Monday, July 22, 2019

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A new report from the United Nations Economic Commission for Latin America and the Caribbean (CEPAL) finds that foreign direct investment (FDI) in Colombia grew by a relatively modest 0.5% year-on-year in 2017, whereas FDI in Latin America actually fell 3.6% region-wide.

According to the report (see: https://www.cepal.org/es/comunicados/inversion-extranjera-directa-america-latina-caribe-cae-tercer-ano-consecutivo-2017-llega), “FDI inflows into Colombia reached US$13.924 billion in 2017, up 0.5% on 2016 levels and close to those recorded between 2011 and 2014.

“Reinvested earnings increased significantly for the year, especially in the fourth quarter, reflecting the increase in the price of oil, as well as the overall improvement of the economy in the second half of the year.”

Transport and telecommunications sectors were the biggest FDI recipients in 2017, at US$3.136 billion, “matching investment flows to the oil sector (US$3.135 billion), traditionally the largest recipient of FDI in Colombia,” according to the report.

Following the crash in global oil prices starting in 2014, “between 2011 and 2014, the oil sector [in Colombia] recieved over US$5 billion annually, but these [FDI] inflows halved in 2015 and 2016,” the CEPAL report noted.

In contrast, Colombia's oil-and-gas FDI rise seen in 2017 and in the first months of 2018 “reflects the pick-up in investment resulting from the increase in [oil] prices,” according to the report.

Colombia’s mining sector also benefited from a global rebound in prices for basic materials, as 2017 mining FDI rose to US$953 million. “FDI in the manufacturing sector also increased, almost reaching its highest level in the past 10 years, at US$2.523 billion,” the report added.

Following a trend of recent years, Spain was the biggest single source of FDI to Colombia, at US$2.616 billion, with the United States a close second, at US$2.121 billion.

“Mexico was the third largest investor [to Colombia] in 2017 with FDI totaling US$1.717 billion, including an investment by Grupo Salinas, which injected an additional US$100 million into its fiber-optic infrastructure subsidiary, Azteca Comunicaciones Colombia,” according to the report.

“Investments from Spain and Mexico increased owing to the recapitalization of the [telecom] subsidiaries of Telefónica and Claro, after a Colombian court ordered the companies to pay the Colombian government US$500 million and US$1 billion [respectively] in compensation for contractual infringements in the framework of the concessions awarded to them in 1994,” the report added.

In contrast to the positive signs for Colombia, 2017 FDI actually declined 9.7% year-on-year in Brazil and 8.8% in Mexico, while Chile saw FDI plunge 48% and Peru dipped 1.4%.

Commenting on the CEPAL report, Maria Lorena Gutierrez, Colombia’s Minister of Trade, Industry and Tourism, stated: “Colombia is a stable country. We have instruments that attract investors such as investment agreements, free zones and double-taxation [avoidance] agreements.

“But the prospects are even better. The peace agreement [between the government and the FARC terrorist group] and the entry of Colombia into the Organization for Economic Cooperation and Development are aspects that make the country even more attractive,” she added.


Medellin-based national electric-power grid operator and wholesale trading center XM announced July 5 the debut of an ultra-high-tech control center that will help maintain and improve power reliability and rationality for all Colombia.

According to XM, the new control center is “the most modern of [all] America, with technological platforms of latest generation, ensuring that during [at least] the next 12 years [we can meet] the challenges of the operation and integrated control of the resources of the Sistema Interconectado Nacional [SIN, the national power grid.]”

The new control center also includes two high-tech training rooms that “allow [trainees] to simulate in real time the operation of the entire SIN in a controlled environment,” according to XM.

“We monitor and control around 26,000 electrical variables measured throughout the depth and width of the national geography, employing multi-site technology for the continuous operation and phase measurement as well as maximum observability of the network, identifying [power-disruption] phenomena impossible to detect with traditional technologies,” according to the company.

XM’s system coordinates 66.89 terawatt-hours/year of power production and dispatch, involving more than 55,000 coordinated power moves annually by 112 players in the Colombian power market, including 74 power generators, 60 centrally-dispatched plants, 146 non-centrally-dispatched plants, 16 power transmitters, 32 power wholesalers, 26,000 kilometers of 110-kilovolt power lines, 249 power substations and the power interconnection with Ecuador.

“The new control center of the National Dispatch System will have two updates of hardware and software every four years, which will guarantee the latest available versions and will ensure the best technology to meet the challenges of the operation, maintainance and integrated control of the SIN until 2030,” XM added.

“The global electricity industry is facing one of its biggest changes [in history] and Colombia is not immune to this reality,” said XM general manager María Nohemi Arboleda.

“For this reason it is essential to have very strong institutions that incorporate new elements and actors in the most appropriate and harmonious ways possible. At XM we have been developing initiatives and projects for several years that point in that direction -- and the new control center that we are inaugurating today is proof of this,” Arboleda added.


Cemex Colombia – a subsidiary of Mexican multinational cement producer Cemex Inc. and Cemex LatAm Holdings – announced June 22 that it failed in its final appeal over a cement price-fixing charge brought by Colombia’s Superintendencia de Industria y Comercio (SIC).
 
The company will pay a COP$923 million (US$316,476) fine as a result of the final ruling by Colombia’s Council of State (Consejo de Estado), which also upheld fines against alleged co-conspirators including Medellin-based Argos (which has denied the charges) and Bogota-based Holcim Colombia (a division of Swiss-based LafargeHolcim).
 
According to Cemex Colombia's June 22 filing with Colombia’s Superintendencia Financiera (Superfinanciera), the price-fixing was alleged to have occurred between May and December of 2005. However, the latest Council of State ruling doesn’t cover separate SIC allegations of price-fixing between 2010 and 2012 -- charges which Cemex continues to dispute in separate proceedings.
 
Maceo, Antioquia Scandal Continues
 
On another front, Colombia’s Attorney General (Fiscal General) announced June 12 that it has brought criminal charges against Édgar Ramírez Martínez (former Cemex Colombia vice president of planning) and Camilo González Téllez (former Cemex Colombia vice president legal affairs) over the Maceo, Antioquia, cement-plant land-acquisition scandal (see Medellin Herald 02/09/2018).
 
Ramirez and Gonzalez both faces charges of illegal enrichment as well as “unfair administration” over allegedly illegal acquisition of lands around the mostly complete, US$420 million Maceo cement plant, which hasn’t started-up and remains in legal limbo pending operating-permit approvals.
 
The Attorney General also brought illegal-enrichment and money-laundering charges against Eugenio Correa Díaz, the legal representative of “C.I. Calizas SA,” which is alleged to have illegally sold land to Cemex for the Maceo plant.
 
The lands originally held by C.I. Calizas had been subject to another legal proceeding (“extinction de dominio”) over non-payment of Colombian taxes on allegedly phony exports of auto parts by former C.I. Calizas owner Jose Aldemar Moncada, who was assassinated two years ago.

According to the Attorney General, Ramirez, González and Correa “advanced negotiations to acquire several assets” of C.I. Calizas -- including lands that supposedly should have been in control of Colombia’s tax authorities because of the earlier tax-evasion charges against Moncada.
 
“According to the investigation, the executives of Cemex and Eugenio Correa were aware of this situation and despite this they insisted on the negotiation, under which the cement company would have disbursed more than COP$40 billion [US$13.7 million], money that went into the personal accounts of Correa Díaz, and from which apparently one part was used to pay obligations of José Aldemar Moncada, while the rest was converted into cash without having entered a single peso into C.I. Calizas S.A.,” the Attorney General charges.
 
Cemex LatAm Holdings earlier brought details of this situation to the attention of the Attorney General, as the alleged scheme “caused serious damage to property and reputation, both to the company and its shareholders,” according to the Attorney General.

Medellin’s business promotion agency ACI (Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana) and Netherlands-based Sana Commerce jointly announced June 21 the launch of Sana’s e-commerce consulting business at the high-tech “Ruta N” business center here.

Attending the launch was Netherlands Ambassador to Colombia JJ Roodenburg as well as Sana Commerce director Cas Nieskens.

According to the company, over the past 10 years, Sana has developed e-commerce strategies based upon enterprise resource planning (ERP), tapping the Microsoft Dynamics systems, applications and products (SAP) software.

Besides the new office in Medellín – targeting customers throughout Latin America -- Sana also has branches in the Netherlands, USA, UK, Sri Lanka, Ukraine, Germany, Austria and Australia, according to the company.

“The city of Medellín was chosen as the location for our newest office for its emphasis on IT [information technology] and engineering education, startup environments and entrepreneurship, as well as for its supportive government and favorable business environment,” Nieskens added.

Medellin’s northern South America location and time-zone “allows Sana Commerce to efficiently deliver technical solutions to a rapidly growing number of customers across the Americas,” the company added.

“Our e-commerce solution leverages existing business logic and data in powerful and user-friendly web stores. This lets our clients focus on improving customer experience, streamlining sales processes, and increasing sales volume and frequency.”

The company touts having developed more than 1,200 “web stores” worldwide, with support services including “online marketing, Search Engine Optimization (SEO) advice, hosting, design and online payment providers.”

“We would like to extend our gratitude to the Colombian government, and in particular to the ACI, ProColombia, the Dutch Embassy and the Holland House for their support in our research and start-up phase,” added Sana chief operating officer Tim Beyer.


The Organization for Economic Cooperation and Development (OECD) – the group of the 37 biggest free-market democracies in the world – announced May 25 that Colombia has now completed all main steps to join the group.

Formalization of affiliation will take place May 30 in Paris, when President Juan Manuel Santos and OECD Secretary-General Angel Gurria sign the official “access agreement” papers during the reunion of the OECD Council of Ministers, according to the organization.

The recent, successful conclusion of talks between OECD and the Colombian government on intellectual property rights had been the main sticking point holding-up Colombia’s final approval.

“It’s great news for our country. OECD is the most important organization that promotes the best public policies in the world,” as well as providing a “stimulus to investment,” President Santos said.

As an OECD member, “we have immense possibilities to advance in health, education, the fight against corruption and protection of the environment,” Santos added.

During the seven-years-long accession process, Colombia underwent “in-depth evaluations, carried out by 23 OECD committees, and Colombia has undertaken major reforms to align its legislation, policies and practices with OECD standards on issues including labor, the judicial system, corporate governance of public enterprises, the fight against bribery and the field of trade, and has introduced new policies at the national level on industrial chemicals and waste management,” OECD added.


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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.

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