By Dr Soraya Caro Vargas,
Colombia, the South American nation classified as a medium revenue economy, accomplished its entry into the OCDE group following complicated adjustments and negotiations, in 2020. An upward development of 3.3% at the finish of 2019, the outcome of private consumption and larger investment flows, forecast inclusive improvement possibilities for its people today that had been delayed with the arrival of Covid-19. The slowdown in the worldwide economy all through 2020 meant the loss of thousands of Colombian SMEs and consequently of about 2.2 million jobs among March and September.
The positive indicators, connected to the reduction of poverty by half in the course of the final decade as nicely as fiscal and macroeconomic management, had been not adequate to compensate the low productivity development, the lack of functional infrastructure and the absence of active and integration policies that support to minimize the concentration of exports in raw supplies, hence escalating the economy’s exposure to price tag shocks. However, the World Bank estimates that Colombia will be one of the nations that will lead the financial recovery in 2021. According to the institution, the economy will overcome a contraction of -6.8% in 2020 and will develop 4.9% in 2021, with a far better efficiency than the typical for the area.
Facing this tough situation, the Colombian government is working on the quick reactivation of the economy. It is focusing efforts on industries that enable higher nearby and regional productive hyperlinks, as nicely as the diversification of exports with added worth. The attraction of intelligent investment is a priority, as is a nearshoring approach aimed at multinationals with interests in the US and Latin American markets.
The nation competes for investments that in the medium term can turn Colombia into a expertise-based production node. In this context, the shipbuilding sector seems as one that generates higher linkages and possibilities for specialization. However, this calls for public-private cooperation and powerful flows of foreign direct investment. Also transfer of technologies, needed to fulfil the requirement of the regional demand.
According to the benefits of the initial study carried out on the possibilities of attracting Indian investment to Colombia, with emphasis on sectors of higher specialization, the repair and building of vessels, regardless of getting an emerging sector in Colombia, seems as one of 12 sectors in which Indian investments could enhance critical advances for the re-industrialization approach of the nation. At the exact same time working with Colombian providers will represent an chance for their Indian counterparts hunting to strengthen their presence in the shipyard sector in Latin America. The study carried out by the Externado de Colombia Universityand Procolombia in 2020, bases its statement on the following elements:
Today Colombia has a State policy, a clear guideline that commits the institutions at the highest level to improve the improvement and internationalization of this sector. Concrete actions have not taken lengthy to materialize: aiming to create 40 thousand jobs in the medium term, Colombian government, by way of a plan known as PROASTILLEROS (decree 1156/2020), decided to market the building of all sorts of Vessels in the nation. The rule eliminates import tariffs on 395 goods and raw supplies that are not produced in Colombia and that are intended to make vessels. Companies can import such merchandise with out tax or exemption from customs duties, this suitable is in depth to suppliers incorporated in the chain of production.
An added variable becomes critical in this venture. The lifting of the Jones Act, by virtue of which US-flagged vessels can only be repaired in shipyards in that nation and in Colombia, thanks to the FTA, is a situation that opens a big marketplace in the Caribbean and that poses fascinating challenges in excellent and compliance for the nation.
The proximity to the Panama Canal is a geographical reality that adds to its favour. As nicely as the presence of critical shipping providers devoted to the transportation of oil and other minerals along the Caribbean Basin in which nations close India are active producers like Trinidad and Tobago, Jamaica or Surinam. The cruise sector hit tough by the pandemic opens a new enterprise line for shipyards in the area, these hunting for refurbish.
Colombian sector functions today by way of strategic alliances with its peers in European nations, primarily Spain. Some experiences of subcontracting the style and electronic systems for boats have been carried out in alliance with Indian providers, but there is no continuity in the connection among each industries. In terms of provide, the sector in Colombia demands items from 14 branches of the manufacturing sector. According to Procolombia, creating a boat generates 1.9 million dollars in linkages.This provide of goods and services is assured by the Colombian enterprise fabric situated in at least six regions of the nation that are close to to most important ports.Colombia has 32 shipyards, 5of them achieve international requirements. Cotecmar in the military sector, Astivik, Ferroalquimar and Yumma are some prospective counterparts of Indian Companies in Colombia.
In the brief term, the sector seeks to position itself as a supplier of spare components in Tier 3, and all through strategic alliances with globally recognized manufacture providers such as L&T shipyard Ltd., and ABG Shipyard Ltd., the aim in the medium term is the provide of prepared-produced most important components with a multifocal productive presence and technological specialization that meets the demand for services in Central America and the Caribbean.
The government of Colombia collectively with ANDI- FEDEMETAL, the industrial chamber that gathers shipyard most important providers, are advancing in the implementation of a policy that aims to turn the nation into a “bioceanic power by 2030”. It is taking benefit of competitive variables such as the availability of educated human capital and the existence of clusters for the production of spare components as nicely as the provide of specialized services.
The current news published in TheSpuzz Online relating to the contract that the US Navy signed in March final year with Larsen & Toubro Shipyards for the building of a specialized provide ship destined for the Chilean Navy, is inside the framework of the military sales plan abroad of the US government. This drew the consideration of the academy as nicely as officials who market investments in Colombia. The news validates the aspiration to make closer relations among Indian and Colombian providers,in order to realize the nations’ supreme objectives of inclusive financial improvement. India is a regional industrial powerhouse, whose shipping and shipyard industries are increasingly recognized for their requirements of excellent, innovation and technological improvement in the engineering style and building of complicated naval platforms as nicely as the building of state-of-the-art shipyards. Recent developments and incentives for the expansion of the sector in India seek to favour the improvement of the national sector, but also to meet a developing demand from the European Union and Asian nations. StrategicallyIndia should really also look to the Caribbean and to Colombia as a new ally in the area.
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Other industrial sectors that the study referred to located as potentially attracting Indian FDI are: infrastructure for electric autos – taking into account the Colombian government’s aspiration to have 600.000 units operating in 2030, the joint production of raw supplies for pharmaceutical industries as nicely as generics to provide the US marketplace, production of spare components for tractors and the production of some pulses, for Colombian and Central American buyers, this taking into account the aspiration of Colombia to diversify agricultural production and make more effective the use of the land readily available ending 50 years of conflicts.
(The author is Director Centre of Studies on Contemporary India CESICAM, Externado of Colombia University. She can be reached at [email protected] Views expressed are private and do not reflect the official position or policy of the TheSpuzz Online.)