Tuesday, January 22, 2019

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Roberto Peckham

Spain-based Grupo Globalia announced January 4 that its Air Europa airline subsidiary will launch three-times-a-week nonstop service between Medellin and Madrid starting June 1.

The company will employ new Boeing 787-9 “Dreamliner” jets, which can cut 40 minutes off flying time compared to competing jets on the same routes, according to Globalia.

Service to and from Medellin will be offered Tuesdays, Thursdays and Saturdays, offering new competition to Iberia’s and Avianca's existing nonstop flights between Medellin and Madrid.

Fare Comparisons

Air Europa was quoting a COP$2 million (US$626) fare for round-trip nonstop Medellin (MDE)-Madrid(MAD)-MDE for flights starting June 1. Iberia meanwhile was quoting COP$2.13 million (US$668) if including two pieces of luggage in the plane's belly, or no belly luggage (just carry-on) for COP$1,84 million (US$576) for June nonstop RT flights.

As for Avianca's June flights, it was quoting non-stop MDE-MAD-MDE (but not on same days as Air Europa nor Iberia) at COP$2,673,150 (US$848) including taxes and surcharges; fares for flights originating in Colombia  include the airport tax.

From its Madrid hub, Air Europa offers flights to 16 European destinations as well as 22 cities in Spain, according to the company.

Medellin’s international airport (Jose Maria Cordova, JMC) also offers other nonstop international flights to Miami, Fort Lauderdale, New York, Orlando, Mexico City, Cancun, El Salvador, Panama, Buenos Aires, Ecuador, Peru and Venezuela, plus seasonal service to Dominican Republic, Aruba and Curazao.

JMC processed 8 million passengers through its domestic and international terminals during 2018.


The Plaza Mayor convention center -- owned by the city of Medellin -- reported this month that total events rose to 734 in 2018, up from 539 in 2017 and 480 in 2016.

Of that total, 38 events were international (up from 29 in 2017), 68 were national and 628 local, according to conventional center officials.

Having dramatically expanded its available space three years ago, Plaza Mayor additionally now offers a renovated conference/convention platform featuring “4k” high-definition video technology including “16:10” video screens that generate ultra-high-quality images for conference presentations, the center noted.

Among numerous upcoming events in 2019, Plaza Mayor will host the annual Colombiatex de las Américas textile-industry congress, the “Expofitness” show, the “”Expoinmobiliaria” real-estate industry show, the World Cities Forum (Foro Mundial de Ciudades) the International Avocado Industry Congress, the International Congress on Workplace Accident Prevention, the Colombiamoda international fashion-industry show, the semi-annual FISE electric-power industry conference, the Organization of American States Assembly and the Agrofuturo agricultural industry congress.

Plaza Mayor now receives about 1 million visitors annually and expects to continue growing, thanks to infrastructure upgrades including the soon-to-be-completed expansion of the Yellow Pavilion, according to the center.

The center also recently inked an “alliance” deal with Bogota’s main “Corferias” convention center to share events such as “Expopet 2019,” and also signed deals with IFEMA-Feria de Madrid in Spain and the KOELNMESSE convention organizer in Germany, enabling greater international participation in events held in Medellin.

Over the past 11 years, Medellin has seen 547% growth in international events, while in 2018 alone, such events brought an extra US$47.8 million in revenues to the city, according the city’s Secretary of Economic Development.


The Medellin Mayor’s Office announced December 28 that China-based electric vehicle (EV) manufacturer BYD won a contract bid to provide 64 pure electric buses for the “Metroplus” bus rapid transit (BRT) system in Medellin.

The resulting zero-emissions bus fleet “will be one of the largest in Latin America” and the contract calls for delivery during the second half of 2019.

“After reviewing the economic, technical and financial proposals of four firms specialized in buses, Metroplús awarded the contract for the acquisition of 100% electric vehicles to the ‘Green Medellín’ consortium, made up of the Chinese company BYD Industry Company Limited and BYD Motor Colombia,” according to the Mayor’s office.

“This award, which had a projected scope of at least 55 electric buses, exceeded this figure by nine [bus] units, for a total of 64,” according to the announcement.

The new fleet will have 16 electric recharge points, 300 kilometers range and two hours required for battery recharge, according to the Mayor’s office.


Colombia’s Transport Ministry and its Agencia Nacional de Infraestructura (ANI) infrastructure agency announced December 20 that they've granted a conditional 30-year concession license to the developers of the proposed “Puerto Pisisi” Atlantic freight port at Turbo, Antioquia.

According to ANI, the initial investment would total US$133 million, and when completed the port eventually would handle 1.7 million tons/year of general cargo, containers, solid and liquid bulk materials, vehicles and hydrocarbons.

“Puerto Pisisí is expected to become one of the most representative ports in the Gulf of Urabá, as it is a maritime zone that offers geostrategic conditions for the movement of cargo towards the center of the country,” according to ANI.

“This port is part of the strategy of connecting the country with the world and is complemented by the program of projects of the 4G [fourth-generation] highways that are being executed in Antioquia,” added ANI president Louis Kleyn.

The conditional license requires the Pisisi port developers to sign a construction contract within one year, upon which it could start finalizing its investment plan.

“This terminal expects to mobilize more than 300,000 tons for the first year of operation, until reaching about 1.7 million tons by year 30,” according to ANI.


Medellin’s investment promotion agency ACI -- Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana -- reported December 21 that foreign direct investment (FDI) in Medellin so far this year has topped US$253 million, or US$11 million over ACI’s initial forecast target.

“These investment projects came mostly from Mexico, El Salvador, Italy, Venezuela, Japan, Spain, Taiwan, the United States, France and Panama and correspond to the economic sectors of tourism infrastructure, health services/life sciences, real estate, food and beverages, manufacturing and ‘fourth-generation’ [high-tech] industries,” according to ACI.

“For the development of these projects, it is estimated that 3,180 jobs were generated,” the agency added.

Meanwhile, foreign-government aid projects to Medellin – mainly from the U.S., the EU, Germany, Switzerland, Sweden, Canada and Japan – targeted education, security, mobility, economic development, environment, social inclusion and “peace building.” These investments topped US$17 million, or US$6 million more than ACI initially expected for 2018.

“Of a total of 1,287 projects and indications of investment intention directed towards Colombia between 2003 and 2018, the majority comes from the United States, Spain, Canada, Brazil, United Kingdom, Chile, Mexico and France, so the recommendation is to strengthen the relationship with these countries through proactive work to attract foreign investment to Medellin,” the agency added.

High-Tech Sector Leads Outlook

On a related front, ACI reported December 20 that a recent joint study by the Medellin Mayor's office and Argentina’s “PRODEM” development agency found that Medellin is becoming a major focal point for high-tech investment.

“In the last three years, the Mayor's Office of Medellín has accompanied about 119,000 people in their ideas of entrepreneurship,” according to ACI.

The joint study was the result of local officials setting a goal that Medellín should become one of the top-three “most-entrepreneurial cities” and the “capital of innovation in Latin America in 2023,” according to ACI.

The study analyzed variables including human capital, entrepreneurial education, culture, business structure, science, technology and information platform, as well as local demand, social capital, financing, local institutional support and local policies and regulations, according to ACI.

"Medellín has an ecosystem of young entrepreneurship that advances and has opportunities for improvement to make the leap towards a new, more dynamic stage,” added Hugo Kantis, director of Argentina’s PRODEM, according to ACI.


Colombia President Ivan Duque and Minister of Finance Alberto Carrasquilla on December 19 both hailed final votes in the Colombian House and Senate to approve a revised tax package for 2019.

“The approved bill retains the initial spirit of protecting the most vulnerable population of the country and strengthening the collection through the taxation of the population with the highest income,” according to a Finance Ministry press statement.

The new law “aims to recover investment in the country and allow the economy to grow above 4% [annually], removing the burden on the generators of employment and encouraging investment,” the Ministry added.

Unlike the original proposal, the new law won’t extend the current 19% value-added tax (VAT) on many products to the basic “food·basket” that includes what most Colombians buy every day. However, beer and carbonated soft-drinks – previously exempt from IVA -- will now be hit by that tax.

On the other hand, neither pensions nor certain service contracts will be taxed, contrary to the original tax proposal.

Meanwhile, the new law strengthens the hand of the national tax-collection agency (DIAN) in the fight against tax evasion, including possible prison sentences for evaders.

Responding to a proposal from President  Duque, “tax conditions were created so that companies related to the ‘orange’ economy [high-tech, environmentally ‘green’] could develop, benefiting cultural and technological ventures that generate added value to economic growth,” the Ministry noted.

According to President Duque, the new law “promotes entrepreneurship, simplifying and facilitating the work of micro-, small, medium and large companies, which currently face a huge and inequitable tax burden that does not allow them to grow, and substantially reduces the fiscal asphyxia in sectors generating formal employment.”

Corporate income-tax rates will be gradually reduced from 33% today to 30% over the next four years.

“To increase productivity, VAT will be allowed to be deducted from the investment in capital goods starting in the taxable year 2019. In addition, companies will be able to deduct 50% of the ‘Industry and Commerce Tax’ from the taxable year 2019 and 100%l in 2022. The deduction of 50% of the ‘Lien on Financial Movements’ is maintained,” according to the Ministry.

Meanwhile, a new “SIMPLE” alternative taxation system “seeks to simplify compliance with the tax obligations of legal or natural persons with annual gross income of less than COP$2.75 billion [US$847,500]. Using a single form, they can settle their income tax obligations and ICA [Industry and Commerce Tax], reducing the costs of compliance with their tax obligations and promoting formalization [of employment],” according to the Ministry.

“In addition, SIMPLE system rates for small stores, mini-markets, micro-markets and hairdressers already are included in VAT liability. On the other hand, restaurants will liquidate the consumption tax in the same form,” according to the Ministry.

The new law also includes a 1% tax on assets of more than COP$5 billion [US$1.54 million], while real estate sales valued at more-than COP$918 million [US$282,760] will be hit by a 2% consumption tax, except for rural properties destined for agricultural production.

In addition, the personal income tax rate is increased for people with average monthly incomes greater than COP$40 million [US$12,320].

The extra tax revenues resulting from the new law “will be directed mainly to address the subsidized health system, social programs such as ‘Families in Action’ and the ‘Elderly and School Feeding Program,’” according to the Ministry.


Medellin-based international electric-power transmission and highway concessions giant ISA announced December 19 an “alliance” deal with Medellin-based construction giant Construcciones El Condor for highway deals in Colombia and Peru.

According to the new partners, ISA will have a controlling 51% stake in the alliance.

“ISA is taking quick steps to materialize the ‘ISA 2030 strategy’ that was recently made public, in which emphasis on the road business is focused on consolidating its business in Chile, where it is currently a leading player, and on exploration of new markets in Colombia and Peru,” according to the company.

“ISA brings its extensive experience as an operator in Chile, where it currently leads the segment of interurban highways, its financial muscle and its leadership as a ‘multilatina’ [company]; while Construcciones El Cóndor S.A, brings its recognized experience in construction, concession management and road infrastructure projects.”

Besides opening doors to public tenders for road concessions in Colombia and Peru, the alliance also “opens the possibility of executing a joint strategy of evaluation, participation and acquisition of concessions,” according to ISA.

In Colombia, several “fourth generation” (4G) highways are nearing completion, so new contracts to maintain and operate these highways are soon to be put up for bid, the company noted.

Luz María Correa Vargas, president of Construcciones El Cóndor, added that “we are a relevant player in Colombia with nearly 40 years in the market. We have great strengths in the management of concession contracts, especially in the structuring of offers, and in the design, construction and engineering of road concessions.

“Our goal is to continue growing and for this, the support of a solid and recognized company like ISA is key. We find that we have an affinity of interests and that we complement each other to be leaders,” she said.

Constructora Conconcreto Loan Syndication

On a related front, Medellin-based Constructora Conconcreto announced December 19 that it just won a syndicated loan agreement with Colombia banking giants Bancolombia, Banco Davivienda, Banco de Bogota, Itaú Corpbanca Colombia, Banco Popular, Banco de Occidente, Banco Santander de Negocios Colombia, BBVA Colombia and Commercial Bank AV Villas.

“The support and vote of confidence of all the banks that participated in this process for Constructora Conconcreto S.A. is undoubtedly a favorable symptom for the construction sector in our country,” according to Conconcreto.

“This contract allows the company to re-profile its financial debt at a value of COP$639.8 billion [US$198 million], a loan whose maturity date will be December 31, 2023.

“Thanks to these new conditions, Constructora Conconcreto S.A. it is able to continue with the fulfillment of the investment plan required in strategic projects, which reaffirm the sustainability of the company in the long term and contribute to the national infrastructure, such as:

“• Via 40 Express, one of the most important concessions in the country, since it is the most important commercial artery in Colombia, connecting the Sabana de Bogotá with the Port of Buenaventura.
“• Consortium Vial Helios, which will complete the execution of Section 1 of Ruta del Sol, corresponding to the sector between Villeta and Puerto Salgar.
“• The continuation of 21 housing projects, which represent more than COP$760 billion [US235 million] in revenues for the company, which are located in the main cities of the country.”

The new credit agreement is backed by Conconcreto’s COP$540 billion (US$167 million) equity in the “Pactia” real-estate private equity fund; other real estate valued at COP$58.3 billion (U$$18 million); and a fiduciary-rights security interest agreement in the Malachí Trust, whose underlying asset is a property worth COP$80 billion (US$24.7 million), according to the company.


The ever-worsening economic and social crisis in Venezuela -- caused by the criminal Castro-Chavista narco-communist dictatorship -- is now likely to trigger out-migration of about 25% of the entire population, according to a shocking new study by Washington, DC-based Brookings Institution.


Medellin-based credit union Cooperativa Financiera de Antioquia (CFA) revealed this month in a filing with Colombia’s Superfinanciera regulatory agency that it won a favorable AA rating for long-term debt from Bogota-based debt rater Value & Risk Rating (VRR).

CFA also won a favorable “VrR1” rating from VRR for short-term debt risk, according to the filing.

The filing, posted by the Superintendencia on December 10, shows that CFA’s net income through August 2018 rose to COP$4.77 billion (US$1.5 million), up from COP$3.99 billion (US$1.26 million) for the same period in 2017.

“The AA rating indicates a high capacity to pay interest and return capital, with a limited incremental risk compared to other entities or rated issues with the highest category,” according to VVR.

“On the other hand, the rating VrR1 corresponds to the highest category in investment grade, which indicates that the entity [CFA] enjoys a high probability in the payment of the obligations in the agreed terms and terms. The liquidity of the institution and the protection for third parties is good. Additionally, the ability to pay will not be affected by changes in the sector or the economy,” VVR added.

Among credit unions, CFA, founded in the year 2000, is ranked fourth by level of assets among the five financial cooperatives of Colombia, VVR noted.

The company mainly caters to lower-income and middle-income clients (strata 1, 2 and 3 in Colombia’s system of income rankings) and has most of its business here in Antioquia.

CFA has 10 main offices, 498 employees, and 68 correspondent offices in seven Colombian departments (states), and continues to expand throughout Colombia.

In total, 85% of the loan portfolio typically goes to salaried employees, commerce, transport and agriculture, according to the filing. The top-20 loan clients represented just 4.27% of the total portfolio, the filing shows.

During 2019, CFA plans to start-up the second phase of its cell-phone-based “Mobile channel,” which seeks to expand the transactional portfolio; complete the modernization and optimization of its “virtual office” platform; and continue with the development of its “Networks” project, according to the filing.


The Medellin City Council on November 26 voted 19-2 to approve a COP$5.3 trillion (US$1.6 billion) 2019 budget mainly favoring the city’s most vulnerable citizens.

More than 78% of the budget goes to public education, health, infrastructure and “social inclusion,” according to the city’s Treasury Secretary Orlando Uribe Villa.

The budget includes a COP$77 billion (US$23.7 million) addition over the Mayor’s originally submitted budget in order to complete infrastructure projects including a new public hospital in the low-income Buenos Aires neighborhood, the new Alejandro Echavarria public school and the “Buen Comienzo” kindergarten head-start program for poorer children in the Loreto neighborhood.

Medellin leads all major cities in Colombia by funding public education from pre-kindergarten through eleventh grade and then subsidizing college studies for many lower-income children.

Electric-Bus Fleet to Expand

On a related front, Medellin Mayor Federico Gutierrez announced November 20 that the city has asked vendors to submit bids for a contract worth COP$75 billion (US$23 million) for 55 pure-electric transit buses for the “Metroplus” bus rapid transit (BRT) system, which currently employs 77 natural-gas-fueled buses and just one electric bus.

If any bids eventually qualify, then the city could start acquiring these new electric buses by end-2019, according to the Mayor.

The zero-emissions buses would have capacity for 80 passengers, have a 280-kilometers range between recharges, be capable of climbing steep inclines in some of Medellin’s neighborhoods, and be capable of battery recharge in four hours, according to the bid proposal.

Medellín aims to slash air pollution by converting more of its vehicle fleet to zero-emissions electric power. The city currently suffers poor air quality mainly because of grossly excessive emissions from cheap, poor-technology motorcycles along with ancient, obsolete diesel-powered trucks and buses, as well as obsolete, high-emitting cars.

If any of the bus-bids are successful, then Medellin soon will have the largest electric-powered transit fleet in Colombia -- and one of the largest in Latin America, Mayor Gutierrez boasted.

The city’s current “Metroplus” BRT system runs through 14.7-kilometers-long circuits on “Line 1” and "Line 2,” from the University of Medellin (Belén neighborhood) through the city center and then onward to Aranjuez neighborhood.

Medellin also has Colombia’s only all-electric “Metro” elevated-train system, tied into its growing, all-electric “Metrocable” aerial tram networks plus the electric “Tranvia” roadway tram system.


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Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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