Obstacles for the military industry to become a hub for the country’s reindustrialization
The military industry is one of the National Government’s bets for reindustrialization. However, it is a sector with a highly variable production and a trade deficit. There are also concerns about the amount to be invested.
Among the bets of the National Government is to take advantage of the military industry for the reindustrialization of the country.
A difficult challenge because it is a sector with a very unstable production and that had a trade deficit of USD $275 million in 2022. For some experts, it is very little that will be invested in the military industry in the coming years.
The military industry is a bet in the reindustrialization policy
In the recently approved National Reindustrialization Policy, CONPES 4129 of 2023, one of the strategic bets is the “reindustrialization based on the defense sector for life”. It refers to taking advantage of the capabilities of the military industry in terms of innovation, technology and human talent.
According to CONPES 4129, the objective is to ensure the transfer of technology to non-military uses, the production of parts for unmanned aircraft, the manufacture of modular metal bridges, the production of fertilizers and the shipbuilding industry will be promoted.
The document also proposes “the development of the different public enterprises of the defense sector for the insertion in international markets”. For this purpose, the existing productive units of the military industry will be characterized and strengthened, a process that will be carried out between 2024 and 2028.
Military industry production in Colombia
The military industry includes weapons, ammunition, military equipment, weapons accessories and different types of chemicals (such as ammonium nitrate, potassium nitrate and nitric acid) used in the manufacture of weapons and explosives.
In Colombia, the main producer for the military industry is Indumil, a state-owned factory that provides arms, ammunition and explosives.
Consolidated data for the last five years (2018 to 2022) show ups and downs in the company’s arms production, according to the Ministry of Commerce, Industry and Tourism’s (MinCIT) economic profile of the military industry.
Rifle production went from 10,102 units in 2021 to only 874 units in 2022, a reduction of 91%.
In 2022 there was also a reduction in the production of 38 caliber revolvers and in the manufacture of shotguns at Indumil. The 9-millimeter pistols grew from 4,553 units in 2021 to 7,802 in 2022.
In the case of explosives, the MinCIT report recognizes “an increase in production in 2022” and relates it to the recovery of mining, road infrastructure and hydrocarbons.
There was also an increase in 2022, with respect to 2021, in the manufacture of bombs and grenades and a reduction in the production of ANFO explosives (Ammonium Nitrate – Fuel Oil), a high explosive.
In addition to Indumil, there are other companies that produce and export in the military industry, especially chemical products.
On average, from 2015 to 2022, there were 63 companies exporting per year, according to the MinCIT report. In 2022 seventy-six companies made sales abroad, the highest record in the last 8 years.
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Colombia’s military industry in foreign trade
In the last eight consolidated years (2015 to 2022) imports of the military industry have been higher, compared to exports.
In that period, the accumulated trade deficit reached USD $1,762 million, according to information from MinCIT. The years 2016 and 2022 had the largest annual deficits, with USD $276 million and USD $275 million, respectively.
In the eight years reviewed by MinCIT on the military industry, the highest annual value of exports was USD $53 million, an amount that was reached first in 2018 and then in 2022. On the contrary, in 2016 only USD $23 million was exported, the worst record.
The resources of the Conpes for the military industry are insufficient
One of the main criticisms of the National Government’s intention to use the military industry as the axis of reindustrialization is the little money that is projected to be invested for this purpose.
According to Miguel Angel Rodriguez, researcher at Cedetrabajo, the first thing to be clarified is that Conpes 4129 does not speak of new resources, but of redirecting existing ones.
On the other hand, in the presentation of Conpes 4129 and in its dissemination material, there is talk of investing COP $200,000 million for the military industry. “A derisory budget if we take into account that it will be used over 5 years (2024 to 2028), according to the proposals of the Conpes”, said Rodriguez.
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