As U.S. firms rethink their global supply chains in the wake of COVID-19, using Colombia as a production base could be part of an effort to “make the Americas great again,” the country’s ambassador told Global Atlanta.
Francisco Santos Calderón said the world has gone from a “just-in-time economy to a just-in-case economy,” forcing multinationals to re-evaluate the concentration of key value chains in China and Southeast Asia during the global pandemic.
Nearshoring, or manufacturing in nearby countries to lower costs while retaining geographical proximity, will be part of what he envisions as a trend toward “regional globalization” in the wake of growing geopolitical competition between the U.S. and China, which he believes is just now heating up.
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Supply disruption will make companies think about investing in smaller, tactical production units closer to their end markets, Mr. Santos said during a webinar interview with Global Atlanta, sponsored by Emory Executive Education at Emory’s Goizueta Business School and organized with help from ProColombia, the country’s investment and tourism promotion agency.
Atlanta and Georgia can play pivotal roles in nearshoring investment and trade relationships between the Southeast and Latin America because of its strategic location and concentration of Fortune 500 companies, said Mr. Santos, also a former vice presient of Colombia.
“Although Miami is the capital of Latin America, Atlanta is the capital of the Southeast,” he said. The Port of Savannah is only seven days by ship from Colombia’s Caribbean port of Cartagena, and Atlanta not quite five hours by plane from Bogota, the Colombian capital.
Colombia plans to reopen to international flights on Sept. 1, according to Mr. Santos, who recounted Colombia’s efforts to combat COVID-19 (91,000 cases and 3,100 deaths as of Monday) while also shoring up one of Latin America’s largest and most fiscally conservative economies.
Delta Air Lines’ flights are integral to business between the regions, he added, hinting that the Atlanta-based carrier should consider purchasing Colombia’s Avianca S.A., Latin America’s third-largest airline and the second-oldest in the world. Delta recently signed a trans-America joint venture agreement with LATAM Airlines Group that will link both airlines’ route networks between North and South America.
Agriculture presents some of the strongest opportunities for Georgia-Colombia cooperation, said Mr. Santos, calling Colombia “the last agricultural frontier,” with some 120 million acres of arable land ready for agricultural development.
“Anyone who wants to be in the ag game has to be in Colombia,” he said.
He expressed enthusiasm for forestry, especially, noting that Colombian President Ivan Duque Marquez’s government has designated some 17 million acres of land for forestry development.
“If you’re in the forestry business, you need to have people in Colombia looking [at opportunities]. In the next three to five years, it’s going to happen,” Mr. Santos said.
He added that Georgia forestry researchers have found the forestry production cycle in Colombia to be three or four years shorter than in the U.S.
“If you put that into a business model, it changes completely the dynamics,” added Javier Urrutia, who leads ProColombia’s U.S. investment recruitment and was also on the call.
Another plus for investing in agriculture in Colombia is that the growing season is year-round, Mr. Santos said. This advantage appeals to a Georgia cashew company that is considering planting thousands of acres of cashews that would make it one of the largest plantations in the world.
Cashews, avocados and other crops have been promoted by the Colombian government in efforts to supplant coca production following a 2016 peace deal with the FARC guerilla group that is in the process of being implemented.
The current COVID-19 pandemic has put 50 million Colombians at risk and, with 25 percent of the population unemployed, has presented a “fight for crucial monies” that might otherwise be used for crop substitution, Mr. Santos said.
But budget shortages will not delay progress toward the peace deal’s implementation, he asserted, brushing off concerns that Mr. Duque has been too slow in moving it ahead.
He said security is a now a “secondary issue” in the country whose democracy, science-based decision making, communicative administration and “institutionality” will help it surmount the pandemic crisis.
Colombia’s inward investment initiatives, meanwhile, align well with Georgia’s strengths as a hub for agribusiness, fintech, services, aerospace, automotive, chemicals, apparel and technology. To compete with Asian countries in terms of labor, Mr. Santos said, Colombia must specialize its investment pursuits.
He said he’d like to see Colombia and Georgia work together to “chew on the tech industry,” noting that Colombia is not as competitive as some Asian countries in that sector, but with a “technology cold war” happening between the U.S. and China, Colombia is a good option for U.S. companies.
Colombia competes well on labor, not because it is cheap but because it is productive and reliable, Mr. Santos said. The country is also ninth in the world in terms of the stability of its energy grid and near tops in the region in technical expertise, which is critical for tech companies, he added.
During a visit to Atlanta in November, he pointed to the dearth of venture capital in Colombia and suggested that Georgia firms could be part of its growth story, pointing to new tech startups like Rappi that have begun to change Colombia’s tech landscape.
Mr. Santos noted that Costa Rica’s successful technology sector was born from an Intel Corp. plant that was based there, and the ecosystem it left behind has made the country into a tech hub in the region. Colombia could do the same by first attracting technology assembly operations and then building from there, he suggested.
“We are going after business with a laser, not shooting with a shotgun,” to incentivize the right companies to invest in Colombia, he said.
Incentives exist for companies to nearshore in Colombia on both sides, he said, noting that the U.S. Development Finance Corporation (DFC), formerly OPIC, allocated $60 billion to put into equity financing for companies that invest in the region, partly as a way to counterbalance growing Chinese investment. U.S. companies must “wake up to this” and begin bidding on projects in Colombia, including infrastructure, which have been dominated of late by the Chinese.
“I have been telling the American companies to come and start bidding again on infrastructure projects in Latin America and Colombia. The U.S. left that market a long time ago, and we’re trying to lure them [back] in,” Mr. Santos said, adding that Southeastern companies are great builders and architects.
Mr. Santos invited Georgia companies, entrepreneurs and business students to visit Colombia, with the help of ProColombia, to discover opportunities.
“We want your investment; we’re open for business. Colombia is the best destination for nearshoring. Don’t miss this opportunity,” Mr. Santos advised.
Contact ProColombia for more information on investing in Colombia.