China nets Bogotá metro contract as Colombia, Panama, Mexico woo Beijing

Colombia, Panama and Mexico want to facilitate Chinese investments and are working on regulatory changes to ease access for investors from the Asian nation, as they seek financing for big projects.

Colombia has netted one such deal, awarding a US$4.7bn Bogotá metro concession to a Chinese consortium on Thursday.

The nation's development financing agency, FDN, is working on new mechanisms to help foreign investors participate, the agency’s financing and investment VP, Carlo Bongianni, said during the Second High-Level China-Latin America Investment and Cooperation Forum, held at the headquarters of the UN Economic Commission for Latin America and the Caribbean (Eclac) in Santiago, Chile.  

He highlighted that 17 of 30 projects in Colombia's 4G highways program have secured financing. Among these projects, China Harbour Engineering is part of the consortium responsible for the Vía al Mar 2 concession, in addition to being part of the consortium set to carry out the Bogotá metro development, along with Xi'An Metro Company Limited.

It is estimated that the country has US$32bn in infrastructure financing needs, with the road sector representing the biggest amount (US$14bn).

Over the past few years, FDN has introduced new tools such as a financing line in pesos to ease foreign access for investors, and Bongianni said that “financiers are very satisfied with everything that has been done.”

In the case of Panama, the country’s new government has planned a US$30bn development plan that entails the public non-financial sector, the financial sector and operations tied to the Panama Canal, according to the National Bank of Panama’s vice chair of the board of directors, Leroy Sheffer.

“We can’t do this by ourselves, we need the help of the private sector,” he said.

When it comes to China, Sheffer said that the new government’s PPP framework will allow the identification of economic sectors that could benefit from Asian investment.

In this regard, he said that Chinese firms have an opportunity in Panama’s energy sector, underlining that “in the next five years Panama has to consolidate its energy efficiency and we [the bank] will support all incentives that the state has the capacity to offer.”

Other actions taken by Panama in the 100 days since the new government took office include creating a process digitalization office to streamline procedures, while an investment promotion bill is in the works.

As for Mexico, the country is still trying to leave behind its vision of China as a competitor, which has limited economic interactions between the two nations.

“Over the past 20 years Chinese investments represented only 0.52% of all direct foreign investment in Mexico,” said the head of the Mexican market efficiency policy unit, Sergio Silva Castañeda.

To reverse this, Silva said that Mexico is working to streamline its permitting processes so that investors can carry out all of the procedures in a single filing, instead of presenting three separate requests to municipal, regional and federal authorities, as well as creating a single office for foreign investors. 

“The impression that we have is that, given China’s economic progress, in reality what we have is two economies with high levels of complementarity, where we can find specific sectors where we’re not competitors, but basically where we could complete value chains,” he said, mentioning the air transportation sector as an example.  

Picture: How the Bogotá metro line will look