In Colombia, there no longer will be a value-added tax (VAT, or IVA in Colombia) on software licenses for various programs commonly used in so-called “Orange Economy” content development fields such as graphic design, animation, and 3D printing, among others. The benefit is even more significant now given that a nationwide tax system overhaul raised the VAT from 16% to 19% in December.

There will also no longer be a VAT included for online educational services that help train people to enter these and other fields, including the development of analytics, big data, the internet of things, and video games, said the president.

“This is a great opportunity for all producers of this type of content,” said Santos, adding that “we know that these incentives are what boost the sector.”

The tax break is part of a wider push to kickstart innovation that Santos detailed in an hour-long address on Friday in Cartagena at Andicom 2017, the largest IT and communications conference in the country.

Colombia Creates Vice Ministry of Digital Economy

In addition to the VAT exemption, Santos also formally launched the nation’s new Vice Ministry of Digital Economy in a ceremonial signing with David Luna, minister of information technology and communications.

The stated goals of the new agency are to support Colombian companies undergoing digital transformation, promote public/private partnerships, advance the adoption of tech tools, and generally track various indicators and figures of the “digital economy.”

Under current measurements, the digital economy accounts for at least 100,000 jobs in Colombia, according to the government, and it generated some $4.5 billion USD (13 trillion pesos) in sales last year. By 2022, MinTIC estimates that there will be 300,000 direct jobs within the digital economy.

The new office will be run by Vice Minister Daniel Quintero Calle and fall within the Ministry of Information and Communication Technology (MinTIC).

“The digital economy is gaining momentum and preparing our industry, labor market, and regulation to allow us to better position ourselves in the global landscape,” said Quintero Calle during a presentation during the conference.

“Having access to technology transforms people’s lives,” said President Santos speaks at Andicom 2017 in Cartagena. (Credit: Jared Wade)

Expanded “Digital “Citizen Services”

On Friday, Santos also signed the new “Digital Citizens Services Decree,” which aims to give Colombians better access to the important forms and documents in their life. Through the creation of a “citizen folder” for each Colombia, people will now be able to have access their own medical history, employment records, and other administrative documents involving the government. They will also have a digital signature that allows for faster digital processing of official forms.

Additionally, the decree aims to improve the inter-departmental communication between governmental agencies so that people do not have to continually provide information two or three times during the administration of routine processes, as has long been the case. “It is a necessary evolution,” said Santos.

The addition of the citizen folder aligns with the county’s “No Más Filas” (No More Lines) initiative to streamline processing times across governmental agencies that oversee everything from immigration and taxation to licensing and legal matters

“We seek to facilitate users’ relationship with the state,” Luna told Finance Colombia in an interview this week. “Therefore, we have made available the webpage No Más Filas, which was previously called Sí Virtual. This is a national government, multi-channel platform where the general public can find state services and perform transactions completely online. In total on this website, there are 714 online transactions and 3,485 partially digitalized transactions available to Colombians.”

President Santos was joined on stage by indigenous Colombians who have benefitted from improved connectivity in their rural Amazon community. (Credit: Jared Wade)

The Benefits of Connectivity in Colombia

Throughout Andicom 2017, the president, David Luna, and other public officials praised the recently released results of the country’s “First Great ICT Survey,” which through polling across the country found that almost two-thirds (64%) of Colombians now have an internet connection in their home and 75% of Colombians used the internet within the past year.

Of the 36% surveyed who do not have a connection in their home, only 8% said it was because their community has no access in logistical terms. Nearly half of those without a connection (48%) say it is because connectivity is too expensive, while roughly one-fourth (24%) say they don’t consider it necessary.

The governmental push to increase connectivity numbers in Colombia has focused on its Vive Digital (Live Digital) initiative that, among other investments, has brought digital kiosks to both poor urban areas and lowly populated jungle, coastal, and mountain communities. In the Amazon/Orinoco Basin region, 56% of people have used these kiosks, according to the MinTIC study. This is compared to an 11% usage rate nationwide.

The government says that the kiosks are also intended to help teach Colombians how to use the internet. Among the 25% who had not accessed the web in the past year, the top reason given was that they don’t know how to use the internet.

To put a face to how these and other tech-focused initiatives can improve the lives of Colombians, Santos invited several Colombians to join him on stage. A woman and young man from the Amazon, using both Spanish and their native language, explained how they have begun to sell clothing and products online thanks to Vive Digital bringing internet connectively to their small indigenous community. A young woman who is studying to be an electrical engineer, with the help of public financial aid, also spoke to the audience about her desire to work in technology .

“Digitizing the country means deepening the state/citizen relationship through the use of the internet,” said Santos. “Having access to technology transforms people’s lives.”

(Photo credit: Jared Wade)

And according to Luna, things are looking up. In an exclusive interview with Finance Colombia in the days before the start of Andicom 2017 on August 23, the minister said that technology companies are working together more than ever before.

“Currently, the IT industry in Colombia is living great times. Companies have evolved from a competition model to a collaborative model.” – David Luna, ICT Minister of Colombia

“Currently, the IT industry in Colombia is living great times,” said Luna. “Companies have evolved from a competition model to a collaborative model.”

Through his leadership at the Ministry of Information Technology and Communications (MinTIC), Luna explained that the country has also “implemented training programs to provide [companies] with the necessary tools and thus attract intelligent capital.”

But the improving climate isn’t just about private sector advancement. Colombia is reaping many benefits from increased connectivity and technology adoption nationwide.

The country has made substantial progress in recent years with its Vive Digital program, for example, that has given people in rural areas better access to the online world. In all, the government has installed nearly 7,000 kiosks and added almost 1,000 free WiFi areas across Colombia.

The nation has also made major progress in the classroom — going from having just one computer for every 24 students in 2010 to one for every four students this year — and when it comes to streamlining and digitizing government processes.

In the following conversation, Luna told Finance Colombia more details about the many ongoing MinTIC initiatives, explained how the IT industry in Colombia is becoming more advanced, and broke down why Andicom is such an important event for the country.

Jared Wade: Andicom is one of the biggest business conferences of the year in Colombia. For you, how important is the event, and how has it helped bring together different stakeholders pushing for innovation in the country?

David Luna: This is the most important annual gathering of the digital ecosystem in Colombia. This meeting converges operators, platforms, applications, and large technology users.

Andicom’s main theme this year is related to the need to promote the use of digital technologies to transform productive processes in Colombia, and this is a priority of our ministry. If we are able to unite all efforts — whether public or private — each initiative promoting innovation will be implemented efficiently.

Precisely, our Digital Economy strategy considers participation in events like this one, where one discusses the current status, the level of understanding, the scope, and the way digital technologies transform productive processes and affect the way we communicate, entertain, and inform ourselves.

David Luna, Information Technology and Communications Minister of Colombia. (Photo credit: MinTIC)

Jared Wade: In terms of the private sector, what must be done to promote competitiveness compared to global peers? How can companies become more involved in this initiative and help themselves improve?

David Luna: Since 2012, the national government, through the MinTIC and ProColombia, has been developing strategies to strengthen the commercial capabilities of IT companies and supporting their international promotion through the campaign ‘Colombia Bring it On.’ This shows the world a world-class technological offering under the slogan, “Here We Make It Possible.”

Through the experience obtained, with more than five years working on this project, we have identified the need for this industry to have trained human talent; where companies adopt globally recognized IT quality models; strengthen their commercial capabilities; explore target markets and adapt their exportable offerings depending on the country they wish to penetrate; and develop specialized technology solutions for the different sectors of the economy, among others.

Furthermore, it has been determined that there are companies that have excellent IT products and services, but they need investment to enter new markets. This is the reason why we have implemented training programs to provide them with the necessary tools and thus attract intelligent capital.

Currently, the IT industry in Colombia is living great times. Companies have evolved from a competition model to a collaborative model, promoted by the alliance between MinTIC and ProColombia, and have determined that their products and services supplement the offerings of other Colombian companies, which has enabled them to establish partnerships to enter global markets with greater force.

Jared Wade: How has the banking industry progressed in recent years in terms of technology? How do you see the “mobile revolution” and the higher rate of penetration of smartphones and connectivity changing the financial services sector in Colombia?

David Luna: This is, undoubtedly, one of the greatest achievements of this government. The challenge with the so-called “mobile revolution” aims at having entrepreneurs use evermore technologies for industries, generating added value, and innovating.

We are aware that, through increasing connectivity and greater use of technologies, it is possible to overcome the gaps in education, inequality, and poverty. There lies the generation of opportunities for the most vulnerable populations.

Jared Wade: After two terms in office, we are nearing the end of the administration of President Juan Manuel Santos. What initiatives and goals do you have for MinTIC during the rest of that time?

“Through increasing connectivity and the greater use of technologies, it is possible to overcome the gaps in education, inequality, and poverty.” – David Luna

David Luna: In the remaining period of the current government, we will work hard to promote Colombian industry and using technology among Colombian people.

Our policies will be geared, on one hand, at promoting the growth of internet connections through initiatives such as: the promotion of infrastructure deployment in the territories, the allocation of new spectrum bands for mobile Internet, new subsidy grants to lower income users, and the deployment of free WiFi zones, among others.

Another line of action is an additional boost to the software industry and associated services. We will continue supporting the growth of our regional software clusters and promoting more young Colombians to study industry-related careers.

Moreover, we will continue the implementation of a strategy to promote development of the “Digital Economy.” To that end, we will transform the IT Vice-Ministry into the Vice-Ministry of Digital Economy, which will be responsible for actively promoting the transformation of productive and creative sectors of the economy.

David Luna, is joined on stage at Andicom 2017 by two Colombians whose lives have been changed by technology. (Credit: Jared Wade)

Jared Wade: I know that two longer-term objectives in Colombia have been, first, to bring more technology-related infrastructure to rural areas to support development, more financial inclusion, and other similar goals. And also I know the country has been focused on improving the systems that the public uses to interact with the government as well as the systems used by the nation’s ministries and agencies in general. How have these two areas advanced in recent years?

David Luna: We interconnected a country. We went from 2.6 million internet connections at the national level in 2010 to more than 28 million connections — both fixed and mobile by subscription and on demand — this year.

Specifically, for rural areas, our quest is to provide universal access solutions to people through the “Vive Digital” kiosks. To date, we have installed 6,926 kiosks, in a same number of districts, throughout Colombia’s 32 departments. With this, we have achieved the government’s goals of reaching places where there is no market yet.

In the social area, and thanks to the wide network coverage, the Vive Digital kiosks are a perfect place for low-income communities to develop ICT skills, to obtain first-hand information on applications to improve productivity, as well as to access information platforms of the agricultural sector as a basis to be more competitive by using technology.

As for online transactions between the public and the government, we seek to facilitate users’ relationship with the state. Therefore, we have made available the webpage No Más Filas (No More Lines), which was previously called Sí Virtual. This is a national government, multi-channel platform where the general public can find state services and perform transactions completely online. In total on this website, there are 714 online transactions and 3,485 partially digitalized transactions available to Colombians.

“We interconnected a country. We went from 2.6 million internet connections at the national level in 2010 to more than 28 million connections this year.” – David Luna

On the other hand, it is worth mentioning that — aware as we are of the access, management and service provision, and public sector transactions issues — we are in the process of regulating “Digital Citizen Services.”

Jared Wade: What have been the most important achievements of MinTIC during your tenure at the ministry?

David Luna: We have achieved important results in different areas. Among those, we can highlight that today 97% of the country’s municipalities are connected: 1,075 municipalities through the National Fiber Optic Network and an additional 15 through the High-Speed Connectivity Network. (These are wireless solutions such as microwaves and satellite for remote and difficult to access sites.)

Similarly, citizens have embraced the technology through free connection and training spaces. Thus, we completed 6,989 Vive Digital kiosks installed in the rural areas and 894 Vive Digital access points in urban areas. Moreover, we will reach this year more than 1,000 free WiFi zones installed at squares and parks of different cities throughout the country.

In the education field, between 2010 and 2017, we went from 24 children per computer to four children per computer with the objective of improving the classroom experience through the use of technology. And we have delivered scholarships-loans to 9,270 students to study information technologies-related careers.

Lastly, we are taking Colombia towards a Digital Economy. To that end, we have created an “observatory” on the topic, which will provide an overview of the digitalization level of the various economic sectors. To date, we have made it possible that 75% of the MiPyme (micro, small, and medium-size companies) utilize ICTs in their business. On the other hand, we have supported more than 70,000 people through Apps.co and have installed 37 labs for training and development of digital content.