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Ministerio de Comercio, Industria y Turismo República de Colombia GABRIEL DUQUE MILDENBERG Viceminister for Foreign Trade June 7th, 2010 COLOMBIAN TRADE.

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Presentation on theme: "Ministerio de Comercio, Industria y Turismo República de Colombia GABRIEL DUQUE MILDENBERG Viceminister for Foreign Trade June 7th, 2010 COLOMBIAN TRADE."— Presentation transcript:

1 Ministerio de Comercio, Industria y Turismo República de Colombia GABRIEL DUQUE MILDENBERG Viceminister for Foreign Trade June 7th, 2010 COLOMBIAN TRADE POLICY AND LOGISTICS

2 Ministerio de Comercio, Industria y Turismo República de Colombia Content I.Colombia: A Top Global and Regional Reformer II.Trade Policy III.Tariffs versus Logistics Costs IV.Logistics in Colombia

3 Ministerio de Comercio, Industria y Turismo República de Colombia Doing Business 2008 Doing Business 2009 Doing Business to 66 among 175 economies * * * 66 to 53 among 181 economies * * * * * 53 to 37 among 183 economies * * * * 7° top reformer 8° top reformer 6° top reformer Colombia, a permanent pro-business reformer For a third year in a row, Colombia was a top reformer promoting improvements for the investment climate Top reformer in the Latin American region for the past 5 years, Vienna, April 22 d, 2009

4 Ministerio de Comercio, Industria y Turismo República de Colombia Most “business friendly” country in Latin America Rankings of latin american economies on the ease of doing business (Doing Business 2010) Source: Doing Business Database

5 Ministerio de Comercio, Industria y Turismo República de Colombia We have made big progress, but there is still much more to be done Colombia´s rankings on the 10 topics covered in Doing Business 2010 Source: Doing Business Database

6 Ministerio de Comercio, Industria y Turismo República de Colombia Presidential mandate Technical assistance from WB & IFC Presidential directive Designation of project manager Strong convincement of the public institutions and the private sector on the usefulness of facilitating the entrepreneurial activity while strengthening effective regulation. Prioritization of key reforms Leadership from the Ministry to coordinate and synchronize efforts and tasks at national and local levels to attain improvements on identified Doing Business issues and to comply with set deadlines and goals. Some of the parties involved: National Planning Department, Ministry of Social Welfare, Ministry of Justice, Finance Ministry, Ministry of Environment, Housing, and Territorial Development, Ministry of Transport, Congress, Judicial Administration, National Tax Administration, Financial Superintendence, Superintendence of Companies, Superintendence of Industry and Commerce, Chambers of Commerce Association (Confecámaras), Chamber of Commerce of Bogotá, the Mayor of Bogotá and his cabinet What have we done in order to have a better investment climate

7 Ministerio de Comercio, Industria y Turismo República de Colombia II. Trade Policy

8 Ministerio de Comercio, Industria y Turismo República de Colombia Parallel to ideological debates, free trade agreements continues growing… II. Trade Policy

9 Ministerio de Comercio, Industria y Turismo República de Colombia … in the same way trade II. Trade Policy … and foreign direct investment FDI/GDP

10 Ministerio de Comercio, Industria y Turismo República de Colombia Source: IMF However, trade and investmente are only one part of the ecuation … II. Trade Policy

11 Ministerio de Comercio, Industria y Turismo República de ColombiaConfidence Security under a democratic framework Social Cohesion Investors Confidence Strategies Reforms implemented to improve the business climate:  Country strategy for competitiveness: Focus on global opportunities and local strengths  Free Trade Zones & Legal Stability Contracts  Formalization of the economy and entrepreneurship  Doing Business II. Trade Policy

12 Ministerio de Comercio, Industria y Turismo República de Colombia As an small economy, Colombia needs an insertion estrategy to global economy : Maximize benefits from an estable and long run preferential access to foreign markets. Attract more investment. Diversify colombian exports, by markets and products. Exploit comparative advantages and incorporate new tachnologies. II. Trade Policy

13 Ministerio de Comercio, Industria y Turismo República de Colombia “In 2010 Colombia will reach US$40,000 millions of exports with less concentration by markets, in labor intensive sectors and 45% of no primary goods. Farsight 1 3 Simplify and improve trade regulaction 4 Institutional coordination Negotiate and take advantage of FTA and BIT 2 Promote value added exports II. Trade Policy

14 Ministerio de Comercio, Industria y Turismo República de Colombia Exports US$ Millions Source: DANE & SIGOB Colombia has tripled exports in the last years II. Trade Policy

15 Ministerio de Comercio, Industria y Turismo República de Colombia Foreign Direct Investment US$ Millions Colombia has quadrupled FDI in the last years Source: Banco de la República II. Trade Policy

16 Ministerio de Comercio, Industria y Turismo República de Colombia Herfindahl- Hirschman Index (HHI) for colombian exports by markets, shows some diversification, but there is a high concentration yet. Source: DANE-DIAN, MCIT-OEE HHI is equivalent to export equal amounts to: 4 countries 6 countries II. Trade Policy

17 Ministerio de Comercio, Industria y Turismo República de Colombia Índice de concentración de las exportaciones y cambio en países de América Latina * HHI Colombia & Perú 2007 Source: ALADI, MCIT-OEE In Latin America, Colombia is in a middle point in markets concentration, although shows the biggest diversification in the last years IHH 2006 IHH Change Latin America exports HHI, by markets, and change II. Trade Policy

18 Ministerio de Comercio, Industria y Turismo República de Colombia * HS 4 digits Source: DANE, DIAN, MCIT-OEE Exports by products shows an important concentration too. HHI is equivalent to export equal amounts of: 9 products 11 products II. Trade Policy

19 Ministerio de Comercio, Industria y Turismo República de Colombia II. Trade Policy

20 Ministerio de Comercio, Industria y Turismo República de Colombia Free Trade Agreements Agenda: Objectives: (i) Renovate and extend the countries sample (ii) Update the trade flows in the last five years. To prepare the new agenda we used 20 countries and 20 variables in five categories: Strength current export markets Potential markets for colombian exports Attract foreign direct investment Political feasibility Willingness to free trade II. Trade Policy 1Panama 2Japan 3South Korea 4GCC 5Russia 6Dominican Republic 7Costa Rica 8Caricom 9Australia 10Singapore

21 Ministerio de Comercio, Industria y Turismo República de Colombia III.Tariffs versus Logistics Costs

22 Ministerio de Comercio, Industria y Turismo República de Colombia Source: Mesquita, Volpe & Blyde (IADB 2008) III. Tariffs vs Logistics Costs

23 Ministerio de Comercio, Industria y Turismo República de Colombia Bogota (25% of GDP), has an additional geographic Ad Valorem tariff of 42%* *Ratio Cartagena – Bogotá freight to implicit import tariff III. Tariffs vs Logistics Costs

24 Ministerio de Comercio, Industria y Turismo República de Colombia Note: Implicit Freight is the ratio of CIF to FOB imports. Implicit price is the ratio of the value to volume imports Source: U.S. Census Bureau Regression line III. Tariffs vs Logistics Costs

25 Ministerio de Comercio, Industria y Turismo República de Colombia Source: Mesquita, Volpe & Blyde (IADB 2008) III. Tariffs vs Logistics Costs

26 Ministerio de Comercio, Industria y Turismo República de Colombia Logistics Performance Index (LPI) Pilars LPI: 1.Efficiency of the clearance process by customs and other borders agencies. 2.Quality of transport and information technology infrastructure for logistics. 3.Lease and affordability of arranging international shipments. 4.Competence of the local logistics industry 5.Ability to track and trace international shipments. 6.Domestic logistics cost. 7.Timeliness of shipments in reaching destination Factors determining LPI: 1.Quality of infrastructure 2.Competence of private and public logistics service providers 3.Customs and other border agencies 4.Corruption and transparency 5.Reliability of the trading system and supply chains Source: WEF(2008) III. Tariffs vs Logistics Costs

27 Ministerio de Comercio, Industria y Turismo República de Colombia Enabling Trade Index (ETI) Pilars ETI: 1.Domestic and foreign market access. 2.Efficiency of custom administration. 3.Efficiency of export-import procedures. 4.Transparency of border administration. 5.Availability and quality of transport infrastructure. 6.Availability and quality of transport services. 7.Availability and use of ICTs. 8.Regulatory environment. 9.Physical security Factors determining ETI: 1.Infrastructure 2.Market access 3.Border administration 4.Business environment Source: WEF(2008) III. Tariffs vs Logistics Costs

28 Ministerio de Comercio, Industria y Turismo República de Colombia Source: WEF(2008) There is a high correlation between trade facilitation and logistics III. Tariffs vs Logistics Costs

29 Ministerio de Comercio, Industria y Turismo República de Colombia Source: WEF(2008) Countries with low tariffs tends to have higher logistics performance … and higher trade facilitation III. Tariffs vs Logistics Costs

30 Ministerio de Comercio, Industria y Turismo República de Colombia IV.Logistics in Colombia A.Current situation B.Challenges

31 Ministerio de Comercio, Industria y Turismo República de Colombia Trade Logistics in the Global Economy 10 The logistics performance Index CountryPosition countries Position countries Chile3248 Argentina45 Panamá5457 Colombia8272 IV. Logistics in Colombia A. Current situation

32 Ministerio de Comercio, Industria y Turismo República de Colombia 2007 Colombia had no Logistics National Policy All customs administration was with physical documents and authorizations required dealing with multiple institutions. Partial electronic processing There was no coordination among institutions for physical inspections 2010 Colombia has a Logistics National Policy that is been implemented Customs administration documents and procedures are digital and using a ‘single window’ (VUCE/MUISCA) Simultaneous inspection procedures for exports through ports, work on improvement of risk assessments and plan for the provision of scanners IV. Logistics in Colombia A. Current situation

33 Ministerio de Comercio, Industria y Turismo República de Colombia Source: WEF(2010) (% countries below) Competitive advantageCompetitive disadvantage IV. Logistics in Colombia A. Current situation (ETI index)

34 Ministerio de Comercio, Industria y Turismo República de Colombia Competitive advantageCompetitive disadvantage Source: WEF(2010) (%countries below) (%countries below)c (%countries below) IV. Logistics in Colombia A. Current situation (ETI index)

35 Ministerio de Comercio, Industria y Turismo República de Colombia Competitive advantageCompetitive disadvantage Source: WEF(2010) (%countries below) IV. Logistics in Colombia A. Current situation (ETI index)

36 Ministerio de Comercio, Industria y Turismo República de Colombia Logistics National Policy CONPES 3547 (27/OCT/2008) Related to the National Competitiveness System Diagnostic - Costs DNP 2007 IV. Logistics in Colombia A. Current situation

37 Ministerio de Comercio, Industria y Turismo República de Colombia Logistics National Policy CONPES 3547 (27/OCT/2008) Recommendations 1.Institutional strengthening -comité técnico de apoyo para la facilitación de la logísitca del comercio y del transporte – Comifal 2.Information on Logistics 3.Infrastructure - Identification, organization and promotion 4.Trade Facilitation – simultaneous inspections, technology, regulation 5.Information Technology IV. Logistics in Colombia A. Current situation

38 Ministerio de Comercio, Industria y Turismo República de Colombia Three challenges: 1.Efficiency of custom administration 2.Efficiency of import export procedures 3.Transport and communication infrastructure IV. Logistics in Colombia B. Challenges

39 Ministerio de Comercio, Industria y Turismo República de Colombia Source: MCIT General information to export and import MUISCA SAE PORT SICEX SISPAP SIVICOS Integrating System VUCE: Colombian Single Window (19 control agencies) IV. Logistics in Colombia B. Challenges: Custom administration  Today VUCE has annual transactions, daily average  There are registered 30,000 users. IFC technical cooperation Now optimization of 19 control agencies participation

40 Ministerio de Comercio, Industria y Turismo República de Colombia Custom inspections Source: “Sociedad Portuaria de Cartagena” IV. Logistics in Colombia B. Challenges: Custom administration I. Risk assessment - better intelligence systems for selectivity (WB) II. Simultaneous physical inspection systems and coordination among control agencies III. Technology – use of scanners

41 Ministerio de Comercio, Industria y Turismo República de Colombia Saving time Source: Doing Business, World Bank Improvements in timeDB 2007DB 2010 Days to starting a business4420 Days for dealing with construction permits14651 Days for registering property2320 Number of tax payments Number of hours to pay taxes Number of days to export3414 Number of days to import3514 Efficiency of import export procedures Countries IV. Logistics in Colombia B. Challenges: import export procedures

42 Ministerio de Comercio, Industria y Turismo República de Colombia IV. Logistics in Colombia Logistic Zones

43 Ministerio de Comercio, Industria y Turismo República de Colombia Logistics Corridors Plan Source: DNP IV. Logistics in Colombia B. Challenges: Transport & communications infrastructure

44 Ministerio de Comercio, Industria y Turismo República de Colombia Logistics Platform Plan Source: DNP IV. Logistics in Colombia B. Challenges: Transport & communications infrastructure

45 Ministerio de Comercio, Industria y Turismo República de Colombia Colombian ICT Plan Source: MITIC IV. Logistics in Colombia B. Challenges: Transport & communications infrastructure

46 Ministerio de Comercio, Industria y Turismo República de Colombia Closing remarks -Colombia has managed dramatic economic and social changes in the last few years, is committed to its effective insertion into the World economy and to the creation of a better business environment -Trade Policy and advances in Logistics are complementary and necessary for competitiveness -Logistics dimensions are varied and require substantial interagency work -In the case of Colombia, Logistics and Trade Facilitation are very much on the agenda of the country facing many challenges -Advances requiere the commitment of both the private and the public sector

47 Ministerio de Comercio, Industria y Turismo República de Colombia GABRIEL DUQUE MILDENBERG Viceminister for Foreign Trade June 7th, 2010 COLOMBIAN TRADE POLICY AND LOGISTICS


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