Placing bets in Colombia: Mining company director Ryan Butta.
A DECADE ago, Colombia was pretty much a no-go zone for foreign investors, who were scared off by stories of crime, cocaine, kidnapping and corruption.
But Colombia, with a population of 46 million, is a country in transition, with a growing middle class, improved security and huge potential for businesses. It also now has Latin America’s fourth-largest economy, and has dodged the economic collapses and hyperinflation of countries such as Argentina.
Virtually shut off from the outside world for many years, the country’s tourism industry and other sectors, including mining, are taking off in a big way.
“Colombia was a country that 10 years ago no foreign company would look at because of the security situation,” says Monica Ramirez Hartmann, director of Austrade’s newly opened Colombia office.
“We’ve had so many problems with violence and drug taking, and that’s what lingers on in people’s minds. I think the perception of people is not matching up at the same speed as the changes we’ve gone through.”
The Australian government recently set up an Austrade office in Bogota to link Australian interests in Colombia and tap into the potential. It will also manage an Australian consulate-general in the capital, set to open next month.
“We think that there are opportunities for all sizes of companies and some specific segments or niches which are very interesting in Colombia,” Ramirez Hartmann says.
Among them are the service sector, the software industry, agribusiness, export/import, education and mining.
“The purchasing power is growing a lot. It has several free trade agreements so there are a lot of possibilities,” Ramirez Hartmann says.
Last month, on the day a free-trade agreement with the US came into effect, a bomb exploded in central Bogota, seriously injuring former justice minister Fernando Londono. Bloomberg reported that the blast killed Londono’s driver and a bodyguard, and injured 17 people.
It was a grim reminder that Colombia has traditionally fought its battles with violence.
But Australian Ryan Butta, a shareholder and managing director of merchant group Mining Capital Resources, which has five staff based in Bogota, says bombing is a rare occurrence.
“We haven’t had a situation like that for about three years,” says the 32-year-old.
“With my work, I’m travelling through the country in areas that five years ago you’d never go into and I haven’t had a single problem. I honestly think the whole drugs, cocaine and guerilla story is sort of like the ’90s, it’s sort of that hangover.”
Butta says those who land in trouble often have “no plan, no management and no language”.
He sees huge potential in Colombian mining, particularly in coal, which he says is of exceptional quality. “They say 50 per cent of the country’s unexplored. It’s one of the few countries in the world that hasn’t had a serious exploration program run over every inch.”
Butta says many mining areas – particularly those in the centre of the country – still operate by ”pick and shovel” and lack proper infrastructure to move the coal out. There is the potential for production rates to soar through mechanisation, he says.
“I’m placing my bets here. I think it’s the place to be.”
Butta first visited Colombia in 2000, and says the changes have been remarkable. “The progress I’ve seen in 10 years – it’s like two different countries.”
Ramirez Hartmann says: “The economy has grown a lot in the last 10 or 12 years. Where I see it most is in the growth of the middle class and definitely moving upwards.”
There is still a lot of poverty – up to 30 per cent of the population in some areas, she says – but the strong middle class is driving the economy, particularly construction growth and imports and exports.
Ramirez Hartmann says Colombia has a well-educated population, and it’s easy for foreign companies to find high-quality professionals to work with, such as architects and accountants. “[But] we also have a problem with English; it’s not really a bilingual country,” she says.
However, Colombia has an enviable location in South America close to Central America and the US. It’s about a six-hour direct flight to New York and the same to Brazil’s biggest city, Sao Paulo.
“If a company wants to come into Latin America, Colombia’s a very interesting point to start operations,” Ramirez Hartmann says.
About 40 Australian businesses have an active interest in Colombia, according to Austrade. Most are larger companies, but several, such as the Cranky Croc Hostel in Bogota – owned by Australian Andy Farrington – and La Villa nightclub are also kicking goals.
Melbourne-born Travis Crockett, 34, is a part-owner in La Villa, along with more than 20 Colombians, and runs its social language event, Gringo Tuesdays, which attracts 400 to 500 locals, travellers and expats.
“I was here about two days before I decided to stay,” says Crockett. ”It was a combination of the friendliness of the people and the ease of which you can do business here.
“It is also a really big opportunity because it has been shut off from the rest of the world for some time. The other side of that is Colombians are very much set in their ways … so they’re not as open to new concepts.”
Crockett has noticed more accents creeping into town, and believes the tourism market is ripe for the picking.
“The tourism industry is very, very new. There are a lot of cowboys out there. Most Colombians don’t know what to offer because they haven’t done much travel themselves.
“There are a million gaps in the market over here. If anybody had a decent amount of capital, there are a bunch of opportunities here.”
However, Crockett, who loves living in Colombia and having his own business, says it’s not all roses. He says many small business operators won’t make enough money to live off unless they have a supplementary income.
“You need time and you need patience to run a business here, and I think a lot of people run out.”
But it is one of the easiest places in the world to start a business, he says.
Ramirez Hartmann would like to see more Australian businesses seeking information about Colombia. ”There’s not a lot of information and the information available is negative.”
Doing business, Latin-style
- Colombians love an early start, with most schools and universities opening at 7am and offices about 8am. ”I don’t know why we’re such big fans of breakfast meetings at seven in the morning,” says Monica Ramirez Hartmann.
- On the other hand, Latin Americans are not known for their punctuality. ”It’s difficult to deal with it if you come from a country where everything’s on time and punctuality is important. You get used to it, but it can be difficult at the beginning,” she says.
- The Colombian government is keen to provide jobs for its young population and offers some incentives for foreign companies who employ graduates. There are also tax-free incentives for foreign hotel operators.
- Australians and Colombians – at least in many situations – find it easy to work together, and share similar work ethics.
- Colombians love the status of working for foreign companies.
Source: Monica Ramirez Hartmann, Austrade
Read more: http://www.brisbanetimes.com.au/small-business/trends/colombia-bolts-from-nogo-to-gogo-20120604-1zs3w.html#ixzz1xBqSA7gs