Foreign Investment in Colombia

Another day and there’s yet another article in the Colombian press purring over the increase in foreign investment in Colombia. I find it very interesting to read these pieces and try and interpret the message behind the text. Clearly, Colombia is headed in the right direction and people are prepared to wager their dollars, yen, euros and pounds here. Fantastic.

Foreign investment in Colombia continues to grow

Foreign investment in Colombia continues to grow

I am curious though to know the figures behind the figures, let’s call this the “hidden data” of what all this foreign investment really means. I am certain that the articles in El Tiempo and Portafolio are not wrong, but, are they being dissected and editorialized by the correct economists? Are we reading nothing more than manipulative press releases carefully constructed by the Colombian government’s PR department which have then been diligently copied and pasted into favorable press and delivered to the appropriate outlets to maintain the image that everything is going positively swimmingly here?

It’s an interesting situation.

Tourism grew by 4,6 per cent in 2013 for the first period of the year in contrast to the figures from 2012. The tourism ministry cited arrivals of almost 685,000 foreigners arriving in Colombia between the months of January and March against 654,000 in 2012.

Sure, I work in tourism and in a destination that’s incredibly specialized and off the beaten track. But, my figures – albeit hardly representative of the country as a whole – have been much lower. I know from friends in the industry in Cartagena that they have had a terrible year so far. This is not Cartagena del Chaira in Caquetá; this is Cartagena de Indias, Colombia’s eternal capital of tourism. Things are not as rosy as they are made out to be.

Cartagena del Chaira's (B) reality is far removed from that of Cartagena de Indias' (A).

Cartagena del Chaira’s (B) reality is far removed from that of Cartagena de Indias’ (A).

Let’s take the figure of 685,000 foreign visitors to Colombia. We can see in the statistics that 150,000 of these arrived on cruise ships. Now we can argue until blue in the face about the economic significance of 150,000 tourists walking the same route in Cartagena/ Santa Marta/ San Andres or wherever and dropping an estimated $75 US per head in precious few trinket shops on the ubiquitous vueltiao and so on.

How many of the remaining 535,000 foreign visitors were here on business for a few hours or 2-3 days in Bogota, Medellin, Barranquilla or Cali? While the Pacific Alliance summit in Cali in May cannot be included in my ruminations, I am just wondering if future statistics will be altered to include all of the foreign diplomats and fixers used to host the dozen or so presidents in attendance in May.

How many were in Cartagena for conventions?

And finally, how many are Venezuelan citizens? Go to Bogota and visit the Zona T, Parque 93, or anywhere between Calles 100 and 116 just to hear Venezuelan accents everywhere. These areas of Bogota have become a “Little Caracas”. This demographic of course and those buying in Cartagena and other wealthy sectors is just one portion of the Venezuelan diaspora moving to Colombia. I would be very interested to see the figures of working Venezuelans moving across at Cucuta and thereabouts.

Now, the figure in today’s El Espectador states that direct foreign investment in Colombia in the first trimester of 2013 reached the staggering figure of US$ 3.706 million. This is a chunk of change. And where did it all mainly go? Into petroleum exploration and mining.

What interests me the most is that we are almost obliged to be impressed with this quantity of money.  And it is impressive, in particular for a country in conflict. But, we are made to see the investment in dollars rather than in the number and diversity of companies. This investment of US$ 3.706 million could in theory be spread across three companies only deciding to invest in Medellin. This, of course is only an example of a theory and I am certain that a total investment of this size must represent a greater breadth of options. But, with a majority of the money said to find its way into mining and petroleum, how is this of benefit and for the greater good of Colombia? This is a narrow field in itself.

Barrancabermeja is home to one of Colombia's biggest oil refineries

Barrancabermeja is home to one of Colombia’s biggest oil refineries

I would like to see statistics and figures drawn up regarding small and medium size foreign investments across the board. We are constantly bombarded with images and advertising in the press and on CNN International that Colombia now has favorable banking for investment and is freeing up some of the bureaucracy to make foreign investment the norm, but, as a small business owner, a foreigner and a freelancer, I have yet to see this. I think the benefits are only aimed at mega companies bringing their brand of know-how.

Renewing my visa here Colombia has become no easier since I moved here in 2007 despite claims to the contrary. I want to know to whom the improvements of which the government speaks are applied?

May, for us in Mompós, was about the worst month in our history since opening in 2008. My colleagues in Cartagena also claimed to have suffered their worst month as well. June has fared a little better and July will improve. Ironically, we had better months than this when we were flooded.

I make a big deal about explaining to people that Colombia is not one of the traditionally “cheap” countries to visit in South America. Keep going south from here through Ecuador, Peru and Bolivia and you’ll find most things pretty comfortably priced. But, one tourist told me recently that he knew that word was out that Colombia is now more expensive than most European countries. With the current economic crisis this may well be so. Why wouldn’t a European tourist then stay in their own backyard?

And for locals. If it costs you more to travel to Mompos within Colombia for Semana Santa than to fly to Quito and see the processions, what are you going to do? Suffer 14 hours over crappy roads to then be tumbado by costenos or fly directly and comfortably into the neighboring capital city?

That Colombia deters the cheapest visitors is not a bad thing, but things need to remain in context. There is no infrastructure, and whatever there is, is poor. Public transport is shoddy, unreliable and overpriced. Try and travel Colombia above a backpacker budget and below luxury status and you’ll be skinned alive with the prices. Renting a car is nigh on possible for the insurance, and why would you anyway with the driving here, the quality of the roads and the pathetic nature of the signage. Just to get out of Bogota seems a Heath Robinson affair.

Demonstrations in Brazil courtesy of the Guardian

Demonstrations in Brazil courtesy of the Guardian

Colombia is surging ahead but losing sight of the end goal. This has happened before on the continent. Argentina was a huge economy, albeit largely agricultural and providing to a depressed and critical European market during and post WW2. The Argentines never diversified their industry and economy, preferring to behave as Europeans but maintain a childlike economic outlook.  Brazil also went through what we could call two decades of spring. Brazilian passivity to the corruption and lack of investment in urgently required social ventures has finally come to an end due to the Confederations Cup and next year’s World Cup. Well done Brazil and thank you FIFA for drawing light on a desperate situation.

What is going to happen in Colombia? Banks continue to behave irresponsibly with loans and no one can afford – even married and with a degree – to move out of the family home. Bogota’s Rosales is now more expensive per square meter than an apartment in Ipanema. Hardly value I think you’d agree.

Interesting times indeed.

9 thoughts on “Foreign Investment in Colombia

  • The Central Bank needs to fire a serious warning shot across the bow of the government. Colombia today is the froth of a massive global commodity bubble. The currency is too high hence the damage to the rest of the economy. Everyone is over-leveraged on credit cards and mortgages. – your visa is a good example of how the fundamental economic improvements are not that substantial. Next year when the US raises interest rates there will be a classic Latin economic crisis.

    • Chris, I wholeheartedly agree with you. Unfortunately, Jose Garcia seems oblivious to the repetitive historical references. Banks are being irresponsible with lending and credit and wages do not meet rising prices.

  • BUENO ESTO DE LOS DEBATES ALGO SE APRENDE, PERO QUEDAN CORTOS Y SIN SOLUCIONES, LO QUE DICE RICARDO, el sabe porque lo dice, seria inoportuno hablar de este tema sin conocimientos y no los tengo, estadísticas y cifras no son de mi alcance, pero noto que tiene razón, acá están acostumbrados aumentar cifras con la ayuda de periodismo con intereses creados, que le hacen gran daño al país y en este caso al turismo, un sector que verdaderamente le falta mucho y al ministerio como le suena bien o no tienen voluntad de organización , como hemos dicho antes en varios debates, la organización de entidades turísticas es necesaria con autonomía y libertad, hablo de asociaciones y corporaciones que tengan el respaldo de los organismo públicos, nacional , departamental y municipal, ellos son los que tienen el recurso pero mal manejado y con muchas amenazas y debilidades, hasta hace poco fui presidente de una asociación de turismo municipal en una ciudad pequeña, enfrentado a una serie de gente (funcionarios ) que buscaban la forma de acabarla, no se dio por mi perseverancia y mi constancia, por motivos de salud renuncie y nombraron una nueva junta directiva que la veo navegando en aguas turbulentas, debido a la declaratoria del paisaje cultural cafetero, hay unos recursos que van a llegar y los políticos de turno están al acecho y quieren manejar esto a su antojo, les comento por la razón que este destino nuevo ,que es la ruta del café si no le colocan una veeduría integrada por varios sectores, esto va ha degenerar en un fracaso y la UNESCO tomara medidas drástica y la imagen de nuestro país se vería más deteriorada de lo que está. El centralismo ha sido la causa de los males que estamos viendo en muchos sectores de nuestra nación, lo estamos viendo en el norte de santander, los caficultores y otros . El debate es importante pero me gustaría que los que manejan el turismo entren en é, sino botaremos caspa como vulgarmente se dice.Agradezco señor Ricardo su documento , también al amigo Horst, el interés que ustedes tienen de ayudar al pueblo Colombiano y a ustedes me excusan de la forma de escribir en minúsculas, pero la pobreza, encima de una mina de oro me hace no escribirlo en mayúsculas, Colombia es un país rico, pero no sabemos trabajar en equipo…………….

  • With that attitude n wonder why your business is bad. If it was so bad why did you go into business in Colombia.
    The country has a solid economy, growing about 4% a year ( vs US 2%)
    The US Dollar is recovering so it will be less expensive for tourists in Colombia
    The country is diversifying. Last year we exported 800 products that had not been exported before.
    The oil is close to a million Barrels a day, which will support further industrialization of the economy
    The Real Estate values are going up significantly ( compare to US) More investors and the middle class growing.
    As they say in the US. If you do not like it get the hell out.

    • My attitude is of a small business owner trying to diversify and help the country and stimulate business and the current government has actually just passed legislation to completely screw us in favor of multi national brands. Ju st ask the small coffee growers. This is a"who cares" attitude, so the big boys can move in. Real Estate values have climbed so much that it is impossible to get on the ladder, this is being buoyed by Venezuelans getting their money out of Venezuela and the ubiquitous problem of money laundering which has kept Colombia "recession free" for decades. Massive high rise apartments are being built and remain unsold and rents are astronomical. I expect real estate agents to be happy with this but it's a simple theory of how to maintain an economy. Yes, Colombia is increasing and diversifying and this is excellent, but in incredibly niche markets as well which, like, dealing with multi national firms can leave/ diminish as fast as they arrive. How much of the oil "regalias" are actually reaching their destinations? Look at the lack of state presence in Yopal which has no water despite receiving the most "regalias" per capita and then followed by the Guajira. It does not add up. So, I guess the question remains, how is Colombia going to combat the inherent corruption?

      • por lo que sé, las causas de los altos precios de la vivienda en Bogotá no son generalizables al resto del país. y tienen que ver con las políticas de este gobierno respecto a la tierra disponible para construir y demás.

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