Region: Latin America and Caribbean
Keywords: Parties, Funding and Financing, PPP Options, Transport, Contractual Provisions, Sample drafting, Privatization
IJ Infrastructure Investment Guide: Colombia bytes
Note from the authors:
Long-standing perceptions of Colombia would perhaps have you believe that it is a country of fantastic natural wealth – in coffee and gold, in agriculture and in oil – but without the clear-headed direction and international clout to truly exploit these riches. Decades of political and economic unrest have led to doubts surrounding the country’s viability as a destination for long-term investment. Colombia’s current administration has worked relentlessly to change this image. A slow and steady approach to fiscal policy, and a new, modernised administration have paid dividends, and the country is now growing at an unprecedented rate both in terms of its economic strength and in its ambition. The political troubles that have dogged its stability have now been pushed to the margins, and the country defied the global economic downturn to grow by almost six per cent last year.
But this growth will only be sustainable if Colombia has a network of roads and rail, homes and hospitals to support it. The Colombian government is well aware of this and over the past few years has entered into a programme of law drafting, has sought advice from other countries and is now establishing itself as part of the countries set to succeed the BRICS. These are the CIVETs – namely Colombia, Indonesia, Vietnam, Egypt, and Turkey – and they have the resources, growth and the young populations that more developed nations are starting to lack.
In particular, Colombia’s new PPP programme looks set to usher in a new era of innovatively funded public and private projects that will change the face of the country. In the making of this report, Infrastructure Journal has spoken to those involved at every level in this step change – from government officials to bankers, to the specialist lawyers who helped draft the new regulations. What was unanimous
from all of these experts was the belief that Colombia is a country on the rise – and that while challenges undoubtedly still exist for the country, its best years are yet to come. International studies and reports
support this changing view of the country. And as Colombia’s global standing increases, so too has international investor interest in becoming a part of its infrastructure revolution.
Some of the key findings of the report include:
• Billion-dollar road and rail PPP projects are set to be the biggest drivers for growth and foreign investment over the next decade, with a comprehensive pipeline of projects already established
• Lessons learnt from the UK’s PPP schemes mean that Colombia’s new regulations for the model will be familiar to UK and European investors
• Foreign Direct Investment has increased exponentially, as a result of eased trade laws and the Colombian government’s dedication to welcoming foreign investors
• Opportunities for investment are huge, but sophisticated investment portfolios and specialist local knowledge still need to be developed to support international liquidity
As this report demonstrates, Colombia looks set to be one of the next decade’s infrastructure success stories. Obstacles and barriers to investment still exist, but the political will to overcome these cannot be underestimated. Nor can the momentum at which the country is growing and investing in its infrastructure, and in its future as a powerful emerging market. It makes for a promising place to do business.
Olivia Gagan & Vanessa Buendia
Updated: October 25, 2021