Latin Finance - May/June 2010 - 40

colombia-peru investment

Colombia Goes South
by Lucien Chauvin olombian Finance Minister Óscar Zuluaga is not just bullish about the prospects for his country’s economy, he also detects opportunity for Colombian companies to expand abroad. What better place for investing than southern neighbor Peru, a country also racking up strong growth and aggressively working to lure foreign capital? “Colombian companies will continue gaining presence. They are creating new opportunities and entering new areas,” Zuluaga told LatinFinance on the sidelines of the late-March annual meeting of the Inter-American Development Bank. “The revaluation [of the peso] helps Colombian companies be competitive outside the country,” he adds. Colombian investment in Peru in 2008, the last year with formal statistics available from the investment promotion agency, ProInversión, was $731 million, putting it seventh in terms of foreign direct investment to the country. It is within striking distance of numbers five and six, Chile ($1 billion) and Panama ($903 million). The FDI leader was Spain, with $4.1 billion. Two-way trade between the Peru and Colombia, both members of the Andean Community (CAN), was $1.5 billion last year, with Colombia enjoying a $300 million surplus thanks primarily to hydrocarbon products. Trade was down 20% compared to 2008, as a result of the international crisis, but it is expected to pick up this year. The two countries not only enjoy strong economic ties, but there are political bonds that set them apart from other Andean countries. They recently negotiated a free-trade agreement together with the European Union – Bolivia and Ecuador, the other CAN members, pulled out of the talks – and began negotiations at the same time with

Colombia’s fast-growing hydrocarbon and energy companies are leaping into Peru, a neighbor rich in potential. Ecopetrol leads the effort, but even miners are expected to join the wave.

Breaking into Peru: Colombian companies are taking control the US in 2004. The Colombia deal got bogged down in US political infighting, while the Peru-US free trade agreement celebrated its first anniversary in February. The countries’ stock markets meanwhile began in March a process integration to facilitate investment. Colombian investment in Peru is diverse, including agriculture, food and housing. Colombia’s Manuelita has been in Peru for some time, operating a sugarcane plantation, while Crepes & Waffles and Juan Valdez are in the food franchise business with restaurants in Lima. Colpatria is a recent arrival and has several housing developments underway in Lima. But it is in the hydrocarbon and energy sectors where Colombian companies have excelled and where the major investment is underway, taking advantage of a growing energy sector in Peru.

Ecopetrol Wants Leadership

State owned oil company Ecopetrol entered into a joint venture in February 2009 with the Korea National Oil Company, to buy Peru’s privately owned Petro-Tech for $900 million. The consortium, which is equally owned by both companies, re-launched Petro-Tech earlier this year under the name Savia. As a result of the purchase, Ecopetrol now has a stake in more hydrocarbon blocks in Peru than any other company.

40 LatinFinance

May/June 2010

Latin Finance - May/June 2010

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