Guest Opinion: A Signal of Caution For Direct Investment in Colombia—Über VP of Global Public Policy
As Colombia prepared to enter this new decade, its attractiveness for direct tech investment was reaching new highs thanks to President Duque’s interest in this new field. The nation was entering an era of peace—possessing open trade policies, featuring pro-business political leaders, and birthing its own stable of runaway startup successes. The progress being made in Colombia’s vibrant urban centers like Bogotá and Medellín showcased to investors that the nation was electric with possibility and growth.
For Uber, we had detected this potential in 2013, and as we began our rapid global expansion to eventually over 60 nations, we chose Bogotá to be our first step into South America. Our services were quickly embraced by their tech-savvy citizens, and the flexible earnings potential of driving with Uber were welcomed quickly by drivers who appreciated a new way to earn a living. A living that, according to a 2019 profile by the Inter-American Development Bank, represented on-average nearly three times Colombia’s minimum hourly wage.
The popularity of the service grew widely across Colombia, and six years later we had expanded across the nation to 88,000 drivers serving two million regular riders. Because of the mass local adoption of the service, the rich local talent pool, and the optimistic economic outlook for the nation, Uber invested heavily. We opened our regional headquarters in Bogotá, and staffed it with over three hundred full time employees—most of whom are Colombian home-grown talent. In 2019, we selected Bogotá as the destination for our third Center of Excellence in Latin America, and we excitedly poised to directly invest USD $40 million and create 600 new direct jobs.
However, by the end of 2019, it was evident we were lacking even the most basic institutional support from the Colombian government for making such a massive investment in the nation. Despite the fact that Uber Colombia was the first such service in South America, it still had been the last to be licensed and regulated by the national government. In the meantime, our industry had over 80 governments across Latin America proceed ahead sensible licensing, including cities like Rio de Janeiro, Mexico City, and La Paz, states like Mendoza and Jalisco, and entire nations like Brazil, Peru and Chile. (Relatedly, in this same time period, dozens of nations worldwide had established their own rideshare rules in short order.) Despite the Duque administration’s public push to move Colombia into an “Orange Economy” that embraces the digital sector, Uber’s investments instead were treated with ambivalence.
For many years, Uber has advocated for ridesharing regulations in Colombia that were designed to protect the public with safety standards and pricing transparency and to formalize the economy with driver licensing and taxation. Uber even advocated strongly for plans to provide hardship relief to the Colombian taxi industry in the event their drivers struggled in a period of changing consumer trends. To ensure we were practicing what we were preaching, Uber went so far as to self-regulate and collect and remit appropriate taxes despite lacking the governmental mandates, and despite the government not equally enforcing tax on our rideshare competitors or taxis. This was done at great cost to Uber in order to maintain our safety standards at a consistent global level, to create a good example for our entire industry, and to support Colombian communities. Notably, Uber’s services to-date have helped generate roughly 130 billion Colombian pesos (roughly USD $40 million) in revenue for the government.
The calls for regulation had been ignored. Recognizing the fragility of the investment environment, Uber announced in late 2019 that we would not be opening our Center of Excellence in Bogotá, and will be forced to find a different regional destination. This bad news was made much worse a few days before Christmas, when the Superintendency of Industry and Commerce ordered Uber Colombia to shut down, citing unfair competition with taxis. (Importantly, none of the other rideshare companies with nearly identical business models have received similar treatment.)
As Uber begins to close our ride services in Colombia (UberEATS continues food-delivery operations unaffected), we are aggrieved for the nearly ninety thousand drivers who lose this earning opportunity. We feel discouraged for the millions of users who rely on our services to remain mobile safely and conveniently. We are disappointed to see such a step backwards for a nation otherwise poised to move forward. The spirit of the people of Colombia is clearly ready to break out from behind the limits of protectionism and cronyism, and its political leaders have said the right things. This debate provides a real opportunity for those leaders to actually apply the promises they have made, otherwise, it may create a chilling effect on investment and innovation for many years to come. Colombia needs #UnaSolucionParaUberYa.
Editor’s note: Finance Colombia reached out to Colombia’s Superintendencia de Industria y Comercio to give them a chance to submit their position. As of press time, we received this statement: “Las decisiones de los trámites y los procesos adelantados por la Superintendencia de Industria y Comercio serán adoptadas dentro de los términos estipulados en las disposiciones legales que los regulen, atendiendo el debido proceso.” (The decisions of the formalities and processes put forward by the Superintendence of Industry & Commerce will be adopted within the terms stipulated in the legal dispositions that regulate it, attending due process.)
Photo courtesy of Über
This is a guest editorial and does not necessarily reflect the opinion or position of Finance Colombia.