The Business Year - Colombia 2016

Infrastructure & Construction THEBUSINESSYEAR 149

B2B

JULIO GERLEIN SERGIO MARÍN
VALENCIA
President, Valorcon

General Manager,
Marval

REGIONAL when buying these houses and over the past few years. At one
construction we work for the government to point, we had a mayor who was
provide the housing. formerly the Mayor of Bogotá
A growing demand for residential and commercial and he encouraged a number of
buildings coupled with an accommodating Both companies have grown business people to come to Bar-
government has made Colombia a lucrative over the past year. What factors ranquilla and invest here. The
market for construction companies. have facilitated this success? FTA with the US has also helped
us by bringing new opportuni-
The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com What is an example of a project of projects because it is easier SMV Marval was created in 1977 ties to our region. Businesses
you are currently working on? for people to live together in by my parents. It was created for have also realized that it is bet-
an area that has been planned me and my brothers and we all ter to export from coastal cities
JULIO GERLEIN We are build- and developed well. These became engineers and started like Barranquilla, rather than
ing social housing called Villa developments are more inte- to build this company. We have from the center of the country.
Olímpica. This development grated, which is what we want grown step-by-step and have
has several models of hous- to achieve. We also have more been able to fulfil our commit- What challenges do you see in
es that are constructed out of space in Barranquilla to build ments and generate confidence the sector?
concrete. It is built in a way this type of project compared to, with our investors, customers,
that is attractive for the people say, Bogotá, where there is less and colleagues. Our first project JG Electricity is a big issue and
of Barranquilla and suits their land available. was social housing in Colom- the pricing needs to be more
lifestyle. The area has wide bia in 1982 and from there we competitive. Barranquilla should
boulevards and trees so as to SERGIO MARÍN VALENCIA In expanded into many different not have the same electricity
encourage people to be outside the 1980s and 1990s, we were cities. There are opportunities prices as Bogotá. We use more
and enjoy the warm climate. We targeting the middle range of in every city; however, we are electricity here than the capital
cannot construct these same the market, as we believed that the leaders in Barranquilla and and other cities in Colombia. We
units in Medellín or Bogotá, for the middle class powered the Cartagena, although Bucara- need fairer tariffs in Barranquil-
example, because the climate is country. We also see that strata manga is also providing many la that are cheaper than in other
different. The important thing of society as the one that will opportunities as well. In Bogotá, parts of the country.
about these new housing devel- be growing the most in com- we are there between the third
opments is the social integra- ing years. The middle class will and fourth in the market. We SMV Overall, interest rates
tion they provide. This sort of want to own a house, and al- are present in each region and are on the rise. There is go-
housing encourages integration though we do housing for oth- are constantly monitoring the ing to be an increase in costs
and relationships within the ers strata, we focus primarily on market. for everyone, and not just in
community. We know that we the middle class. In the last five the construction sector. I see
cannot just build box-like units years, we have strongly focused JG Valorcon was able to in- many positive things happen-
for people; we have to build on social housing for the gov- crease its sales thanks to the ing in Colombia, like the peace
something that people like and ernment, and we expect further social housing projects that the agreement, and consequently
is positive for the city socially. It growth in this area. Families are government has been develop- expect to see further growth in
is important to do these kinds subsidized by the government ing. This work is important for the construction sector. There
us, the country, and especially are some risks and challenges
the poorest people in Colom- remaining, and the primary
bia. The second benefit of these risk is not understanding the
projects is that they trigger economic environment in Co-
growth and boost the econo- lombia. This is a time for pro-
my. We have had good mayors fessionals to be aware. ✖

150 THEBUSINESSYEAR COLOMBIA 2016

FOCUS SKYSCRAPERS

UP IN THE SKY

OVER THE LAST FEW YEARS, Colombia’s construction increase in tourism. Many have compared the transformation to
the revamping of cities like New York, Barcelona, and London,
boom has been gradually changing the face of its city vistas. Sky- which were followed by boosts in visitors. Bogotá’s renovation
scrapers have arrived, catering for growing business demand and looks likely to open the city to new opportunities for construction
adding a new dimension to the traditional city architecture. companies and international investors, whose move from Cara-
cas or Buenos Aires has been hampered by the previous lack of
Bogotá is the capital of the country, both economically and po- guarantees.
litically, and unsurprisingly it has seen the grandest architectural
additions. Several new skyscrapers are either under construction The strong and diverse development of Colombia’s other cities
or in the planning stages. Such projects are becoming an increas- is also peaking the interest of developers. The general manager of
ing trend as the city struggles to cope with a lack of business space Proksol, Ricardo Uribe, assured TBY that developers are becom-
and high land costs. Most of these new skyscrapers are located in ing increasingly interested in moving to mid-sized regional cities
the important urban hubs of Cartagena, Barranquilla, Medellín, such as Medellín, Cali, and Barranquilla; “The cheaper prices and
and Bucaramanga, where there are a total 16 skyscrapers, ranging the climatic conditions of the coastal area attract the attention of
from 42 to 96 floors, set to rise. investors to move their businesses.”

Colombia’s first skyscraper, the Avianca Building, was built in Another project that is already under construction is the Atrio
1965 and the second one, the Coltejer Building,was constructed in Towers, two massive skyscrapers located in the capital center, 44
Medellín. From 1975 until 2015, Torre Colpatria, a 50-storey build- and 59 floors respectively. The development will take BD Bacatá’s
ing measuring 196m high in Bogotá’s center, held the record for crown, with one tower measuring 270m. This project will be fin-
being the tallest tower in Colombia. It took 40 years for the Torre ished by 2018 and is expected to attract new national and inter-
Colpatria to lose its crown. national business to Bogotá’s heart. However, a crown jewel of a
skyscraper waits just below the horizon. The Entre Calles will be
In June 2015, the new BD Bacatá tower, a 67-storey skyscrap- a massive skyscraper that will top the World Trade Center of New
er measuring 240m, became the tallest building in Colombia and York and the Petronas Towers of Kuala Lumpur. The building’s 96
Latin America. The space is home to luxurious flats, offices, and floors will reach 420m into the sky. According to Obras de Bogotá,
a hotel, all of which are expected to be completed by the end of the project’s construction will start at the end of 2017 and be the
2016. seal of approval on Bogotá’s urban city center renovation. ✖

Bogotá has welcomed the new skyline, and many see the de-
velopment as a welcome fresh look and expect a corresponding

Infrastructure & Construction THEBUSINESSYEAR 151

VOX POPULI

CRANES

Development has always been a priority for
Colombian constructors. With demand in the
country strong, companies in the sector are
utilizing the latest technology

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com CESAR J. with European and American W e always wanted to cranes, but this one was. We
MARTINEZ technology because most of the enter the mining sec- have faced challenges in many
big companies in sedimentation tor even though it has buildings; we even developed a
General Manager, are from Germany, Switzerland, been slow during the last de- project in the jungle.
Colcimes and Italy. Recently, we signed a cade. The development of min-
contract with a Chinese com- ing has been difficult because CAMILO ANDRÉS
T he methodology that pany to purchase $1.2 million of the falling commodity prices RUSINQUE
Colcimes is following worth of machinery. Our main and the increasing relevance of
to face this compet- characteristic is the 15 years environmental issues, but min- General Manager,
itive market is to invest in the of experience we have in the ing is a fundamental sector for MCS
latest technology available. All sedimentation market and the the development of Colombia
of the equipment that Colcimes personalized customer service and we have to be there even
has in Colombia is brand new. that we provide. We offer our though it can be a bit difficult.
Our machines are equipped clients brand-new machinery, We have developed several
with everything, such as GPS but we also provide them with challenging projects depend-
and automatic leveling systems. a consulting service from the ing on sectors. We are finishing
We see that the way to remain beginning. These two services the tower for the hotel Estrella
competitive is to bring new tech- together explain the terrific per- in Cartagena, which is going
nology into the market. We work formance that the company has to be the tallest building in the
experienced in recent years. city. We have done some other
non-commercial construction
works in Cartagena, such as a
cement plant that we devel-
oped. That was a challenging
undertaking, especially be-
cause those cement structures
are generally not built with

PAOLA BERNAL RODRIGUEZ

General Manager, Imberform

W e have strategic agreements with One thing that was great for us over the last few
constructors in Colombia such as Ci- years is that we have long-term projects. It has
vilia and Prabyc. We attend the proj- been beneficial for the company as we contin-
ects that they do outside of Bogotá and that ue to have work even in moments of slower
has helped us to do many things outside of the economic development such as this one. We
city; we go with them to provide them with our worked on the BD Bacatá project, which is the
products and services. This has led to us par- highest building that has ever been construct-
ticipating in important opportunities in places ed in Bogotá, and Grand Hyatt Hotel, both of
such as Neiva, Barranquilla, and Santa Marta. them over the last two years.

152 THEBUSINESSYEAR COLOMBIA 2016

FORUM

CONSTRUCTION COMPANIES

MARCELA RICARDO URIBE LUIS FERNANDO DIEGO LOBO-

GUTIÉRREZ DÍAZ General Manager, LIAN GUERRERO

General Manager, Proksol General Manager, SCP General Manger,
Gutiérrez Díaz y Cia Ingenieria Prominsa
S.A.

C urrently we are con- S ubstantial foreign in- B arranquilla and Cali W e have a new project
centrated in project vestment started to are locations with with Cundinamarca
management, su- come in around 10 considerable poten- in Tocaima, a region
years ago, which helped com- that has not had professional
pervising (inspections), and panies find another way to fund tial. Cali experienced a small housing constructers for a long
their projects. It also meant that time. Compared with other ar-
consulting. In terms of project project designs that could not recession and major unem- eas in Bogotá with established
be envisioned under the re- housing concepts, Tocaima
management, we can help our straints of traditional financing ployment last year, but we are is quite undeveloped. We saw
were made possible. Foreign this as an opportunity and we
clients at any and every stage investment has changed the hopeful the city will recover its successfully launched a second
way we do business here in Bo- middle-income residential proj-
of a project, be it from the be- gotá and in Colombia general- potential and power. Many oth- ect there. The project consists
ly, because we have more ways of 320 flats that will be built in
ginning at the planning stage, of raising money. The major er cities have taken off, such as three different stages. This proj-
issue for the mayor is whether ect targets Bogotans who want
or midway through. These are to grow vertically or horizontal- Barranquilla and Bucaramanga. to buy a new house close to the The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
ly. Those two extremes are not city where they can disconnect
mostly building and construc- good choices—you have to find Also, the new government has from the intense urban environ-
ways of vertically regenerating ment while still enjoying ame-
tion projects, usually housing, depressed neighborhoods and provided more economic sta- nities like swimming facilities,
urban areas where there has not all amid more pleasant weather
education, health, urban space been any orderly development. bility and boosted investment conditions.

projects, and also industrial potential. We have our own real

projects. We help our clients state projects; we purchase land

apply their designs to the con- to design, build, and commer-

struction phase, creating the cialize. We build a maximum

right team and organization to of one or two of these projects

ensure that those plans and de- per year. We provide personal-

signs are realized as they should ized customer service for these

be. We hold tenders and man- projects and provide the entire

age technical studies, taking infrastructure. There are good

care of all the legal procedures projects, but just a few promi-

and licensing; everything until nent companies in the market

the construction is finished and dominate many of them. The

up and running. finance sector is supporting the

construction sector as well, of-

fering guarantees and funding

to back certain projects. This

has been crucial for the success

of the sector.

Infrastructure & Construction THEBUSINESSYEAR 153

Though a number of problems have slightly hampered construction companies, industry
leaders are innovative and have the drive to continue to build on their success.

RAFAEL E. MOJICA PEDRO SALAZAR ARTURO CEPEDA ANTONIO PÉREZ,

Manager, Mojica President, Inversiones President, Barajas General Manager,

Constructora Chila Constructora Lambda

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com F ollowing the prob- W e are developing W e are committed to T here is a bubble in
lems of regulation and countryside houses, the development of Bogotá in terms of
public services in Bo- apartments, offic- Barcelona de Indias, the cost of the land.
gotá, large, medium, and small es, and commercial areas. We the project which changed the It is not that the developers or
companies have moved to the work in a diverse sector, with residential culture in Carta- construction companies are
Savanna area. It seems there major projects in Barranquil- gena. At Barcelona quality of making more money. When we
are some financial risks to buy- la and seven apartment block life is recognized as one of the had problems between 1995
ing land in a city with such legal projects in Chapinero, Bogotá. highest levels in the country. and 1998 there really was a bub-
uncertainty regarding what is al- Colombia has many big cities, We still have stages to develop ble because there were people
lowed be built. Players are cau- which provides a large national over there, and will continue with money who could afford
tious about investing in Bogotá, market. There are many oppor- to do so. Actually the north to buy at any price. Now, buyers
and many of them have opted tunities to invest outside of Bo- area of Cartagena is increas- are more realistic and there are
to develop in the outskirts in- gotá because several cities have ing dramatically. In a couple more filters and controls that
stead. Chía has been one of the experienced strong growth over years it will count among the have been put in place by the
cities benefiting from this trend. the last 20 years. Villavicencio best offer of health providers government to prevent money
Furthermore, homebuyers are and Barranquilla, for exam- in the country and Cartagena laundering. People are going to
realizing that for the price of a ple, are cities that have gone will position itself as a major Panama to invest instead. We
small apartment in Bogotá they through major changes due to health destination. At Barajas, have an obligation to ensure
can buy a good size house with the success of the construction we have also worked on many that the money used to buy
amenities, space, and security sector. They are dynamic cities government programs for so- property has come from a le-
for their families. Being closer with plenty of room to grow. cial housing. Within the last gitimate source. This is why we
to good schools, which have We scout locations where we four years we have built more now use trusts to hold buyers'
also moved to the area, means a identify potential for develop- than 4,000 residential solutions money. This means we have a
reduction of school transporta- ment. We are not interested with government support; we certainty of cash flow and can
tion time for their kids. They are in constructing high-end ex- already started a new 1,300- embark on a construction proj-
finding a better quality of life. pensive housing; our focus is unit project and are working on ect with confidence.
high-quality, middle-income a new one to launch 2,000 solu-
houses at reasonable prices. tions in the second half of 2016.

154 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

highest standards

TBY talks to Felipe What is Forsa’s background? What are the main character- kets abroad. At the moment,
Otoya Domínguez, we are also considering estab-
President of Forsa, on Forsa is a pioneering compa- istics of Forsa’s construction lishing a plant in either India
the company’s early ny that has operated in the or South Africa; these are our
days, Forsa’s unique commercialization and de- system? main targets in the short and
methodology, and the velopment of construction medium term. However, this
importance of being systems with aluminum form- It is a formwork system that project is still at an early stage
located in the Cauca works in Colombia, South is 100% aluminum and com- of development.
Free Trade Zone. America, Central America, plying with high standards.
and some countries in Africa It also guarantees good per- How important has being locat-
BIO and Europe, since 1995. We formance in housing con-
were first established in Co- struction. Building housing ed in the Cauca FTZ been for the
Felipe Otoya Domínguez lombia and we now operate in units using the Forsa system
received a degree in more than 25 countries. The achieves organized, fast, and success of the company?
mechanical engineering company started as a group progressive processes, main- The Cauca FTZ represents
from the Universidad of Colombian businessmen taining more balanced inven- the large majority of exports.
Autonoma de Occidente, and engineers with the goal of tories, reducing labor, con- This FTZ has generated many
Cali, as well as a degrees in transforming the construction tributing to a cleaner, greener employment opportunities
manufacturing technology sector and developing a more construction process, and and industrial development.
from the Carl Duisberg practical, specialized, and ef- increasing the productivity Throughout the years, we
Centren in Colonia ficient system for the benefit and profitability of the con- have been able to generate
(Germany) and finance of builders. The goal was to struction. With this system, a true associative network
specialization from the improve profitability in the we can develop innovative between all companies op-
Universidad del Valle, industrialized construction projects of high-quality ar- erating here, giving every
Cali. His career has been of housing and civilian infra- chitectural design. One of the company more stability. This
based in the commercial structure. We were one of the main challenges we face has FTZ has certainly been instru-
and engineering areas, few companies established in been to change the construc- mental for us to reach current
with extensive experience the mid 1990s, thanks to some tion culture in the region. Our levels of performance. Public
in team management, tax advantages in the Cauca system allows the industrial- authorities have developed
business development, area. We have invested in our ized construction of housing, much-needed infrastructure
sales management, client operations through train- building housing units like a along with the FTZ, which was
prospecting, customer ing people and establishing production line, one housing key for companies like ours
loyalty, and customer partnerships with universi- unit per day. to export. Security levels have
satisfaction, contributing to ties, tech centers, and sector also increased since the con-
maintaining the sustainable associations. Our people are Which foreign markets does struction of this FTZ. Cauca
growth of the organization. highly specialized and that has developed significantly in
Domínguez has been the has been something we have Forsa operate in? the last decade and made sev-
CEO of Forsa since June always considered one of our eral key infrastructure projects
1995. From 1986-1995, priorities. Today, we employ We started exporting in 1999 possible, and has increased
he was the Operations more than 800 people, 70% of when we saw the opportu- collaboration between local
Manager of Conciviles. whom are from the region. nity as a way to balance the and regional authorities.
situation locally. We started
with neighboring countries Where do you see Forsa in five
in Central America and Mex-
ico. The late 1990s and early years?
2000s were challenging years I see Forsa even more consoli-
for the Colombian economy dated than today, with a strong
and in 2001-02, 40% of our product portfolio in which in-
sales were in Mexico. This novation plays an even more
was a common trend up until important role than it does
a few years ago and Colombia now. I expect the service of
now represents 40%, Mexico renting out formworks ex-
slightly less than 10%, Brazil panding to other Latin Amer-
less than 15%, and Central ican countries after it further
America (the Dominican Re- consolidates in Colombia. We
public, Panama, and so on) target Peru, Mexico, and Chile
making up the remaining first and then other countries
part. On top of that we have in the region. ✖
had projects in Iran, Spain,
South Africa, and other mar-

Infrastructure & Construction THEBUSINESSYEAR 155

INTERVIEW

GAINING IN NUMBERS
momentum
Exports
TBY talks to Miguel Recently you acquired two region and will continue in-
F. Rangel Galvis, vesting. These two companies 30%
General Manager companies in Colombia. What were producing three of the
of Knauf, on new main gypsum board types, of products, intends
investments in is motivating this level of in- namely standard, the type to raise that to
Colombia, the used in more humid environ-
advantages of vestment? ments, with the other being 50%
Latin America, and for passive fire protection.
construction sector Our company is a German The final product was joint Products can reduce
trends. company that operates in the compound plaster to cover building times by
Latin American region, with drywall. The difference with
BIO investments in Argentina, Knauf is that we build and 80%
Brazil, and a commercial of- sell systems, rather than just
Miguel F. Rangel Galvis is fice in Chile. There was a gap offering basic products. We Are you exporting from Colom-
the General Manager of in the northern part of South also look into ventures with bia?
Knauf, a position he has America, as well as Central locals, and are potentially set- This is a major driver for our
held since 2015. Before America and in Mexico in ting up new production facil- business. We currently export
that, he was the General terms of Knauf products. The ities. We will establish a joint around 30% of our production,
Manager of CERAMICA company has a presence in compound plaster produc- and we aim to reach around
SAN LORENZO, Global North America with Knauf tion facility in July in Bogotá 50%. The natural market for us
Director of Sales Excellene Insulation, which is the glass to mitigate the high transpor- is the Andean region, Central
at Avery Dennison, and wool that is used to insulate tation costs in Colombia. The America, and the Caribbean,
Sales & Marketing Director against weather or even fire. government has made a great which is where we are focus-
of Spanish Speaking South Most of the plants for busi- deal of effort to improve the ing. We are planning to control
America, Central America, ness are in the US; therefore, transport networks, but much this expansion into northern
and the Caribbean at the we began the analysis of po- remains to be done. Latin America from Colombia.
same company. tential investment destina- We set up in Honduras but are
tions and Colombia was des- What kind of construction does looking into other markets like
ignated as a good opportunity Mexico. In Colombia we are on
north of Argentina. There are the system suit best? the coast, which is useful. We
three plants in Colombia that do not yet have a plant in Bo-
produce this product, two of The biggest market is hous- gotá because there are no gyp-
which we now own. One of ing, which is a little harder sum quarries in the area.
the attractions is that the eco- than the commercial seg-
nomic environment is better ment, as businesses will nev- What are your views on the con-
tailored to companies that er complain as long as we can struction industry in Colombia?
want to invest and get returns. get their office ready quickly. There was a 6% increase in li-
For example, the market in In Colombia, the biggest area cense approvals in 2015 com-
Ecuador is smaller, while Peru for sales at the moment is in pared to 2014, meaning there
could present a good oppor- ceilings. The internal drywall are projects coming. The gov-
tunity if it was not for the fact market is just opening up. At ernment was investing a great
that we have a plan to start the moment, builders place deal in housing for lower-in-
quarrying gypsum in Chile bricks and then a board on come people, but as you know
further down the line, and either side, and instead of the state budget has been re-
producing there. That was using cement, this is a much duced because of oil prices, so
why we chose Colombia. cleaner and faster method. that could be a challenge. ✖
Our main drivers are current-
Why did you decide to come to ly malls and hotels, because
they need their jobs done
Latin America at this time? quickly and the flexibility of
our system is attractive to
The company momentum is them.
targeting Latin America. In
March 2016, we bought a gyp-
sum plant in Honduras. We
now have three plants in the

156 THEBUSINESSYEAR COLOMBIA 2016

VOX POPULI

ARCHITECTURE

While 2015 may have been a hard year for some, O ur core business is
demand for architects is strong and growing, focused on creating
and many firms are set to see their hard work added value in differ-
pay off in 2016 and 2017.
ent sectors in the retail segment

and the success of our compa-

ny is based on the success of

malls and retailers. The results

of the last five years have been

great for the sector and conse-

quently it has been great for us.

We are experiencing Colom-

bia’s mall boom, a sector that

has changed dramatically over

the last 10 years. In the retail

sector, we observe particular

interest from the Chilean, Pan-

amanian, and Spanish markets

to enter a country with many

opportunities to develop their

international expansion plans.

The main factor that has driven

our performance is the steady

growth that Colombia has ex-

perienced. Colombia is growing

faster than the countries across LEOPOLDO VARGAS

the continent and in the last General Manager, Mall The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com

year the economy grew 3.1%. & Retail

We were the country with the

largest growth after Panama,

and that phenomenon has been

ongoing over the last nine years.

ARMANDO FUENTES

Executive Director, Morphosis

A t Morphosis, we want change in Colombian cities. We about them, which is the spir-
to stand out from our mix architecture and commer- it of the company; those small
cial design into housing; for ex- details define us as a brand.
competitors. Our goal ample, the lobby of a building Furthermore, we are a young
resembled the lobby of a hotel company; however, our goal
is to make things different from and it was a success and peo- over the next 20 years is to be
ple liked it. We can proudly say a reference company for devel-
other companies in order to we have a personal signature in oping similar projects in Co-
all our buildings in Colombia. lombia and Latin America.
have excellent products. We Our buildings have something
different, unique, and personal
aim to create unique designs

within the average standards

of the market, a niche where

we see a selling opportunity,

and in this way we can make a

Infrastructure & Construction THEBUSINESSYEAR 157

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com MARCOS BRAVO R. Bank of Latin America (CAF). I n terms of area, we projects, but we want to have
In terms of engineering and have designed, built, the company evolve and move
General Manager, project management, we grew and developed ap- toward less expensive hous-
Poch Colombia by 20% YoY in 2015, and we proximately 200,000sqm of ing that can potentially have a
signed important long-term projects. These include all much wider range of the Co-
W e used 2015 as a tran- contracts for projects such as types of uses, such as residen- lombian market.
sition year, during the Atrio towers project with tial, institutional, and tourism.
which we included QBO, which will be an iconic We are also developing proj- ROBERTO LÓPEZ
environmental services for building in Bogotá. Another ects outside of Bogotá. We are
construction projects as a new important project that we de- excited because this includes a CEO, SUMA
business line. We are a strong veloped was the refurbishment very different product, such as Arquitectónica
company in Latin America of the Campín stadium, which more middle-class type proj-
for environmental consult- will be ready to hold the biggest ects in Ibague and Cartagena.
ing; therefore, we decided to gigs and events in Colombia For example, the one in Ibague
include this new service for by 2018. Those two important is a 200-apartment develop-
the Colombian market, and projects have helped us be- ment. We are expanding our
we started to develop a proj- come recognized for our engi- housing products because we
ect with the Development neering achievements. believe the market in Colom-
bia is quickly changing and
the demand—and need—for
middle-class housing is get-
ting stronger and stronger. At
SUMA, we have had 10 years of
booming business in high-end
developments. We are interest-
ed in continuing those types of

JUAN JOSE CAJIGAS

Gereneal Manager, Cajigas

O verall, 2015 was a difficult year for ev- of the country go hand-in-hand. We generally
erybody, not only in the construction work in the private sector and most of our work
industry, but also for business in gen- is done through private invitation or clients we
have been working with for a long time. As dif-
eral. We planted many seeds that we expect to ficult as 2015 was for us, 2016 has started with
many opportunities in the architecture sector,
see come to fruition in 2016, and we have been particularly as we are finishing projects that we
believe will launch us to wider audiences and
working hard in using new architecture and give us the opportunity to keep on doing it.

designing projects that stand out. We need to

play our part in the Colombian economy, as

what we do and the current economic position

158 THEBUSINESSYEAR

161 164 166

Aurelio Iragorri Valencia, The Agriculture Minister Companies are introducing
Minister of Agriculture, on the key announced a new plan to develop innovation into the value chain,
role the agriculture industry will the agricultural sector and reduce changing the way that food is
play in securing lasting peace. food imports. distributed to Colombians.

Agriculture
REVIEW

The agricultural sector is pushing itself as a key pillar of the economy,
consistently increasing its annual contribution to GDP, employment, and
exports. The agriculture, forestry, and fisheries sector represented 6.2% of
total GDP in 2015 and employs 61% of the working population in rural areas.

BLOOMING
MARVELOUS

L ike in most econ- The sector as a whole is ori-
omies, over the entated toward the major ex-
years agriculture’s port products; coffee, cut flow-
ers, bananas, and sugar. Other
share of GDP has important products are rice,
palm oil, cocoa, cattle, and
decreased as industry and ser- poultry. The Ministry of Interi-
or has projected the sector as a
vices have expanded. Likewise, whole to grow between 3% and
3.5% in 2016, ahead of general
the sophistication of the ag- economic growth of between
2.5% and 3.2%.
ricultural sector has grown as
The minister in charge of
subsistence farming practices agriculture and rural develop-
ment is Aurelio Iragorri, the
have been abandoned in fa- former Minister of Interior, a
man who was personally in-
vor of cash crops. This has put volved in facilitating dialogue
between the government and
the sector on a fast track to so- protesting farmers in August
2013’s nationwide strikes. His
phisticated value chains and a ministry’s mandate, when he
joined, was to raise agricultural
well-diversified sector. exports 20% by 2018, and es-
tablish programs that reduce
This has been achieved rural poverty. The ministry is
working hard to fulfill those
alongside a long history of in- aims. The Colombia Siembra
plan, for example, will be brin-
ternal conflicts that has had ing 300,000ha into production,
growing crops that are deemed
a detrimental impact on agri- useful.

cultural output from certain The ministry is facing an up-
hill battle, being significantly
areas and regions. Consider- involved in the peace process

ing the size of the country, it is

impressive that the agriculture

industry has does so well with

just 4.5 million ha of arable Image: Banco Agrario de Colombia

land—the UK, for example, has An increasingly diversified agricultural
base is bringing forth greater
17.2 million ha of arable land opportunities to develop the value chain,
with space for entrepreneurs to develop
despite being almost five times new products and bring them to both
local and export markets.
smaller than Colombia. With

so much potential, the Ministry

of Agriculture is working hard

to realize this and is trying to

protect and support its indus-

tries amidst low oil prices and

an expensive peace process in

the pipeline.

Agriculture THEBUSINESSYEAR 159

and tasked with creating a structure that will in- It is a little known fact that Colombia is the second
corporate former guerrillas into the agricultural largest cut flower market in the world. The country
value chain, giving former fighters incentives to exports $1 billion worth of flowers per year, giving
drop guns and pick up shovels, replacing coca the country a 15% of global market share.
fields with palm plantations. The Ministry is us-
ing this as an opportunity to restructure the in- RICE
dustry in underdeveloped regions. Such an over-
haul will include policies for access to land, the Rice is produced in several areas: Valle del Cauca,
reassessment of agrarian processes, policies for High Magdalena, the Caribbean area, La Guajira,
irrigation and drainage, plans for credit and seed Llanos, Huila, Tolima, and Orinoquia. The state
capital for family farms, along with a whole host has been increasingly proactive in incentivizing
of new agencies for rural development includ- the industry, making land available for use and
ing the Ministry of Postconflict, the Office of the making inroads to protect the sector amidst sub-
High Commission for Peace, and other entities. sidized competitors. One issue facing the rice in-
The overarching aim is to reorientate the coun- dustry is smuggling. Colombia consumes rough-
try, developing the rural areas and bringing these ly 150,000 tons of rice per month, but smuggling
formerly untouchable districts into the food val- is estimated to bring in double that amount.
ue chain.
CUT FLOWERS
COFFEE
It is a little known fact that Colombia is the sec-
Coffee is big business in Colombia. Market de- ond largest cut flower market in the world. Its po-
mand is growing, especially for organic prod- sition on the equator is ideal for flower growth,
ucts that are heading north to North American and consequently the country exports $1 billion
markets. Today, American and European export worth of flowers per year, giving the country 15%
markets are expected to gain 100,000 bags to 11.5 of the global market share.
million. Current Arabica production is forecast
down 300,000 bags to 13.3 million due to expect- SUGAR
ed heavy rain toward the end of 2016, affecting
the mitaca crop, which accounts for 40% of total Sugar production is doing better YoY, with yields
output, and creating conditions conducive to the increasing to satisfy export and ethanol markets.
spread of coffee rust. More resistant varieties will Production is largely focused in the Cauca river
be planted next year, and generally production valley in southwest Colombia, but with the area
is expected to increase. The market is becoming already at almost full capacity, it will be down
more and more commercialized, with middle to technology improvements to boost yields. In
men increasingly going into “red zones” to find marketing year 2015/2016, production is expect-
coffee seed that other companies have not yet ed to reach 2.3 million metric tons, with exports
commercialized, further developing the coun- to make up 790,000 tons of that, down 7% from
try’s value chain. the previous year. Despite this downturn, it is

160 THEBUSINESSYEAR COLOMBIA 2016

part of a larger steady increase from 2011, when try. Another is the granting of permission to im- HERNANDO
heavy rains reduced production substantially. port breeding cattle from the US in December FONSECA
2015 in a bid to improve the competitiveness of
Exports are forecast to continue dropping into the sector. General Manager,
2017 as a result of increased ethanol production Inversiones Peniel
to meet domestic blend mandate. In the Cauca BIOFUELS
river valley, there are 13 mills and five ethanol Where do you produce all of
distilleries, and the region harvests 90% of the Demand for domestic gasoline is increasing with your products?
country’s acreage. the closure of the border with Venezuela, which We were located in Honda, be-
limited fuel contraband, resulting in Colombia cause it was cheaper to produce
CATTLE seeing an impressive rise in the volume of sugar- milk there and because there
cane and palm production. With the expansion were qualified people to supply
Colombia has the fourth largest stock in Latin of palm growers, there is large potential for an the sector. However, recently
America, with 23.5 million head of cattle, mak- increase in palm oil-based biodiesel production. we moved to Bogotá due to the
ing it the seventh-largest cattle inventory in the Two new facilities will be coming online in 2017, cooler climate, which produces a
world, and the sixth-largest exporter. The indus- adding 110 million liters to the current domestic finer product, and we are able to
try relies on cebu breeds for cattle, such as the capacity of 590 million liters per year, with palm better supply the schools. Here,
Colombian Braham, which is enjoying country- oil being used as the primary feedstock. we launched a new product
wide efforts to increase the sanitation of the beef line called Quesarte to diversify
industry. Such campaigns, including a national In 2015, sugarcane-based ethanol production the company sales. Today, we
vaccination campaign against foot-and-mouth capacity increased to 1.65 million liters per day, a provide dairy products to 95%
disease in 1997, meant that in 2009 the World Or- 32% increase from 2014 with a new plant owned of school lunches in Bogotá and
ganization for Animal Health declared Colombia by the Riopaila-Castilla sugar mill began opera- 50% of those in Medellín.
a foot-and-mouth disease free country, which tions. Although production for 2016 is expected
opens up the export market for cattle farmers. to drop by 2% due to El Niño, more distilleries Cheese consumption in Co-
Especially with the new FTAs, exports across the are coming online, with a new one managed by lombia per person is between
Pacific and to the EU will be growing, as well as ECOPETROL scheduled to begin operations in 1.1 and 1.5 kg per year, low in
local demand for beef. early 2017, having a capacity of 160 million liters comparison to France with 23
per year. All of Colombia’s ethanol production kg. Do you think local cheese
SORGHUM & FEED is currently supplied by six distilleries near the consumption will increase?
city of Cali in south central Colombia, clustered Colombia does not have cheese
Concern about the future of the beef industry is within the industrial sugar production and mill- culture. We have to introduce
always brought into question by the rise of bio- ing facilities. cheese as a must in the fami-
fuels, as the increase in grain prices increases ly-shopping basket, as Colombia
the cost of feeding cattle. In 2015, the Ministry of LOOKING AHEAD did with wine. Some years ago,
Agriculture took some initiative and subsidized coffee and beer were the highest
a new variety of sorghum to support cattle feed One issue that many are facing is the difficulty consumed products; however,
ahead of El Niño, part of a wider move to reduce to buy machinery for factories and farmers alike. now wine is among that shop-
reliance on importing sorghum, a crop that can With so few producers of tractors and machin- ping basket. We have to educate
be produced locally. In 2015, around 23,000 tons ery, most technology is imported from the US the consumer on when and
of sweet sorghum JJT18 was harvested, to boost and Europe, and with the current exchange rates, where to consume cheese. It is
cattle feed, as its production cost is lower with many individual farmers are putting off upgrad- cultural, and we have to diversify
better drought tolerance than traditional corn. ing machinery. products and make them easier
The total state funding for cattle feed totals over to consume. It is important the
$10 million and is one of many examples of the At the same time, the currency exchange rate government plans to pro-
government being proactive in the cattle indus- is making the export market very competitive mote cheese consumptions in
for Colombian producers. This has been useful schools.*
SORGHUM IMPORTS (TH. TONS) during El Niño, which has meant things such as
milk production levels dropped in 2015/2016,
SOURCE: UNITED STATES DEPARTMENT OF AGRICULTURE increasing the price of milk; however, with the
exchange rate, companies are still able to find
600 markets for their milk. *Read the full interview at thebusinessyear.com

500 To mitigate the worst effects of El Niño, the
ministry has provided more than COP90 billion
400 to support numerous entities, through crop fer-
tilization, well construction, and special lines of
300 credit for farmers to invest in their business.

200 Going forward, the Colombian agri-business
sector is set to become more diversified, with
100 companies finding more niche markets to cater
to a growing diversification of taste palates, with
0 2013/14 2014/15 2015/16 companies venturing into the Greek yogurt mar-
2012/13 ket, for example, tapping into growing markets
for organic products, and even pet food. ✖

Agriculture THEBUSINESSYEAR 161

INTERVIEW

PREPARING
the groundwork

TBY talks to Aurelio Iragorri Valencia, Minister
of Agriculture, on the key role the agriculture
industry will play in securing lasting peace in
the country’s rural areas.

How important will the peace sense, the carrying out of the and we need to achieve it for thanks to financial support
obligations of the Regional Ar- the people. We are working provided by the government
agreement be for the develop- ticulation Plans will continue, together to reinvigorate in- through FINAGRO and the
taking into account the differ- vestment, growth, and em- Agrarian Bank, and by projects
ment of rural Colombia, and ences and particularities of ployment in the countryside. from MADR such as Colombia
the country, and the issues of At the same time, we will soon Siembra. The Colombia Siem-
what role can agriculture play in women and young people in announce new credit instru- bra strategy will continue to
the countryside, indigenous ments to finance this policy. expand in the countryside,
achieving peace and stability in groups, vulnerable rural pop- and in 2016 it is expected that
ulations, victims of conflict, What are your expectations for 232,215 new ha of prioritized
the coming years? and the general concept of crops will be sown. ✖
seeking reconciliation for the the Colombian agricultural sec-
The Ministry of Agriculture country. BIO
plays a key role in achieving tor for 2016?
peace. Without a doubt, it is The Colombia Siembra pro- Aurelio Iragorri Valencia
the right setting for various The forecasts of financial or- was born in Popayán in
opportunities for progress gram is designed to encourage ganizations in the private 1966 and graduated from
and development. On the one sector and the Ministry of the the Universidad Javeriana
hand, it is the right time for the development of agriculture. Interior project that the econ- as a lawyer. He has a long
Colombians to reconsider the omy will grow by between trajectory in the service
countryside and to rediscover What innovations will be imple- 2.5% and 3.2%, respectively. of the state and private
the essence of rural develop- We hope that the tendency industry, fulfilling important
ment at the heart of being an mented as part of this program toward growth of the past two responsibilities. Before
agricultural country. This is years will be maintained, with taking up the portfolio
outlined in the Integral Rural in 2016? growth of between 3% and of agriculture, he was
Development Policy (Politica 3.5% expected for 2016. This Minister of the Interior. His
de Desarrollo Rural Integral – In 1Q2016, producers were growth was sustained thanks ministry was characterized
RRI), which places the family offered the chance to express to the beneficial exchange by good results in such
and community as pillars of their interest in participating rate for permanent export essential affairs as rural
a balanced economy based in this plan, and the results crops like coffee, bananas, areas, strengthening
on a restructuring and trans- have confirmed that there is and flowers. Elsewhere, rice democracy, security, justice,
formation centered around a strong appetite for turning continues growing, with cul- international relations,
farming. At the same time, agriculture into a primary tivated land growing by 18% and coexistence in the
the strengthening of this new sector of the economy. The in the second quarter of 2015. community. His primary
institutionalism allows for the provisional information gath- Modified yellow corn, accord- aim is to create policies that
articulation of programs and ered indicates that 391,667 ing to FENALCE, grew from will generate equity in the
projects that integrate com- producers are interested in 51,541 sown ha in the 1Q2014 rural sector, as it is there
mitted municipalities with sowing 2,588,075ha of land, to 75,720ha in 1Q2015, that is especially that opportunities
families and organizations, surpassing the expectations to say an increase of 47% in lie for constructing peace,
organized by the Ministry of of the national government, terms of area, with production and transforming the
Postconflict, the Office of the whose objective with the expected to stand at around Colombian countryside.
High Commission for Peace, Ministry of Agriculture was 400,000 tons in the first quar-
and other entities. The test 1 million hectares over the ter of this year. We believe
of this institutional transfor- coming three years. The peo- that with the reduction of the
mation is represented by the ple believe in the project; the effects of drought, short-cycle
new agencies for rural devel- challenge now is to obtain ad- crop yields will be rejuvenated
opment, land, and Territorial ditional resources to finance
Renewal that serve as guides double the target that we had
for regional policy. In this set out. This is positive news,

162 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

field of How does the agriculture sector
DREAMS
factor into your portfolio in Co-
What is your manufacturing ca- How competitive is your mar- TBY talks to Alberto
Zuñiga, General lombia?
pacity here in Colombia? ket in Colombia in terms price, Director of BASF
Colombia, on Agriculture is one of the main
We only have a factory here innovation, and foreign and lo- expansion and sectors, and it will increase
in Colombia for construction opportunities in importance in the future.
chemical products. This is cal investment? for business Colombia and Ecuador have
where we produce additives in Colombia’s huge potential to export
for concrete so that the cus- There are many customers fresh produce or agricultur-
tomer can change the features who have more possibilities agriculture sector. al commodities. We have a
of the concrete to make it easi- to export to external markets. strong portfolio and are in-
er to dry or to delay the drying This is one of the positive BIO vesting in the registration of
process to enable it to be more impacts of the 70% deprecia- new products and technolo-
resistant and solid. Through tion over the last 18 months. Alberto Zuñiga was born gy. Innovation will continue
these additives they can add This reduction in terms of in Cali, Colombia. He has to play a critical role in the
features to the concrete de- the dollar is giving some ad- an MBA from Javeriana development of agriculture.
pending on their needs. If a vantages to our customers University Business School Sustainability is key, because
customer is going to build a who have export capabilities Ecuador IDE. In 2000, he if you want to export to con-
bridge then he or she will have and the opportunity to cap- was Manager of the Unit sumers in Europe or the US,
different requirements com- italize abroad. With the de- of BASF Crop Protection the market wants to know if
pared to constructing a build- preciation the country gains in Ecuador before being the bananas or pineapples
ing, for example. competitiveness against oth- promoted in Brazil as head are produced in a sustainable
er nations where it has not of strategic marketing for manner. This is where we are
How will the new plant in Brazil been possible to devaluate. Latin America in 2003. strong; we work with small
Even against countries with He returned to Ecuador in and large growers to improve
strengthen your position, par- a strong devaluation such as 2005, assuming the position capabilities for a more sus-
Brazil we are gaining com- of CEO of BASF Ecuador. tainable agriculture sector.
ticularly in the Colombian mar- petitiveness. It takes some In 2008 he took on the
time to adjust and in other challenge of Unit Manager What are your expectations for
ket? areas we see that it is diffi- for Crop Protection BASF
cult. 2010 and was promoted as 2016?
We opened what we call Director General of Central
the Chemical Complex in How will infrastructure devel- America and the Caribbean It will be a challenging year
Camacari, which is related to based in Costa Rica. In April because we started with de-
the butyl acrylate value chain. opments increase demand for 2015, he was appointed as preciation, inflation, and El
There you can produce mono- CEO of BASF for Colombia, Niño. What will really help
mers such as butyl acrylate BASF chemicals? Ecuador, and Venezuela. us develop positively is being
and acrylic acid, and from that closer to our customers to
you can derive the production We have a presence in almost know what they need, work
of super absorbent polymers. all industries. We can go in collaboration with them,
We are already seeing positive into infrastructure through understand their needs, and
results because we are supply- different routes. We have together create new products
ing customers here with acryl- the chemical construction and solutions for the market.
ic acid and monomers from division, one of BASF’s 13 Sustainability drives will help
the butyl acrylate, but we are different business units. We us differentiate our offers to
also supplying customers lo- can also do so by supplying our customers and the mar-
cally with the super absorbent chemicals to customers who ket. Last but not least, the
polymer. For example, these are present in the infrastruc- development of our internal
polymers are used for diaper ture sector. There we have capabilities is crucial; the de-
production here in Colombia, dispersions, resins, and oth- velopment of our team to un-
Venezuela, and Ecuador with er chemicals like monomers, derstand the market and be
local customers and globalized which are used to produce able to tackle the opportuni-
ones like Procter & Gamble dispersions. We can reach ties that will arise out there. ✖
and Kimberly Clark. the infrastructure sector in
different ways.

Agriculture THEBUSINESSYEAR 163

INTERVIEW

gHrOoMwEn

TBY talks to Gustavo Edmundo Vergara,
General Manager of Gelco, on the challenges
facing the gelatin industry and the growth of
Barranquilla.

How was 2015 for Gelco? What factors are behind the lack represent our interests to the Lead
Overall, 2015 was a complex government and protect our manufacturer of
year. The entire country faced of raw materials for manufactur- industry. We try to document jelly products in
difficulties when it came to se- the situation and provide facts Colombia
curing raw materials; however, ing jelly products in Colombia? and statistics from our sectors.
that drove us to become more Unfortunately, the govern- industry alongside the tradi-
efficient and creative, looking One of the main reasons for ment sees us as an industry tional artisan section of the
into alternative sources in US the lack of raw materials in the aiming to live off subsidies, industry. This has allowed for
and Asian countries. We also country is the lack of export with no commitment to work. greater flexibility in the market
had an increase in our costs restrictions for raw material There is a lack of real interest as a whole.
due to the fact that we de- producers. They choose to ex- from the government to ad-
pend on the US dollar, against port rather than sell to the lo- dress the situation, and it has How would you rate Barranquil-
which our currency depreciat- cal market. It is not a problem become increasingly difficult la’s economic development?
ed. When our plants are work- of capacity to serve the local to do business in this industry. Barranquilla’s growth has
ing at full capacity, we export market, but of willingness to been a surprise for both lo-
57% of our production. The serve this. Every month be- In 2008, you acquired a produc- cals and foreigners. In the last
gelatin industry is a sector that tween 100,000 and 150,000 decade, we have seen a boom
always tends to export more skin units are exported. If you tion plant from Kraft in Brazil. in housing and infrastructure
than it sells locally and this is multiply every unit by 18kg, that has changed the face of
because most countries, with which is the average weight What drove that decision? the city. We have also seen
the exception of the US, do not that we can use, then you can a boom in population in the
produce these products. understand how many kilo- The plant is the largest cow- city with many people ventur-
grams of this raw material we hide plant in the world. From ing here from other regions.
BIO use. Both our industry and the the beginning of our opera- We have an economy that is
leather sector cannot compete tion, we had Brazilian manag- focused on exports, which
Gustavo Edmundo with foreign players because ers in the factory; therefore, we means that the economy is dy-
Vergara studied chemical we pay in Colombian pesos, understand the particularities namic. We have also seen an
engineering at the National and abroad they pay in USD. of the Brazilian market and the increase in cost of living and
University, and has work In 2015, we stopped produc- local needs. One of the main services such as hospitality
expeirence in breweries, tion for an equivalent of two challenges with that plant and restaurants. This has been
tanneries, and chemical months, which drives up costs came from the staffing point accompanied by an increase
companies across Colombia. even further. Another factor of view, in terms of costs. This in the purchasing power of
He is also a former member is the free trade agreements move was thought to expand people in the city. ✖
of the Colombo-American Colombia signed with coun- the export side of our busi-
Chamber of Commerce for tries like Mexico. From that ness and we transformed the
Barranquilla. we see how other countries factory from a local producer
in the region have taxes for to a global player, raising the
leather exporters, creating a standard levels. Today, it is a
level playing field for the local mature company, regardless
and foreign markets. Howev- of the current economic situ-
er, Colombia is the only coun- ation of the country. Over the
try in Latin America with no past 15 years, we have seen
exports restrictions at all. We an increasing level of special-
created a lobbying group to ization and technicality in the

164 THEBUSINESSYEAR COLOMBIA 2016

FOCUS COLOMBIA SIEMBRA

SOWING COLOMBIA

The Agriculture Minister has announced a new plan to develop the
agricultural sector and reduce the quantity of imported foods into
the country.

COLOMBIA PRESENTS massive potential of millions in technical assistance that it will
be used to provide solutions to 282 municipal-
to develop a strong agriculture sector thanks ities in 15 Colombian departments.
to its ideal climate conditions, vast cultiva-
tion area, and variety of products. In order to Within the promising plan lies another con-
tap the country’s full agriculture potential, cern: the quality of crops. The ministry has
the Ministry of Agriculture released the new taken this critical issue into consideration and
Colombia Siembra (Colombia Sows) plan, a has launched the Plan Semilla (Seed Plan),
program that aims to boost production output another program that aims to provide the best
and increase in over a million hectares the na- quality seeds to farmers requiring special at-
tion’s arable land. Hence, the country will be tention all the way to the smallest ones. Pro-
able to satisfy its own consumer demand and fessionals from large agriculture businesses
reduce the number of imports. The govern- have been working side by side with the gov-
ment, pledging an estimated a public invest- ernment to develop and improve those crops.
ment of $1.6 billion between 2016 and 2018, Over a period of about two years, the experts
aims to increase growth in the agricultural have tested 22 species and more than 120 va-
sector by over 4 % per year. rieties, rescuing, cleaning, and standardizing
multiplication systems of the most valuable
Colombia’s Ministry of Agriculture wants and useful seeds for farmers.
to use this plan to take advantage of the like-
lihood of a peace agreement with the FARC According to the data provided by the Cen-
guerrilla group in 2016 that will showcase the so Nacional Agropecuario, Iragorri conclud-
country’s primary sector as an attractive op- ed that the amount of cultivated hectares
portunity for FDI. will jump from 7.1 million, recorded in 2014,
to 8.1 million in the coming years. This plan
In a press conference held in late 2015, Min- also targets the generation of new jobs in ru-
ister of Agriculture and Rural Development ral areas and reducing the current 10 million
Aurelio Iragorri Valencia presented the main tons of food imports by 50%, prioritizing the
ideas of Colombia Siembra. “We have to cul- plantation of corn, soy, fruit, and vegetables
tivate what belongs, where it belongs,” said in Colombian soil.
Iragorri. To this end, it will be necessary to
set up an educational program for farmers to The Ministry of Agriculture focused on the
teach and make them understand what better figures provided by the National Administra-
suits their land. There are many things that tive Department of Statistics (DANE), which
farmers have to take into account, such as the revealed that Colombia has 114 million hect-
quality of the land, the weather and environ- ares of arable land, of which half are poorly
mental conditions, and the real possibilities to situated due to unsuitable climate conditions,
harvest. Consequently, the program includes or because the particular crop cultivated is
an agriculture map of the country that ex- ill-suited for the location’s climate.
plains what land meets the characteristics of
different crops and types of plantations. Colombia Siembra is considered to be one
of the most ambitious plans in recent years
To achieve the expectations, the Ministry of for Colombian farmlands. The plan’s success
Agriculture will hire 200,000 experts for tech- depends on the government’s ability to reach
nical assistance who will supervise the pro- the objective of becoming a self-sufficient
gram. “Agronomists will provide the farmers country in terms of food production and, thus,
with their knowledge and they will be the ones increase the sector’s growth from 2.3% in 2014
who will tell us what crop to seed,” Iragorri re- to 6.2% in 2018 and generate 264,000 new jobs
marked. The ministry assured an investment in agriculture. ✖

Image: Alimentos Polar de Colombia

Agriculture THEBUSINESSYEAR 165

VOX POPULI

SEEDS

The sector is seeing a high level of
investment in research and development,
and with the devaluation, many
companies are taking advantage of the
export opportunities.

MARIANO O ver the last five years, AVM has grown rapidly and CARLOS EDUARDO
GHYSAYS, sales have notably increased. The number of palm VILLOTA
tree plantations in Colombia has increased in re-
President, Superbrix CFO, Semillano
cent years. Planting palm trees in Colombia is very profit-
L ast year was interest- T here are five areas
ing for new markets able, so the business has grown steadily. We are present in where rice is produced.
and the consolidation The Valle del Cauca,
of the US as well. In the past, we Central America, Peru, Honduras, and Guatemala, and we High Magdalena, the Caribbean,
only exported individual piec- La Guajira, which is the north-
es of equipment to the US, but also focus on exports to Panama and Costa Rica. Further- ernmost part of Colombia, and
now we are exporting complete Orinoquía in the south east. It is
processing plants, which is a more, we are starting to work with some Malaysian compa- an attractive and interesting sec-
huge step forward for us. The tor in Colombia, with many in-
US is one of the most import- nies, as the country is the largest oil palm producer in the centives from the state to invest,
ant markets for SuperBrix. We and there is plenty of land to be
opened up the Korean market, world. With the peace agreement, the potential is growing, used. Illegal seeds and their use
which is also an important com- have been on the rise, and this
petitor for us in capital goods. and that region of the country will cultivate many palm has been problematic for us. In
It is no small feat to enter this previous years, the market main-
market. Besides this, we have trees. It is a profitable crop, and we are confident about its ly used “pirate seeds,” which re-
been exporting to the Philip- duced our participation. In the
pines and Vietnam. SuperBrix performance in the short term and it could be a good way of meantime, we are investing in
is an engineering company that R&D and have been working on
designs technology suitable for substituting illegal crops being grown in the region. patents for different varieties of
tropical weather conditions. We seeds. Our most recent launch
differentiate ourselves from our VICTOR is a variety that we expect to be
competitors in those markets popular in this area called Vic-
because we offer a solution; a JULIO toria 1039, and we launched it a
complete, sustainable, innova- year and a half ago. Our program
tive solution, and that is part of GONZÁLEZ of investigation and research is
our mission. continuing, and in a year and a
President, half we want to launch another
Industrias AVM new variety.

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com BERNARDO SILVA CASTRO

General Manager, Semillas Valle

W e are focused on white and yellow corn lower than other countries. Colombia has taken
seeds and actively pursuing R&D to the necessary steps to develop high-quality tech-
develop a high-value product. We are nology to be a leader producer of corn. Our R&D
currently carrying out a research program that program has a regional scope and today we are
requires plenty of investment but, at the same exporting to Guatemala, Panama, Venezuela,
time, has brought significant profits to our firm. Ecuador, and we want to start in Peru. In 2017,
Our budget it is not as large as those of major we expect to have around 50% of the sales out
international companies, but step by step we of the country. Right now, we are trying to take
are more able to compete with them. Colombia advantage of the exchange rate and increase our
is changing the perception of R&D but it is a bit presence abroad.

166 THEBUSINESSYEAR COLOMBIA 2016

B2B

JOSE ANTONIO JUAN FERNANDO full PLATES

PULIDO VÉLEZ

General Manager, General Manager,
Alimentos Polar de Ancla & Viento
Colombia

Both of your companies have of food, including Peruvian, Delivering food to the dinner tables of Colombia
experienced impressive growth Spanish, Mexican, French, and, has changed over the years. These two companies
figures. What factors have driv- of course, Colombian cuisine.
en this? The restaurant business has re- have focused on introducing innovation to the
ally boomed in the past decade. value chain and are reaping those rewards.
JOSE ANTONIO PULIDO Our It has taken place in Bogotá over
strategy is to strengthen our the past eight years, and has These were corporate decisions plant and grow their crops. We The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
brands. We are the market lead- spread to the rest of the country based on what was happening have a research center where we
ers in corn flour with close to over the past two years. It has at the time. have developed high produc-
50% of the market and for oats reached as far as Bucaraman- tivity seeds for Venezuela. We
we have almost 78%. Our sec- ga, Cartagena, Medellín, and JFV We are exporting some of are now bringing those seeds to
ond focus has been bolstering Cali. That is one of the reasons our products. About 50% of the Colombia. If all goes well, by the
our distribution network. We why our company has grown production from Betania goes to end of 2016 or by 2017 we will be
have over 5,000 points of sales so fast. Secondly, seafood is the export market. Ancla & Vien- able to offer those seeds at a cost
in Colombia, and the sales are considered to be healthy and to mainly operates in the local to our growers. Seeds are close
evenly distributed. Therefore, nowadays people are trying market, but the expansion we to 30% of the total cost structure
unless you can get to mom-and- to increase their seafood con- have planned is oriented toward of growers.
pop stores, you can’t tap into sumption. Thirdly, against this the export market.
the potential in any efficient background, Ancla & Viento JFV The potential is high be-
way. That has been our focus has been successful because we What are the barriers facing cause we have the right climate
for the past four years. One of have the right know-how and growers in Colombia, and how and good quality water. Besides
our strengths over this time has the necessary technical and fi- do you help overcome them? this, Colombia usually has plen-
been our focus on innovation; nancial support within the com- ty of water. The future for fish
not only have we developed new pany to allow us to grow rapidly. JAP There are basically four ob- production here is excellent.
and correct extensions in the ex- stacles that growers in Colom- There will be many investment
isting portfolio, but we are also How have export markets per- bia face. The first is they need opportunities created in this
entering new categories to pro- formed over the last year? technology and know-how to sector, and we will definitely
vide consumers with new and boost productivity, which small need funds from abroad to ad-
different products at reasonable JAP Most of what we sell in Co- and medium growers usually vance the government’s ambi-
costs. This will be our focus for lombia is produced here locally, lack. Secondly, growers need to tious plans. We will not be able
the next five years in Colombia. and we also export, mainly corn have access to everything they to do this by ourselves. Huila is
flour. We export to four coun- need to grow their crops at effi- a good location because of the
JUAN FERNANDO VÉLEZ The tries, but we used to sell our cient prices, be it seeds, fertiliz- industry cluster that already
company has had compounded corn flour to 50 countries. The ers, or other chemicals. Thirdly, exists in that area. Huila has
growth of around 20% over the company decided three years they need financing. Fourthly, fish processing and food pro-
past 15 years. There are several ago to move the export opera- they need to secure the sale of duction plants, as well as other
reasons for this. The first was tion outside Colombia due to the crop. We provide those four infrastructure already in place.
the boom in the gastronomy the fact that the peso was too elements, free technical assis- It is natural that our main ex-
and restaurant segments. There high. If we had waited, we could tance, and attractive discounts pansion efforts are being made
are many restaurants in Colom- have done exports from here for supplies that they need to in that area. ✖
bia now serving different kinds still, due to the devaluation.

Agriculture THEBUSINESSYEAR 167

Colombia's rich
biodiversity makes
agriculture a staple of
the country's economy.

Image: javarman

168 THEBUSINESSYEAR COLOMBIA 2016

FOCUS COFFEE

MORNING JOE flooded farmland, meant yields were low. This
has a dramatic impact on livelihoods, because
Colombian coffee has an incredible reputation for its aroma, although the coffee sector only contributes
taste, and purity, which is why it is considered one of the 0.8% to the Colombian GDP, according to the
best quality coffees in the world. This belief has not changed National Planning Department (DNP), the sec-
despite the entrance of huge producing countries such as tor employs more than 500,000 families, gen-
Ethiopia, Brazil, and Vietnam into the market. erating around 2.3 million direct and indirect
jobs.
COLOMBIA IS WIDELY regarded as the
To compare the current situation to 20 years
world’s finest producer of soft coffee. According ago, 80% of Colombian exports were directly
to the International Coffee Organization (ICO), related to this crop. Today, it represents just 6%
since 2000, Colombia has been the third largest of the country’s total exports. This reduction in
exporter of coffee, with 9.59 million bags, after export share is largely due to the growth and de-
Brazil’s 27.81 million bags and Vietnam’s 15.63 velopment of other export products. FNC Gen-
million bags. The main buyers of the coffee are eral Manager Roberto Vallez Vallejo assured
the US, Japan, and Belgium, accounting for the 82nd National Congress of Coffee Growers
41.3%, 9.3%, and 8.2%, respectively. that coffee is not an essential component of the
export basket and neither is it important to the
Café Devoción was chosen as one of the best country’s GDP. However, it is still vitally im-
coffees in the US in a contest in New York. Juan portant “to restore the profitability of the coffee
Pablo Isaza, General Manager of the company, industry.”
told TBY one of the main differences between
the company and its competitors is that it ex- One factor that has removed a cloud of worry
ports the finest and freshest green coffee to the from the coffee growers’ shoulders is the peace
US within 10 days, going “from green to the agreement. An end to the conflict is particular-
cup” as fast as possible. ly welcomed in the rural areas. The association
Reconciliación Colombia sees the coffee indus-
Coffee producers are distributed throughout try as a fundamental player in the transition
the whole county. Its geography and weath- towards peace. In the late 1990s, thousands of
er conditions give coffee growers not only the families in coffee areas such as Caldas and Ris-
right irrigation, temperature, and sunlight lev- aralda had to abandon their fields due to the vi-
els, but also warm wind streams. The main cof- olence. It is estimated that 7% of farmers left the
fee-producing areas are Boyacá, Caldas, Guaji- industry during this period.
ra, Magdalena, Quindío, Santander, or Cauca,
where the Arabica variety, which is the unique The National Congress of Coffee Growers has
crop that Colombians use, is cultivated. offered to help Juan Manuel Santos’ govern-
ment by analyzing the coffee belt in terms of
A recent study by the National Federation of offering a reintegration opportunity for “guer-
Coffee Growers of Colombia (FNC) noted that rilleros.” It is thought that the former guerrille-
coffee producers are going through a golden ros will work with coffee families and develop
period with yields reaching a record level of coffee plantations in new regions to generate
14.2 million 60kg bags in 2015. sustainable economies and employment.

The last decade was a poor period for coffee The outlook for coffee growers is promising.
production. A combination of tired soil and the In January 2016, Colombia exported 1.13 mil-
La Niña meteorological phenomenon, which lion 60kg-sacks of coffee, a 4% increase on the
same month in 2015. The possibility of peace
will also bring new opportunists to cultivate
former untouchable land. From here, the future
looks bright. ✖

JUAN PABLO ISAZA In which regions is your coffee grown? *Read the full interview at thebusinessyear.com
We work with regions all around the country from
General Manager, Café Devoción Huila, Santander, and Cundinamarca, to Sierra Neva-
da. We usually go to the so-called “red zones,” which
Café Devoción’s coffee was chosen as one of are regions where guerrillas have a long-standing
the best in the US. To what do you attribute this presence, in order to find coffee seeds that other
success? companies have not yet commercialized. In addition
Our coffee is the freshest in New York City, and to opening new stores in New York, Bogotá, and
we stress that because we take the coffee from potentially another in Cartagena, we opened a dis-
green to your cup in just 10 days. This makes our tribution company in Bucaramanga and Cali; we are
products completely different from other coffee planning to distribute our coffee there. We also plan
companies, which usually take between a month to increase at least 20% our sales this year.*
and three months to export. Our product is also
100% Colombian coffee, while others sell coffees
from various countries.

173 175 THEBUSINESSYEAR 169

With medical services on par with The healthcare sector presents 178
Europe and the US, Colombia many opportunities after a rocky
is increasingly welcoming year, with optimistic growth rates Gina Parody, Minister of
international patients. in the future. Education, on its programs to
enhance the education system.

Health & Education
REVIEW HEALTH

A Colombia’s healthcare landscape has seen sweeping changes across the
last two decades, a testament to sustained political commitment that has
revolutionized the sector.

BILL OF HEALTH

n ongoing series of ments of the population. Pen-
reforms in Colom- etration for the poorest 20%
bia that started in of Colombians rose from 4%
in 1993 to 89% today; in rural
1993 and continue areas it increased from 6.6% in
1993 to 92.6%.
to this day have yielded a ma-
Out-of-pocket spending has
jor transformation in access declined accordingly. In 1993,
52% of national expenditure
to quality healthcare in the on health was out-of-pocket.
According to the OECD, Co-
country. At the same time, the lombia’s healthcare consum-
ers now pay on average less
changing demographics of an than 15% of total expenditures
out-of-pocket, equivalent to
economy on the rise—increas- about 1% of GDP. This puts
Colombia at one of the lowest
ing life expectancy, growing levels of out-of-pocket pay-
ments in Latin America and
per-capita income, and epide- significantly below the OECD
global average of 20%.
miological shifts—are creating
Statistics indicate that these
new pressures on the system. changes are directly impact-
ing health and quality of life.
As a result, health remains a According to the World Bank,
life expectancy rose to 74 in
focal point of the country’s po- 2013, up from 69 in in 1993.
Infant mortality has moved
litical and economic priorities, downward in tandem—from
21 deaths per 1,000 in 2000 to
while at the same time offering 14 in 2015. Today only 1.8% of
urban children under the age
a wide range of opportunities of two do not receive routine
vaccinations, which is an even
for investors. lower 1% for rural children.

In 1993, Colombia passed

Law 100, which established a

health insurance market that

sought to increase efficien-

cy through competition and

extend coverage to millions

of citizens. At that time, one Image: Christian Delbert

in six Colombians had health The 2015 Statutory Health Law
declares medical care a human
insurance; today, Colombia right, rhetoric that provides the legal
framework for key reforms to the system.
boasts 97% coverage. Even

more impressive, particularly

for a country that is struggling

to narrow a troubling income

gap, is that the greatest expan-

sion occurred in poorer seg-

170 THEBUSINESSYEAR COLOMBIA 2016

A UNIQUE MODEL ing. Colombia’s fiscal position is strong; how- RODOLFO *Read the full interview at thebusinessyear.com
ever, healthcare takes its place amidst a list of EFRAIN
The Colombian healthcare model reflects a national spending priorities, which include SCARPETTA
continued evolution of the system created major infrastructure projects, a potentially SOLÓRZANO
under Law 100, which established the General pricey peace deal with FARC, and reforms to
System of Social Security in Health, or Sistema the pension system and old-age support. General Manager,
General de Seguridad Social en Salud (SGSSS). Bionexo
The SGSSS acts as a decentralized statutory FULL-SPEED AHEAD
body, funded primarily through employee What factors lead to the com-
insurance. Citizens participate in the manda- Despite fiscal pressure, the Ministry of Heath pany’s growth last year?
tory Compulsory Health Plan (Plan Obligaorio is moving forward with its plans to expand The market model and the
de Salud, POS) either through the contributo- the range of drugs and treatment included in service we offer was a definite
ry regime, the subsidized regime, or special coverage provisions. In early 2015, Congress factor. Our system offers solu-
regimes. As of 2015, according to the Ministry passed the Statutory Health Law (Estatuar- tions to healthcare institutions.
of Health, approximately 43% of Colombians ia de Salud, LES), which declares that health The leaders of these institutions
use the contributory system, to which an em- coverage is not just a state obligation, but also have to understand the need
ployee pays 8.5% of their salary and the em- a constitutional and fundamental right in Co- to modernize their acquisition
ployer contributes the equivalent of 4% to the lombia. process, and there are some,
Solidarity and Guarantee Fund (Fondo de Sol- who even though they are expe-
idaridad y Garantía, FOSYGA). Although the full practical and budgetary riencing economic difficulties,
implications of this ideological re-center- understand the need to adapt
The subsidized regime covers those who are ing are unclear, the changes are likely to be to a model of on-line purchas-
not formally employed or who make under a far-reaching, as patients will be covered for ing for the health sector. They
certain income. Originally, subsidies covered all procedures, services, and drugs as long as understood this need and this
just 60% of procedures, but a 2012 reform uni- they are not cosmetic, experimental, or oth- behavior is changing.
fied the program to provide full access. The erwise unsafe. It is expected that Colombia’s
regime is financed through general taxation healthcare spending—currently about 6.8% of How would you assess the
(48%), contributions from the contributory re- GDP—will have to grow significantly, which in coming year?
gime through the FOSYGA (40%), and district turn will likely necessitate tax reform in order This year will be more complex
and municipal taxes (11%). The remainder of to be sustainable. than 2015. Colombia faces high
the population, about 9% or 390,000 people, inflation, an increasing currency
are covered under special regimes as mem- MAKING ROOM devaluation, and a GDP that is
bers of the armed forces or employees of the expected to decline compared
national oil company. A number of projects to increase capacity to the previous year. However, it
for needed healthcare infrastructure are also could also be a year of stability,
Within the systems, citizens choose from under way. One particular need is oncology. as institutions have already
about 60 Health Service Providers (Entidades Last year Colombia saw 80,000 new cases of gone through the most difficult
Promotoras de Salud, EPS), which connect cancer, and according to Healthcare Global period; therefore, this year could
patients to hospitals and doctors and collect magazine will see upwards of 113,000 cases give them the opportunity to
service fees. per year within the next 10 years. In response, consolidate their processes.
the Cardiovascular Foundation of Colombia At the end of the day, they still
THE BOTTOM LINE (FCV) has entered into an agreement with have to attend to patients, and in
the University of Pittsburgh Medical Center times of crisis you need to be as
The reforms of the 1990s and 2000s were de- (UPMC) to finance, develop, and co-manage efficient as possible.*
signed to activate the private sector and cre- a new oncology institute at the Hospital Inter-
ate competition among service providers, by national de Colombia (HIC). Expected to open
extension facilitating consumer choice, low- in 2016 in Piedecuesta, the new facility will
ering prices, and creating a race-to-the-top in provide chemotherapy and radiation therapy
quality. Today, however, demand for quality as well as bone marrow transplantation. It will
healthcare is outstripping supply, driven in be the country’s first private cancer program.
large part by increasing life expectancy, ur-
banization, and rising incomes. The result is Luis Carlos Sarmiento Angulo—the richest
marked financial pressure on the system. In man in Colombia and the President of Grupo
2013, the contributory regime ran a $193 mil- Aval—announced in June 2015 that he would
lion deficit followed by a muted $83 million also build a cancer facility under his construc-
deficit in 2014. The subsidized regime also op- tion subsidiary, Construcciones Planificadas.
erated in the red, with a loss of $33 million in The facility will hold 300 beds and have an on-
2013 and $91 million in 2014. The EPS, which cology research center.
shoulders some of the losses, owes around
COP5.8 trillion ($2.1 billion) to the IPS, creat- Elsewhere, Clínica del Bosque, a private
ing potential imbalances in the system. hospital, is currently adding a new building
while Hopsital Universitario de la Fundación
The challenge ahead, then, is public financ- Santa Fe de Bogotá has announced new con-

Health & Education THEBUSINESSYEAR 171

struction that will increase capacity by more tinued price controls, have given the phar- It is expected that
than 50%. Infrastructure will need to expand maceutical industry jitters. In April 2016, the Colombia’s healthcare
in order to keep up with demand. Currently Minister of Health approved a compulsory spending—currently
Colombia has 1.6 hospital beds per 1,000 in- license for Novartis’ anticancer drug Gleevec about 6.8% of
habitants, putting it on par with Mexico but after the company successfully went to court GDP—will have to
well behind Brazil (2.3) and the OECD average to secure the patent. Two months later, in an grow significantly,
(4.8). unusual move, Health Minister Alejandro Ga- which in turn will
viria announced plans to unilaterally force the likely necessitate tax
SYMPTOMS AND CURES company to lower the drug’s price tag after reform in order to be
weeks of failed negotiations. sustainable.
For years Colombia had some of the highest
drug prices in the region, driven up by the Novartis is once again standing its ground
increasing prevalence of intermediaries who in a faceoff with the Colombian authorities,
each add their margins to the baseline price arguing that any incursion on the patent
of consumer medicines. Upon election in would be a violation of trade law. So far the
2010, the Santos administration implemented minister has made no indication that it would
much-needed price controls based on maxi- seek to sidestep the current patent, which ex-
mum rate of return for producers. It has since pires in 2018. It’s a battle that resonates with a
extended the mechanism to over 500 prod- number of other countries around the world,
ucts, helping to bring Colombia’s drug prices fighting to find balance between patients and
in line with similar economies. profits. Many in the industry see the current
friction as potentially precedence-setting, for
While price controls have muted expec- Colombia and beyond.
tations for the industry, sustained market
growth is cause for optimism on the demand Despite the concerns, Colombian drug
side. From 2009 to 2014, consumption of med- maker Tecnoquimicas entered a partnership
icine grew at a compound annual growth rate with mAbxience of Spain in April 2016 to re-
(CAGR) of 7%. Pharmaceutical sales reached search and manufacture biosimilars. Colom-
$4.3 billion in 2014, leveling off to $3.3 billion bia’s pharmaceutical sector employs 24,000
in 2015. Both the 2014 and 2015 figures repre- people and sees approximately 22,800 profes-
sent an even 1.4% of GDP. sionals graduate each year from studies relat-
ed to the industry. Bogotá in particular, due
A new government strategy is to make new to its rich biodiversity, is cited as a potential
product licensing contingent on cost effec- center for chemical synthesis medicines. ✖
tiveness studies. This, in concert with con-

172 THEBUSINESSYEAR COLOMBIA 2016

B2B

JORGE RICARDO VÍCTOR RAÚL In addition to investing in better equipment and
personnel, medical institutions also focus on
LEÓN FRANCO CASTILLO being experts in their fields to attract patients
from across the region.
General Manager, President - CEO,
Clinica Foscal Hospital International medical
de Colombia TOURISM

Can you tell us more about your VICTOR RAUL CASTILLO The How are you serving customers difficulties in finding staff locally, The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
institution? Hospital International de Co- from overseas? for example, so we have to bring
lombia is a new project for the in people from the head office.
JORGE RICARDO LEÓN FRAN- Fundacion Cardiovascular de JRLF We are now concentrating We are investing in our cancer
CO We are in the northeastern Colombia and will be our fifth on a project known as Foscal In- center, and offering state-of-the-
part of Colombia in Santand- hospital in Colombia. It will ternational, which focuses on at- art technology.
er. This institution has been be a $400 million investment tending to patients from abroad.
around 38 years and serves and the largest private hospital We established this as a free trade VRC Right now, we are exporting
patients from La Guajira to Bo- in Latin America. The facility zone, which allowed us to save cardiovascular services to the
gotá. We started doing ophthal- will have 1,200 beds with spe- on taxes and offer better services. Caribbean, Aruba, Curaçao, and
mology but gradually added cialties including an institute We saved over COP30 billion by Suriname and that is a concen-
new areas and specializations for orthopedics, neurology, being part of the free trade zone trated number of patients; how-
such as surgery, transplants, and oncology, among others. regime and that saving has been ever, we also sell our services to
and other areas of expertise. We The rest of the facility is based reinvested. We are the best per- Ecuador, Venezuela, and some-
are a foundation, which means on a medical center. We will forming company in the Colom- times Panama. We also expect
we have to reinvest all our prof- open three buildings, and the bian healthcare sector, which to provide services to all the Ca-
its into our business. We do not first one will be pediatrics and gives us an advantage. The fact ribbean islands and the US. We
share our dividends with stake- adults; in a year, when we finish that our only international flight expect to attract people from the
holders but spend them on the the second tower, it will become here is from Panama still limits US and Canada because the hos-
institution. We also cover some a children’s hospital. The de- our capacity to expand; never- pital is going to be an American
health areas that the govern- valuation of the peso increased theless, we receive health tour- hospital in Colombia for export
ment does not cover. There is the cost of finishing the building ism from Aruba, Curaçao, and medical services. One of the
a big hospital shortage in Co- and purchasing the equipment; St. Martin. We attend trade fairs main ideas for creating free trade
lombia; we need more beds and however, we still need to move in Mexico, Monterrey, and Mexi- zones for hospitals is so that in-
emergency services, which we ahead with opening our doors co City, and competition is fierce stitutions could divert their tax
provide at Foscal. Our aim is to and exports. for health tourism, especially for expenses to investments in inno-
make the best technology avail- a small market like Colombia. vation. We liked the model and
able in different areas, which We have obtained great results asked the government to create
has helped us to consolidate in some areas, having offered a free trade zone for Hospital
ourselves as one of the largest some great family packages for Internacional, because for regu-
institutions in the country. Our patients, so families can be with lar investment the free zone di-
top areas are ophthalmology, their loved ones. We organize minishes taxes from 35% to 15%.
oncology, transplants, surgery, tours for relatives at competi- Nevertheless, we have to reinvest
and six or seven other special- tive rates. Half of our workforce the tax exemptions in buying
ties. We generate over 3,000 jobs is from Bucaramanga, but we new equipment. ✖
but are still only working at 30% also bring in professionals from
of our installed capacity. Santander. In pediatrics we have

Health & Education THEBUSINESSYEAR 173

HEALTH TOURISM FOCUS

OPEN WIDE

Offering medical COLOMBIA’S HEALTH TOURISM indus- explained CEO of Gilmedica, Luis Fernando
services on par Gil. Gil added that Cali has the largest medical
with hospitals in try has grown rapidly in recent years. The sta- tourism industry in Colombia, closely followed
Europe and the US, ble political situation and high-quality health by Medellín, but also believes other cities such
Colombia’s doctors institutions attract thousands of patients as Bucaramanga, Barranquilla, and Cartagena
are welcoming looking for cheaper prices without compro- are competing for these patients as well.
an increasingly mising on quality. In 2015, nearly 41,000 for-
international roster of eign patients received medical assistance The tremendous demand for these services
patients. in Colombia, injecting $145 million into the has spurred investment in private clinics.
economy, according to the Ministry of Com- There is a demand to attract the best physi-
merce, Industry and Tourism. cians and the best medical equipment. Conse-
quently, the hospitality sector has become an
The Colombian government has realized important ally for this sector and has conse-
the benefits that a health tourism sector can quently witnessed demand for its services in-
bring to the economy, and is now providing creasing during the patients’ recovery period.
the sector with the support it needs to become
a global leader in the industry. As a result, Co- One such example is the International
lombia now plans to exempt tourists from tax- Hospital of Colombia, a $400 million project
es when they come to the country on a con- backed by the Cardiovascular Foundation of
tracted health package. Colombia in Bucaramanga. The hospital is the
largest private hospital in Latin America. “The
During his speech at the country’s largest facility has 1,200 beds with specialties, includ-
tourism fair, ANATO, in February 2016, Presi- ing an institute for orthopedics, neurology,
dent Juan Manuel Santos launched this incen- and oncology, among others,” claimed Pres-
tive for foreign tourists in order to eliminate ident and CEO Victor Raul Castillo.
the 16% sales tax for medical tourism-related
services. “There is already a decree prepared “We expect to attract people from the US
exempting those who come from abroad and and Canada because this hospital is going to
those who buy tour packages associated with be an American hospital in Colombia to ex-
health tourism, tourism events, or cultural ac- port medical services.”
tivities,” he announced.
The treatment that international tourists
Executive President of the Organizacion receive is a complete package, covering the
Sanitas International, Ignacio Salinas, un- hospitals and the hotel as well as restaurants,
derscored that Colombia need not “envy” transport, caregivers in the postoperative pe-
European countries. “Human resources in riod, and other services. Patients are given the
this sector is one factor that differentiates option to stay longer in the country, present-
Colombia from other nations. People are ex- ing the possibility for broader contributions to
tremely friendly and highly qualified here,” he the domestic economy.
explained.
As a result of the success that the health
Now, Colombian cities are competing with sector has experienced during the last decade,
each other to offer the best healthcare for for- the Ministry of Commerce has impressive
eigners. “Many people come from Spain and long-term expectations. Its vision is that in
the US due to fairer prices; for example, a pair 2032 Colombia will be recognized as one of
of breast implants in Miami will cost $1,200, the world leaders in health tourism, generat-
whereas in Colombia, it is less than $400,” ing billions in revenue for Colombia. ✖

*Read the full interview at thebusinessyear.com LUIS FERNANDO GIL T. Where do you see future growth for the com-
pany?
CEO, Gilmedica We will expand into cardiac rhythm management
and continue in aesthetics. In aesthetics, much
How has the universal healthcare system affect- of what is on the market today did not exist 10
ed your business? years ago. We are not currently exported abroad,
Around 35% of our business is dedicated to aes- though we have received offers. Instead, we
thetics; we sell implants, tattoo removal machines, decided it was better that we grow in Colombia
and anti-aging machines. Aesthetics are covered by first. We were offered the chance to enter Peru,
the patient rather than by the healthcare system, which is one of the largest growing markets in
and patients pay in cash. Therefore, we are not Latin America, as well as Costa Rica, which is
heavily impacted by universal healthcare. The aes- stable, but a small market.*
thetics business in Colombia is big. About 65,000
women underwent breast implant surgery in 2015.
For the remaining 65% of our business, we do have
a problem with payments.

174 THEBUSINESSYEAR COLOMBIA 2016

VOX POPULI

PHARMA

With the industry having strong fundamentals and a solid
foundation that will only create more opportunities for
companies, pharmaceutical companies are set to increase sales.

O ur aim has always of costs. The acquisition of LKM
been to become a gave us the opportunity to pro-
truly Latin American duce in Argentina with the two
plants we have there. Now our
company competing through- priority is to expand our capac-
ity and consolidate our regional
JOSÉ ANTONIO out the region. Until December presence.
OLIVERA
2015, we were active in Argen- JOSÉ FERNANDO
Director General, BELTRÁN
Laboratorios DAI de tina, Bolivia, Brazil, Colombia,
Comombia President, Biotoscana
Chile, Ecuador, and Peru. In Ar-
W e have been successful
here in Colombia—we gentina, we wanted to increase
have approximately
40% of the market in the blood our presence, because we were
banking area, implementing
exactly the same strategy as in expecting positive economic
Venezuela. We have turnkey
business development and par- prospects and also because we
ticipate in all the areas in the
supply chain of blood; at the diagnostic area, more for blood wanted to focus on the special-
end, it is a supply that we do banks and laboratory busi-
for hospitals, supplying them ness, as well as a retail area for ty care business. We increased
with blood, which they process pharmacies and retail related
and use the different compo- to miscellaneous products of our presence in Argentina and
nents required for surgery. We healthcare, such as glucose me-
give them all the supplies they ters or blood pressure monitors acquired a company called
need to undertake that trans- for pharmacies and wholesal-
formation. In 2016, we created a ers for drug stores. By the end LKM that allowed us to launch
of 2016, we should have a plant
manufacturing reagents for lab- new products in all of our Lat-
oratories, and we will also begin
private labeling for many of our in American countries, thereby
products. We aim to establish
the plant in Colombia. So within increasing our focus in the spe-
three to five years, some 50% of
our product portfolio will be pri- cialty business and increasing
vately labeled.
our market share in the oncolo-

gy subsector. Most of our prod- The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com

ucts are in HIV, oncology, rare

diseases, or critical care, and

they largely came from Europe,

the US, or India. Therefore, we

wanted to be able to produce

more products in Latin America

to be more competitive in terms

LUIS ALFONSO DÍAZ bought from the German com- panies are concentrated in high
pany Boehringer Ingelheim. We biotech products. Traditional
General Manager, La Santé have launched two new prod- products lose their patents and
ucts and these are doing well. La then companies like us see an
W e are focusing on three Santé also increased its market opportunity in those areas. La
businesses: prescrip- share in distribution, which is Santé is launching innovative
tion, generic, and fragmented in Colombia. We branded generics and this is
manufacturing. The generic implemented some strategies why we are successful. We plan
business is doing well because to improve our distribution, es- to launch biosimilars in the fu-
we develop our business be- pecially at the wholesale level. ture. La Santé will be involved in
yond the market; the market is We have good potential for pri- this segment, and we will launch
increasing by 9% and our busi- mary care products because re- those products, especially in the
ness is increasing by 11%. Ap- search and development com- oncology and arthritis market.
proximately 70% of our sales are
concentrated on our unbranded
generic business. The manufac-
turing facility Pharmetique was

Health & Education THEBUSINESSYEAR 175

FORUM

HOSPITALS The healthcare sector presents companies with
many opportunities after a rocky year, with
optimistic growth rates in the future.

CÉSAR CARRIAZO, JUAN CARLOS CRISTIAN DARIO BERNAL

President, Clinica MADRIÑAN CARVAJAL President, Idime

Carriazo General Manager, General Manager,
Clinica Portoazul Daimar
Construcciones

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com I n 2015, we developed I n 2016, Clinica Por- W e have mainly worked W e have been focusing
a treatment to solve toazul was recognized on hospital construc- on image and lab-
keratoconus, a degen- as the key and pre- tion in Colombia and based diagnosis for
erative disorder of the eye, with ferred clinic in the provision of have participated in several over 28 years. However, this
a revolutionary surgery. Before, private services. We are proud public and private hospital proj- model is not that common. We
keratoconus used to be treated to have this reputation and it ects. We work closely with the also do a lot at the ambulatory
with an implant, but with this has enabled us to attract a wide Ministry of Health and support level. For the last two decades,
new system the cornea is going variety of doctors from all over them in realizing its projects. we have grown at a rapid pace,
to be improved. This surgery the country. We have excellent The hospitals niche is import- averaging nearly double-digit
is easier and less invasive than infrastructure that incorporates ant in Colombia, and although annual growth rates. In the last
others have been in the past, so the best technology available the country lags behind other few years, we realized that we
there are several multinational and hotel-like facilities. This has regional neighbors, Colombia needed to consolidate our offer-
companies that are interested in enabled us to undertake com- has improved more than any ings in consultation, diagnosis,
this solution. I am also working plex surgeries. Some of our clin- other country in the region emergency services, and hos-
on processes to change the col- ical cases have been extremely over the last 10 years. Building pitalization. We now offer inte-
or of the iris and this is a process successful and Clinica Portoazul the distribution of a hospital grated services, which allowed
where we can change people’s is now a reference point for Co- is a complex mission, because us to grow in cities where we
eye color for aesthetic purpos- lombia’s northern region. Our according to their needs each recently had no presence at all.
es. We are not a clinic; we are a emergency services are growing plan has to be different. When Overall, we serve between 7-8
spa of ophthalmology. The con- at 40%, as have our occupancy we work for private clients, the million people a year. We are a
cept is successful because of the levels, and we carry out over 900 rules of the game change. We company accustomed to large
quality of the service; it is differ- surgeries a month. These are ex- have more freedom to consult volumes, and our experience
ent and if you come here you feel cellent figures for an institution and advise them with the con- at the ambulatory level, where
different. I never wanted a clinic that is less than three years old. struction and design, as it does volumes are larger than in hos-
because when I went to a clinic I The clinic will focus on highly not have as many restrictions as pitals, proven to be extreme-
felt sick. This concept results in complex diseases. The technol- public hospitals do. Many other ly useful when entering the
a very calm, human space, and ogy we are using and the doc- Colombian companies started hospital segment. At the same
we pay attention to detail. The tors we have mean that there is to internationalize their ser- time, this latter experience was
difference between other insti- a large gap between our clinic vices, but for our market niche it particularly valuable when in
tutions is the investigation and and other medical institutions is better to be specialized in only 2014 we began offering medical
service that we provide. on the coast. We imagine that one country. Working in other consultation. The public sector
when these institutions struggle countries would be significantly represents 15% of our entire
with difficult cases they will be different and difficult, because portfolio, whereas EPS and pri-
referred to our facilities. even in the same sector each vate sector business represents
country has different rules and the other 85%.
health policies.

176 THEBUSINESSYEAR COLOMBIA 2016

In recent decades, Colombia made changes to nearly every level and
aspect of its education system and has been exceeding the expected
results, putting the country on the right track to achieve the president’s
goal of becoming the best educated country in the region.

Review E D U C AT I O N

GOLD STAR FOR YOU

COLOMBIA’S EDUCATION SYSTEM has to upper secondary school, which lasts for two
years, but which is not compulsory.
made several astonishing transformations over
the past 20 years. Attributed to serious focus- According to the latest OECD figures, Co-
es on expanding access to education, learning lombia has approximately 7.5 million students
outcomes, and increased enrollment across enrolled in basic education, which consists of
all levels, the country has seen a promising in- grades 1-9. The country is reportedly working
crease in school life expectancy alongside in- to implement a full day of schooling, adding at
creasing numbers in post-secondary education least another hour to the current estimated 5-6
as well as early childhood care and education. hour school day. There are over 50,000 school
Though the country still has work to make the branches in the country, some offering all stag-
necessary improvements, honest efforts to re- es of compulsory education. The OECD reports
form the Colombian education system have so that close to 1.1 million students are enrolled in
far proven effective. an upper secondary education program, with
over three-quarters receiving schooling for
Following reforms aimed at increasing the general academic programs, with the remain-
quality and coverage of education, the Colom- der enrolled in vocational education and train-
bian Constitutional Court mandated in 2010 ing programs.
that public primary education be free, and in
2015 President Juan Manuel Santos increased According to the OECD, Colombia contains
the education budget by 5.75%, bringing it to some 288 tertiary education programs. There
some $14.5 billion. The move followed Santos’ are four primary types of tertiary institutions:
pledge to turn Colombia into the region’s best universities, which represent 28% and offer un-
educated country by 2025, and followed the dergraduate and graduate degrees; other univer-
country’s Development Plan for 2014-2018. sity institutions, which provide professional and
specialization programs below a master’s degree
There are 10 years of compulsory education but above a bachelor’s and account for 42% of
in the country, with students in school from institutions; technological institutions that pro-
age five to 15. According to the Organization vide high-level skills and knowledge and that
for Economic Co-operation and Development make up 18% of tertiary instructions; and pro-
(OECD), the government wants to increase this fessional technical institutions that offer train-
number by 2030, with aims to include upper ing programs for a particular professional job or
secondary education in compulsory education. career and constitute 13% of such institutions.
Basic education provides students with five
years of primary education, followed by four Among the government’s education initia-
years of lower secondary education. A transi- tives is increasing opportunities for students
tion year, known as grade 0, occurs after child- to learn the English language. There is a stark
care and before primary education, but is still disparity between students from wealthy fam-
considered a part of the education system. Af- ilies who can afford to attend private, bilingual
ter secondary school, students can continue on schools, and those that cannot. The govern-

Health & Education THEBUSINESSYEAR 177

GROSS ENROLMENT RATE FOR 51.29 finance education infrastructure and should,
TERTIARY EDUCATION (%) by 2018, cover 60% of the current classroom
deficit. Under the scheme, the federal govern-
SOURCE: UNESCO ment will provide 70% of investments, leav-
ing the remaining 30% to local governments.
50.1 So far, more than 80 agreements have been
46.22 signed and, in total, the fund has financed
43.5 more than 19,000 classrooms, spending al-
39.41 most $1.2 million. The government expects
that, by YE2018, nearly 10,000 more class-
2010 2011 2012 2013 2014 rooms will be built through a variety of financ- ADULT LITERACY RATE
ing plans.
SOURCE: WORLD BANK
The government’s multifaceted education
plan is starting to show its worth and bear 93.6
results that are better than expected. To eval-
ment recently brought the English Teaching uate progress in education, the government 93.4
Fellowship Program to the country, with the uses the Índice Sintético de Calidad Educativa
goal of providing underprivileged children (ISCE), or the Education Quality Synthetic In- 93.2
with access to English language learning. The dex, which is an annual measure of progress
program is digital based and couples some in education, repetition rate, and school envi- 93.0
600 native English-speaking fellows in more ronment. In 2015, the country ISCE rating for
than 50 different countries with teachers in primary education was 5.07; the goal for 2016 92.8
Colombia. The program is boasted as one was to reach 5.24, but the country instead saw
that promotes the idea of global citizenship the number rise to 5.42, surpassing even the 92.6 2008 2009 2010 2011
among students participating, and gives them target for 2017. Results were similar across all 2007
the opportunity to learn about different cul- levels: The ISCE rating for high schools stood
tures from around the world through inter- at 4.93 in 2015 and rose to 5.27 in 2016, sig-
acting with the native speaker. Currently, the nificant progress past the goal of 5.12; and for
program reaches more than 175,000 students middle schools, the 2015 rating of 5.56 rose to
in 46 cities throughout the country. 5.89 the following year, above the initial tar-
get of 5.86. Parody highlighted how promising
In an exclusive interview with TBY, Gina these results are and the fact that it is possible
Parody, the country’s Minister of Education, to overcome the trends the country has expe-
said that between 2010 and 2015, the govern- rienced for so many years
ment successfully constructed over 12,000
classrooms, which are now used by nearly The progress the country has made is unde-
475,000 students. According to a new scheme niable, but there is still ground to be covered.
in the Development Plan, a special fund creat- Increasing access to education and a falling
ed by the Ministry of Education will be used to drop rate are promising motivators, but Par-
ody would like to see an improvement in the
quality of education as well as a reduction in
the gap between privileged and underprivi-
leged students. ✖

DIEGO MAURICIO MAZO CUERVO

Dean, CEIPA Business School

*Read the full interview at thebusinessyear.com What are the main areas of work for CEIPA in What demand do you see for international busi-
the last two years? ness programs and how does CEIPA contribute to
In the last two years, we have focused on im- the internationalization of the economy?
proving the quality, innovation, and effectiveness International business is one of the fastest-growing
of our work. We have worked hard to enhance programs currently. Programs like these help our
the quality and the number of programs we have students, who are the leaders of tomorrow, to better
in higher education. Currently, 42% of all our understand the role that Colombia can play in Latin
programs are certified by the national agency of America. Before, no one wanted to come to Colombia
accreditation. In 2016, we plan to present new and all the companies here were local. There was
higher education programs for accreditation. no interest for FDI. However, now there are many
They are in finance, marketing, and international international companies investing here, and likewise
business, with e-learning modality as well as many national firms expanding to other countries in
face-to-face programs. Latin America. CEIPA has contributed to a changing
mindset in the Colombian business environment.*

178 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

HITTING the BOOKS Launched
“Colombia Aprende”
TBY talks to Gina Parody, Minister of educational website
Education, on strategies to improve English-
language education, the challenges the
ministry has faced, and its programs to
enhance the education system.

What are the main challenges textbooks have been distribut- child per year in order to close cal knowledge. We also estab-
ed across the country, and an the existing gaps between the lished a way in which they can
to implementing your strategy interactive version is available public and private sectors. get feedback or support classes
free of charge for both students Increasing COP1 million per for those who need it. Another
of increasing English language and teachers. child would represent a total important strategy refers to ed-
investment of COP8.6 billion. ucational materials; between
education? What are the main challenges 2010 and 2014 we delivered
What are the main programs 20 million school texts for lan-
In Colombia, wealthy families the Ministry of Education has to guage and math. By 2016, we
pay for their children to attend you are developing to overcome have delivered 10.36 million
private schools, where they deal with in the short and long educational materials for lan-
receive bilingual education. these educational challenges? guage and math that have ben-
That situation leaves under- run? efited 88,000 teachers and over
privileged children at a disad- Since late 2014, we have imple- 2.4 million students. ✖
vantage as they are not able Although Colombia needs mented and strengthened sev-
to receive the same opportu- to keep increasing access to eral key programs to overcome BIO
nities. The English Teaching education and reducing the our current challenges and
Fellowship Program is shifting dropout rate (particularly in increase education quality. Gina Parody is a lawyer who
that situation. There are 600 secondary and upper second- Currently, the main program graduated from the Pontificia
fellows, from more than 50 dif- ary education), the main chal- is called Jornada Única (Sin- Universidad Javeriana,
ferent countries that co-teach lenge faced by the country in gle Shift), aimed at providing where she specialized in
with our Colombian teachers, the short, medium, and long eight hours of education to all conflict resolution. She
reaching more than 176,000 term is increasing education the children in the country. holds a master’s in public
students from 46 cities in Co- quality. This is essential for Co- Public schools have two shifts administration from Harvard
lombia. The program endorses lombia to increase its produc- and every child receives four- and a specialization in
the notion of our students as tivity, and, more importantly, hour education, while private management of cities in
global citizens, providing them close the inequality gaps that schools have a single shift and the 21st century from the
not only with the opportunity exist in the country and con- offer children eight-hour ed- Universidad Abierta de
to interact with a native speak- solidate internal peace. In the ucation. Our goal by 2018 is Cataluña. Parody was a
er and improve, therefore, long run, our main challenge to have 2.3 million students senator during 2006-2010,
their language skills, but to is changing the quality trend in benefiting from this program. and member of the House
also get to know different cul- order to become the best-edu- So far, we have been able to of Representatives (2002-
tures from around the world. cated country of Latin America reach out to 867,000 students. 2006). In the 2011 local
Additionally, most of the stu- by 2025. In the short run, our Other significant programs elections she was presented
dents from public schools do main challenge is increasing include Teacher Excellence. as an independent candidate
not have textbooks to work the resources for the education Under this strategy, we have for Mayor of Bogotá. She
with. The ministry has created, sector. Increasing the resourc- the Scholarships for Teacher was previously on the high
in collaboration with teachers, es received by the sector so Excellence Program that has presidential counsel for
local education authorities, far is fundamental in order to to date given out 4,667 scholar- issues in Bogotá and was
and experts in ELT, textbooks design, develop, consolidate, ships for teachers who want to the Director of the Servicio
for our students in grades nine, and expand the programs and get a master’s degree. In addi- Nacional de Aprendizaje
10, and 11, as well as a sug- policies aimed at increasing tion, we have over 4,000 tutors (Sena) from 2013-2014.
gested English National Cur- education quality. At the mo- who provide in situ training
riculum. More than 192,800 ment, the basic educational for teachers, which benefits
basket per child in the public 2.3 million students. We have
sector is around COP2.5 mil- also changed the way teach-
lion per year ($806). In a study ers are evaluated in order to
conducted by the ministry, it focus on their teaching prac-
was found that we would need tices instead of their theoreti-
COP5 million ($1,612) per

Health & Education THEBUSINESSYEAR 179

PACT FOR EDUCATION FOCUS

Government officials and the general public alike are looking to education
reform as the key tool for fostering an inclusive and lasting transition
toward long-term peace and prosperity for all of Colombian society.

THE POWER
OF THE PEN

COLOMBIA, which has one of the most un- It was in response to this structural shortcom-
ing, the movement’s young leaders devised the
equal income distributions of all Latin Ameri- Pact for Education. Since first being proposed,
can countries, is nearing an end to an historical the agreement has gained support from both
conflict with one of its largest rebel groups, and the government and the general public, a uni-
challenges posed by the processes of reconcili- fied backing that exemplifies the commitment
ation and integration of former guerrilla mem- of Colombian society to implementing the
bers into society await. Consequently, Colom- changes that the country needs. Some of the
bians have identified education as one of the most important elements of the 10 basic ar-
most important tools for ensuring long-lasting guments that make up the Pact for Education
peace throughout the country. include the ideas that quality is the most im-
portant education policy, that excellent teach-
Because of the already unequal stratification ers are needed to enhance education, and that
of Colombian society, the educational system it is necessary to increase public investment in
is in great need of restructuring to both ensure education. The objectives stated in the official
peace and bridge the inequality gap that has pact have been wholeheartedly supported by
for so long hindered the country. In order to the government, and in that regard, Minister
achieve that ambitious goal, a number of Co- of Education Gina Parody highlighted in an
lombian citizens have formed the organization exclusive interview with TBY the importance
Todos por la Educación (United for Education) of the investment that the government is car-
and are promoting a progressive idea, the Pac- rying out in order to meet the proposed tar-
to por la Educación. The Pact for Education, gets. “Between 2010 and 2015, we built 21,069
as it is known in English, is a social agreement classrooms, which benefited 474,632 children
endorsed by the Colombian government that around the country.” The Minister also ad-
aims to put an end to the often poor quality of dressed the importance of English language
education in the country, particularly in less instruction, which has in recent years seen sig-
economically advantaged areas. nificant improvements in Colombia.

The Program for International Student As- At the local level, mayors and governors are
sessment, sponsored by the OECD, in 2012 in agreement on the ideas of the initiative and
ranked education in Colombia 59th out of the are guaranteeing their commitment to enact-
64 countries that participated in the study and ing the Pact for Education. The local council in
second to last in Latin America. In response to Pereira, a major city located in the Coffee Axis,
these worrying results, the United for Educa- announced its immediate intent to implement
tion movement grew to convince Colombians the main points of the pact. This will provide
of the prominent role that education plays in access to education for scores of vulnerable
transitioning the country out of decades of communities that historically have been de-
armed internal conflict and unequal oppor- prived of many basic rights in the area, which is
tunities for socioeconomically disadvantaged far less developed than the rest of the country.
citizens and into a sustainable and inclu- United for Education believes that other cit-
sive prosperity for all as well. Founders of the ies should follow suit and that those 10 points
movement believe that if Colombia improves ought to be implemented as soon as possible
its educational system, it could become one of to ensure the significant improvements in the
the most developed countries in South Amer- educational necessary to reshape the future of
ica. The low quality of education currently Colombia. ✖
available in the country perpetuates systemic
inequality, especially in the poorest rural areas.

180 THEBUSINESSYEAR COLOMBIA 2016

FORUM

UNIVERSITIES

With a high demand in
Colombia for education,
opportunities abound in the
sector.

DR. JAVIER ALFREDO CARLOS ALBERTO

BARRERA PARDO VILLABONA

Chancellor, Coorporacion Dean, Universitaria
Universitaria Agustiniana
Iberoamericana

T he founders studied at the Uni- W e offer quality higher education The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com
versity Iberoamericana of Mexico at a low price, working in an envi-
and established an educational ronment with people who are not
institution for people who have children affluent. Our students do not come from
with disabilities. There was no one helping families with high incomes, and as a result
such children and the founder came from the prices here are competitive. We offer the
Mexico and established this institution with best education possible for the least money
25 students. Today, we can proudly say that you can pay. Our average tuition is COP2
we have 20,000 students in Colombia. We million ($685) per semester, which is reason-
have many blind and deaf students, and we able compared to other institutions’ fees. We
are prepared to offer them the services and do not receive any assistance from the state,
education they need, which is challenging. and remain totally independent. We also do
We also have been able to gain more recog- not receive help from other organizations;
nition because of the guerrilla conflict that however, we have an active administration.
Colombia has suffered from for so many If the finances of your institution are in good
years; many children have been displaced shape, it is easier to organize. Ours is not a
from the south of the country because of rich university but it gets enough money
the guerrillas, and we have 154 students to run properly. We have been certified by
as a result of this. We also have minorities Bureau Veritas in all areas. The next step is
represented at the university, and 82% of to be approved by the government. It has a
the people at this university are women. Of special qualification that we are aiming for.
those women, nearly 60% are women rais- We expect to get that from the government
ing children, and we are proud of that. This in one or two years. We base our activities on
is something important for the country. We the doctrine and teachings of Saint Agustin.
have a program with Ciudad Bolivar, which Our university is humanistic and provides
is a poor area. The mayor awarded scholar- the best possible circumstances for teach-
ships for people to study with us. Besides ers. We are concerned about developing
that, we work with Colsubsidio, which is people, not just work machines, but people
a company that does social work and pro- who are conscious of their duties for their
vides scholarships. We work closely with country, themselves, their family, and their
private funds and public institutions, such religion, because ultimately we are a Cath-
as the Minister of Education. olic university.

Health & Education THEBUSINESSYEAR 181

DR. WILLIAM ALBERT CORREDOR JORGE VASQUEZ

SCHUTMAAT, ED.D. GÓMEZ President,

Dean, Coorporacion Dean, Corporación Uniremington
Universitaria Reformada Universitaria
Americana Medellín

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com W e are a young university and have T he main issue we saw in education W e are known for teaching people
the advantage over traditional was inclusion, so we include peo- humanistic values in our courses
universities, which tend to have ple from all social backgrounds. and we try to teach the idea of con-
a specific vision of education. This context We are particularly focused on strata two tinuous learning. Our educational system is
in which we live is changing. For example, and three, though we also cater to strata aimed at lower-income people and the mid-
we have a course program for maritime ad- one, and we even have some students who dle classes, which have been growing signifi-
ministration, a sector for which profession- belong to strata four, five, and six. One of cantly in Colombia, and we offer financial
als are needed. Colombia does not have the the differentiators is our location in the cen- services to ensure that people can come to
professionals that are needed to support the ter of Medellín. Many people want to come study with us with flexible payment options.
development of the country’s seaports, mar- and study in this location, which turns the In that regard, we see ourselves as an inclu-
itime ports, and river ports. It needs a large location into a key factor in our strategy. sive university, and we think this distinguish-
workforce of people who can administrate We also offer financial plans so that people es us from other similar schools. In fact, some
and prepare for the investments being made who are not particularly affluent can join our of the first women in the region who studied
rather than importing employees from Pan- university. Our main program is our degree such vocational courses as typing and sec-
ama, for example. We are one of the few uni- in law, which has the biggest demand. We retarial programs did so at Remington. We
versities that are doing something proactive have 5,700 students just in Medellín, 40% are mainly focused on strata one to four. We
and interactive in this area. If we consider of whom are studying law. Our university created the Credito de Confianza Remington,
the rate of growth and investment in these has the highest number of law students in which is a trust-based financial aid system.
areas, the task of preparing professionals Medellín. International business is also a Such systems have been popular and well
who will administrate this growing sector of unique and important program, as are in- received in the country. Many other financial
the economy might be too late. Our priori- dustry and engineering. There are about institutions would not finance the studies
ty was to provide programs that are needed 300 universities in the whole country; how- of lower-income people, and in that sense
and not necessarily traditional. One of our ever, only 70 of these are 100% established. we are making a major contribution to the
main objectives is to inform high school The other universities are really vocational country. Another of our characteristics is that
students of their choices, to show them how schools or tertiary education institutions, people who study here easily find employ-
they can contribute to the development of even though they are classified as a univer- ment afterwards. According to a report by
the country, and how they can earn a good sity. We see opportunities to enter into the the Ministry of Education, people who study
living. Many universities have courses that education market, as there is a high demand here are among the quickest to find a job after
are not clear about how they will help young in Colombia for education. People want to graduation. About 70% of our students also
people decide what to do. The universities study, and this is an attractive market to in- work while attending. Our university tries to
have to go farther and instead enter the ed- vest in in Colombia; education in Colombia offer courses to all those who wish to contin-
ucation system at a younger age to explain is a great business. ue to improve in their jobs and offers flexible
vocations and new professions. courses as well as financial packages.



187 189 THEBUSINESSYEAR 183

Sandra Howard Taylor, Vice Colombia boasts a unique 190
Minister of Tourism, on strategies selection of cities for the country’s
for increasing tourist arrivals growing number of tourist The Tayrona National Natural
from abroad. arrivals to visit. Park stands out as a perfect way
to experience Colombia at its
Tourism all-natural best.
REVIEW

I A reputation for violence had for many years stunted the growth of
Colombia’s tourism sector. But now that the country has enormously
improved its image abroad, there is little to prevent it from becoming one
of the most ideal destinations in Latin America.

IT’S NOT MAGIC

n 2015, the Co- World Travel and Tourism
lombian Ministry Council (WTTC). With a pro-
of Industry and jected growth rate of 1.4%,
that number is expected to be
Tourism debuted $17.5 billion in 2016, making
up a slightly lower portion of
its rebranding. With the tag- GDP, at 6%. The WTTC ex-
pects a steady increase in the
line “Colombia is Magical Re- sector’s contribution over
the next 10 years to 2026,
alism,” the ministry sought to with a forecasted rise of 3.8%,
bringing its contribution to
channel its most famed con- GDP to $25.4 billion, contrib-
uting 6.1% to the total.
tribution to world literature,
While leisure tourism con-
Gabriel García Márquez, and stituted the majority of the
sector’s contributions to the
the fact that its charmed cul- GDP, business travel played a
significant role. According to
ture, landscapes, architec- WTTC data, in 2015, leisure
travel spending accounted
ture, and cuisine do indeed for 78.6% of the sector’s total
contribution to GDP, or some
come to life. The ministry has $9.5 billion, whereas business
tourism made up the remain-
a plan to considerably boost ing 21.4% and accounted for
$2.6 billion. In 2016, leisure
the tourism industry before spending is forecasted to in-
crease by 4.3%, generating
the end of the decade, with some $9.9 billion, while busi-
ness tourism spending is in
specific aims to grow the in- fact expected to drop by 3%
to $2.5 billion. The WTTC’s
dustry by 15%, equating to projections for 2026 give lei-
sure travel in the country a
$6 billion in tourism revenue

and generating some 300,000

new direct and indirect jobs.

By working to ensure the sta- Image: Barranquilla

bility of the sector, Colom- The tourism ministry has a plan to
considerably boost the tourism industry
bia’s extremely diverse cul- before the end of the decade, with
specific aims to grow the industry by
tural offerings are sure to lay 15%, equating to $6 billion in tourism
revenue and generating some 300,000
the foundation for continued new direct and indirect jobs.

and sustained growth.

The tourism sector plays a

significant role in the coun-

try’s economy. In 2015, the

total contribution of the sec-

tor to GDP was just over $17

billion, accounting for 6.1%

of GDP, according to the

184 THEBUSINESSYEAR COLOMBIA 2016

per-annum increase of 3.3%, reaching $13.6 that figure is not expected to fluctuate, but by PABLO UMAÑA
billion, and a business spending increase of 2026 the contribution is expected to create 1.6
5.4% per annum to contribute $4.2 billion by million jobs and account for 6.4% of total em- General Manager,
2026. ployment, growing at 1% per annum. Cinemark

The industry also plays an important role According to the Ministry of Industry and How does the cinema industry
for domestic employment, as foreign visitors Tourism, the US accounted for the most vis- in Colombia compare to that in
utilize hotels, airlines, and other transporta- itors to the country from January to June of other countries in the region?
tion, as well as travel agents, among a score 2016, making up over 21% of total visitors, Colombia has close to 50,000
of other services. In 2015, the sector directly or some 251,380. Other popular countries of inhabitants per screen, with
created 556,000 jobs, representing 2.5% of to- origin for visitors included Venezuela, Bra- around 960 screens in the coun-
tal employment, according to the WTTC. This zil, and Ecuador. Among the top 10, the only try, but it should be closer to
number is expected to grow by 0.7% in 2016, source country not located in the Americas 40,000 inhabitants per screen.
bringing the number up 4,000 to 560,000, but was Spain, which fell in last place. Compared When we started 17 years ago,
not making a significant impact on total em- to the first six months of 2015, January to June there were only 350 screens in
ployment. By 2026, the WTTC reports, the in- of 2016 saw a 10% decrease in the number of the country. It has been driven
dustry will directly provide some 626,000 jobs, arrivals, equating to almost 230,000. by the growth of malls, which
increasing by 1.1% over the next decade. In have been built in Colombia
total, the sector accounted for 1.4 million jobs According to the ministry, during the first for the past 15 years. It is the
in 2015, or 6.3% of total employment. For 2016 half of 2016 compared to the first half of 2015, normal consequence of growing
the department with the greatest increase in with the construction of malls
NUMBER OF ARRIVALS (MILLIONS) tourist arrivals was the Department of An- whereby Colombia is catching
tioquia, which saw an increase in arrivals by up to international standards
SOURCE: WORLD BANK 48.5%. Antioquia is located in the northeast of of commercial area per capita.
the country, with a small strip of land along Peru is going through the same
2.57 the Caribbean Sea. However, it is not the Ca- trend and also Brazil; these are
ribbean beaches that are the primary attrac- the three countries that are hot
2.32 2.36 2.18 2.29 tions to the city, but rather what is commonly right now in terms of mall con-
2.04 referred to Colombia’s most favored city: Me- struction and movie theaters.
dellín. While the city was considered one of
1.41 the most dangerous in the world as recently as How can ticket pricing affect
the 1990s, security has improved considerably the volume of cinema visits?
2008 2009 2010 2011 2012 2013 2014 in recent years and is becoming a favored city Ticket pricing is relatively in-
in the country for tourists, perhaps due to its expensive. We have an average
HOTEL OCCUPANCY RATES infamous former residents. The city is famed ticket price of around $2.85,
for its annual Festival of the Flowers, which which is low. Before the massive
SOURCE: COTELCO celebrates events like the independence of devaluation we were close to
Antioquia and the abolition of slavery. The $4, which was right up there
77.5 80.5 city is served by Jose Maria Cordova Inter- with Chile, which sells tickets at
national Airport and is home to the country’s an average of $4.20. Colombia
70 only metro system. is currently cheap, as cheap as
Peru and Ecuador. It is the most
59 61 Colombia has a small but budding cruise in- affordable entertainment you *Read the full interview at thebusinessyear.com
54 dustry. As of June, almost 125 cruise ships had can get today.*
stopped at a Colombian port, bringing with
SAN ANDRÉS ANTIOQUIA BOLIVAR them over 173,000 passengers, according to the
Y PROVIDENCIA tourism authority. The most popular means of
arrival is by air travel, and, unsurprisingly, Bo-
Jan - Jun 2016 Jan - Jun 2015 gotá’s El Dorado International Airport was the
country’s busiest between January and June of
2016, with 1.77 million arrivals, representing
65.7% of total arrivals and a 3.1% increase YoY.
The second most popular airport is Medellín’s
Jose Maria Cordova, which saw 357,000 arriv-
als, considerably less than Bogotá, represent-
ing only 13.3% of all arrivals, but an increase of
26.7% from the same period the previous year.
The most popular origins for international
flights were Panama City with 410,102 passen-
gers, Miami with 259,500, Lima with 134,341,
and Madrid with 125,586.



186 THEBUSINESSYEAR COLOMBIA 2016

While the country’s reputation as a
vacation destination has grown in
recent years, it has for some time
been a popular spot for medical
tourism.

Image: Barranquilla coast of Nicaragua in the Caribbean Sea, ho-
tel occupancy for the same period of time was
According to the Hotel and Tourism Associ- 80.5%, the highest in the country. In Antioquia,
ation of Colombia (COTELCO), from January hotel occupancy was 70%, the second-highest
to June 2016, the average hotel occupancy rate occupancy rate in the country and represent-
in the country was 48.8%, representing only a ing an 11% increase from January to June in
0.6% increase from the same period in 2015. 2015. The third most-occupied department in
This rate is not very representative of certain the country was Bolívar, with a rate of 48.6%,
parts of the country, however; in the Depart- according to COTELCO.
ment of San Andres y Providencia, which ac-
counts for the country’s two islands near the While the country’s reputation as a vacation
destination has grown in recent years, it has
for some time been a popular spot for medical
tourism. While in the early days of its medi-
cal tourism industry the country was popular
for cosmetic surgery as a means of rounding
things out, today the country is home to a
score of highly skilled and highly accredited
medical professionals and facilities. Cosmetic
surgery and dentistry remain among the most
popular procedures; however, Colombia is
known in the region for having one of the most
advanced medical care systems that frequent-
ly and successfully performs some of the most
state-of-the-art operations and surgeries, all
at a fraction of the cost as compared to some
North American and European countries. ✖

*Read the full interview at thebusinessyear.com ALFRED KLING Do you have many foreign clients?
We have many customers both living in Colombia
General Manager, Alfred Kling Joyas and visiting from abroad. The government has
granted an exemption from the 16% tax for jewels
What characterizes a jewel manufactured by sold to foreign citizens, so tourists have the option
Alfred Kling Joyas? of finding beautiful jewelry with the benefit of
Our products are personalized. We listen to the tax reimbursement, although this only applies to
needs of our customers and create the product jewels up to a certain price. This is a good incentive
that they have dreamed of. It is this tailor-made for increasing our foreign sales as well.*
service and the strong bonds that we foster with
our customers that have positioned us so well in
the market. Our modus operandi is to charge the
customer for the name on the case, and the jewel
comes with it, meaning that our customers are
really purchasing the prestige and trust offered by
Alfred Kling Joyas brand.

Tourism THEBUSINESSYEAR 187

INTERVIEW

let’s take a TRIP

TBY talks to Sandra Howard Taylor, Vice Minister of Tourism, on key
areas for promoting local tourism, the changing perceptions of Colombia,
and strategies for increasing tourist arrivals from abroad.

BIO How has the tourism sector Top contributors and protect lasting peace and
to foreign help develop these areas that
Sandra Howard Taylor evolved, and which areas are arrivals are the have been ravaged by war.
began her career in public US, Europe, and We want tourism to devel-
administration as Manager you promoting to bolster tour- Latin American op in a sustainable way, in a
for seven years of the countries way that complements the
Fund for Promotion of ism in the country? conservation of fragile hab-
The State of San Andres government and president itats and ecosystems, while
and Providence. She Colombia’s tourism sector have been doing everything also being able to make all
later became Secretary has evolved and developed in their power to try and find the treasures that we have to
of Education and Culture greatly over the last few a lasting solution between offer accessible to Colombi-
of the same state and years, and this is down to two the two sides, and once that ans and the outside world. In
acting Governor on several major factors. First, Colom- is done, the tourism sector, that sense ecotourism is a key
occasions. In October bia is one of the most geo- and Colombia as a whole, part of our strategy.
2013 she was appointed as graphically diverse countries will boom. We are closer to
Colombia’s Vice Minister in the world and, second, it a lasting peace than ever be- What are you doing to attract
of Tourism, where the has an extraordinary cultur- fore, and this will really spur
development of sustainable al heritage that is as diverse the small and medium busi- more tourists to Colombia, and
tourism has been one as it is rich. So Colombia re- nesses and operators in the
of her main objectives. ally stands out from other in tourism sector, expanding from where do most of the in-
Representing Colombia, Latin American nations and and filling capacity, mak-
she presided over the indeed the world. Colombia ing new investments, and ternational tourists originate?
Americas Commission of has something to visit every building up international
UNWTO in 2014 and 2015 season, 365 days a year, with networks and connections The US continues to be the
and currently leads the jungles, mountains, beach- to bring more tourists and number one source of tour-
Sustainable Development es, desert, tundra, savanna, visitors into the country. But ists for Colombia. But we
Committee of the UNWTO. coastlines on two oceans and most importantly, beyond also get many visitors from
She has also spoken at the Caribbean, and a blend just the tourism sector, a last- Europe, mainly Spain, and
many international forums, of African, European, Amer- ing peace will transform our also tourists from other Latin
including the Global Tourism ican, and other cultures and society, our economy, our American countries. Tourism
Economy Forum in Macau. civilizations. We also have politics, and the country as is growing in all areas, be it
some of the richest variety of a whole. Many of the most ecotourism, beach and hotel
flora and fauna of any coun- beautiful, fertile, and pro- tourism, cultural tourism,
try in the world. We really are ductive regions of Colombia or business tourism. We are
blessed with an incredible have been unable to reach also looking to attract visitors
country, and that makes our their potential because of from new markets and also
job really easy. decades of conflict. We have open new tourism sectors
developed a plan whereby we and sites, while developing
How has the perception of Co- think tourism can help foster new products and packag-
es to attract more people to
lombia changed and evolved the country. We want to fo-
cus on developing Colombi-
globally, and how has this re- an tourism to international
standards, with the right cer-
flected on the tourism indus- tifications, licenses, permits,
training, and educational
try? activities that would help us
achieve our goals so that Co-
The tourism sector has been lombia occupies the place it
perhaps the most positively deserves in the global tour-
affected sector of the whole ism market. ✖
economy by the ongoing
search to create a lasting
peace in Colombia, which
we are getting nearer and
nearer to achieving. Our

188 THEBUSINESSYEAR COLOMBIA 2016

INTERVIEW

welcome
to the JUNGLE

TBY talks to Jean- How has the depreciation of Does the image of Colombia IN NUMBERS
Claude Bessudo, abroad match the reality of the
President of Aviatur, the peso affected your perfor- country? Aviatur has
on the impact of Colombia’s image abroad
macroeconomic mance? does not match the reality 350
changes on the tourism and it is, in my opinion, a jew-
sector, identifying Our activity is directly related el in the rough in Latin Amer- agencies
new opportunities, to the exchange rate. A high ica. The world needs to come
and measures to boost exchange rate is the better for to Colombia and discover the Colombia received
tourist arrivals. us because our expenses are beauty of its landscapes, its
in pesos while our income is nice people, and the excellent 1.8
BIO in US dollars. Consequently, gastronomy. Customer ser-
the situation has been good vice is excellent and the high- million tourists in 2014
Jean-Claude Bessudo was for Aviatur because people light of this country for the
born in 1947 in Nice. After still spend to travel. In 2003, tourism industry is its people. on a concession and we are
finishing his A-levels at Louis the exchange rate was at returning them to the gov-
Pasteur French High School COP2,985 per one US dol- What segments in the tourism ernment with excellent infra-
in Bogotá, he continued lar, and people still traveled. industry hold the greatest po- structure.
his studies at Solvay I do not expect demand to tential?
Mathematics Institute in decrease. My view is that our All of them hold potential. What measures need to be
Brussels and completed the currency has been overval- There are architectonical taken, in addition to the peace
High Company Management ued. We had good sales in wonders, beautiful beaches, agreement, to boost the tour-
Program at Los Andes 2015, but taxes are still high in and colonial cities. Certain ism industry?
University. He has spent his Colombia, which means 60% cities could be promoted The tourist site Ciudad Per-
entire professional career of our income goes to the gov- overseas thanks to their as- dida is virtually unknown.
with Aviatur, starting in 1967- ernment. tonishing colonial architec- Barely 2,000 people travel
1970 as a personal board ture, as Mexico has done with there a year. It is a three-day
assistant. He was promoted How many tourists does Colom- some of its cities. In addition, trek; however, it is important
in 1970 to President and scuba diving is a segment that to let the world know about
Director General, a position bia receive annually, and what has seen huge growth in the this place. Furthermore, there
he has held ever since. He country in recent years. are many beaches that can
authored a book in 2009, is your outlook for the tourism be improved and promoted
Improvised Strategy, and You have administered Tayrona overseas. Sometimes people
is the recipient of numerous industry? Park since 2005. Do you plan complain about the lack of
honors and distinctions, to administer other national infrastructure and the poor
including the Tourism Colombia received around 1.8 parks? quality of the roads, but to me
Deserve Order, the French million tourists in 2014, the We have administered Tay- that is an advantage because
Government Deserve Order, same as in 1982. The govern- rona Park since 2005, a tem- it makes driving around the
and the Simón Bolívar ment says that by 2018 Colom- porary role with the aim to country more attractive. ✖
Democracy Order Deserve. bia will have 5 million visitors create the conditions for sus-
who are not tourists. A tourist tainable tourism in Tayrona.
is a foreigner who stays over- However, in the future we
night in another country. The want to focus on the devel-
government counts all visi- opment of touristic projects
tors, such as people who cross on our own land in certain
the border from Venezuela to areas of the country. We do
Colombia and back to their not want to continue partic-
country, but that is a visitor ipating in concession-held
and not a tourist. What mat- land, although it has been an
ters is the number of tourists interesting stage for the com-
and, unfortunately, the image pany. We have given back all
of Colombia abroad is still the national parks that were
negative. Nearly 50 countries
have travel warnings for their
citizens coming to Colombia.
Nevertheless, the peace treaty
with the guerrillas will signifi-
cantly improve that and could
boost tourism in Colombia.

Tourism THEBUSINESSYEAR 189

B2B

JUAN JOSE ADRIANA MARCELA CITY
promotion
JARAMILLO GUTIÉRREZ
Colombia boasts unique topography, and this
Secretary, Tourism, Director, IDT attractiveness translates into an equally unique
Heritage and Culture
of Barranquilla selection of cities for the country’s growing
number of tourist arrivals to visit.

The content on this page is taken from exclusive interviews. Read the full versions at thebusinessyear.com What role does tourism play in ADRIANA MARCELA GUTI- How are you promoting busi- AMG MICE tourism has become
the successful development of ÉRREZ Tourism is important ness tourism in your city? one of the most important seg-
your city? for Bogotá. Bogotá is becoming ments for Bogotá. Its develop-
a cosmopolitan city, and the JJJ Cartagena is the strongest ment has been natural due to
JUAN JOSE JARAMILLO Many hospitality sector is important city for MICE tourism in Colom- the international character of
people like to live in Barranquil- to improving the perception of bia; however, Barranquilla holds many companies that set up
la because the weather is great the city as well as the country as many events. With this new cen- their headquarters in the cap-
and we have a strong industrial a whole. Other Latin American ter, we will be on the map for ital. In that regard, we are fin-
muscle. The metallurgical in- cities have more tourism than many international companies ishing the Agora Center, which
dustry has traditionally been us, but we are in the middle way and we expect that this kind of will be one of the most import-
important for Barranquilla, and working on different strategies to tourism can boost the economy ant convention centers in Latin
we see that this sort of business boost the sector. In the following of the city. Many people come America and will be connected
is thriving. Barranquilla has two years Bogotá can become one to Barranquilla just for the Car- to Corferias. Our strategies are
main interesting events, which of the important cities of Latin naval, which is regarded as the focused on promoting the city
are the carnival and the family America because of its location, second-most important in Latin with the aim of increasing the
holiday tourism. The Carnaval is its population, and the services America. Unfortunately, Carna- number of visitors. We are also
the most important folk festivity that it offers. The capital is the val only takes place once a year working to attract international
in Colombia and we expect to top destination in Colombia, and and we need to find something and national events to the city.
receive around 60,000 foreign- we want to be even more attrac- to maintain the tourism industry In that regard, we have to count
ers and bring in COP50 billion tive. Bogotá receives 8 million in the meantime. Consequent- on a better-organized offering
every year. We want to show off tourists every year, 1.1 million of ly, we have identified business in order to boost the culture,
our culture and traditions. The which are foreign tourists. Most tourism as an attractive segment businesses, and gastronomy of
Carnaval is part of the UNESCO of these tourists are coming for that can boost the local tourism the city. We are developing our
Heritage and, by 2016, Barran- business, events, or meetings. industry and the economy of strategies with different allies
quilla’s regional government IDT wants to communicate to the city as a whole. We want to such as Cotelco, the main as-
will invest COP3 billion in the tourists the value of the city as offer an array of cultural activ- sociation for the hotels in Co-
Carnaval to improve the festiv- an urban public space for them. ities for those businesspeople lombia, Anato, the Colombian
ity to internationally export “la We want to focus on the gastro- that will come to the city to en- travel agency and tourism as-
fiesta.” We are working to spur nomic areas of the city and new joy in their spare time. We have sociation, Acodres, the Colom-
MICE tourism in the city, and touristic routes through which several direct daily flights to the bian gastronomy association,
we believe that with the new visitors can enjoy the city. We US, although for the European and Bogotá’s Chamber of Com-
convention center we can be want to enhance our culture connections it is necessary to merce. ✖
on the spot for those companies through the arts, festivals, the- stop in Bogotá. The Ministry of
that want to celebrate events in aters, and historical museums. Transport wants to improve the
Barranquilla. The Golden Gate This administration wants to mix capacity of our airport instead of
Event and Exposition Center of up all of these values to create a building a new one, which will
the Caribbean will be inaugurat- reference city within Colombia; reach international standards
ed in August of 2016. we want to open the city hills and have a large international
and see the tourist offer out on and local capacity.
the savanna as well. Our slogan
is, “Bogotá: a city 2,600m closer
to the stars.”

190 THEBUSINESSYEAR COLOMBIA 2016

PHOTO ESSAY TAYRONA NATIONAL NATURAL PARK

TAYRONA NATIONAL NATURAL PARK

MEET ME
IN THE
PARK

Image: Jess Kraft Among Colombia’s many world-
class attractions, the Tayrona
National Natural Park stands out
as a perfect way to experience the
country at its all-natural best.

THE TAYRONA NATIONAL NATURAL

Park is situated in the northern Colombian
department of Magdalena on the Caribbean
coast, just one hour away from Santa Marta
and about four hours from the touristic Cart-
agena. The national park was established in
1964 and covers an area of 150sqkm, where
astonishing white sand beaches with a crystal-
line sea and a unique jungle landscape merge
to create a natural retreat for rest and relax-
ation.

The park boasts outstanding flora and fau-
na, with a plethora of different trees and flow-
ers, as well as nearly 59 species of mammals,
among which the gray-bellied night monkey,
the brown-throated sloth, armadillos, jaguars,
and the giant anteater stand out. According to
park authorities, there are around 70 species
of bats, 396 species of birds, and numerous
unique reptiles. Visitors will also be able to ob-
serve a wide array of sea species such as mol-
lusks and turtles.

The natural park is also in close proximity to
the Sierra Nevada de Santa Marta, a mountain
range isolated from the Andes that is home
to four indigenous ethnic groups, namely the
Kankuamo, Kogui, Wiwa, and Arhuaco. Even
though these peoples do not inhabit Tayrona

Tourism THEBUSINESSYEAR 191

Image: Aviatur

Image: javarman

Image: Aviatur

Park, they consider it part of their ancestral Image: Aviatur
territory. In fact, usually once every year the
park is closed so that these ethnic groups can
undertake a spiritual cleansing of the site (and
so that mother nature can take a month of rest
from the 1 million tourists that visit the park
every year).

Visitors have two main accommodation
options. The more adventurous can stay at
the camping areas, where they can bring their
own tent or sleep in a hammock at a low price.
There are two camping areas, one of which
is in the Arrecife sector, which can accom-
modate up to 400 people, while the other is
Cañaveral, where 200 people can stay. Those
looking for a more comfortable and unique
accommodation can take advantage of park’s
14 ecohabs located in the Arrecife sector, all of
which feature the same amenities found in a
conventional hotel—the most exquisite way to
balance leisure and nature. ✖

192 THEBUSINESSYEAR

194 197 198

Colombia has made a number Mauricio Zagarra, Managing A look at some of TBY's top
of changes to make it easier for Partner of Norton Rose Fulbright picks for where to stay when in
companies to establish operations Colombia, on local regulations, Colombia.
and invest in the country. rule of law, and FDI in 2016

Executive Guide
REVIEW DOING BUSINESS

GOOD AT BUSINESS

A short yet vital overview of key information to consider before setting to work in Colombia.

Colombia enjoys an array of advantages that most countries Simple Stock Corporation
could only hope for; it sits at the intersection of the Americas, it Liability of shareholders in simple stock corporations is strict-
has access to the Atlantic and Pacific Ocean, and the country’s ly set at no more than the value of their capital contributions.
diverse geography is rich with natural resources. Following a As with regular stock corporations, capital stock in simple stock
period of rapid growth and development during the last decade, corporations is represented by shares, which can be assigned
Colombia has become the fourth-largest economy in the region, through endorsement and delivery.
with annual GDP growth rates in recent years exceeding regional
and global averages. Limited Liability Company
A maximum of 25 partners of a limited liability company are li-
In the World Bank’s Doing Business 2016, Colombia was able for the value of their capital contributions and also take on
ranked 54th in the world in terms of the ease of doing business fiscal and labor liability. Capital stock is represented by quotas,
in the country. Compared to the 29.4 days required on average to which must be fully paid at the time of incorporation and at
start a business in the Latin American & Caribbean region, the 11 any instances of a capital increase thereafter. The assignment
days required in Colombia reflect concerted attempts to main- of quotas after incorporation requires a revision to the compa-
tain investor-friendly policies on the part of the government. The ny’s bylaws.
same report rated the strength of minority investor protection in
Colombia 7.2 out of 10, far outpacing the regional average (4.9) Branch
and the average among OECD high-income countries (6.4). The Foreign companies also have the option of incorporating a lo-
World Economic Forum’s 2015-2016 Global Competitiveness cal branch to carry out operations in Colombia. These branch-
Report echoed these findings, ranking Colombia 10th for its es are required to adhere to Colombian GAAP reporting re-
strength of investor protection and the best in the world for the quirements and must maintain financial records denominated
efficacy of its legal rights pertaining to the financial market. The in Colombian pesos prepared in Spanish.
value of FDI in Colombia was $1.72 billion in 2004, while in 2014
that figure rose to $16.257. Both branches and stock companies are required to appoint
a statutory auditor. Incorporation of stock companies must
BUSINESS ENTITIES be done through a corporative contract and may or may not
require a public deed of incorporation. Registration of all doc-
Businesses wishing to establish an operation in Colombia may uments must occur with the chamber of commerce in the city
do so by incorporating as either a subsidiary or a branch. The of incorporation and renewal of registration must take place
most common types of incorporation for foreign businesses are every year.
stock corporations, simplified stock corporations, and limited li-
ability companies. FREE TRADE ZONES

Stock Corporation Colombia currently has the most free trade zones of any coun-
Liability of shareholders in stock corporations is limited to the try in the region. Since new legislation concerning FTZs came
value of their capital contribution, though in special cases liabil- into effect in 1991, 90 new zones have been approved, pushing
ity may extend to matters of labor. Capital stock is represented the total number throughout the country to 101. Businesses op-
by ownership shares, at least 50% of which must be subscribed erating in FTZs can take advantage of a flat income tax rate of
at the time of incorporation along with payment amounting to 15%, custom duty exemptions, procedural facilitating of import
one third of the value of each share. Assignment of shares is done and export activities, and many other incentives as set out by the
through endorsement and delivery of the security. current regulations of Law 1004 of 2005. ✖

Bumper years, growth years, record-breaking
years, challenging years. The key players and

their stories are all in The Business Year.

The Business Year is also available on tablet, giving you
an insider track into the country’s most dynamic
sectors—in the palm of your hand.

w w w. t h e b u s i n e s s y e a r. c o m

194 THEBUSINESSYEAR COLOMBIA 2016

REVIEW LEGAL

LEGAL TRENDS
AND OUTLOOK

The Colombian government has mechanism for conflict resolution, the cost of
made a number of changes to make which will be significantly lower than tradition-
it easier for companies to establish al arbitration.
a base of operations and invest in
the country. The new arbitration proceedings promise
to be much faster and more efficient, as arbi-
Colombia is fast approaching an era of political trators will have a maximum term of 90 days
change that will inevitably follow the conclu- extendable for up to 40 days to decide on the
sion of three complex years of negotiation by respective dispute. This means that times will
the current government with the FARC gue- be reduced by over 50% vis-à-vis traditional ar-
rillas. This political climate could well offer bitration, which currently can take up to a year
attractive opportunities for foreign investors or more.
in all sectors of the economy, but particularly
in public infrastructure projects, agribusiness, Costs have also been significantly reduced
and post-conflict social issues. for two reasons: (i) the tribunal will consist of
only one arbitrator (unless the parties agree
Positive framework for foreign investment otherwise), and (ii) the arbitrator’s fees are
As established in Article 100 of its 1991 Consti- convenient (between 1.5% and 3.25% of the
tution and Decree 1068 of 2015—and with few amount of the dispute, depending on its value).
exceptions (such as national defense)—Colom-
bia grants foreign investors the same civil rights Notwithstanding the foregoing, the cur-
as it does to its own nationals. Although foreign rent Presidential instruction is for govern-
investment in Colombia does not require prior ment-owned entities to avoid agreeing on ar-
authorization from a governmental authority, it bitration, and to instead submit the dispute to
does have to be registered with the Colombian ordinary courts. However, it is foreseeable that
Central Bank, particularly for the country’s pay- the main public contracts will continue to be
ment/exchange balance. submitted to arbitration.

New conflict resolution mechanisms are now New corporate obligations under Law 1778 of
available to investors and companies 2016
The Superintendence of Corporations has re- Law 1778 of 2016 provides that companies
cently created a new arbitration proceeding must issue policies, manuals, and proceed-
that is specially tailored for corporate disputes, ings to prevent, detect, and investigate cases of
offering an alternative and more streamlined fraud, corruption, or bribery within their orga-
nizations. In order to do so, it is mandatory to
establish a risk management system subject to
ISO standard 31000 and to train company em-
ployees in fraud prevention and anti-corrup-
tion practices.

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Norton Rose Fulbright Colombia S.A.S. | Calle 97A # 9A – 50 Edificio K2 Piso 7, Bogotá DC, Colombia T: +571.746.4666 | F: +571.746.4620

196 THEBUSINESSYEAR COLOMBIA 2016

Law 1778 further provides that parent overall it makes business easier to conduct The content of this article
companies will also be liable for any acts of and complete through the different societal is intended to provide
cross-border bribery conducted by their sub- vehicles available under Colombian law. a general guide to the
sidiaries or affiliates. Sanctions for fraud, cor-
ruption, or bribery have also been extended to Tax reforms expected in 2016 subject matter. Specialist
the absorbing companies in M&A transactions. The government has asked an expert commis- advice should be sought
sion to prepare and submit a proposal for a pos-
Streamlining of paperwork for incorporat- sible tax reform to be implemented during 2016. about your specific
ing traditional corporate vehicles such as This is due to a looming shortfall in taxes that circumstances.
corporations and limited liability partner- must be corrected and the post-conflict costs for
ships the country associated with the end of the peace TBY would like to thank
Bill 70 of 2015 was recently filed in Congress process. Norton Rose Fulbright for
by the Superintendence of Corporations with compiling this analysis.
the intention of simplifying the incorporation One of the most important proposals of the
and operation of traditional corporate forms, commission centers on indirect taxes such as
such as corporations and limited liability VAT. For instance, energy, gas, public transport,
partnerships. The initiative would extend health, residential leases, and fixed telephony
some of the benefits of the simplified stock services will be exempt from VAT, thus creating
corporations to other corporate forms by, for a positive outlook for investments in these sec-
example, no longer requiring that a company tors of the economy. On the downside, however,
be incorporated by means of a public deed. it is expected that VAT will be upped from 16%
The cost of establishing a new company in the to 18%.
form of a corporation or limited liability part-
nership will, therefore, be significantly lower. Regarding corporations, another significant
proposal of the commission is to replace income
Other reforms contemplated in Bill 70 mean tax with a tax on company profits at a rate of 30-
that traditional companies will be able to (i) 35%. Therefore, initial investments and capital-
have an undetermined corporate purpose; (ii) izations will not be taxed, which is an interesting
establish an indefinite duration of the compa- incentive for start-ups.
ny; (iii) not appoint alternate directors; and
(iv) establish more convenient conditions for In summary, current legal trends in Colom-
the payment of the subscribed capital, among bia create a positive framework and are aligned
other benefits. With all of these measures, with the government promotion of the country
Bill 70 of 2015 intends to provide as much as an attractive foreign investment destination.
contractual freedom as possible for investors The 2015 “Ease of Doing Business” rankings put
wishing to create a company under any of the Colombia in the 34th position worldwide (1st in
corporate forms available in Colombia, but Latin America), and the above-mentioned legal
notification confirms that the country is con-
tinuing to seek ways to improve in that respect. ✖

Executive Guide THEBUSINESSYEAR 197

INTERVIEW

A BRIGHT somewhat concerned with
FUTURE many macroeconomic fore-
casts for 2016. Next year will
TBY talks to Mauricio Zagarra, Managing hopefully bring a concrete re-
Partner of Norton Rose Fulbright Colombia, on sult in the peace talks in Cuba
due to the agreed deadline for
local regulations, rule of law, and FDI in 2016. the peace process, which has
taken more time than origi-
• The first respect. Due to this scenario on international arbitration, nally expected and generated
international and international prices of which we believe meets in- uncertainty among foreign
law firm with certain commodities, our cli- ternational criteria. In 2012, investors and our clients for
ents and foreign investors are though not entirely derived the past three years. At the
a presence in now cautious about their in- from UNCITRAL’s Model Law same time, the government
vestments in Colombia, wait- on International Commercial has also discussed and ana-
Colombia as a ing to see how the situation Arbitration (“Model Law”), lyzed tax impacts on foreign
evolves, both tax-wise com- Colombia’s Arbitration Law investment and it seems to
result of its global pared to other Latin American bears several similarities with be willing to explore possibil-
countries and also in terms of the Model Law when dealing ities to modify the current tax
strategy the ongoing peace talks with with international arbitration. structure. This will not hap-
• 53 offices the guerrilla FARC in Cuba. pen in the short term due to
Under the current global and What are the priorities for Nor- the great pressure of interna-
worldwide local circumstances, being ton Rose Fulbright in Colombia tional oil prices on our econo-
cautious makes sense. right now? my, but the finance officers of
We continuously hold conver- the administration know this
How would you describe the How do you evaluate the legal sations with other members has to be addressed at some
of the legal community and point. ✖
regulatory framework for in- security and the rule of law in key players in the Colombian
market about achieving sus- BIO
vestment in Colombia? Colombia? tainable growth while main-
taining our current ratios of Prior to joining the Norton
Colombia has a regulatory Legal certainty and rule of profitability and success. At Rose Fulbright Bogotá
framework that favors foreign law are alive and well in Co- Norton Rose Fulbright, we al- office, Mauricio Zagarra
investment. As you know, Co- lombia. We have some of ways want to hire and retain worked both in Colombia
lombia has been an invest- the highest standards in the best legal talent there is in and the Andean Region
ment destination for some Latin America in this re- Colombia and the region. We as legal vice-president,
time now. The past and cur- spect. For example, there is want to have the same quali- general secretary, and
rent governments have been legal certainty about sever- ty and compare ourselves to associate general counsel
very interested in fostering al things. Justice, although other law firms not just in Co- for Latin America for
foreign investment and have slow in countries like ours, lombia or Latin America, but several multinational
tried to cut the red tape and is still reliable, especially at anywhere in the world. We are corporations such as IBM,
help foreign investors in their the higher court levels. Laws a London-based global law Bellsouth International,
incorporation process and are enforced, and, if they are firm, and that is our standard. and Telefonica Moviles-
operations in the country. changed, they change toward We have to continue to pro- Movistar. He also worked as
That has been achieved to a the future, not retroactively, vide legal services of world- an international associate
certain extent, but it is a work which provides legal certain- wide quality. with a prominent law firm
in progress. However, there ty. In the past, foreign com- in the US and as a partner
have been recent modifica- panies have entered into legal What is your outlook on FDI in of and counsel for some
tions to the tax regime that, stability agreements with the Colombia in 2016? of the largest law firms
in the view of many foreign government, which shows the I am somewhat optimistic in Colombia. His practice
investors, may affect their clear intention to promote because of the many projects focuses on regulatory,
future investments in Colom- stability and the rule of law. and huge investments in the corporate, commercial,
bia. This message has been Furthermore, an arbitration infrastructure sector. This transactional, and
conveyed to the government procedure can be handled in- will greatly help the Colombi- telecommunications/IT.
by several key players and dependently and without the an economy, and FDI in this Zagarra is well acquainted
stakeholders, and there is interference or influence of sector will continue to grow. with the legal systems
something to be done in that the government, other sectors However, it is justified to be of several countries in
or third parties. Colombia has Latin America and has
adopted a flexible and inter- an extended network of
nationally derived regulation business and legal contacts
throughout the region.

198 THEBUSINESSYEAR COLOMBIA 2016

WHEN IN COLOMBIA..

WHERE TO STAY

3 9 up to 120 people. Dining
Restaurante Bistró offering

international cuisine.

4 PESTANA
Rooms 81 rooms, including Queen
Executive, Twin Executive, Junior
Suite. Guest Services Room
Service, gym mini bar, Wi-Fi, coffee
maker, and air conditioning. Dining
Restaurant and terrace bar.

CARTAGENA

5 H OLIDAY INN CARTAGENA
MORROS

Rooms 140 rooms. Guest

Services Located in a natural

environment, the Holiday Inn

Cartagena Morros Hotel provides

modern facilities ideal for

business, leisure, or both. Dining

Restaurant Blue bar and lounge.

Los Morros Beachfront Hotel in

BOGOTÁ7 Cartagena de Indias.
6 H OTEL LAS AMÉRICAS
1 RAMADA BOGOTÁ CARTAGENA DE INDIAS

Rooms 51 rooms. Guest Rooms 530 guestrooms. Guest

Services Three meeting rooms Services Direct access to 400m

to meet your business needs. The of beach, nine swimming pools

Hotel Ramada Bogotá Parque and four hot tubs, 24-hour room

93, located in the financial service, spa, fitness center, beauty

district, offers a contemporary salon, two tennis courts, nautical

design. Dining Enjoy the best sports, children’s club, fully

of international cuisine at the equipped business center with

Ramada bar restaurant. meeting rooms. Dining Food and

drinks available.

2 HOTEL COSMOS INSIGNIA CALI
Rooms 136 elegant rooms and

suites featuring stunning views of

the city skyline or the mountains. 7 H OTEL PUERTA DE SAN

10 Spacious, high-ceilinged ANTONIO
bathrooms include marble Rooms Deluxe, superior, twin,

floors and countertops, and rain and standard rooms. A privileged

showers. Guest Services Indoor location adjacent to San Antonio

pool and a fitness center, steam and the traditional colonial

room, and beauty treatment at quarter in Cali. Guest Services

the Insignia Spa. Dining Agata, Includes the modern amenities.

Cosmos Insignia Hotel’s signature Dining Bar and restaurant.

restaurant, is a modern yet BARRANQUILLA
intimate eatery serving innovative

international cuisine.

3 CITÉ HOTEL 8 G HL COLLECTION HOTEL
BARRANQUILLA

Rooms 56 Rooms Guest Rooms The GHL Collection

Services Outdoor pool, 24-hour Barranquilla Hotel offers King and

room service, business center, Twin rooms are equipped with a

meeting rooms accommodating work area, safe, minibar, coffee