought shares
Between 2002 and May 2010 447 new fields were
explored
From 2002 to 2010 successful exploration
passed from 40% to 61.4%
Seismic exploration in the country (Onshore, Offshore
and 2 dimensions) increased by more than
250%
Colombia is currently close to produce 1 million oil
barrels per day
Success triggers
Security: Investment,
exploration
Government Reform: New
ECOPETROL and ANH
Investment target policies:
New players and new
exploration and production
contracts
The case of the oil sector in Colombia: Change is possible
Indicator 2007 2008 2009 2010 pr 2011 pr
Nominal GDP in US$ Millions 213.957 214.405 248.793 280.488 339.449
Per capita GDP 4986 4899 5573 6160 7309
Inflation
(IPC Dic-Dic)
5.7 7.7 2.0 2.6 3.2
Interest Rates(Banrep) 9.5 9.5 3.5 3.0 4.5
Interest Rate Fix Deposit Rate (90 days) 9.0 10.1 4.0 3.5 5.0
Consumption interest rate 24.9 25.5 20.5 17.0 18.0
Preferential Interest Rate 14.1 15.6 7.5 7.3 7.5
Currency Exchange 2.015 2.244 2.044 1,950 1.750
Currency devaluation % -10.0 11.4 -8.9 -4.6 -10.3
Trade Balance US$ millions -824 470 -45 100 2300
Exports US$ mill FOB 29.991 37.626 32.853 39.400 45.300
Imports US$ mill FOB 30.816 37.155 32.898 39.300 43.000
Current Account US$ mill -5.819 -6.857 -5.146 -5.963 -6.600
Current account as a % PIB -2.7 -3.2 -2.1 -2.2 -1.9
International Reserves US Mill 20.601 23.660 24.983 28.500 30.300
Fiscal Deficit %PIB (FMI) -0.8 -0.1 -1.8 -3.2 -3.6
Urban Unemployment% 10.2 10.9 12.3 11.1 10.0
2. The current challengesEconomic Fundamentals keep strengthening…
Commentators and analysts continuously talk about Chinas
transformation and praise its effort for becoming the World second
largest economy and by being able to allow 400 million people come out
from the poverty trap
However in our region a silent process of change has also occurred and
today Latin America is an active contributor to the Emerging Nations
Century:
In the last three decades Latin America has increased its population by
240 million people and today counts with almost 600 million habitants
Our average age variates between 26 and 28 years while Asia’s average
is closet to 34 years
64% of our population is part of an expanding middle class
Our per capita GDP in purchasing power is close to ten thousand
dollars while in the rest of emerging economies is close to six
thousand dollars
During the last decade 40 million people have left the poverty line
1. Opportunities,
challenges and risks
The regional silent evolution
Between 1980 and 2010 we have experienced an outstanding improvement
of our social indicators in what can be called a social transformation:
Life expectancy has increased from 65 to 75 years
Child mortality has been reduced by 50 per cent
Literacy rates are above 94%
Mobile phone penetration has increased by 78 per cent
Internet access has increased by 33%
Healthcare coverage has increased by 50 percent
And water and sanitation coverage has reached on average 80 per cent
in the region
1. Opportunities,
challenges and risks
Latin America is also a land of opportunities
Latin America is a region with a vast number of natural resources that
will help the World attend great part of the demand patterns.
We count with:
10 percent of the World oil reserves
6 percent of the World Gas reserves
Almost 50 percent of the World cooper reserves
50 per cent of the World silver reserves
13% of the World iron reserves
26% of the World fertile land
24% of the World beef supply
Almost 50% of the World potable water supply
Approximately 20 per cent of the World Biodiversity is
concentrated in the Amazon ring
1. Opportunities,
challenges and risks
The SECRET BEHIND Latin American Success
This change process is a consequence of the principles that a group of countries have adopted as their
policy cornerstone. Brazil, Mexico, Colombia, Chile, Peru and Uruguay represent 70 per cent of the
region’s population and 75% of the regional GDP.
This group of countries have common characteristics that explain their outstanding performance:
1. The strengthening of Liberal Democracy
2. The adoption of an institutional Framework in favor of foreign and national investment
3. The construction of a sound and sustainable social safety net
4. The expansion of export markets and the commercial integration with the World (FTA’s)
5. A public administration driven by results
6. A sound Macroeconomic Administration driven by fiscal and monetary prudence
7. Better regulatory environment
8. Construction of strategic infrastructure
9. The consolidation of an innovation agenda leaded by an improvement in education
10.A well capitalized financial sector and the constant expansion of financial services
Today countries like Panama, Dominican Republic, Costa Rica, Salvador, Guatemala, Honduras,
Belize, Paraguay, as well as most of the Caribbean States, are following that line of behavior
1. Opportunities,
challenges and risks
Building Modern Democracies
(5 parameters)
Security
Freedoms and Private Initiative
Independent Institutions
Social Cohesion
People Participation
A dynamic Economic
transformation
Investment Target Policies
Maintaining Fiscal and Monetary transformation
Integrate commodity and knowledge based
economies.
Expand export markets
Create an Entrepreneurship culture
(Innovation agenda)
Closing Social Gaps
Improve education (quality, coverage,
vocational)
Insure Universal Healthcare
Formal Job creation
Access to Finance
Climate Change, Environment and Energy
Sustainability
Expand renewable sources
Install an energy efficiency conscience
Improve waste management
Protect the Amazon Ring
Reduce Co2 Emissions
1. Opportunities,
challenges and risks
Challenges
Economic Risks
More Sovereign Debt restructuring in Europe
Higher inflation in Emerging Markets and exploding
bubbles
Real State Bubbles in China
Rapid Expansion of commodity Prices
Currency volatility
Geopolitical Risks
Terrorism
Illicit Trade (Drugs, arms, counterfeiting, organs,
persons)
Organized Crime (Central America, Mexico, Colombia,
Brazil, etc)
Lagging Democracies and fragile States (Venezuela,
Haiti,Bolivia, Cuba)
Nuclear weapons
Environmental Risks
Earthquakes and Tsunamis
Flooding
Deforestation and Biodiversity Loss
Climate Change
Social Risks
Demographic Challenges
Food Security
Massive Migration
Infectious Diseases
Economic Inequality
1. Opportunities,
challenges and risks
Risks
2. The future is now: The
emerging markets as engines of
growth
A new historical dynamic
Emerging economies
have become engines of economic
growth
Since 1980 the world
population has increased
by 2.500 million
people. 95% of that
expansion has taken
place in the developing
world
In 1980 developing economies represented 33% of the
world GDP…today the represent
46%
By 2025 8 countries
(India, China, Brazil, Russia,
Indonesia, Korea,
Mexico and Turkey) will
be responsible
for the largest share in
world economic
growth
By 2030 emerging
economies will represent
68% of the world
economic growth
By 2050 19 of the 30 largest
economies will be
countries known today as emerging
markets
By 2050 China and
India will be the first and third worlds
largest economies
2. The future is now: The
emerging markets as engines of
growth
New trends will take place
Trade: in 1980 global
exports were one
sixth of the world GDP.
By 2030 they will be
one third
By 2025 urban middle
class will represent 40% of the
world population
By 2030 food
demand will
increase by 50%
By 2030 water
demand will
increase by 35%
By 2030 energy
demand will
increase by 40%
The most important Emerging Markets Description
País PIB, precios corrientes US$ PIB per capita, precios
corrientes US$
Población Millones Territorio Millones de KM2
Argentina 370.269 9.138 40.159 2.767
Brasil 2.090.31 10.816 193.253 8.512
Chile 203.232 11.827 17.19 0.757
Colombia 285.511 6.273 45.512 1.42
México 1.039.12 9.566 108.267 1.973
Perú 152.83 5.171 29.5 1.285
Venezuela 290.0678 9.960 29.183 0.912
China 5.878.26 4.382 1.341.41 9.561
India 1.537.97 1.264 1.215.94 3.287
Indonesia 706.735 3.015 234.77 1.904
Malasia 237.959 8.423 28.251 0.333
Tailandia 318.85 4.991 63.878 0.513
Filipinas 188.719 2.007 94.0 0.300
Corea del Sur 1.007.08 20.590 48.9 0.09
Rusia 1.465.08 10.437 140.367 17.075
Polonia 468.539 12.300 38.0 0.313
Hungría 128.96 12.879 10.013 0.09
República Checa 192.152 18.288 10.5 0.07
Turquía 741.853 10.398 71.341 0.779
Egipto 218.466 2.788 78.336 1.000
Suráfrica 357.259 7.157 49.912 1.226
EAU 301.88 59.716 5.0 0.08
Marruecos 103.482 3.248 31.8 0.447
Nigeria 216.803 1.389 156.051 0.924
Vietnam 103.574 1.173 88.257 0.331
2. The future is now: The
emerging markets as engines of
growth
Natural Resources
Growing Entrepreneurial spirit
Human Capital
Democratic values
Sound Economic Management
Latin America most vibrant emerging economies have consolidated the right
fundamentals to succeed in a world of new patterns…
2. The future is now: The
emerging markets as engines of
growth
Natural resources
Entrepreneurial spirit
Increasing Middle class
Independent Institutions
Political Stability
Rule of law
Security
Colombia has the elements to become the region third largest economy,
attracting long term investment and expanding trade markets for the future…
Canada’s contribution for the region
Canada in the
Americas
Become a consolidated market
for the region largest economies
Boost investment in strategic sectors
Promote Democratic values
Contribute in the strengthening of the
Inter-American System
Attract Human Capital for
specialized training (Scholarships and
temporary work opportunities)
Transfer knowledge in world class
sectors
Provide incentives for regional
corporations to be listed in the
Canadian Capital Markets
Colombia and Canada
General
Canada is the world second largest Country with a smaller population than Colombia
Canada has FTA’s with Mexico, Costa Rica, Panama, Peru, Chile and Colombia
68% of the Canadian Economy is based in the provision of services, while 29% is
based in aggregated value manufacturing. Agriculture only represents 2.5% of the
Economy
Investment
Canada is the world 9th largest FDI provider
Canada is the second largest FDI provider in Latin America with 15.7%
of regional FDI
Colombia is the 14th largest Green field Canadian investment
destination in the world
FDI
Canada is the 8th largest source of FDI for Colombia
Mining, trade, furniture and agriculture have concentrated 92% of Canadian FDI in Colombia during
the last 3 years
Canada has become a key player in Colombia and the bilateral relation will
continue to improve ….
Canada and Colombia Success Stories
• MiningGreystar
• MiningMedoro
• Food IndustryMcCain
• Logistics and SoftwareSYNERGEX
• Private equity investmentsPSP Investments
• ForestryKruger
• Oils and Gas Talisman Energy
• Oil and GasPetrolifera Petroleum
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