The B&I team interviewed Ambassador Luis Carlos Villegas, Ambassador of Colombia in the United States, and asked him about the current situation of Colombia, and his key areas of focus as the Colombian Ambassador. Mr. Villegas spoke about Colombia’s remarkable macroeconomic performance, and insisted in the importance of increased American trade and investment in the country.
Colombia is now averaging a growth higher than 4% annually. The country is now becoming one of the emerging markets to look at. What are the key factors for growth and development of Colombia?
Growth has moved up to 6.4% in the last data available for the first quarter of this year. The average GDP growth has increased to 5%. That is very unique in the developing world. The cause for this sustained growth in the last decade is diversity. We have grown in every single sector. Our agricultural sector is growing, infrastructure is growing, the financial sector has an acceptable growth, manufacturing is growing after some years of paralysis, our foreign trade is stable, and our foreign direct investment has reached record numbers in 2013. We have different sources of growth. From the demand point of view, we are having more consumers in the middle classes. Indeed, in the last 14 years, between 10 and 11 million Colombians have moved from poverty to the middle classes. It is happening every day. From the demand point of view, you also have a diversified reality for growth. The second cause, after diversity, is macroeconomic stability. We have low inflation, with a very independent central bank; we have the historically lowest interest rates; we have our public accounts balanced; we have lowered out debt as a percentage of GDP to around 20%; and we have a flexible exchange rate. All those instruments give investors a very stable context to make decisions. I think those two are the main causes of growth. In the political arena, security levels have changed dramatically, and security and investment go hand by hand.
How do you feel the country was able to achieve this remarkable transformation in terms of perception? Why do you think Colombia has managed to be so successful?
What you have to bring to the public is facts. You have to tell the facts. What we did since 2000 was bringing facts on security improvement. We moved from 200 thousand hectares of coca to less than 30 thousand today. We moved from 60 homicides for each 100 thousand habitants to 18 in Bogota. We moved from more than 3000 kidnappings a year to around 40. Facts are really the key to changing international and national perceptions. You can tell stories and describe things, but without facts, perceptions do not change. Decisions of investment started to come. Security brought the chances for the exploration of the territory, and we found oil, coal, and gold. We moved from almost being an importer of oil in 2002 to producing 1.2 million barrels a day. That is half of what Venezuela produces. That happened because of security and economic stability.
The world is shifting. Emerging markets are coming into place. When it comes to Colombian foreign policies, do you think Colombia acts as an example for other countries that face similar challenges?
One of the main changes of the bilateral agenda with the US is that we have moved from bilateral cooperation for security in Colombia to trilateral cooperation between the US, Colombia, and other countries with similar problems. We have already trained 20.000 public employees for fighting organized crime in Mexico, Dominican Republic, Guatemala, Honduras, El Salvador, and Costa Rica. Last month, we had 7 delegations from Africa in Bogota asking for cooperation. The change that Colombia has to show to the world was done with great effort by Colombians. It was a big sacrifice. Obviously, Plan Colombia helped a lot. It made our public force respectable, efficient, and modern. Colombia will play a major role in the future, as a source of cooperation.
You have been in business, and also spearheading further economic growth and development in Colombia. Why do you think you have been selected to become the ambassador here in the US?
First, because president Santos is generous! I think that having the expertise in both fields: politics and private sector, is a right profile for the moment. This moment is very special, where we have left aside the traditional agenda of security in bilateral talks. We now have cooperation in technology. We had an event called Colombia 3.0 in Bucaramanga, to further the training of 10 thousand technicians to develop applications of internet for the lowest income families in Colombia. We want to give them access to banking, social security network, and distance learning programs in education. It is a real portfolio of things that internet connectivity facilitates for lower-income families. Every single municipality in Colombia is connected to broad band. This has changed the access of the most marginalized communities to modernity. Implementation of this program was during the Santos administration, with investment of 7 billion dollars. This was done together with US companies which cooperated (Apple, Microsoft, and Facebook).
What are the key priorities of your embassy?
The first would be to multiply by two the number of trade and investment. That is possible, and it will happen. Second, would be to diversify our cooperation with third countries in matters of security. Third, we have to conclude the negotiations of the double taxation agreement that we are negotiating right now. In the practical field, we want a visa waiver for Colombia. We started the procedure two months ago, and it will take about 5 years. It is a dream for every Colombian to be welcomed in the US without a visa, and it would be the conclusion of many years of sacrifice.
The majority of the diaspora community is in NY or Florida. How much are they? Where are they?
We have 12 consulates. I have visited 10. Yesterday, I was in Puerto Rico. At least 10% of Colombians are going back. They are mostly second generation. As security and business opportunities improved, there has been a strong trend of Colombians returning. We have legislation to help them return. Very well trained PhDs, have incentives to go back with their families. They can take their property duty-free to Colombia. Our goal is to get 300 PhDs back to the country. They go to national universities hired by the government for three years. The general trend is among people who came between 1994 and 2004 because of violence. They have kids that were born in the US.
This legislation is now in place to encourage return. Is there dual citizenship as well?
Of course, you can have both.
Are you seeing investment being sent back?
It is hard to measure. When you go back, you don’t want to be seen as a failure. Going back shouldn’t be seen as failing abroad. Nobody wants to be seen as that. They want to go back, and the general return is SMEs opened. You see that in medium cities of Colombia. New businesses flourish everywhere in Colombia. Of course, I think that Colombian capital is also coming back. FDI last year was 17 billion USD last year; that is the third after Brazil and Mexico.
Doubling trade and investment is one of your key priorities. How do you expect to achieve this?
First, we have to be very active in the promotion of our free-trade agreement. We have to find new opportunities every day. As long as I am the Ambassador, I will do that. Everyday has to be a new day for investment and trade. We have companies from Colombia investing in the US. A Colombian cement company is the biggest in Texas. Investment will come massively, I think. The other chapter is going to be the Pacific Alliance. It is, in my opinion, the most interesting integration initiative we have embarked on in the last 100 years. The presidents and governors have done more for trade, integration, and investment in one year than the rest of Latin America in 50 years. We have free movement of goods, persons, and capital without visas, and we act together in that commercial and multilateral economic field. That is going to be one of the key issues for relationship with the US in the future, and also with Asia.
Baring in mind that we are looking at doing a report for Fox News, which is more business-conservative people, what would you want your key message to be?
We are going to be the next half a trillion GDP in Latin America in the next three of four years. That should be kept in mind by investors. Not many countries in the world with 50 million habitants have the growth we have. Everything in Colombia is growing, with exception of the government. My message is that, not only will we grow and become a big economy, but we will be a member of the OCDE. Nobody could have thought Colombia would become a member of the OCDE. We hope to offer investors the best practices we can find. What we have achieved has produced a social revolution in Colombia. We have moved from a poverty rate of 60% of our population to one of 29%. There are growing consumers, stable macroeconomics, and stable politics. When you have a growing middle class, that is ideal for any business.
Deep down, what do you think it is about Colombians that have been able to achieve this transformation?
We have taken some implicit consensus in the last 15 years. First, we have opened ourselves to the world. We were a closed country. We made reforms in the political and economic fields. We opened our society, our economy, and our politics to the main currents of thinking in the world. Second, we decided to face and defeat organized crime. In my opinion, organized crime is the major threat for emerging countries. People accepted this because we suffered so much. We had kidnappings, homicides, loss of wealth, and loss of leadership. 10 years ago, 20 million Colombians came out to the streets saying “no more”. They were not invited by anybody; they flowed to the streets. That day, we won the war against organized crime. Third, with all the differences that you can have in politics, if you take a line from 2000 to today, that line is following the same path. We currently have one of the most progressive agendas in our history. President Juan Manuel Santos faced the oldest problems of our society. It produced a big change in the empowerment of people. People think they belong to a system that works (and he did it in democracy: the hard way!).