Colombia’s Minister of Transport Natalia Abello Vives discusses the country’s competitive advantages in the region for international investors and the trade corridors taking shape through its massive 4G infrastructure plan.
Colombia was the third fastest-growing economy in 2014 and has been rated as the best economy for doing business in Latin America by the World Bank. There is a feeling of optimism in the air. What would you say is the role of Colombia in the region?
Colombia is the best positioned Latin American economy. In fact, we might get close to a 3.5% growth this year, which despite being less than the year before, it's still a very good figure in the Latin American context.
This is thanks to the good policies that President Santos has been carrying out: fiscal responsibility, responsibility in the public finance management, and clear strategies for keeping the sector dynamic through construction, infrastructure, and job creation.
Those have been the key issues, always with good government policies.
President Santos expressed his interest in Colombia becoming a member of the OECD in 2014, and this organization already extended the invitation to join. What can Colombia learn from and contribute to the OECD?
There is much to learn and to contribute by entering the OECD group of countries, which are the countries of best practices.
This goes along with the policies of good governance of President Santos in issues like regulation, competitiveness, and economic development.
We believe we will be close to becoming members by 2016. Regarding the regulations, I think that is one of the main topics in which the government has shown how it has moved forward, how we have built and we have democratized them, and implemented our policies.
This is what makes us an open country, democratic, competitive, a country that allows best practices and where industry also works in that direction in order to achieve the best competitiveness.
This is something that we have been building all these years, a country that strives to open its markets and be more competitive.
We can't avoid talking about the peace process. What kind of impact do you think it will have on the socioeconomic development of the country?
It is fundamental. We usually say that in La Havana we are negotiating the achievement of peace, but in Colombia we are actually building it.
We are doing it by creating jobs, helping all the sectors to become more formal, and integrating the regions. In my area, which is transport and infrastructure, the complete integration of the territory is essential, so that is why we say that we are building peace with presence and investment.
The socioeconomic impact is something that we are already seeing for ourselves right now, and it will definitely triple itself in profits once the peace treaty is signed, because it will bring much more opportunities for development and investment.
All the resources we are now using for war will be invested in peace.
You mentioned how you are making Colombia more competitive. What is the role of your area in achieving this goal?
It is very important; transport is definitely the most socially relevant of all sectors. Transport gives us the mobility of a modern and competitive infrastructure.
A well regulated transport system allows us to have that mobility in a big area, to bring closer the production hubs with the areas of high consumption, to place the production in the rest of the territory, both globally and domestically, and to do this at a good cost.
Therefore it is absolutely fundamental for the development of everything we are doing in the country right now.
Which projects would you say are your “star projects”?
The project that President Santos is leading this year in matters of competitiveness is the Fourth Generation Highways – 4G.
It is a group of at least 30 projects, with a total investment of around 50 billion pesos, through the mechanism of public-private partnerships.
This is allowing us to strengthen that infrastructure and make it much more competitive in the medium and long term, in a way that covers the maintenance expenses, increasing the investment in order to raise the standards of that infrastructure, saving time with lower operation costs, and bringing us closer to the production hubs.
We are already working on a project, which was structured and planned from day one of the Santos administration, and after five years it is already mostly licensed and on its final project stage.
This will make Colombia experience a complete transformation in matters of transportation. We will invest in 8,000 kilometers of the national road network, which will have a huge impact on the main foreign trade corridors in the country.
Which are the big challenges that the 4G project is posing, and how are you planning to face them?
Logistics and innovation are two main issues in the sector. While we work on the development of infrastructure, raising our standards, and building our roads in a way that increases their capacity, we must also create room for innovation in the industry.
We also need to improve in terms of the logistics. We know that we will not achieve competitiveness only with infrastructure, but we also need to improve the logistics and innovation in the private sector.
In our interview with the Minister for Housing, Mr. Henao he highlighted the new public contracting system, implemented by the Ministry for Housing in 2014. He mentioned that they “have implemented a contracting system with rules similar to those of the private sector, with less risks of unfinished projects” How are you planning to work through your ministry to encourage these public-private partnerships?
This has been one of the great revolutions inside the infrastructure sector, not only in the way the projects are planned, but also in how they are being licensed and carried out.
It started as a change in regulations, in which two very important legal frameworks were issued, the Infrastructure Law, and the Public-Private Partnerships Law.
These two laws changed the way in which the projects are being contracted, licensed, and carried out. We are talking about important things, like contracting only when the projects have a good design.
Also important is that we only allocate the public resources when the projects reach the pre-established standards, so the private company or contractor doesn't receive any remuneration before that.
It is also important that we have a well implemented value chain in the entire process, and a good intertwining between the public and private sectors.
Not only that we have worked with them on the technical issues but also on management, implementing other key tools like standard tender documents, which allow us for a much more transparent and objective procedure.
There has to be an initial stage of pre-planning of every project, so only those which are previously approved and qualified can move to the next stage that is purely about the costs, and where there are specifically pre-established conditions for the modification of the projects.
We haven't received a single complaint in all the 4G infrastructure projects, and we have already awarded half of the licenses, so it is definitely an important shift in the way things are done, which starts with the planning, the institutions, and the people involved.
There have been three major shifts: institutionally through better regulations, the procedures, and the people, who are previously selected as having the right conditions and integrity in order to be a part of the process.
This is all helping us achieve very different results from which we were having in the past in the country.
We were present in the 50th anniversary of the Asobancaria Convention, in which all these old problems were discussed. We also noticed that some banks said they would be financing these projects. How do you work together with the banks and what role will they play in the transformation of Colombia?
One of the key issues is trust, and that is something you gain when you work in a reliable way.
Today we have the trust of the banking system, both domestic and international, as a product of everything we've been doing, but also as a result of having well-structured projects and great opportunities for development in the country.
The banks have manifested that they have the resources to enter this process. In fact, three of the four 4G contracts already reached their financial closing, which we will be announcing soon.
This all means that we have the confidence of the public and clear rules of the game. The financial sector has been very close to the projects, the contractors, and the closing of those projects.
They have stated that the resources for financing this second semester and next year really exist.
Today we are counting on the possibility of having great infrastructure investments, backed not only by the financial sector but also by pension funds.
The two largest pension fund groups will support us with roughly 12 billion pesos each for financing. We think we are definitely on the right track; we will reach the financial closing of the projects very soon and very successfully.
Considering that we are publishing in the United States, what is your opinion on the relationship between the two countries? In which area would you like to see a closer cooperation?
It is very important that the United States is a part of this. Spain has been one of our investors; there is also participation from Latin American countries like Chile, Mexico, and Brazil.
The US is important and so is Canada, which has already participated in some projects. It is very important that the US looks at what we are doing here.
Our PPP policies, and our medium and long-term concessions, are a guarantee of stability for our investors.
Our projects are mature and attractive; we are an emerging and growing community with great opportunities, much more profitable than any other part of the world, and with the reliability of a government that is backing all these projects and assuring their success.
We invite them to come and see for themselves the opportunities for investment and progress we have, so they choose to stay with us.
What legacy would you like to leave behind after the end of you tenure?
It's a big challenge to revolutionize the infrastructure of Colombia, leaving a country that is more competitive, that is in motion, with more progress, and always closer to the regions.
Our motto in the transport sector is “We are a country of regions” – we want to be closer to them and we do it through infrastructure, with commitment, with specific projects for every means of transportation there is.
I would like to leave a country that is connected, integrated with its own territory; I think that is the best gift we can leave behind.
Talking about being a country of regions, Joe Arroyo sings “From the Caribbean it comes, charming, a great society”. What does Barranquilla have that the rest of the country doesn't?
Barranquilla has its people. It is open, and it is used to being the gate through which the immigrants came into the country, which has made it particularly open and attentive to what is happening in the world, and very welcoming to foreigners.
That opens a million possibilities. It has a strategic location in the Caribbean. It is said that it is the corner between the Magdalena River and the Caribbean, a fertile soil surrounded by water – a sea of opportunities.
Besides, its people have a spirit of conquest, of progress, with a high level of education, and currently living a truly blooming moment.
This is a relatively young city, only 200 years old, of which the latest have been a moment of emergence and development in the area of governance, especially lead by the public sector and united with the private sector as well. I am from Barranquilla, and our history has proven that when there is division between public and private sectors, the loss is for the city and the society.
Barranquilla now has a responsible public sector that makes plans and carries them out, and a private sector that accompanies that, coordinates and leads those policies.
I think it is the sum of a number of things, the territory, and the Caribbean flavor.