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Colombia – Investors Sold on Peace and Security

12 Feb

For many investors the mention of Colombia has for decades been accompanied by the frantic waving of red flags. It is no longer the case. The unparalleled success of President Álvaro Uribe Vélez in reducing the prevalence of violence and unrest has translated to new heights of investor confidence.

Political Stability

Violence has been a mainstay of the Colombian nation. Simply put, the fighting has been between left-wing guerrilla groups and right-wing paramilitaries. Drug cartels fund the violence so that the guerrillas defend their cocoa crops from any government interference. Civilians have been very involved. The fighting has occurred in their backyard, and on their front lawn.  Their family members have been murdered and kidnapped.

It was no surprise then when in 2002, Uribe was elected on a platform to restore security and target violence. His language was highly explosive and his policies hard line – and guess what – they worked. The rebel groups have been left weak and fragmented and the most of the paramilitaries have been demobilised. He was re-elected in 2006 by a grateful citizenry.

The Colombian Economy

Despite the turbulent political environment the Colombian economy is diverse and relatively advanced. Its key exports include petroleum, coffee, bananas, emeralds, flowers and coal. After a crippling recession in 1999 in which GDP contracted 4.3% the economy was resilient and bounced back with an annual economic growth rate of 5% from 2002 to 2007. The economy was not immune to the recent crisis. GDP fell 0.7% at the end of 2008, and unemployment rose slightly in 2009. 

The momentum behind the economy is in part due to Uribe’s economic reforms on tax, pensions and the budget. But it is mostly due to his security policies. It is amazing what difference it makes when people no longer fear their income, notoriety or business could lead to their murder or capture. A secure political, civil and business environment has unsurprisingly increased FDI and exports!

 Opportunities

There is an array of opportunities available to Australian businesses in Colombia including wheat, corn, soy and seeds, cotton and yarns, environmental services, renewable energy and medical equipment to name a few. But the most promising areas are agriculture and mining. Agriculture and mining are important sectors to Colombia but are not yet fully developed. As firms become more developed they will look to advanced economies like Australia to import sophisticated technologies so they can increase efficiency and yield. Australia has the opportunity to export mining machinery and training to the Colombian oil, gas and coal sector and both genetic materials and live animals to the Colombian agricultural sector.

Amy Doyle – International Market Analyst

For more information or assistance, please contact Australian Business International Trade Services on 1800 505 529 or email Robert at robert.trzebski@australianbusiness.com.au.

 
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Posted by on February 12, 2010 in Latin America

 

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