Is Investment in Colombia’s ICT Sector in Danger?

EPA / MIGUEL GUTIERREZ

File photo: Colombians living in Venezuela cast their vote for the referendum on the peace agreement between the government and FARC guerrila group in Caracas, Venezuela, 02 October 2016.

Is Investment in Colombia’s ICT Sector in Danger?


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After the recent Peace Agreement with the FARC rebels, Colombia seemed like the next Latin American promise. However, according to the Central Bank foreign direct investment (FDI) decreased 20.9% in August, and the country remains stagnant in number 61 of the Global Competitiveness Report of the World Economic Forum(WEF). Particularly, FDI for the transportation, storage and communications sector was negative in the 2Q of 2017 for the first time in the two last years.

The ICT sector seems to be suffering beyond the FDI numbers, GDP for the subsector of Telecom and postal services has decreased for the last 7 quarters, with no signs of recovering. Colombia has also lost positions in the WEF Networked Readiness Index (NRI), going from number 58 in 2011, to 68 in 2016, behind countries like Chile, Uruguay and Panamá. Indexes from entities such as the ITU, and the World Bank Doing Business state that the sector is not doing great.

Beyond the indexes and indicators, ICT services should be pulling the economy forward, and it is worrisome to have a sector in such dire conditions. In the last decade, the economic growth at World level was strongly correlated to the investment and innovation in the ICT sector.

However, the government, represented by Minister David Luna, continues to see the sector only as a source of income. It is time the government remembers that without a strong ICT sector that encourages innovation, the country will never be competitive in the digital economy world.

Just some of the issues experienced by the industry include: the unequal treatment of pay-Tv services that today pay significantly more in regulatory fees than any other service in the ecosystem, the lack of effective mechanisms to fight piracy and underreporting, the proliferation of unnecessary regulatory obligations that lack proper cost-benefit analysis, and the lack of certainty in regulatory and legal obligations.

Given this reality, it is no wonder companies are thinking twice before investing in Colombia’s ICT sector. Uncertainty and unfair competition are the biggest stop for the development and the innovation of sector in the short period and the growth of the economy in the long period.

In this context, it is unbelievable that instead of taking measures to create better conditions for the growth of the sector, Mr Luna proposes regulations that further diminish investors trust and erode the sustainability of the market. The current regulatory project to establish a new model for Pay-Tv regulatory fees does not include technical and economically sound methodologies that guarantee investors a basic return on investment. In addition, the fees are not straightforward to implement and can become very hard to enforce. Regulatory processes should be transparent and show clear signs that the ICT policy will be different moving forward. This is also not present in the current process being held by the Ministry and the ANTV.

As President Santos last year in office advances, there are still opportunities for him to show the world that Colombia is still the region’s promise. He can begin by addressing the anti-technical regulatory fees the sector has had to live with for years and avoiding further burdens on an industry that is already drowning. He shouldn’t forget that Colombia’s future is intertwined with the sector’s future.

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