Friday, October 22, 2021

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Medellin-based Conconcreto President Juan Luis Aristizábal – head of one of the three principal contractors for the US$5 billion “Hidroituango” hydroelectric project here in Antioquia -- today contradicted disturbing damage claims being made by Colombia’s Comptroller General as well as Medellin Mayor Daniel Quintero.

In a wide-ranging interview with El Colombiano -- Medellin’s biggest mainstream daily newspaper – Aristizábal points out that neither Conconcreto nor any of the 26 officials, politicians and companies named in the Comptroller’s COP$4.3 trillion (US$1.15 billion) damages claim over supposed “gross negligence” at the Hidroituango project have been given a chance to provide contravening evidence.

What’s even more disturbing is that there are indications that the Comptroller seems headed toward confirming its charges against the contractors in the next few weeks -- without ever hearing evidence from the accused, Aristizábal suggested.

Hence this Kafkaesque scheme – hearing only from the prosecution and almost nothing from the defense – could resemble a banana-republic kangaroo-court procedure, or Soviet communist dictator Josef Stalin’s murderous “show trials” of the 1930s -- rather than what people and companies in real democracies, such as in North America or Europe, deserve and ought to expect.

Even more ironic is that neither the Comptroller nor Medellin Mayor Quintero have any knowledge or experience in civil engineering, let alone hydroelectric dam-building. Yet both somehow are claiming to know the causes of the diversion-tunnel collapse at Hidroituango, which all engineering studies so far haven’t been able to prove conclusively.

If the Comptroller confirms its damage claims, then EPM must -- under Colombian law -- terminate the existing contracts of the affected Hidroituango builders and designers, then find and get-up-to-speed some unknown replacement contractors -- hence delaying the project likely for many months beyond the current June 2022 scheduled start-up of the first power turbines.

Such delays could cost EPM huge fines not only for failure to provide power to the national grid -- as it has legally promised by June 2022 -- but also untold hundreds of millions of dollars in revenues from lost power sales because of inevitable delays from training new contractors.

Then there’s an enormously costly US$450 million loan pre-payment obligation to the Interamerican Development Bank (IDB) if the project fails to come on-line by June 2022.

What’s more, these fines and costs would come in addition to possibly hundreds of millions or even billions of dollars in counter-claims that probably will be brought by contractors, along with civil torts brought against EPM by lawyers representing persons temporarily displaced downstream of Hidroituango as a result of the 2018 tunnel-collapse incident.

And as a final wound, Hidroituango project insurer Mapfre possibly could cancel all further insurance payments beyond the US$350 million already paid to EPM, and – potentially – demand repayment of what it has already paid, citing the Comptroller’s finding of “gross negligence” and Mayor Quintero’s repeated, unsubstantiated claims of “corruption” and mismanagement.

Following a pattern, Mayor Quintero continues making wild, unsubstantiated claims against the Hidroituango contractors, former EPM officials and former Antioquia elected officials.

The latest pot-shot claim from Quintero – made last week without offering a single shred of evidence -- is that the contractors used substandard construction materials and made reckless design and execution decisions, which supposedly led to the costly 2018 collapse of a diversion tunnel at Hidroituango.

In addition, Quintero now claims that Mapfre and lesser insurers have just decided to exclude insurance payments for diversion tunnels, for some required stabilization works, for much of future lost-power sales and for other Hidroituango project costs that collectively would total roughly US$1 billion.

But if Quintero and the Comptroller are successful in their campaign to blame the main contractors and some former officials and former politicians for the tunnel collapse – resulting in a mandatory switch of contractors, enormously costly delays and inevitable counter-lawsuits – then EPM could lose far more than the US$1 billion that supposedly has been excluded from insurance payments.

To date, Mapfre has not stated publicly what it plans to exclude from insurance payments, nor explain how much it had planned to pay EPM for supposedly covered losses at Hidroituango.

But many leading engineering firms, trade associations, trade unions, public-advocacy organizations -- and now even Colombia President Ivan Duque -- have publicly stated that the correct way forward for recovering Hidroituango damage costs ought to be via negotiations with insurers, rather than blaming contractors.

However, according to Conconcreto President Aristizábal, if blame must be placed on anyone, then the correct target ought to be EPM itself, rather than its contractors, as Aristizábal explained in the El Colombiano interview published today. This would mirror public statements made by some legal experts that Mayor Quintero's US$2.85 billion parallel lawsuit against Hidroituango contractors actually could wind-up as a case of EPM suing itself.

In the interview, Aristizábal pointed out that Conconcreto wasn’t involved in designing nor building the diversion tunnels, which actually were designed and then demanded by EPM, the general contractor for Hidroituango.

“We are not responsible for the design, or the selection of materials, or the decisions that are made around all these activities,” Aristizábal stated in the interview. “We execute the construction, with the designer's guidelines, it is approved by the controller and received by our contractor EPM. All the works that we execute were supervised by the controller, approved by the designer, received by EPM and paid for by them.”

So, if anyone is to blame for the diversion tunnel collapse, then the blame ought to be put on EPM, which specified and approved all design, engineering and execution at Hidroituango, he said.

As a result, the Comptroller “should be investigating EPM. Furthermore, the resources managed by EPM are public resources. We are not fiscal agents because they did not give us an advance and because the money we received from EPM was a payment for services,” Aristizábal concluded, citing the Comptroller's responsibility for investigating public entities.

On another ominous note, Aristizabal pointed-out that Conconcreto’s principal stockholder is France-based Vinci. Hence the eyes of foreign investors are now fixed on the outcome of the current legal claims, which if adverse to some of Antioquia’s biggest and historically prestigious companies could discourage crucial foreign investment that generates tens of thousands of jobs, vital infrastructure development, huge tax revenues and economic progress for all Colombia, Aristizábal added.


Only one day after its fellow “Hidroituango” hydroelectric-project contractor Coninsa Ramon H filed for bankruptcy, Medellin-based construction giant Constructora Conconcreto likewise today (October 13) filed for bankruptcy, citing Colombia’s Comptroller-General proposed COP$4.3 billion (US$1.15 billion) fine for supposed “gross negligence” that allegedly caused an enormously costly 2018 diversion-tunnel collapse at Hidroituango, now almost completely recovered.

While Conconcreto states in the filing that its over-all financial outlook is “solid and positive,” nevertheless “the recent ruling in the first instance of the Office of the Comptroller General of the Republic for a figure of COP$4.3 trillion [US$1.15 billion] has an undeniable patrimonial and operational impact.”

The bankruptcy petition “aims to guarantee the sustainability of Constructora Conconcreto, maintain the more than 12,000 jobs that it currently generates, comply with all obligations and mitigate the uncertainty generated by speculation in the market and the eventual consequences of the ratification of the ruling of the Comptroller General of the Republic through the mechanisms provided by law,” according to the company.

“In the next few days, the negotiation phase of the reorganization agreement with the creditors participating in the process will begin,” the company added.

Commenting on the filing, Conconcreto president Juan Luis Aristizábal added: “We are prepared and committed to the country, Antioquia and their communities in the culmination of the Hidroituango project, critical for the energy stability of Colombia."

Antioquia Governor Gaviria Urges Insurance-Settlement Pathway

Meanwhile, Antioquia Governor Anibal Gaviria today publicly urged that any financial settlement over the diversion-tunnel collapse ought to be the exclusive province of Hidroituango project insurer Mapfre (along with other lesser insurers), with whom EPM has a damages policy totaling more than US$2 billion.

Mapfre has already paid US$350 million to EPM for Hidroituango damages, and likely would continue to make further payments -- barring some contradictory legal ruling putting blame for the tunnel collapse on contractors, consultants and politicians, rather than upon an unforseen, unpredictable tunnel fracture.

"The solution for Hidroituango has been, is and will be, as it should be: PAYMENT BY INSURANCE COMPANIES," Governor Gaviria publicly stated today, adding further emphasis by inserting all-capital letters.

This statement puts the Antioquia Governor in direct conflict with Medellin Mayor Daniel Quintero, who has issued wild, President-Trump-like conspiracy theories about "corruption" among former EPM officials and supposed negligence and/or conflicts-of-interest among contractors, consultants, former EPM officials and former politicians. Quintero has already sued the contractors and consultants for US$2.85 billion in a proceeding separate (but parallel to) the Comptroller-General's legal claims.

 


Medellin-based construction giant Coninsa Ramon H – one of the principal contractors to the US$5 billion “Hidroituango” hydroelectric project – this morning (October 12) filed a bankruptcy petition with Colombia’s Superintendencia de Sociedades (Supersociedades) regulatory agency.

Under Colombian law, the petition is known as an “Emergency Negotiation of a Reorganization Agreement (NEAR) under Law 560 of 2020,” according to Supersociedades.

“Within the framework of the procedure, the company must set a notice regarding the duration of the negotiation, notify the creditors of the beginning of the emergency negotiation and all the judges and entities that carry out executive, restitution, and guarantee enforcement processes or coercive collection, in order to be suspended during the process, and the company must start the negotiation with creditors and enter into the reorganization agreement in a term no longer than three months for confirmation by the Bankruptcy Judge,” according to the agency.

“The Emergency Negotiation of a Reorganization Agreement, established in Decree Law 560, is a mechanism for rescue and business recovery for those debtors who are affected by the causes that led to the declaration of the State of Economic, Social and Ecological Emergency, which allows to avert the crisis and preserve the company and employment through negotiation with creditors and the confirmation of a reorganization agreement,” the agency added.

Coninsa Ramon H is one of 26 companies, politicians and former Hidroituango officials hit by a proposed COP$4.3 trillion (US$1.15 billion) claim brought by Colombia’s Comptroller General (Contraloria General) for alleged “gross negligence” that supposedly triggered a costly 2018 collapse of a diversion tunnel at Hidroituango.

Potentially, Coninsa Ramon H and other companies could lose the current construction contract at Hidroituango and be forced to pay huge damage claims, possibly threatening the future viability of those companies.

In a September 6, 2021 press statement following the Comptroller-General’s claims announcement, the CCC-Ituango Consortium -- of which Coninsa Ramon H is one of the principal member companies -- announced that they will appeal the Comptroller’s claims.

“From what has been analyzed so far, the [Comptroller’s] ruling corresponds to issues that are eminently technical (project scheduling and tunnel construction), and we hope that the totality of the evidence that we provide is taken into account by all the instances to which we will resort,” according to that press statement.


Colombia President Ivan Duque announced October 11 during a visit to Washington, DC, that the proposed “Puerto Antioquia” ocean freight port near Turbo, Antioquia just won another US$200 million in financing from the Interamerican Development Bank’s “IDB Invest” group.

The project – now estimated to start-up in the second half of 2024 -- has a total estimated cost of US$672 million, of which IDB Invest is putting-up a US$150 million in equity plus “mobilization of US$50 million of funds under administration of IDB Invest, which offers a long-term financing of 17 years not otherwise available in the [private equity] market, and necessary to ensure the financial sustainability of the project,” according to IDB.

The project earlier won a US$110 million term loan from New York-based Global Infrastructure Partners (see Medellin Herald July 9, 2020).

The new IDB Invest financing will support “construction, operation and maintenance of Puerto Antioquia, a new multipurpose port facility located in the Gulf of Urabá,” the agency noted.

The project developers already have obtained a 30-year concession contract with Colombia’s National Infrastructure Agency (ANI).

“Thanks to its geostrategic location and the construction of '4G' [soon-to-open fourth-generation] highways, it will be the port terminal closest to the main production and consumption centers of the country, becoming a key infrastructure for strengthening Colombian foreign trade,” IDB noted.

The project also has lined-up “mezzanine financing from Global Infrastructure Partners and loans of US$193 million from Colombian local banks,” IDB added. Puerto Antioquia also has an environmental license and enjoys Special Permanent Free Zone status.

Among Puerto Colombia’s project sponsors: international shipping company CMA CGM, the Colombian port development company Puertos, Inversiones y Obras (PIO SAS), the European construction company Eiffage and Colombian banana-exporting companies Agrícola Santamaría, Banafrut, C.I. Unibán and C.I. Tropical.

The project features a 16.5-meters-deep ocean draft to a marine platform including 1,340 linear meters of dockage, all connected to a 3.8-kilometers-long viaduct to a 38-hectares shoreside parcel, which will include “logistical and technological facilities necessary for the storage of general cargo, bulk, vehicles and refrigerated and dry containers,” according to the funding agency.

“IDB Invest has promoted the alignment of Puerto Antioquia with the highest international standards in socio-environmental matters, which also means that the project responds to the need to implement sustainable, safer and more efficient transport infrastructures, which contribute to improving global indicators, such as the Sustainable Development Goals,” according to the agency.

Puerto Bahía Colombia de Urabá S.A. is the formal entity holding the concession contract with ANI for the ocean-freight terminal project.

The port initially will move an estimated volume of 7 million tons of cargo per year. “Due to its strategic location in the southeast of Urabá, the Colombian Caribbean coast, it will reduce the distance between the port and the main centers of production and consumption of the region by more than 350 kilometers,” according to the agency.


While the Medellin City Council is mulling Medellin Mayor Daniel Quintero’s proposed sale of EPM’s 50% stake in the UNE-EPM telecom/internet/cell-phone/cable-TV joint venture with Spain-based Millicom, a new report from Wall Street bond rater S&P (BRC Ratings) ironically sees a brighter outlook for the unit, contradicting Quintero's gloom.

In an October 4 filing with Colombia’s Superfinanciera oversight agency, UNE-EPM discloses the latest S&P/BRC ratings report, which finds that the UNE-EPM internet/telecom unit – commercially known as “Tigo” -- continues to enjoy a strong “AAA” bond rating.

“For the next few years we project profitability margins close to 32.5% and leverage indicators (measured as net debt to EBITDA) around 2-x (times), which we consider consistent with the rating,” according to the ratings agency.

“Despite an environment of greater competition and high investment commitments, the generation of the company's own resources will continue to provide favorable levels of liquidity for the continuity of its operation, which reflects a ratio of sources-over-uses above 1.2-x for the next two years.

“Our assessment of Tigo reflects its favorable market position in most of its business lines. It ranks second as the most relevant operator in the internet, fixed telephony and TV segments, and the third in the mobile [cell-phone] market nationwide.

“This is supported by an adequate spectrum mix between the high and low bands after the award of access to 40 megahertz (MHz) of 700 MHz in 2019, which we believe will continue to provide a competitive advantage in the telecommunications industry in terms of higher levels of digitization and coverage.

“Despite increased competition in 2021, all business segments maintain favorable results,” according to the report.

While UNE-EPM posted a net loss in 2020, “as of June 2021, consolidated revenues grew 6.5% compared to the same period of the previous year, a result that contrasts with the negative 1.2% of 2020 that incorporates the effects of the pandemic, and which is above the record of the last three years,” according to the report.

“In the next two years, we estimate that the home segment will mitigate the reductions in the mobile business and the small and medium-sized business market, so we project revenue growth of close to 4% in the next two years.

“The strengthening of its sales channels and the greater offer of prices have pressured profitability margins by about 1.6 percentage points during the first half of 2021, registering an EBITDA margin of 32.4% from 34% in 2020.

“In our opinion, the cost of these measures will be offset by the higher level of consumption offered by the sustainability of its customer base. Thus, for the next two years we estimate margins above 32.5%, in line with the rating agency’s expectations,” according to BRC.

“We project relatively stable levels of leverage over 2x, even under the continuity of its operational and investment commitments. Under the current scenario of cash flow generation, we do not foresee that the company will increase its debt in the next two years, because these resources will continue to be adequate to fulfill its investment plans, the commitments acquired in the 700 megahertz auction (MHz) of 2019, and the payment of the renewal of their spectrum licenses.

“This result compares favorably with that of its peers within the same industry and companies within the same rating at the national level,” BRC added.

UNE-EPM “maintains strict control of the stability of its debt levels and maturity profiles, for which in 2021 it advanced the prepayment of US$150 million of its syndicated debt against the issuance of bonds at the local level. This in order to minimize its exchange rate exposure, which, as of June 2021, its debt in dollars was close to 20.2% of the total, down from 36.7% in 2020, and [the company has] improved its payment profile which, to date of this review, it maintained an average term of more than six years,” the report explains.

As for the capex forecast, UNE-EPM will be spending “between 5% and 6% of income generation for 2021 and 2022, a share that would remain in line with what the company budgets,” according to BRC.

“Under our liquidity scenario, cash sources will be above 1.2-x and 1.3-x in the next 12 and 24 months, respectively. This result allows us to confirm that Tigo will have adequate resources to meet its operational requirements and payment of financial obligations.

"In addition, we consider that the company has mechanisms to face stress scenarios, such as the flexibility of its investment plan, access to the capital market and available quotas in the financial system, which, as of June 2021, amount to a value of COP$3.6 trillion [US$948 million],” according to the report.


Back in 2016, Medellin-based engineering-technology “coach” Hector Londoño was searching world-wide for new, creative ways to inspire his students to get involved in designing and building novel, affordable products that could help improve the lives of disabled people.

At first, Londoño -- a 20-year-veteran educator (including the last 14 years at The Columbus School, Medellin’s prestigious bilingual primary-through-secondary school) -- had no idea that this search eventually would lead him to Israel’s Mashav international development agency. That trip also included a one-month tour of some of Israel’s world-famous engineering and educational centers.

The 2016 trip – sponsored by The Columbus School – enabled a crucial meeting with Mashav executive Damian Filut, who introduced Londoño to the global “Tikkun Olam Makers” (TOM) organization, which promotes free, open-source technology development for disabled people world-wide.

“Tikkun Olam” is an ancient Hebrew phrase that can be translated as “mending the world,” a commandment that calls upon Jews to help disadvantaged people overcome obstacles and injustices.

Based upon that tradition, Tikkun Olam Makers (TOM) arose in 2014 -- founded jointly by U.S.-based philanthropist Gidi Grinstein, Israel’s social-advocacy Reut Group and the ROI Community of the Schusterman Philanthropic Network.

Today, Medellin hosts Colombia’s first -- and only, so far -- local chapter of TOM -- and it has delivered impressive results in five years of projects and programs here. Also note: the program joyously involves both Jews and non-Jews alike.

TOM-Medellin works in cooperation with El Comite de Rehabilitacion de Antioquia (CRA), Medellin’s prestigious EIA engineering university and numerous Medellin-based corporate sponsors including multinational banking colossus Bancolombia, electric power giant Celsia, construction giant Conconcreto, multinational health-care conglomerate Grupo Sura, technology incubator Ruta N and frequent collaborators including Medellin’s pioneering Theodoro Hertzl primary/secondary school.

Each year, TOM-Medellin organizes a public event where students from The Columbus School, EIA and other specialist collaborators show-off their prototype products that were first suggested by CRA and then designed and executed by the students themselves.

In October 1 interviews and walkabouts at the TOM-Medellin annual “Makers” exhibition -- here including Hector Londoño and his colleagues including Columbus School technology director Sandra Milena Hernandez, communications director Juan Humberto Ramirez, EIA University biomedical technology professor Juliana Velasquez and Columbus School student leader Andrea Cardenas -- Medellin Herald enjoyed the opportunity to see first-hand what these students are doing.

The initial beneficiaries of these technology developments are so-called “need knowers” – that is, disabled people whose candidate technologies are first nominated by CRA and then vetted by an expert committee at Columbus School and EIA.

But at the end of the annual “Makers’ exhibitions, the prototype designs resulting from the student developers are uploaded to the TOM global internet so that manufacturers and engineers anywhere in the world -- not just in Medellin -- can manufacture or further develop these novel products without paying any intellectual property royalties -- hence helping reduce costs for end-users.

Among the products we saw at this year’s exhibition:

A novel, low-cost, easily replicable prosthesis for people lacking arms;
A small, low-cost, hand-held “pictogram” device that enables a person that can’t speak or read to communicate to others on basic needs such as feeding, transport or bathing;
A low-cost, customized wagon-and-bike transport system enabling partially disabled people to move appliances or similarly heavy and bulky items on public streets;
A software project that will ease the task of uploading TOM prototype product designs to the global TOM network;
A low-cost, prototype kit for converting manual wheelchairs to motorized wheelchairs, including an electric-bike motor and an easy-to-use joystick for people unable to push the chair by themselves; and
A customizable, ergonomic prototype chair/desk computer workstation for short-stature, wheelchair-bound people.

This computer workstation design-project took top prize at TOM 2021. A detailed, 21-page description and construction manual (in English) explains exactly how to replicate this workstation. A copy can be obtained directly from TOM 2021 engineering participant Hans Mestizo at This email address is being protected from spambots. You need JavaScript enabled to view it..

Perhaps you are interested in participating in or sponsoring future TOM-Medellin projects and programs? If so, then contact Columbus School officials Juan Humberto Ramirez (This email address is being protected from spambots. You need JavaScript enabled to view it.) or Sandra Hernandez (This email address is being protected from spambots. You need JavaScript enabled to view it.).

According to TOM-Medellin, future projects and programs would benefit from more volunteers and donors, such as corporate and individual financial sponsors, engineering and technology experts, manufacturing experts, exhibition volunteers, social workers and communications directors.

Also note: the students you can help to get involved in these projects and programs today may very well become the sort of creative, hard-working and socially conscious employees or collaborators that your company or organization could call-upon tomorrow.

Which helps explain why so many leading Medellin companies are already working with TOM-Medellin right now. So: Tikkun Olam, indeed.


Colombia Health Minister Fernando Ruiz revealed October 1 that 40.7 million doses of Covid-19 vaccines have now been applied nationally here through end-September -- meaning more-than-half of all Colombians have already received at least one shot.

Through September 30, Colombia received another 14 air-freight deliveries of Covid-19 vaccines last month, totaling 12.85 million doses.

Meanwhile, for all of 2021, Colombia has so far acquired 83.4 million vaccine doses: 20.3 million through the Covax mechanism; 55.9 million through bilateral mechanisms and 7.1 million through donations -- overwhelmingly from the United States government.

Given Colombia’s total population of 51 million, this means 51.2% have already gotten a first dose and 33% have gotten complete doses against Covid-19, according to the Ministry.

Among population groups, 97% of those over 80 years of age are already vaccinated with one dose and 85.24% have been completely vaccinated, according to Health Ministry promotion director Gerson Bermont.

For the 40-to-49-year-old group, 68.5% have already been vaccinated, while 44% of those aged 20-to-29 years and 37% of those aged 12 to 19 are now vaccinated, he said.

Colombia’s relatively small cohort of people older than 70 years also can get a booster shot starting this month, which would involve Pfizer or Moderna vaccines – even if those people had first gotten Sinovac or AstraZeneca shots earlier this year, he added.

“We have a very important number of vaccines -- 12.8 million doses that have arrived in September, for which there is ample availability to advance the National Vaccination Plan,” added Health Minister Ruiz.

“October is essential to advance and consolidate vaccination. We have to reach 70% coverage of the population by the end of December [2021], for which we have three months to grow and increase coverage,” he cautioned.


Medellin-based multinational insurance and health-care giant Grupo Sura just confirmed this afternoon (September 23) that its VaxThera biotech division will build a US$54 million plant and laboratory here in Antioquia for production of up-to-100-million bottles/year of vaccines for the Latin American market.

“The location was defined after a detailed analysis by a group of experts and consultants that took into account the conditions necessary for the company’s operations. Construction is projected to begin in the first quarter of 2022, to start operations in 2023,” according to the company announcement.

First word of the proposed plan to build the 35,000-square-meters plant in the metro Rionegro, Antioquia area, came from Antioquia Acting Governor Luis Fernando Suarez last week. But confirmation only came today directly from VaxThera.

“Our plant for the production and packaging of vaccines in Colombia will be located in eastern Antioquia,” according to VaxThera’s official announcement.

The new plant and laboratory will generate 500 jobs here, dedicated to “research and development of vaccines for the prevention and treatment of emerging infectious diseases in the Latin American region,” according to VaxThera.

The plant’s output will follow strict standards as demanded by the World Health Organization, the U.S. Food and Drug Administration (FDA), Colombia’s Invima medical-standards regulator, and the European Medicines Agency (EMA), according to the company.

While the plant will have capacity to produce around 100 million vials per year, VaxThera also “seeks to import and commercialize vaccines and other types of biologicals for Colombia and Latin America, and transfer the necessary technology to the country to produce and develop these types of products,” according to the company.

VaxThera aims to develop vaccines for treating coronavirus, dengue, chikungunya, yellow fever, influenza and Zika, the company added.


Colombia President Ivan Duque today (September 14) signed far-reaching tax and social-benefits legislation that promises to benefit more than 29 million poor- and middle-class Colombians -- while also putting a heavier tax burden on wealthier individuals and corporations.

Not only is the legislation progressive -- contradicting some biased media reports and some blowhards that paint Duque as a “right-wing” President -- but also it’s remarkable that the bill passed both houses of Congress in the final months of a four-year presidential term. Getting anything done legislatively when Colombian presidents are leaving soon is almost unheard-of in Colombian politics.

The new law also “makes Colombia the first country in the hemisphere to carry out a social and fiscal reform in the midst of the pandemic,” according to Duque.

The bill aims to raise COP$15.2 trillion (US$3.97 billion) by raising the corporate income tax rate to 35%, cracking down on tax evasion, cutting non-mandated federal expenses, and continuing the existing financial-transfers tax and the ICA tax.

As for social benefits, the bill gives all students in lower-income strata (1, 2 and 3) free tuition at all public schools; extends the “solidarity income” subsidy for hiring young people; refunds the 19% value-added tax (VAT) to poorer people; extends the “emergency basic income” subsidy -- created at the start of the Covid-19 pandemic -- through 2022, and continues a variety of income subsidies for senior citizens, young people and poor families.

“Thanks to the application of the law, extreme poverty levels will be reduced from 15.1% in 2020 to 6.7% in 2022,” according to Duque. “Moderate poverty levels will also decrease from 42.5% in 2020 to 34.3% in 2022. In total, 4.1 million households will benefit from Solidarity Income, equivalent to 14.3 million people,” he added.

The employment subsidies included in the bill are projected to recover around 1 million jobs and help slash unemployment to levels prior to the pandemic outbreak.

“Every [temporary subsidy measure] that arose in the midst of the [Covid-19] complexities today becomes state policy thanks to the assistance of the political parties, unions, youth, governors and mayors,” Duque added, citing the broad coalitions that backed the new legislation.

“The Formal Employment Support Program [PAEF in Spanish initials] is historic for what it represents. This year, when we see the reactivation [of the national economy], we are not going to put it aside. On the contrary, we know that there are companies that are still affected and there are sectors that are just getting ahead and, therefore, retroactively, from May this year to December this year, the PAEF has also become an effective response to the needs of the Colombian people.

“And new elements are added: support for women, support for the population with disabilities, support, also, for those who were victims of the [‘Paro National’ riots and] blockades, those who wanted to destroy and who, too, were affected in their lives, in their income. They, too, are answered,” Duque added.

“But let it  also be clear: The solution has not been at the cost of taking away competitiveness from the private sector, but of maintaining it -- and I say this because of the following: this reform maintains the 100% VAT discount on capital goods. This reform maintains the elimination of presumptive income [from tax]. Because even with the increase in the nominal [corporate tax] rate [to 35%], it is still a rate substantially lower than the one we had in 2018 and, also, because the ICA tax deduction is left at 50%.

“In other words, the private sector contributes, but maintains the competitiveness gained in these years, to continue making Colombia an attractive place for foreign investment,” Duque concluded.


Coltejer Shuts Down Completely

Friday, 10 September 2021 08:36 Written by

Medellin-based textile giant Coltejer revealed in a September 9 filing with Colombia’s Superfinanciera oversight agency that it has decided to shutter all operations for what remains of 2021 -- and hinted of even more drastic, permanent measures coming.

“The suspension of productive activities will continue for the rest of this year 2021,” according to Coltejer.

“To date, the management team is analyzing some strategic issues that would allow it to reactivate some operations during the year 2022, among which we can highlight the following:

“a. The sale of fixed assets and product inventory.
“b. Real estate rental offer.
“c. Analysis of marketing strategies regarding the industry, clients, competitors and other market variables, which allows us to determine the relationship between the supply and the demand for textile products according to the capacity of the company.”

The Superfinanciera filing concludes with this ominous-sounding note about the company’s future: “We thank our suppliers, employees and other collaborators for all the support that they have given us.”

Coltejer and other major textile suppliers in Colombia have been suffering huge losses due to below-cost and contraband textile imports mainly from China and elsewhere.

The company racked up more red ink in second-quarter 2021 (see Medellin Herald 08/18/2021), shut down its non-woven fibers production in July (see Medellin Herald 07/16/2021) and announced closure of its historic, foundational factory in Itagüí last December (see Medellin Herald 12/18/2020).


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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

Medellin Herald welcomes your editorial contributions, comments and story-idea suggestions. Send us a message using the "contact" section.

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