The Business Year - Colombia 2016

Telecoms & IT THEBUSINESSYEAR 99

connections had surpassed 13 million, with in place to improve telecommunications in-
3G and 4G mobile connections reaching 4.53 frastructure and adopt more sustainable and
million and 3.07 million respectively. At the eco-friendly practices. The capital city and
start of the year mobile subscriptions stood at the major urban centers of Medellín and Cali
over 57 million, bringing mobile penetration are already featured on the University of Na-
to 117.5%. The three primary companies are varra IESE Business School list of most sus-
Claro, Movistar, and Tigo, each operating as tainable Latin American cities. According to
a Mobile Network Operator (MNO), while Vir- the Colombian Chamber of ICT (CCIT), the
gin Mobile and a number of other operators benefits of incorporating smart city technol-
participate as Mobile Virtual Network Oper- ogy would be mainly in energy savings. Citing
ators (MVNO). Claro held 49.47% of the mar- studies carried out by US multinational Cisco,
ket share in the first quarter of 2016, Movistar savings of as much as 80% could be made on
22.79%, Tigo 19.27%, and Virgin 4.21%, with street lighting by ensuring that bulbs are used
the remainder of the market spread among at full capacity only at night. But the concept
the smaller firms, according to MINTIC data. extends far beyond energy savings. The cur-
One of the country’s largest firms in this seg- rent National Development Plan (2014-2018)
ment, the public Empresa de Telecomunica- has identified the technological development
ciones de Bogotá (ETB), announced the sale of of Colombia’s cities as a key objective for the
around 80% of its shares in mid-2016 to raise medium term. This goal will involve building
money, which is planned to be used for rein- technology clusters in certain areas of cities
vestment in the city and in public infrastruc- to create economies of scale and encourage
ture. innovation and entrepreneurship in the ICT
sector. This is hoped to provide skilled posi-
One potential advance under discussion in tions for the country’s emerging creative class.
Bogotá’s policy centers is a concerted effort to
turn the nation’s many large municipalities The Vive Digital program has already made
into “Smart Cities.” Though still in the very notable gains in encouraging the develop-
early stages of development, there are plans ment of software and applications by Colom-

100 THEBUSINESSYEAR COLOMBIA 2016

bian startups and tech firms. By 2014 over Fixed telephony has been decreasing like in many other markets
65,000 entrepreneurs had taken courses in as cellular coverage expands. The number of fixed lines in use
software and marketing through the govern- in early 2015 was registered at 7,195,264, but had dropped to
ment portal Apps.co, and by the end of the 7,077,787 by 1Q2016.
second phase it is hoped that the country will
have established itself as a leading develop- The continuation of the Vive Digital program
er of applications for health and agricultural will allow Colombia to build upon the solid base
productivity among others. The government it has created since 2010, and the ambition of its
is keen to get SMEs active in the digital realm, authors cannot be denied. One of the primary
and aims to have 70% of such enterprises uti- goals of the 2014-2018 phase of the plan is to de-
lizing tech solutions to expand their business- velop applications specifically designed for the
es by 2018. It is also hoped that digital content poorest citizens in the country. By encouraging
exports will reach $120 million by the same the development of applications to assist with
year, and that sales of Colombian software farming and health, policymakers hope that the
will triple and the number of companies ac- nation’s least fortunate will benefit most. Be-
tive in the segment will double. The Unidad yond that, the plan envisages a Colombia capa-
de Gestion de Crecimiento Empresarial del ble of exporting such technology to lead global
Gobierno Nacional (iNNpulsa) was formed in efforts to lift people out of destitution. Given the
2012 to facilitate entrepreneurial activity and dramatic achievements of the past five years,
innovation nationwide. Recognized by the and the inevitable and continued slowdown of
World Bank as a critical institution for pro- the extractive industry, the ICT sector could be
moting productivity and development in Co- one of Colombia’s main reasons to be optimis-
lombia, it aims to see the country become one tic in the coming years. ✖
of the top three most innovative countries in
Latin America by 2018.

Telecoms & IT THEBUSINESSYEAR 101

INTERVIEW

CONNECTIVITY

What is the long-term objective TBY talks to David 2016 will be no exception. We Allocated
of the government’s Comput- Luna Sánchez, continue to focus on the devel- COP1.4 billion
ers to Educate program to ac- Minister of ICT, on opment of a convergent strat- between 2015 and
quire tablets and computers for the ambitious plan to egy for our public television, 2019 to support
schools across the country? strengthen the quality increasing the production of education
The ICT Ministry seeks to con- of education via local content and strengthen-
tribute to strengthening the technology, his plans ing regional TV channels for Aims to increase
quality of education through for mobile broadband users to find a wider range of internet
technology via the Comput- communications, and content. connections in the
ers to Educate program. To connecting the entire country from 12m
achieve this, the ministry set country to the internet. What projects are lined up in the to 27m
aside a budget of COP1.4 bil-
lion between 2015 and 2019 acquired through public auc- area of mobile broadband com- Won Best
to support the education of tions); training teachers and Government
young Colombians. For this principals through a certified munications for 2016? Strategy award
purpose, “Computers to Edu- course after which they will by GSMA
cate” developed a strategy that receive a diploma and a tablet The award for the best gov-
includes three aspects: the de- as a tool for their work, as well ernment strategy for manag- tion. This process will ensure
livery of technology to educa- as training parents through the ing spectrum, handed out by us better telecommunication
tional sites (tablets and laptops so-called ICT Family School; the World Mobile Operators services for Colombians.
and dealing with electronic Association (GSMA), recog-
BIO waste as part of our environ- nized Colombia’s excellent What are your thoughts on the
mental commitment and re- management of spectrum. fact that Colombia is now one
David Luna Sánchez is a sponsibility. The goal for 2018 Our strategy aims to ensure of the top countries for internet
lawyer from the Universidad is to provide tablets to every the availability of this resource penetration in Latin America?
del Rosario. He is a teacher in the country’s public to support the growth of mo- The work that Colombia has
specialist in administrative educational centers and quali- bile broadband internet con- done in the past five years
law and holds a master’s fy them with an ICT diploma. nections, which we project to makes us proud. We have
in government and public have with the implementation worked hard to provide the
policies from Universidad What are your plans to support of the “Plan Vive Digital.” We country with the tools for the
del Externado and from the development of Colombian have been making projections digital revolution. We cannot
Columbia University. He public television? for spectrum requirements for rest on our laurels; we have to
has been president for The government of Presi- the next 10 years and these bring connectivity to the low-
environmental organization dent Juan Manuel Santos has are updated annually. In 2016, er strata, to ensure that all cit-
Capítulo Colombia. He made an unprecedented bid plans to continue with this izens enjoy the benefits of be-
is a professor at various to strengthen public televi- strategy of judiciously study- ing connected to the network,
universities and is the sion. That effort has resulted in ing mobile spectrum needs for no matter what area of the
author of the book “Starting co-productions with world-re- the coming years, with an ad- country they are in. To do this
Point: Nine Proposals for the nowned houses and domestic ditional component: the study we have an ambitious plan to
Governance of Bogotá.” producers to continue to po- of frequencies for the fifth gen- increase internet connections
sition public television with eration of mobile communica- from 12 million to 27 million
high quality content. Since tions and participation in 5G in 2018. ✖
2010, the government has in- in international forums such
vested about COP25 billion as ITU and CITEL. Colombia
on a multi-platform content, expects to continue to have
developed with the support an important role in these
of international production discussions. These activities
houses, with a scheme that is of international participation
improving programming and go hand-in-hand with the
public TV content. In addition, management of internation-
we have opted to strengthen al agreements for the use of
the capacity of personnel in- spectrum in several frequency
volved in these large projects, bands to ensure proper pro-
promoting good practices in vision of telecommunications
television production; and services in the border areas. In
the telecommunications area,
in 2016 we have a major chal-
lenge: forward the auctioning
of 700Mhz band, the most cov-
eted spectrum by mobile op-
erators thanks to its coverage
characteristics and propaga-

102 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

MAJOR and is the third-biggest coun-
player try in Latin America for Hua-
wei after Brazil and Mexico.
TBY talks to Xiong Yihui, President of Huawei We always regard Colombia as
Colombia, on deploying the 4.5G network in the a key market when introduc-
country, the factors behind Huawei’s success, ing new technologies, and this
and its upcoming projects. year we are in the throes of a
digital transformation. Opera-
Colombia has advanced four po- They want data services, and users’ electricity bills to their tors are moving toward IT and
sitions in Huawei’s Global Con- they want fast speeds. This is computers so that they can cloud computing and leading
nectivity Index. What factors a basic need for people to be keep track of use, expendi- a digital transformation. We
have led to that improvement? connected. The government tures, and so on. 5G is the next have another important pro-
Connectivity is key in telecom- has a new initiative called revolution, and we will ensure gram in the country named
munications. Coverage essen- Vive Digital, which encour- that it takes place in Colombia Safe City wherein we work
tially provides connectivity, ages companies to invest in at the fastest pace possible. alongside governments and
but that is migrating more to improving their connectivity. major firms to create safer cit-
the internet and digital-based Being active in telecommuni- What factors have led to your ies through shaping a smarter
user experience. End-users cations means we are already strong share of the market for city. We work with the nation-
expect to have coverage ev- everywhere and are willing smartphones in Colombia? al police, municipalities, and
erywhere; they want to have to participate in all aspects of We are a major player in the local governments to provide
service whether they are in that initiative. smartphones market here command centers, data cen-
the city or in the countryside. in Colombia, and indeed ters, and cameras everywhere
When and how do you foresee throughout all of Latin Amer- through which they can eas-
IN NUMBERS ica. We always introduce ily monitor the city and take
the 4.5G network being imple- the latest cellphones, tech- precautions and preemptive
1st nologies, and models to the measures where necessary,
mented in Colombia? market, and we also focus on while also responding quick-
company to develop user experience to improve er to security situations. Ev-
4G network in We are talking about 5G, connections between phones erything is recorded, and if
Colombia which is the official name of and people. We invest a great something happens it can
the next generation, where- deal in branding and work- be tracked to reveal what has
40% as the current technology is ing with public icons such as happened, to help track crim-
4G. Huawei was the first to Lionel Messi in Argentina as inals. By creating smarter cit-
share of Colombia’s deploy the 4G network in Co- our spokesman and football ies, we are on the brink of de-
smartphone market lombia, and in Medellín, with player James Rodriguez in Co- veloping a safer Colombia. ✖
LTE technology. We are now lombia. All of that has led to
10% connecting people through our success in the Colombian BIO
smartphones, but in the fu- market, where we have about
of global operations ture we see that through the a 40% market share. The ad- Xiong Yihui is President
from Latin America Internet of Things (IoT) all vantage of smartphones is ob- of Huawei in Colombia,
devices will be connected and vious here, in that they provide with over 20 years
will have to communicate better value for individuals, experience in information
with everything else. 5G will the market, and the industry. and communications
accomplish this and is, there- Smartphones are necessary to technologies, specializing
fore, a relevant technology to allow users to access mobile in marketing and business
develop. That is the next level, broadband and data services, development. Xiong joined
and that is where our users to enjoy more information, to Huawei 11 years ago
will enjoy the technologies, work better, and to bridge the and has worked in Latin
capabilities, and reduced la- gap in the digital divide. America for over nine years.
tency of IoT. We have another He worked as wireless
solution called Enhanced-LTE What role does Colombia play in marketing and solutions
(E-LTE) based on 5G that al- Huawei’s global portfolio? director and recently as
lows users to see each other, Latin America accounts for vice-president of Huawei
talk to each other, and sync 10% of our global business in Brazil. Xiong holds an
up all together on a big screen. electronic engineering
Another technology is Nar- degree from Wuhan
row Band, which can connect University.

Telecoms & IT THEBUSINESSYEAR 103

The government
is keen to boost
internet penetration
rates across the
country.

Image: asharkyu

104 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

room to GROW

TBY talks to Andrés How was 2015 for SISCOAX? Is there room for growth in the IN NUMBERS
Ríos, General Manager
of SISCOAX, on the Last year was successful for us. sector in 2016, both in Colombia Expecting
factors driving the We grew by more than 30% in
company’s growth, 2015, even though the econo- and throughout Latin America? 48%
opportunities in the my was sluggish and the dol- Fiber optics are being de-
country and region, lar rose against the peso. We ployed throughout the region, sales increase for
and the company’s had a financial structure and connecting the police force, 2016
plans for the future. strategy in place to ensure the hospitals, schools, munici-
devaluation did not affect us palities, and homes in almost Grew over
BIO in a negative way. Instead of every country in Latin Amer-
selling, we focused on stock- ica; hence, the potential is 30%
Andrés Ríos holds a ing up on primary products huge. We see many opportu-
degree in electronic and cutting down imports of nities in Mexico, Brazil, and in 2015
engineering from UPB new products while reducing Central American countries,
and has wide experience costs. specifically Guatemala, along process of production and
in the construction, with the ongoing projects in delivery, we will invest, be it
study, and infrastructure What factors are driving your Colombia and Peru. In fact, machinery, chemicals, or ma-
of telecommunication supply is not keeping up with terials. The aim is simple: to
networking and energy. He growth in 2016? demand. Everything is grow- always use and offer top qual-
is an active participant in ing rapidly, and there is an ity products. At the end of the
the fields of certification and The first quarter of 2016 was ongoing transformation of the day, we are competing with
international guidelines for great, and there have been whole communication struc- top international brands.
the production of fittings some interesting projects. The ture and systems of the region
and cabling and fiber optic biggest and most important creating a truly revolution- What do you expect of SISCOAX
products. Rios is general one was the national fiber op- ary level of interconnectivity for 2016?
manager for SISCOAX tic project in Colombia and among society. That being In terms of business devel-
and a member of the the national fiber optic back- said, first and foremost we opment, keep a double-digit
executive committee for bone network of Peru, both of are placing special priority on growth in comparison to pre-
Ingelel. He has over 20 which are being undertaken Pacific Alliance markets and vious year, which is a realistic
years of experience in the by Azteca Communicaciones. countries. objective considering the ex-
telecommunication industry We have been the primary change rate and the growing
in the American continent. provider on those projects, What kinds of changes will the inflation over the last four
Rios is also a researcher delivering services and sales. years. We also want to keep
of organizational cultures In 1Q2016, we have grown by fiber optic network bring to Co- providing the best human re-
and new technology 28%, and with many coun- sources and the best quality in
of telecommunication tries seeking the same kind of lombia and other countries? all aspects of our business to
networks. fiber-optic investments and It will revolutionize these our end clients. We will keep
projects that are under way countries. Businesses, cell growing and keep improving
in Colombia, and we expect phone operators, and media through 2016 and beyond.
to grow more in the future. and entertainment compa- Our main goal is to engage our
In municipalities outside the nies will see huge growth in customers. ✖
major cities, many people do capacity, with an unprece-
not have access to television dented number of TV chan-
or internet. The fiber-optic nels on offer as well as fast
network will connect all of internet and broadband ca-
these households and people pacity. Everything is faster,
to the internet, which is a huge safer, and with far more data
development in terms of data capacity. It is a network that
access and services in me- will belong to none because it
dia, banking, entertainment, will belong to all.
online services, shopping,
health, and education. Tele- What innovations have you
communications is growing
at 13% annually in Colombia, brought to your products, and
and there is an average of two
cell phones per person; there- what innovations do you plan to
fore, there is great demand for
a robust network that only fi- add in the future?
ber optics can provide. It is simply about the quali-
ty of the materials we use. If
there are any new technolo-
gies or innovations that add
to the quality of these and the

Telecoms & IT THEBUSINESSYEAR 105

BUSINESS PROCESS OUTSOURCING (BPO) FOCUS

COLOMBIA CALLING

Contact centers and Business Process Outsourcing (BPO) companies are an important part of
Colombia’s service sector and link the country with international markets and investment in a
unique way.

CONTACT CENTERS and Business Process Outsourcing growth, such as telemarketing. The General Manager of Uniso-
no Colombia, Fernando Rodriguez, assured TBY that English
(BPO) companies are useful tools for national and international services are developing quickly in the nation and that one trend
firms that want to enhance their customer service provision. Co- that Unisono and its competitors see is offering call services from
lombia’s perfect location and skilled workforce result in a strate- Colombia to the US.
gic source of these services at a high level of quality and, hence,
this sector has grown significantly in recent years Demand for contact centers and BPO services is on the rise.
Frost and Sullivan analyzed the revenue for outsourcing in an
This industry saw a leap in sales from COP104.566 million to annual inquiry with ACDEEC’s data and pointed out that 62.41%
COP2.9 billion between 2001 and 2014, according to the Colombi- of revenue comes from customer services provided in Spanish
an Contact Centers and BPO Association (ACDECC). The industry and another 4.41% from English language services.
experiences and excellent average YoY growth (27 %) is resulting
in international companies investing heavily in Colombia. An interesting development that is having big impact on the
market is robot assistance. The aim is to offer a better customer
Spanish firm Atento, one of the global leaders, made a COP30 service by filtering incoming calls and redirecting the customer
billion investment in 2016 to open new contact centers in the to the right telemarketer. Moreover, robot assistance can execute
country, which will contribute approximately 1,500 new jobs simple tasks such as changing a bank address or answering an
to a sector that already generates over 200,000. The Colombian inquiry. “We do not want to automate the whole process; we only
government sees the industry as a strong employment generator want to robotize the easiest part,” Rodriguez said.
and wants to stimulate investment. The Santos administration
estimates that by 2019, contact centers and BPOs will employ Robotizing contact centers might be able to structure the
over 500,000 Colombians. number of incoming calls and facilitate more qualified assis-
tance over the phone. Additionally, it could be way to make the
The expansion of contact centers and BPO services in Colom- sector more efficient without losing any important added value
bia can be explained by three factors. Firstly, consultancy firms to the call.
estimate that to establish one of these companies in Colombia is
about 30-40% cheaper than in Europe or the US. Secondly, Latin In terms of national distribution, Bogotá city hosts the largest
American countries, and Colombia in particular, have a skilled number of call centers (49.3%), with the rest spread out among
labor force in this sector, and it is common for people to speak mid-size cities such as Medellín, Cali, Manizales, or Barranquilla.
more than one language. And third, more businesses worldwide
look to reduce costs by outsourcing. The Colombian contact center and BPO sector expect good
results from 2016. The country’s labor-friendly legislation for
Outsourcing services are being requested by a plethora of sec- international companies and the high number of skilled work-
tors. Although telecommunications, banking, and financial are ers in this segment looks to attract new investment in the com-
the main ones, there are another areas that are experiencing ing years. ✖

FERNANDO RODRIGUEZ SIERRA

General Manager, Unisono

*Read the full interview at thebusinessyear.com How would you assess the importance of Colom- niche demands in order to differentiate ourselves
bia for Unisono globally? from other players. Robotic developments are an
The company’s biggest growth is seen in Colom- important progress, and we are already deploying
bia. Moreover, we are having a major inversion in such technology within several projects.
technology and resources; currently, it is one of the
main growth focuses of the company. What sectors do your clients come from, and
where would you like to focus in the future?
How competitive is the Colombian call center The majority of our clients come from the banking,
and BPO sector? telecommunications, and insurance sectors. We
It is quite competitive with many companies also have a few clients in the industry sector. Our
offering contact centers, telemarketing, and headquarters have contact with all kinds of indus-
customer care services. Colombia still has room to tries and sectors, giving us the experience and the
develop new services, and we would like to serve expertise to adapt to any sector’s needs.*

106 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

flying Asset Management tools such that. We are one of the most
HIGH as Snow or Flexera. What tru- efficient subsidiaries of Soft-
ly makes PyraCloud unique, wareONE around the world,
TBY talks to Erick H. Cepeda, General Manager however, is its ability to help and we are ranked eighth
of SoftwareONE, on the company’s investments organizations that have a Mi- worldwide and third in terms
in the past year, the importance of its Colombia crosoft Azure deployment of efficiency. That is an im-
operations, and the opportunities available in better forecast their resource portant statement for us, as
the local IT sector. and budget allocation to key SoftwareONE is a multina-
business segments based on a tional company with offices in
What factors have underscored • Grew 55% in usage trend analytics. In oth- 62 countries around the world
2015 er words, just like with your that cover 145 countries on
SoftwareONE’s performance in • Serves Latin phone bill, you can see which five continents.
American region departments are using Azure
Colombia? from Colombia the most, and budget for What opportunities does the Co-
• Released them accordingly. As one of lombian IT sector offer to inter-
The talent and passion of our new PyraCloud Microsoft’s premier partners, national investors?
people is a critical factor. Our product we offer end-to-end Advisory Creativity is an important as-
recruitment team in Colom- Services to help put all of this set that Colombians have. It
bia uses a refined process to unique challenges, and fully software and infrastructure is a highly creative and inno-
ensure our employees are ful- realize their IT vision. Soft- in our PyraCloud platform so vative sector and we are well
ly aligned with our organiza- wareONE adapts its service that our clients can analyze prepared to offer services from
tional culture and Seven Core delivery according to meet our how much space they are us- Colombia to other countries.
Values. We aim to create a fun clients’ business needs. ing and what kind of contracts The government is investing
place to work, and we provide they have. We have invested a great deal of money to sign
flexible time shifts and oppor- What have been your main in- more than $10 million in this international agreements with
tunities for our people to be vestments over the last year? platform worldwide and we other governments in Eu-
able to work from home or We have been investing in are using scaled economies, rope to generate knowledge,
from other cities. The idea is platforms and solutions such developing the software from studies, and skills in order to
to work hard but have fun; we as PyraCloud, through which our corporation to deploy it grow in the IT industry, and
believe this enables our peo- our clients can manage their around the world. Colombians are responding
ple to bring their best selves entire global software port- well to those new opportuni-
to the job everyday. In addi- folio through a single pane of What services and solutions are ties. There are excellent op-
tion to our company culture, glass. It integrates seamlessly portunities in this sector, and
our portfolio of products and with their internal ERP sys- most in demand in Colombia? people in this country are well
services supports companies tems such as SAP, Oracle, or Every single IT manager, prepared to face global chal-
to be successful in other busi- Ariba, as well as their Software CFO, or COO seeks efficient lenges and provide knowl-
nesses and more efficient in solutions that allow them to edge, talent, and services
their IT infrastructure in a do more with less money. around the world. ✖
way that goes hand-in-hand Companies are cutting their
with their business needs and budgets, their investments BIO
goals, providing a complete are constrained, and in some
return on every dollar that industries all investments Erick H. Cepeda has more
they put into their technology are on hold. People measure than 18 years of experience
capabilities. We have the tools every single dollar spent and leading sales, service,
and methodology to help IT evaluate how much value it and marketing areas, with
professionals be successful in generates for the business, expertise in negotiation
their business, mitigate their while trimming costs that are skills and strategic
considered superfluous. Our alliances implementation.
portfolio is in a great position His expertise has been
right now to cope with the developed in technology
challenges that businesses are companies such as IBM,
facing during this global eco- Lexmark, Intergroup, and
nomic downturn. SAS.

How important is Colombia

within the global operations of

SoftwareONE?
Colombia is an important
market, and we are proud of

Telecoms & IT THEBUSINESSYEAR 107

INTERVIEW

TBY talks to Adriana Lucia Falla, General Manager of
SoftManagement S.A., on the important elements of the company’s
business, its key strengths compared to its competitors, and the
significance of the IT sector in Colombia.

growing How would you assess the cur-
POTENTIAL
rent investment environment
Which of your services are de- as the application of these of dematerialized securities
tools. These people also work from a digital perspective. within the IT sector in Colom-
veloping at a more rapid rate? alongside our quality depart- One of our strongest points
ment to develop and improve with these projects is that we bia?
Our strength is operation and our current procedures. always try to understand the
manufacturing software, and Thanks to that group of peo- structure behind the problem The IT sector in Colombia is
this trend will continue in ple, we apply innovation to and generate value from that. one of the most attractive sec-
the same line for the near fu- our products and services. tors in our economy for for-
ture. With the recent chang- We also invest a great deal of BIO eign investors. This is due to
es, we intended to boost effort in the development of the fact that we have become
consulting and services. Our pilot projects alongside our Adriana Lucia Falla is a key sector for the economy
experience and knowledge customers, where innovation the General Manager of and we have an aligned polit-
enabled us to start offering is key in this context. SoftManagement. She has ical strategy from the govern-
services of supervision and over 25 years’ experience ment, in order to strengthen
auditing, enterprise archi- What are your advantages in project management of the investment environment.
tecture and cloud. Up until software development and The government has appre-
now, our main customers compared to the competition? over 20 years in technology ciated that IT is one of the
were government and large and business management. country’s greatest assets in
corporations and through We have received several She has taught in the faculty terms of potential. There is
the new services, we intend awards in the last few years. of systems engineering at a public strategy to diversify
to reach to SMEs, widening For example, the Ingenio EAN and Piloto universities our economy, which in the
our portfolio of customers. Award is for the IT sector and in Colombia. Falla has past used to be based on tra-
All the services we recently is judged on the IT solutions published several articles ditional sectors such as min-
started providing have great presented by a customer and in magazines such as ing and coffee. One of our
potential; however, since our has to be technologically Innovación in the Misión main challenges is the lack of
main strength is in software innovative. In 2014, we pre- Pyme Magazine and enough qualified human re-
development, we understand sented a joint project with Empresarial & Laboral sources; however, the country
that supervision and auditing the Ministry of Culture as Magazine. She has a degree also has a nationwide strategy
services are those with the part of the Read Again proj- in systems engineering supported by the government
greatest potential, because ect where we tried to boost from Piloto University of to develop more IT profes-
large companies are the ones the reading culture, especial- Colombia and is a financial sionals. Colombian IT profes-
requiring these kinds of ser- ly among children. We devel- management specialist sionals are extremely innova-
vices. oped a strategy to link all the from EAFIT University tive and creative, we always
public libraries in the coun- and superior direction in say our workforce is our most
What is the role of R&D within try as part of the virtual li- management and leadership valuable asset.
braries network of Colombia, from Los Andes University.
your overall business activity? and we received the award in What are your expectations for
the category of education. In
R&D and innovation are key 2015, we participated in an- SoftManagement S.A. for 2016?
elements of our business. other joint project with Certi-
We have a dedicated group camara, a nationwide leading This is a year full of challeng-
of people developing this entity when it comes to digi- es, and we have targeted 24%
activity and have a particu- tal certificates, where we pre- growth; however, this goal has
lar methodology. This group sented a solution in the field to be put into context because
works on a full-time basis the country expects to grow at
to develop new tools as well a 7% rate. Furthermore, from
now until 2020, we expect to
grow by 200% and expect to
have operations in two other
countries, consolidating our
brand and company as a lead-
ing provider of IT solutions
and services. ✖

108 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

maximum IN NUMBERS
POTENTIAL
$5
TBY talks to Oswaldo Medrano, General
Manager of Ikonosoft, on the company’s million turnover
transformation process, the sectors with the
greatest potential, and how the company Ikonosoft will invest
distinguishes itself from its competitors.
$500,000
How has Ikonosoft evolved in What products are you currently What are the main trends in the
in 2016 to improve its
the last year? developing? Colombian IT industry? systems

In 2015, Ikonosoft underwent As an SME, our turnover is We see the greatest oppor- What are your main expansion
a transformation process to around $5 million, and we tunities in the SME segment, plans for the future?
respond to developments in create products for medi- which has been overlooked up Over the course of 2016,
this rapidly changing sector. um-sized companies. To to this point. There are more we will invest more than
We went from being focused manage our stock with soft- than 8,000 SMEs in Colombia, $500,000 in the acquisition
on integrating well-known ware designed for a multina- yet nobody has made specific of systems in the training and
brands such as IBM with tional company, we would IT products and services avail- recruitment spheres in order
other producers to actually need to spend some $300,000 able to them. There has been a to broaden our services and
preparing our own prod- on it every year; therefore, we lack of technical and strategic product portfolio. We also
ucts. We used to sell to the leverage our capabilities and innovation in Colombia. This want to expand our body of
largest companies in Colom- base our strategy on signing has started to change, espe- staff to around 40 engineers.
bia; however, many of these partnerships with small pro- cially taking into account that In the future, we also see
companies then began to ducers. We provide our prod- today, 8,000 SMEs are driving strong potential for export-
deal directly with the larger ucts and services with rele- innovation development due ing our knowledge to other
IT service providers, which vance and flexibility to adapt to the fact that they had to regional countries, starting
forced us to reorient our to the different needs of the revise their cost strategy with- with our neighbors Panama
strategy toward SMEs. There different economic sectors, out negatively impacting their and Ecuador. ✖
is huge potential from these with a reasonable price and growth strategy to survive.
customers. Out of the 10,000 viability. We also base our BIO
largest companies in Colom- strategy on developing a long- What are your competitive ad-
bia, only 1,000 are consid- term strategy with our cus- Oswaldo Medrano is
ered to be large companies, tomers and partners. vantages? the General Manager of
with the rest designated as Ikonosoft. He has worked
SMEs. What economic sectors hold the We aim at making a difference in several technological
by leveraging our capable and companies such as
Why did you decide to change greatest potential in the short skilled workforce to provide Compaq, HP, Xerox, Sun
our employees with the nec- Microsystems, and IBM. In
your strategy? term? essary tools for development. 2013, he joined Ikonosoft
We have created a training and a few months later,
The main reason for the Our main focus is on manu- and educational platform, Medrano acquired part
change was the impact of the facturing companies, but we Ikonoflex, on which we spend of the company. He
cloud on customers in Co- also have different applica- around $5,000 per quarter to has a business degree
lombia. Today, every single tions depending on the prod- provide learning opportu- from Sabana University
customer can access these uct. We launched IkonoCloud nities to our staff. Since the with a specialization in
services without having to go Asset Management, a tool for creation of this educational commercial management.
through to an intermediary. In companies to manage their as- service, there has been a no-
Colombia there are more than sets on a renting basis. We also ticeable increase in the num-
500 IT intermediary compa- offer IkonoCloud Commerce, ber of people interested in
nies, which is a figure that is a tool for small and medium working for Ikonosoft. We also
far higher than it should be. producers to reach their cus- distinguish ourselves from
We needed to reassess our tomers through e-commerce the competition through our
services and objectives, and channels. In this context, we management of social media
understood that we could also focus on small and me- channels. We started to do
reach a larger audience by dium manufacturers selling thing differently in the sector
producing rather than being regionally and nationally. We and aim at further strengthen-
an intermediary. have products and services in ing these innovative activities.
the CRM sphere.

Telecoms & IT THEBUSINESSYEAR 109

B2B

FEDERICO JUAN CARLOS IT retailers

ECKARDT V. URIBE SUÁREZ The high-profit IT sector in the country
provides many opportunities and challenges for
General Manager, General Manager,
Heritage Group Lenovo Colombia companies trying to stay ahead of the market.

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com How did the company perform our plan is to become the lead- JCUS The company has decided costs no more than $600-700.
in 2015? ing company in the PC industry to invest in the cloud and soft- The other product is HG Ex-
in Colombia, a title that we hold ware services business, which treme, which is for gaming and
FEDERICO ECKARDT V 2015 in the rest of the world. On the is why 18 months ago we an- we introduced it in 2015. These
was an excellent year for the other hand, our numbers are nounced that we would buy IBM are high-performance com-
Heritage Group. We complet- positive in all the segments, Enterprise Business Group and puters for high-income profile
ed some previous business and we are growing on the con- X86 architecture. At this mo- consumers. The market is not
with the government we had sumer side. That is why our re- ment, we have support in bring- large, but it is a high-profit area.
from 2014. It felt like a new be- sults for this year are positive, ing the growth that the company Gaming is the future for desktop
ginning, and we started a new and we are growing by double needs. We just recovered the computers. Colombia has had a
company offering logistics ser- digits. market share that we had before problem with the gray and black
vices for companies focused the merger of these two compa- markets for telecommunications
on IT products and services, as What are the priorities for the nies, and after one year, when we and IT products, such as mobile
well as a new line of business company right now? close in December, the merger of phones. Up until now, wholesal-
in e-commerce. In 2015, our these two units will have a posi- ers and retailers acquired these
revenue was $20 million, which FEV In 2016, we do not intend tive balance. We are now gaining products through the gray mar-
was around 30-40% less than to be aggressive; instead, we shares on the volume side, mean- ket. However, the government
in 2014. This was mostly due want to maintain the business ing the server, one or two proces- has been reducing illegal impor-
to the devaluation of the COP, because many retailers and sors, and a tower and racks, and tation and sale of these products
and also because we had less other players in the market we are investing a great deal on in the country. Now only a few
business with the government, are getting out. In the past, how to be a confident partner companies are permitted to im-
which is a large buyer of our Heritage Group’s consumer for all these industry companies port mobile phones into Colom-
products. The company’s profit division grew because many of and all those data center service bia.
was similar for 2014 and 2015, our competitors disappeared. providers that invest a great deal
but with less revenue in 2015. When I started the company, in cloud services. We do not have JCUS The Colombian market is
there were about 30 techni- a cloud solution at the moment. challenging because it is com-
JUAN CARLOS URIBE SUÁREZ cal wholesalers for comput- Instead, we have a strategy that petitive and Colombian users
We are still in our 2015-2016 ers. Now, there are not more supports all our partners, how know about technology and
year because we are measured than 10 companies that sell to go to market, and why should adopt it faster than other coun-
by a fiscal year based on the over $20-30 million worth of they invest with us. tries, so we need to be in the
Chinese calendar. We are cur- products; therefore, 2016 is a latest wave of technology to be
rently in the last quarter of the re-accommodation year for What is the state of the retail successful in Colombia. A com-
year and our numbers are still us because too many people market for IT? pany cannot be successful here
growing. Colombia has a pos- are getting out of the business if it only sells entry and main-
itive contribution in terms of or going broke. You have to be FEV We have products for all stream products; it needs to in-
volume and market share. We aware and remain conservative market segments. Our own HG novate and bring products that
are still closing the gap that we in terms of assets to stay in this computer brand targets low-in- customers like to buy. All of the
have with our competitors and business at the moment. come customers. This computer big players are here. ✖

110 THEBUSINESSYEAR COLOMBIA 2016

FORUM

SOFTWARE

MANUEL CARLOS FERRER CÉSAR CAMUSSO ANDRÉS

FRANCISCO LEMOS MARULANDA General Manager, CIFUENTES

General Manager, Esri General Manager, Softtek General Manager,
Colombia LACSA & VP Financial Eforcers
Industry, Latin
America, Unisys

O ur geographic infor- A s part of the transfor- W e have worked a great W e opened the Google
mation system tech- mation of Unisys, our deal in the past few Apps for Work line of
nology is what we approach to the in- years on new trends in business and simpli-
the industry, especially in cloud fied the buying process for all
call a system of systems, which dustry has been a combination mobility. Currently, we are entities. We are the only Goo-
working on a new campaign to gle e-partner in Colombia that
integrates a variety of informa- of vertical as well as horizontal introduce an industrial internet has the financial backing to
specifically for manufacturing support our operations. Goo-
tion on a map. It enables cus- solutions for IT businesses. customers. We are working hard gle has tried to attract other big
on integration projects bringing partners outside Colombia to
tomers to better understand the From the vertical perspective real time information to deci- operate here, but they are not
sion-makers within a company. interested in the market with
relationship between sales and we have our core banking solu- Of course, we still have IT sup- the current regulatory envi-
port, application maintenance, ronment. The business mod-
their customers in a way that tion SFB, the retail delivery and traditional services where el to establish operations is The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
we focus more on where the challenging, and we spent five
a spreadsheet cannot. It gives channel solution TM, our pay- value is on reducing costs. We years growing without being
work with our customers to de- profitable. We have developed
companies the opportunity to ments solution R&L and more. termine where the key drivers a product called the “cloud
of their business lie and how we key,” which is a security pro-
understand, analyze, and make From the horizontal perspec- can help them with these new gram that allows people with
tools, not just from an IT point an internal corporate directory
decisions in a more educated tive we provide the traditional of view but from a business one. system for storing passwords
Colombia opened its markets to use the same password for
way. Our portfolio of clients is services that most companies and started working on new cloud services. Because of that,
technologies a little later than we can have better security on
diverse, which has both posi- offer; however, we also have the rest of South America. Over- Google. Also, we can restrict
all, growth here has been larger where you log in. We can block
tive and negative implications. three new specialized services than the other countries, and we an entire country. That helps
also see that it has been easier companies comply with inter-
There is no economy, industry, that contribute to our growth. for SMEs to move to use new nal security and cloud security.
technologies than it is for larger In general the adoption of Goo-
or sector for which we are not One is analytics; Unisys has a companies. gle for work has been success-
ful in Colombia.
useful. In numbers, Colombia large practice on business an-

represents around 1% of what alytics and predictive analytics

Esri does. This is small; how- coming from our use of fed-

ever, in terms of the number of eral businesses in the US. We

countries and the size of Colom- have moved those services into

bia, we are proportionally big. In our commercial area and of-

mapping, our sales in Colombia fer them to our customers. We

sometimes exceed sales in Mex- also have developed a new se-

ico. Just a few years ago, we were curity solution based on micro

less than half-million dollars segmentation technology. The

away from beating the sales in third area in which we invest

Brazil, so our business in Co- heavily is DevOps (operation

lombia is well covered. We have development), which is a quick-

a great deal of support from the er and easier method to devel-

US and it is invested in this part- op applications that respond to

nership. market needs, compared to the

traditional development model.

Telecoms & IT THEBUSINESSYEAR 111

IT companies no longer just provide basic products; they have branched
out into supporting their clients and their business plans with innovative
solutions as well.

ASIER BOLLAR LUCAS E. ARIZA FÉLIX SASTOQUE MARIA CLARA

Vice President Latin BUITRAGO General Manager, CHOUCAIR

America, Aspect General Manager, AlfaPeople General Manager,
Geotech Choucair

T he vision of Aspect is I n 2015, we established O pportunities lie par- I n 2015, we imple-
that we are no longer an important alliance ticularly in AlfaPeo- mented our new
a provider of software; for a cargo monitor- ple’s market sector, company strategy. We
we are becoming an advisor, ing business with two American shifted from providing software
helping clients to reshape their companies. We now represent which is business solutions, testing services to providing
business model. This is what is this solution through our soft- valuable support to our clients
needed in Colombia, and we ware and through our commer- namely ERP and CRM, because by supporting the digitaliza-
have done it with a number of cial staff throughout Latin Amer- tion of their business models.
banks to completely change the ica. Usually, we sell our products of the needs of mid-sized com- We want to help our clients in
view of a traditional bank. We to cargo transportation custom- a useful way so that they can
bought another company three ers, and now we have added panies. Our focus is predomi- accomplish their own ideas
years ago, which is the num- more segments by designing and and business. Choucair was the
ber one in the world for speech developing a monitoring system nantly on Dynamics AX in Co- first company solely dedicated
analytics so users can talk with tailored to companies’ needs. to software testing in Colom-
The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com their regular accents and it will For the construction segment, lombia. However, we started bia and contributed to the cre-
identify what they are saying. It for example, we adapted existing ation of a new industry in this
can identify language regard- hardware to our software and our sharing practice about five country. For at least four years,
less of the topic or dialect. We now provide companies with we were alone in the market.
are implementing that type of a solution to monitor and im- years ago and have experienced When local competitors ap-
software and that type of solu- prove the efficiency of their op- peared and global companies
tions with the omni-channel. erations. This has seen tremen- significant growth over the last came, we were recognized and
Another large investment has dous growth because the system the idea was validated and
been putting everything on provides total security, ensuring year. We had an opportunity to eventually evaluated by others.
the cloud. You must tailor your that cargo cannot be opened Other than Brazil, Colombia
growth through investment be- without us knowing, and we can merge with a smaller company has the most software testing
cause in Colombia even if you furnish authorities with such companies in Latin America.
invest a great deal you still have information if issues arise. Our and added that resource to our I also want to consolidate our
a gap in infrastructure com- main business is still monitoring four business units as a conse-
pared to developed countries. and remote solutions for fleets. Colombian operation. We also quence of the approach of our
Using the cloud helps bridge We adapt our solutions to our new strategy. We have excellent
this gap and means you can customer’s needs. We provide grew with a team of senior con- products and solutions; this
be flexible in incorporating the the software and can therefore industry is complicated but we
market’s needs. develop solutions, tailoring it to sultants who are well known have designed a strong range of
the customer’s needs. products for this.
in the market. We started to

develop a different strategy for

demand generation as a result

and this was pivotal for us as

a company. However, talking

about the market in general,

Dynamics CRM definitely has

the fastest growth in the mar-

ket because Microsoft is greatly

focused on this solution. Dy-

namics AX, which is the more

complex and comprehensive

ERP solution from Microsoft,

is the top brand in the minds of

CIOs and CFOs in the Colombi-

an market today.

112 THEBUSINESSYEAR COLOMBIA 2016

B2B

IT
infrastructure

The challenge in the coming year for IT
companies will be to provide customers with

higher levels of services.

RICARDO JULIO CESAR services, all our integrates solu- an enabler of this growth in the The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
IMBACUAN PEREIRA tions can reach our end users. market. Internet penetration is
Because of the acquisition of steadier now and cloud services
General Manager, General Manager, Dico Lazus, and also our own de- are presenting an important in-
Cable & Wireless Telecomunicaciones ployment, we are the leaders in crease in demand. Companies
Business 11 cities throughout Colombia. from the different sectors in
an excellent year for us. We We are in every medium- to Colombia are becoming more
How did the company perform in increased sales and expanded large-sized town in the country. aware of how important tech-
2015? services to our customers. At Financial education, hospitality, nology is to the growth of their
the end of the year, we had great and retail are some of the strate- business. Firms are increasingly
RICARDO IMBACUAN Over- results and expect 2016 to be a gic sectors we address; however, looking at providers as partners
all, 2015 was a challenging year. good year as well. There was a we provide services to all the for them to grow their business
We are a foreign company in 15% increase in sales between economic sectors in the country. so that they can focus on a stra-
Colombia, sales targets are in 2014 and 2015 due to an increas- tegic role in the company while
US dollars but our customers ing amount of business with car- How would you evaluate the we look after their IT needs. We
estimate their sales in pesos, riers and customers, including quality of Colombia’s telecom- are using better technology and
but also, the currency experi- new projects in the optical fiber munications network? the newest equipment located at
enced a strong depreciation and wireless networks. our data center, which allow us
from 4Q2015 to 1Q2016. The JCP We have good infrastruc- to provide better service to our
overall performance was good; What were the reasons for ac- ture. It might not be the best, customers.
however, most of our growth quiring IT company Lazus in but there is good optical fiber
was affected due to the devalu- Barranquilla? and wireless infrastructure and JCP One of our principle goals is
ation. Our customers became we have LTE and 4G technol- to increase our customer base.
more cautious about what they RI We used to do carrier-to-car- ogies and submarine cables in We also want to have some busi-
were buying and began mak- rier sales back in 2000 by man- many of the country’s inter- ness relating to wireless and
ing decisions between capital ufacturing a fiber-optic infra- communications centers, not fiber-optic technology, within
investments instead of opera- structure for the Caribbean and only in the Pacific but also in engineering and design, not
tional expenditures. In fact, we Latin America. Nevertheless, we the Atlantic Ocean (Caribbean just on operation, maintenance
currently see more operational kept addressing new countries Sea). We have very good optical and installation. We believe that
expenditures because securing and serving new markets and rings in the country; some of 2016 will be a very good year,
capital expenditures is more started to receive requests from them in the south and others in as 2015 has been for the com-
expensive. That situation drove corporate customers asking us the north of the country. In sum, pany. Next year we will have
us into a creative scenario in to have the fiber-optic service in we have high levels of technolo- engineering projects relating to
which we crafted new products their facilities. Therefore, we saw gy in comparison to the United the operation and maintenance
so that we could help customers an opportunity to acquire Lazus States, Canada, and Europe. of wireless networks across the
with their needs. It was difficult, as a terrestrial carrier in order to entire country. We also have
but we managed to work it out spread fiber optics throughout What are your expectations for new business with installation of
through imagination and ideas. the different cities in the coun- 2016? customers in Triple Play, which
try. Now that we are moving covers TV, internet, and telepho-
JULIO CESAR PEREIRA Ev- toward business-to-business RI We have an aggressive five- ny. The extra business for 2016 is
erything considered, 2015 was year plan where revenues need the result of new customers, new
to grow by two digits consis- technologies, new networks and
tently every year. The IT sector new representations (hardware
is growing and technology is and software). ✖



114 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

STOP • Main economic
the press newspaper in
Colombia
TBY talks to Ricardo Ávila, Editor-in-Chief of • Majority of
Portafolio, on the factors behind Colombia’s revenue comes
steady growth, the need to adapt to the web, and from print version,
his predictions for the paper. but growth seen
online and on
What underpins Colombia’s being in a recession. The rea- growth in GDP. That is too op- mobile
growth despite the negative fac- son Colombia can grow is timistic. A peace deal would • Portafolio
tors it faces? that internal consumption is be the end of the beginning still the most
Colombia has been affected strong. Latest figures show rather than the beginning of profitable unit of
by the same issues that have that growth might even be the end. Casa Editorial El
confronted other Latin Amer- above 3% in 2015 and 2016. Tiempo
ican countries; therefore, it This is also due to the fact that How has the company adapted
is by no means an exception the employment situation in to the online trend and what forms that we have today, but
in that regard. Nevertheless, Colombia has not deterio- steps have you taken in this re- with changes in which part of
we have been able to sustain rated the way it has in other spect? the brand receives how much
growth at a higher level than countries in the region. At We are always trying to push of overall revenues. Print will
other economies in Latin the same time, due to a lucky the brand on different plat- recede somewhat from be-
America, even Brazil. While coincidence, the ambitious forms, be it on paper or digi- ing our main breadwinner.
3% is not something to be infrastructure development tally. Our online presence is When looking at tradition-
proud of, it is still better than program that the government very strong, and we are one of al media, business journals
has undertaken is picking up the top-five websites for eco- have done best with the tra-
BIO pace as a counter-cyclical pol- nomic and business news in ditional print media model
icy, so that is also keeping the the Spanish-speaking world. compared to other kinds of
Ricardo Ávila is the Editor- economy churning just at the We are also active in mobile journals, so that gives us a
in-Chief of Portafolio, right time. phones through our Portafo- bit more room to breathe. As
Colombia’s largest and lio app and push our brand safety has improved, more
most influential business To what degree will the signing in terms of organizing meet- companies have been will-
daily, as well as the Deputy- ings and events. So we have ing to open up and talk more
Editor-in Chief (Opinion) of a peace agreement between a much more diversified of- candidly to business journals
of El Tiempo, the most fering compared to the past, in Colombia, showing greater
important newspaper in FARC and the government help when it was only about our willingness to share informa-
Colombia. An economist by printed media. We are not just tion with the media and our
training, he holds a masters’ improve Colombia’s image a newspaper anymore; we are readers. It is much more open
degree from the University a brand. That said, the major- now than before, audienc-
of Pittsburgh, as well as a abroad? ity of our revenue still comes es are much more educated
graduate certificate in Latin from our printed offering, than they were, and the size
American Development. There is no doubt this country but we see incredible growth of the middle class has dou-
Earlier, Ávila was Editor-in- will be better if a peace agree- also in online and mobile bled over the last decade or
Chief of Cambio, at the time ment is signed with the oldest traffic and revenues. The in- so; all these factors have im-
one of Colombia’s leading guerrilla group in the country. formation cycle has changed proved numbers, revenues,
weeklies. A winner of the At the same time, the effects dramatically. Instead of pro- and readership for us, and we
National Prize of Journalism will be slow in terms of imme- ducing new news and content will continue to see this im-
Simón Bolívar, he has taught diate gains. We need time and every 24 hours, we have to proving trend into 2020 and
econometrics and economic more agreements to be made, produce it all the time, con- beyond. ✖
journalism at Universidad but if things go to plan, we can stantly updating our content.
Javeriana in Bogotá. expect more investments be-
ing made in rural areas than Where do you see Portafolio by
were made in the past, and 2020?
that will be a huge gain for the It will be a stronger brand,
country, especially if we can with basically the same plat-
get our act together in terms of
agricultural production. But at
the same time, I do not believe
those who think that a peace
deal will lead to an added 2%

119 122 THEBUSINESSYEAR 115

Natalia Abello Vives, Minister After decades of disuse, Colombia 126
of Transport, on upgrades to is rehabilitating many of
the transport network and its railways, a cost-effective Demand for Colombian exports
innovations in the sector. alternative to starting anew. has drastically increased the
importance of the country’s
Transport many ports.

REVIEW

Colombia is pressed to ensure optimum nationwide, air, port, and road
connectivity that counters the topographical obstacles presented by the
Andes and reflects the market forces that drive global transportation and
commerce.

FROM HERE
TO THERE

A weak oil price al Transportation Master
environment has Plan (PMTCT) 2015-2035 in
obliged the gov- order to develop infrastruc-
ture that integrates all modes
ernment to look of transport in order to face
the demands of regional
to commercial alternatives development and interna-
tional trade.” This scheme
that demand a well-oiled lo- also takes into account the
country’s rivers, not least the
gistics infrastructure to drive Magdalena. Colombia is also
a signatory nation of a sup-
the value chain. And mean- port scheme aimed at assist-
ing emerging economies to
while, currency devaluation incorporate environmental
strategies in their transport
is having a knock-on effect of programs, known as Nation-
ally Appropriate Mitigation
making Colombian exports Actions (NAMAs).

more appealing. According 4G CALLING

to the World Bank’s Doing A historic step was taken in
2011, when the government
Business 2016 report, Colom- launched a landmark and
comprehensive 10-year in-
bia placed 110th out of 189 frastructure plan. In January
2012, parliament enacted the
nations in terms of ease of Public-Private Partnership
(PPP) Law, establishing the
cross-border trading, up one framework for the imple-
mentation of key infrastruc-
place from 2015. Yet, under- ture projects and services by
facilitating private invest-
lining the government’s need ment in the sector. Then, in
2015, President Santos an-
to enhance national compet-

itiveness, it ranked notably

lower than neighboring Peru

(88th), Mexico (59th), and

Panama (54th). The report

puts the domestic cost of ex-

porting a container from Co- Image: Willis Colombia

lombia at $1,525, compared The World Bank’s Doing Business
2016 report puts the domestic cost of
to $1,361 in Mexico, $390 in exporting a container from Colombia at
$1,525, compared to $1,361 in Mexico,
Panama, and $278 in Peru. $390 in Panama, and $278 in Peru.

As Natalia Abello Vives,

Colombia’s Minister of

Transport, told TBY, “The

Ministry of Transport (has)

defined a roadmap for the

sector through the Intermod-

116 THEBUSINESSYEAR COLOMBIA 2016

nounced the intermodal transportation mas- KEEP ON TRUCKIN’
ter plan 2015-2030, committing an annual
investment of $10.4 billion in 2015, claiming Discounting coal and oil transportation, 99%
1.3% of GDP. This long-term commitment to of all goods nationally utilize the road net-
strategic growth through infrastructure will work. Colombia’s cargo transport has pre-
underpin the economic growth of tomorrow. dominantly been the domain of super-heavy
The scheme connects 18 key urban regions, trucks known as tractomulas, or work don-
the production of which amounts to 85% of keys. The problem of an aging fleet has been
GDP, with border zones and Caribbean and partially addressed by a government incen-
Pacific ports. Furthermore, sector regulation tive to renew vehicles, but this solution alone
and heightened urban mobility is creating a is inadequate, calling for development of ad-
nationwide commercial framework conducive ditional roads and water-based solutions to
to foreign investment. Thus, the government boost the country’s competitive edge. Trans-
aims to invigorate foreign trade and encour- port Ministry data puts the number of road
age even regional development. The so-called haulers at close to 1,600, although roughly
4G concession plan, largely addressed at dou- 80% of all trucks are owned by an individuals
bling the length of Colombia’s four-lane high- or small enterprise, with just 2.5% owned by
way network, is but a part of an overall scheme forwarding companies. And just eight freight
billed at $70 billion by 2035 that features 101 forwarders have more than 100 trucks. In
road projects of over 12,500km, as well as 52 commercial cargo operations, short-distance
integration projects of around 7,000km. In the vehicles have a 74% market share. Around
case of rail, deregulation in the 1980s allowed 22,418 tractomulas have a transport capacity
the national system to expand from a 2010 of 872,200 tons, at 42% of total volume. Some
base of around 846km of operational track to tension has arisen in the form of industrial
over 1,300km by 2014, a 58% rise. The ongoing action since the government, to reduce trans-
infrastructure project envisages an additional port costs, began promoting competition
1,600km of new rail tracks. Meanwhile, mari- through price setting.
time projects to exploit eight rivers, as well as
31 airport expansions are earmarked. PORTS

The 4G concessions rank among the world’s Colombia aims to become a major player in
largest PPP infrastructure programs. And ad- cruise ship tourism, a gigantic international
ditional economic growth of 1.5% is targeted money-spinner globally worth $37.1 billion in
in direct consequence of the plan. Its financ- 2014, but also to double its exports. “The ma-
ing involves a 25-75 split between internation- jority of ports,” Julian Palacio, Director Gen-
al and domestic financing, with an estimated eral of Latinports told TBY, “are located on the
$5 billion to be executed through the local Atlantic, and in my view we now have to focus
capital markets and private debt offerings. on the Pacific. I think there is no doubt that
Between 35 and 40 projects were expected to the future of commercial trade from Colom-
be awarded by end-2016. bia is in the Pacific region in Asia. To this end,
the government is undertaking huge invest-

RAFAEL ROBLEDO MONTAGUT Were Colombian companies purchasing aluminum *Read the full interview at thebusinessyear.com
trailers and semi-trailers before your company
General Manager, Romarco S.A. started to produce it?
Some companies were buying aluminum trailers and
How has the introduction of hybrid and 100% semi-trailers outside of Colombia. Foreign aluminum
aluminum trailers been received by the market? semi-trailer manufacturers opened the Colombian
It has been successful. Hybrid and 100% alumi- aluminum market, and once we were sure that the
num semi-trailers have a smaller market com- Colombian semi-trailer market was ready to accept
pared to traditional steel trailers and semi-trailers the change in semi-trailer technology, we decided
due to its high price. These new designs create to make the final investments and benefit from all
lighter trailers, allowing them to carry around 2 the research and development that we have done
tons more. These new products have permitted with aluminum. The investments necessary to adopt
us to segment the market. There are those who aluminum technology totaled more than $2.5 million.
prefer to invest more in the short term and save in These investments included software, machinery,
the long run, while others want just the opposite. labor force training, and working capital.*
It depends on the business strategy of each
individual.

Transport THEBUSINESSYEAR 117

ment at Buenaventura, which is one of the key provements, to TBY, said this is a “technologi-
ports on the Pacific.” cal tool that compiles all information systems
in ports, from the cargo generating forward-
Furthermore, the government is working ers, to the government and general public,
to make the Magdalena River more naviga- (allowing) access to the country’s ports in real
ble. Colombia has 87 port concessions and time, which will reduce waiting times.”
annual sectoral investment to the tune of $1
billion, including a restructuring of ports both AIR
in the Caribbean and Pacific that includes ex-
pansion, a deepening of access canals, and Official projections are for a doubling of the
improved links with key production hubs. Latin American air transport sector by 2030.
Colombia’s principle port is Buenaventura, Colombia’s air transport, a vital component
the major port on the Pacific coast, account- of the overall matrix, has indeed grown ex-
ing for over 50% of the nation’s cargo. Both ponentially, at an annual rate of around 14%,
Buenaventura and Cartagena ports have seen exceeding global growth rates by 2.3% in 2014.
dredging to respective depths of 19m and 16m.
Barranquilla, also a world-class port city, has In Bogotá alone air passengers are estimat-
played a notable role in the sector’s diversifi- ed to grow from today’s approximately 30 mil-
cation drive on the back of its resident indus- lion annual arrivals to 40 million by 2020. Air
trial zones, the nation’s first FTZ having been cargo growth between 2004 and 2013 posted
erected there. Just 100km from Cartagena and at 7%, while the average annual growth for
Santa Marta, it has become a hub of trade the period was 1.13%. The airports operated
with readily available workforce. Deep-water by Opain, AirPlan, and AeroCali, whose main
Caribbean ports such as Cartagena and San- airports respectively lie in Bogotá, Medellín,
ta Marta handle considerable cargo flows of and Cali, carry the greatest tonnage, both in
international shipping, with flows set to rise incoming and outgoing air cargo, national-
thanks to the Panama Canal expansion. ly and internationally. Overall, as with pas-
senger transport, private airport operators
Minister of Transport Abello Vives, explain- collectively account for 85-90% of the cargo
ing INSIDE, an aspect of ongoing port im- sub-sector of the air market, with the remain-

118 THEBUSINESSYEAR COLOMBIA 2016

der managed directly by Colombia’s Civil Avi- FLOW RIVER FLOW The Magdalena river
ation Agency (AEROCIVIL). today still transports
Long years of civil strife have significantly petroleum bulk cargo,
Colombia has over 800 airports, with over curbed river transportation. The Magdalena but investment has
700 unpaved. AEROCIVIL is responsible for river today still transports petroleum bulk car- broadened its scope
the regulation and control of the aeronautic go, but investment has broadened its scope as as dredging has
and airport infrastructure. Since Colombia’s dredging has allowed passenger and cargo allowed passenger
shift to broader liberalization, the aviation ferry transit. Current peace talks with FARC, and cargo ferry
sector has been subject to fierce price com- therefore, point to a return to more produc- transit.
petition across the board from maintenance, tive times. According to Julian Palacio, Direc-
repair, and operations (MRO) to military sup- tor General of Latinports, “the development
plies. Furthermore, Colombia’s signing of an of Holland and many other European coun-
open skies agreement with the US effective as tries was built on having the Rhine, a naviga-
of January 2013 introduced additional play- ble river that transportation companies can
ers. To facilitate this, the Colombian Agency take advantage of. Likewise, President Santos
of Infrastructure (ANI) has been tasked with understands the great opportunity the Mag-
overseeing the modernization concession dalena River presents for the country to move
process at four airports. Additionally, Colom- forward.” A 10-year contract valued at $1.35
bia’s FTA with the US is a factor in rising air billion was awarded to Brazilian firm Ode-
transportation. Bogotá’s El Dorado Interna- brecht for the channeling and maintenance of
tional Airport is Latin America’s third busiest, a 260km stretch of the Magdalena to its mouth
ranking among the top-100 busiest world- on the Caribbean coast, at the Port of Barran-
wide. Around 70% of total cargo and passen- quilla. Latinports data indicates that the Mag-
ger operations in the country are handled at dalena basin of over 27.3 million ha (25% of
the facility. By 2012, it was handling around the national territory) accounts for roughly
700,000 tons of cargo. Restored to merit its $200 billion (85%) of GDP.
namesake, it is home to Avianca as well as 30
international airlines, six domestic airlines, Colombia’s exhaustive public-private ef-
and 18 cargo airlines. In 2015 it catered to 30 forts to transform its transportation matrix
million passengers and in 2Q2016 the airport into an intermodal system will not only max-
saw 1.2 million international and 2.6 million imize its international trade footprint, but
national passengers, with 35,618 landings. ultimately transform a nation defined by its
geography into a unified totality. ✖

Colombia's rugged terrain presents
many challenges for transport
infrastructure development

Image: Ministry of Transport

Transport THEBUSINESSYEAR 119

INTERVIEW

WHERE ARE What measures does Colombia
you going? have in place to regulate the
expansion of mobile applica-
How will the current economic network through increased TBY talks to Natalia tions offering private shuttle
connectivity between centers Abello Vives, Former services?
context influence in the gov- of production and consump- Minister of Transport, First it is important to point
tion with the major cities, port out that we have a regula-
ernment’s investment plans for areas, and borders that have on government tion that states that passen-
shorter travel times and oper- investment plans, ger transport is considered a
transport infrastructure? ating costs. This has enabled public service. Therefore, you
production and marketing of new upgrades cannot use private transport
We are working to continue low-cost goods produced and to the national to provide public passenger
with a program of new high- consumed throughout the transport network, service. Secondly, the govern-
ways, the concessions of which country, which has increased and integrating ment sees technology plat-
are fully allocated and running. competitiveness and improved innovations in the forms as a tool that duly em-
We also promote the develop- the quality of products. For transport sector. powered transport companies
ment of a transport system this reason we are expanding can use to improve service
based on what we call intelli- the portfolio of infrastructure tions for closing regional gaps. delivery in order to be more
gent infrastructure, where we projects in all transport modes We will boost the development efficient and accessible to the
not only construct roads but to improve conditions for the of the tertiary network through user. In this context, we have
we promote an efficient logis- mobilization of cargo and pas- a joint effort with institutions, been regulating the conditions
tics system through intermod- sengers. In the National Devel- promoting the use of local la- to be met by technology to be
al connectivity and compet- opment Plan 2015-2018, one bor. All these actions will stim- used in public transport pas-
itiveness, linking the private of the crosscutting strategies ulate the economy and gener- senger platforms. ✖
sector as the main actor. In this was the construction of the ate employment both directly
context, the Fourth Genera- PMTCT. This articulates the and indirectly. Therefore, all BIO
tion program is an alternative national logistics system and other structuring programs of
for the development of road seeks to identify a portfolio of projects advanced under this Natalia Abello Vives is
infrastructure in the country, transport projects in the short, government enjoy a degree the Former Minister of
accelerated by ensuring the medium, and long term (2015- of maturity that establish not Transport for the Republic
quality of roads and facilitating 2030) with an intermodal ap- only an excellent distribution of Colombia. She earned
the country’s competitiveness. proach that responds to the of risks in contracts but a guar- a bachelor’s of law from
present and future needs of the antee of legal stability that al- Pontificia Javeriana, with
What new developments will we economy. This project portfo- lows us to advance with great- further specializations in
lio is established under an ap- er certainty in implementing management, public service,
see in the national transport net- propriate methodology, which them. The sectors with growth business and company law,
identifies the projects required expectations, such as industry negotiation, and conflict
work in the short term? to meet the present and future and infrastructure, will benefit management and resolution
demands of the road, river, rail, from this first wave and thanks from Los Andes, Javeriana,
The planning and execution airport, and port networks. By to these sectors, the econom- and Externado universities.
of major road infrastructure December 2018, the country ic slowdown will be orderly She completed studies
that the government has been will have about 11,000km of and gradual, and recovery at Harvard and Yale in
promoting have reduced risks national roads under conces- will begin to strengthen in the leadership and management
for investors and this has influ- sion. ANI had about 6,820km, 2H2016. for lawyers, respectively. She
enced the influx of foreign cap- 1,870km of which correspond has 22 years of experience
ital. Among the most notable to dual carriageways built in the public sector, where
developments are institution- through concession. We will among other positions she
al strengthening through the continue with programs like served from 2012 to 2014
creation of the Vice Ministry Prosperity Corridors by Invi- as General Secretary of
of Infrastructure, the Nation- as, and we will also structure the District of Barranquilla
al Infrastructure Agency, and a road-paving program that and on several occasions
the Funding Institution for prioritizes those necessary sec- as its acting Mayor. She
National Development, which also served for 13 years
focuses on structuring proj- as Secretary General of
ects. The PPP law was enacted electricity transmission
in 2012, introducing improve- company Traselca.
ments in the procurement re-
gime. We have also sought to
consolidate the national road

120 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

oalnways How do your international oper- What is the scope of your con- Offers the entire
the go supply chain of
ations complement your local sulting services? logistic services
TBY talks to Juan
Camilo Samacá, operations? We have a strong and unique How is the exchange rate affect-
President of Almaviva, consulting service at Alma- ing or benefiting Almaviva?
on the company’s We have different partnerships viva. We do not go to our Exchange rates do not affect
global reach, the with companies around the clients with theoretical anal- Almaviva directly, but affects
importance of world that give us the ability yses or recommendations; our clients in different ways
ongoing government to move products and mer- we give them solid, practical, depending on the industry
infrastructure chandise around the world. on the ground, specific, and and sector they operate in. For
projects, and creating We support land, sea, and air in-depth consulting services. some industries, the impact is
a diversified offering. shipments; the whole package. We have 76 years of logistics positive, while for others it is
We can import products from experience and a highly ex- negative. The job of Almaviva
all over the world, take care perienced consulting team, is to understand our custom-
of the customs process, move which is what we leverage for ers by knowing their require-
the product from ports to any our clients. We do not want ments and needs so we can
city within Colombia, manage to just execute the logistic redesign and operate their
the warehouse operation, and operation; we want to opti- logistics operations to make
then handle the distribution to mize the way our customers sure they have significant cost
our customer clients both for are leveraging the logistics and time reductions, which
modern and traditional trade operation and services. We will allow them to counter the
(all channels), all of these giv- want to give them a strate- impacts of a disadvantageous
ing our customers an integrat- gy and framework that suits exchange rate. ✖
ed view of the operation. their needs in terms of effi-
ciency, financial and oper- BIO
How do government-backed ational results, and, more
importantly, their service Juan Camilo Samacá
infrastructure projects benefit quality to their customers. has been the President of
This will all have a final ben- Almaviva since January
your business and the logistics efit on our customers’ mar- 2016. He has worked
ket growth. at companies such as
sector in general? Mondelez, Votorantim,
What kind of financial products SABMiller, and Unilever,
The investments will be a huge where he has held different
benefit for us, for the sector do you offer and how have they positions within the supply
overall, and a crucial benefit to chain area and has managed
Colombia. The government’s grown and evolved over the operations in Latin America
extensive investment in infra- as well as holding regional
structure projects will help us last few years? Latin American and global
achieve our ambitions even positions. He holds a degree
more effectively and will ex- Our finance products have in industrial engineering
pand our capabilities. In the had huge importance for Al- as well as computer
last couple of years, the econ- maviva. We are part of the science engineering from
omy in Colombia has been Banco de Bogotá and the Universidad de Los Andes
outstanding and the global Grupo Aval, and we have a in Bogotá and a post-
economic difficulties have huge financial and economi- graduate degree in logistics
had a minimal impact on Co- cal background. For this rea- management from the
lombian growth. We do not son, financial products are a Universidad Sergio Arboleda
discriminate based on com- critical part of our business, in Bogotá.
pany size; we serve the largest and we are one of the few
to the smallest companies, so logistics companies that of-
we have tried to develop a cus- fers these unique products
tom-fit type of logistic service in Colombia. We enable our
depending on the client and customers to get bank credit
the sector in which the client by providing them with cer-
operates. Some cities are grow- tificates of deposit for their
ing at a faster rate compared to merchandise. We have dif-
others, but the new infrastruc- ferent markets, industries,
tural investments, roads, and and clients that work with us
ports, for example, are chang- in Colombia, and we have an
ing the whole landscape and outstanding track record in
opening up much more op- these 76 years of experience.
portunities and potential.

Transport THEBUSINESSYEAR 121

INTERVIEW

COME FLY a result of that, even though
with me there are some regions with
amazing landscapes and ex-
TBY talks to Major General Pedro Ignacio cellent locations for outdoor
Lozano, President of Satena, on the company’s sports. The great outdoors in
evolution, increasing its passenger count in 2016, Colombia are fantastic; how-
ever, a tourism industry could
and differentiating the company’s strategy. not develop in those regions
because of FARC and ELN.
How has the company devel- Adding 19-seat lombia, what other advantages If the government is able to
aircraft to target differentiate you from your com- close an accord with both
oped since its foundation in less popular petitors? groups, tourism in Colombia
destinations We do not want to compete will grow exponentially, and
1962? with other companies, as that those remote regions will have
our service and the fulfillment is not our mission. Competing a chance to develop. Caño
The Colombian Air Force that we offer. We have added with those companies would Cristales is the most beautiful
(CAF) was founded 96 years four brand-new planes to our also not be easy. Competition river in the world, situated in
ago, and during the develop- fleet in order to guarantee the among the large airlines is al- a place where guerrilla activi-
ment of its institutional mis- quality of our flights. ready strong, and our goal is ty was high and was off limits
sion it was deemed necessary not to compete with them. to travelers as a result. These
to create an air transportation Which routes are the most heav- Satena will stop its services days, the guerrilla presence in
firm to connect the remote ily trafficked? once a commercial airline that area has diminished and
regions of the country. Most Our main destinations are the finds a potential market where people can access those natu-
of those regions were among most isolated geographical ar- it is flying right now. That is ral wonders. ✖
the least developed areas of eas, which are in the western, why Satena flies to routes that
Colombia, and commercial southern, and eastern areas of connect the most remote re- BIO
airlines did not have any inter- Colombia. These are not typ- gions of Colombia.
est in operating flights there. ical destinations for tourists, Major General Pedro
Satena was created to offer na- but for rather for Colombian Are there any particular regions Ignacio Lozano graduated
tional services to those remote nationals. Those regions have or cities that need to be included from the Military Aviation
areas using the pilots from the not experienced much devel- among your destinations? School Marco Fidel
CAF, and that mission has al- opment, and some of them There are regions such as the Suarez and Manager
ways remained clear. We have even struggle with an ongoing Amazonas that have this need. Aeronautic Aeronautical
played a key role in generating guerrilla presence. We do not It would be costly to send a Military Institute. He
a network to connect all the re- fly to the northern regions, large aircraft there, but we are studied in senior business
gions of the country. where cities like Santa Marta, thinking of sending new small- management at INALDE.
Cartagena, and Barranquilla er planes. We are planning to Throughout his military
Satena expects to have over are located. Our mission is not add some 19-seat planes to career, among other
to fly where the rest of airlines our fleet to be able to connect positions, he served
1 million passengers in 2016. are, but instead serve the des- certain cities in the Amazonas as commander of Air
tinations forgotten by com- to the rest of Colombia. Combat Command No.
What factors will lead to attain- mercial operators. 2 in Villavicencio and
What benefits could the peace Commander of Air Combat
ing that success? Besides the important social agreement with the FARC bring Command No. 6 in Tres
role that Satena plays in Co- for Satena? Esquinas Caquetá. He served
We have implemented several The peace agreement will help as Military Air Attaché in
strategies to consolidate the tourism, and more foreigners Brazil. As third officer in the
company in Colombia. We will come. Many of our desti- chain of command in the
have always brought the latest nations are in areas where the Colombian Air Force, he has
technology to our aircrafts in guerrilla militia has had great for the last three years been
order to provide our custom- presence. Tourism in those Chief Inspector General
ers with a good service as well areas has not developed as Intelligence and Air Force.
as security. Our customers He is currently the President
know that Satena is the only of the state airline, Satena,
government-backed airline in a position he has held since
Colombia. Customers see us January 2015.
as one of the safest travel com-
panies for domestic travel. We
are strict with the quality of

122 THEBUSINESSYEAR COLOMBIA 2016

FOCUS RAILWAY

After decades of disuse, Colombia is rehabilitating thousands of
kilometers of railways, a cost effective alternative to starting from scratch.

ALONG FOR THE RIDE

RAILWAY TRANSPORTATION is still underdeveloped in The President of Ferropetrol, Miguel Centanaro, assured TBY
that the problem with the inactive railway lines is common in
Colombia. According to the World Economic Forum (WEF), the South America. He explained that after the 1950s, many railway
country has only 0.2km of railways per 100sqkm of territory, a fig- lines were abandoned when they were nationalized and govern-
ure that is below the 0.5km average in Latin America and 0.9km ments could not make them profitable. “The cost of rehabilitating
for countries with medium to high incomes. Although Colombia’s these rails,” he explained “is $1 million per km, whereas for totally
first railway—the Bogotá Savannah Railway—commenced oper- new projects the cost per km is around $3 million to $4 million.”
ation in 1882, and its development has been quite unstable and
ineffective. That is all set to change, with the launch of a national According to a report by the National Infrastructure Agency
transportation plan that includes several railway revival projects. (ANI) in Spanish, Colombia currently has 3,304km of rail network,
of which 1,510km are idle and only 799km are fully operational. A
The call to renovate Colombia’s railways was reinforced in the striking detail is that the only in passengers transport in Colombia
XII National Congress Infrastructure held in November 2015 in is “the touristic train Savannah” between Bogotá and Zipaquira,
Cartagena. Natalia Abello, Transport Minister, pointed out the in- and the funicular that operates up the mountain of Monserrate
tention of developing a long-term “Intermodal Transport Master in Bogotá.
Plan” (PMTI), with the aim of building a primary rail network at
internationally competitive levels of services, improving connec- At this stage, Colombia has already initiated several projects;
tions with other markets and being more efficient in a variety of some of them are more advanced than others, such as the Pacif-
transportation modes. ic railway and the line between Yumbo and Buenaventura, but
the PMTI aims a general national improvement. With a public
The Colombian government created the National Institute of investment of COP4.5 billion for 2016, plus the investment from
Concessions (INCO) in 2003, the organization responsible for the the concessions companies, Colombia is looking forward to the
concession administration in order to revitalize the railway use. following decades to reestablish the railways of La Sabana, Antio-
Ferropetrol is one of the examples of companies that are updating quia, Santa Marta, Caldas, and La Dorada, to realize a fully func-
the railway, and are currently handling eight different projects in tional railway service. ✖
the country.

Transport THEBUSINESSYEAR 123

INTERVIEW

LONG, wide rails

TBY talks to Miguel Centanaro, President of Cenconsas and Ferropetrol,
on the new rail project, the state of rail lines in Colombia, and the role of
PPPs in developing the country’s transportation network.

What is the background of the as eight railway projects in the every year, and cargo logis- IN NUMBERS
country; four of them have tics will undergo a massive
company, and what projects already received the green transformation. Final con- Neiva-La Dorada
light from the National Infra- sumers will benefit from Railways Project
have defined your tenure here? structure Agency (ANI) from this transformation through current cost stands at
Ferropetrol is a railway project a feasibility point of view. The lower transportation costs,
that stretches from Neiva to La remaining four are still in a increased agility, multimod- $700
Dorada. La Dorada is 385km development stage and these al transportation systems,
existing corridor, which are in already constructed and the capacity to transport BIO
means we do not face social corridors. The cost of rehabil- large amounts of cargo. Mul-
and community conflicts in its itating these kilometers is $1 timodal logistic transport Miguel Centanaro was a
implementation. This project million per km, whereas for systems will definitely be im- business administrator
foresees the mobilization of totally new projects the cost plemented in Colombia. The at the University of
cargo from Neiva to the cen- per km is around $3 million to Magdalena river represents a Cartagena, a recipient of
ter of the country and passen- $4 million. Colombia used to key project for this transfor- the National Research
ger transport in the medium have 5,000 active km of rail- mation as well. We have seen Award (Analdex), and a
term after approximately 10 way, whereas now the coun- cooperatives of truck owners candidate for a doctorate of
years. Certain areas of this try has 1,200km. There are and companies investing in business administration at
project have narrow-gauge 3,500km of inactive railway Ferropetrol, because they the University of Liverpool.
railways. We expect to start now in this country; there are understand the need to do He has over 30 years of
construction works in a period many opportunities for for- so in order to survive in the experience in formulating,
of three years and be opera- eign companies. In fact, the future. We have a company evaluating, and structuring
tional in five years’ time. The projects we are involved in of 700 trucks that has already projects. In addition to
main opportunity this project represent a total of 2,500km agreed on investing in Fer- Cenconsas and Ferropetrol,
represents for investors is the of railway that will be reha- ropetrol, and we just need he is also the President
high profitability level; the cur- bilitated. The problem with to formalize everything and of Francolex, Kunzell, and
rent cost of the project is $700 inactive railway lines is pretty make it public. Nevertheless, Constructora Tibabita.
million, and we aim to raise common across South Amer- this is a good indicator of He has been an advisor of
equity of between 30% and ica; after the 1950s many rail- market activity and the op- more than 30 bills and has
40%. This means we expect to way lines were abandoned portunities this project has, outlined four successful
attract foreign investors to join due to these being property of as well as its importance in railway APPs as well as
us and cover some $250-300 the state and the difficulties the transformation of the Co- 12 building APPs, airports,
million. The RoI of this project they had to make this sector lombian logistics sector. roads, tunnels, and parks
is high, at around 30-40% as of profitable. Currently, we have throughout Colombia.
the fourth year of operations, seen a regional reactivation What role can PPPs play in the
which is when we will start to of the railway industry under
distribute dividends. private and public-private transformation of the logistics
partnership schemes. The
How do you assess the state rehabilitation of inactive rail- sector in Colombia?
ways would be a key econom-
of development of the railway ic driver for the country and PPPs certainly have a vital
its logistics sector. Railway role to play. We have become
sector in Colombia? would give support to road highly specialized in PPPs and
We currently handle as many transportation and reduce we currently have PPPs total-
transportation costs across ing as much as $30 billion in
the country. logistics, real estate, educa-
tion, health, and so on. This
How do you see the logistics is a segment that offers many
opportunities to foreign in-
sector evolving up to 2020? vestors across the country.
Colombia has a high deficit
Colombia manages around of infrastructure in all the sec-
280 million tons of cargo tors and PPPs are just the per-
fect tool to close those gaps. ✖

124 THEBUSINESSYEAR COLOMBIA 2016

FORUM

PORTS

Increasing support from the government for infrastructure projects
has put a renewed focus on Colombia’s ports, a key node in the
country’s transport and logistics network.

ALVARO JULIAN PALÁCIO

RODRIGUEZ Director General,

General Manager, Latinports
Ventura Group

M ost of Colombia’s ports are adequate, but the problem O verall in Latin America, ports are fulfilling their goals.
lies in the connectivity with the rest of Colombia. We are Over the last 20 years many countries in the region un-
going to have four terminals in Buenaventura, which is
sufficient. However, the connection among these ports and inland derwent privatization, and Colombia also took part in this
is inadequate. The government is making huge investments in 4G
concessions, but we have to expedite this process if we want to be process. This has been beneficial for the region and for the coun-
competitive. The government has to pay more attention to the port
in Buenaventura, not only in order to be competitive, but also for the try. In my view the government does not need to be paternalistic
people. The condition of the port is currently abysmal, and there is
a great deal that needs to be done with regard to social matters. We toward the ports and should leave their operations to private en-
have a foundation called Étika Verde and are currently working in
different neighborhoods in Buenaventura to educate people on en- terprise. In fact, shortly afterwards privatization Colombia’s ports
vironmental issues and on how to invest in their own companies to
help them progress. We have an agreement with the government in improved their operations. This has been hugely beneficial to the
our concession to invest $80 million over the next 15 years. We are
starting next year in Cartagena, investing $50 million in a project, and country’s foreign trade. As such, I am not really worried about the
for Buenaventura we have to invest $80 million. We bought a new
conveyor belt system to charge vessels in Buentaventura. We invest- ports. They are well managed and have a good level of investment,
ed around $5 million this year and next year we are going to build a
specialized warehouse, for grains, which will cost around $15 million. with some ports belonging to international, and some to Colom- The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com

bian companies. What is a concern is the lack of connectivity be-

tween ports and cities. This is a severe problem for Colombia. One

of our stated goals is to work on the development of the ports. How-

ever, the problem is not with the ports, it is with the logistics from

the ports to the cities. This is what the country needs to improve

on. Currently, it is considerably more expensive to ship cargo do-

mestically from Cartagena Port to Bogotá, compared to shipping

it internationally from China to Cartagena. This is due to the poor

connectivity and logistics between Colombia’s cities.

MICHEL GARCIA RIASOCOS

General Manager, MichellMar

T he currency depreciation and the and as MichellMar is located within the city ship that either comes to or leaves Colombia
fall in commodity prices made we subsequently faced a difficult year. The will have to stop in Barranquilla. That route
2015 a complex year. Our terminal main advantage that a port in Barranquil- will connect the mines with the port, which
port is specialized in the transport of liquid la has is the Magdalena River, which in the represents a massive opportunity for us. If
and solid bulks with hydrocarbons, a sector near future will be navigable. That is a ma- they improve that infrastructure, we can re-
that has decelerated. The two important port jor competitive advantage because the river duce the time and cost of transport. There-
competitors of Barranquilla are Cartage- runs through the middle of the country and fore, we will definitely be more competitive
na and Santa Marta. In order to bring more will allow shipping companies to transport as a result of better connections. Sometimes
cargo into their ports, the operators had to cargo to the heart of Colombia. The gate to freight from Barranquilla to Europe costs
drop fees to be more competitive. Barran- the Magdalena, and consequently to Co- the same as cargo from the mines in Boyacá
quilla is an important port for hydrocarbons, lombia, remains Barranquilla. Every single to Barranquilla.

Transport THEBUSINESSYEAR 125

VOX POPULI

ROAD TRANSPORT

Complementing major upgrade projects
to the country’s ports, the Colombian
road transport network is undergoing
massive nationwide upgrades.

C ompetitiveness will increase thanks to ongoing
government infrastructure projects. The country

AMAURY ENRIQUE needs infrastructure to be more competitive, and
COVO
we need to be on the forefront of competitiveness in the re-
President, Tractocar
Logistics SAS gion. Bogotá, Medellin, and Cali are on the continental side

W e recently began of- of Colombia, so we need to develop more infrastructure and
fering logistics ser-
vices to some of the roads to connect Colombia with the coast. Transporting GONZALO
main industrial companies in ECHEVERRY
Cartagena, such as Ajover and freight from ports to Bogotá is more expensive than doing GARZÓN
Mexichem. We have grown with
them, but we knew that we had so from China to Buenaventura. For general cargo we are President, Transportes
to diversify and opened offices in Vigia
Bogotá, Barranquilla, and Cali. aligning all our efforts and strengths to design value propos-
Next we worked to build a strong I n particular, there
and sustainable relationship al for the industrial, fashion and lifestyle, high technology, is room to increase
with our customers and started the usage of IT and
to offer them different services. consumer goods, and automotive segments. For industrial increase the integration with
Now the expectation is that the logistics systems. This would
exchange rate will probably re- projects, we are focusing our efforts on infrastructure and increase the efficiency of not
main around COP3,000 per $1, just port and road logistics, but
so it is not currently viable to power projects. Infrastructure will be the driver of the Co- would have a knock-on effect
import new trucks. We aim to on retail prices as well as the
finish some of the technological lombian economy in 2016. We are ideally aligned with this tourism sector. We see the 4G
projects we have been working roads as a great opportunity to
on in 2016 to make our clients’ trend because the flow of import and export goods and in- improve logistics infrastructure
jobs easier. and benefit the communities
frastructure projects are increasing in the country. surrounding the projects. Trans-
port companies could greatly
The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com CARLOS benefit from the new roads,
making it faster and cheaper to
PALACIOS, get goods and people from point
A to point B.
Managing
Director,
Geodis Wilson
Colombia

HOLLMAN YESID SUAREZ AMADOR with more capacity. We incorporated ideas from
universities and other transport companies, but
General Manager, Transmasivo the idea was not adopted by the district. Just
1km of proposed underground transport line
T hrough Transmilenio, we have around costs the same as 20km of Transmilenio’s abo-
2,000 buses in Bogotá, 120 buses in veground option, yet the capacity is similar; we
Barranquilla, and 160 buses in Lima. In transport around 50,000 passengers per hour.
each city, we have an organization to control the Transmilenio is not working properly now be-
network. We are also in charge of the Sitp, which cause it was not implemented as planned. What
is another public bus transport network. We have we need to do is establish complementary net-
presented some public-private partnerships works to support one another.
(PPPs) to the government, one of which is “Elec-
tric Bogotá” to improve infrastructure, air quali-
ty, and service. We redesigned the whole system,
making it simpler while introducing larger buses

126 THEBUSINESSYEAR COLOMBIA 2016

B2B

KEES VAN DEN CAPT. RAFAEL GIL port
SERVICES
BORNE General Manager,
The boom in demand for Colombian
General Manager, Dragados Hidraulicos exports has drastically increased the
Intertug importance of the country’s many ports.

How are your operations distrib- RAFAEL GIL We have been How do you evaluate the suc- RG Colombia has a privileged The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
uted across Colombia? present in all the Colombian cess of ports in Colombia? location being close to the Pan-
ports. Now we are primarily ama Canal. The country also
KEES VAN DEN BORNE In Co- focused on the maintenance KVDB There will be more ex- has a coast on both the Pacif-
lombia we have 15 vessels. In of rivers, particularly the Canal ports and more vessels in all ic and the Atlantic seaboards.
the Latin American region, we del Dique and the Magdalena public ports in Colombia. The We have several locations that
have over 40 vessels. There are River; therefore, we are spe- current problem is that our rate are positively placed for the
15 in Colombia, eight in Mexico, cialists in maintenance of these is per vessel, but there is more creation of new ports. One of
12 in Brazil, one in Honduras, water channels. Dragados Hi- cargo and the vessels are larg- these strategic locations is the
and four in Peru. The market in draulicos is the largest compa- er now. These days, there are Gulf of Urabá, particularly be-
Colombia is saturated. There ny offering such services in the vessels from 360m, whereas cause some 4G roads will be
are many players but not many country. We have also bought before there were three 120m built there, which will make
projects coming online in the new boats for dredging work vessels. As a tug provider, we access to Medellín and the cof-
coming years. As a result, our that have allowed us to do larg- do not consider small cargo or fee region easier. The Gulf of
focus is now on countries where er and more complex projects. large cargo to be important. Urabá is also close to the Pan-
new projects are coming up This is a new market that is The changes also depend on ama Canal so this will be an
and where tender processes re- opening up to us, including the how the economy reacts. With important area. There is a great
quire long-term contracts. The maintenance of harbors and the current exchange rate, it is opportunity to develop a port
problem in Colombia is that the jetties, which we have focused likely we will see more exports here. Cartagena Port is the best
contracts are short term, and on in the last four years. These than imports in the next cou- existing port Colombia has and
we would rather focus on Brazil, will be important business lines ple of years or months. But, in investments have been carried
where we are building 12 offshore for us in the future. We have our case, we just want vessels out there to make it more effi-
vessels, as we have an eight-year carried out essential works to continue coming in and cient. Improvement works due
contract with Petrobras. We are to keep port depths at the re- out regardless—the higher the to be carried out at Barranquil-
also looking for growth in Mexi- quired levels. We work with all better. The ports in Cartage- la Port will be key as well. ✖
co, in the offshore market as well the ports in the city of Barran- na or Barranquilla are doing
as in the harbor towage market, quilla to help them maintain well, but the ports in places
where there are opportunities their port depths. like Buenaventura and Santa
for long-term contracts of more Marta need more investment.
than 10 years. Even though there The port infrastructure here is
are no long-term contracts on an already well developed. What is
ongoing basis, Colombia is still really needed is investment in
our home base and will contin- inland transportation, and that
ue to be the provider of our cash involves local governments.
flow, which has helped us grow
in Brazil, Mexico, and the rest of
Latin America. It is a saturated
market and a mature market, but
we have over 50% of the market
share.

Transport THEBUSINESSYEAR 127

MAGDALENA RIVER FOCUS

DOWN BY THE RIVER

The Magdalena River THE RECOVERY OF the navigability of In 2014, the Navalena consortium, made up
hopes to become a of Colombian company Valorcon and Brazilian
vital route for trade and Magdalena River is an ambitious infrastructure giant Odebrecht, won a PPP contract to restore
passage once again. project that aims to create a waterway through the river as a viable means of transport that will
the heart of Colombia; a new path that will ease connect the country’s main production and
trade, slash transportation costs, and boost consumption centers, while lowering transport
the national economy. The project is regarded costs and providing better logistics alterna-
as one of the most challenging infrastructure tives. Nearly 73% of cargo in Colombia is cur-
works in Latin America, and the Magdalena is rently transported by land, while just 1% flows
forecast to be navigable again within the next through rivers, and transport costs account for
10 years. The river flows northward for around 65% of the total cost of manufacturing and de-
1,528km from the Andes through the western livering products in Colombia, a rate dramati-
half of the nation to the city of Barranquilla on cally higher than in other Latin American coun-
the Caribbean coast. The pharaonic work will tries. In addition to lowering CO2 emissions
cost around $1.3 billion and generate approxi- and decreasing the maintenance costs and
mately 9,425 new jobs. congestion of road networks, the revitalized
waterway will decrease transport costs, making
The Magdalena River has historically been a Colombia’s economy more competitive.
vital corridor for the country. However, in the
early 1960s the river began to lose its relevance Due to its position at the mouth of the Mag-
as the government instead prioritized the con- dalena, the city of Barranquilla, once known as
struction of highways and rail lines. Colombia’s the “Golden Gate of Colombia,” will likely be
economic growth in the 20th Century was con- the principal beneficiary of the river’s improved
centrated in cities such as Bogotá, Cali, and Me- navigability. ✖
dellín, none of which are crossed by the river.

128 THEBUSINESSYEAR

134 140 152

Eleuberto Antonio Martorelli, Colombia is looking toward Though problems have
President of Odebrecht Colombia, the future and improving its hampered construction,
on current projects, lucrative transportation network by companies have the drive to
sectors, and goals for next year. renewing road infrastructure. build on their success.

Infrastructure & Construction

REVIEW INFRASTRUCTURE

Colombia is committed to a game-changing overhaul of its entire
transportation matrix to achieve the nationwide interconnectivity essential
to industrial diversification and the reversal of a decelerating economy.

FOR WHOM
THE ROAD TOLLS

E ven a cursory rates, including financial in-
glance at Colom- stitutions, exit the country in
bia’s economy adds the wake of weaker perfor-
mance. This only underlines
context to its ambi- the urgent need for Colombia
to shore up its own resources
tious infrastructure objective, to fuel its economy of tomor-
row. Tellingly, in 2015 Colom-
and its likely consequences. bia ranked 103 out of 140 in
the World Economic Forum’s
The World Bank notes that Business Environment and
Infrastructure Index, and 130
GDP per capita has doubled out of 140 for transportation
infrastructure. Additionally,
over the past decade, reaching it ranked 93 out of 189 in the
Trading Across Borders rank-
$12,424 in 2014. Meanwhile, ing of the World Bank report
Doing Business 2015. The
according to the National truth is that both mountain
and jungle have long made it
Administrative Department more feasible to export goods,
rather than supply locally.
of Statistics (DANE), interna- The government’s diversifica-
tion efforts, however, require
tional trade (both exports and greater local content sourcing.

imports) has more than qua- The key, then, is nation-
wide provision of high qual-
drupled from $24.915 billion ity infrastructure not just on
the water and in the air, but,
in 2000 to $118.824 billion in most importantly, on the road
for greater regional integra-
2014. Colombia also received tion. To do this, Colombia has
passed laws and introduced
an official invitation in May dedicated agencies to oversee
component projects, and to
2013 to commence work to-

wards full membership of the

OECD. Duly, Colombia has

become a regional magnet for

foreign investment thanks to

its fortunate location of being

a six-hour flight from North Image: Odebrecht Colombia

and South American capitals At the heart of Colombia's infrastructure
shake-up are its roads and their attendant
and for able to commercially structures, such as toll systems, bridges,
and tunnels, as over 80% of Colombia's
utilize both the Atlantic and internal transport burns rubber.

Pacific oceans. FDI in 2014

stood at $16.054 billion, a ten-

fold hike from the previous

decade.

Nonetheless, 2015 has seen

several international corpo-

Infrastructure & Construction THEBUSINESSYEAR 129

ensure their smooth roll-out, where past efforts The Fourth Generation (4G) (PPP) program, launched in 2014,
had suffered from investor-unfriendly delays. In aims to reduce journey times between key population centers
January 2012 the National Congress promulgat- by up to 47%, therefore slashing the bill for shunting raw goods
ed the Public-Private Partnership (PPP) Law, the and finished products between industrial zones in the Andes and
legal basis on which to fund future projects. Its Colombia's port network.
finer points were aimed at attracting and retain-
ing private-sector infrastructure investment by Concessionaires do not receive any payments
factoring all-important predictability into each until a project is completed, delivered to ANI,
project. The PPP Law differentiates projects ac- and has entered operation. Neither do they re-
cording to those initiated by the government ceive non-governmental remuneration, such as
and those initiated by private firms. For the for- tolls and revenue from road-side service facili-
mer, the government draws up the project while ties, until a project is in use.
for the latter, the government makes a feasibili-
ty study of a proposed scheme to determine if it In November 2013, the National Congress
meets the public interest. Public resources con- introduced the Infrastructure Law to avoid
tributed to these schemes do not exceed 20% of previous project delays over land acquisition.
the project’s budget. Approved projects are then The government set out national infrastructure
put out to tender, and the winner receives a bo- priorities in its 2010-2014 National Develop-
nus of 3-10%. Where no public resources are ment Plan, which in turn have factored into the
sought, a bidding company is allowed to submit 2014-2018 National Development Plan. This
a second improved bid if its first one did not hit new framework has resonated with the investor
the spot. The concessionaires of unsolicited PPP community, and official data reveals that in 2013
projects will generate most, if not all, of their over 60 Colombian and international companies
income from tolls and commercial revenues. had shown interest in the $718 million tender for
The National Infrastructure Agency (ANI), part the Cartagena-Barranquilla road, set to plug the
of the Ministry of Transport, oversees trans- two cities into ports and free trade zones.
port-related concessions realized through PPPs.

130 THEBUSINESSYEAR COLOMBIA 2016

THE FOURTH GENERATION viaducts spanning over 146km. Though ports,
large conurbations, and borders will predom-
At the heart of Colombia’s infrastructure inantly be joined by double-lane highways,
shake-up are its roads and their attendant four-lane highways will also play a role in this
structures, such as toll systems, bridges, and network, with around 3,400km set to become
tunnels, as over 80% of Colombia’s internal operational by 2018. By 2023, the 4G program
transport burns rubber. Half of the $50 billion will have delivered 5,892km of roads in three
designated to transport infrastructure devel- waves, requiring investment of $10.7 billion.
opment is earmarked for the national road sys-
tem. IFC, a member of the World Bank Group, LENDING A HAND
has committed an investment of $70 million in
Financiera de Desarrollo Nacional (FDN), the 4G, being a decade-long investment of around
Colombian infrastructure development bank, $24 billion, doubles public expenditure on in-
promoting private sector participation in Co- frastructure. Due to its scale it requires capital
lombia’s infrastructure remake. FDN data as markets financing to mitigate any potential
of 2016 indicates that in the first round of the financing gaps. The World Bank Group (WBG)
approximately $4.5 billion committed from di- subsequently established the Colombia Capi-
verse sources, 66% derived from local and 34% tal Market Deep Dive (DD) to combine invest-
from international financing. ment, advisory, and treasury support from the
International Bank of Reconstruction and De-
The Fourth Generation (4G) PPP program, velopment (IBRD), the International Finance
launched in 2014, aims to reduce journey Corporation (IFC), and the Multi-Lateral In-
times between key population centers by up vestment Guaranteed Agency (MIGA). Other
to 47%, therefore slashing the bill for shunt- types of support afforded to the 4G Program,
ing raw goods and finished products between according to World Bank report Colombia:
industrial zones in the Andes and Colom- 4th Generation Toll Road Program include
bia’s port network. The total 4G investment improved pricing benchmarks (government
equates to 2-3% of annual GDP, and 4G ranks bonds) facilitated by technical advisory sup-
among the world’s largest PPP infrastructure port from the IBRD, a $70 million IFC equity
programs. In 2014, ANI awarded its first 4G investment in the FDN itself, and a $50 mil-
Concessions program in the first wave. In lion IFC investment in a local infrastructure
2015, the first concessions in the second wave debt fund that generated $400 million in debt
of the 4G concessions program followed. Both financing, mostly from pension funds.
waves combined meant that as of 2015, ANI
had 17 projects under way in various stages. PACIFIC EXAMPLE
According to ANI, by 2015 23 projects had
been agreed on valued in excess of $8 billion, A prime component of 4G is the 100km Pacif-
with the number set to reach 35-40 projects by ico 2 road project, requiring investments of
YE2016. $426 million and geared at improving the con-
nection between the country’s second major
The $25 billion program features 40 toll road city, Medellín, with the coffee-producing re-
concessions, and ANI data shows that by end- gion and Colombia’s leading Pacific port of
2015 the toll collection of up and running con- Buenaventura.
cession projects had appreciated by 11.39%
over 2014. Accordingly, the 87 toll booths of The construction consortium includes Gru-
the ANI projects had generated $2.34 billion po Odinsa SA with a 25% stake and Construc-
in 2015, up from $2.10 billion in 2014. ciones El Condor SA and Mincivil SA, each
with a 21% share.
The projects overall will ultimately encom-
pass over 8,000km of various road types, 141 According to Bloomberg, Latin America’s
tunnels of over 125km in length, and 1,300 largest bank by market value, Itau Uniban-

CARLOS JACKS of the country will be everywhere, so we aim to *Read the full interview at thebusinessyear.com
have a comprehensive presence.
CEO, Cemex Latam Holdings
What are your thoughts on the government’s
In recent years, you went from 19 concrete infrastructure masterplan for 2035?
plants to 70. What factors have led to this It was very much needed; the only plans that
expansion? Colombia had were four or five-year plans. Only
We were present in 11 cities and now we are in 31. Mexico and Chile have master plans comparable to
We cover the whole country with office representa- this in the region, which is a roadmap for the next
tion, but in terms of physical presence, we essen- 20 years in terms of the transportation of individ-
tially tripled the number of sites. We diversified the uals, goods, and population and in every segment
sites where we expanded our production capacity. from roads and rails to seaports and airports.*
In cement, instead of expanding current plants,
we built one cement plant in Clemencia, a town
located between Cartagena and Barranquilla, and
are building another in Antioquia. The development

Infrastructure & Construction THEBUSINESSYEAR 131

co Holding SA, was working on a loan of up tion, the government targets investments of
to $300 million to the consortium in April of up to $2.1 billion in Colombian ports. ProCo-
2016. Of note, too, Goldman Sachs Group Inc. lombia also informs that $1.8 billion has been
had participated in 4G financing in February, designated to improve the navigability of the
by underwriting a $260.4 million bond for the River Magdalena, where dredging has enabled
Pacifico 3 highway. Fitch rated the Goldman greater accessibility for a range of vessels. And
Sachs deal BBB-, a notch below Colombia’s additionally, the $5 billion Panama Canal
sovereign rating. Meanwhile, prominent is already having a knock-on effect on local
Colombian financial conglomerate Grupo economies in terms of higher rents at proxi-
Aval has revealed its intention to finance 11 mate industrial zones amid speculation over
projects through projected disbursements of lasting benefits. The Panama Canal expansion
$2.212 billion over the next five years. is having a notable growth effect on Cartage-
na and Barranquilla, both anticipating greater
Financial closings for the first phase of 4G shipping traffic. Logically, more merchandise
are occurring in 2016, while those of the sec- using the canal will spark the construction of
ond phase are set for the 2016-2017 period. dry ports and related facilities, where cargo,
Project funding is set to come from Colombi- benefiting from Colombia’s 4G network will
an Banks, the Fondo de Desarrollo Nacional, be readily offloaded for inland transportation
and local debt funds, as well as local and inter- abroad.
national institutional fixed-income investors.
In conclusion, by reducing the transport
OTHER INFRASTRUCTURE bill by 28% according to World Bank esti-
mates, Colombia’s road program is galvaniz-
While the overarching significance of road ing industry and commerce alike, while also
connection within Colombia’s infrastructure rendering the nation’s skilled workforce more
drive cannot be overstated, other modes of mobile. Once the infrastructure scheme is ful-
transport have not been neglected. During the ly operational, GDP is set to rise by 1.5% per
2015-2018 period Colombia aims to actualize annum and by around 3% during construc-
a $1.8 billion investment in existing airports tion. Colombia will also better exploit its ac-
and envisages building two additional air- cess to the 47 countries and over 1.5 billion
ports at an estimated cost of $2.3 billion. For consumers granted by its trade agreements. ✖
the same period, at the wet end of the equa-

132 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

TBY talks to Juan Martin Caicedo Ferrer, Executive President of
the Colombian Chamber of Infrastructure (CCI), on the future of
infrastructure in the country, challenges, and the role of SMEs.

an infrastructure
revolution

How much do you expect the What steps is CCI taking to IN NUMBERS What will the infrastructure of
Colombia look like in 2020?
construction sector to contrib- ensure that SMEs play a role Infrastructure has By 2020 we will have a modern
and service-oriented road sys-
ute to the Colombian economy in infrastructure development? 3% tem. This implies a revolution
in comparison with what we
in 2016? Last year CCI was part of a share of Colombia’s have now. The construction
The average share of the in- roundtable lead by the Vice GDP of more than 140 viaducts
frastructure sector in GDP President’s office, which and 150 tunnels will change
has been around 3% for the aimed to outline the obsta- convincing the government the experience of traveling
past five years. I do not expect cles that SMEs are facing in about the importance of this by road, and will increase the
this figure to change dramat- the sector, and to identify ex- matter for the strengthening country’s competitiveness
ically in 2016, because of the actly what is standing in the and development of SMEs. dramatically. ✖
huge investments in the road way of them finding new and
concession program that different business opportu- Has the Colombian PPP law BIO
will commence late this year. nities. The main conclusions made the country more attrac-
However, taking into account of this exercise suggested tive as an investment destina- Juan Martin Caicedo Ferrer
that the oil and gas sector will that an assessment of the in- tion? is the Executive President
lose its share in the economy, centives that Colombia’s Pro- Our PPP law was introduced of the Colombian Chamber
other sectors, such as ours, curement Act offers in terms for understandable reasons. of Infrastructure (CCI). He
will increase in relevance. of access to tenders and bid- However, our competitive studied law and economics
ding processes must be car- advantage in the region is at the Javeriana University in
What are the main challenges ried out. Figures show that not the law itself, but the Bogotá, with specializations
the majority of the processes economic guarantees that in the state universities of
that Colombia faces in develop- offered by national and re- Colombia offers to inves- Louvain and Antwerp in
gional governments end with tors. The country has long Belgium. Caicedo has served
ing its infrastructure projects? just one player, which means had effective rule of law in several public posts, such
In the short term, the main that there is no real competi- and tight fiscal discipline, as Mayor of Bogotá and
challenges are mainly relat- tion. Corruption is also still both of which help investors President of the National
ed to managing financing a major problem in the pro- feel more comfortable. The Federation of Municipalities,
and environmental licensing. curement process, and this challenge we have now is to and served as a senator from
Our main goal is to overcome issue illustrates the need for maintain this positive im- 1994-2002. He is a member
these issues in order to start public policy to be oriented age abroad, while working to of several boards of directors
the execution of the construc- toward building capacity and overcome the threat of Dutch in the public and private
tion phase of these infrastruc- creating a standardized sys- Disease and the challeng- sectors and has been twice
ture projects. Once this hap- tem for applications. Thank- es presented by the drop in honored as Executive of the
pens, our next efforts will be fully, the OECD commission global oil prices in 2015. Year in the House Junior.
to focus on land acquisition that is assessing Colombia’s
for the first units. admission to the organiza-
tion has shared its concern
over the lack of standardized
forms with us, and I hope
that its recommendations
and the results contribute to

Infrastructure & Construction THEBUSINESSYEAR 133

INTERVIEW

FLOOD
control

TBY talks to Pedro José Collado Gómez,
President of FCC Colombia, on current
projects, challenges in developing the country’s
infrastructure, and the future of Colombia.

What projects is FCC involved in What is the importance of the 4G What are the main elements know that over 85% of the
foreign companies should take infrastructure projects here
throughout the country? highway projects for Colombia? into account when targeting require joint ventures and
projects in Colombia? PPPs, meaning private in-
We have two projects; one is As of October 2015, there have One of the main elements vestment. Our consolidation
the new control tower for El been almost 20 projects as is to have foreign expertise will come with our increas-
Dorado International Airport part of the 4G tender waves in such projects, which FCC ing participation in several
and another building next to and most of them need to be has with the main infrastruc- of these projects. There is
the tower, which is the civ- financially closed now. This ture projects we developed in the third wave of 4G projects
il aeronautics management is important also because in a Spain. Also, foreign compa- coming up soon and FCC will
building. The latter will con- year’s time the projects should nies require a local partner; try to position itself as a key
trol the airspace in Colombia be completed and the finan- a company that understands player for the development of
along with another such cen- cial closing reassures parties and knows the local mar- some of these projects. ✖
ter in Barranquilla. The con- of having the funding neces- ket. In this context, it is very
trol tower is a 90m high build- sary for the construction of important to establish clear BIO
ing, doubling the current size the projects. This is a common roles for both parties. Having
of the tower. Both projects are situation and we have seen said that, I think that PPPs Pedro José Collado Gómez
very important for the expan- projects being postponed for have great potential here and has a civil engineering
sion of the airport. We expect five or even 10 years already. have to be fully exploited. degree from Universidad
to inaugurate the tower in No- This is bad, since the conces- Politécnica de Madrid.
vember this year. The second sionaire also sees its terms What coming projects will FCC He has been with the
project we currently handle is postponed, and that limits be participating in? FCC since 1999 and has
the flood control project of the part of the funding it counted We will be actively participat- assumed several different
Bogotá River for the Regional on for the construction of the ing in the Toyo Tunnel, the responsibilities in the
Autonomous Corporation of project. longest such infrastructure in company. Before assuming
Cundinamarca. We dredged the country at 9.8km, which his current role, he was
the river to an average of 2m What are some of the challeng- has a budget of over COP1 Construction Manager for
and built a dike and small trillion. The expansion of the Central America and was
beach areas in order to control es the infrastructure develop- Wastewater Treatment Plant in charge of the Civil Works
the growth of the rivers and of Salitre is another project Department. Currently, he is
avoid future floods. By doing ment sector faces right now in and has a budget of more than the responsible for business
this, we doubled the hydraulic $500 million. This project is development and supervises
capacity of the river from 100 Colombia? publicly funded, The World construction projects.
cubic meters per second to Bank being one of the public
200 cubic meters per second. Land availability and land organizations backing it.
At the same time, this project property are some of the main
also includes the development issues right now. This also in- How do you see FCC develop-
of natural areas along the river cludes relationships with local ing in Colombia in the next cou-
to compensate communities communities and environ- ple of years?
for the activity we currently mental licensing. At the same We want to consolidate our
carry out. This includes plant- time, the country faces a chal- activity here with the two
ing over 100,000 trees. We are lenge in terms of project and projects I mentioned. We
talking about a $60 million to equity management. There
$70 million investment. should be a more common
understanding of the impor-
tance of these projects, be-
cause the country needs them
for its future development.

134 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

IN NUMBERS

navigating The pre-construction
COLOMBIA phase of the
Magdalena River is to
be completed by mid-

2016

One of your landmark projects concerning the project are TBY talks to Eleuberto because of that, problems
almost non-existent in the Antonio Martorelli, abroad do not affect our local
in Colombia is improving the Magdalena River. The licens- President of operations. Besides, we con-
ing for this project is also less sider ourselves a Colombian
navigability of the Magdalena bureaucratic and we expect Odebrecht Colombia, company; we have been op-
minimum social challenges on current projects, erating in this country con-
River. How is that project pro- as well. This occurs because the most lucrative tinuously for almost 25 years
we are doing the works of and most of our workforce in
gressing? maintenance in the river sectors, and goals for the country is made up of na-
We are dealing now with the and the navigable channel the coming year. tive Colombians. Today, we
pre-construction phase of the since the first day when we have over 6,000 people who
project and will have until assumed control of the river. What other sectors offer great depend directly and indirect-
mid-2016 to complete it. We We will carry out 150 works potential for you? ly on Odebrecht in Colombia.
initially took over the river’s of breakwaters that will not We can play an active part We are also a highly reputable
control in June 2015 and we affect either villages or towns in the energy projects the company from the perfor-
were affected by the drought along the river and we are government wants to boost. mance and financial points
in the region. However, we committed to not causing There is a lack of energy in- of view in Colombia thanks to
managed to maintain naviga- any social or environmental frastructure along the coast our activity throughout these
bility in the river, and we have concerns. and we could offer many al- years. One of our main assets
also undertaken the finan- ternatives as solutions there. is our people; we invest a great
cial side of the project. The BIO Water recycling systems and deal in them and have training
project foresees five years of sewage water projects are also facilities, offering programs
construction, but we expect Born in 1965, Eleuberto areas where there is much to and courses to our people.
to complete it in four years. Antonio Martorelli be done in Colombia. Water is
This is a rather short-term graduated with a degree the main challenge in the 21st Where do you see the company
project that presents a 13.5- in civil engineering and century, and Odebrecht can
year concession between later obtained a master’s positively affect Colombia’s in 2017, the company’s 25th an-
pre-construction and con- in finance and an MBA. He development in that regard.
struction activity. We fore- has more than 20 years of The water tariff culture in the niversary in Colombia?
see intelligent dredging in professional experience, country must change. We also
the river, especially between working on and managing see great potential in the agri- We are among the top-10
Barrancabermeja and Puer- major infrastructure business industry. construction companies in
to Salgar, which are key ar- projects in Brazil, Ecuador, Colombia. We want to be
eas for project feasibility. We and Peru. With 23 years in Do you think that the corruption among the top five. In ad-
looked at similar projects like the Odebrecht Organization, charges that the CEO of Odebre- dition, we want to become
the river Rhine in Germany to he is currently the President cht faces in Brazil could affect the most attractive company
develop something similar in of Odebrecht Colombia. your operations in Colombia? for young people to work for
Colombia. We truly are a decentralized when finishing their studies.
company. We are a group We want to generate benefits
You stated that investing in the with more than 100 compa- for our people, our activities,
nies distributed in 15 different and our society. We want to
Magdalena River project is saf- business areas. Each compa- further help Colombia to de-
ny acts independently and, velop its infrastructure and
er than investing in 4G projects. be ready to take on future
challenges associated with its
Why is that? continuous growth and de-
In our opinion, the Magdale- velopment. ✖
na River project actually has
less or smaller risks than the
4G projects have. For exam-
ple, the environmental issues

Infrastructure & Construction THEBUSINESSYEAR 135

INTERVIEW

ENORMOUS little infrastructural work has IN NUMBERS
needs been done. They have been
working on the international Created in
TBY talks to Luciano What has characterized Latco’s terminal for about 10 years,
Gómez, General mainly because the airport is 1998
Manager of Latco, developments since its inception operating through a conces-
on the company’s sion. This new terminal will Not only is Tecnoquimicas a
recent achievements, in 1998? also be instrumental in attract- local firm, it is also exporting
expectations for Latco is a family-owned busi- ing investment for the city. to different countries. There is
the economy, and ness that builds in a variety of Generally speaking, Cali has a plenty to be done in Cali but
expansion plans. sectors including universities, great need to improve its infra- the economy is in a good posi-
schools, hospitals, and com- structure to solve circulation tion to accomplish it.
BIO mercial centers. We have done and mobility issues.
a great deal of work in hospi- Are you planning on expanding
Luciano Gomez graduated tals and social housing; how- Latco’s vision is to strengthen to other markets outside of Co-
with a degree in civil ever, our main projects have the footprint of the company in lombia?
engineering from Purdue been in the industrial area. In the national market by 2016. We are excited about expand-
University and later early 2015, we were awarded Do you think you will be able to ing into international opera-
obtained a master’s degree the bid for construction of the achieve this? tions. For example, last year
in structures from the same international terminal for the We are in the process. For ex- we were invited to bid on a ce-
university. He worked for airport in Cali, and we started ample, we have undertaken ment plant in Peru. We are also
five years as a structural construction in July. Our goal is many projects in areas near to considering partnerships with
engineer for Skidmore to complete the project in Oc- Cali. We currently have a con- different firms. The correct
Owings & Merrill in the US. tober 2016. The project has an struction project in Buenaven- thing to do is first consolidate
He returned to Colombia as investment of COP104 billion. tura, which is a port on the Pa- our work here in Colombia,
the Construction Manager We are leading in a consortium cific. We also have another job and then we will start thinking
for Constructora Melendez with 70% of the participation, in Bucaramanga, which is in about going abroad.
from 1988-1992, and along with a Portuguese firm. the northeast of Colombia.
was General Manager at What are your expectations for
Constructora Holguines How important is this new termi- What is your outlook for the Latco in the year ahead?
from 1995-1998. Since economy of Cali? The airport is a challenging job
1998, he has been the nal for the development of Cali The connection with Bue- for us, and we have to finish it
General Manager and naventura is important for in October 2016. Latco is in-
shareholder of Latco. and the economy? Cali. Many businesses are es- vesting a lot of its resources to
Since the current airport infra- tablished in Cali because of make that happen. We are also
structure was built in 1971, the the imports and exports that considering undertaking our
only renovations made were go through Buentaventura. My own projects in the commer-
structural reinforcements, expectations for Cali are very cial and social housing seg-
because the terminal is in a high. Cali and its surround- ments, and housing in general.
zone with strong seismic activ- ings have been able to attract We are positive about 2016,
ity. There have been electrical investment; for example, the because we anticipate that
improvements, but in general Marriott was built in Cali, and the city is going to be building
we worked on that project. more infrastructure. Overall,
Unilever started operating a the economy is doing well in
new plant close to Cali, which Cali and the construction is
we also built. The pharma- going to do well, too. ✖
ceutical business is growing,
especially through Tecnoqui-
micas, and we are involved in
building its plants and offices.

136 THEBUSINESSYEAR COLOMBIA 2016

FORUM

INFRASTRUCTURE
COMPANIES

ANDRÉS ARELLANO TOMER BONJACK SERGIO PAGUAY LUIGGI PUGLIESE

SAMPER Partner, TNM General Manager, MERCADO

CEO, 3A Engineering Hidalgo e Hidalgo General Manager,
Ecovias

W e looked into a wind T he market has been C olombia is among the O ur strongest side of
power project for changing here, and in three most important the business is in
Corficolombiana and recent years you can countries for the com- roads and basic sani-
Grupo Aval three years ago to see it. The first projects were at-
power the Doble Calzada Bo- tractive, with a guaranteed fixed pany. Ecuador is the first one tation systems, like sewage. We
gotá-Villavicencio. In energy, income every year, and there
we are focused on renewables, was the transit income from as it is where our home offices do not have much experience
and we are looking at devel- the toll road as well as guaran-
oping renewable projects like tees from the government. The are. Then comes Peru, where in ports but we are looking for The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
wind farms or solar energy projects were very attractive for
projects. In the IT sector, we a lot of companies. These days, we have been present for many strategic partners to get into
used our experience in our the situation with oil prices and
approach to new PPP projects the exchange rate is changing years, and next is Colombia. Co- that sector, too. We are now
and we are selecting IT renew- dramatically, so the country
al for the Silos plant. For the does not have a lot of resources. lombia is trying to catch up with looking at 4G roads as well, and
concessions, we are leveraging Today, those projects are more
our past successes to advise risky; they do not include a lot its neighbors so it is the destina- we are doing the auditing and
companies based on our own of fixed-income flows, and they
experience. We generally take are based more on the existing tion for investment. We are spe- supervision for all those proj-
on a primarily advisory role income from the toll road.
for these companies and try to cialists in roads but we can do ects and we expect it to grow.
customize, plan, and structure
their systems and projects. several kinds of civil works. We We did a mass transportation

are looking into a program from project in Cali, the MIO, as well

the Ministry of Education to as the auditing for Transmilen-

build new schools in Colombia. io Bogotá. We designed the

Furthermore, we are working transportation system for Bar-

toward launching public-pri- ranquilla and we’re the audi-

vate partnerships in Colombia. tor of that system. Ecovias has

We will see what opportunities done that for many years and

we can find in the hydroelectric we expect it to continue.

energy sector as well.

Infrastructure & Construction THEBUSINESSYEAR 137

The topographic features of Colombia have made it a uniquely challenging place for
building infrastructure. However, high demand and constant innovation keep the sector in
a strong position.

JORGE FANDIÑO GREGORIO GABRIEL EVELIO ROSENDO

RAMIREZ RENTERÍA MOLINA GONZALEZ

General Manager, General Manager, General Manager, General Manager, OHL
Jorge Fandiño GRISA Incoasfaltos

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com T he topography and W e contacted a pio- W e have focused on W e opened our main
geology of the country neering American seizing upon the ad- office in Colombia
are crucial factors, so company following a vantages that the loca- in 2008, although we
investors need to know about difficult experience that we had tion of our plant, in the center of gained our first concession here
that before they plan and design a few years ago digging a tunnel the country, has offered. We are in 2011. Our next development
their projects here. There are between Manizales and Perei- in the perfect place to attend the in the country was granted in
a lot of mountains and dense ra. There were many earth- local market and have focused 2013, which was a project to
vegetation and climate can also quakes in that area so we had on that. Consequently, we made construct the Medellín Tram.
play a major role in the execu- to find new solutions because the decision to improve the The deceleration of the Span-
tion of a project. There are many the unstable soil made it the quality of our asphalt to differ- ish economy after the 2008 real
variables that make projects in worst place to build a tunnel. entiate our product from the estate bubble burst made OHL
Colombia different from Eu- For this reason, we decided to competitors. In our case it is seek opportunities overseas;
rope. The biggest challenge to build a viaduct instead, which an asphalt that is excellent and we amplified our exposure to
overcome here is the topogra- was at that time the most via- has a very high quality that will emerging counties such as Mex-
phy. It is a mountainous coun- ble option. With that purpose, bring fewer costs to companies ico, Saudi Arabia, and Colom-
try and necessitates building a we made an agreement with and last longer. We decided to bia. In Colombia, we grew our
lot of bridges and tunnels, which the American company to en- improve the capacity and qual- presence two-fold, as we under-
makes it expensive and slow go- sure that the bridge would last. ity of our asphalt during this stood that it was a country with
ing. 4G infrastructure projects Since this association between time in order to undercut po- legal security, which provides
will open opportunities for cer- our two companies, earth- tential competitors and tell the certainty to business develop-
tain regions that were previous- quake isolation systems have customer that, if they use our ment here. Our strategy has
ly limited by their lack of access. been key in achieving our proj- asphalt, their projects will be been to bid for the medium to
ects, and it has been the perfect cheaper and better quality. large infrastructure projects the
technological solution to im- nation plans to develop.
prove our ability to meet our
engineering goals.

138 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

rapid development

TBY talks to Luis Eduardo Barrios López, General Manager of A Construir,
on the company’s evolution, investment trends, and expectations for the
year ahead.

What are some of the flagship Foreign investment in construc- government, and purchased IN NUMBERS
the remainder from all the
projects of the company? tion in the first nine months of different owners. We will pay 70%
back the government with
In Barranquilla, we developed 2015 increased significantly the construction of the new public
the Corridor of the Maritime council building for Barran-
Port, a maritime infrastruc- compared to the same period quilla. Eventually, we will 30%
ture concession that provides urbanize 100ha of the city.
access to the main maritime the previous year. Will this trend This project has a budget of private projects in
ports in the city. This infra- COP450 billion. We will later portfolio
structure represented a turn- continue in 2016 and beyond? commercialize the industri-
ing point for the city and its al lots of the island, and we BIO
logistics development. We This trend will undoubtedly are now about to start con-
started the construction in continue. There are many Co- struction works. The goal is Luis Eduardo Barrios
2010 and completed it by lombians living abroad who to connect La Loma with the López is a civil engineer
2014. This infrastructure has have invested in housing and Fair and Conference Center with a master’s degree in
been a key element in the de- other properties in the last of Barranquilla. marketing and sales and
velopment of Barranquilla, year and this will only increase financial management.
providing a solution to traffic in 2016. The country is work- How do you see the company He has worked with A
problems as well. The greater ing on replacing oil as one Construir since 2006.
context of the port develop- of the main income sources, evolving in the future? Among other positions,
ment are the FTAs Colombia and peace will also increase We will consolidate the work López has been the General
has signed in recent years, the flow of investment into we have done in our first five Manager of S.F Convias
which will leverage Barran- the country, especially the years of activity. We have un- since 2010. He also worked
quilla’s role and weight in construction sector. Hope- dergone a structural transfor- at Argos (Agrecon S.A) as
the national economy. We fully 2016 will bring positive mation in order to make the Marketing Director from
have also just completed a transformations and projects next step, and now we want 1991-2004. He was a
7,000sqm low thermic emis- that will boost the country’s to grow nationally. We will member of the Colombian
sion plant, the only one of its growth and development even have a role to play in the sec- Chamber of Infrastructure
kind in Latin America, with a more. The country is also in ond wave of 4G projects. We between 2003 and 2005,
$8.5 million investment. desperate need of tax reform see great opportunities both as well as a member of the
with a long-term vision. This locally and nationally and we Camacol-North Chapter in
What other opportunities do you is required to generate greater will expand activities to cities 1997.
interest among investors and such as Bogotá and Medellín.
see for Barranquilla in the con- would help generate further We are set to start some key
income from other non-oil project such as the Children
text of the FTAs? sectors and boost industrial Development Centers for the
activity and exports. Atlantic Coast, a project with
The construction sector can a budget of COP57 billion.
strongly benefit from these What are some of the key infra-
FTAs and the arrival of foreign What are your expectations for
investment. It goes without structure challenges that Bar-
saying that imports will expe- the company in 2016?
rience rapid development in ranquilla still faces? I hope we have a year as pos-
the upcoming years, especially itive as 2015, and our goal is
if foreign exchange rates con- The city must complete chan- to reach or surpass a COP154
tinue along the same trend. neling the streams in various billion turnover. We want
areas of the city, particular- to further consolidate and
ly the south, which will save strengthen our position in
many lives. The city also Barranquilla and the region. ✖
needs to expand current road
infrastructure to reduce traf-
fic congestion. In terms of our
involvement, we will lead a
project on Barranquilla’s only
island, La Loma; we received
50% of the land, owned by the

Infrastructure & Construction THEBUSINESSYEAR 139

INTERVIEW

TBY talks to Fabio of the dollar. The asphalt IN NUMBERS
A. Méndez Pinilla, is shipped from Hawaii to
Maine, because we sell it to 2015 demand for
President of MPI global suppliers. The use of asphalt was half of
Asfaltos, on asphalt asphalt rubber is entirely new expected
in Latin American markets,
demand and the and even in the US. It is used 70k
product line. from California to Texas, but
other states are not using it metric tons
INCREASING yet. We know that technique,
diversification and there is no patent hold- of our product abroad, but
ing on it. We are looking to those are spot businesses. We
How was the previous year for What new innovations are you other countries. Logistically, will import, not every month
it is not that challenging for but at least once every three
MPI? adding to your products? us because we have facili- months. These commodity
We introduced asphalt rub- ties in Cartagena, next to the companies are vulnerable,
MPI sells asphalt to the con- ber eight years ago, and this Caribbean Sea. We make a because around 50% of their
struction business and we are is the best solution for pave- major effort to participate in sales depend on 10 custom-
expecting 2016 to be much ments. It is asphalt mixed meetings and conferences ers. At the same time, they
better that 2015. In 2015, we with tire-crumb rubber. We to increase awareness of our want to improve the asphalt
forecasted the demand to ex- did all the necessary tests and services. Part of our strategy themselves but have only one
ceed 70,000 metric tons per implemented the technology, here in Colombia is to find supplier. We buy from Eco-
month; however, it dropped and proved that we were pro- an additional refinery to in- petrol Barranca, but want to
to 35,000, half of what we viding an excellent product crease the diversity of the diversify our sources, too. ✖
were expecting. We export that had been successful in pricing, because here the
asphalt after buying it from Europe and the US. We are price is fixed. BIO
the refinery and transform- extending this level of qual-
ing it to meet international ity and value addition and What is your forecast on as- Fabio A. Méndez Pinilla
standards. We have been able have a new division special- is a chemical engineer,
to do that for many spec- izing in pavement preserva- phalt consumption in Colombia having graduated from the
ifications. There are more tion. These surface treatment Industrial University of
players in this market right techniques are common in the short term? Santander. He has expertise
now, rising from four to six, in Europe and the US. We It might rise the next year, but in the development and
which has reduced our share are the only ones doing this not to the level the govern- formulation of emulsions,
of the market. Generally, the maintenance service, which ment is expecting. Besides, laboratory testing, the
road construction business puts us ahead of any compet- cement companies want to handling of mixtures
has been delayed because it itors. get involved in the road con- with emulsions, modified
has not been easy for devel- struction business. They are asphalts, polymers, and
opers to start new projects How much of your total produc- of course already involved, rubber asphalt. Pinilla
and environmental, social, but they want to move into has developed multiple
and other issues are delaying tion are you exporting? the pavement business. I do publications and has been
projects. We are preparing for Exports reached close to 50% not see 2016 being easy; how- a speaker at different
the demand of asphalt to in- of our production in 2015. ever, the good news is that events at the national
crease compared to last year, We were able to ship nearly we are producing more val- and international levels.
and consequently we expect 6,000 metric tons per month, ue-added products. Contrac- Currently, he serves as
the price to rise. which was aided by the price tors do not just look at price, President and Legal
they look at the quality and Representative at MPI
the way we work. Asfaltos.

What do you expect of MPI in

the coming year?
It is difficult to forecast proj-
ects. I can at least say that in
terms of revenue we are ex-
pecting the same figures as
2015. In terms of products it
is going to be different. As-
phalt products and services
will be better. We sell half

140 THEBUSINESSYEAR COLOMBIA 2016

FOCUS 4G GENERATION

Colombia is looking toward the future and improving its transportation network by renewing
road infrastructure, putting an end to the nation’s underdevelopment in roads and highways.
The government estimates that in the next four years the 4G program will dramatically enhance
the Colombian economy, shortening traveling time between cities and, consequently, reducing
transportation costs.

MOTORING
TOWARD DEVELOPMENT

IN ORDER TO OVERCOME and eradicate international promotion that allowed attracting Current status
investors, funding agencies, and leading con-
geographical underdevelopment, the govern- struction companies on the world stage infra- Colombia depends on
ment announced the most ambitious infra- structure,” said Andrade. its roads for
structure plan in the history of the country, in-
vesting COP50 trillion in 40 different projects. One of these companies is Hidalgo e Hidal- 80%
The 4G Highways project aims to rehabilitate, go. The company entered the country nearly
refurbish, and construct around 7,000km of five years ago and has since won five tenders to of internal transport
roads, of which 1,400km are dual carriageways. build roads. “These tenders are related to the
The plan also includes the construction of 141 program Vias para la Equidad, a public initia- According to the
tunnels and 1,300 viaducts to overcome the Co- tive whose goal is to build new roads in remote World Bank’s Logistics
lombian topography. areas,” said the CEO of Hidalgo e Hidalgo in Co- Performance Index,
lombia, Sergio Paguay, in an interview with TBY. Colombia’s road
The former Minister of Transport, Natalia Paguay pointed out that they decided to invest infrastructure is
Abello, stated in an interview with TBY that the in Colombia because it has the most ambitious
4G highways will be the “largest contributor” infrastructure plan in Latin America and his 18th
to the Intermodal Transportation Master Plan company was one of the most experienced in
2015-2035 (PMTCT), which aims to dramati- road construction in Peru. among Latin American
cally improve infrastructure as a means of sup- countries
porting regional development and international The construction of these roads is expected to
trade. “We want to promote the development of generate 400,000 direct and indirect new jobs. Underinvestment
a transport system based on what we call intel- The infrastructure program is expected to boost in transport
ligent infrastructure, where we not only build the economy of Colombia’s rural areas as well infrastructure
roads, but also create an efficient logistics chain as the industrial sector. According to the Min- has hampered
through intermodal connectivity,” explained istry of Transport, the program will add 1.5% competitiveness
Abello, who was Minister of Transport between growth in GDP every year whilst the roads are
August 2014 and April 2016. being built.

The 4G roads will revolutionize the Colombi- The government has already invested COP24
an economy, boosting connectivity between the trillion in the first and second phase of the pro-
main cities, industrial hubs, and ports. The min- gram, which has four stages, and expects that
istry estimates that the average traveling time most of the roads will be finished before 2020.
will be reduced by 30%, and transport costs will The Executive President of the Colombian
drop by 20%. Chamber of Infrastructure (CCI), Juan Martin
Caicedo, pointed out to TBY that by 2020 Co-
The President of the Colombia’s National lombia will have a modern and service-orientat-
Infrastructure Agency (ANI), Luis Fernando ed road system. “The construction of hundreds
Andrade, explained to the XII Infrastructure of viaducts and tunnels will change the experi-
National Congress in November 2015 the im- ence of traveling by road, and will increase the
portance of the PPPs and concessions to devel- country’s competitiveness dramatically,” em-
op the entirety of the 4G plan. “One of the key phasized Caicedo. ✖
points to the success of this program was the

Timeline

Prequalification Tender process opens Tender process ends Award of concessions

DEC 2012 JAN 2013 MAY 2013 JUN 2013 JUL 2014
Maintenance 20-25 YEARS
Construction 2-5 YEARS Phase III designs,
environmental permits and
studies, land purchases

Infrastructure & Construction THEBUSINESSYEAR 141

4G road plans

THE 4G GENERATION PROGRAM IS EXPECTED TO
DRAMATICALLY BOOST THE COLOMBIAN ECONOMY,

WITH NEW ROAD NETWORKS SHORTENING
TRAVELING TIME ACROSS THE COUNTRY

Positive Impact On Economic Development

Savings in travel 2015-2019 23 Savings in From 2015-2019
time by up to unemployment vehicle operation multiplier effect is
rate to reduce by new toll cost up to
30% booths ~1.5%
1% 20%
of GDP

Riohacha Estimated kilometers
under construction
Santa Marta Paraguachón
8,170
Barranquilla Valledupar Cuestecitas
Cartagena Buenavista
San Juan

La Paz

El Carmen San Roque Estimated total
de Bolívar investment (billion $)

Necoclí Montería San Marcos 24.4

Cucuta

Bucaramanga Arauca
Barrancabermeja

Medellín Tame Puerto Carreño

Sogamoso

Tunja
Yopal

Armenia BOGOTÁ Puerto Arimena
Ibagué Villavicencio Puerto Gaitán

Cali

Neiva

Popayán

Existing concessions
New concessions

Pasto

SOURCES: MINISTER OF TRANSPORTATION, TBY RESEARCH

142 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

a DRIVING force

TBY talks to José What is your strategy regarding concession contracts. This • Founded in 1978
Joaquín Ortiz García, experience is instrumental • INVIAS, ANI,
CEO of JOYCO, on the planning and design? in the preparation of tenders and IDU are main
company’s strategy, for our public sector clients. clients
factors of success, We are driven to have proj- Another important factor is • Doubled sales
and the impact of the ects finished on time, accord- the financial health of the of the company
government’s efforts ing to the budget and to the company; we strive to main- twice in 4 years
on the 4G project. quality required by the client; tain strong balance sheets
this is our main purpose. The and financial indicators that market, and it is encouraging
BIO founder of the company, my keep us ahead of similar com- to see large international con-
father, used to say, “Colom- panies. Our partners provide tractors and concessionaires
José Joaquín Ortiz García bia is about to be built,” and project experience as well associated with traditional
graduated as a Civil today the country is still un- as operational and financial local construction firms, as
Engineer from Universidad der construction. We, there- capabilities that, when com- this should bring expertise
Javeriana and obtained a fore, modified it to our vision, bined with our own, results and state-of-the-art con-
Master’s in Environmental which is one of transforma- in successful tenders for large struction techniques. I ex-
Engineering from tion, progress, and wellbeing contracts. Finally, we have pect to see positive transfer of
Universidad de Los Andes. through infrastructure. This strengthened our bid team, knowledge as a result. On the
He moved to England in means that we truly want to which invariably produces other hand, the 30-50 offers
1996 to pursue an Master’s be a key player in the transfor- impeccable offers. All of these received by ANI for the Inter-
in International Highway mation of Colombia through factors have lead to an attrac- ventoría contracts was exces-
Engineering and went on the provision of quality in- tive client portfolio that in- sive, indicating that the ten-
to obtain his PhD from the frastructure. We do so with cludes INVIAS, ANI, IDU, the der requirements were low.
University of Birmingham the clear understanding that Ministry of Transport, Fondo This raises doubts regarding
in 2000. He joined ATKINS, most of the resources that we de Adaptación, and the Min- the quality of the service that
a major British engineering manage are public resources, istry of Information Technol- ANI will receive from some
consultancy in 2001, where and we, therefore, have to en- ogies and Communications, of the winners, who in some
he advised a number of sure that those resources are all of whom are modernizing cases do not have a track re-
highway authorities on well invested to make Colom- the infrastructure and trans- cord of delivering projects of
strategic planning of bia a better place; this is what portation services in Colom- this magnitude. The level of
highway maintenance in drives us. We have a number bia. Traditionally, we have planning and design at which
the UK and abroad before of testing laboratories around focused on providing services the tender documents were
returning to Bogotá in 2007 the country in addition to our to public sector clients, but issued is better than what we
to lead JOYCO. He managed central lab in Bogotá, which nowadays we have expanded have seen in the past; how-
the transition of JOYCO is operated as a center of ex- our portfolio to cover 4G con- ever, there is still room for
as a family company to its cellence from which quality cessionaires, particularly in improvement. The provision
second generation and is standards are transferred to our role as Lenders Technical of infrastructure through
now its general manager. the satellite labs. Planning Advisors, a key role provid- concession contracts will en-
and design are key steps to ing lenders with confidence sure that the road network is
ensure that projects are well in the execution of these maintained for the duration
structured before they are put megaprojects. of the contracts, providing
forward to the market. Our the required level of service
experience in delivering proj- How do you assess the efforts that is otherwise difficult to
ects positions us on a good achieve. ✖
platform to provide planning that the government is making
and design services.
to develop the 4G roads?
What factors have driven the
I welcome the initiative and
company’s success? the effort that the govern-
ment is making to push for-
The main factor is the track ward the development of
record of the company; we road infrastructure in Co-
have successfully delivered lombia. The many offers that
more than 150 projects in were received by ANI for the
Colombia, ranging from 4G program demonstrates
road design contracts to the that there is interest in the
supervision of multi-year

Infrastructure & Construction THEBUSINESSYEAR 143

B2B

ALEXIS BEHAGHEL ANDRÉS BOTERO geo
TECHNICS
General Manager, HERRERA
Colombia offers many unique advantages for
Geofundaciones General Manager, the geo technical industry. For many industry
Botero e Ibañez
players, 2015 was riddled with uncertainty,
but the future looks promising.

What were your major accom- ANDRÉS BOTERO HERRERA, What kinds of unique challenges What expectations do you have
plishments and performance 2015 was a good year for us, and does Colombia represent? for the company in the year
highlights from last year? we had acceptable growth. We ahead?
have been able to increase mar- AB The geotechnical standards
ALEXIS BRAHAGHEL Overall, ket share and had participated need to improve. The investiga- ABH We expect to grow 10%
2015 was a hectic year. We had in various foundation works. In tion and execution quality has to this year, and we think it will be
an intense agenda for the first the market there are two large be enhanced in order to keep the a good one for us.
six months and a great deal of international companies that standard high. Today, things are
production activity; however, compete with local players in working well, but we need to be AB Even though the econo-
in the second half there was Colombia. Still, in several cases, more efficient and use more ad- my is performing badly, we
a notable reduction. This was local construction companies vanced engineering techniques. are optimistic about the next
due to several factors. First- prefer to do business with a lo- The disparity between compet- three months. We need to be
ly, the entrance of new com- cal Colombian company rather itors should be equalized, be- on alert, especially as we never
petitors into the market, and than a foreign one, as Colombi- cause the client is a bit lost when know what is going to happen
secondly the wider economic ans better understand each oth- similar companies offer totally with the commodities and dol-
instability had a knock-on ef- er. We participated in the con- different services and clients lar prices, but it is not apoca-
fect on the construction sector. struction of foundation works have to understand the reason- lyptic. ✖
We closed the year on a stable and screen wall of the “Parques ing behind these different pric-
The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com result, even though the last few del Río” in the city of Medellín. es. Unified rules and legislation
months were quite negative. In This is one of our important would help in the future.
2015, we had 20 small projects. projects to highlight. In this case
One of the more interesting we worked with OHL, a Spanish ABH Generally, Colombia is the
ones was the Atrio Towers, for company. We worked on foun- second country in the world
which we made the support dations and screens for a viaduct with predominantly crumbly
piles. For 2016, we have a major that had been quite a challenge soil. That’s why it is so difficult
project that will be important for us. Still, we had good results to lay foundations in Colombia.
for us. We will take on part of and that represented a milestone Stabilization here is difficult.
a road contract; however, this for us. In 2016 we are building For instance, it is challenging
is a difficult market and there foundations to enlarge the Me- to build in Bogotá as the soil in
are competitive prices in the tropolis mall in Bogotá. We have the city is soft. Foundations sink
market. We cannot compete on also just completed the founda- easily, and you can see sinking
small projects, but we are able tions for the airport of Quibdó, sidewalks everywhere as a result
to face big projects and that is Chocó, in Colombia. This year of this. For the same reason, the
our main objective. we are planning to participate in foundations have to be deeper
various infrastructure tenders. than usual, especially now when
We recently started to work with the majority of new buildings
a company called AIA, from Me- are higher. Colombia has a great
dellín, to build the foundation value in terms of infrastructure.
works of the forthcoming Marri- I think that it is important for
ott Hotel. the country to develop this. Ex-
perts say that if Colombia does
not improve its infrastructure,
it will not continue to improve
and grow.

144 THEBUSINESSYEAR COLOMBIA 2016

One of the main drivers of economic growth in Colombia over the last
decade, construction continues to power on, supported in large part by
public housing projects and transportation infrastructure.

Review C O N S T R U C T I O N

BUILD IT BIGGER

One of the nation’s key sectors, construction Manuel Santos. The three phases of the pro-
has played a significant role in the perfor- gram over a period of six years entail 47 proj-
mance of the economy in Colombia over the ects spanning 8,000km of roads and 3,500km
last few years. In 4Q2015, the economy grew of four-lane highways as well as the expansion
3.3%, led by great performances in agriculture, of ports and railways. The program is the larg-
construction, industry, and financial services, est investment plan of its kind in Colombia
Colombia’s National Administrative Depart- and will have a significant impact on not just
ment of Statistics (DANE) reported. GDP the sector but on employment as well, expect-
growth in 2015 was 3.1%, the second highest ed to generate between 180,000 and 450,000
of the major economies in Latin America after jobs during the construction period.
Peru (3.3%), and coming in ahead of Mexico
(2.5%), Chile (2.1%) and Brazil (-3.8%). The The housing sector also looks set to remain
construction sector in Colombia was a sig- an important engine of growth in the coming
nificant contributor of these positive results, years. The construction of social housing pro-
growing 3.9% in 2015 from the previous year. vided the bulk of the momentum in the sec-
In 2014, the sector grew by 7% YoY, driven in tor in 2015, after President Santos pledged to
large part by public investments of $29 billion reduce the housing shortage in the country
in new homes. Finance Minister Mauricio by 50% in three years’ time. The government
Cárdenas noted that the government expects aims to have 450,000 houses constructed be-
the Colombian economy to grow approxi- tween 2015 and 2018 via four different hous-
mately 3% in 2016, led mainly by the indus- ing programs that target various population
trial and the construction sectors. Hays Co- segments. In addition to low-cost housing,
lombia declared construction to be the largest the government initiated a subsidy program
employer in the country at present, moreover for minimum wage earners, allowing them
being one of the few industries in the country to purchase a home without spending more
with growing employment rates and job sta- than a portion of their income on debt. The
bility, and possessing a positive ripple effect significance of the social housing program for
on its related value chain and sub-sectors. The the construction sector will also have a wider
sector is expected to receive another boost in impact, as President Santos announced that
the coming months with the implementation $6 billion will be invested to construct new
of the second phase of a government-housing schools, parks, and daycare centers to accom-
program that aims to construct 400,000 social pany the houses. Elsa Noguera, the Minister
houses by the end of 2016. of Housing, City, and Territory, told TBY that
the housing programs have been successful
Pivotal to this growth will be the $18 billion across the country, with sales of new homes
in infrastructure investments outlined in the growing 6.9% in 1Q2016. At the regional level,
‘fourth generation’ (4G) program launched Boyacá, Nariño, and Santander experienced
in 2014 by the government of President Juan growth in home sales of 198%, 51%, and 49%,

Infrastructure & Construction THEBUSINESSYEAR 145

respectively, while regions such as Antioquia, The significance of the social housing program for
Valle, and Norte de Santander also saw pos- the construction sector will also have a wider impact,
itive figures. Noguera also pointed out that as President Santos announced that $6 billion will
the housing programs have had an extremely be invested to construct new schools, parks, and
positive effect on the economy, resulting in daycare centers to accompany the houses.
the employment of 3.1 million people in the
sector, while permits to build housing rose try. There have been no less than 60 com-
by 5% in the last 12 months, all of which will mercial projects over the last few years, with
play a big role in generating greater economic Colombian Association of Shopping Centers
growth. In addition, with the armed conflict (ACECOLOMBIA) estimating that by the end
in the country coming to an end, there will of 2016 there will be 30 new malls under con-
also be additional investments in housing struction that will be completed in 18 differ-
for those affected. Noguera told TBY the gov- ent cities. The largest projects are located in
ernment will invest COP2.2 billion in its Free Chía, outside of Bogotá, Medellín, and Cali.
Housing Program framework to house victims
of the armed conflict, benefiting about 60,000 GOING GREEN
households in more than 220 municipalities
and 28 regions in addition to Bogotá. Noguera Sustainable construction looks set for major
also added that the government’s key aim is growth in the region, with Colombia being the
to ensure that rural areas are well integrated fourth-largest market for Leadership in Ener-
together with large urban development poles, gy and Environmental Design (LEED) build-
and it has consequently made this an explicit ing in Latin America. According to Colombia’s
objective of the National Development Plan green building council, CCCS, as of November
2014-2018. 2015 there were 59 LEED-certified projects
in the country—most of them in Bogotá and
Similarly, the construction sector has seen Medellín—comprising almost 11 million sqft
a boom in commercial property development, of space and another 140 projects underway,
with Colombia coming in third place in the re-
gion behind Mexico and Brazil in terms of the
total number of shopping malls in the coun-

146 THEBUSINESSYEAR COLOMBIA 2016

making up a total of over 44 million sqft. The BREAKDOWN OF CONSTRUCTION BY TYPE
boom in green building has been driven in
part by new guidelines outlined by the gov- SOURCE: DEPARTAMENTO ADMINISTRATIVO NACIONAL DE ESTADÍSTICA (DANE)
ernment for new construction projects that
require 10-15% percent savings in energy and APARTMENTS EDUCATION
water use compared to the national average.
Rafael Mojica, the manager of Mojica Con- 17,299,231 593,803
structora, told TBY in an interview that the
company’s new developments almost always HOUSES HOTELS
include features that encourage water and
energy savings, and the proper management 2,573,309 817,185
of waste. Building developers in particular
are taking notice, as more LEED educational OFFICES HOSPITALS
resources have been translated into Spanish
and there is greater awareness in the market. 2,278,252 734,127
Notable examples of certified buildings in-
clude the 600,000sqft Tierra Firme, ALPASO COMMERCE PUBLIC
Plaza, and Centro Empresarial Colpatria Torre ADMINISTRATION
2. With international companies coming to 2,666,385
Colombia in larger numbers, the construction 221,659
of eco-friendly and sustainable office build-
ings has been in high demand, with new ho- WAREHOUSES OTHERS
tels operated by American brands coming in
a close second. 811,760 1,443,516

CEMENT producers are subsequently amping up pro-
duction and upgrading their existing produc-
The projected growth of Colombia's con- tion capacities. Two expansion projects that
struction market over the next several years are currently under way include Cementos
is based largely in the expected boost that the Argos’ new plant at Sogamoso in Boyacá, with
4G infrastructure program will provide to the an expected capacity of 1.4 million tons per
sector, with the Business Monitor predict- year, and Cemex’s cement plant at Maceo in
ing the value of the construction industry in Antioquia with a capacity of 1 million tons an-
Colombia to almost double to $52 billion be- nually. ✖
tween 2015 and 2020 and Asogravas estimat-
ing that the 4G projects will require a total of
74 million tons of aggregates such as sand and
gravel. The government’s program to build
450,000 new houses alone will require approx-
imately 16.5 million tons of sand, 14 million
tons of aggregates, 8 million tons of ceramic
products, 6.8 million tons of cement, 200,000
tons of steel, and 53,000 tons of PVC. Cement

RODRIGO ESTAY

Country Manager, Cushman & Wakefield

Why did the company decide to pursue a diversifi- How many projects do you currently have in Co- *Read the full interview at thebusinessyear.com
cation strategy? lombia and which regions of the country are most
Colombia is an important market for the company, as important?
it is the fourth-largest economy in Latin America and We currently have around 20 projects with multi-
it is not yet a mature market in corporate real estate national and industry-leader companies, which are
services but has a huge number of potential clients mainly located in the Cundinamarca region, and along
that we can work with; therefore, we see a huge the coast; however, we have clients in Cali, Medellín,
opportunity to grow. The market needs larger players and other important Colombian cities. Even though
in corporate real estate services, which is the main our main offices are in Bogotá, we have full capability
reason to diversify our services and operations in the to deliver our services to any city throughout the
country. We have the know-how, the experience, and country, including the Caribbean coast, which is an
a deep market knowledge so we can add value to important region for industrial and logistics develop-
local and foreign corporate clients. ments that can attract investors.*

Infrastructure & Construction THEBUSINESSYEAR 147

INTERVIEW

DYNAMIC and housing is part of this.
investments The government has sought
to ensure the housing rights of
TBY talks to Elsa Noguera, Minister of the victims of the armed con-
Housing, City, and Territory, on the My House flict. People are the most vul-
Now program, foreign investment, and plans nerable in urban areas, with
for the future. investments of about COP2.2
billion through the Free Hous-
The government es. The government provides a by 6.9% and permits to build ing Program framework for
is investing subsidy of up to 20 minimum housing rose by 5% in the last the care of housing for victims
heavily in social wages for the initial fee plus a 12 months, all driven by these of the internal armed con-
housing housing subsidy interest rate programs. Employment in the flict, benefiting about 60,000
of 4%. Thirdly, My House Now sector climbed to 3.1 million households in more than 220
The government is active in get- subsidizes interest rate on pri- people and we project to close municipalities and 28 regions
ting low-income households on ority interest housing and low 2016 with at least 3.4 million and Bogotá. Much of the ten-
the housing market. Can you ex- income housing, whereby we people. In the next few years, sions in the country lie in the
plain the initiatives? grant a subsidy to the interest we will continue to generate huge gap between rural and
This is the year of housing rate of loans of 5 or 4%. economic growth with the urban Colombia. Our main
and the national government development of our plans, challenge is to integrate rural
made 150,000 subsidies avail- Foreign investment in Colombia with which we intend to build areas with large urban devel-
able for families wishing to has an increasing impact on na- 450,000 housing units with di- opment poles. This is critical
own a housing unit as well as tional GDP. What opportunities rect support from the national and as a government we have
a series of plans tailored to would you highlight within the government. The offer is var- made closing regional gaps
the socioeconomic charac- construction sector for interna- ied and subsidies are intend- an explicit objective of the
teristics of Colombian house- tional investors? ed to cover various population National Development Plan
holds. First of all, My House The arrival of foreign capital segments, from the most vul- 2014-2018. ✖
Now is for savers and helps to non-speculative invest- nerable sectors to consolidat-
households earning up to two ments like the construction of ed middle class families. BIO
minimum wages to acquire housing benefits the housing
priority interest housing. Ur- market and the national econ- The year 2016 is set to be the Elsa Noguera received a
ban priority interest housing omy. In a turbulent economic degree in economics from
is worth up to the equivalent environment, business con- year the armed conflict will end. the Pontifica Universidad
of 70 minimum wages; there- fidence figures kept growing Javeriana, and holds an MA
fore, the government assigned and construction is one of the How can the peace process in- in business management
subsidies for up to 30 mini- economic sectors where for- and finance from the
mum wages to cover the down eign investment continues to fluence the construction sector? Universidad del Norte.
payment and 5% rate of inter- grow, witnessing 14% growth She also holds a diploma
est on the mortgage. Second- in 2015. Housing plays a key role in in international business
ly, My House Now is part of peace building. During the from the Universidad
a scheme that aims to reduce With programs like My House post-conflict process, we will Americana (Washington).
paperwork and procedures, Now, Colombia has endeavored find institutional challenges Her professional career
facilitating the acquisition to develop social housing. How and cities, municipalities, lo- started in the banking
low income housing to house- would you assess its impact on cal authorities, local commu- sector and later moved
holds with incomes between the housing market and what nities, and departments must to the educational field
two and four minimum wag- are the plans for the near fu- be ready to take on the tasks within the banking and
ture? and responsibilities necessary financing segment. She
Government housing pro- to sustaining peace. These then entered the public
grams have had a positive processes need to emphasize sector as treasurer for the
effect, making the housing social inclusion and adapt government of the Atlantic.
market dynamic and creat- to the new conditions of our Later, Noguera came to the
ing jobs. Sales have grown democracy. Former armed ac- Council of Barranquilla as
tors and victims will become Tax Secretary for Alejandro
urban actors; therefore, cities Char. She is currently
will take on the challenge of Minister of Housing, City,
inclusion and reconciliation, and Territory.

148 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

constant growth
and great opportunities

TBY talks to Fernando Marín Valencia,
President of Grama Construcciones, on making
the right investments, predictions for the
construction sector, and current projects.

Which regions have the most What is your target market? itself, and houses there go from Building
$400,000 onwards. We also homes from
investment potential in the real We work with all people from have other large-scale proj- every different
all segments of society and ects that we are working on at social strata in
estate sector? all tiers of real estate, from the moment. For example, we Colombia
low-income housing to luxu- are involved in 52-storey hotel
The northern coast of Colom- ry, from houses worth $15,000, AC Marriot by the sea, Amura, BIO
bia is an attractive investment to houses worth upward of which will be the tallest hotel
destination, not only for real $400,000. The government and condo in Cartagena. We With more than 36 years
estate, but also other econom- has a program called Vivien- were previously involved with of experience in the
ic sectors due to the fact that it da Para Ahorradores (Hous- various projects in the US, but construction industry,
has the best ports, in Cartage- es For Savers), which helps now we have decided to focus Fernando Marín Valencia, a
na, Santa Marta, and Barran- people own their own houses on the domestic market; most Universidad Industrial del
quilla. There is plenty of trade through subsidies whereby of our projects are in Bogotá, Santander graduate, has
and traffic going through homeowners pay a signifi- Barranquilla, and along the At- become one of Colombia’s
those ports, which are strate- cantly lower monthly quota lantic-Caribbean coast in the major developers. He was
gically and centrally located, on their homes. About 100,000 north of the country. a member of the Board for
providing connections to the houses have been sold as part ECOPETROL, representing
Caribbean, North America, of that program and we have What are you expecting for 2016 Colombian ex-president
Europe, Africa, and the rest of participated with 1,500 hous- Andrés Pastrana Arango
Latin America. Barranquilla is es. Colombians want to own in the Colombian construction from 1998-2002. He also
one the most interesting cities their houses, which is differ- served as an ambassador
along the Atlantic coast be- ent from Venezuela or many sector and what are your tar- in Thailand, Malaysia,
cause several positive initia- other countries in the region and Vietnam in 2002.
tives and incentives have been where renting is perfectly gets for the year? He began his career in
introduced for businesses and acceptable. So this program construction in 1976, when
investors; there is a large and makes sense for Colombians, I expect to grow around 15- he founded the Marval
well-educated population, even though there have been 20% in 2016 as our projects S.A. In 2004, he founded
and it is only one hour away some doubts regarding its continue to come online. Grama Construcciones, a
from Santa Marta and Carta- sustainability in the long term. Government housing subsi- Colombian company ranked
gena. Barranquilla is strategi- dies will continue to spur the among the top 10 in sales,
cally located to keep growing What are the main projects you sector and add to its growth which has transformed
and offering great opportu- figures. The depreciation of the lives of thousands of
nities in real estate. The pe- are working on at the moment? the peso might tighten up the families in the Colombian
so’s fall against the dollar has domestic market somewhat, Caribbean, as well as other
made people nervous about Most of our projects are located but it will also entice foreign important cities like Bogotá
real estate in Colombia, but along the coast. We have three investments into Colombia, and Bucaramanga, among
this has also made the local main projects, each targeting a especially from the US, mainly others.
real estate market much more different segment of the pop- from Colombian expatriates or
affordable on an international ulation. One is called Ciudad people with Colombian roots
level. We can expect a serious Caribe, which includes 4,500 living there. Other sectors will
injection of foreign invest- units, valued between $15,000 also keep growth rates stable,
ment along the Atlantic coast and $30,000. Another big proj- with the coffee sector, flowers,
this year. ect is Ciudad del Mar, which and other sectors expected to
features more than 3,000 units post high export rates due to
aimed at middle-income fam- the added competitiveness
ilies, worth between COP170 they will see internationally
million and COP280 million. from the weakening of the
And we also have a top-tier peso. We expect a growth rate
project between Barranquilla for Colombia of 2.8% in 2016,
and Cartagena called Novater- which is not ideal compared
ra, which is like a small city in to previous years, but at least
it is still growth. ✖