OPIC CEO MOSBACHER HIGHLIGHTS U.S.-COLOMBIAN

UNCLAS BOGOTA 006957 SIPDIS SENSITIVE SIPDIS C O R R E C T E D COPY TEXT EEB/IFD/OIA PASS TO OPIC KCALLAGHAN E.O. 12958: N/A TAGS: ECON EINV EFIN ETRD ENRG OPIC CO SUBJECT: OPIC CEO MOSBACHER HIGHLIGHTS U.S.-COLOMBIAN INVESTMENT POTENTIAL REF: BOGOTA 6499 ¶1. (SBU) SUMMARY: In September 10-11 meetings with government and private sector representatives, Overseas Private Investment Corporation (OPIC) Chief Executive Officer (CEO) Robert Mosbacher, Jr. highlighted the potential for increased U.S. investment in Colombia and the range of OPIC services available to facilitate U.S. investment. CEO Mosbacher underscored the role of increased U.S. investment in reinforcing the economic development benefits of the U.S.-Colombia Trade Promotion Agreement (CPTA). President Uribe identified housing, energy and infrastructure as critical sectors in need of increased investment. Separately, business leaders expressed broad interest in taking greater advantage of OPIC services. Together with the Colombian export and investment promotion agency, Proexport, CEO Mosbacher signed a Memorandum of Understanding to cooperate on investment facilitation. END SUMMARY. President Uribe and Economic Cabinet Welcome OPIC Engagement -------------- -------------- ¶2. (SBU) President Uribe opened his meeting with CEO Mosbacher by describing increased investment as a "daily concern" for his administration and outlined GOC efforts to encourage investment through tax incentives, stable rules for investors, and regulatory reform. He noted that these efforts, along with Colombia's postive economic conditions, raised investment from 15 percent of GDP to almost 27 percent since 2002. Uribe expressed interest in OPIC's work on housing programs in the region and said the GOC has tried to encourage the private sector to get more involved in low-income housing construction. He also suggested that Colombia's public pension and worker unemployment funds may have resources to invest in housing development. In response, CEO Mosbacher detailed OPIC projects which helped create a market for 15-year fixed rate mortgages in Central America and have leveraged more than USD 7 billion in housing around the world. ¶3. (SBU) President Uribe said Colombia must also catch up on developing modern road, port,and freight systems. He encouraged OPIC to look closely at infrastructure projects as well as the Colombian energy sector. Mines and Energy Minister Martinez said Colombia must add 6000 megawatts of electicity generation capacity over the next 10 years and will solicit several power generation project bids by the end of 2007. President Uribe and Minister Martinez both described biofuels development as a priority. CEO Mosbacher said OPIC wants to support clean energy development projects, including biofuels production for domestic consumption. CEO Mosbacher encouraged the GOC to consider utilizing biofuels for electricity generation as a means of reducing dependence on thermal generation plants. ¶4. (SBU) In a subsequent meeting with the GOC's economic cabinet ministries chaired by Finance Vice Minister Juan Pablo Zarate, representatives from Finance, Foreign Relations, Transportation, Agriculture, Planning, and Environment and Housing emphasized the Uribe administration's committment to increasing investment in housing, infrastructure and access to credit by 2010 as part of the administration's comprehensive poverty reduction strategy. National Planning Director Carolina Renteria said her office wants to facilitate the building of 800,000 low-income housing units over the next five years for displaced persons, demobilized ex-combatants and other vulnerable populations through access to credit, government housing subsidies, and construction projects. Vice Minister Zarate characterized the Colombian mortgage market as inefficient and said that no real secondary mortgage market existed. He suggested OPIC expertise in the mortgage sector and in securitization would improve the situation. ¶5. (SBU) Vice Minister of Transport Gabriel Garcia described eight low-emission public transit projects the GOC plans to request bids for soon and suggested some might qualify for OPIC financing. CEO Mosbacher acknowledged banks' hesitance at times to make loans to low-income borrowers, but said OPIC can guarantee up to 75 percent of the debt of qualifying projects if necessary. He stated OPIC's interest in seeing any tender processes for GOC housing or transportation projects. CEO Mosbacher congratulated the Uribe Administration on its significant gains in reducing poverty and increasing access to basic services. He reiterated OPIC's interest in assisting the GOC in facilitating private investment to meet its development goals Private Sector Interested in OPIC Services -------------- ¶6. (SBU) In separate meetings with business leaders from the Colombian-American Chamber of Commerce (AmCham),the National Association of Industries (ANDI),and the National Association of Financial Institutions (ANIF),the private sector consistently characterized Colombia's current positive economic conditions as the optimal moment for increased OPIC assistance. They identified the credit, housing, infrastructure and energy sectors as priorities. Many representatives acknowledged current limits on access to credit for small and medium enterprises as well as chronically insufficient investment in infrastructure as key impediments to long-term sustainable growth in Colombia. CEO Mosbacher stated that OPIC's interest in Colombia stemmed from the USG's desire to support opportunity in Colombia, complement the economic gains of the CTPA, and build a strong private sector to serve as a basis for further development. CEO Mosbacher noted that much of OPIC's activities in Colombia previously focused on the energy sector, but said that OPIC could expand its area of activities to include credit, housing, health, educational institutions, telecommunications and infrastructure. In particular, OPIC wants to support projects that reduce carbon emissions or reduce pollution. He encouraged companies interested in partnering with U.S. investors on projects that meet OPIC standards to contact the U.S. embassy in Bogota. MOU Signing -------------- ¶7. (U) In addition to his meetings, on September 10, CEO Mosbacher signed a Memorandum of Understanding with Proexport to provide technical assistance and promote coordination on the submission of local project proposals to OPIC. Implementation of the MOU, signed by Proexport President Maria Elvira Pombo and CEO Mosbacher before an audience of government, private sector and media representatives, will begin with the visit of an OPIC technical team at the end of September. ¶8. (U) OPIC cleared this cable. Brownfield