Foreign capital playing bigger role in Colombia

 

Stability in recent years opens the way for new business ventures to thrive across a variety of economic sectors

Rich energy reserves and an investment-friendly environment have made Colombia an ideal place for Chinese investment, said Chinese analysts.

"Colombia has very rich resources in energy and farm produce, and needs infrastructure construction, which is an opportunity for Chinese investors," said Zhang Sen'gen, a researcher of the Latin American economy at the Chinese Academy of Social Sciences.

Among the major resources in Colombia are oil and gas. From 2007 to 2012, crude oil output in Colombia increased by 77 percent to about 1 million barrels a day.

Foreign capital is playing an increasing role in Colombia's oil and gas industry, rising from 10 percent in 2005 to more than 35 percent in 2013.

Mansarovar, a joint stock company in Colombia owned by China-based Sinopec and India-based ONGC, now makes up 4 percent of the local oil market. In 2012, Mansarovar purchased $1 billion worth of French oil giant Total's assets in Colombia.

Alejandro Roa, commercial counselor to the Colombian embassy in China, said that China can help Colombia increase efficiency in old oil fields.

"The efficiency in many of the old oil fields is only 16 percent. China's high efficiency technology can bring it up by 30 percent," said Roa.

According to a World Bank report, Doing Business 2014, Colombia's business environment ranks behind only Chile and Peru among Latin American countries.

In order to attract foreign investment, Colombia has designated duty-free areas where foreign enterprises can face only a 15 percent business tax. Other preferential policies include tariff-exempt sales channels to domestic markets.

According to Colombia's financial ministry, the country is the third-largest economy in Latin America. Last year, Colombia's economic growth stood at 4.6 percent, compared with a mere 1.1 percent in Latin America, making it the fastest-growing economy in the region.

"Colombia's mineral resources, including gold, iron, coal and tantalum, have rarely been exploited because of the political instability in the past," said Ma Tianhao, standing director of the Asian Association in Colombia. The country has the fourth-largest coal reserves in the world.

"People hold prejudice toward the country because of the prevalence of drugs, mafia and the guerrilla warfare in the 1980s and 1990s. In fact, most of these unstable factors have subsided. The country is now focusing on developing the domestic economy," said Ma.