Colombian Consul Speech to Melbourne Rotary 2014

Speech by the Honorary Consul Mr Geoffrey R Widmer for the Republic of Colombia to Melbourne Rotary 16th July 2014

The Honorary Consul of Colombia Geoffrey R Widmer described Colombia as a mystery to Australians as they have no real information on its size and scale, its location, culture, biodiversity and its political and economic attributes of this modern economy in Latin America. Further there are about 12-15,000 Colombian post graduate students in Australia.

The presentation focussed on the theme that “Perception is not Reality” and that the headlines views of an image of drugs and guerrilla insurgency are not relevant in to-days modern Colombia. The presentation noted the strategic geographical position of Colombia and its ready access to markets inEurope and the Americas.

The main impetus for change in the direction and performance to the society came from the Uribe Government in 2002. Colombia then was considered a candidate for a “Failed State” position but the Uribe Government (2002-2010) under President Uribe started a major strategy to change the security and the economy by taking on the vested interests and confronting the narco-trafficors and initiating economic and political reforms. The economic revival started then made great strides in changing the prospects of Colombia and President Santos from 2010 has further “built-on” these changes over the last 4 years with impressive reforms and developments in agrarian policy, trade and initiating peace negotiations with the rebel insurgency in early 2013 in Havana Cuba. This year in July, he was re-elected for a further 4 years to consolidate the economic performance and human rights & security initiatives of his earlier tenure.

But that is the theme that Colombia has to and is addressing in part by these key issues:-

1.    Global engagement in trade in FTAs and a leader in the Pacific Alliance,

2.     Instituting political and economic reforms to institutions that have strong economic fundamentals in growth, inflation and investor protection & investment grade ratings to Colombian debt instruments.

3.     There is a new focus Human Rights with the establishment of Victims’ Land and Restitution Act- Human Rights & IHL violations; 340,000 victims have received compensation and 57000 requests for land restitution over 3 million hectares with 20,000 hectares restored.

4.     Successful democratic elections since 2002 with peaceful transitions.

5.     Peace negotiations with FARC and ELN (Havana and Quito) with international engagement in the process.

6.     War on drugs with USA assistance.

7.     Focus on infrastructure to assist in the regional disparities.

8.     Joining global institutions as being invited to join OECD in February 2013; it is applying to join APAC, and is a founding member of Pacific Alliance.

In to-days modern Colombia, there is a strong economy underpinned by significant resource development, large agriculture and manufacturing sectors and a young consumer market that drives economic growth. There is little reference to the daily life of Colombians of these drug matters. To Colombians it is the past and as are, the diminishing effects of the guerrilla problems.

Colombia was founded in 1499 by the Spanish arrival in the Caribbean. It declared its independence from the Spanish on 20th July 1810 through it founder Simon Bolivar and is a place with a rich a diverse culture and heritage.

It is the 2nd largest Spanish speaking country and there are 47 million Colombians with 55% of the population under 30 years old.

The capital is Bogotá situated at 2600 metres with a population of 9.7 million people. The other major cities Medellin at 3.7 million, Cali 3.2 million, Barranquilla 2.1, Cartagena 1.5 million and Cucuta and Bucaramanga at 1.3 million each. There are 32 provinces or departments with 7 cities over 1+ million people.

It has access to the Atlantic and Pacific Oceans and has land boarders with Peru, Ecuador, Panama, Brazil and Venezuela. It has maritime borders with Costa Rica, Nicaragua, Honduras, Jamaica, Dominican Republic, Haiti, Panama, Ecuador and Venezuela.

Colombia is roughly the size of Victoria and NSW together and has 3 main mountain ranges as the Andes at upto 5000 metres and about 40% of the country is in Amazon delta. It has a main river system running north south for 1528kms in the Magdalena valley river system. It accounts for water drainage for 24% of Colombia’s area, where 66% of the population and 86% of the GDP is generated from. This is a key river system that floods often and despite challenging navigation it can move product well inland. A key focus of infrastructure spend is to improve the efficiency of this river system.

The presentation reviewed the political structure as a Constitutional Democratic Republic with separation of powers into – the Executive (President), Legislative (Congress) and Judicial branches. Central Government headed by a President elected every 4 years for a maximum of 2 terms.

The Legislative Government (Congress) which deals with legislation. The Senate (102 senators) is elected nationally and Chamber of Representatives (166 reps) election is by regions and minority groups. Elections are held every 4 years at the same time as President Elections. The Senate has a political censure role on the Executive. The Chamber has a budget and treasury audit focus with some impeachment powers.

The economy is 28th largest globally with a GDP about US $500 billion (Australia: - 1$ Trillion) and is the 3rd largest in Latin America. The currency is the pesos and the exchange rate is approximately 1A$= 1800, and it is stable currency that has the same issues the A$ has, as resource economy – appreciation of the current that impacts on other sectors like manufacturing.

The economy is a resource based economy in energy (1.0 million BOPD) and mining in coal (5th largest globally) emeralds 2nd largest globally (33% market share after Zambia) and 4th largest gold producer in LA. It has a vibrant agriculture business in coffee (3rd largest producer globally) and livestock and horticulture (70% of USA and exports to Russia and Europe) and manufacturing.

The broad GDP breakdown of the economy is broad categories

1.    Agriculture- 12% (compared to Australia: 3%)

2.     Mining and Energy-12% (compared to Australia: 8%)

3.     Manufacturing -24% (compared to Australia: 14%)

4.     Services -52% (compared to Australia: 75%)

The economy has strong metrics with

1.    GDP growth at 4.3% in 2013 and average last 4 years > 4% p.a. Tracking in 2014 into 2015 at 4.7% p.a.

2.     Inflation in 2013 at 1.94% and expected 2-3% in 2014 with a forecast over next 5 years at 3.3% average.

3.     Unemployment is at 8.5% down from 15.6% in 2002 with an estimate it will fall further to 6.8% by 2018.

4.     Capital formation has increased from 16% in 2002 to 27% in 2012 to 33% by 2016 which has underpinned the strong investment performance by improved productivity through innovation in the resource and infrastructure sectors.

5.     Strong consumer spending at 11% p.a., over the last 12 years has given balance to the economic drivers besides resources/ agriculture and manufacturing.

6.     FDI is at $16 Billion pa up from $5 billion in 2002. It is the 3rd destination in LA after Brazil and Chile.

7.     Export growth has been strong with export valued at US$59 billion (USA, China, India, Panama, Spain) up from $US32 million but so has imports to about the same levels (USA, China, Mexico, Brazil). This has been aided by over 50 FTAs in Asia, the Americas and Europe to give Colombian industry to world markets.

The presentation discussed the substantially changed security issues since 2002 and noted the issues with border protection and the evolving Peace Negotiations in Cuba and Ecuador. It is anticipated this process will continue for another 18 months as these internationally supported negotiations come to finality now the Presidential elections has been completed and the re-elected President Santos has a mandate to achieve a just and lasting solution for all Colombians.

The importance of infrastructure development in schools, hospitals, road, rail and ports was noted as was the potential capital expenditure over the next 5 to 10 years of some US$45 billion underpinned by a strong resource economy.

The presentation discussed the rapid rise in tourist numbers to over 2 million annually and the positive metrics in lower business risks in Colombia being a leader along with Peru and Chile in LA in “Doing Business “ and Investor Protection in Colombia.

An important alliance for Colombia is the Pacific Alliance (PA) which was formed after it was proposed by President Garcia of Peru in 2011. It consists of the Pacific coast countries for the Pacific Alliance; foundation members are Mexico, Colombia, Peru and Chile with Costa Rica making application. These countries have democratic governments and large reform agendas.

The PA is about the free trade with the free movement of capital and people between the member States. It aims are to

1.    Eliminate all tariffs between member countries

2.     Establish a common share market and

3.     Eliminate all visas ( other than migration)

It represents a market of 214 million people with 35% of the regional GDP of $2.0 trillion and 50% of Latin American trade of $1.116 trillion dollars and FTAs with 60 countries accessing 86% of global GDP.

There are 33 observer countries (USA, Canada, Australia, EU, China to name but a few).

The success has been stunning in instituting key reforms to date:

1.    Over 95% of the tariffs have been eliminated between the countries.

2.     Elimination of the visa for tourism and business.

3.     Agreements on shared diplomatic representation.

In summary, the Consul noted some of the key challenges for Colombia related

a.    Successful completion of Peace negotiations with FARC and ELN that is just and durable for all Colombians.

b.  High levels of Infrastructure expenditure for future economic growth and prosperity from a strong resource economy; a key issue to address regional inequality.

c.     A successful functioning Mining Agency to address Illegal mining.

d.     Having a political stable neighbour in Venezuela that assists in economic development and security of the region.

In the end, “Perception is not Reality “with this modern sophisticated economy in Latin American making its presence felt on the global stage.

Geoffrey R Widmer,
Cónsul Honorario de la República de Colombia
16th July 2014