the time has come to colombia

8/11/2019 The time has come to Colombia

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YEAR VI

number 27

JUL/AGO/SEP

2014

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BRAZILIAN COMPANIES GO INTERNATIONAL

THE TIME HAS COME TO

COGuerrillas? Drugs?Forget it! Colombiansattract investments


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Contents

10ANTENNA+ Gisele Bndchen advertises sportswear+ Asians tourists want to visit Brazil+ Pharmaceutical companies aim

for the global market+ Enaex discusses the costs of foreign trade+ Beer from Vinhedo in upstate So Paulo

wins award in Portugal+ Odebrecht leads internationally-active

Brazilian companies+ Three questions for Carlos Alberto dos Santos

48OPINION Brazil needs a newinstitutional structure forforeign tradeRUBENS BARBOSA

52SMALL BUT OUTSTANDING Innovative acclimatizer fromRio Grande do Sul company is in 30countriesANTONIO CARLOS SANTOMAURO

56SMALL BUT OUTSTANDING Hammock maker Redes Isaac,from Fortaleza, competes withColombian producers in EuropeANTONIO CARLOS SANTOMAURO

58

EXECUTIVE TRAVEL New lookfor Guarulhos airport; Minas

Gerais seasoning in Paris; an iconichotel in RioMARCO REZENDE

66IN TRANSIT Tiffany Kearneydraws a parallel between theFields medal and Brazil in the world

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62EXPRESS TOURISMEva Perini lives between Braziland Florence and presents herpersonal suggestions for a visit tothe capital of Tuscany

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20ARTContemporary Brazilian artists arespringing surprises, gaining prestigeand going internationalADRIANA SETTI, BARCELONA

30 INTERVIEWFormer ambassador Donna Hrinak heads Brazilian operations and is aiming to formpartnerships with companies and universNELY CAIXETA AND ARMANDO MENDES

34 COVERWith its eye on the future,Colombia is attractinginvestments and creatingbusiness opportunities forBrazilian companiesMARCO ANTONIO DE REZENDE, BOGOT

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TOTUMEXCELNCIA EDITORIAL

PIBBRAZILIAN COMPANIES GO

INTERNATIONAL

AQUARTERLYMAGAZINEFOCUSINGONINTERNATIONALBUSINESS ANDECO NOMICS

PublisherNely Caixeta [email protected]

EditorsArmando Mendes, Dario Palhares

and Marco Antnio Rezende

Contributors to this edition

Antnio Carlos Santomauro, Dario Palhares,Eva Perini, de Florena, Rubens Barbosa,

Tiffany Kearney, de Boston

COVER:Protexto

DesignerRenato Dantas

Copydesk and PreparationMary Ferrarini

TranslationJohn Fitzpatrick and Kevin John Wall

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If only Brazil could be like MedellinThis was the feeling editor Marco Antonio de Rezende had when he

returned to Brazil from a trip to Colombia at the beginning of September.Marco is a veteran foreign correspondent. He spent over a decade basedin Europe for the news magazine Veja and covered historic events likethe revolution of the ayatollahs in Iran, the break-up of the Soviet Unionand the endless violence in the Middle East. He now presents us witha portrait of his latest immersion in foreign lands. Marco spent 10 daysin Colombia during which he made seven flights and drove along almost1,000 kilometers of tip top asphalted roads through various regions, visi-ting plants, work sites and the local headquarters of Brazil ian companies

which have crossed the Andes to play a part in the surprising rebuildingof the Colombian economy. I knew that Colombia was experiencing agood period after decades of civil war and international isolation but Iwas still taken by surprise, he said.

Of all he saw, Marco was captivated, above all, by the city of Medellin,the second largest in the country. Not so long ago, Medellin only appea-red in the media linked to the word cartel and the top drug traffickerPablo Escobar. Nowadays, in a si gn of its transformation, the word mostassociated with Medellin is innovation. The stories of a city and countrythat have reinvented themselves and the role of Brazilians in this effort are told in 14 pages of this issue.

The reader will also find a report by Adriana Setti from Barcelona onthe impact Brazilian artists are making on the international art market. Itis not just contemporary artists like Beatriz Milhazes and Vik Muniz whoare winning space in galleries and museums. Iconic names in Brazilianart from the 20th century, such as Lgia Clark and Srgio Camargo, arealso being discovered and revaluated. The interview in this edition is withDonna Hrinak, a former US ambassador to Brazil and currently head of the

American aerospace giant Boeings operations in Brazil. She talks aboutthe challenges and opportunities of cooperating with the Brazilian aeros-pace industry. Our piece for travelers includes a short break in Florence,the jewel of the Italian Renaissance. Have a good trip!

Nely Caixeta

Marco withminister Cecilialvarez: great timefor Colombia

Ouvidoria: 0800 702 6307

www.bndes.gov.br

BNDES EXIM AUTOMTICO.A parceria do BNDES com bancos no exterior

ajudando sua empresa a exportar mais.

O BNDES Exim Automtico uma nova linha de financiamento do BNDES para a

comercializao de bens brasileiros no exterior. Com ele, os exportadores brasileiros e seus

estrangeiros tm acesso a mais de 40 bancos no exterior, com taxas atrativas e comp

Alm disso, por contar com procedimentos operacionais padronizados e simplificados, o

ao financiamento mais rpido e fcil. Acesse www.bndes.gov.br/bndesexim e saiba

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Editorial


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Thats whatmagicalrealism isWith a vision of the future, Colombia

attracts investments and creates

opportunities for Brazilian companiesMARCO ANT ONIO D E RE ZE ND E , BOGOT

At the steel mill nottoo far away fromthe historical Bridgeof Boyac, whereSimn Bolivar fought

the decisive battle for the indepen-dence of Colombia in 1819, workersgraft around the clock, 24 hours aday, seven days a week, to produce450k tons of steel a year, almost aquarter of the expected nationalconsumption in 2014. 425km tothe North of Bogota, in the regionof Barrancabermeja, a large trans-national construction firm is racingagainst the clock to deli ver, by 2017,a 528km double-lane stretch of Rutadel Sol, the highway that transportsalmost 70% of Colombian GDP tothe ports of Barranquilla and Carta-gena, in the Caribbean. At a modern

building in the financial heart of thecapital, one of the worlds largest fi-nancial institutions is also present,providing customized services ex-

clusively to companies with annualrevenues in excess of 100 milliondollars.

Readers may already be wary,but theres no harm in asking: whatdo these companies all have in com-mon? They are all Brazilian: since2007, Votorantim Siderurgia owns

Acerias Paz del Rio, in Boyac. TheColombian subsidiary of the con-tractor Odebrecht is constructing,and already operates as conces-

sionaire, Ruta del Sol the highwaythat is Colombias biggest publicconstruction work right now. AndBanco Ita BBA has teamed up with

other Brazilian companies that haverun to Colombia in recent years tosurf an unprecedented wave of

prosperity. At the ar-rival lounge of flightsarriving from Brazilat the modern airportof Eldorado, in Bogota,it is commonplace tosee drivers holding upsigns waiting for execu-tives of Brazilian com-

panies such as Petrobrs, Gerdau,Natura, Artecola and many others.There are already over 50 Brazilianplayers (more on this later) produc-

ing in the country, constructing stra-tegic infrastructure works or pres-ent via franchises.

They are joining multinationalsfrom all over the world, seduced bythe opportunities in a territory thesize of Mato Grosso and Rondniatogether, with 48 million inhabit-ants, right in the heart of the conti-nent and with escape routes to theAtlantic and the Pacific. Last year,foreign direct investment in Co-lombia totaled 16 billion dollars, 10times more than in 2003 accordingto the Colombian Central Bank.

The country that until recently

was caught in the crossfire of thedrug cartels and the civil war, fromwhere foreign investment and

tourists fled like the devil from thecross, has changed its look and atti-tude in a very short period. Foreignexecutives working in Bogota and

other cities no longer obligarequest armor-plated vehicle

safety guards. A peace accordthe guerrilla, on the brink of bsigned after tough negotiatioHavana, and improved safetyditions in general will likely pend to talk of violence and bringood things to the surface.

Indeed, Colombia has garnering a growing reputof solid economic policy, haried out and continues to carrnecessary reforms in practicaareas and is cementing its sas one of the most thriving emies in Latin America. The cohas been growing at almost 5since 2010 (6.7% in the first

ter of 2014), and 2013 annuainflation was the lowest in th60 years at 1.94%. To the disure of their Argentine neighin the next two years Colomexpected to become the thirdest Latin American economy iafter Brazil and Mexico, knoKirchner and co. off the podiu

Unemployment, whichmained stuck at high leveldecades totaling 12.7% in 2

has been falling fstraight months anow approachinA read of the nepers on a single dSeptember is ento glean a seripositive news reCreated two year

the law of PPPs, or APPs ilombia meaning Public-PrPartnerships has already lthe concession of nine new

The country from whichinvestors and tourists fledhas changed very quickly

Schooling: Colombia, with9.4 years, is approachingChile, with 9.7

Boticdispulocal worthbillionwith

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ways of the so-called 4G (or fourthgeneration) group, and there are an-other 251 APPs underway in sectorssuch as urban transport, waste col-lection, health, airports, water andsanitation, as well as another 178

in approval phase. Colombia, with9.4 years of schooling on average,is reaching Chile, the Latin Ameri-can leader with 9.7 years (Brazil istied with the Dominican Republicat 7.2 years). By 2015, the countrywill reach the target of producing 1million barrels of oil per day. And in10 years, commercial aviation grew250%, from 12.1 million to 28.6 mil-lion passengers in 2013.

We have healthy macroeconom-ic indicators and major infrastruc-ture works underway, said Ceclia

Alvarez, heads of one of the 16 min -istries (Trade, Industry and Tour-ism) in the Colombian government.

But we also offer investors the ben-efits of 14 free trade accords alreadysigned and that guarantee productsmade in Colombia access to a marketof over 1.5 billion people. (see pages44 and 45 for interview with ministerand tables with economic indicators).

Good macroeconomic indicators

and broad access to markets repre-sent more business opportunities forthe Brazilian companies that joinedthose who discovered the Colom-

bian gravy train before. Take Mar-copolo, which arrived in 1999. The

city where Brazils presence is mostobvious is the capital city, Bogota.All you have to do is look up to seethe red articulated buses runningthe segregated lines of the Transmil-lenium system, the local BRT systeminspired on the Curitiba model, cre-ated by Jayme Lerner: almost all of

them are produced by Superpolo,the local name of the joint venture

between Brazils Marcopolo andColombias Fanalco. The bi-nationalbus bodies are assembled at a plantin Cota, in Greater Bogota, em-ploying 1,500 workers in an area of77,000m2. The rapid industrial andurban expansion of Bogota planted

the factory in the lands of a bucolicfarm, where cattle still graze. Fromthe room of general manager JamesPosadas you can see a pack of horses.

The partnership between Mar-copolo and Fanalco gained traction

when Bogota City Hall decided tobuild the Transmillenium bus net-work at the end of the 1990s. Busesarent an expensive product, but thefreight is, says company CEO JosRubens de la Rosa. It isnt easy tomove a large product 13 metersin length by 2.55m by 3m in height

via the Amazon rain-forest or the Andeancordilleras. To explorethe opportunities of theBogota mobility projectand the market of theneighboring countries,it decided to produce in

Colombia. 2013 saw the production

of 2,100 buses, 1,200 of which for thecollective transport system of thecapital of Panama, called Metrobus.

In addition to Brazil and Colom-bia, Marcopolo makes buses in Ar-gentina, Mexico, South Africa, Egypt,India, China, Australia and the US.In terms of volume, according to

de la Rosa, Colombia is already inthird place alongside Argentinaand Mexico (after Brazil and India).Around one sixth of the companysrevenues in 2013, of 3.7 billion reais,came from the international opera-

tion (280 million reais in Colombia).The flagship product of Superpolo isthe triple articulated bus Gran VialeBRT, measuring 21 meters in lengthand with capacity for 145 passengers,used on the exclusive corridors ofthe Transmillenium. The system isefficient: it allows a bus parked atthe bus stop to be overtaken, guar-anteeing fluidity a blessing in thecongested city of Bogota. The traf-fic of cars is so intense that there isa 50% alternate day traffic systemduring rush hours, depending onwhether your car plate ends in aneven or an odd number.

What else could attract a Brazil-ian investor to Colombia? For thetime being, oil, mining and tradi-tional sectors such as manufactur-ing and transport account for the

bulk of GDP. But as well as reapingthe rewards of the administrativecontinuity of the last 12 years aperiod covering the two terms of ex-

president lvaro Uribe plus the firstterm-of-office of Juan Manuel San-tos, recently sworn into his secondterm , the Colombian governmenthas a clear modernization target.

The sectors based on innovation are

a symbol of our vision of the future,of our bet on greater developmentand of our ambition to compete onequal terms in international mar-kets, as per the 2010-2014 NationalDevelopment Plan.

Innovation has become a sort ofnational hashtag, almost a religion.

The best place to witness the newcult is the beautiful and surprisingMedellin, with 3.7 million inhabit-ants in the metropolitan area. It isthe second largest city after Bogotaand capital of the state of Antio-quia, but up until the 1990s it wasonly famous for being the home ofPablo Escobar. Medellin is the HQ

of some of the countrys largespanies, including the biggestBancolombia, and the largestcompany Nutresa. The citysis a bit higher than national Grelative terms. The city is pro

be the only one in Colombia wpermanent plan of science, tecogy and innovation, aimed at ing the conditions for Medelhouse the largest technologicaplex on the continent by 2023

The task of engineer FHoyos is strategically proport

to the name of thethat was tailor-created for him:mayor of IT, EconDevelopment, nationalization Public-Private Paships. Industry

represented 30% of our econbut now its less than 18%, Htold PIB. In a joint work of thernment, universities and prsector companies, we identifthe sector of knowledge a paour development.

There are 130,000 universidents and 12 universities in M

Inspired on the BRT ofCuritiba, the Transmilleniumbus makes Bogota breathe

Innovation has become akind of national hashtag,almost a religion

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lin. The best known is the University

of Antioquia (Colombias version ofBrazils USP, or So Paulo Univer-sity). Part of the vision of the futureof the city is born at the university.In a partnership with the city hall,it created the Park of Entrepreneur-ialism, or Park E, to cultivate entre-preneurialism and support start-ups.Many of the business opportunitiesare identified by students duringtheir academic studies. Afterwards,in order to create a company withthe support of the program, all youneed is a diploma and an idea. At themodern, clean HQ of Park E, a small,modern building in downtown Me-dellin, the doors are always openand a consultant is always availablefor the first interview. If the ideamakes sense and is approved by atechnical committee, the future en-trepreneur receives a workstationand works alongside other talentedaspiring youngsters.

Park E helps the business plan,

signals the financial paths, offers

specific courses in coaching pro-grams and monitors until the pre-operational phase but does not getdirectly involved. The future en-trepreneur must use his/her ownmeans to get the project off the

ground. A common factor among allthe projects is the high added value

of the services or products createdthere, which in general are based onthe intensive use of IT. Of the 293projects, one is a flight simulator forsmall aircraft, based on the gradu-ation thesis of the projects creator.

Another 37 are in incubation phase.The turnaround at Medellin (see

chart on page 40) is rooted in the

strong partnership between the cityhall, the academy and the commer-cial association. This environmentspawned another idea to boost thecitys rebirth: the stimulus to busi-ness clusters. They are groups of

companies from thesame sector that sharetheir sustainable ini-tiatives to increase thecompetitiveness andrevenues of their busi-nesses. Five were iden-tified and created since2007: energy, construc-

tion, textiles, apparel production,design and fashion, tourism, fairsand conventions and, finally, medi-cine and odontology (Medellinplays in Colombia and in neighbor-ing countries the same role that SoPaulo has in Brazil as a receiver ofso-called medical tourism).

The theme of innovation mo-bilizes Medellin like street parties

mobilize Salvador, in Bahia. At the

start of September, 2,700 peoplerepresenting 400 companies andpublic and academic institutions

joined up at a festive event to sign adocument called Grande Pacto Me-dellinnovation, or the Great Medel-lin Innovation Pact. The objective:to ensure that 1% of the regionsGDP is invested in activities linkedto technology and innovation. Themost visible result of this enthusi-asm is in another initiative, the so-called Corporacin Ruta N, a non-profit entity better known as Ruta N(the n is the exponential symbol),a city hall partnership with the localpublic utility concessionaire EPM(water, sewage, gas and energy),inspired on the pioneering district22@Barcelona, in Spain. In short, itis dedicated to receiving know-howand technology-intensive compa-nies, receiving them in the landingphase in the city. Installed next tothe University of Antioquia, it oc-

cupies three buildings of excellent

architecture covered by ivy, one ofwhich is exclusively the global backoffice of Hewlett Packard (HP). Inthe others, at colored and transpar-ent open spaces reminiscent of theglobal HQs of Google, there are 45

companies, including a start-up ofyoung engineers ready to assemblea network of nano-satellites and theBrazilian company Algar Tech.

An IT company of the AlgarGroup, from Uberlndia (MinasGerais), Algar Tech makes around500 million reais in annual revenues.It was already present outside ofBrazil with subsidiaries in Argentina

and Chile, but is accelerating

ternationalization in the regioMedellin. We didnt come jucause the country has an openket, said Carlos Maurcio Fergeneral manager for Latin Am

We came due to the countrys vthe vision of the cveloped by the Cbians. InauguratMay in the buildiRuta N, the Colom

Algar Tech alreadvides IT infrastruand business softservices to four

tinational clients one Brazand three US. In the 45-person

only 2 are Brazilians. We are g

City Hall, universitiesand companies workon turnaround

We are here due toColombians vision of whata country and city mean

2 Ferreira,from AlgarTech: Localcompany

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suppliers, says Ferreira. But wewant to be a local company in eachplace.

Another two Brazilian IT andoutsourcing companies are in Co-lombia, the giants Stefanini andTOTVS. The fourth most interna-tionalized Brazilian company, as per

the Fundao Dom Cabral ranking,Stefanini operates in 33 countriesand posted 2013 revenues of 2.11billion reais, of which 40% abroadand 9% in Latin America (the com-pany doesnt disclose the per coun-try breakdown). Its core business ismanagement of IT applications andinfrastructure for clients. In Colom-bia since 2011, the local Stefaninigrew 38% in 2013 and expects togrow over 30% this year. There areopportunities to increase presencein large banks and strengthen theservices that we provide to Colom-

bian telecom operators, said Mar-celo Ciasca, Latin American CEO.

TOTVS, market leader in Braziland in Latin America in software

for business management systems,

started to go international 17 yearsago, and also operates in dozens

of countries and hasbuilt two solid LatinAmerican hubs in Ar-gentina and Mexico,with almost 300 clientseach. During times ofBrazilian GDP growth

of 0.8% or lower, I believe in inter-

nationalization as the main driverof the competitiveness of Brazil-

ian companies, said the directorof international market operationsof TOTVS, lvaro Cysneiros. Go-ing international is essential in or-der to learn practices, cultures andcontinue being the best on yourown turf. With an eye on innova-tion, the company opened a unit in

Silicon Valley in California. But itsdecision to touch down in Colombia

had another motivation: followingglobalized Brazilian clients such asOAS and Odebrecht Agro and reap-ing new opportunities in a growthmarket. The Colombian TOTVSgrew 50% last year and expects tomaintain this pace in the comingyears. Cysneiros likes the Colombi-

an model: The bases of the privateinitiative are very strong, no-oneaccepts State intervention, he says.

But the partnership model betweensociety, companies and the State isworth being copied, and the countryis a construction site to eliminate in-frastructure delays.

The countrys geography is tor-mented by the three Andean cordil-

leras that run from North to Swhich has always obstructeconstruction of good highwaythe main problem was the hical lack of cash for roads, high

ports and airpsince much of thtional budget wethe Armed Forccombat narcotand guerrillas. these problems under control, theey has started to a

and some of Brazils major contion companies are leading plin this construction boom.

Odebrecht, with works countries, made the first higin Colombia in 1992. Now, it ising the Ruta del Sol consortiuma 66% stake. The project inv

modernizing the countrys agmaster highway and construc

Strong privateinitiative: ban onstate intervention

The peace accords havealready ensured excessmoney for infrastructure

THE CITY THAT TURNED THINGS AROUND

IN A survey taken this year with2,000 executives in 32 countries byIndra, the giant Spanish IT group,Medellin and Santiago (Chile) weresignaled as the best Latin Ameri-can cities to live in. Santiago isnt asurprise, as Chile has been first-in-class in almost everything for along time now. But Medellin? Yes.They tie in the perception of goodpublic services, in the parameters

of sustainable development and inthe use of technology in the publicadministration.

To rid itself of the old imageof a lawless land, dominated bynarcotraffic until almost the turn ofthe century, Medellin first set about

transforming its poor neighbor-hoods, where organized crime domi-nated the working population. Inthe biggest of them, Santo Domingo,on the slopes of the cordilleras, theybuilt equipment such as schools,health posts and UPPs and gave outproperty title deeds to those livingthere. And they built a comfortablecable car which in 12 minutes linksthe top of the hill to the metro sta-

tion in the valley. The Spanish gov-ernment donated a modern library,inaugurated personally by then king

Juan Carlos. Santo Domingo pro-vided the tone of change in the city.

Medellin was always beautiful,due to its geography, but today it

is pleasant, clean, with most of theelectrical wires buried underground,without the holes in the pavementseen in Bogota or So Paulo. Thereare modern hotels and high-cuisinerestaurants, such as In Situ, awooden/glass box in the middle ofthe sumptuous vegetation of theBotanical Gardens. The only metroline cuts the valley from North toSouth, partly at a raised level, and

the metro stations offer new booksfor free that, in theory, should bereturned after being read. Only12% are returned, but vice-mayorFelipe Hoyos thinks its a good thing:

People having books at home is apositive.

2 In SantoDomingo, cablecar removedthe narcos

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THE ROAD WHERE GDP PASSES

RUTA DEL Sol is a 2.4 billion dol-lar project, directly or indirectlyemploying over 4,000 workers.Odebrecht received the conces-sion for the central stretch of

528km, between Puerto Salgar, tothe South, and San Roque, in theNorth. But the total stretch fromNorth Bogota to the Caribbeancoast is just over 1,000km.

The effect of the new high-way, 40% ready, is already visiblethroughout the route. In Aguachi-ca, a city of 100,000 inhabitantsnear the border with Venezuela,the three stores and motorbikeworkstations 2 years ago now total12. The handful of mini-marketshas multiplied, but over the nextfew months they will face com-

petition from a store of the giantColombian supermarket chainOlmpica, in conclusion phase.

Out of the thousands of work-ers and engineers there are only

30 Brazilians and a dozen of otherLatin Americans, mainly Peruvians,including the engineer leading theconstruction, Ricardo Paredes,with 8 years of experience in worksin the Andean region. Our missionis to build the road with workersfrom the region, he says. TheBrazilians are imported for specificmissions, such as maintenancework on the 400 heavy machinesand 620 trucks. For the locals,many without prior experience, thecompany offers training programs.The Colombian version of the

Believe Project, which Odebrechtruns to qualify and certify labor, iscalled Creer. It also offers talks inself-esteem, considered essentialto avoid accidents. At the end

of the afternoon, at the centralcampsite, our reporter witnessedthe ex-priest Jos Geraldo Fer-reira (Minas Gerais), psychologist,preaching to a group of Colombianworkers: If our self-esteem islow, our performance in life will below. The chief-engineer Paredestook the microphone and gave hiscontribution: A gift of great valuethat we can give our children is theconfidence that we have in our-selves, it is to go home after workand be able to embrace our family.

Building Ruta del Sol poses

technical and political problems the former are easier to resolve.The works pass through longstretches of soggy clay soil andthis is resolved with the regions

abundance of limestone, whichdries the bottom of the riverbed,and of stone, which stabilizes thebase. A more complicated processhas been facing the ire of somegroups that see the road passingoutside villages, as the govern-ment project requires, when theypreviously crossed through them,bringing some commercial activitywith them. There are negotiationswhen protests and road blocks oc-cur, and the government ends upauthorizing counter-concessionssuch as accesses or overways notforeseen in the original contract.Sometimes, the dwellers, who

end up getting their point across,demand a new church or a newschool in the village.

Odebrecht arrived in Colombiain 1992, constructing pumpingstations for British Petroleum.

Colombia has taken things to thenext level because it decided toface its problems, including aninfrastructure deficit, said the en-gineer Eleuberto Martorelli, presi-dent of the Colombian subsidiary.

To attract investors, Colombiaoffers a safe business environ-ment, respect of contracts andcredit facility, he says. The localbanks are solid and have liquid-

ity, we can finance our projects atgreat rates. Martorelli heads upthe company of a building that isalso home to the local Braskem,next to the beautiful Calle 93 parkin Bogota.

At the end of August, Mar-torelli celebrated another multi-million dollar contract - alsorelated to the governments infra-structure strategy - with his board.Together with the local groupValorcon, which has a 13% stakein the consortium, the ColombianOdebrecht will recover the navi-gability of the Magdalena River,which runs alongside Ruta del Sol

to the ports of the Caribbean. Viathis river, in the 16th century, theSpanish conquistadores enteredin search of the mythical Eldorado.

Making the river navigable againwill make the country more com-petitive, says Martorelli, withthe 1.25 billion dollar contract inhis hands. The annual cargo flowcapacity on the river will rise from1.5 million to 6 million tons at theend of the works.

VENEZUELA

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brand-new second lane (see paleft). Other Brazilian companialso in Colombia. Camargo Cwhich built the Porce III helectric plant, a 1.35 billion dproject, leads the consortium

is building, for the company the countrys largest hydroelplant, Ituango, 180km from Mlin. The project, on the Cauca and in a mountainous regionered by forests, foresees total iments of 5.5 billion dollars. Wit comes on-line, in four yearango will generate 2,400 MW

Andrade Gutierrez arrivColombia in 1991. It had concsix projects, including a raiand a 400-meter stayed bridgfore abandoning the country inafter two engineers were kidna

by the FARCs and after 6 monnegotiations and ransom paym

to free them. They returned 2 ago. But we should have goneearlier, says Portuguese engBernardo Serafim (35), presof the Colombian subsidiary,an eye on the new package ofstructure works up for tender,cially the G4 highways.

Serafim praises the tranency of the tenders, but regretsmall-size local companies, wannual revenues of less thanmillion dollars, win projects w2.5 billion dollars. It is a riterms of financing and execcapacity, he says. At any rasays, the company considers C

bia to be a target market, thastrong demand, the good busenvironment and resources city. Andrade Gutierrez has consulting work for the governwhilst positioning itself in thding for works in the areas of ogas, transport infrastructure

2 Martoresignalsopportunto grow

1 Completedstretch ofRuta del Sol:GDP passesthrough here


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MinisterAlvarez the messopen do

BRING YOUR MONEY HERE

POSITIVE INDICATORS,innovation,market opening, works and growthare the Colombian recipe to attractinvestments, says the Minister ofTrade, Industry and Tourism, Cecilialvarez.

If I am international investorwhy should I take my dollars toColombia and not, for example, toMexico, Chile or Brazil?

What a doubt! Colombia wasthe worlds second highest growtheconomy in the first quarter of2014, after China, and at the endof August its annual GDP growthestimate was raised to 5% morethan any other neighboring country,including Peru, which is now in aturnaround process, and Brazil,with two negative quarters. Colom-bia offers great opportunities, dueto its macroeconomic indicators

and major projects underway thebiggest in the world in infrastruc-ture. We are looking at 25 billiondollars that are being invested inhighways, railroads and ports. Andwe shouldnt forget the rectificationand improvements in the Magda-lena River channel, a project worth2.5 billion reais, awarded to thelarge Brazilian player Odebrecht.I had the privilege to work withOdebrecht for 2 years, when I wasTransport Minister, and I must takemy hat off to their work in executingprojects and as a concessionaire. Ican guarantee that this opinion isshared by President Santos, who

told me of his delight when helearned that the company won thebid for the Magdalena River project.

What is the most concrete thingthat Colombia offers the compa-nies looking to invest there?

Colombia currently has 14free trade agreements, whichrepresents the possibility oftaking its products to a mar-ket of 1.5 billion people. Weare also investing in civil con-

struction 3 billion dollarsin homes for the low-incomepopulation and education.In 20 years time, we wantColombia to have a popula-tion with the best schoolinglevels in the hemisphere. Thepeace treaties will maintainthis growth rate.

The wellbeing in Bogota, Medellinor Cali has yet to be repeated inthe interior of the country, witha massive contrast between richand poor. And pacification stillisnt 100% concluded.

The recent evolution of the Gini

index shows that social inequalityis declining. The stated objectivesof our government are peace, socialequality and education. All theongoing projects have this purpose.In recent years, we took 4.5 millionColombians off the poverty line andpoverty in general has fallen. Thisgives confidence to foreign inves-tors, as does the end of the controlof part of the population by theguerrilla. Since 2002 we have beenmaking progress in the pacificationprocess. The companies that cameto Colombia have not faced theseproblems and if they do, they knowthat all they need to do is make a

phone call to receive all the help ofthe government.

Industry is losing importance inBrazil, due to a lack of competi-tiveness, low productivity and allkinds of obstacles. What is the

situation of Colombian industry?There is a mutual commitment

between industry and governmentin our country. Industry must in-novate and the government mustdo its part to help and not hinder.An example: the company that

compiled printed telephone numberlists had to reinvent itself. Googleensured that. Companies must becompetitive and the governmenthas the obligation to help them. Mymission at the ministry is to helpindustry follow the path of innova-tion. In this respect, we also receivethe help of Colciencias, a govern-ment agency dedicated to support-ing the development of research,technology and innovation.

In which sectors, in your opinion,are the biggest opportunities forBrazilian companies in Colombia?

In all areas: energy, apparel

industry, manufacturing in general,infrastructure, tourism, services...All you have to do is choose, the op-portunities are out there. Legisla-tion has changed a lot to favor thesuccess of public-private partner-ships. It is time to invest here.

Degree ofInvestor Protection

General Qualityof Infrastructure

Degree of Development Financial Market

Degree of Development Infrastructure and Trans

GDP GROWTH

2009

1,7%

4%

6,6%

4,7%

6

4%

7%

6%

5%

4%

3%

2%

1%

0%

20122010 20132011 2

SCENARIO

OF OPPORTUNITIES

DIRECT FOREIGN

INVESTMENT

20122010

6.430

14.648

15.119

16.77

15.

20132011(P

*Inthisrankingof 120 nations,by the World BanColombia ranksat thetop (6th)ininvestorprotethemiddle (63rd)in financial market developmeoneof thelast (106th)ininfrastructure,showintheopportunitiesforthe homebuildersthere.

Boticrio disputes localmarket worth 4 billiondollars with Natura

energy. We will have a very good10-year period in this country, saysSerafim.

Several Brazilian companieshave set up shop in Colombia withfranchises, including the car rentalcompany Localiza, Chilli Beans,the bookstore Nobel, the Wizard

language course school and shoestores such as Via Uno and CarmenSteffens. Larger groups, with a lon-ger presence in the country, havemade new investments. Petrobrs,which started its internationaliza-tion in Colombia in 1972, boughtthe Shell gas station chain for 140million dollars in 2004 and nowruns the largest gas station chain

in the country, as well as exploringdeep-water wells on the coast of theCaribbean. Gerdau, which 10 yearsago took control of the plants of theDiaco group, invested 600 milliondollars in expansion and modern-ization. And Votorantim continuesmodernizing its Paz del Rio plant,acquired 8 years ago for 361 milliondollars in a move that marked thestart of the internationalization ofthe groups steel division.

The company created by theState in 1946 to explore the neigh-

boring coal, iron and limestone

mines and create jobs in a poor re-gion was bankrupt and had beendonated to its employees. As theplant modernized and became vi-able, its headcount shrunk consid-erably, from almost 8,000 to 1,700workers. 214 million dollars wereinvested in technological modern-

ization, social projects and envi-ronmental actions a single smokescreen cost 29 million dollars. Pazdel Rio has a partnership with uni-

versities to train and qualify t echni-cians and also finances basic educa-tion schools in the community.

Colombias affluence has sped

up the process of seducing Braziliancompanies. Natura, present therefor the last 7 years, considers Colom-bia one of the main Latin Americanmarkets, alongside Argentina andMexico. "The constant growth ofthe economy strengthens the pros-pects of Natura in the country", saidthe vice-president of internationaloperations, Erasmo Toledo. "We

already have 50,000consultants and 15% ofthe products sold in thecountry are producedlocally". The interna-tional operations of Na-tura represent 18.1% of

global net revenues andhave been growing 40%p.a. since 2009.

At the end of August, it was theturn of another heavyweight in per-fumes and cosmetics, O Boticrio, totouch down in Colombia to contesta piece of the rich 4 billion dollarmarket. According to Andrs Giral-do Torres, director of the operation,the plan is to post annual revenuesof 90 million dollars in 2016, whenthe chain of 100 stores to be openedover the next 5 years will already beup and running. Growth in civil con-struction (16.2% in the second quar-ter of 2014) has been a blessing for

Duratex, which 2 years ago boughtits first stake in the local MDF slab/plate producer Tablemac (so far, ithas kept the brand name). Duratexwas born 60 years ago to export,said Antonio Joaquim de Oliveira,CEO. But today we have a hardtime supplying the local Brazilian

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upon arriving and, upon leaving, agift bag with Havaianas flip-flops.In the gift raffle, the Chilean am-bassador won a basket of O Bot-icrio products. In the festive at-mosphere, a foreign economist, whoworks for a multinational consul-tancy, told PIB that not everything

is rosy and that theres still a lot ofwork to do. Even the free-trade ac-cords can be bad, given the lack ofinfrastructure, he says. A Mazdaplant was recently transferred toMexico, where production costs arelower, to export back to Colombia.

Another weakness that he signalsis the excessive GDP dependencyon oil and gas exports, subjectingthe country to the mood swings ofinternational prices.

In the opinion of another inter-

national executive, Italys MatteoCera, who spent 3 years working atthe bank Morgan Stanley in Londonand was a consultant of McKinseyin the area of oil, what really mat-ters is the virtuous trend of the Co-lombian economy, political stabilityand improved safety. Cera married

a Colombian, decided to set up hisown business and, with an invest-ment of 75,000 dollars, launched astart-up in Bogota to offer home-help services online. To open thecompany, all he needed was a bank

account, signed articles of incorpo-ration and one day to register hiscompany at the trade board. Co-lombia today reminds me of Italy inthe 1960s, after exiting poverty andthe war. My father told me of his

joy in buying his first fridge and firstTV. Today, Colombians want to

visit Miami and not be viewedan air of distrust, says Cera. want to show off their passporcredit cards with pride.

market; and its also tough grow-ing where you are already marketleader. It was thus with an eyeto growth that Duratex identifiedin Colombia a market with goodpotential. Last year, the companyalready had 35% of Tablemac and,in January 2014, it achieved an 83%

stake via a public offer. It has fourfactories, which annually produce200,00m3 of panels for furnitureand civil construction.

Duratex has only one expatri-ate in its central offices in Medellin,financial director Rodrigo Delbem.

All the other employees, around1,000 people, are Colombians. Likeall Brazilians who invest there,Oliveira praises the commitment,amiability and good education ofColombians. But he really took a

liking to the bureaucratic simplicity.When I arrived, I asked to see thefiscal sector and they showed me 2employees in a room. In Brazil, wehave at least 200 people to deal withthe multiple tax requirements of theRevenue Service.

Colombia has an active policy of

attracting investments and the trickfor multinationals looking to touchdown in the country is provided

by Proexport, a type of mega-Apexwith offices in 30 countries. Proex-port establishes connections, offersinformation, signals the financingpaths and helps to obtain protec-

tion in the innumerous free tradezones, if the case. There is even thepossibility of setting up shop in thecountry as a unibusiness free tradezone if production is intended forexports, both the raw materials thatarrive and the products that leave

receive tax benefits (but it is alsopossible to export to the localmarket, at a different tax bracket).When it arrived in Colombia in2004, Rio Grande do Sul company

Artecola 9thin the Fundao Dom

Cabral ranking of Brazilian mul-tinationals and Latin Americanleader in adhesives, laminates andengineered plastics bought a localcompany and obtained the benefitof the unibusiness free trade zone.Last year, it took control of the larg-est Colombian adhesives company,

Pegatex, by buying a 55% stake.As well as Proexport, there are

also local agencies for attractinginvestments, such as Invest Bogota,the Cooperation and InvestmentAgency in Medellin and Invest Pa-cific, in Cali, which all intenselypromote the positive local attri-

butes. Although Bogota enjoys thestrength of being the capital cityand producing in its macroregion al-most 25% of national GDP, Cali, thecapital of the Valle del Cauca region,offers the attraction of being closeto the Port of Buenaventura, 115km

from the Pacific Coast. Unileverslargest plant in Latin America wasopened in Cali, which is also hometo Brazils Ortobrs and Furukawa.Ortobrs makes wheelchairs andequipment for the disabled and in-

vested 5 million dollars in a plantwith 50 employees. This year, Furu-kawa also opened a 5 million dollarplant to produce fiber-optic cables.

At the reception organized atthe residency of the Brazilian em-bassy to celebrate September 7, theguests received green-yellow tapes

2 Tablemac(Duratex)standat fair

3 Paz dVotoraplant inColom

1 Bogota:the first of OBoticrios100 stores

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the time has come to colombia

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