Colombia has already spent several decades not correcting the modest panorama of its exports. This sector is concentrated in just 16 companies, led by Ecopetrol, the country’s largest company, followed by mining multinationals Drummond and Carbones del Cerrejón. Despite the fact that the causes have been well diagnosed, each government’s promises to defuse the situation and expand export supply remained within the realm of intentions. Suffice it to look at various regional measurements to see that the panorama is not very optimistic due to the maelstrom of non-tariff barriers, the delay in logistics or other tariff shadows.
The President of the National Association for Foreign Trade (Ancoldex), Javier Díaz, said a week ago during the annual Asobancaria Congress that in Colombia “the risks arising from the paperwork and drug trafficking” make foreign trade fundamentally impossible. A position that touches sensitive nerves in a country trying to shake off inflation and adjust indicators of a difficult post-pandemic economy. It was also Díaz who explained that out of a total of 10,000 registered export companies, only a handful accounted for 53% of commercial activity.
“At the base of the pyramid there are around 9,000 companies that make up barely 2% of the export basket,” explains Díaz in an interview with EL PAÍS. In this context of high concentration, a market is developing that has not yet fully reached its true capacity: “If we were to match the average per capita exports of other countries in the region, we would have to be close to $120,000 million.” But we’ve barely reached 57,000 million. Half of what a country the size and population of Colombia should export.”
Breaking down the stats further, Private Competitiveness Council executive Ana Fernanda Maiguashca recognizes that there is one feature of the current scenario that is of particular concern: “Basically, there are a number of quite different companies, but if you…” Look Look closely, these are small and medium-sized companies that have only exported once in the last ten years.” Exports account for around 16% of GDP in Colombia, led by the oil and coal sectors, extractive industries with products , for which there is no added value in the country. For the experts, the problem is primarily related to the customs barriers.
“In Colombia, the rates are not very high on average,” Maiguashca argues, “however, what happens is that they are very dispersed and it is not easy to organize the process for such a complex structure.” Another issue concerns the Paperwork with colonial undertones, which the also former director of the Banco de la República describes as “paratariff trade barriers”. Ask for a permit here, a registration there, and a stamp elsewhere. “This reality is part of our institutional culture and represents the major obstacle to international trade for most experts,” he concludes. And the third limitation is rooted in an almost inherent backwardness of infrastructure. Javier Díaz recalls that the production apparatus was installed “in the center of the country”, contrary to what happened in other countries like Chile or Peru. “Connecting the ports has been very difficult and we rely on the least competitive system, which is the motorway. Navigation on the Magdalena River did not work and the railway was left to sink.”
According to data from the Administrative Department of Statistics (DANE), exports increased by 4.9% in the first quarter of this year compared to the same period in 2022. An acceptable number considering that imports have increased against the background of global instability due to the Russian invasion of Ukraine or the trade conflict between the United States and China fell by 7.4%. José Manuel Restrepo, former Minister of Foreign Trade, concedes before the evidence that Colombia is one of the countries in the region that “least uses international markets”.
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But the current rector of the EIA University also assures that things need to be put in context: “Colombia has made great efforts to increase the share of non-mining exports. However, efforts must focus on strengthening strategies that allow micro and small businesses, which make up a large part of the business fabric in Colombia, to take advantage of international markets.
Restrepo also reminds that these handful of 16 big companies are a big contributor to GDP, which is also highly concentrated. Sergio Guzmán, head of the Colombia Risk Analysis think tank, adds that these companies are the only ones able to cover tax expenses, have infrastructure near the ports or pay for their own transport.
“Gas prices are going up,” Guzmán concludes, “travelling to ports is getting more expensive, and freight is getting more expensive.” A problem that is exacerbated by the country’s geographical fragmentation. Colombia has “been looking inward for many years,” says Díaz. A significant part of the growth has been driven by a market of 50 million consumers, which, while not insignificant, also harbors risks: “We haven’t had a new exportable product range with flowers since the 70s. There is no incentive to diversify. Now we are dealing with exotic fruits or avocados. But there are no big networks or export projects.”
Maiguashca provides another piece of information: by 2021, 6% of major exporters contributed 79.3% of total exports. This is a global concentration trend that is getting worse in the Colombian case. Furthermore, the president of the private body that oversees competitiveness continues: “The world has come a long way with the advent of digital commerce and we don’t have that much opportunity for improvement because it’s difficult to keep up with the export process exactly like that. “ Result of all these administrative hurdles.
Where do so many talanqueras come from? For Díaz, the answer must lie in failed government policies to curb drug trafficking. The Analdex officer explains that the authorities wanted to control every little detail of formal companies. Ultimately, it is an “over-regulated” market that is overloaded with lengthy controls: “It takes several days to clear a container through customs in our time, whereas in Panama it only takes a few minutes.” Then there are controls and fines, and the entrepreneurs get away with it prevent them from participating in the foreign market.”
However, Díaz also proposes solutions: “We must give more power to local AEOs and deepen the digital inspection process more than the physical one.” He also recalls that the United States authorities are convinced of this after the September 11 attacks were that they did not have to track goods, but knew in detail who the foreign trade actors were. Certification requirements have increased. This is the way, according to Javier Díaz: “It would speed up the work so that the DIAN, the anti-drug police, INVIMA and the ICA are more effective.”
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