By Publisher Kyung-sik with Business Industry Editor Kim Tae-moon, Reporters Kim Jung-mi, Sua Kim
Colombia is a gateway for Korea to Latin American markets and is a 'paradise' for Korean business companies to make good money thanks to many advantages offered, including an attractive Free Trade Agreement network. This was disclosed by newly accredited Ambassador Juan Pablo Rodriguez Barragan of Colombia in Seoul at a recent interview with The Korea Post media, publisher of 3 English and 2 Korean news publications since 1985. A retired 4-star general, an engineer and an MA holder in business administration and national security, Ambassador Rodriguez Barragan also worked as a university professor. Details of the interview follow:
Question: What are the areas in your country where you want Korean companies to invest and what are the areas where you wish your businessmen to invest in Korea?
Answer: Colombia means a gate to the Latin American markets due to many reasons. Firstly, it is strategically located in the middle of the Americas with almost the same distance to Canada and Argentina, and access to both Oceans Atlantic and Pacific, which allows in logistic terms coverage of all the Americas in an efficient way. Secondly, Korean companies would have preferential access to the Americas and Europe from Colombia thanks to the Free Trade Agreement network that the country has; because at the same
time a company would have preferential access in countries such as Brazil, Mexico, The United Stated and any country in Europe; Thirdly, Colombia is a member county of the Pacific Alliance a profound, innovative, flexible integration process, with a projection to the world and with clear and pragmatic goals committed to promote free circulation of goods, services, capital and people to which Korea recently applied to be an Associate State. Finally, Colombia is a very competitive country, with one of the best energy liabilities of the world, competitive salaries and 96% of the municipalities with Optical Fiber. Finally, one of the top reformers in order to improve business environment, which ranks the country in the first positions in Latin America of Doing Business World Ranking.
Therefore, the opportunities to invest are in Manufacturing in sector such as Automotive, Chemicals, IT and Agribusiness. Regarding this last sector, due the peace agreement that we signed last year, we will have more 20 million new hectares of productive land to cultivate cacao, Avocado, Pineapple, Palm Oil, among others; in order to accelerate the investment in these areas, the Colombian Government has important incentives for the companies which invest there. Micro enterprises and small businesses located in the Most Affected Areas by the Armed Conflict (in Spanish “ZOMAC”) will have a tax incentive reflected in a 0% income tax between 2017 and 2021; In the period from 2022 to 2024 the income tax rate will be 25%, 50% between 2025 and 2027 and full rate after 2027. For medium and large companies that are Located in these areas, will have a 50% income tax between the years 2017 to 2021, 75% between the years 2022 to 2027 and henceforth the general rate. (In all cases complementary taxes are included).
Theas effort was complemented with the Zidres passed by the colombian Congress in 2016 which created interest zones for rural, economic and social development as an institutional strategy to foster the productivity of territories with special characteristics such as remoteness to urban centers, low levels of population density, among others. They will increase the availability of land for agro industrial developments. The productive projects approved under the Zidres law will enjoy a policy of incentives, as long as they link the small or medium producer without land. They will also facilitate the peasants and workers involved in their development acquire their own lands.
Colombia has done an important effort in IT infrastructure. The country with the aim to resolve poverty through IT, has passed to have 200 municipalities with Optical Fiber to 1,094 municipalities which represents 96% of the total territory; also, went to have 5 submarines cables to have 11, which connect the country internationally. Therefore, the country has become a hub in the region for Big Data Centers of international companies such as Telefonica and IBM; and also have given the infrastructure needed to develop software and IT services in several verticals, especially in finance, retail, energy and health.
With the purpose to diversify the source of Energy and become more sustainable, Colombia has launched a new law to incentive the generation of renewable energies, particular solar, wind and biofuels. This incentive consists in a tax return of 40% of the value invested in this field, which means a big opportunity for Korean firms that wants diversify in renewable energies. Finally, there is many infrastructure projects that are going to be adjudicated in Colombia, mainly in airports, ports, metro systems and railways, which some Korean firms have the knowhow. So, we would like to invite the Korean companies to participate in these projects.
Q: As Your Excellency is new in Korea, please introduce yourself in detail, including your career, family background and hobbies.
A: I began my tenure as Ambassador of the Republic of Colombia in the Republic of Korea on February 21, 2018. Prior to that, as former 4 Star General, I served as a Commander General of the Colombian Armed Forces. I am an Engineer in civil and military works with a Master´s degree in Business Management from the University of La Sabana and a Master's degree in Defense and National Security from the Nueva Granada Military University in Bogotá, Colombia. I have experience working in planning special and strategic operations, human talent management, logistics administration, unified action of the State, development of the peace process and implementation of transitional justice models as well as in negotiation techniques, crisis management, leadership skills in decision making and teamwork.
I have also served as a Professor at some universities such as the Javeriana University and the School of Military Engineers. I participated in the preparation of the book the Use of Explosives in Civil and Military Engineering Works which won the national prize of engineering "Diódoro Sánchez" in 1993 for having been the work that made the most important contribution to the technical part of national engineering. I am married to Patricia Calderón Carmona and we have two daughters. My hobbies are doing sports, listening to music and reading books.
Q: Nowadays, economic cooperation is very important between the countries. Who are the major Korean companies actively engaged in bilateral economic cooperation? Please introduce them in detail in the order of size and scale of business activities.
A: There are some examples of Korean presence in Colombia:
- LG CNS Korean Enterprise that provides IT participated in three government procurement Project in Colombia:
o Money collection system in Transmilenio and SITP (Tarjeta Tu llave).
o Project on Technologies of Information and Communication.
o Intermunicipal transportation system control in Pasto, Colombia.
- Korean Development Bank invested in the Connection North Highway project.
- Hyundai E&C (Engineering and Construction) is building the water treatment plant for the Medellin River associated with the Consorcio Aguas de Aburrá.
Finally, there is commercial presence of Korean companies such as Samsung electronics, Hyndai, Kia, LG POSCO, SK, LIG Next one, Korea Environmental Industry & Technology Institute, Hankook Tire, Korean Export – Import Bank, Posco Daewoo, TGL Colombia, Cheil Worldwide INC., Ceragem, Suntech International, Samsung Corporation, Samsumg SDS, Pantos Logistics, Line Corporation, Daewoo Engineering and Construction, Nugabest, Nexen Tire, SK Holdings, LG Electronics y LG CNS. It is important also to mention the Colombian companies in Korea. At the moment we have 4 four Colombian companies who opened offices in Korea and they are basically located in the agro industrial sector. More than 5 years ago Rans Korea opened its office and since then it has been supplying high quality hydrangeas.
A major milestone for this company came in 2017 as they started the imports of Colombian yellow pitaya, which is a fruit that has been very well accepted by Korean consumers. Today we are working with the Korean sanitary authorities on mechanisms aimed to maintain exports of pitahaya in Korea. In second place we have two green coffee distributors, Café Nogales and Amativo Korea, one located in Busan and the other in Seoul respectively but both bringing the best Colombian specialty coffees. The fourth company is Daabon Organic that started operations this year and is selling organic palm oil, organic bananas and organic coffee in the Korean market.
Besides, Colombian coffee is becoming more important in Korea. In 2016 Colombia was the second biggest exporter of coffee beans to Korea after Brazil. Additionally, we are in the top three exporters of instant coffee extracts and essences to Korea. Companies such as Colcafe and Descafecol are suppling Korean companies with high value products. Finally, the two countries are currently working on a bilateral cooperation program with the Korea Institute for Advancement of Technology (KIAT) for the automobile components sector through the ODA programs, called the Technology Advice and Solutions from Korea "TASK". This is an action based consulting program where Korean experts visit companies in the partner country to provide customized technical consulting, through which companies in the partner company can resolve their onsite technical issues and can establish a business to business network with Korean companies. This initiative would complement and enhance previous bilateral efforts made in this sector under the “Memorandum of Understanding for Cooperation in the Automotive Industry”.
Q: What is the current volume of bilateral trade, its outlook in the next 12 months?
A: For 2017 the bilateral trade reached over US$1.25 billion, a decline of 3.3 % when compared to the trade that was recorded in 2016. This decline is explained by lower exports of cars from Korea to Colombia. However, Colombian exports has been increasing particularly coal and coffee. The bilateral trade is heavily skewed towards Korean exports to Colombia which account for two third parts of the total volume. In 2017, Colombian exports to Korea amounted US$ 457 million, with an increase of 13.7% compared to 2016 (US$ 402 million). The increases of Colombian exports to Korea were mainly in coal, waste of metals (cooper, aluminum and iron) and pesticides and fungicides.
Other exports included are: unroasted or decaffeinated coffee and extracts and concentrates of coffee, hydrangeas and carnations, balloons of latex and leather. In 2016, Korea import from the world US$ 406 billion. Colombia's exports represented 0.11% of its total imports in the world and ranked 56th among the countries that sell in that market. In 2017, Colombian imports of Korean products reached US$ 791 million (FOB), with a reduction of 12,3% compared to 2016 due to less imports mainly vehicles among others but composited by an augment of tires and cellphones among others. In 2017, South Korea ranked 20th of Colombia's exports to the world. At the same time this country ranked as 8th supplier of Colombian purchases.
After one year and a half on the entry in force of our bilateral Free Trade Agreement in July 15th 2016 I am confident that the FTA will help to boost during the coming years Colombian exports in products such as flowers, fresh and processed fruits such as pitahaya and cacao preparations just to say a few. We have a wide range of agro industrial products that suit very well the Korean consumers but due to import duties their competitiveness was low something that should change in the near future thanks to this agreement. Moving ahead and thanks to this FTA both economies will continue to find more synergies and increase trade relations.
Q: What are your competitive products and/or services attractive to Korea and what are Korean products and services that your country might wish to import?
A: A sector that shows big potential, especially after the Free Trade Agreement between the two countries is Agribusiness. Colombia as tropical country doesn’t have strong seasons, therefore agricultural products can be growth almost all year round; additionally, the variety of climates allows to cultivate several types of fruits, some of them very popular such as Avocado, Mango, Pineapple and Banana and exotic fruits such as Golden Berries, Passion Fruit and Pitaya among others.
Hence, our main competitive products are food process products based in these kind of fruits. Products that we strongly believe have a big potential for the Korean consumers, which constantly are looking for health and new products at the market.
Also, Colombia has shown strength in the apparel sector, especially in products of Leather, active wear, under wear and control wear. In the recent years, Colombia has become a referent in terms of innovative and luxury products in this field, however, this know how is still to be acknowledge in Korea. In the case of Korean companies, there are opportunities to expand your business in sectors such as Automotive, Electronic devices, Home Appliances, Cosmetics and Pharmaceuticals, as Colombia represents the third largest country of Latin America with around 50 million people.
Q: Please add whatever other details that Your Excellency might consider to be important.
A: Colombia used to be a country that was facing an internal conflict during the last 60 years. The Colombian Government signed and approved a Peace Agreement with the guerrilla, by which our President Mr. Juan Manuel Santos received the peace Nobel Prize last year. Nowadays, the country is a safe place to visit, where you can run business or visit for tourism. Colombia is going through a historic moment in its life as an independent country. At the time of the commemoration our 208 year of the Declaration of Independence, the country prepares for a new era of living in peace after the agreement of ceasefire and hostilities with the FARC. Colombia government efforts are focusing in many areas of economic development including promotion of trade and foreign investment. It is in this framework in which the Pacific Alliance (comprise by Chile, Colombia, Mexico and Peru) became instrumental of this objective. Korea recently requested to be consider an Associated State of the PA and is expected to have a response during the course of Colombia Protempore Presidency that last until mid-year.
The Associated State mechanism seeks to strengthen trade, regional and free trade integration, as well as take advantage of regional platforms and promote negotiations of trade agreements with high standards in the field of disciplines in the short term. Therefore, it is expected to strengthen not only the bilateral relations between Colombia and Korea but also with the countries that are part of the more successful integration process in the Pacific Alliance framework.