The coronavirus pandemic has hit Colombia hard, but according to its government, foreign investment remains firm.
After imposing a strict lockdown in mid-March, sealing its borders and halting domestic and international passenger flights, South America’s second most-populous nation endured a steady and relentless rise in daily virus deaths as the closure measures failed to work in poorer areas. By August, more than 300 people were dying per day, making Colombia one of the worst affected nations in the world on a per capita basis.
Foreign investors, however, are undeterred, according to trade minister José Manuel Restrepo. President Iván Duque’s government has set a target of drawing in $11.5bn in foreign investment by the end of its four-year term in 2022; Mr Restrepo says it is now close to $10bn and is tracking progress against promises made so far.
“We have been following more than 115 foreign investment projects which took a position of investing in 2020 and . . . in the exercise we have done . . . more than 95 per cent of those projects remain firm,” Mr Restrepo says. “Some will move [back] a few months; others a little less but the important thing is that most of the decisions to invest remain firm.”
There’s a big opportunity to increase Chinese investment in Colombia . . . especially in infrastructure and energy
The minister says this is because his nation’s attractions to investors remain intact. These include stable macroeconomic management and a pro-business government. Almost uniquely in South America, Colombia has not defaulted on its foreign debt in modern times and has had an uninterrupted democracy since the 1950s.
Colombia has been exceptional in another important respect: as a US ally. Until last year it stood back from a Chinese lending boom in Latin America, as Beijing poured more than $100bn into energy, infrastructure and mining projects.
Almost half went to Brazil, followed by Peru with $25bn and Chile with $15bn, according to the China-Latin America Academic Network.
Following a visit by President Duque to Beijing in July 2019, Chinese companies announced several big investments. China Harbour Engineering, a state firm, won a concession worth more than $4bn to construct and operate a metro in Bogotá, Colombia’s biggest infrastructure project.
Nationwide street protests against inequality and poor public services last year drew attention to festering discontent
Two months later, another group of Chinese companies secured a $1.1 billion deal to build a nearby rail line. In December, China’s Zijin Mining Group said it would buy gold mining firm Continental Gold.
Mr Restrepo now hopes that Colombia can boost exports of products such as meat and avocados to China and attract more Chinese tourists. “There’s a big opportunity to increase Chinese investment in Colombia in various areas, especially infrastructure and energy,” he said. “But we have also seen an enormous interest in helping our country develop in the area of ecommerce, for example”.
Before the pandemic, Colombia was growing faster than other major Latin American economies, with 3.3 per cent growth last year.
However, a prolonged lockdown has hit output, and the recovery is only just beginning to gather steam. Capital Economics forecasts that GDP will fall 7.5 per cent in Colombia this year and bounce back by 5.0 per cent next year, broadly in line with the regional average.
A 50-year-old economist who completed his postgraduate studies in the UK, Mr Restrepo has taught economics at Bogotá’s Rosario university and worked as a business consultant and higher education adviser before his cabinet post.
Now he finds himself handling the greatest challenge to his country’s economy in his lifetime. “We are in a process of recovery of productive activity and that recovery . . . is focused on generating employment, which is very important and is geared towards the fastest possible activation of sectors which pull along the economy, such as retail in particular,” Mr Restrepo says.
Aside from the immediate challenges of coronavirus, there are other problems that concern investors.
Nationwide street protests against inequality and poor public services last year drew attention to festering discontent. That erupted again in September into riots in Bogotá, after the death of a suspect who was repeatedly tasered by police while lying on the ground. Fourteen people died in the ensuing violence.
Street protests in Bogotá © Guillermo Legaria/Getty Images
Populist politicians on the far-left, such as ex-guerrilla Gustavo Petro, have challenged the pro-business consensus, which has prevailed in Colombia for decades. They are urging greater state intervention as they gear up for the 2022 presidential election campaign.
Mr Restrepo, however, is sanguine: “The only response to populism is sanity,” he says. “Sanity is production, the creation of companies and the jobs generated through their creation. That has to be the answer”.