Tuesday, September 28, 2021

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Roberto Peckham

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

Published in Companies September 10 2021 0

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).


The U.S. Agency for International Development (USAID) announced September 6 that it’s teaming-up with France-based Elite Chocolate to train women from the Embera Eyabidá ethnic group here in Antioquia on specialized production and export of organic cacao for gourmet French chocolate.

According to USAID, “the cacao grown by women from the Embera Indigenous Council of Mutatá, Antioquia, begins to take its first steps to enter the French market.”

The initiative -- part of USAID’s Páramos y Bosques (highlands and forest) conservation program -- “facilitated a commercial alliance between the [Embera Council] and the French company La Finca Brava, whose business is to find the best cacao in Colombia to produce gourmet chocolate,” according to the agency.

“The initiative was joined by Elite Chocolate, a French organization that supports product markets in vulnerable communities,” according to USAID.

According to the partners, “the [Colombian] Pacific cacao has very special characteristics of flavor and aroma that come from the soil, the vegetation and the jungle, hence its high national and international demand. These characteristics, added to the organic process with which it is grown and upgraded, make it a highly desired product in specialized markets.”

To launch the initiative, three Embera women -- Laura Marcela Suescun Goez, Gloria Esther Bailarin Domico and Argelia Bailarin Bailarin (see photo, above) -- are traveling to France this month for 10 days of special training on production of specialty cacao, while also learning from French master chefs about gourmet chocolate production.

Back in Mutatá, Antioquia, other Embera women and their husbands subsequently will learn the same techniques and employ only the best raw materials, according to the project partners.

“It is projected that by 2022 the indigenous council of Mutatá will send the first quantities of organic cacao and later the product will be transformed into chocolate bars,” according to USAID.

Cacao production is just one of the commercial activities for the Embera de Mutatá Council, which currently guards 34,000 hectares of tropical forest dedicated to a “REDD+” project (Reduction of Emissions derived from Deforestation and Forest Degradation), supported by USAID.

The specialty cacao project not only will help boost the economy of the Embera community but also help master French chocolatiers and pastry chefs to produce the finest gourmet chocolates, according to La Finca Brava manager Gregory Le Heurt.

French consumers currently devour an astounding 36,000 tons of chocolate every 15 days -- the equivalent of two-thirds of Colombia’s entire annual production of cacao, Le Heurt added.


Colombia’s Commerce Ministry revealed this month that foreign direct investment (FDI) here skyrocketed by 62% in second quarter (2Q) 2021, on top of an impressive 17.6% year-on-year rise in gross domestic product (“PIB” in Spanish initials) during the same quarter.

One of the companies that is helping to spark this rebound is Medellin-based agricultural investor/producer/exporter Managro, simultaneously boosting both FDI and vital Colombian exports, thanks to Israeli capital, sophisticated management, high technology -- and admirable corporate social responsibility.

Honoring Managro’s efforts, Colombia Vice President Martha Lucia Ramirez, Israeli Ambassador Christian Cantor, Colombia Vice Minister of Agriculture Juan Gonzalo Botero, ProColombia President Flavia Santoro, Finagro Vice President Rodolfo Bacci and other top officials made a special trip last month to the recently renamed “Managro Fresh” produce packing-house in Valle del Cauca.

In her presentation, Vice President Ramirez specifically praised Managro’s Medellin-based executive director -- Israeli expat Chagai Stern -- for Managro’s novel innovations, big investments and positive contributions to Colombia’s economy.

For example: Managro just exported another 18-tons of Colombian avocadoes to South Korea, on top of a 20-tons shipment earlier this year.

Having purchased the former Pacific Fruits International packing house in 2020, Managro Fresh is now one of the biggest produce packers in Colombia -- with big plans for future growth, as Stern revealed to Medellin Herald in the following interview:

Medellin Herald: The Covid-19 quarantine in 2020 and the ‘Paro Nacional’ strike in 2021 as you know caused both health and economic hardships among Colombians and the entire world. Can you comment on what impact the quarantine and the strike had on Managro?

Stern: The pandemic didn't affect much the business. Though restaurants were closed, people eating at home were more conscious of eating healthy -- and the demand for avocado actually increased.

The strike did cause a lot of damage. No trucks were able to come to our facility and we lost seven containers of produce that were stored in our cold room. We couldn't even donate them as no trucks were able to get to us. The economic damage of the strikes was over US$1 million to us. In addition, many farmers lost their crops as they couldn't harvest and transport them to any packing house.

Medellin Herald: Now that the strike seems to be mainly quieted if not entirely settled, are you more confident about boosting production and exports of Managro products this year and next?

Stern: We are planning a major investment of buying 3,800 hectares for avocado. We are importing our own genetics and using Israeli software technology and irrigation system. The investment will allow us to export 2,200 containers a year of our own production in five years. The investment is US$60 million.

We are also coming out with new initiatives of social programs like ‘Mana Allies’ where we supply the farmers with monthly finance, technology-- what we call ‘Agritask’ -- and expertise.

Medellin Herald: While nobody could anticipate the 'Paro Nacional' road blockades that caused so much losses of fresh produce and farm products here, is there any sort of insurance for companies like Managro to help manage such losses?

Stern: Unfortunately there are no insurances for this.

Medellin Herald: Did the Colombia government offer any programs that helped Managro keep people employed during these crises of 2020-2021, and helped reduce some of the inevitable corporate revenue losses?

Stern: During the strike, the government gave us an option to freeze the contracts of our workers. Of course we did not take that option. Workers put their trust in our company for financial security and we didn't let them down. All of our workers got fully paid.

 


Colombia’s Comptroller-General announced this afternoon (September 6) that it has decided to go ahead with court claims totaling COP$4.3 trillion (US$1.13 billion) against 26 officials, companies and several politicians for alleged “gross negligence” that supposedly resulted in a 2018 diversion-tunnel collapse at the US$5 billion Hidroituango hydroelectric dam in Antioquia.

Following provisional charges brought last December (see Medellin Herald 12/03/2020), the Comptroller has now decided to dismiss its initial charges against former Antioquia Governor and former Medellin Mayor Aníbal Gaviria, as well as former project official Jorge Mario Perez Gallon, according to the Comptroller’s announcement today.

The 2018 diversion-tunnel collapse has caused a 115% hike in the original budgeted cost for Hidroituango, according to the Comptroller.

The following 26 persons, companies and politicians -- divided into four groups – all now face Comptroller charges, which they are entitled to dispute:

1, Hidroituango board members Federico Jose Restrepo Posada; Juan Esteban Calle Restrepo; Alejandro Antonio Granda Zapata; Fabio Alonso Salazar Jaramillo (a former Medellin Mayor); Alvaro Julia Villegas Moreno; Sergio Betancur Palacio; Alvaro de Jesus Vasquez Osorio; Ana Cristina Moreno Palacios; Ivan Mauricio Perez Salazar; Jesus Arturo Aristizabal Guevara; Maria Eugenia Ramos Villa; Rafael Andres Nanclares Ospina; former Medellin Mayor and Antioquia Governor Sergio Fajardo Valderama; and former Antioquia Governor Luis Alfredo Ramos.

2. Hidroituango managers Luis Guillero Gomez Atehortua and John Alberto Maya Salazar;

3. EPM-Hidroituango Vice President Luis Javier Velez Duque;

4. Construction contractors and consultants including Integral S.A; Integral Ingenieria de Supervision SAS (which absorbed previously involved Solingral SA; Construcoes e Comercio Camargo Correa SA; Constructora Conconcreto SA; Coninsa Ramon H SA; Ferrovial Agroman Chile SA; Sainc Ingenieros Constructores SA, and Ingenieros Consultores Civiles y Electricos SA (Ingetec).

The Comptroller also seeks to recover COP$400 billion (US$105 million) in insurance payments that would be advanced to EPM (Hidroituango’s over-all project overseer).

Hours after seeing the Comptroller’s announcement, EPM issued the following public statement:

“Faced with the failure of fiscal responsibility [alleged by the Comptroller], EPM with its technical, legal and financial team will study the consequences that this could have on the development of Hidroituango,” according to EPM.

“The persons [and companies] subject to fiscal responsibility will have five business days to file for remedies for reconsideration and appeal against this first-instance ruling, after being duly notified. This means that the effects of the ruling can be suspended until the appeals are resolved by the Comptroller General.

“EPM will be attentive to all subsequent actions carried out by the fiscal control entity, since if this first-instance decision is upheld, then EPM must have an adequate and planned structure that allows the continuity, without delay, of the execution of the Hidroituango project.”


As of today (September 6), more than 36.5 million doses of Covid-19 vaccines so far have gone into the arms of Colombians -- and that's likely to hit more than 40 million by September 30, according to latest Health Ministry statistics and forecasts.

What’s more, 15 million Colombians have now been fully vaccinated, along with 21.5 million partly vaccinated-- meaning that Colombia is moving ever-closer to its goal of getting its 35 million most-vulnerable populations protected against Covid-19 by the end of 2021.

Yet ironically, probably 90% of Colombians over the past 18 months have contracted at least one or another version of Covid-19 -- although most had only mild symptoms or unrealized (asymptomatic) effects, according to a new study by Colombia’s Instituto Nacional de Salud (INS, the national health research institute).

Officially, Colombia has recorded more than 4.9 million documented cases of Covid-19, with 125,278 deaths and 4.75 million recoveries, according to latest Health Ministry statistics.

But of Colombia’s total 50 million people, most have never been tested for Covid-19, the INS study showed. Because of that, INS employed a math formula to extrapolate likely infection rates among populations in 12 main cities where Colombians actually did get tested.

According to INS Director Martha Ospina, this math calculation indicates that likely 89% of Colombians have had one or another type of Covid-19 variant in their bodies since testing started here 18 months ago, though most didn't know it.

The “Mu” variant that now predominates in Colombia accounts for 53% of cases currently, she added.

With the more-dangerous Delta variant already here and likely to spread over the next few weeks, that means it’s even more important for Colombians -- and visitors -- to continue wearing masks, avoid crowds, regularly disinfect hands, keep safe distances and get vaccinated (if they still haven’t done that), she said.

In other words, it doesn’t matter if people have already been infected with some earlier, less-dangerous Covid variant. Unvaccinated people that luckily survived an earlier variant can’t be sure of protection against the latest variants -- and what's worse, they can become super-spreaders of Delta variant, sickening and killing many others.

Meanwhile, Health Minister Fernando Ruiz announced September 7 that Colombia now expects to receive 12.75 million doses of Covid-19 vaccines from five pharmaceutical companies during September.

Of those, 2.35 million will come from Pfizer; 1.1 million from AstraZeneca; 4 million from Moderna; 2 million from Janssen; and 3 million from Sinovac.

In total, 76 municipalities in Colombia have already fully vaccinated at least 50% of target populations, helping to stem the spread of infections, slash deaths and cut hospitalization rates. But one-third of the latest vaccination reports have yet to be filed electronically with the Ministry – meaning that the actual vaccination rate is likely higher than the reported rate.

So far, the Ministry has already distributed nearly 40 million vaccinations to hospitals, clinics and health networks in Colombia, including 2.1 million shots being handled by private-sector companies that are vaccinating their employees. That’s likely to rise to 50 million by month’s-end -- and not a moment too soon, given the arrival of Delta variant.


Medellin’s Mobility Secretariat this afternoon (September 3) finally unveiled its long-awaited rules on the upcoming “pico y placa” driving restrictions that start Monday, September 6.

Under the new rules (see: https://www.medellin.gov.co/irj/go/km/docs/pccdesign/medellin/Temas/NuestroGobierno/Publicaciones/Shared%20Content/Documentos/2021/Decreto-0730-de-2021-Pico-y-Placa.pdf), starting September 6, cars and light trucks (under 3.5 tons) with license plates ending in 0 are banned from circulation from 5 am to 8 pm.

The following day (September 7), cars and light trucks with plates ending in 1 are banned, then cars with plates ending in 2 are banned on September 8, and so-on.

The climbing-numbers rotation starts all over again on Monday, September 20, with the same numerical sequences -- plate numbers variously ending from 0 to 9 -- banned from circulation each corresponding day from Monday through Friday (see chart, above).

For the first two weeks (through September 17), the restrictions are “educational,” but starting September 20, the longstanding, historic “pico y placa” fines begin, according to the Secretariat.

Certain routes that pass through the entire Medellin metro area are exempted from the restrictions, including Autopista Sur, Avenida Regional and the parallel Avenida Occidental (the highways that run alongside Rio Medellin); Avenida 33 from Rio Medellin to its connection at Las Palmas; Avenida Las Palmas; and La Iguaná.

Also exempt are the eastward/westward roads alongside the La Iguaná stream between Avenues 63 and 80, and the east-to-westward segment of highway from the Horacio Toro bridge connection to La Iguana heading westward.

Exempt vehicles include fully electric and hybrid-electric cars; compressed-natural-gas-fueled cars; ambulances; buses; heavy trucks; public service vehicles; fire trucks; wreckers; health/medicines transport vehicles; and all types of emergency vehicles. Food/perishables transport vehicles also can be exempted if properly registered.

Enforcement will be especially strict on 40 heavily-trafficked, inner-city road routes as specified in the new regulation. But rural Medellin’s outlying, rural routes are exempt.

As for motorcycles, their “pico y placa” restrictions start October 4, the new rules show. Motorcycles making home-deliveries will be exempted.

AMVA Cities Follow Medellin's Lead

Hours after Medellin formally announced its pico-y-placa rules, Area Metropolitana del Valle de Aburra (AMVA) -- the coordinating agency for the 10 cities in metro Medellin -- unveiled its parallel guidance for the whole metro area (see: https://www.metropol.gov.co/Paginas/Noticias/pico-y-placa-empezara-a-regir-a-partir-del-6-de-septiembre.aspx).

That regional guidance includes internet links to each of the individual city regulations, which mainly follow the Medellin rules. For example, all 10 cities incorporate the 5 am-to-8 pm daily driving bans on individual vehicles, the same day/plate number rotations, and the same exclusions for certain vehicles (such as electric/hybrid vehicles, natural-gas vehicles, buses, etcetera). 


Medellin-based highway/airport concessionaire Odinsa – a division of cement, electric-power and concessions conglomerate Grupo Argos – announced this morning (September 2) a strategic alliance with Australia-based global infrastructure giant Macquarie Infrastructure and Real Assets (MIRA) and its affiliate Macquarie Infrastructure Partners-V (MIP-V).

According to Odinsa, the new alliance “will create an investment platform for road assets in Colombia and the region.”

Under the deal, Macquarie and Odinsa will create a private equity fund that will assume control of Odinsa’s highway concessions in Colombia and also jointly develop new projects.

“The investment platform would manage Odinsa’s current highway assets in Colombia, including Concesión La Pintada S.A.S., Concesión Túnel Aburrá Oriente S.A., Autopistas del Café S.A. and Concesión Vial de los Llanos S.A.S., with a consolidated valuation close to COP$4.3 trillion [US$1.14 billion],” according to Odinsa.

The new platform also would manage Odinsa’s private highway initiatives in Colombia including the “IP Perimetral de la Sabana” and the “IP Conexion Centro” projects, as well as the planned expansion of the existing “Túnel Aburrá Oriente” highway tunnel that connects Medellin to the JMC International Airport in Rionegro.

That group of Odinsa’s assets and future expansions would enjoy “significant financial backing and technical strength for their management” from the new investment platform, while the partners also would “continue to explore other opportunities for creating value through the development of new projects,” according to Odinsa.

“As a consequence of the acceptance of the proposal, the companies signed a contract for the sale of shares and assets that contemplates the operations for the constitution of the investment platform,” according to Odinsa.

Macquarie Asset Management (MAM) – the corporate owner of MIRA and MIP-V – currently has US$427 billion in assets under management in 20 markets across Asia, Europe, Australia and the Americas, in sectors including infrastructure, renewables, real estate, agriculture, transportation finance, private credit, equities and fixed income, according to the company.

“The interest shown by national and international investors in being part of this initiative translates into good news for Grupo Empresarial Argos” while also confirming “the interest of international investors in continuing to invest in Colombia,” Odinsa added.


Medellin-based multinational electric power giant EPM announced August 31 that insurer Mapfre’s just-issued US$100 million payment for physical damages at the estimated US$5 billion Hidroituango hydroelectric project now brings total damage payments from Mapfre to US$450 million.

EPM recently boosted the estimated cost of the Hidroituango project to COP$18.3 trillion (US$4.877 billion), since a 2018 diversion-tunnel collapse resulted in about a US$2 billion cost overrun -- once including both physical damages and even-greater losses from nearly four years of lost power sales.

With restoration work now well underway, EPM foresees the first two power generation units at Hidroituango coming on-line in the second half of 2022, while the six remaining units would come on-line between 2023 and 2025, eventually enabling a maximum 2.4-gigawatts of power capacity.

The Mapfre policy covers up-to US$2.56 billion for physical damages and up-to US$628 million for lost power sales.

US$1.29 Billion Debt Request Ahead of UNE-Tigo Divestment Plan

On a related front, EPM revealed August 31 in a filing with Colombia’s Superfinanciera oversight agency that it is seeking authorization to contract another US$890 million in external debt, plus another US$400 million in Colombian Treasury loans equivalent to COP$1.5 trillion. As a result, EPM’s debt load potentially could grow by US$1.29 billion.

Meanwhile, to help pay for the cost overruns at Hidroituango and simultaneously reduce the need for more debt funding, Medellin’s City Council plans to begin hearings next month on EPM’s request to sell its 50% share of the UNE-Tigo telecom/internet/cable-TV joint venture that it shares with Spain-based Millicom.


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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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