Bogota - A History of Financial Prowess
Bogota: Business Capital
Bogota - A History of Financial Prowess
It is important to understand that Bogota is one of the oldest and most successful financial centers in the world.
In 2009, the city of Bogota had a GDP of nearly 68 Billion US-Dollars, which was nearly 50% of the GDP of the entire nation of Hungary, more than two times the GDP of the entire nations of Costa Rica, Lebanon, Uruguay or Panama, 3.5 times the GDP of the nation of Jordan, and more than four times the GDP the nations of Iceland, Brunei, Bolivia and Paraguay.
Dating back to the pre-Columbian period, Bogota, or as it was previously called; Bacata, already was one of the most developed centers of trade and commerce in the Americas. The Chibchan nation, but more importantly, the local Muiscas were the key-holders to the factual treasures of El Dorado, and they were one of the most economically and socially developed indigenous people to inhabit the continent.
Today, you will find the largest, most important gold museum in the world located in Bogota –El Museo del Oro.
Given the strategic geographical and political importance that the city of Bogota inherited, it stood to reason that Bogota would continue to be the center of economic trade and activity for the entire northern region of South America and into the Central American Isthmus (Panama and Costa Rica). In fact, Bogota was the political and economic capital of the entire northern region of South America! …And its regional influence has never wavered since.
Nations such as Venezuela, Ecuador and Panama actually belonged to the larger republic of La Nueva Granada –later called La Gran Colombia.
Today, Colombia is actually one of the most industrialized nations in Latin America, a nation which in addition to its heavy industry and important exports such as coffee, oil, coal and gas, the nation’s strong and well managed banking industry has helped to maintain this nation’s economy as the single-most stable economy in Latin America. In fact, Colombia has been the engine of the Andean Pact group of trading nations which was originally composed by Colombia (its founder), Ecuador, Peru, Bolivia and Venezuela (which seceded from the association a few years ago under the nationalist dictums of President Hugo Chavez).
The vitality of the Colombian economy is further evidenced by the Free Trade Agreements (FTAs) that have been entered into with the European Unison and other western democracies such as Canada, Switzerland, Norway, Iceland, Lichtenstein, Mexico, Chile, Guatemala, Honduras and El Salvador. The FTA with the United States is also well underway and President Obama is pressing for final congressional approval. Given the large size of the Colombian economy, once implemented, it will be the most important trade agreement to impact the U.S. economy after NAFTA. Other FTAs are also being negotiated, China, South Korea, Japan and Panama.
Colombia is one of the few nations in the world to consistently have demonstrated positive GDP growth (sometimes approaching 6% to 7%), and it is the only economy in South America to have never experienced negative GDP growth in modern history.
Important to NOTE: Colombia is the second oldest uninterrupted constitutional democracy in the world after the United States and (despite the efforts of a General to remain in power after his election in the late 1950’s) Colombia has never experienced the despotic dictatorships such as those which occurred in Chile, Argentina and Paraguay (amongst others) in recent memory.
Despite the imperfections that can be found in any modern democracy, Colombia, with its penchant for pluralism, has actually cultivated strong democratic institutions that have historically given the country a very good standing in the international business community, as it is the only major Latin American nation that has always met its debt repayment obligations and has never had to renegotiate any major loan. Furthermore, the Colombian Peso is the only major currency in the region which was never been affected by the unbridled periods of inflation which so severely impacted Argentina, Mexico, Brazil and Venezuela on several occasions. More recently, the Colombian banking system, with its unique regulatory supervision, ranked as one of the most resilient banking systems in the world, as it was able to thrive without a single bank failure even after the severe global financial meltdown that commenced in the Fall of 2008. In fact, there are five major new banks scheduled to open in Colombia in 2010.
Moreover, in a study conducted by Merrill Lynch, Colombia ranked as one of the top 10 nations in the world that was better prepared to survive the arriving global crisis. And in addition to the many profitable large and small national banks, other foreign banks have had great success stories in Colombia. Citibank alone has had a successful presence since 1929.
Not counting the small islands of St Lucia and Puerto Rico, the large Colombian economy actually ranked number one in Latin America in which to do business in the 2010 Doing Business Report which surveyed 180 countries. In other words, as more international studies are focusing in the region, Colombia is now outperforming the other competitive regional economies of Chile and Brazil.
Lastly, for those of you who might think that Colombia has benefitted in any way from the deleterious drug trade, it should be made abundantly clear that Colombian tax payers pay far more towards national security in order to safeguard their democracy, than the small (inflationary) income brought by the narcotraffickers, not to mention the high price that this stoic nation has had to pay with the lives of its judges, politicians, soldiers, police officers, children and the many others who have fallen victim to the effects of that illicit trade.
According to an extensive 25-year study published in 2000 by the United Nations Office on Drugs and Crime (UNDP) regarding narcotrafficking in Colombia, it should be noted that in 1996, when illegal drug exports were still high, the income from this illicit traffic amounted to only 3.2% of Colombia’s GDP, and in recent years, thanks to the effective measures undertaken by the administration of President Alvaro Uribe, that figure, as a component of the nation’s GDP is well under 1%. Moreover, Colombia receives very little assistance from the international community in its war against illicit drugs, as even the controversial Plan Colombia from the United States amounts to much less than 4% of Colombia’s defense budget.
It is also important to report that given the great success which Colombia has achieved in recent years in improving its security –and its image, in dispelling so much disinformation and ongoing misperceptions about the Colombian reality– tourism has now become the third most important source of foreign income into the country.
Therefore, Bogota should not just be seen as a formidable business capital, but more importantly, as one of the safest and most profitable cities in the world. Bogota’s surprising affluence and lifestyle includes the largest Porsche dealership in Latin America, a plethora of Mercedes Bens, BMWs, Citroëns, even a beautiful Maserati showroom. It is no wonder that the New York Times finally took notice and published an article on January 28, 2010, entitled: Colombia's Capital Finds New Sense of Optimism, in which it states “…Bogota has become one of South America’s most attractive cities for foreigners to live and invest in.”
During the first two months of 2010, two new mega projects were announced in the city’s downtown district, totaling nearly one billion US Dollars in investment (in addition to the many others already underway).
It is no wonder that Bogota’s efficient business history has galvanized to make the city the number one international business capital in Latin America –with major hotel and business center construction projects that will soon make it number one in convention facilities, as it also builds the largest, most utilized airport in Latin America.
For comprehensive, up-to-date information on Colombian law and business news, Bogota Brilliance recommends that you visit the excellent and well-informed blog Colombia Law & Business Post: http://colombialawbiz.com , created by attorney Hunter Carter, a partner with the New York City law firm Arent Fox LLP. Mr. Carter shares our passion for Colombia and has created this blog to "share research and analyses about its [Colombia's] law and business developments in order to foster better awareness and to stimulate a dialogue."
Bogota Brilliance is proud to be bullish on Bogota!
COLOMBIA – Leader of the CIVETS
The once highly touted BRIC nations (Brazil, Russia, India and China) which have by now disillusioned many investors given their troubling inflation rates and a myriad of legal complexities impacting investors, have given way to a new group of the emerging nations, the CIVETS, comprised of Colombia, Indonesia, Vietnam, Egypt Turkey and South Africa, have now been dubbed as the world’s new rising stars.
But in the minds of many, Colombia is by far the best positioned CIVETS nation for investment consideration, as financial leaders such as Carlos Slim and real estate savant Sam Zell and others are now naming Colombia the best nation in which to invest.
Despite the internal challenges that Colombia has had in past decades, the Colombia of today is surprisingly safe, sophisticated and progressive, as the nation’s democratic institutions never wavered. Colombia has actually been one of the most stable democracies in Latin America, the only nation without a history of bloody dictatorships. Moreover, Colombia’s economy has been so remarkably stable, that it is the only major economy in Latin America to have not suffered from runaway inflation or major currency devaluations.
Colombia is not only the most stable major democracy in Latin America, it is a Western country that has been the strongest ally of the United States in the region, the result of being the second oldest uninterrupted constitutional democracy in the world (since 1809, after the United States).
While the high growth of Colombia is just being noticed, the nation’s economy actually grew by 4.3% in 2010, and it is expected to grow nearly by 6% in 2012. In the final quarter of 2011 alone, Colombia’s GDP grew by 7.7% ii . This figure may soon be dwarfed when the impact of the various Free Trade Agreements (FTA) that have already been approved and implemented (such as the ones with Canada, Switzerland, Norway and the United States) start making an impact on the economy.
It is also important to note that Colombia has far more natural resources than any other CIVETS nation, including being a major oil producer. A well established oil, coal and gas exporter, Colombia will be exporting well over 1,000,000 barrels a day in 2012. Coupled with low inflation and Colombia’s reputation for excellent banking and money policy management, Colombia is destined to be recognized for the economic potential it possesses.
In 2011, Colombia’s President, Juan Manuel Santos, a man who continues to develop and protect the nation’s strong free market identity, successfully submitted Colombia’s candidature to the Organization for Economic Co-operation and Development (OECD) for Colombia to achieve recognition as a first world developed nation.
More importantly, during times of global financial crisis, Colombia has the distinction of not having to depend on its export income. Colombia, with its vast potable water resources, manufactures and grows nearly everything necessary to sustain the viability of its economy in a manner that no other CIVETS nation is able to.
LGBT Business Leaders Take Bogotá !
The National Gay & Lesbian Chamber of Commerce (NGLCC) of the U.S. was in Bogotá during the week of September 10, 2012 for the first U.S. Government-certified lesbian, gay, bisexual, and transgender (LGBT) Trade Mission and the inaugural LGBT Summit of Americas, which brought together business leaders from the U.S. and several Latin American countries. Bogota Brilliance in association with BogoGay and Colombia Investing hosted a welcome recption for the U.S. delegates on the evening of September 12, where they mingled and networked with Colombian and ex-pat LGBT business leaders, members of Bogotá's cultural life and representatives from the Instituto Distrital de Bogotá (IDT), Bogotá's tourism department.
"Our goal is to increase LGBT business presence throughout the Americas," said Justin Nelson, NGLCC Co-Founder and President. "There is a hunger among the LGBT business community, not only in Colombia, but also in the United States, to increase opportunities between our two nations and access new markets in which to sell products and services."
Read the complete article on BogoGay
Bogota Named One of the World's 15 Best Cities for Business
Source: Proexport Colombia
Fortune magazine named Bogota as one of the 15 best cities for business in its annual Global 500 feature, highlighting several multinational companies that recently established outposts in the Colombian capital.
Fortune included Bogota on its short list of the top 15 new cities in the world to do business—up-and-coming cities in which investors can find skilled workforce, solid infrastructure, and potential customers.
Says writer Josh Dawsey in the “Global 500” article’s enhanced digital map of the 15 best new cities for business: “A World Bank study recently ranked Colombia No. 2 in Latin America for entrepreneurs (it takes just days to incorporate a company), but large multinationals like Bogota, too: Citibank and McDonald’s have set up there, and call centers serving the world are proliferating in the city. Why? Colombians speak clear, unaccented Spanish.”
To select cities for this feature, Fortune consulted corporate and economic development executives to determine where companies are opening new businesses, taking into account (among other factors) the age and prosperity of the locals.
Colombia received additional plaudits with the inclusion of Bogotano businessman Luis Munoz on Fortune’s short list of “Four CEO’s on the Edge of Global Business.” With the input of Proexport Colombia for Bogota, the magazine highlighted Munoz’s successful business plan and recent international expansion of Juan Valdez Cafes, “a five-year-old company created by the Colombian Coffee Federation to boost revenue and prestige for Colombian grown coffee.”
Fortune portrays Bogota as a booming city ripe for multinationals, which are flocking there for its young, talented workforce, and business-friendly government policies.
The “Best New Cities for Business” roundup forms part of the report that complements the annual Global 500, where for the first time a Colombian company, Ecopetrol, makes the list.
Read the entire Fortune online report here.
Genpact and Diageo – a Recipe for Shared Services Success?
By Tigre Haller
Take one part Diageo, the world’s leading beverage company, add one part Genpact, a global leader in BPO management and technology services, mix – but do not blend – and you may have the formula for an ideal hybrid-model shared services center. At least that is what both companies are hoping to achieve with their new operations that will optimize Diageo’s comprehensive F&A operations. in Bogota, Colombia which were inaugurated on October 22, 2012, just over a year of Genpact’s establishment of operations in the Zona Franca Bogotá.
The deal formalized, explained Scott McConnell, Genpact’s Senior Vice President and Business Leader, Americas, when Diageo was looking for a partner in Latin America and, although they had experience using companies like Genpact before, they wanted something a bit different and they jointly designed a hybrid model. “Typically we will do our virtual captive approach where we carve out a space in our building for the client,” explained McConnell, “This is different in that we share floor space. But we have done it a few times to know how to run the operation well. It’s not the standard model but it has worked out quite well.”
Staffing Up and Growth Plans
Diageo representatives visited Genpact’s Bogota site at the beginning of 2012 when it was still being outfitted in order to work through the specifics of the hybrid center. After signing the agreement in May, the design was completed, and Genpact added local hires to their small team of seasoned Genpact personnel, such as the facilities manager Raul Chavez who was relocated from Mexico are charged with establishing the company’s best practices. “We will seed the site with a few key roles,” explained McConnell, “but front line management and associates are hired locally.” As of now, the shared services center employs approximately 70 people, almost evenly split between Genpact and Diageo, with the goal of hiring up to 200 employees by the end of 2013. Each company is responsible for managing their own staff, and measures have been taken to ensure that there is a clear delineation of responsibility and governance. “We have very clearly defined processes and service levels,” stated McConnell, “Diageo has their people working on processes that are close to their markets and our processes pick up where theirs stop.”
Genpact has established consistent and standard practices for hiring, retention, performance management, awards & recognition and how they communicate with personnel. They also hire local HR professionals to ensure that cultural factors are honored.
In a joint statement issued by Diageo and Genpact, Gregorio Gutierrez, Commercial Director of Diageo, explained that the partnership with Genpact, Gutierrez explained, will allow Diageo to focus on their core business and plans to expand in the region, while more effectively serving their internal and external clients.
Although Genpact is concentrating on making sure the hybrid program with Diageo is successful, the objective of the center is to grow beyond that, and McConnell told us that Genpact is already talking to other clients about Bogota as a delivery center.
Of course the types of skills they look for are dependent on client needs, but for the Diageo partnership, Genpact sought candidates who had a financial background. In order to work with the global Genpact and Diageo teams, all managers and supervisors are required to be fluent in Spanish and English, even though services in this center will be provided only in Spanish.
Colombia – Strong Leadership
Genpact has a strong footprint in Latin America with centers in Mexico, Guatemala and Brazil, but McConnell has been impressed with what Colombia has to offer in terms of a favorable political environment, good labor pool and a stable economy. He has also observed the level of C-Suite leadership that hat has been exported from Colombia to the world, but have returned to the country. “I think of senior leaders in other companies that I have met in the last six months in Colombia – a lot CFOs, CEOs and senior executives who have a global mindset and from Genpact’s perspective that is favorable,” McConnell explained.
Diageo’s Gutierrez also stated that “Establishing the shared service center in Bogota was ideal for Diageo given our strong existing ties and confidence in the country, the offer of talented workforce, and the open investment opportunities that we have seen for the last few years and that ratify our commitment for the long term.”
NOTE: Bogota Brilliance is a private, apolitical enterprise, created to help recalibrate the international perceptions of Bogota.