Colombia has arrived. After decades of institutional corruption, civil unrest and poor infrastructure, Latin America’s fourth largest economy has gained greater stability and become far more hospitable to global partnerships. Though its oil and gas segment is lagging along with the rest of the world’s, its vast minerals deposits remain largely untapped and hold great potential. Additionally, government initiatives and incentives are carving out unique opportunities for investors—especially in the construction industry. Here’s a look at five “then and now” scenarios that tell the story of Colombia’s modern makeover.
THEN: Like other Latin American nations, Colombia has suffered from the ill effects of corruption for decades. A combination of economic and political inequality, drug-trafficking and weak governmental control in remote areas left various sectors vulnerable to profiteering, bribery and graft.
NOW: It’s no secret that Colombia is still combatting the causal factors of corruption, but recent government initiatives provide a positive platform for change—and optimism. In 2013, officials signed the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention, an international Act that defines the legal framework and criminal activities related to bribery and corruption. Earlier this year, President Juan Manuel Santos enacted the Transnational Corruption Act (TCA), which focuses on domestic abuses. It covers corporate and individual liability.
Rebels Come In From the Cold
THEN: Colombia’s struggle to suppress the Marxist rebel group Revolutionary Armed Forces of Colombia (FARC) is Latin America’s longest running war. For more than 50 years, attempts to eliminate the FARC resulted in the deaths of an estimated 220,000 people and displaced millions.
NOW: A $10 billion investment of military and diplomatic aid by the United States since 2000 has paid off. Called Plan Colombia, the financing empowered then President Álvaro Uribe (2002-2010) to effectively pacify the FARC. Colombia has “transformed itself,” says Mark Feierstein, a senior director at the White House’s National Security Council, into a “more secure, more prosperous and more peaceful democracy with a vibrant free-market economy.” The FARC and Colombian officials signed a peace agreement in June that will permit the group to enter into civil society and operate as a political party.
Public-Private Partnerships Heat Up
THEN: As recently as 2013, only 20 percent of roads in Colombia were paved. That’s been a huge roadblock, so to speak, for greater investment considering that more than 80 percent of internal transport within Colombia takes place on the country’s road network. Three previous government plans intended to overhaul Colombia’s infrastructure met with delays stemming from corruption and financing shortfalls.
NOW: A new, fourth generation (4G) infrastructure masterplan—the largest in Latin America—will target roads, bridges and tunnels, wtih the goal of improving productivity and global trade. Due to be completed within about ten years, 4G is expected to improve infrastrucutre in three waves via public-private partnerships with an investment value of $10.7 billion. Private groups have also proposed an additional $3.32 billion in funding.
Big Business Gets a Big Break
THEN: Though it has consistently ranked third in Foreign Direct Investment (FDI) in Latin America (behind Brazil and Mexico), many big companies avoided Colombia for years, leading to improvised best practices.
NOW: The World Bank ranked Colombia as fourth most-business friendly country in Latin America (behind Mexico, Chile and Peru). Growing global partnerships are helping to set benchmarks and standards for doing business. Colombia’s government is also offering substantial tax incentives to spur business. One example: a 30-year exemption from income tax for hotels that start new construction before December 31, 2017. Another: A deduction from income tax equivalent to 50 percent of investments into renewal energy projects for a period of five years. There’s more: Colombia’s Free Trade Zone is offering a slew of benefits for projects.
THEN: Corruption. Civil unrest. Drug-trafficking. Poor infrastructure. Put them all together and they don’t exactly scream, "Come and visit Colombia!" The tourism industry in Colombia is ripe for upgrade.
NOW: Colombia is shattering stereotypes: A hotel building boom (175 new since 2010; 46 more expected by 2020), peace at last and a more receptive climate for international business speaks to the growing confidence of this spectacular and sophisticated country filled with beaches, mountains and cafes. President Santos announced plans last year to boost tourism with the modernization of airports and more international flights scheduled. No less than The New York Times ranked Medellín number 11 in its “52 Places to Go in 2015” article. With those assets, it’s no wonder the government has adopted the bold tourism slogan, “Colombia: The Only Risk is Wanting to Stay.”