VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0209 0161643
ZNR UUUUU ZZH
R 161643Z JAN 08
FM AMEMBASSY BOGOTA
TO RUEATRS/DEPT OF TREASURY WASHDC
RUEHC/SECSTATE WASHDC 0973
INFO RUEHBR/AMEMBASSY BRASILIA 7995
RUEHCV/AMEMBASSY CARACAS 9781
RUEHPE/AMEMBASSY LIMA 5787
RUEHZP/AMEMBASSY PANAMA 1087
RUEHQT/AMEMBASSY QUITO 6494

UNCLAS BOGOTA 000209 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
WHA/EPSC FOR PMAIER; EEB/IFD/OIA PASS TO OPIC; TREASURY FOR 
MEWENS 
 
E.O. 12958: N/A 
TAGS: EINV ECON BEXP CO
SUBJECT: FOREIGN INVESTMENT CONTINUES TO BOOM IN COLOMBIA 
 
REF: BOGOTA 2 
 
¶1. (SBU) SUMMARY. According to preliminary figures Colombia 
attracted over USD 7.5 billion in foreign direct investment 
(FDI) in 2007 amid improvements in security, investment 
climate reforms and strong macroeconomic fundamentals.  The 
total represents Colombia's second highest inflow of FDI in 
history and registered 18 percent higher than 2006.  Foreign 
companies invested approximately USD 1.25 billion in the 
energy sector with the balance spread across the retail, 
financial, manufacturing, transport, and telecommunications 
sectors.  New investment (vice acquisition of existing 
businesses) comprised USD 1 billion of the total--a 378 
percent increase over 2006.  END SUMMARY. 
 
One for the Record Books 
------------------------ 
 
¶2. (U) The inflow of foreign direct investment in 2007 
represents Colombia's second highest total ever, exceeded 
only by 2005's total of USD 10.2 billion which included 
SabMiller's USD 5.5 billion mega-purchase of the Bavaria 
brewery.  As a percentage of GDP, Colombia's 2007 take ranked 
as second highest in Latin America after Chile.  Investment 
remained strong in the energy sector at USD 4.5 billion, up 
from USD 3.1 billion in 2006, but increasingly spread across 
the economy with commercial, financial, and manufacturing 
sectors receiving a total of USD 2.3 billion--a 300 percent 
increase over 2006.  The rise in FDI helped push total 
investment (foreign and domestic) from 13 percent of GDP in 
2002 to 28 percent in 2007. 
 
¶3. (U) The FDI also originated from a more diverse selection 
of countries than in previous years.  Prominent foreign 
investors include French steelmaker Arcelor Mittal, Brazilian 
steelmakers Gerdau and Votorantim, French retail chains 
Casino and Cencosud, Mexican communications firm Telmex, 
Belgian construction firm Jan de Nul, Salvadoran construction 
company Poma, Chilean retailers Forus and Falabella, and 
Korean automaker Hyundai.  The United States, however, 
remained Colombia's largest source of FDI with an accumulated 
stock of USD 7.7 billion, or 21 percent of Colombia's total 
since 1994. GE Money's USD 228 million purchase of a 39 
percent stake in Banco Colpatria ranked among the highest 
profile non-energy sector U.S. investments in 2007 along with 
hotel chain Sonesta's USD 70 million investment in three new 
hotels. 
 
(Re)Locating to Colombia 
------------------------ 
 
¶4. (SBU) Economic and security improvements in Colombia led 
several international companies, such as U.S. consumer paper 
firm Kimberly-Clark, U.S. agbiotech firm Monsanto, and 
Mexican petrochemical firm Mexichem, to select Colombia as 
their base for regional operations during the year. 
Likewise, the increasing contrast with the political and 
economic uncertainty in Venezuela has resulted in some 
companies shifting planned investments from Venezuela to 
Colombia.  A representative of U.S. firm Mars told us that 
uncertainty in Venezuela and the positive investment climate 
in Colombia was key in the company's decision to build a USD 
100 million processing plant, originally planned for 
Venezuela, in Barranquilla. 
 
Outlook for Continued Investment Bright 
--------------------------------------- 
 
5.(U) According to ProExport President Maria Pombo, final 
2007 FDI figures could reach USD 8 billion.  She underscored 
that, beyond total amounts, 2007 registered a significant 
increase in new "greenfield" investments, which normally 
create more new jobs than foreign acquisitions of existing 
companies.  Pombo also said ProExport expects strong FDI 
inflows in both "greenfield" projects and acquisitions to 
continue in 2008.  In addition to continued growth in 
partnerships between Colombian and foreign companies, she 
cited opportunities arising from GOC plans in 2008 for USD 2 
billion in infrastructure concessions and privatizations of 
minority stakes in companies such as Banco Popular. 
Brownfield