“The unbridled negotiation of FTAs decreased industrial capacity, by 2024 I do not see an increase in Colombian exports”: Camilo Llinás

The Colombian Auto Parts Manufacturers Association (ACOLFA) aims to develop the automotive industry. Más Colombia spoke to its executive president, Camilo Llinás, about Colombia’s exports. According to him, Free Trade Agreements and the lack of a domestic agenda and government support are the main problems for exports.

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What are the main barriers you observe for Colombian exports?

Colombian exports have several barriers. I am going to say them in disorder. First, with the unbridled negotiation of Free Trade Agreements, what was done was to reduce the capacity and competitiveness of the industrial sector.

I am going to refer to the case of the automotive sector. If we used to have 70% of the domestic market, today we are at 20%. The domestic market, production at scale, made us competitive. With the Free Trade Agreements, many sectors lost participation. To be exporters, we need to be strong in the domestic market.

Second, Colombia committed itself to making a comprehensive plan on everything that the Colombian governments had to do. It was the internal agenda, the work agenda. This agenda was never fulfilled. The competitiveness of ports and land, air, sea and rail transportation had to be improved.

We, as businessmen, are competitive from the door to the inside, but from the door to the outside, the country has to be competitive.

This part has not been fulfilled by the different governments. They took away our domestic market, they took away our competitiveness and they did not comply with the domestic agenda.

Another issue that complicates Colombian exports is that we have no exportable supply. After 40 years of economic opening, we still depend on the same mining-energy exports. This continues to be maintained, but the manufacturing sector has not increased.

Finally, all countries in the world have export subsidies. They have subsidies in all parts of the chain. Starting with China, which has the most subsidies registered in the WTO. This is another factor that puts us at a disadvantage. The governments of those countries invest money to provide subsidies so that their products can be exported, while we think nothing of it.

The above problems affect Colombia’s exports, which means that, for the moment, I see no possibility of increasing exports, at least until we begin to modify these variables.

What is your assessment of the current government’s policy for Colombian exports?

In the National Development Plan (PND) there are some articles on the reindustrialization policy. In addition, the Ministry of Commerce, Industry and Tourism (MinCIT), headed by German Umaña, issued a policy on what will be the reindustrialization, focused on some sectors such as agro-industry, infrastructure, environment and energy transition.

We believe that this is already a start. For forty years there was no talk of industrialization, but rather they went on a rampage to make Free Trade Agreements and ended the industrialization of the country. They put an end to many companies that closed down. So, at least there is already a political decision of the Government to reindustrialize.

What is missing is to start executing. It is time for the MinCIT and the President to start setting policies on how this reindustrialization is going to be carried out in the four or five areas chosen by the government. Fortunately we have started, but it is time to have real commitments.

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What do you think of the Government’s measure to import vehicles with zero tariffs?

The program that allows imports is a decree called IAMAS 2.0. It is issued by the government for assemblers that are in the country. If they invest 100 dollars, those dollars allow them to import a small quota of cars with zero tariffs.

What the government wants is to encourage investment and the production of goods, giving them this facility to have a higher profitability so that they can sustain investment and business in Colombia. It is interesting.

The Decree came out 15 days ago. We will wait to see how it evolves, but it is a well-intentioned decree. Hopefully the assemblers will take advantage of this decree, invest, we will generate labor, increase vehicle production and, consequently, increase the production of auto parts. It is a good initiative, but its effect cannot yet be measured.

How do you see the automotive sector in the short term?

Currently, the automotive sector and the construction sector are the sectors that have fallen the most; construction has fallen almost 50% and we have fallen 40%. This means that a lot of labor has been lost which, in time, is going to turn into political and social manifestations of dissatisfaction with the loss of employment.

In addition, I see next year being very similar to this one, with growth at 1%, because interest rates are going to remain high. The banking system has a very reduced option to opt for credits, due to the fact that the overdue portfolio has increased a little and that many potential buyers have debt levels that reach the limit.

In our case, where 80% of the vehicles are sold on credit, there is no possibility of opting for credit. At least for next year, I see no possibility of growth.

And how can this growth be obtained? With public investment and private investment. In public investment, the government must execute the budgets at 100% and promote road infrastructure works. It also has to increase the possibility of providing soft credits so that the different sectors can leverage themselves in these difficult times. And in private investment.

Colombian researcher participated in the study of the first materials created by early modern humans and Neanderthals: interview