Chinese investment seeking to relocate to Latin America does not reach Colombia

Chinese investment seeking to relocate to Latin America does not reach Colombia
Chinese investment seeking to relocate to Latin America does not reach Colombia

01:48 PM

In his intervention in the Dialogues of the EIA University Thinking Center, the international expert Martín Gustavo Ibarra, president of Araujo Ibarra y Asociados, He maintained that in the context of global trends that have impacted trade and investment in the last 23 years, Colombia has at least 10 business opportunities in different sectors which, in particular, could be taken advantage of by Antioquian businessmen.

Part of this potential is green electricity, electric vehicles, data centers, health, tourism and agribusiness, some of which have some emerging initiatives in our region.

Ibarra referred to the enormous potential that Antioquia presents to capture an important part of the nearshoring strategy or taking advantage of the relocation of strategic activities in Latin America from Chinain which the big winner is Mexico.

IDB data indicates that Colombia could reach US$6 billion in export potential, of the total of US$78,000 million that correspond to Latin America, if the population of our country is considered. In the opinion of the global analyst, Antioquia has all the conditions to take advantage of this platformeven by taking advantage of complementarities with Mexico, both in its domestic market and in that of the United States.

The EIA University Thinking Center facilitated an EL COLOMBIANO interview with Ibarra, who detailed some of the tasks that the department of Antioquia must undertake to capitalize on the opportunities.

Since the covid restrictions began to be lifted, there has been talk of the progress of the nearshoring in Latin America, but what specific examples are there of companies that have relocated to Colombia or Antioquia?

“He nearshoring has had a great impact in Latin America and clearly the winners have been Mexico, Costa Rica and the Dominican Republic. In Mexico, exports per capita have gone from US$3,000 to US$4,500 and we have investments like Tesla, which exceeds US$10 billion. In addition, 450 new projects have arrived in Mexico in the last 2 years, of which 20% come from China. Unfortunately, that wave that has reached Latin America in an important way and that according to the IDB is worth US$78 billion in investments has not yet touched Colombia. So we cannot register a new anchor company or a large investment either in Colombia or Antioquia and it is a shame. It is a shame because I believe that we should make it a national goal to prepare Colombia as a whole and through its regions so that anchor companies and new businesses come to Colombia with the nearshoring”.

The need to attract investments is insisted upon, but in key sectors such as mining and oil the current Government does not want them. How can we overcome this situation or will we have to wait until 2026?

“This Government wants the decarbonization of the country, but in order to produce decarbonization, certain minerals are essential without which there can be no decarbonization and I am referring especially to nickel, aluminum and copper. And Colombia has large reserves of nickel as we see today in Cerro Matoso and there is also copper and important copper projects in Cesar and La Guajira. I believe that those minerals that are essential for decarbonization, as well as eventually attracting aluminum investment to Colombia, may be within the objectives of the current Government. The Government has said that it does not want traditional minerals such as coal, so minerals that are essential for the decarbonization of the planet, for the manufacture of electric vehicles, in which Colombia has important reserves still undiscovered, fit perfectly.”

There is also emphasis on energy transformation, but in recent years only 20% of the projects have been implemented because environmental licensing and conflicts with communities prevent progress. What to do in this direction?

“Definitely, Colombia’s challenge is to move from non-renewable energies to renewable energy. If we look at Colombia’s trade balance since the economic opening of 1991, 50% of the US$800 billion that the country has exported is oil and coal, 37.5% oil and 12.5% ​​coal. Without a doubt, these products will no longer have that shine in the future, not only because the Government does not sponsor them, but because the world is heading towards a period of decarbonization. And this is where renewable energies can be Colombia’s new business, not only because renewable energies, unlike traditional ones, do not travel, but also because the new industrialization will have to come to Colombia to look for renewable energies. But, obviously, a great capacity for coordination and agreement is required to make these projects a reality. It is sad to see how wind farms in La Guajira are dismantling their equipment to take it to Peru, which has already happened. That is why perfect synchronization between the Government’s intention to decarbonize the environment with environmental permits and consultations with the communities is essential so that hopefully within this Government they will become a reality.”

And what can we say about an energy with enormous green and sustainable potential, such as hydrogen, which has very important players in the south of the continent like Chile, but we are still behind and barely formulating some alternatives without entering into specific projects?

“The great challenge that Colombia has is to overcome the proposal of Brazil and Chile as a destination for investments in green and blue hydrogen. In fact, in Chile there are 63 hydrogen projects identified, of which 10 are in an advanced feasibility phase. In Colombia, according to the Andi Hydrogen Chamber, there are 43, of which only 5 are in an advanced phase. I do believe that Colombia has many possibilities of leveling or surpassing the proposals that Chile and Brazil have, which are the two great competitors in Latin America, for several reasons. The first, for objective reasons, since in Colombia, the Colombian Caribbean coast has two fundamental elements to produce green hydrogen, such as luminosity and wind. In the case of Chile, it has the wind offshore in Patagonia and the luminosity also exists in the Iquique desert, and here we have those two elements concentrated in one place. But we also have 4.3 billion tons of coal buried in Cesar and La Guajira, which with CO2 capture and through a procedure, that coal can be used in the production of blue hydrogen, which is considered environmentally friendly and is the subject of the benefits of Law 2099 on environmental tax incentives. Likewise, there are the gas wells that Colombia has on the Caribbean coast, from which blue hydrogen can also be produced. Another fundamental element that allows Colombia to aspire to compete with Brazil and Chile is the combination of two very important incentive mechanisms. One is the free zones and the other is the environmental benefits, because by combining free zones that lowers taxation to 20% of the income tax, plus the exemption of the VAT tariff for the equipment necessary for the production of hydrogen, This combination will mean that these users will not pay more than 15% of the global minimum income provided for in Law 2077, thus leveling the possibilities that Brazil and Chile have for environmental projects.”

Despite the Paisa push and although the advances in 4G roads and port developments are notable, currently there is a risk of being disjointed from the rest of the country. How to achieve integration into national projects from Antioquia through new initiatives?

“I believe that the great challenge that Antioquia has is not only to connect with Colombia, but to connect with international trade. We have always had a central vision of economic development. The other day they invited me to the coast and I thought they were going to see the opportunities of the coast in terms of foreign trade and everyone was comparing how to get to Bogotá. I believe there is a biblical figure, Ruth, who turned to salt by looking back. I would invite us to think about how to connect not with Colombia, but with the world and this is how two very important projects will allow Antioquia to connect with the world. One is Puerto Antioquia, which will allow us to go from 2 million to 7 million tons, of which this difference of 5 million, hopefully half will be imported products for export or export, that is, raw materials that are transformed in Urabá to be exported and do not necessarily have to be moved to another location in the national territory. And the second, the Rionegro airport, which with the exponential growth of cross-border electronic commerce and the great incidence of international trade that goes by plane, and which today reaches 35% of the value of international trade, will undoubtedly connect Antioquia through the packages with foreign trade, as long as there is the necessary supply to cover this demand.”

In what horizon and with what actions will Antioquia have per capita exports of US$2,175 dollars, which is the Latin American level?

“I believe that Antioquia’s aspiration is not only to level the US$2,175 per Latin American capita, but to level the US$3,000 per capita worldwide in exports. And for this there is only one formula, which is to turn this strategy into a high regional policy decision. As long as this objective is not in the mouth of the governor of Antioquia, the mayor of Medellín, the mayors of Urabá and the towns near Urabá, and the leaders of the main municipalities that have a vocation for internationalization, the work will not take place. started”.

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