Mónica Lanzetta Mutis, Ambassador to India, Colombia |

From nowhere, a sudden surge in oil imports have made India the 4th largest trading partner of Colombia and trying to further strengthen ties is Mónica Lanzetta Mutis, the country’s Ambassador to India. In a freewheeling interaction with The Dollar Business, she talks about trade, economics, the oil crash and much more

Interview by Vanita Peter D’souza | The Dollar Business

 

TDB: There is perhaps only one commodity that Colombia exports to India – crude oil. What other Colombian exports do you think have a potential market in India?

Mónica Lanzetta Mutis (MLM): Although diplomatic relations between Colombia and India were established 50 years ago, the trade relationship is still young, as the real business between the two nations started just five years ago. As your question goes, most of this trade is concentrated in oil. Therefore, now our aim is to diversify this portfolio. We have started promoting our landmark products such as coffee, flowers, undergarments & beachwear, cocoa, toffees and gums in India, to provide Indian consumers a variety of Colombian quality products.

TDB: What has been the impact of the recent crash in crude oil prices on the Colombian economy? How are Colombian policymakers dealing with the situation?

MLM: The recent oil crisis has affected the entire world and Colombia is not an exception. However, Colombian economy is prepared to face such shocks. Our government has implemented a series of reforms to safeguard our economy in situations like these. One of them is the fiscal reform that obliges the Colombian government to maintain the fiscal deficit below 2.5% of GDP. According to set guidelines, the fiscal deficit of the country must maintain a declining graph. For this, the government is aiming to keep it under 2.3% of GDP in 2014, under 1.9% of GDP in 2018 and equal or less than 1% of GDP in 2022.

And of course, Colombia is working towards the diversification of sources of energy. Currently, 60% of energy generated in my country is hydro electrical, with the potential to generate 90,000 MW of power. In addition to this, we are in the process of developing more projects in the energy sector.

 

TDB: It was a surprise to learn that India, from being Colombia’s 16th biggest export destination in 2011, was the 4th biggest in 2013. What can you attribute this newfound bonhomie to?

MLM: It is very satisfying for both the countries that we have managed to achieve this much in a very short period of time. As I said earlier, real business started only very recently. To explain what you call the newfound bonhomie, part of the reason could be the oil and gas exploration boom in Colombia. Our country used to earlier produce only 5,00,000 barrels of oil a day, but is now producing around 1 million barrels a day. However, our aim now is to take advantage of the impetus provided by the oil trade and to take forward our relations by expanding our trade basket.

 

 

TDB: Because of geographical proximity, it’s only natural that US is your biggest trading partner. Tell us how significant India is in Colombia’s scheme of things.

MLM: The diversification of our trade portfolio and network has provided us valuable lessons on how to do competitive business despite physical distances. Six years ago, our main trade partners were mostly regional – USA, Venezuela, Ecuador and Mexico. The situation has changed. Today, it is USA, China, Mexico, Brazil and India.

 

TDB: Does Colombia get enough investment from Indian Companies? Do you think Indian infrastructure companies have a role to play in Colombia’s road construction programme, which is scheduled to start next year?

MLM: It is important to highlight that within a short span of six years, the number of Indian companies in Colombia has grown from six to more than 35. In the services sector, we have important Indian companies such as Hinduja Global Services, Sutherland, Wipro, Genpact and TCS. In manufacturing, there is United Phosphorus, with a plant that covers different Latin-American markets and Hero MotoCorp, with a plant to cover the entire region. I would like to refer to the comments made by Mr. Rajju Shroff, Chairman, United Phosphorus Limited, in a recent interview to a magazine, regarding how the UPL plant in Colombia has become one of the 30 leading plants in the world. In this regard, we can say that there are enough opportunities for Indian investors in Colombia to establish cost-effective, competitive and world-class enterprises.

In Infrastructure, there definitely exists a scope as the government has planned to invest $24 billion in the construction of roads, railways, airports and highways via public-private partnership (PPP) model, which means the same amount will be invested by the companies willing to participate in infrastructure projects in Colombia. One more important thing to note here is that Indian companies will be competing with other multinationals world over, as the projects will be assigned through competitive bidding. In addition to infrastructure, Indian investments are welcome in all other sectors.

TDB: Which goods/ commodities should an Indian exporter focus on, if he/ she is trying to get a foothold in the Colombian market?

MLM: There are opportunities in many sectors. The Colombian economy, in 2014, clocked the highest growth rate in the region (4.9%). At the same time, it is the third largest in population, with 47 million people. Therefore, Colombia itself is an interesting market in Latin America. But even more, I would say that if you are looking at Latin America as a whole, Colombia is the right place to be. First, the location – the access to both the Atlantic and the Pacific Oceans gives access to both South and North America; second, because of several FTAs that the country has in force, Colombia is an excellent export platform to be more competitive in the region; and finally, and probably the most importantly, its qualified workforce.

 

 

TDB: Not enough Indian tourists visit Colombia, despite it being a tourism hotspot? What are you doing to change the situation?

MLM: The Colombian economic boom has also been witnessed in the tourism sector. From a mere 9 lakh visitors per annum a few years back, Colombia today hosts more than 3 million visitors (including cruise tourism) every year, which has made our country an important tourist destination.

In terms of tourist inflow from India to Colombia, there exists a big knowledge gap. Therefore, not many Indians visit our country as tourists. We understand that air travel is also not cheap. However, we are actively addressing both the areas. For example, we are promoting Colombia as a honeymoon destination as well as an exotic spot for grand Indian weddings. In terms of air connectivity, we want tourists to take advantage of the increased frequencies of flights. Now, connections are available from Paris, Frankfurt and London, with only one stop. In December last year, the Colombian airline AVIANCA signed a contract regarding the codeshare with Air India.

 

TDB: Colombia’s merchandise trade has been very balanced for the last many years, without major deficits or surpluses. Has it been a conscious decision? What lesson should India, with its massive trade deficits, learn from Colombia?

MLM: Colombia acknowledged years ago that to expand its economy, it needed to increase exports and this was done through free trade agreements (FTAs) and strengthening the competitiveness of its companies. In fact, the country has come a long way in terms of FTAs, from with only four countries in 2002, to 58 countries in 2014 and three more in the row. Moreover, Colombia has climbed 19 positions in the World Bank’s ‘Ease of Doing Business’ report, ranked first among Latin American countries and the 34th in the World. As a result, Colombia has been officially invited to become a full member of the OECD. Additionally, we have 900 new exporters to United States, 284 to Canada, 107 to Switzerland, and 383 to Mexico, just to give some examples. Summing up this point, Colombia has increased its international trade not only through FTAs, but through constantly increasing the competitiveness of its domestic enterprises.