VZCZCXYZ0013
RR RUEHWEB
DE RUEHBO #0229 0162048
ZNR UUUUU ZZH
R 162048Z JAN 08
FM AMEMBASSY BOGOTA
TO RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/SECSTATE WASHDC 0990
INFO RUEHBR/AMEMBASSY BRASILIA 7996
RUEHCV/AMEMBASSY CARACAS 9786
RUEHPE/AMEMBASSY LIMA 5788
RUEHZP/AMEMBASSY PANAMA 1088
RUEHQT/AMEMBASSY QUITO 6497
UNCLAS BOGOTA 000229
SIPDIS
SENSITIVE
SIPDIS
WHA/EPSC FOR PMAIER; EEB/IFD/OIA PASS TO OPIC; TREASURY FOR
MEWENS
E.O. 12958: N/A
TAGS: EINV ECON BEXP CO
SUBJECT: FOREIGN INVESTMENT CONTINUES TO BOOM IN COLOMBIA
REF: BOGOTA 2
1. (SBU) SUMMARY. According to preliminary figures Colombia
attracted over USD 7.5 billion in foreign direct investment
(FDI) in 2007 amid improvements in security, investment
climate reforms and strong macroeconomic fundamentals. The
total represents Colombia's second highest inflow of FDI in
history and registered 18 percent higher than 2006. Foreign
companies invested approximately USD 4.5 billion in the
energy sector with the balance spread across the retail,
financial, manufacturing, transport, and telecommunications
sectors. New investment (vice acquisition of existing
businesses) comprised USD 1 billion of the total--a 378
percent increase over 2006. END SUMMARY.
One for the Record Books
------------------------
2. (U) The inflow of foreign direct investment in 2007
represents Colombia's second highest total ever, exceeded
only by 2005's total of USD 10.2 billion which included
SabMiller's USD 5.5 billion mega-purchase of the Bavaria
brewery. As a percentage of GDP, Colombia's 2007 take ranked
as second highest in Latin America after Chile. Investment
remained strong in the energy sector at USD 4.5 billion, up
from USD 3.1 billion in 2006, but increasingly spread across
the economy with commercial, financial, and manufacturing
sectors receiving a total of USD 2.3 billion--a 300 percent
increase over 2006. The rise in FDI helped push total
investment (foreign and domestic) from 13 percent of GDP in
2002 to 28 percent in 2007.
3. (U) The FDI also originated from a more diverse selection
of countries than in previous years. Prominent foreign
investors include French steelmaker Arcelor Mittal, Brazilian
steelmakers Gerdau and Votorantim, French retail chains
Casino and Cencosud, Mexican communications firm Telmex,
Belgian construction firm Jan de Nul, Salvadoran construction
company Poma, Chilean retailers Forus and Falabella, and
Korean automaker Hyundai. The United States, however,
remained Colombia's largest source of FDI with an accumulated
stock of USD 7.7 billion, or 21 percent of Colombia's total
since 1994. GE Money's USD 228 million purchase of a 39
percent stake in Banco Colpatria ranked among the highest
profile non-energy sector U.S. investments in 2007 along with
hotel chain Sonesta's USD 70 million investment in three new
hotels.
(Re)Locating to Colombia
------------------------
4. (SBU) Economic and security improvements in Colombia led
several international companies, such as U.S. consumer paper
firm Kimberly-Clark, U.S. agbiotech firm Monsanto, and
Mexican petrochemical firm Mexichem, to select Colombia as
their base for regional operations during the year.
Likewise, the increasing contrast with the political and
economic uncertainty in Venezuela has resulted in some
companies shifting planned investments from Venezuela to
Colombia. A representative of U.S. firm Mars told us that
uncertainty in Venezuela and the positive investment climate
in Colombia was key in the company's decision to build a USD
100 million processing plant, originally planned for
Venezuela, in Barranquilla.
Outlook for Continued Investment Bright
---------------------------------------
5.(U) According to ProExport President Maria Pombo, final
2007 FDI figures could reach USD 8 billion. She underscored
that, beyond total amounts, 2007 registered a significant
increase in new "greenfield" investments, which normally
create more new jobs than foreign acquisitions of existing
companies. Pombo also said ProExport expects strong FDI
inflows in both "greenfield" projects and acquisitions to
continue in 2008. In addition to continued growth in
partnerships between Colombian and foreign companies, she
cited opportunities arising from GOC plans in 2008 for USD 2
billion in infrastructure concessions and privatizations of
minority stakes in companies such as Banco Popular.
Brownfield