Colombia has signed numerous free-trade agreements in recent years, and the Pacific Alliance — also including Mexico, Chile, Peru — continues to mature.
Photo: “I believe we are going to have a better performance for our exports,” says Analdex head Javier Díaz Molina. (Credit: Analdex)
One agency in the South American nation that is helping to advance international trade is Analdex, the National Association of Foreign Trade (Asociación Nacional de Comercio Exterior).
To learn more about the state of Colombian exports, Loren Moss, executive editor of Finance Colombia, recently sat down to chat with Javier Díaz Molina, an economist and head of Analdex.
Loren Moss: So I’m here Javier Diaz Molina, the executive president of Analdex, the National Association of Foreign Trade. If I understand correctly, Analdex is the union for Colombia’s exporting sector? Is that right?
Javier Díaz Molina: Yes. We were born as the Exporting Association in 1971, and Analdex was founded as the National Association of Foreign Trade. However, some years ago, the board of directors said we should not only look at exports but also foreign trade.
So, we kept Analdex, but now we are the National Association of Foreign Trade, and we opened the road not only for the exporters but also for the importing companies and the logistic companies as well. So, we are really focusing all of Colombia’s foreign trade subject.
Loren Moss: So what role does Analdex have in supporting those Colombian companies in exporting to places like the United States, European Union, South Korea, and any other markets they want to reach?
Javier Díaz Molina: Colombia has not taken advantage of the free trade agreements in a proper way, and precisely this has not been done because, when the validity of these agreements started, Colombia was suffering from the valuation of its currency. So exports remained concentrated in oil and in mining mainly. Due to the great increase of the oil prices earlier this decade, one can say that there was sort of a “Dutch disease” from one sector having a boom of prices.
But after the drop of the oil prices in 2014, and then the devaluation of the peso, came the adjustment of economy. And now we are seeing how the exporting activity is again profitable, and we have started to see a better performance for exports. The international economy also contributes to this — the recovery of the American economy, European economy, and the region’s economy.
Let’s remember that, in 2016, Venezuela, Ecuador, Argentina, and Brazil all had negative growth of their economies, and those are the buyers of our manufactured products, the products with an added value. So, today’s improved international economy and better behavior of the exchange rate, for sure will allow us to now begin to see how we can take advantage of these free trade agreements.
Loren Moss: What sectors of the economy are seeing improved exports?
Javier Díaz Molina: One starts to see, first in the agricultural sector a better development of products such as coffee, bananas, flowers, fish. Tilapia and trout have begun to be exported into the American market. Taking advantage of the geographic location of Colombia, we can send fish that is not frozen, but refrigerated, to the United States. They can depart and arrive on the same day to the United States. They can reach the restaurants as refrigerated fillets not frozen, which gives a better price.
We are also developing protocols that will allow us to enter that market with the fruits that aren’t required to go through quarantine safety treatments, as in the case of the uchuva, which has had to have a cold treatment that decreased its useful life. So thanks to all these, the fruit can arrive fresh to the North American market from the zones here in Colombia.
The same goes for the avocado. We recently saw, late last year, the approval of our avocado to the North American market. We are developing — particularly Analdex is developing — a project in seven Colombian departments, among more than 800 producers, to guarantee that one kilometer around those fields is guaranteed to be free of diseases. And that allows that those products arrive — without being subject to any cold or vapor or heat treatment — to the U.S. market.
Other products come next. We already signed the operating work plan for citrus, including sweet oranges, tangerines, pomelos. And after these, comes peppers and other products. So, this new stage for sure will allow for Colombia to start taking advantage, in a better way, of these free trade agreements.
And the same is happening with Europe. We see that, previously we exported basically just oil or coal or ferronickel to Europe. But, now, manufactures are starting to find other specific niches. For example, bathing suits, women’s underwear, sportswear — a series of high quality products and high price. These have started to arrive to markets that demand quality, design, exclusiveness.
So, I believe, we are going to have a better performance for our exports. Since the final days of last year, we’ve had a growth of agricultural and agro-industrial exports, and manufacturing has been constant. So, we expect that 2018 will bring the consolidation of that process and we start to see new products in the international markets.
Loren Moss: What challenge does the transportation network present? In Colombia, other than small railways for transportation of coal, there is not a network of railroads. What impact will there be from the 4G project to overhaul the nation’s highway network, which is already being executed? Or what impact will we see from the port that’s being constructed in the Gulf of Uraba?
Javier Díaz Molina: Yes, undoubtedly that is one of the areas that is being worked on. Basically we have a transportation system based on trucks, not railroads, not the Rio Magdalena, not rivers. Those are subjects that need to be developed, but in the meantime, what the government has worked on is developing a road network that allows the center of the country to be connected with the maritime ports in double carriageways. And that’s being developed.
Of course, it takes time, but undoubtedly, this will allow us to decrease the time and cost in terms of transportation. When one looks at the subject of costs, we are much more expensive than some of our competitors, such as Chile or Peru. But it is because that they have their productive centers near the port. We have ours in the center of the country. The Bogotá-Medellín-Cali triangle is our manufacturing center. So, we have to see how we can more efficiently connect those places with the ports.
The Magdalena River can also become a factor for the movement of big loads — of great weight and volume — that allows Bogotá to be a better exporter of manufactured products. An option is going out of Bogotá to Puerto Salgar, either by land or by train, and, from there, connecting with the Magdalena River. It takes time, but I believe that work must be done.
Loren Moss: How does the digital world factor into all this? Can Colombia take better advantage of online sales?
Javier Díaz Molina: The other element we have to work on — and here in Analdex we are developing a project around it — is e-commerce, the modern way of trading. When one looks at what is happening in the world, a recent article of Ali Baba’s president said that e-commerce is going to “retire” containers because a great amount of loads are now going to be managed in packages through airways. This will beging eliminating the intermediary chains, with the producer sending goods directly to the consumers through e-commerce. There are a lot of products that can make use of this.
Recently, I had the chance of being with DHL, which was inaugurating a second flight to the United States. They are tripling the operation because it is an airplane whose capacity is of 50 tons. And in 24 hours you can be in Miami or in New York. So you can ship, for example, a glass and a buyer will be able to receive it in New York in just 24 hours. There’s no doubt about the potential in these possibilities of e-commerce.
So part of what we are trying to develop is having regulation here in Colombia that is pro e-commerce. We wants rules that make operations easier — so that there aren’t papers or barriers or obstacles for this type of commerce.
Loren Moss: What role does Analdex have for the businessman who doesn’t know that much? I imagine that you have events and various resources, but basically when should a business contact and communicate with Analdex?
Javier Díaz Molina: We have a series of services, including some basic services for the companies. For example, we do many things in the area of information. Many companies tell me, “Hey, I want to know what the tariff of my product will be in this market.” Or, they ask, “I want to bring a machinery from the United States. How can I do it? How can I receive benefits from the incentives that exist?” So we help in this advisory capacity.
And we help some affiliated companies in areas such as interacting with the DIAN tax agency. Sometimes they tell me, “They seized my merchandise — I believe I am in the right, but the merchandise is seized.” So, we enter to take a look at the documentation. We will look to see if you are right.
Colombia has a nest of drug dealing, and that drug dealing tries to pollute the legal loads. So we may be working with the anti-narcotics police in many cases to visit the companies and help them understand the security norms. For example, the pharmaceutical laboratories told me, “they are opening our medicines in the airport.” So we sit with the police, and tell them, “let’s go visit the laboratories, get to know the processes.” We help them get to know the security norms in such way that, when you have a case for one of these laboratories, you know who is it and how to manipulate those medicines in order to not damage them. The same happens in the subjects of food.
There are some other companies that ask us to help them find markets. So we have some networks of information, and we get support from the commercial offices of ProColombia abroad to search for marketing possibilities. Also, we will help companies from abroad that are looking for suppliers. We connect them with providers. We tell them what Colombia is about.
Loren Moss: Colombia is in a cycle of elections. From the point of view of a foreign investor, what risk is there for the Colombian economy?
Javier Díaz Molina: What we have done is contact the candidates. We have brought them here to our board of directors. Not only so that they tell us what they are thinking, but also for them to hear our positions in the subject of, for example, e-commerce. So we’ve been developing a dialogue with each one of them.
Particularly for foreigners, we have to think that Colombia has an institutional structure that is relatively strong and that has a separation of powers — so a president can’t do whatever he wants. There is a Congress, there are courts, which won’t allow mad things to be done. So, there is a institutional structure that works — with flaws — in the subject of justice.