Latin Trade (English Edition) - Jan/Feb 2013

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YOUR BUSINESS SOURCE FOR LATIN AMERICA » WWW.LATINTRADE.COM JANUARY/FEBRUARY 2013

HOTELSAIRLINES

RENTAL CARSDESTINATIONS

ALSO INSIDE:

• DEALS OF THE YEAR

• WILL PANAMA GROW AFTER THE CANAL?

FORECAST: REVENUES OF TOP LATIN AMERICAN COMPANIES IN 2013

HOTELS & RESORTS IN LATIN AMERICA

Don’t just travel, treat yourselff

SHERATON SAO PAULO WTC HOTEL, BRAZIL

TAMBO DEL INKA, A LUXURY COLLECTION RESORT & SPA,

VALLE SAGRADO, PERU

Feel the energy of Latin America in your choice of more than 70 hotels, each refl ective of

one of nine brands that are part of Starwood Hotels & Resorts. A selection of 42 unique

destinations in 13 countries throughout the region. Each hotel provides the essential elements

for an unforgettable stay.

To learn more, visit STARWOODLATINAMERICA.COM

2013 Openings: The Westin Panama; Sheraton da Bahia Hotel, Salvador; Sheraton Tucuman

Hotel; Four Points by Sheraton Mirafl ores; Palacio del Inka Libertador, a Luxury Collection

Hotel, Cusco; Aloft Panama; Four Points by Sheraton Cancun and the just opened Le Meridien

Mexico City.

Best Business Hotel Chain in Latin America

by the readers of Business Traveler magazine

©2013 Starwood Hotels & Resorts Worldwide, Inc. All Rights Reserved.Preferred Guest, SPG, Aloft, Element, Four Points, Le Méridien, Sheraton,St. Regis, The Luxury Collection, W, Westin and their logos are the trademarks of Starwood Hotels & Resorts Worldwide, Inc., or its affi liates.

THE WESTIN PANAMA

ALOFT BOGOTA AIRPORT, COLOMBIA

Reducing energy consumption andenvironmental impact while improving quality. Sounds impossible? Not for McDonald ’s.

As the manager of McDonald’s restaurants throughout Latin America and the Caribbean, Arcos Dorados is planning for the future by making our restaurants more environmentally sustainable. Doing so has a positive impact on our business, the environment and the communities in which we operate. In January

was built with technologies that reduce the use of electricity, water and gas. It is also equipped to promote

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Council. It is the third McDonald’s restaurant in Latin America to receive this

made some important strides in making our restaurants environmentally sustainable, we know we have more work to do. Our vision is to serve meals that are appreciated by millions of Latin American families while encouraging sustainable practices in our restaurants and local communities.

4 LATIN TRADE JANUARY-FEBRUARY 2013

Features16 Cover

Best of Travel: Latin Trade weighs in on the best hotels, destinations, airports, and meeting venues in Latin America.

30 Industry Report Latin Trade’s Deals of the Year

36 Financial Strategies: Real Estate Shopping for the well-heeled

38 Corporate StrategiesAIG starts over

40 Special Report: LatAm 2013 For companies, 13 is a lucky number

46 Education: Educating for Success Homework for the authorities in Ecuador and Haiti: Make sure the children get to school.

50 Country Report: Panama The Challenges Ahead: How will mega projects

impact the country; a hub for the Americas, and the toruism boom.

60 Investments: China’s Slowdown Chinese Shadows: China’s economy is cooling. How will Latin America fare?

62 Investments: Venezuela Outlook Venezuela in its labyrinth

64 Investments: Spain in Latin America Spain reconquers Latin America

66 Investments: Brazil in AfricaUnder the African sun: Brazilian firms increase

their presence in Africa.

50

62

CONTENTS JANUARY/FEBRUARY 2013 VOL. 21 No.1

60


Editor’s Note8 Business Revs Up for Growth in 2013

The Scene 12 Thumbs Up for LatAm

Opinion14 The Contrarian: Cash Credit is King

By John Price

Tech Trends70 E-Learning for the Twitter Generation

How technology is revolutionizing education

Events 72 CFO México, D.F.

74 CFO Miami

Spotlight: Colombia

76 The Only Risk is Wanting to Stay...

76

70

CONTENTS JANUARY/FEBRUARY 2013 VOL. 21 No.1

8

Cover: Best of Travel

WebFind us online at www.latintrade.com

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Global solutions.

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Taking your opportunity further.

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EDITOR’S LETTER

Santiago Gutiérrez,

Executive Editor

[email protected]

BUSINESS REVS UPFOR GROWTH IN 2013

This year will be a good one for Latin

America. In what is the fi rst issue of Latin

Trade for 2013, we want to show you what lies

behind our optimism from a variety of angles.

Maybe we’ve been donning our rosy-tinted

spectacles. After all, the region’s economic

growth came to a close on 3.1 percent last year,

down from 4.3 percent in 2011.

But estimates from Latin Business Chronicle,

the digital news and market intelligence of

Latin Trade Group, show that last year’s slow-

down was far from a disaster for the productive

sector. On the contrary, the region’s leading

non-fi nancial companies recorded a 10 percent

average sales growth in 2012, and a quarter of

them achieved increases of 20 percent or more

(see story on page 40). Th e biggest increases

were recorded by companies involved in com-

merce, consumer goods, transport and telecom-

munications. Th ey were able to shrug off the

problems of the international economy thanks

to a growth in demand from Latin America.

On top of that, leading economists, such as

those from the UN Economic Commission

for Latin America and the Caribbean, reckon

that domestic demand will remain strong this

year, as shown by labor indicators and growth

in bank credit. Both drivers will boost growth

of the middle class, which the World Bank has

shown is now running neck-and-neck in num-

bers with the poor. Between 2003 and 2009,

the region’s middle class grew from 103 million

to 152 million.

2013 will also have an additional advantage.

Th e prices of raw materials produced by Latin

America are not expected to slump due to

economic uncertainty in Europe and elsewhere

because Chinese purchases will provide an

additional support mechanism (see story on

page 60).

Yet another positive factor will be the re-

newed importance of tourism as a result of

growth in business, the movement of the Eu-

ropeans and help from governments (see story

on page 16).

Good results are also to be expected from

the multilatinas, whose internationalization

strategy has paid off in terms of a diversifi ca-

tion of the sources of growth. Th ey are opening

up new markets in the South, as are Chilean

companies in Peru and Colombia, Colombian

fi rms in the Caribbean and Brazilians in Africa

(see story on page 66). Investment fl ows will

also continue from the United States, Europe

(see story on page 64) and, to a lesser extent,

Asia, providing increased fi nancial returns from

the growth of Latin America.

For all of these reasons, as well as others, this

year is heading in the right direction from the

viewpoint of business activity in almost all the

region’s countries. For some of them, such as

Panama, 2013 will be yet another marvelous

year (see story on page 50). Of course, there

are challenges to the fi scal fragility of some

countries, especially those of the Caribbean,

and the need to increase investments so that

consumption is no longer the sole motor of

growth. Others, thanks to their relative well-

being, might fi nd room for technical changes

to boost social inclusion. But in general, except

for unforeseen events, the productive sector

will have a clean bill of health and will generate

economic prosperity. Are things looking good

for the year? No question.

Do you live an InterContinental life?

©2013 InterContinental Hotels Group. All rights reserved.

Shouldn’t each business trip or vacation you take be an unforgettable experience? At InterContinental, that is our mission. We use our local knowledge and insight to provide you with an authentic and captivating stay at the best destinations and cities in Latin America and the Caribbean…every time you travel!

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MIXING BUSINESS WITH PLEASURE?AUTHENTIC EXPERIENCES INCLUDED.


CEO

Rosemary Winters

EXECUTIVE DIRECTOR & PUBLISHER

María Lourdes Gallo

EXECUTIVE EDITOR

Santiago Gutiérrez

ART & PRODUCTION DIRECTOR

Manny Melo

GRAPHIC DESIGNER

Vincent Becchinelli

CONTRIBUTING EDITORS

Gabriela Calderón (research), Mark Ludwig

COLUMNIST

John Price

CORRESPONDENTS Argentina: David Haskel, Charles Newbery • Brazil: Taylor Barnes (Rio de Janeiro), Tereza Cruvinel

(Brasilia), Vincent Bevins, Thierry Ogier, (São Paulo) • Chile: Gideon Long • China: Ruth MorrisColombia: John Otis • Mexico: David Agren (Mexico D.F.), Nancy Ibarra (Monterrey) • Peru: Lisa K. Wing,

Ryan Dube • Spain: Sergio Manaut • US: Alejandra Labanca, Joseph Mann Jr. (Miami), Mark Chesnut, John T. Sullivan (NY), Ángela María Riaño (Washington D.C.),

Pablo Calvi, Isabel Piquer • Venezuela: Peter Wilson TRANSLATION: David Buchanan COPY EDITOR: Ronald Buchanan/Millie Acebal Rousseau

EVENTS & CONFERENCES

PROGRAM MANAGER

Victoria Kenny

EVENTS EXECUTIVE

Sandra Bicknell

EVENTS MARKETING EXECUTIVE

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SALES & CIRCULATION

Miami/Pan-regional sales: Silvia Clarke, Senior Account Manager/Team LeaderMercedes Fernández, Business Development Director

Andean region/Central America: María Cristina Restrepo, ManagerDubai: Stephen Dioneda

Special Projects Coordinator: Rebecca MillerSales and Marketing Coordinator: Silvia Morales

For advertising/sponsorship opportunities: [email protected] or [email protected]

LATIN BUSINESS CHRONICLE

Senior Marketing Associate: Rosemary Begg: [email protected] Associate: Blanca Charún: [email protected]

OFFICE MANAGER & CIRCULATION

Claudia Banegas

Latin Trade Group

CHAIRMAN

Richard Burns

CHIEF OPERATING OFFICER

Joanne Harras

ACCOUNTS MANAGER

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CUSTOMER SERVICE AND SUBSCRIPTIONS: Please visit www.latintrade.com to order online or call +1 (305) 749-0880. Latin Trade (ISSN 1087-0857, USPS 016715) is published bimonthly, with editions in English and Spanish, by Miami Media, LLC. All rights reserved. Reproduction in whole or part of any text, photograph

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Page

69


There is a general consensus among North American and

European investors that, despite signifi cant macroeconomic

headwinds in Europe and China, Latin America is a region with

steadfast domestic markets and attractively valued companies with

signifi cant growth potential. Also, the consumer goods and services

sectors are the most attractive to investors, while utilities, basic

materials, and commodities sectors are the least appealing, accord-

ing to a survery conducted by Ipreo in September 2012, on behalf

of J.P. Morgan’s Depositary Receipts Group. Respondents for the

survey were global institutional investors from the United States,

Canada, and European countries.

THE SCENE

Source: North American and European Investor Opinions of Latin American Companies, by JP Morgan’s Depositary Receipts Group

THUMBS UP FOR LATAMIT’S A GOOD TIME FOR REGIONAL COMPANIES TO PURSUE A PUBLIC EQUITY OFFERING.

In total, Ipreo obtained feedback from 40 participants who invest

in Latin America. As of June 30, 2012, these participants’ fi rms

managed a combined $807.6 billion in equity assets, $43.0 billion

of which represented holdings in Latin American companies. Of

these fi rms, 70 percent are traditional investment advisers/mutual

fund managers, while 30 percent are hedge funds. A high percent-

age of survey participants believe that now is a good time for a Lat-

in American company to pursue a public equity off ering. However,

investors have concerns about government intervention, as well as

company-specifi c shortcomings in fi nancial accounting standards,

investor communications, and corporate governance practices.

0% 5% 10% 15% 20% 25% 30% 35% 40%

38%

28%

25%

23%

23%

15%

15%

GovernmentIntervention

Liquidity

InvestorCommunications

PracticesCorporate

GovernancePracticies

MacroEnvironment

RealisticGuidance

Sustainability of Results

Main challenges to maintaining a fair market valuation *

0% 10% 20% 30% 40% 50% 60%

50%

38%

35%

35%

23%

23%

18%

Strong Senior Mgmt. Team

Track Record of Execution

Valuation

Corp. Governance Practices

Strong Business Model

Stability of Results

Market Sector/Industry

Most important factors for a successful IPO *

0% 10% 20% 30% 40% 50% 60% 70%

65%

60%

20%

15%

10%

Consumer Goods

Consumer Services

Infrastructure

Financials

Healthcare

Which sectors in Latin America do you favor?

0% 10% 20% 30%

25%

20%

18%

13%

10%

10%

Utilities

Basic Materials

Commodities

Energy

Gov-Regulated Industries

Technology

Which sectors in Latin America are you avoiding?

5%10%

30%55%

YesNoMixed OpinionNo Opinion

Does an ADR program help LatAm Issuers maintain a fair market valuation?

* Participants had the option of providing multiple responses. Only the responses with 6 or more mentions are displayed.

* Participants had the option of providing multiple responses. Only the responses with 7 or more mentions are displayed.

JANUARY-FEBRUARY 2013 LATIN TRADE 13

THE SCENE

FIGURES FOR TOURISM IN LATIN AMERICA

TURNING ONE BILLION TOURISTS INTO ONE BILLION OPPORTUNITIES

On December 13, 2012, Latin America received its symbolic

tourist number one billion, a Brazilian lady entering Argentina where

she was greeted by a special welcoming committee. Th at billion fi gure

means one out of seven people crossed the borders of their country in just

one year, 2012. Amazing! Also note, that in 1950, the registered fi gure

of international travelers was 25 million passengers.

of least developed countries

of world trade

$ in US1.2 trillion1/12 jobs

9% GDP

(Direct, indirect and induced) (Direct, indirect and induced)

in exports

6% 8% exports


The expansion of credit has dramatically

altered the consumer landscape in Latin

America over the last decade. Going back a bit

further, in 1990, fewer than 3 percent of Latin

American households had a credit card. By

2020, that fi gure will grow to 25 percent. In

Brazil, where credit has grown even more radi-

cally, consumer loans expanded eight fold from

2002 to 2012.

Access to credit changes how consumers

shop. Credit enables people to buy larger ticket

items that would otherwise be out of reach.

When Mexico’s Telmex began off ering Acer

computer packages to its landline customers in

1998, it instantly became the largest computer

re-seller and doubled Mexican PC and laptop

demand from 1 million to 2 million units per

year. Most of Telmex’s customers could not ob-

tain a credit card at the time, so the opportunity

to pay for a computer through installments on

their monthly phone bill was irresistible, even

if the interest rate used to calculate the install-

ments was set at loan-shark levels. Th e Telmex

example illustrates how consumer credit, even

unconventional and costly sources of credit, can

unleash repressed demand for expensive but

vital goods.

Over the last decade, Brazilian software sales

CASH IS KINGBY JOHN PRICE

have jumped 671 percent, car sales have grown

by 561 percent, and appliance sales have leapt

521 percent, all faster than GDP or general

consumption growth.

In Latin America, credit card interest rates

are onerous, ranging from 30 percent to 230

percent per year. Th e banks defend the rates

based on the high costs associated with collect-

ing unsecured debt. High interest rates limit

the use of cards. Latin Americans generally do

not buy groceries, medicine, clothing and other

staples with a credit card. Plastic is reserved for

big ticket and extraordinary expenses. High

interest rates also provoke prudent balance

management. Default rates in Latin America

are about half the levels found in the United

States. Even while growing, consumer credit

in Latin America represents no more than 70

percent of total GDP, versus 230 percent in the

United States.

Consumer demand for credit in Latin

America is not fully satisfi ed by banks. Push-

ing credit beyond the top 15 to 20 percent of

households into the base of the pyramid has

proven too daunting a task for most of the

region’s banks, and their brick-and-mortar ap-

proach drives up the cost of customer acquisi-

tion beyond a sustainable level. In their place,

John Price is the managing

director of Americas Market

Intelligence and a 20-year

veteran of Latin American

competitive intelligence and

strategy consulting.

[email protected]

innovative alternative providers of credit have

stepped in. Th e largest credit card issuer in

Chile is Falabella, a leading supermarket chain.

Elektra, the Mexican domestic appliance re-

tailer focused on the vast working class segment,

provides credit to customers who can show they

receive regular remittances from family in the

United States. Elektra is also the largest agent

network for Western Union inside Mexico.

Th e next frontier in the expansion of credit

will be pursued on two fronts. Extending short-

term credit to Latin America’s 200 million

base-of-the-pyramid consumers remains an

unrealized ambition for a handful of banks

and a curious mix of non-traditional lenders,

including retailers, utilities providers, phone

companies and mono-line lenders who are not

burdened by the fi xed costs of banking.

Th e larger, still untapped prize is consumer

mortgages. Of Brazil’s 62 million households,

approximately 550,000 have mortgages (<1

percent) compared with over 50 percent in the

United States. Mortgages are growing rapidly

(by 58 percent in Brazil in 2010), but are both

expensive and diffi cult to obtain. In most juris-

dictions in Latin America, seizing property post-

foreclosure is a time consuming and legally costly

procedure. Th at gives banks pause before extend-

ing new mortgages. Tenancy laws, which in

many countries tend to favor tenants and squat-

ters over property owners, need to be reformed

before banks will be willing to extend mortgages

to those beyond its premium level customers.

So far, the benefi ts of credit expansion in

Latin America have outweighed the costs. To

get to the next level, however, both lenders and

legislators will need to be far more bold and

creative than they were during the last decade of

easy and rapid growth.

THE CONTRARIAN

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0

100

200

300

400

500

600

700

800

900

Loan growth surpasses all other consumer categories(Brazilian Consumer Category Sales 2001-2015)

Source: Economist Intelligence Unit

Credit_

SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. © 2011 SAS Institute Inc. All rights reserved. S71303US.0411

ANALYTICSBuild on your future.

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Along with religion and politics, travel is a topic that produces very strong opinions. Whether they’re raving about the best airplane seat or ranting about the worst hotel res-taurant, nearly every business trav-eler is well equipped to launch into a list of their best and worst travel experiences.

In Latin America — as in the rest of the world — the travel in-dustry is in a state of fl ux, as airlines merge, airports struggle to handle more passengers, and hoteliers and destinations react to economies that are booming in some places and struggling in others. No one knows this better than the readers of Latin Trade, who seem to cross national borders within the Americas the way that other people cross a street in their hometown.

To help harried business travel-ers navigate the region and point them in the direction of the best pos-sible experiences, we’ve assembled a group of well-traveled experts to rank and rate a variety of hotels, destinations, airports and meeting venues throughout the region. Our expert panel includes a crucial cross-section of savvy travelers and objec-tive industry experts — including frequent business travelers, travel agents and destination management companies, the organizations that make meetings happen around the globe. Th e results off er unique insight into the very best options for travel-ers in Latin America — and helpful guidelines for the months of travel that lie ahead.

BY MARK CHESNUT

BEST OF TRAVEL

Latin Trade’s


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BEST OF TRAVEL

Latin America is a closely watched region by the International Con-gress and Convention Association (Icca), a global organization that represents specialists in organiz-ing, transporting and accommo-dating international meetings and events, with more than 950 mem-ber companies and organizations in 88 countries around the world.

To host its 51st world congress, Icca chose the Caribbean island of Puerto Rico, a destination that saw its number of international meetings grow from 9 in 2010 to 30 in 2011 (Icca’s 2012 figures had not been released as of press time). The increase represents a

jump in Puerto Rico’s worldwide rankings (measured by num-ber of international association meetings per country) from 77th place in 2010 to 56th in 2011 and, in the regional North and Latin American rankings, from 18th to 12th position.

Latin America overall is becoming a more popular area for international meetings, accord-ing to Icca figures, with a steadily increasing market share over the past decade. And while the United States may lead the hemisphere in terms of number of internation-al meetings, other nations lead when broken down by city.

THE IMPORTANCE OF THE MEETINGS MARKET

BEST HOTELSTh e expansion of international hotel brands in Latin America is, in many

regions, continuing an impressive growth trajectory. In Brazil, mid-market

chains are growing especially quickly, largely in response to the growing

middle class and, in Rio de Janeiro, also to prepare for the large infl ux

of visitors expected to attend the 2014 World Cup and 2016 Olympics.

Bogota and Panama City also stand out as cities with substantial growth

in hotel investment and the debut of new international brands, while San

Juan, Puerto Rico, is aiming to recast itself as a destination for meetings

and conventions with new group-friendly upscale properties in the works.

Hotels serve such a diverse group of clientele that it’s necessary to break

them down into multiple categories in order to provide an accurate picture

of which properties are best. And even within each ranking category, there

may not be a black-and-white best answer — especially when it comes to

ranking things like value for the money, notes Vera Joppert, a member of

Latin Trade’s expert panel for this issue and the director of Turismo Clas-

sico, a destination management company in Rio de Janeiro. Th rough her

years of experience in the “Cidade Maravilhosa,” she knows well that what

you pay for a hotel one month may be very diff erent from the rate just a

couple months later. In other words, you might get more for your money at

one time of year than another, based on occupancy and peak travel trends.

“Th is will always depend on the particular situation of each property for

the requested date,” she says. “Th is applies to each and every city.”

Hotel lobby of The Ritz-Carlton in Santiago, Chile

According to the most recent Icca rankings, here are the western hemisphere’s most important countries and cities in the international meetings and convention segment:

Number of meetings by country:1. USA: 7592. Brazil: 3043. Canada: 2554. Argentina: 1865. Mexico: 1756. Colombia: 1137. Chile: 878. Peru: 559. Uruguay: 4610. Paraguay: 34

Number of meetings by city:1. Buenos Aires: 942. Rio de Janeiro: 693. São Paulo: 604. Vancouver: 555. (tie): México City: 51 Washington D.C.: 517. Montreal: 508. Santiago: 499. (tie) Bogota: 44 Boston: 44 Lima: 44 Toronto: 44Fuente: www.iccaworld.com


THE WINNERS(Note: Hotels are presented in alphabetical order, not in order of votes)

BEST LOCATED HOTELS FOR BUSINESS ACTIVITIES

Asuncion: Sheraton Asunción Bogota: Charleston Casa Medina, JW Marriott Bogotá Brasilia: Brasil 21 Convention Suites, Meliá Brasil 21,

Royal Tulip Brasilia Alvorada Buenos Aires: Four Seasons Hotel Buenos Aires, Hilton Bue-

nos Aires, Palacio Duhau Park Hyatt Buenos Aires

Caracas: Eurobuilding Hotel & Suites, Gran Meliá Cara-cas, JW Marriott Caracas

Guadalajara: Fiesta Americana Grand GuadalajaraGuatemala City: Barceló Guatemala City, Real InterContinental

Guatemala, Westin Camino Real GuatemalaLima: JW Marriott Lima, Mirafl ores Park, Westin Lima

Hotel & Convention CenterManagua: InterContinental Real Metrocentro Medellin: InterContinental Medellín Mexico City: Four Seasons Hotel Mexico, D.F., JW Marriott

Mexico City Montevideo: Radisson Victoria Plaza, Sheraton Montevideo Panama City: Miramar Intercontinental, Panama Marriott,

Sheraton Panama Hotel & Convention CenterQuito: JW Marriott Quito, Sheraton Quito, Swissotel

QuitoRio de Janeiro: Copacabana Palace, Sofi tel Rio de Janeiro

Copacabana, Windsor AtlanticaSan Jose: Grano de Oro, InterContinental Real San José San Juan: Caribe Hilton, El San Juan Resort & Casino San Salvador: Courtyard by Marriott San Salvador

Santiago: Grand Hyatt Santiago, Ritz-Carlton, Santiago Santo Domingo: Hotel Frances Mgallery, Meliá Santo Domingo,

Occidental El EmbajadorSao Paulo: Grand Hyatt Sao Paulo, Renaissance Sao

Paulo, Tivoli Sao Paulo MofarrejTegucigalpa: Tegucigalpa Marriott

BEST FOR NUMBER/QUALITY/

VARIETY OF CONVENTION ROOMS

Asuncion: Sheraton Asunción Bogota: JW Marriott Bogotá Brasilia: Brasil 21 Convention Suites, Naoum Plaza

Brasilia, Royal Tulip Brasilia AlvoradaBuenos Aires: Alvear Palace, Hilton Buenos Aires, Sheraton

Buenos Aires Hotel & Convention CenterCaracas: Gran Melia Caracas Guadalajara: Presidente InterContinental GuadalajaraGuatemala City: Westin Camino Real GuatemalaLima: Mirafl ores Park, Westin Lima Hotel & Conven-

tion CenterManagua: Crowne Plaza ManaguaMedellin: Dann Carlton Mexico City: Four Seasons Hotel Mexico, D.F., Sheraton

María Isabel Hotel & TowersMontevideo: Radisson Victoria Plaza, Sheraton Montevideo

Radisson Panama City: Miramar Intercontinental, Panama Marriott,

Sheraton Panama Hotel & Convention CenterQuito: JW Marriott Quito, Sheraton Quito, Swissotel

QuitoRio de Janeiro: Sofi tel Rio de Janeiro Copacabana, Windsor

Atlantica, Windsor Barra San Jose: Crowne Plaza Hotel San José Corobici, Inter-

Continental Real San José San Juan: Caribe HiltonSan Salvador: Sheraton Presidente San SalvadorSantiago: Grand Hyatt Santiago, Ritz-Carlton, Santiago,

Sheraton Santiago Hotel & Convention CenterSanto Domingo: Occidental El Embajador, Meliá Santo Do-

mingoSao Paulo: Grand Hyatt Sao Paulo, Renaissance Sao

Paulo, Tivoli Sao Paulo MofarrejTegucigalpa: InterContinental Real Tegucigalpa

BEST VALUE FOR THE PRICE FOR

BUSINESS TRAVELERS IN GENERAL

Asuncion: Sheraton Asunción Bogota: Charleston Casa Medina, JW Marriott BogotáBrasilia: Brasil 21 Convention Suites, Meliá Brasil 21Buenos Aires: Hilton Buenos Aires, Meliá Buenos Aires, Sofi -

tel Buenos Aires

BEST OF TRAVEL

Exterior view from a hotel room in the Real Metrocentro Managua

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Caracas: Eurobuilding Hotel & Suites, Gran Meliá CaracasGuadalajara: Crowne Plaza Guadalajara Guatemala City: Westin Camino Real GuatemalaLima: Meliá Lima, Mirafl ores Park, Westin Lima Hotel

& Convention Center Managua: Hilton Princess ManaguaMedellin: Holiday Inn Express MedellínMexico City: Meliá México Reforma Montevideo: Radisson Victoria PlazaPanama City: Deville Hotel Panama, El Panamá, TRYP by

Wyndham Panama CentroQuito: Holiday Inn Express Quito, Hotel Quito, Shera-

ton QuitoRio de Janeiro: JW Marriott Rio de Janeiro, Rio Othon Palace,

Sheraton Rio Hotel & ResortSan Jose: Aloft San José, InterContinental Real San JoséSan Juan: Caribe Hilton, Conrad San Juan Condado Pla-

za, InterContinental San Juan Resort & CasinoSan Salvador: Hilton Princess San SalvadorSantiago: Grand Hyatt Santiago, Sheraton Santiago Ho-

tel & Convention CenterSanto Domingo: Occidental El Embajador, Meliá Santo Do-

mingo Sao Paulo: Grand Hyatt Sao Paulo, Renaissance Sao

Paulo, Tivoli Sao Paulo MofarrejTegucigalpa: Tegucigalpa Marriott

BEST OVERALL SERVICE

Asuncion: Sheraton AsunciónBogota: Charleston Casa Medina, JW Marriott BogotáBrasilia: Meliá Brasil 21, Royal Tulip Brasilia Alvorada Buenos Aires: Alvear Palace, Four Seasons Hotel Buenos Ai-

res, Palacio Duhau Park HyattCaracas: Gran Melia Caracas Guadalajara: Westin Guadalajara Guatemala City: Westin Camino Real GuatemalaLima: Country Club Lima, JW Marriott Lima, Westin

Lima Hotel & Convention CenterManagua: InterContinental Real Metrocentro Medellin: InterContinental Medellín Mexico City: Four Seasons Hotel Mexico, D.F., JW Marriott

Mexico CityMontevideo: Radisson Victoria Plaza, Sheraton MontevideoPanama City: Le Meridien Panama, Marriott Panama, Mira-

mar InterContinentalQuito: Hilton Colon Quito, JW Marriott Quito, Swis-

sotel QuitoRio de Janeiro: Copacabana Palace San Jose: InterContinental Real San JoséSan Juan: Caribe Hilton, Ritz-Carlton, San Juan San Salvador: Sheraton Presidente San SalvadorSantiago: Grand Hyatt Santiago, Ritz-Carlton, Santiago,

W Santiago

Santo Domingo: Hilton Santo Domingo, Hotel Frances Mgal-lery, Meliá Santo Domingo

Sao Paulo: Fasano Sao Paulo, Grand Hyatt Sao Paulo, Hotel Unique

Tegucigalpa: Tegucigalpa Marriott

BEST REWARDS/LOYALTY PROGRAM

Asuncion: Sheraton Asunción Bogota: JW Marriott BogotáBrasilia: Meliá Brasil 21, Royal Tulip Brasilia Alvorada Buenos Aires: Hilton Buenos Aires, Marriott Plaza Hotel Bue-

nos Aires, Palacio Duhau Park HyattCaracas: Gran Meliá Caracas, Renaissance Caracas La

Castellana, Tamanaco InterContinental Guadalajara: Crowne Plaza Guadalajara, Westin GuadalajaraGuatemala City: Real InterContinental GuatemalaLima: JW Marriott LimaManagua: InterContinental Real Metrocentro Medellin: Four Points by Sheraton Medellín Mexico City: JW Marriott Mexico City, Presidente InterCon-

tinental Mexico City, Sheraton María Isabel Hotel & Towers

Montevideo: Radisson Victoria Plaza Panama City: Le Meridien Panama, Panama MarriottQuito: JW Marriott QuitoRio de Janeiro: Copacabana Palace, Sheraton Rio Hotel &

Resort

BEST OF TRAVEL

W Santiago in Chile

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ALAMEDA SANTOS, 1437 | CERQUEIRA CÉSAR

SÃO PAULO | SP | BRASIL

T: 55 11 3146 5900F: +55 11 3146 5901E: [email protected]

THE MOST EXCLUSIVE PLACE TO START DISCOVERING SÃO PAULO.A privileged location in the heart of Jardins, the

best neighborhood of São Paulo. Tivoli São

Paulo – Mofarrej is a member of the The Leading

Hotels of The World. The hotel has 220

apartments, equipped with the most recent

technological devices combined with its elegant

decor. All fully inspired to satisfy well-being and

provide exclusive comfort to our guests.

Whether you are travelling for pleasure or

business and need to unwind, choose a relaxing

treatment from many new and soothing options

available at Elements Spa, part of the prestigious

Asian Bayan Tree chain. The treatments involve

traditional Asian techniques improved along the

years, passed by generation to generation.

Lovers of good food are also well looked after at

our two international restaurants.

The Spanish 2 stars Michelin chef Sergi Arola is

at the helm of our stylish 23rd floor restaurant

called Arola Vintetres. He is the first Michelin

award winning chef to lead a restaurant in all of

the Americas. And Bistrô Tivoli is a French bistro

with a Brazilian contemporary touch, offering a

casual atmosphere in an informal environment.

At Tivoli São Paulo – Mofarrej, life assumes an

indescribable level of refinement and

sophistication, dedicated to all of those who

want to experience it.

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TIVOLI SÃO PAULO - MOFARREJ

1- Arola Vintetres restaurant; 2- Presidencial Suite Mofarrej;3- Outdoor climate controlled swimming pool; 4- Collection Suite.


San Jose: InterContinental Real San JoséSan Juan: Caribe Hilton, InterContinental San Juan Re-

sort & CasinoSan Salvador: Sheraton Presidente San SalvadorSantiago: Grand Hyatt Santiago, Ritz-Carlton, Santiago Santo Domingo: Hilton Santo Domingo Sao Paulo: Grand Hyatt Sao Paulo, Renaissance Sao

Paulo, Sheraton Sao Paulo WTCTegucigalpa: InterContinental Real Tegucigalpa

BEST CHECK IN-CHECK OUT SERVICE

Asuncion: Granados Park, Sheraton Asunción Bogota: B.O.G. Hotel, Charleston Casa Medina,

JW Marriott BogotáBrasilia: Royal Tulip Brasilia AlvoradaBuenos Aires: Four Seasons Hotel Buenos Aires,

Hilton Buenos Aires, Palacio Duhau Park HyattCaracas: Eurobuilding Hotel & Suites, Gran Melia

Caracas, InterContinental Tamanaco Guadalajara: Westin Guadalajara Guatemala City: Westin Camino Real GuatemalaLima: JW Marriott Lima, Meliá LimaManagua: InterContinental Real Metrocentro Medellin: InterContinental Medellín Mexico City: Four Seasons Hotel Mexico, D.F.,

JW Marriott Mexico City Montevideo: Radisson Victoria Plaza Panama City: Le Meridien Panama, Panama MarriottQuito: Swissotel QuitoRio de Janeiro: Copacabana PalaceSan Jose: InterContinental Real San JoséSan Juan: Caribe Hilton, El San Juan Resort & CasinoSan Salvador: Hilton Princess San Salvador Santiago: Ritz-Carlton, Santiago, W Santiago Santo Domingo: Hotel Frances Mgallery, Meliá Santo Domingo Sao Paulo: Grand Hyatt Sao Paulo,

Renaissance Sao Paulo, Tivoli Sao Paulo MofarrejTegucigalpa: Clarion Hotel Real Tegucigalpa

BEST OF TRAVEL

AIRLINES/RENTAL CARS

THE BEST AIRLINES FLYING IN LATIN AMERICA

Any list of the best — or worst — airlines fl ying in Latin America

today is noticeably shorter than it would have been a few years ago,

thanks to the continuing consolidation of the industry. LAN and

TAM have come together, although still fl ying as separate brands,

while the TACA name will disappear in 2013 as its parent, Avian-

caTaca Holding S.A., rebrands its various divisions under the Avianca

banner. Still, clear favorites appear in our expert panel opinions.

THE WINNERS1. Best food and beverage (in order) LAN, TAM/Copa (tie), Avianca, Emirates

2. Most comfortable cabins overall (in order) LAN, Avianca, TAM, Aeromexico, Copa, Emirates

3. Best business-class service (in order) LAN, American/Copa/TAM (tie for second), United

4. Best in-fl ight technology and entertainment (in order) LAN, American/TAM (tie for second), Delta, TACA

6. Best VIP lounges (in order) LAN, TAM, Aeromexico, American

7. Best on-the-ground service (in order) LAN, Copa, TAM, United, American

8. Best partnerships and alliances with other carriers Delta, LAN, Avianca, United

9. Best frequent fl yer program in terms of rewards (in order) American, LAN, Delta

10. Best overall route network for travelers in Latin America Copa, LAN, Avianca, TAM

11. Best luggage handling (in order) LAN, Copa, Avianca, TAM

12. Best with on-time arrivals/departure (in order) LAN, Copa, Avianca

LAN DreamLiner/Boeing 787-8

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RENTAL CARS

BEST PAN-LATIN PRESENCE: AVIS BUDGET GROUP

Th e Avis brand maintains a presence at 337 locations around Latin

America, including 68 offi ces in Argentina, 4 in Bolivia, 85 in Brazil, 24

in Chile, 6 in Colombia, 75 in Mexico, 8 in Uruguay and 67 in Venezuela.

In Latin America, licensees operate every location of the Avis and Bud-

get brands except in Argentina, which is a corporate operation. “We are

seeing increases in travel to and from South America, and our intent is

to ensure that the trusted Avis brand is conveniently located to meet the

needs of both commercial and leisure travelers here,” says Patric Siniscal-

chi, president for Latin America/Asia Pacifi c at Avis Budget Group. Th e

company recently announced its intention to acquire Zipcar Inc., a com-

pany that specializes in car sharing, although no plans have been made

public about introducing that brand into Latin America.

ONE TO WATCH: DOLLAR THRIFTY AUTOMOTIVE GROUP

Hertz recently completed its acquisition of Dollar Th rifty, potentially

increasing this dual-brand company’s exposure in Latin America. Ac-

cording to Dollar Th rifty, Brazil holds a lot of potential for the division.

“We are experiencing robust growth in Brazil, where Th rifty Car Rental

has expanded operations to 32 cities across the country,” says Fernando

Intriago, executive director for Caribbean & Latin America operations at

Dollar Th rifty Automotive Group. Th e Caribbean and Latin America fi g-

ure heavily in the international operations of the company’s Dollar Rent

A Car brand, and Panama was cited as a major focus in Latin America

for both brands.

BEST NEW PARTNERSHIPS: ENTERPRISE HOLDINGS

In 2012, Enterprise announced two new franchising agreements: One to

bring the Alamo and National brands to three locations in Uruguay, and

another with Brazil-based rental car company Unidas to introduce both

Alamo and National in Brazil, starting with the fi ve largest international

airports. Enterprise maintains a franchise network for its National Car

Rental and Alamo Rent A Car divisions at more than 350 locations in 23

countries in Latin America and the Caribbean.

BEST NEW LUXURY OPTION: HERTZ CORPORATION

Travelers seeking a bit of luxury on the road in Mexico might want to

consider Hertz, which recently introduced its Prestige Collection there,

featuring vehicles like the BMW 325i. Hertz also provides Hertz Gold

Service in Mexico, and plans to expand to other Latin American coun-

tries in 2013. Hertz has more than 24,000 vehicles in Latin America and

the Caribbean, with franchises in Mexico, the Caribbean and Central and

South America; Hertz Puerto Rico and St. Th omas are the only corporate

operations in the region. Th e company recently signed up a new franchise

operator for Bolivia, leaving Guyana as the only South American nation

where the brand is not represented.

BIGGEST SOUTH AMERICA PRESENCE: LOCALIZA

In 2012, Localiza opened 29 new offi ces in Brazil, for a total of 464 of-

fi ces in that country alone, with a total fl eet of 107,312 vehicles. Th is

Brazil-based company operates 513 offi ces in 352 cities, with a presence

in Argentina, Bolivia, Colombia, Ecuador, Paraguay and Uruguay.

BEST DESTINATIONS

People look for diff erent things in diff erent cities, depending on the pur-

pose of their visit. Individual business travelers might be most concerned

with a decent airport experience, a good hotel and perhaps a pleasant

restaurant or two. Th ose involved with meetings, conventions and other

business-minded events need all those things too, as well as group-friend-

ly venues where they can spread out and get down to business.

In the following ratings, Latin Trade’s Expert Panel weighs in on all of

these aspects of Latin America’s top business destinations. In some cases,

ratings can vary widely — especially with airports, several of which are

in the midst of expansion and upgrades. In addition, new meeting and

convention spaces that are about to debut are already attracting business

as well as positive reviews even before their opening date, since meeting

planners work months or years ahead of time.

BEST OF TRAVEL

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THE WINNERSAIRPORT RANKINGS

(“1” is bad, “5” is excellent) based on infrastructure, services, amenities

BEST NON-HOTEL MEETING SPACE

Asuncion: Yacht y Golf Club ParaguayoBogota: Club El NogalBrasilia: Centro de Convenções Ulysses Guimarães,

CICB — Centro Internacional de Convenções do Brasil (to open in 2013)

Buenos Aires: Centro Costa Salguero, La Rural, Faena Arts Center

Caracas: World Trade Center ValenciaGuadalajara: Expo GuadalajaraGuatemala City: Domo Polideportivo de la CDAG (Domo de la

Zona 13), COPEREX (Comité Permanente de Exposiciones)

Lima: Larcomar Managua: Centro Cultural de España en Nicaragua

Medellin: Centro de Convenciones Plaza Mayor Mexico City: La Hacienda de los Morales, Expo Bancomer

Santa FeMontevideo: IMM Centro de Convenciones, Torre de las

ComunicacionesPanama City: Centro de Convenciones Atlapa, Club de Golf

de Panamá Quito: Centro de Convenciones San FranciscoRio de Janeiro: RioCentro, Centro de Convenções SulAmérica San Jose: Teatro Nacional de Costa Rica San Juan: Puerto Rico Convention CenterSan Salvador: Centro de Ferias y Convenciones-CIFCO Santiago: Espacio Riesco, CasaPiedraSanto Domingo: Terminal Sansouci Sao Paulo: Ahhembi Parque, Centro de Convenções Re-

bouças, Expo Center NorteTegucigalpa: Centro de Convenciones Plaza Juan Carlos

EASE OF ORGANIZING A MAJOR CONVENTION

(“1” is very diffi cult; “5” is very easy)

Asuncion: 2Bogota: 3; “general security issues”Brasilia: 3.3Buenos Aires: 4; “Buenos Aires has lots of good hotels, is at-

tractive as a city, and has a good price/value relation.”

Caracas: 4; “general security issues”Guadalajara: 4; “easy access via plane from major gateways

in the US and Central America via Mexico City”

Guatemala City: 5 Lima: 3.75; “needs to improve communication access

and transportation”

Asuncion: 1Bogota: 4Brasilia: 3.3Buenos Aires EZE: 3 Buenos Aires AEP: 3 Caracas: 2.2Guadalajara: 3 Guatemala City: 4Lima: 3.5Managua: 2 Medellin: 3 Mexico City: 3 Montevideo: 3.3

Panama City: 4.3Quito: 3 Rio de Janeiro GIG: 2.5Rio de Janeiro SDU: 3.5San Jose, Costa Rica: 3 San Juan: 2San Salvador: 5 Santiago de Chile: 4.2Santo Domingo: 3 Sao Paulo GRU: 3.2Sao Paulo CGH: 2.8Tegucigalpa: 3

BEST OF TRAVEL

General view of Comalapa International Airport in El Salvador

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Expert PanelEzequiel Barrenechea, director for Latin America & Caribbean, Corporación América, Buenos Aires; Luciana Belfort, manager, Ovation Rio/Ovation Global DMC, Rio de Janeiro;

Sandra Borello, president, Borello Travel, New York City and Buenos Aires; Francisco Cerezo, chair, Foley & Lardner LLP’s Latin America practice group and co-chair of the fi rm’s

international practice, Miami; Bryan D. Foat, senior sales executive, Bloomberg LP, Buenos Aires (Foat’s input refl ects his own personal opinions and not an endorsement on the part of

Bloomberg LP); Doris Dornheim, managing director, Condor Verde Travel, Caracas; Benedicto Grijalva, marketing director, Martsam Travel, Antigua Guatemala, Guatemala, www.

martsam.com; Gaelle Jacques, Mice director, Surtrek, Quito; Vera Joppert, director, Turismo Classico, Rio de Janeiro; Mariann Lentz, market manager of the Americas, Sportstour, San-

tiago de Chile; Aaron Paiva Leyton, general manager, Peru Magia y Misterio, Lima; Brian Pearson, founder and CEO, Santiago Adventures Ltda, Santiago de Chile; David Preciado,

director of sales and marketing, Latin America & Caribbean region, Th e Hertz Corporation, Miami; João H. Rodrigues, senior account director, Turner PR, New York City; Alonso

Roggero, country manager, Metropolitan Touring Peru, Lima; Ana Royo, CEO, Experience Panama DMC, Panama City; Emanuel Schreibmaier, president, Global Travel Leaders,

Doral, Florida, USA; Alejandro Verzoub, president, AV Business & Communication, Buenos Aires; Anonymous panel member, frequent business traveler, Miami, Florida.

Managua: 3Medellin: 3Mexico City: 4; “lots of convention hotels, easy access from

all of the Americas”Montevideo: 2.5Panama City: 5; “lots of convention hotels, easy access from

all of the Americas”Quito: 4 Rio de Janeiro: 4.3San Jose : 4; “limited hotel inventory in fi ve-star category”San Juan: 4.5; “easy access from all major gateways in the

US”San Salvador: 3 Santiago: 4.25; “lots of convention hotels, easy access from

all of the Americas”Santo Domingo: 3.5; “limited hotel inventory in fi ve-star category”Sao Paulo: 4.2; “lots of convention hotels, easy access from

all over the world”Tegucigalpa: 3

BEST OF TRAVEL

COST OF ORGANIZING A CONVENTION OR GROUP EVENT

Asuncion: Reasonable to inexpensive Bogota: Reasonable to expensiveBrasilia: Reasonable to expensive, “depending on time of the year” Buenos Aires: Reasonable to inexpensive Caracas: Reasonable to expensiveGuadalajara: Reasonable Guatemala City: Reasonable Lima: Reasonable to inexpensive Managua: Inexpensive Medellin: ReasonableMexico City: Reasonable to expensiveMontevideo: Reasonable to inxpensivePanama City: Reasonable to inxpensiveQuito: ReasonableRio de Janeiro: Reasonable to expensive, “depending on time of the year” San Jose: Reasonable San Juan: Reasonable to expensiveSan Salvador: Reasonable Santiago de Chile: Reasonable to expensiveSanto Domingo: Reasonable to inexpensiveSao Paulo: Reasonable to expensive, “depending on time of the year” Tegucigalpa: Reasonable

Colorful stage production with monitor displays

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BY PETER WILSON

INDUSTRY REPORT

When BNP Paribas began to put together

a $390 million loan for a Colombian

consortium to operate, manage and expand

the airport in the capital, Bogotá, many com-

mercial banks balked at participating.

Th e Opain consortium, made up of fi ve lo-

cal construction and infrastructure companies,

needed the funds to complete the terms of the

20-year, $1.2 billion concession contract they

won in 2007.

BNP Paribas, and its partner, Bancolombia,

met their customers’ needs by thinking out-

side the box. “Many commercial banks were

reluctant to take on 14-year debt at a time of

US dollar liquidity issues,’’ said Jean-Valery

Patin, managing director and head of BNP

Paribas Latin America.

“Th at is what made us think about seek-

ing help from multilateral lenders such as

the Inter-American Development Bank

(IDB) and the Development Bank of Latin

America.”

But in an added twist, BNP Paribas and

Bancolombia approached the China Develop-

ment Bank (CDB) even though it had mini-

mal experience in Colombia. Nonetheless, the

CDB put up $175 million for the loan, taking

the lion’s share of the credit facility. Th e IDB

approved $165 million and CAF $50 million.

“Th e idea to seek capital from China was

due to that country’s decision to join the IDB

as a non-borrowing member country,” said

Patin. “Th is was the fi rst time that the CDB

had participated in a transportation project in

Latin America.”

Innovation and creativity were necessary

ingredients last year in Latin America as

bankers faced the lingering eff ects of the US

fi nancial meltdown, as well as the crisis in the

Eurozone. Many fi nancial institutions were

still reluctant to lend. Others tightened re-

quirements. But deals did get done, and often

with unexpected benefi ts for clients.

Opain was a case in point. Th e inclusion of

multilateral lenders resulted in lower borrow-

ing costs and the certainty that the deal would

be made, said Philippe Birebent, a director at

BNP Paribas, who worked on the transaction.

“Our client wanted to be certain that they

would receive the funds, given the deadlines

for expansion works in the concession agree-

ment. Th at was paramount,” he said.

Th e involvement of the development banks

did come at a cost. More work was involved

because the loan concession not only had to

meet the requirements of Opain’s fi ve share-

holders, but also of the participating multilat-

eral lenders.

Slower execution is not uncommon in the

region. “In Latin America in general, deals

take a longer time to complete,” said Hernan

Rissola, head of advisory for Latin America

at HSBC Securities (USA) Inc. “Many of the

deals completed, and in the works, have a long

history.”

Many of the deals consummated in 2012

were years in the making, discussions starting

before the US meltdown and then concluding

as conditions improved. Regional diff erences

also played a part.

ALL IN THE FAMILY

Global players sometimes take a long time

to learn that building client relationships is

crucial in Latin America, especially as many

companies are family owned. Close ties and

long-term partnerships are key to deal making

in the region. In 2012, there were some inter-

esting examples.

HSBC helped broker a deal between

American paint company Sherwin-Williams

and Mexico’s biggest paint company Cons-

orcio Comex. Sherwin-Williams agreed to

acquire privately held Comex for $2.34 bil-

lion, the largest coatings transaction ever in

Latin America. Th e acquisition was also the

largest investment bank-driven sale in Mexico

in 2012.

HSBC was the sole fi nancial advisor to

Comex, a family-owned company, during the

sale. Long ties to the company meant every-

thing, said Rissola.

Bank of America Merrill Lynch parlayed

DealsYear

Lati

n Tr

ade’

s

of theFrom complex loan arrangements

to large-scale initial public off erings,

innovation was a hallmark of several

deals in 2012. Th ese are some of the

most interesting of the year.


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INDUSTRY REPORT

Financial instruments and struc-tures in Latin America tend to follow trends and developments in Europe and North America. Accord-ing to bankers surveyed, there are reasons why Latin America lags in innovation and creativity.

The level of fi nancial sophistica-tion varies greatly throughout the region, often mirroring the state and health of the countries’ capital markets and the size of their middle class. Brazil, Chile and Mexico are regarded as the most developed markets; laggards include Venezu-ela and Ecuador.

Secondly, many businesses in Latin America remain in the hands of their founding families or govern-ments. For such businesses, fi nan-cial records – essential to putting deals together – are often lacking as the owners have minimal ac-countability. That makes it diffi cult to assess the veracity of any results they might care to share. Accoun-tants can be pressured to overlook fi nancial twists and turns, leading to unintended or blatant misrepre-sentation of facts, they say.

Government-owned businesses carry their own set of baggage. Governments can reverse their poli-cies, and seize previously privatized companies. Venezuela, for example, has resumed control over previously sold telephone, steel, and electricity companies with mixed results for the former owners.

And thirdly, banking and fi nancial instruments remain out of touch for many fi rms in the region due to their lack of projects. Given that, fi nancial institutions have little rea-son to think outside the box.

INNOVATION IN LATIN AMERICA

a good working relationship with the family

that owned the Dominican Republic’s larg-

est brewer, Cervecería Nacional Dominicana

(CND) into a deal that might serve as a

model for other mergers with family-owned

companies in the region.

“We had been advising the family that

owned Cerveceria for several years on various

matters and projects,” said Martin Sánchez,

who heads Bank of America’s mergers and

acquisitions unit in Latin America. “Many

families are very reluctant to engage in

straight sales of businesses. Personal relation-

ships are therefore very important in putting

deals together. You build trust with time. We

approached them with this idea.”

Bank of America proposed that the family

look into merging CMD with Ambev, the

Brazilian unit of Anheuser-Busch InBev, the

world’s largest brewer. Under terms of the

accord, that took two years to hammer out,

Ambev paid $1.23 billion for a controlling

interest in the resulting company.

Th e agreement brought together Ambev’s

exceptional operating capabilities and CND’s

strong footprint in the Caribbean, said San-

chez. “It’s a win-win deal for both parties,”

Sánchez said. “It creates value for each party.

It’s a strategic alliance. We think the resulting

deal that emerged (a joint venture instead of

a straight buyout) between Ambev and Cer-

veceria can be a model throughout the region

for family-owned companies.”

GOVERNMENT INTERESTS

Bank of America also successfully put to-

gether the merger of Colombia Telecomuni-

caciones, the country’s third-largest fi xed line

operator, and Movistar, which was the second-

largest mobile operator. Th e agreement also

included a restructuring of the payments to

the Colombian government’s pension fund.

“Th e biggest challenge to the deal was

arriving at the relative valuations of the com-

panies,” said Sánchez. “When Telefónica in-

vested in 50 percent of the fi xed line company

in 2006, who would have imagined that the

wired line businesses around the world would

suff er in a relatively short period of time ver-

sus wireless/integrated operations.”

“Making the agreement trickier was the

need to talk to the government to reduce its

participation in the new company, as well as

reshaping the government pension fund.” Th e

fund was in charge of administrating pension

payments to former Colombia Telecomunica-

ciones employees. Th e fund received payments

from the company as defi ned in the original

concession agreement.

As a result of the agreement, the govern-

ment took a 30 percent stake in the new com-

pany, with Telefónica retaining the remainder.

The president of Dominican brewer CND, Franklin Leon; the chairman of the board of directors of ELJ, Abel Wachsmann; and the vice-president of Ambev, Alexandre da Medicis Silveira. Brazilian Ambev acquired 51 percent of CND, making it the leading company of the sector in the Caribbean.


INDUSTRY REPORT

Th e government also agreed to take the new

company’s payments to the fund.

Bank of America advised Telefónica, which

owned 50 percent of the fi xed-line operator,

and 100 percent of the mobile operator, on

all aspects of the agreement. “Th is was a very

complex deal as it involved two parties with

diff erent participations in two assets, the gov-

ernment and the restructuring of the pension

plan,’’ said Sánchez. “For the government, an

important consideration was to restructure its

participation in the context of creating a lead-

ing integrated player in the country.”

THE HOTTEST DEAL OF THE YEAR

Deutsche Bank, acting as one of four global

coordinators, successfully priced Grupo

Santander’s Mexican unit initial public of-

fering, which sold a 24.9 percent stake of the

company for $4.3 billion. Th e sale was the

largest Mexican IPO ever, the largest in Latin

America since 2009, and the ninth largest

bank IPO in the world in the last decade.

Key to its success was strong coordination

among the four leaders, said Deutsche Bank.

Th e quartet led a syndicate of 22 banks, and

11 international bookrunners. “Deutsche

Bank compiled a team of experienced bankers

to closely advise the issuer on every aspect of

the transaction,” the bank said in a statement.

Deutsche said key to the IPO’s success and

its oversubscription by fi ve times was a truly

global marketing eff ort, both before and dur-

ing the roadshow. Deutsche bankers visited

more than 500 clients and investors before

the sale.

Th e sale, although it took place during a

period of market volatility coming as it did on

the heels of concerns about Greek and Span-

ish fi nancial stability, was successful as the

bank stressed Santander Mexico’s dominant

position in retail banking and the opportuni-

ties for increased lending in the country. Th e

Mexican operation was very important for the

bank as it accounts for approximately 10 per-

cent of its global profi ts, which is very close to

the amount they receive in Spain.

Interestingly, Santander had sold a 24.9

percent share of the company in 2006 to Bank

of America, and bought it back in 2009. “So,

in eff ect, all they’re really doing is putting

the same 24.9 percent back into play,” said

Wharton lecturer Adrian Tschoegl in a recent

interview for knowledge@wharton.

On the same direction of tapping local

markets, another IPO attracting attention and

investor interest was Cemex LatAm Holdings’

$1.2 billion off er. Th e IPO was the second

largest ever off ered and executed in Colombia,

and was led by a quartet of global coordina-

tors: Bank of America, Santander, Banco Bil-

bao Vizcaya (BBVA) and Citibank.

Th e sale had a local public off ering in Co-

lombia and an international off ering as well.

Th e off er was oversubscribed by three times

with strong demand from international funds

leading the way.

Unique to the Colombian portion of the

sale was the IPO´s bookbuilding mechanism,

the fi rst time it was used in the country. ¨Citi

was the only global securities fi rm that could

structure, market and close this landmark

transaction, because of its integrated Colom-

bia-US banking and European capital mar-

kets and local brokerage capabilities, Citibank

said in a statement.

TOP NAMES

“In Brazil, Banco Pactual and Banco Itau are

the leaders without a doubt,’’ said one banker

who didn’t want to be identifi ed. “Th roughout

Government and corporate offi cials from Grupo Financiero Santander at the company´s IPO on the Mexican Stock Exchange.

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INDUSTRY REPORT

the rest of the region, J.P. Morgan is the most

aggressive bank in going after new busi-

ness. Whenever we hear of an opportunity,

J.P. Morgan is usually already there. Th ey’re

tough.”

J.P. Morgan’s big deal of the year was its

handling of Chile’s Cencosud’s purchase of

Carrefour’s Colombian unit. “J.P. Morgan

provided Cencosud a unique competitive

advantage by delivering single-handedly an

integrated $2.5 billion debt commitment and

disbursement in a very short time frame, and

without having to tap other banks,” said the

bank’s former CEO for Latin America Nico-

las Aguzin, by email. Aguzin has since moved

to head the bank’s Asian Pacifi c unit.

Cencosud is Latin America’s third-largest

retailer. Th e company is expanding aggres-

sively throughout Latin America, where it has

bought several small to medium-sized retail

chains in Brazil over the last fi ve years.

Colombia’s growing economy, which was

forecast to grow by 5 percent in 2012, led

Cencosud to consider the deal. “To minimize

the risk of interlopers, J.P. Morgan committed

the full amount and only after the announce-

ment reached out to other institutions,”

Aguzin said. “We saw this as a key competi-

tive advantage for Cencosud.”

J.P. Morgan’s strategy also meant that

Cencosud could close the deal 60 days earlier

than competitors, and went a long way to-

wards convincing Carrefour that the Chilean

company was a credible buyer, Aguzin said.

Completion of the transaction made Cenco-

sud Latin America’s largest independent food

retailer.

Appetite for longer-term debt was also

more pronounced last year, as witnessed by

BNP Paribas’ management of a $527 million

debt placement for the Parque Rimac proj-

ect. Th e bond placement was for 25 years, a

record tenor, said Paribas. Th e overall project,

which carries a price tag of $983 million, is

for a brownfi eld urban toll road expansion in

Lima, Peru. Once completed, it will comprise

15 miles of highways. Lamsac (the conces-

sionaire) will operate the concession for 30

years under a contract with the Metropolitan

Municipality of Lima.

Last year’s strong momentum is expected

to carry through 2013, especially as the US

fi scal crisis seems to have been averted for

now, and worries about Europe subside. “We

look for increased activity in 2013,” said Ge-

rardo Mato, chief executive offi cer at HSBC

Global Banking Americas. “Th ere is more

and more interest in emerging markets and

in Latin America. “Mexico and Brazil will

always be the chief areas of interest, but we

are also seeing interest in Colombia and Peru.

Investors view companies in Chile as more

expensive and with lower growth potential

than in the rest of the region, but with more

stable cash fl ows.”

Bigger, more innovative deals: Th at is a

trend that was consolidated in 2012 and

which will surely continue this year as a liquid

world looks for investment opportunities.

Latin Trade wanted to recognize some of the

most important members of this sophisti-

cated fi nancial legion that in 2012 devised

interesting ways to place capital in productive

projects.

Peter Wilson reported from Miami.

Chilean retailer Cencosud offered its stock on the New York Stock Exchange

in 2012. Horst Paulmann, founder of the fi rm, at the helm.

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Completion of the transaction made Cencosud Latin America’s largest independent food retailer.


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BY DAVID RAMÍREZ

SHOPPING FOR THE WELL-HEELED

Growth of the purchasing power of the region’s middle classes has

spurred commerce and an increase in opportunities for new com-

mercial projects in construction. Consumers prefer to shop in a single

area in order to save time from one to another. As a consequence, shop-

ping centers have arisen under the leadership of major chains of super-

markets and department stores that act as poles of attraction for the in-

dependent shops that surround them. Th e population’s increasing income

in real terms, meanwhile, has drawn the opening of luxury boutiques that

off er products from high fashion and jewelry to high-end automobiles.

Brazil appears to be the main magnet for luxury boutiques. Last

year, 28 new malls were opened, bringing the total to 458, with a

likely increase this year of 48, according to Abrasce, the association of

Brazilian boutiques. Th e proportion of unoccupied spaces is a mere

2 to 3 percent. Th e rental prices of top-class spaces are the highest in

the region. Real estate consultants Cushman & Wakefi eld reckoned

that the rental per square foot in Sao Paulo for such locations stood

at $309 toward the middle of last year, the most recent estimate avail-

able. By comparison, the rentals per square foot in the Chilean capital,

Santiago, were $97, in Lima $94, and in Mexico City $97. Bogota was

much closer to Sao Paulo at $250 per square foot.

FINANCIAL STRATEGIES: REAL ESTATE

The expansion of retail chains, the appearance of exclusive boutiques and consumers’ shopping habits are boosting commercial construction this year in Latin America. Investors in real estate are looking at double-digit returns.

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In Bogota, intense competition for land has soared, pushing up the

costs of rentals and real estate purchases in general, as it has in other Lat-

in American capitals. A similar phenomenon has persuaded boutiques in

Mexico City to opt to set up in already-established luxury malls. In the

Colombian capital, they have sought to seek out new constructions in

areas where land prices are highest.

On the other hand, developers of commercial projects that target

middle-class consumers have opted to tackle the shortage of land prices

by building in provincial cities or on the outskirts and marginal areas,

as well as underused locations of major population centers. One such

expansion has been in downtwn Bogota where the development of com-

mercial, housing and offi ce space has been backed by the local govern-

ment. Rental costs in the new development zones are about $6-$8 per

square foot, according to the estimates of Carlos Rico of the Century 21

real estate agency. Th is level, way below that of the luxury areas, can pro-

vide annual rental profi ts of 10-12 percent for the owners of the proper-

ties, and are thus attracting the interest of investors. Th e association of

Colombian malls, Acecolombia, forecasts that between last year and

2015, more than 45 malls will be opened and another 15 updated, for a

total investment of more than $2.2 billion.

Meanwhile, as Abrasce expects 48 malls to be opened in 2013 to bring

the total to 500, the Peruvian association of shopping centers, Accep,

forecasts 13 this year, up from the existing 35. As in other Latin Ameri-

can major cities, expansion of the leading retailers — most of them

Chilean — is boosting the construction of new commercial areas. As

Juan Agüero, of Coldwell Banker Perú, points out, Lima has enormous

potential for new centers, given that the penetration of inhabitants is 1.5

million per mall compared with the overall proportion in Latin America

of 2.5 million. Agüero adds that the new commercial developments

that aim for middle-class consumers off er average rental costs of $12

per square foot, providing investors with gross annual profi ts of some 15

percent.

In parallel with the surge in growth of major shopping centers in

Lima and other cities of the region, there has been a growing tendency

of construction of strip malls that are attracting investors, shops and con-

sumers. Álvaro Antadillas of the real estate brokers Colliers International

Panamá, says that the average profi tability of investors in Panama City’s

strip malls amounts to a gross 12 percent a year, per shop. Meanwhile,

this year, two major new shopping centers are to be built on the outskirts

of the capital that are expected to have a similar success to the new com-

plex opened in 2012 around the Tocumen International Airport.

Within the concept of strip malls along major streets and shop-

ping centers in residential and offi ce areas, real estate investors and

funds in the Costa Rican capital of San José are looking at annual

profi tability of 11 to 12 percent a year, according to the estimates

of Danny Quirós of Colliers International Costa Rica. People who

live in San José feel that new commercial areas where they live and

work are key to avoiding the growing traffi c that aff ects them and

other cities in the region. Th is year, the dynamics are expected to

be similar to those of 2012, when eight new shopping centers were

opened in the Costa Rican capital.

David Ramírez reported from Miami.


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IG

Back in 1919, when Cornelius Vander Starr founded AIG in Shang-

hai, he could scarcely have imagined that the fi rm that began in two

little offi ces in China would one day become one of the world’s top 10

insurance companies, only to face the setback of the 2008 crisis, over-

come it, and stage a vigorous recovery in 2012. He would probably have

imagined he had been dreaming if he were to see the major expansion

plans the company has for Latin America this year.

Th e 2008 crisis was no minor bump in the road. AIG had to bor-

row from the US Federal Reserve and Treasury in order to overcome

the setback. It even had to change its name to Chartis, sold part of its

assets – including some of its Latin American operations – staged a

recovery, and once again kept its competitors awake at night in order

to follow its progress.

BY SANTIAGO GUTIÉRREZ

CORPORATE STRATEGIES: AIG

STARTING OVER

With the problems of the 2008 crisis behind it and its former name restored, the insurer AIG is embarking on an expansion in Latin America.

“Latin America is very important to us,” said Ed Mena, AIG’s lead-

ing executive for Latin America and the Caribbean. Th e numbers prove

his point. AIG’s Latin American operation is growing at a rate of 20

percent, boosted by greater access to credit and growth of a middle class

whose younger members are now joining the labor market.

But Latin America is a very profi table place to be. Insurers are receiv-

ing a return on their assets that Franklin Santarelli of Moody’s reckons

to be 2.5 percent. Th e return in Brazil is slightly over 2 percent, but in

Central America it is more than 5 percent.

In addition, Mena says, the future holds a rich bounty of growth

thanks to the continuance of controls on infl ation combined with multi-

million investments in infrastructure. And there is plenty of room to

grow in the insurance industry; cover in the region is very scarce. On

average, Moody’s estimates that premiums in Latin America amount to

2 percent of GDP. Th e proportion rises to 3 percent in countries such as

Chile, but it falls well short of the 10 percent of GDP in Spain.

With its former name restored, AIG aims to make the most of its

opportunities by concentrating eff orts on Brazil, Mexico and Colom-

bia — three of the 29 countries where it has businesses in the region.

Th ese days, AIG is the leader of commercial insurance in many of these

countries, especially in property, marine and fi nancial policies. And, says

Mena, it wants to maintain that position. But, this year’s strategy will

focus on home, automobile and life insurance, with the aim of being

“consumer-centric,” a favorite buzzword of Mena.

In life policies, he forecasts major expansion projects in fi ve countries,

which he prefers not to identify. Mena also sees several opportunities in

micro-assurance, as long as the governments concerned are willing to

participate, as they do in Colombia and Venezuela. On the question of

clients’ new needs, Mena mentions bancassurance and policies such as

his Cyberedge product, which provides cover against damage or fraud in

the management of information stored or moved by electronic media.

Ed Mena aims to grow his basic channel of distribution through bro-

kers and agencies. In fact, 85 to 90 percent of AIG’s distribution is done

in this way.

If that is not enough, Mena refuses to rule out the possibility of grow-

ing by means of acquisitions, as the company has in the past. Th ese days,

it generates 30 percent of its revenue outside of the US and Canada.

AIG’s plans, on the basis of new offi ces and more hiring, seem to keep

the company’s owners happy. Th e share price rose from $25.3 in January

of last year to $26.2 a year later, which amounts to a 45 percent annual

return for the shareholders — much more than the company’s closest

competitors.

Santiago Gutiérrez reported from Miami.

Latin America is very important to us.

Ed Mena, AIG’s leading executive for Latin America

and the Caribbean

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BY DAVID RAMÍREZ / RESEARCH BY GABRIELA CALDERÓN

SPECIAL REPORT

The expected economic growth for 2013

in Latin America will off er an opportu-

nity to recover for some of the companies in

the region that were aff ected during 2012,

as a result of a slower regional and global

economic growth. Most mining companies

in the region are among those that are ex-

pected to recover. Th is year will also help

sectors such as telecoms and retail maintain

their expansion rates.

Th e mining and energy sector is expected

to maintain its leadership in terms of striking

the biggest business deals in the region this

year. Th e main goal for integrated oil fi rms

such as Petrobras, Pemex and Ecopetrol is

to increase their reserves and production. To

achieve this, they have planned multi-billion

dollar investments, mainly in exploration and

production. Brazil’s state-owned Petrobras,

one of the companies in the stock market

with the highest revenues in Latin America in

2012, will continue its ambitious investment

program, valued at $237 billion from 2012 to

2016. Mexico’s state-owned Pemex will invest

some $25 billion this year alone, which could

turn out to be the year it radically changes its

business model by introducing private invest-

ment into its activities, a move proposed by

the government.

Other large oil companies in the region,

such as Argentina’s YPF and Colombia’s Eco-

petrol have planned investments of $7 billion

and $9.5 billion respectively. Th ey too will

focus on exploration and production. Ecopet-

rol will also use its investments to expand and

improve its refi nery capacity and transport.

Optimizing refi nery activities will require

investments of $1.3 billion by Peruvian com-

pany Petroperu, and some $800 million by

La Pampilla, a subsidiary of Repsol, also from

Peru. Braskem, from Brazil, expects more

positive conditions for the petrochemical

industry this year, and hopes to recover some

of its losses from 2012. Braskem’s plans for

this year include several expansion projects,

such as a mega refi nery worth $12 billion,

to be built in association with Petrobras. In

addition, the company plans to build a poly-

propylene plant worth more than $3 billion in

Mexico, currently under construction. Grupo

Ultra, a Brazilian petrochemical company

with the highest sales during 2012, is plan-

ning to invest $700 million for the expansion

of its plants in Brazil, Mexico and the United

States. Grupo Ultra might also make more

investments in acquisitions. Grupo Copec has

announced its intentions of increasing invest-

ments in its fuel distribution sector, which

could lead to acquiring more assets. However,

the investments in Arauco, the cellulose pro-

ducer, will be shunned by the poor projections

in the global market prices of cellulose.

Mining companies are hoping that an ex-

pected growth in China’s economy will lead

to an increase in the price of raw materials,

helping them make up for their losses during

2012. Last year, the companies were aff ected

by a sharp drop in sales and international

prices. Brazil’s Vale, one of the world’s larg-

est iron producers, has been recovering over

the last few months thanks to an increase in

the prices of iron, which has gone up by 70

percent since last September. Vale reported

huge losses during all of last year. However,

the predicted increase in iron prices in no way

compares to the historic prices of 2008. Fac-

ing challenges and uncertainty as to the sta-

bility and growth in the global economy, Vale

has implemented an austere investment plan

for 2013, of about $16 billion. Sixty percent of

the investment will focus on new projects. It is

worth pointing out that some mining, energy

and hydroelectric projects could be set back by

socio-political or regulatory issues. In the case

of Colombia, the construction of the El Qui-

mbo hydroelectric plant, valued at about $800

million and fi nanced by Colombian affi liate

Endesa, has been subject to environmental

and social protests. Resistance from local

communities is also putting at risk the Conga

project in Peru, a gold mine planned by US

company Newmont and Peruvian company

Buenaventura, which plan to invest $5 billion

on the project.

Th e economic slowdown of 2012 was not

enough to stop growth for companies selling

mass consumer goods, Internet providers, cellu-

lar phone services, banks, insurance and health

companies. America Móvil, among the fi ve

top-selling companies in 2012, plans to expand

its business this year, taking advantage of an

increasing demand for wireless technology

products. Th e company, controlled by Mexican

billionaire Carlos Slim, plans to invest some

$10 billion in maintaining and expanding its

operations throughout Latin America.

Th e large supermarket chains will continue

to attract more customers by opening new

Latin Trade presents its fi rst forecast for the performance of Latin American companies. Sales will show similar growth as in 2012. Mining will recover, and retail will maintain its profi ts.

13 IS A LUCKY NUMBERFOR COMPANIES,


SPECIAL REPORT

stores and introducing new formats. Chilean

supermarkets could be among the big win-

ners this year as the European Casino and

Carrefour move out, but only if the Chilean

companies’ regional expansion plans prove

successful. More good news for Chilean

companies is the small growth expected

for Walmart this year, although Walmart

could launch a surprise by launching new

operations in Central American countries or

Colombia. Cencosud, which recently bought

strategic stocks in Brazil and Colombia, is

planning to invest up to $1.2 billion this year

to strengthen its presence in Brazil and open

new stores in Peru. Falabella announced in-

vestments of up to $900 million this year, to

launch new stores and shopping malls.

Revenues

Latin America’s Top Companies 2013 FORECAST

Sources: Thomson Reuters, BofA Merrill Lynch, BTG Pactual, BBVA, Citi Research, HSBC, J.P. Morgan, Latin Trade. © Copyright Latin Business Chronicle/Latin Trade

Company, Country2012F

US$ Mill2013F

US$ Mill‘13/’12

% Ch. Avg.

# of est.

1 Petrobras, Brazil 142,529 143,830 0.9 12

2 América Móvil, Mexico 59,482 61,235 2.9 13

3 Vale, Brazil 43,800 48,574 10.9 19

4 Gerdau, Brazil 19,577 21,868 11.7 4

5 JBS, Brazil 37,525 39,964 6.5 6

6 Ecopetrol, Colombia 37,319 35,578 -4.7 6

7 Grupo Ultra, Brazil 27,262 29,129 6.8 4

8 CBD, Brazil 26,901 28,911 7.5 2

9 Braskem, Brazil 18,188 18,336 0.8 4

10 CSN, Brazil 8,239 8,873 7.7 5

11 Alfa, Mexico 15,792 17,407 10.2 1

12 Telefónica, Brazil 17,099 17,028 -0.4 6

13 AmBev, Brazil 16,386 16,956 3.5 8

14 Cemex, Mexico 15,230 16,097 5.7 16

15 YPF, Argentina 14,395 15,325 6.5 4

16 BR Foods, Brazil 14,401 15,187 5.5 5

17 LAN, Chile 9,265 14,616 57.8 9

18 Enersis, Chile 12,878 14,379 11.7 4

19 Oi, Brazil 12,402 14,346 15.7 4

20 Marfrig, Brazil 12,608 13,621 8.0 1

21 Coca-Cola Femsa, Mexico 11,361 12,241 7.7 10

22 TIM , Brazil 9,529 9,843 3.3 4

23 Cemig, Brazil 9,305 9,530 2.4 1

24 Southern Copper, USA 6,685 6,848 2.4 13

25 Embraer, Brazil 6,635 6,403 -3.5 16

26 Fibria, Brazil 2,786 6,106 119.2 7

27 Grupo Televisa, Mexico 5,331 5,678 6.5 9

28 Sabesp, Brazil 5,376 5,671 5.5 1

29 Gruma, Mexico 5,013 5,259 4.9 1

30 Telecom, Argentina 4,821 4,723 -2.0 7

31 GOL, Brazil 4,179 4,318 3.3 6

32 ICA, Mexico 3,835 4,154 8.3 3


SPECIAL REPORT

1 Petrobras, Brazil 130,171.7 142,528.9 9.5 17,759.4 9,937.0 -44.02 Pemex, Mexico 111,734.6 128,526.3 15.0 -6,559.1 -2,609.3 60.23 Vale, Brazil 55,014.1 43,799.7 -20.4 20,158.7 9,603.3 -52.44 América Móvil, Mexico 47,700.1 59,482.0 24.7 5,940.3 8,281.7 39.45 Ecopetrol, Colombia 33,194.6 37,318.6 12.4 7,952.0 8,465.4 6.56 JBS, Brazil 32,944.2 37,524.6 13.9 -40.4 171.7 525.37 Walmart de Mexico 27,309.8 32,560.0 19.2 1,595.5 1,806.0 13.28 Grupo Ultra, Brazil 25,941.6 27,261.7 5.1 452.5 519.0 14.79 CBD, Brazil 24,839.8 26,900.9 8.3 382.9 558.8 46.010 Copec, Chile 21,124.6 21,981.0 4.1 932.7 257.7 -72.411 Gerdau, Brazil 18,875.6 19,577.1 3.7 1,069.3 785.5 -26.512 Braskem, Brazil 17,686.4 18,187.8 2.8 -280.0 -574.7 -105.313 Eletrobrás, Brazil 17,625.2 21,168.2 20.1 1,989.9 1,854.5 -6.814 Telefonica, Brazil 15,528.7 17,099.5 10.1 2,321.9 1,980.5 -14.715 Femsa, Mexico 14,557.7 18,367.2 26.2 1,085.0 1,304.2 20.216 Cencosud, Chile 14,515.4 19,064.7 31.3 548.3 629.7 14.817 AmBev, Brazil 14,461.4 16,385.6 13.3 4,606.6 5,471.7 18.818 BR Foods, Brazil 13,704.2 14,401.5 5.1 729.0 178.1 -75.619 Cemex, Mexico 13,546.3 15,230.1 12.4 -1,371.3 -161.0 88.320 YPF, Argentina 13,124.3 14,394.9 9.7 1,225.9 1,736.8 41.721 Alfa, Mexico 13,103.6 15,791.6 20.5 373.2 1,363.0 265.222 Cosan, Brazil 12,214.7 13,030.2 6.7 1,565.8 321.6 -79.523 Enersis, Chile 11,993.7 12,878.3 7.4 720.0 707.6 -1.724 Marfrig, Brazil 11,667.0 12,607.6 8.1 -397.7 47.4 111.925 Viavarejo, Brazil 11,204.1 13,955.3 24.6 48.2 256.1 431.126 Tenaris, Argentina 9,972.5 11,407.0 14.4 1,331.2 1,926.9 44.827 Grupo Bimbo, Mexico 9,586.7 13,725.4 43.2 382.1 162.2 -57.628 Grupo Mexico, Mexico 9,296.4 10,197.6 9.7 2,098.8 1,963.1 -6.529 Falabella, Chile 9,267.9 11,395.5 23.0 811.3 708.0 -12.730 TIM , Brazil 9,108.6 9,528.8 4.6 683.0 1,602.2 134.631 Coca-Cola Femsa, Mexico 8,941.7 11,361.5 27.1 761.0 1,074.9 41.232 CSN, Brazil 8,806.7 8,238.6 -6.5 1,975.7 -309.6 -115.733 Cemig, Brazil 8,430.7 9,304.8 10.4 1,287.7 1,591.7 23.634 Telmex, Mexico 8,034.8 8,216.8 2.3 1,045.5 1,030.0 -1.535 Org. Soriana , Mexico 7,045.1 8,119.4 15.2 219.4 332.0 51.336 Ind. Peñoles , Mexico 6,944.9 7,703.3 10.9 914.5 683.2 -25.337 Southern Copper, USA 6,818.7 6,685.3 -2.0 2,336.4 1,637.9 -29.938 CPFL, Brazil 6,804.6 7,474.0 9.8 815.9 660.6 -19.039 Grupo Modelo, Mexico 6,539.0 7,659.9 17.1 856.4 917.1 7.140 Embratel, Brazil 6,521.6 9,496.4 45.6 208.7 443.1 112.441 Usiminas, Brazil 6,345.0 6,433.6 1.4 124.3 -206.3 -266.142 LAN, Chile 5,585.4 9,265.0 65.9 320.2 -44.8 -114.043 Lojas Americanas, Brazil 5,438.6 5,663.0 4.1 181.5 205.8 13.444 Grupo Carso, Mexico 5,303.8 6,496.7 22.5 328.4 663.1 101.945 Sabesp, Brazil 5,300.0 5,375.9 1.4 652.2 1,351.0 107.146 Embraer, Brazil 5,255.4 6,635.1 26.3 83.3 -25,700.3 -30,945.347 Eletropaulo, Brazil 5,243.4 5,020.5 -4.3 838.1 105.1 -87.548 Neoenergia, Brazil 5,208.9 5,536.1 6.3 827.2 624.4 -24.549 CSAV, Chile 5,152.0 3,201.5 -37.9 -1,249.8 -268.7 78.550 Petroperu, Peru 5,047.1 5,146.5 2.0 153.1 144.0 -6.0

YEAR-END 2012: These are the fi gures companies will likely post for 2012.

* Publicly-traded companies

REVENUES NET INCOME

Company, Country2011

US$ Mill2012F

US$ Mill‘12/’11

% Ch.2011

US$ Mill2012F

US$ Mill‘12/’11

% Ch.


SPECIAL REPORT

51 Walmart, Chile 4,994.6 6,081.8 21.8 218.4 237.6 8.852 Oi, Brazil 4,928.7 12,402.2 151.6 536.2 503.0 -6.253 Amil, Brazil 4,802.7 5,285.5 10.1 93.4 -95.6 -202.454 CMPC, Chile 4,796.5 4,685.6 -2.3 492.1 159.4 -67.655 Endesa, Chile 4,578.4 4,744.7 3.6 857.0 532.3 -37.956 Grupo Televisa, Mexico 4,486.9 5,331.3 18.8 494.0 696.2 40.957 CGE, Chile 4,475.4 4,813.6 7.6 -27.2 54.8 301.758 Ref. La Pampilla, Peru 4,468.6 4,789.5 7.2 107.7 15.4 -85.759 Exito, Colombia 4,402.3 5,684.8 29.1 200.5 306.0 52.660 Telecom, Argentina 4,288.2 4,820.7 12.4 560.7 569.7 1.661 Coppel, Mexico 4,213.9 5,320.1 26.3 534.5 793.6 48.562 Liverpool, Mexico 4,204.9 5,156.6 22.6 469.1 617.7 31.763 Copel, Brazil 4,145.5 4,203.1 1.4 617.2 498.3 -19.364 Gruma, Mexico 4,133.0 5,013.3 21.3 377.9 129.5 -65.765 Grupo Chedraui, Mexico 4,121.6 4,959.5 20.3 108.8 115.3 6.066 GOL, Brazil 4,019.3 4,179.3 4.0 -400.7 -782.2 -95.267 Whirlpool, Brazil 3,979.8 4,329.7 8.8 196.5 561.7 185.868 LF Telecom, Brazil 3,908.0 3,642.4 -6.8 -104.2 2.0 101.969 Elektra, Mexico 3,729.6 5,372.4 44.0 2,153.4 -1,143.5 -153.170 Light, Brazil 3,702.3 3,749.6 1.3 165.6 1,473.6 789.871 PDG Realty, Brazil 3,666.4 2,897.0 -21.0 375.5 -186.7 -149.772 NET, Brazil 3,569.6 4,011.4 12.4 198.9 312.6 57.173 Magazine Luiza, Brazil 3,422.2 3,870.5 13.1 6.2 -12.0 -293.174 Mexichem, Mexico 3,392.0 5,003.1 47.5 194.4 534.3 174.975 Grupo Casa Saba, Mexico 3,338.8 3,711.1 11.2 6.3 109.0 1,641.276 Petrobras En. , Argentina 3,305.1 2,781.2 -15.9 163.0 103.2 -36.677 Cyrela Realty, Brazil 3,266.2 3,100.6 -5.1 265.6 272.3 2.578 Arca Continental, Mx 3,211.9 4,430.5 37.9 323.4 396.6 22.779 Nemak, Mexico 3,202.7 4,105.7 28.2 76.4 133.8 75.280 Southern Peru 3,179.6 3,025.5 -4.8 1,078.1 1,030.5 -4.481 Comercial Mexicana, Mexico 3,138.6 3,562.2 13.5 88.6 536.1 505.082 Fibria, Brazil 3,121.0 2,786.2 -10.7 -465.2 -489.2 -5.283 Molinos Rio, Argentina 3,106.7 3,882.5 25.0 64.2 21.8 -66.084 ICA, Mexico 3,066.4 3,835.0 25.1 106.1 142.8 34.685 Paul F Luz, Brazil 2,982.7 3,270.5 9.7 327.0 272.1 -16.886 Natura, Brazil 2,980.8 3,227.0 8.3 443.0 457.7 3.387 Souza Cruz, Brazil 2,958.8 3,113.7 5.2 854.4 743.5 -13.088 Sigma, Mexico 2,945.2 3,595.6 22.1 59.6 359.6 503.489 Ahmsa, Mexico 2,928.0 3,064.2 4.6 140.0 24.8 -82.390 Arcor, Argentina 2,921.1 2,985.7 2.2 110.1 109.7 -0.491 Telefónica del Peru 2,891.7 3,117.0 7.8 197.7 216.4 9.492 Energias do Brasil 2,879.7 3,194.1 10.9 261.6 110.7 -57.793 Siderar, Argentina 2,811.3 2,648.7 -5.8 310.5 790.6 154.694 CAP, Chile 2,787.0 2,259.2 -18.9 441.7 154.0 -65.195 Weg, Brazil 2,766.5 3,167.7 14.5 312.9 333.0 6.496 CCR Rodovias, Brazil 2,737.1 2,876.1 5.1 479.5 515.2 7.597 Coelba, Brazil 2,648.1 2,963.9 11.9 400.1 365.4 -8.798 Suzano, Brazil 2,586.8 2,609.0 0.9 9.2 -28.4 -409.899 Grupo Aeromexico, MX 2,567.3 3,149.5 22.7 149.2 75.3 -49.5100 Xignux, Mexico 2,562.3 2,466.0 -3.8 32.1 211.4 559.0

YEAR-END 2012: These are the fi gures companies will likely post for 2012.

* Publicly-traded companies Sources: Economatica (actual 2011 fi gures), Latin Business Chronicle (2012 forecast) © Copyright Latin Business Chronicle/Latin Trade

REVENUES NET INCOME

Company, Country2011

US$ Mill2012F

US$ Mill‘12/’11

% Ch.2011

US$ Mill2012F

US$ Mill‘12/’11

% Ch.


Education will become one of the main obstacles to competi-

tiveness in Latin America over the next few years. Recent

studies by Eric Hanushek at Stanford University show that the

difference in students’ levels of knowledge has a lot to do with

Latin America’s slow growth, compared to that of Asia or the

Middle East. The problem is more about what students know,

and the cognitive skills they acquire, rather than the number of

years spent in the classroom.

In Brazil and Peru, for example,

only 1 in 10 students is func-

tionally literate by age 20, says

Hanushek. Th at means only 10

percent of those who fi nished

primary school know how to read

and write texts that are needed for

their work, or everyday life.

Hanushek also found that only 1.2 percent of Latin American

students have superior cognitive skills. He adds that failure to take

into account what the students know diminishes the importance of

the role of human capital formation in economic growth.

Hanushek’s disturbing observations sheds new light on the edu-

cation debate and regional development. Th e results of the Latin

Education Index, carried out by Latin Trade Group and Latin Busi-

ness Chronicle, is based on fi ve criteria. Th e Index shows the state of

the education in 19 Latin American countries, and helps explore

the paths they should follow in order to improve.

Hanushek would no doubt agree that while education cover-

age is not necessarily the way to measure cognitive skills, it does

present local authorities with a very clear goal: to make sure chil-

dren go to school. Th at is particularly true of countries such as

Guatemala and Ecuador, while education coverage is just over 70

EDUCATING

BY ÁLVARO MORENO & SANTIAGO GUTIÉRREZ

percent, or in Haiti where it is 40 percent. In terms of coverage,

Argentina and Uruguay are the region’s education stars, with cov-

erage of about 90 percent.

Another aspect to take into account is the number of years

for which students attend classes. In countries such as Haiti and

Guatemala, the average student only remains in school for about

four or fi ve years. In addition, the expected number of years in

school should be increased for those who are now joining the

system, so as to greatly reduce

illiteracy rates of, for example,

35 percent for Haiti, and 25

percent for Guatemala.

Th e data from the Latin

Education Index shows that

Uruguay has the best education

system in the region, followed

closely by Argentina. Chile, Venezuela, Bolivia, Peru and Brazil fol-

low, in that order. After these, come Panama, Colombia, Mexico and

Costa Rica, while at the other end of the scale are Paraguay, Ecuador,

Dominican Republic, El Salvador and Honduras. Nicaragua, Guate-

mala and Haiti are at the very bottom of the list.

Taking into consideration Hanushek’s observations, what would

then follow is to establish that the education students receive will

give them the necessary practical knowledge they will require in

their jobs and community. Th at would translate into education that

really has an impact on the development of the countries.

Perhaps companies, which choose to focus their corporate social

responsibility programs in education, can help make these much-

needed changes.

Visit Latin Education Index at www.latinbusinesschronicle.com.

Álvaro Moreno reported from Miami.

EDUCATION

Students with limited access to education in Latin America sometimes fail to develop cognitive skills needed for success.

HOMEWORK FOR THE AUTHORITIES IN ECUADOR AND HAITI:

MAKE SURE THE CHILDREN GET TO SCHOOL.

FOR SUCCESS

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Protectionist duties, outdated infrastructure, security risks and low productivity are among the traditional logistics challenges in Latin

America. “Lack of rail and road networks, customs issues and port delays are among the biggest issues,” says Felipe Arbeláez, Panalpina’s area head of marketing and sales for Andina (Colombia, Ecuador, Peru and Venezu-ela). “In addition, the third-party logistics (3PL) market is fragmented with many small to medium-sized providers in niche markets, and supply chain security is an additional concern in almost every country in Latin America.”

But signifi cant changes are underway, with even bigger ones on the horizon. Many ports are modernizing their facilities, and providers are investing in new technology to accelerate shipments. Imports and exports are expected to grow in 2013 due to improving global economies and ad-ditional free trade agreements, and the 2014 widening of the Panama Canal

promises to create new logistics opportunities throughout the Americas. “Shippers increasingly need international and express delivery ser-

vice,” says Alexandre Cecolim, managing director, logistics, FedEx Express Latin America and Caribbean Division. “Higher volumes of e-commerce and demand from consumers to receive their goods in a timely man-ner drive businesses to use express shipping services. Also, many of the goods shipped worldwide are becoming lighter and smaller, and thus easier to ship via express service.”

The Outlook for 2013With a robust economic environment in Latin America and increased inter-national trade Poul Hestbaek expects continued pressure on the region’s logistic infrastructure. “While there are a number of promising private

port/terminal projects underway, there is a lack of substantial investments in the highway and railway systems in most countries,” says Hestbaek, senior vice president, commercial for Hamburg Sud, Caribbean and Latin America West Coast.

As for trade fl ows, Hestbaek believes the level of consumer goods imported from Asia will continue to increase in 2013. “With a slowly improving U.S. economy, we may see higher level of housing con-struction, which will have positive impact on the im-porting of building materials from Latin America,” he says. “We may also see an improvement of the fl ow of imported refrigerated food products from Latin America.”

Overcoming the Challenges and Capitalizing on New Opportunities

Logistics 2013:

By Richard Westlund

LATIN TRADE SPECIAL SUPPLEMENT

Looking at Mexico, Raul Barrera, regional head of industry vertical technology – Americas Region, Panalpina, expects a solid increase in manufacturing exports. “While the U.S. will remain the main destina-tion for Mexican exports, shipments to Latin America will also grow proportionally, highlighting the importance of trade between emerg-ing economies,” he says, adding that the bilateral trade between Latin America and Asia will outpace the growth of trade with other regions by a signifi cant margin.

Investing in the futureThroughout the Americas, ports, transportation companies and service providers are investing in the region’s future. For example, PortMiami has three major infrastructure projects underway total-ing more than $2 billion, according to Bill Johnson, director. “We have big visions and plans for the future, and we’re making great progress on our projects,” he says.

Later this year, PortMiami will inaugurate on-port rail service providing direct connections to the rest of the nation. “Rail is a cost-effi cient, environmentally sound mode of transportation for ship-pers,” Johnson says. In May 2014, PortMiami expects to complete a four-lane tunnel that will allow trucks to access the U.S. highway system without a single traffi c light.

“Our star attraction, in terms of infrastructure, is the deepening of our port,” says Johnson. “Dredging the channel to a depth of 50-52 feet is expected to start later this spring. When completed in 2014, in the same time frame as the Panama Canal widening, Miami will be the only such deepwater port in the region, allowing us to continue growing the container business.”

FedEx is also preparing for the widening of the Panama Canal, which now handles about 12 percent of American seaborne trade, according to

Cecolim. “The Panama Canal expansion will help alleviate conges-tion at West Coast ports and offer options for North American shipping,” he says. Last year, FedEx initiated an alliance with Farma-zona, a Panama-based 3PL operator with two major regional distribution centers. “This alliance will serve our custom-ers who will be taking advantage of the Panama Canal widening next year,” Cecolim adds.

As part of a global network, Panalpina offers multimodal solutions in Panama and is working on a unique solution for pharmaceutical custom-ers, says Fernando Arias, country manager. Panalpina is also evaluating opening warehouse in Cartagena, Colombia to support its growing hub operations, according to Arbeláez.

Brazil is spending billions of dollars to improve its air and seaports in advance of the 2014 World Cup and 2016 Olympic Games. Noting that new terminals are coming Santos, Rio de Janeiro and Suape, Karin Schöner, area head of marketing and sales, Mercosur, Panalpina, adds that Brazil is also investing in new railway concessions and an expansion of its road network to support cargo transportation.

Advice for shippersShippers today should look at the entire supply chain with their logistics

partners in order to implement best practices and streamline processes, says Ricardo Kamnitzer, trade lane manager FCL Asia-Latam, Panalpina.

“Work with a well-established partner that under-stands the complex processes and changing regula-tions,” he adds.

Andres Osorio, Panalpina’s area head of ocean freight product, Andina, advises shippers to get deeply involved with Latin American govern-ments in infrastructure planning and international commerce policies. He adds that input from the private sector is vital to improving logistics opera-tions.

Finally, Cecolim says, “Globalization is not a static process, particularly since comparative ad-vantages are constantly shifting. To see continued growth, companies must learn to think globally and to operate without borders. We believe that superior business performance minimizes waste, cost and effort, helping to make companies more competitive in this global marketplace.”

Dredging the channel to a depth of 50-52 feet...Miami will be the only such deepwater port in the region, allowing us to continue growing...

Bill Johnson- Director,

PortMiami

LATIN TRADE SPECIAL SUPPLEMENT


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BY ÁNGEL RICARDO MARTÍNEZ

PANAMA THE CHALLENGES AHEAD

Panama is one of the rising stars of Latin America’s economy. Th e construction of large infrastructure projects,

such as the $5.2-billion Panama Canal expansion and a $1.8-billion subway in the capital city, have boosted

the country’s economy to 10.5 percent growth in 2012, slightly less than the 10.6 percent in 2010, and reduced

unemployment to 4.8 percent in 2012.

But as these mega-projects —most of them turnkey—come online, some analysts fear that the huge burden

they will place on the country’s debt, and an eventual increase in unemployment, could have severe economic

consequences. While the creation of a wealth fund sounds somewhat reassuring, it seems that the real challenge

for Panama will be to position itself as a world-class logistics hub if it wants to consolidate its recent economic

success. Th e inauguration of the new locks in early 2015 may give Panama a boost towards creating the kind of

infrastructure it needs to truly take advantage of its strategic location.

COUNTRY REPORT: PANAMA

Panama Canal


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In economic terms, the last decade in Central America

and the Caribbean may well be dubbed “the rise of

Panama.” Between 2001 and 2011, this country of 3.6

million doubled its GDP, and commanded a 45 percent

employment expansion. Th is outstanding evolution has

naturally been accompanied by several double-digit

growth fi gures, the latest being 10.4 percent in the

second quarter of 2012, and low unemployment levels,

currently at 4.2 percent.

In the midst of the last few years’ global economic

hardship, Panama’s achievements might sound like a

great feat. But speaking with former President Nicolás

Ardito Barletta (1984-85), one of the country’s top

economists, one gets the sense that it was somehow

meant to be. “Panama’s economy has been transformed

over time. Th e handover of the Canal boosted

our services-based economy, enabling the further

development of a conglomerate of interconnected

activities that revolves around the Canal and that

generates 62 percent of our exports,” he says.

Th at conglomerate, according to Barletta, “includes the ports, which

moved more than 6.6 million containers last year; the Colon Free Zone

(CFZ), with yearly activity topping $25 billion; and Tocumen Interna-

tional Airport, which connects Panama with more than 30 countries and

through which 24 percent of the CFZ’s exports leave.” All that, more-

over, “is complemented by a dollarized, world-class banking system and

the best telecommunications infrastructure in Latin America. If I have to

sum up this country in one word, that would be ‘connectivity ’,” he adds.

It is this connectivity that puts Panama on the logistical map of the

world. “Th ese are the forces Panama has been taking advantage of. And

they are all long-term forces. Th is is not a passing trend,” he concludes.

According to Barletta, every dollar in Canal revenue generates an addi-

tional $1.27 in the local economy.

Despite this apparent inevitability, few economists dare ignore the

fundamental role played by the construction of large infrastructure

projects in the recent economic bonanza.

Th e two superstars are the $5.2-billion expansion of the Canal and

the $1.8-billion subway in Panama City, but that’s hardly it. Overall,

Panama’s public spending program will average some $8 billion a year in

the 2010 to 2015 period. “What’s happening in Panama is that public

investment has acted as a platform for private investment. Th at explains

a great deal of the recent growth,” says Rodolfo Minzer, economic aff airs

offi cer at the United Nations Economic Commission for Latin America

and the Caribbean (Eclac).

With the majority of the megaprojects still under construction, Pana-

ma’s 2013 performance is expected to continue along the same lines. “For

next year, we expect Panama’s economy to grow between 7 and 8 percent,

and we expect that trend to continue in the following years,” says Óscar

Calvo-González, the World Bank’s top economist for Central America.

But as the completion dates arrive, many observers are already worry-

ing about the possible eff ects of some of the more obscure aspects of the

recent boom. Th e fi rst headache is likely to be debt, with the country’s

levels having swollen by 30 percent in the last three years, from $10.8

billion in 2009 to $14.15 billion in 2012. Linked to this are unemploy-

ment concerns: the Canal expansion employs 10,000 people alone. “We

are worried about the pressure all these turnkey projects might exert on

the country’s capacity to incur on debt and repay. Besides, many of these

projects have not followed the proper allocation process, and there’s also

the doubt that they are not as profi table as they claim to be,” says Ro-

berto Brenes, executive vice president and general manager of Panama’s

Stock Exchange. All in all, the current debt situation shouldn’t be a

burden in the immediate future, provided the country maintains its out-

standing economic performance. After all, FDI levels remain the highest

per capita in Latin America, and authorities expect them to approach the

$3-billion mark for the second consecutive year in 2012.

“It isn’t a threat as of now, and if the economy continues growing

above our potential— above 6 percent— it won’t become a burden. We

have the capacity to face it,” says Felipe Chapman, managing partner at

Indesa, one of Panama’s top fi nancial services fi rms. Barletta agrees, but

issues a warning. “We have to be careful. Right now it’s fi ne, but what

happens if we stop growing? It could become a problem, so it’s better to

be a bit more careful and not push the limits.”

In line with Barletta’s arguments, the Panamanian government passed

a law last September creating the Panama Savings Fund, known by the

Spanish acronym FAP. Th e FAP is expected to serve as an economic

stabilization fund during periods of economic recession or natural disas-

ters. It will be kickstarted with $1.3 billion in seed money from a pre-

existing fund, and will receive any payments the Canal authorities make

to the government in excess of 3.5 percent of annual GDP, starting in

2015. By 2026, it could amass some $6 billion.

Th e question before Panama is how to keep the economy growing

once the current megaprojects come online. For Eclac’s Rodolfo Minzer,

the answer is simple: Panama should continue to work under the same

formula. “If the secret is that public investment drives private investment,

it is only logical to continue with those dynamics, so they should fi nd

new public projects. It will be complicated, but there are some things that

can still be done.”

So far, the subway’s second line could fi ll the gap. It is even rumored

that the current government might allocate the project before leaving


Construction on the Panama Canal


offi ce. On the private side, the construction of a new $6-billion copper

mine is expected to have a major impact. Work on the project will begin

this year, and its peak employment demand is expected to take place

around the time the expansion of the Canal is completed. It should be-

come operational in 2016.

Even with renewed investment drive, Panama is facing a major ob-

stacle in the form of education and professional training. A recent World

Bank study shows that while Panamanians spend the same amount

of time in school as students from the Oecd countries (11 years), their

scores refl ect the fact that the quality of their education amounts to only

eight years. Furthermore, only 30 percent of those who fi nish secondary

school attend universities, and only half of these actually complete their

degrees. In addition, the universities’ output is not in sync with the needs

of the market, with social sciences, administration and law proving the

predominant choices for Panamanian freshmen.

“It is already a problem and it will become more acute in the future. In

Panama, there already is a lack of human resources. Th at will be the big-

gest hurdle for the economy’s future,” says Eclac’s Minzer.

“Th e current training of our people is gravely poor, especially when you

look at the results we get in areas like math, science, comprehensive read-

ing or even English in international tests. We need a radical transforma-

tion of our educational system if we are to take advantage of our economy’s

growth opportunities,” adds Indesa’s Felipe Chapman. In 2011, the

English-teaching company Education First published a study in which

Panama ranked 40th out of 44 countries in terms of English profi ciency.

According to economists, the road ahead shouldn’t be so bumpy.

“Th e transition will be pretty natural, because as investment dwindles,

consumption will gradually replace it within the joint demand. If con-

sumption, both internal and external, fails to replace the impulse given by

public investment, growth rates will decelerate a little, but always as part

of high or very high growth levels in comparison with the rest of Latin

America and the world,” says the World Bank’s Óscar Calvo-González.

A key aspect of this will be the sharp increase in revenue from the

expanded Canal. Between 2015 and 2025, the canal authority expects to

contribute in excess of $30 billion to the government, $8.5 billion more

than if the expansion had not taken place. “Th e expanded Canal will have

a short-term impact: fi rst, more revenue will be generated, part of which

will be spent on new public projects. Second, and more importantly, as

the Canal’s capacity grows, so does activity in the ports, in the CFZ,

and in logistics centers like Panamá-Pacífi co, making the conglomerate

grow. Some people are wrong to think that once investments are off , the

economy will shut down,” explains former President Barletta.

Th e enhancement of Panama as a world-class logistics hub seems to

be the key to Panama’s economic future. “On top of the Canal’s business,

we have built an operational port base. So the idea is not only to have the

vessels cross the Canal, but also have them stop in the ports and perform

cargo operations for Latin American distribution,” says Juan Carlos

Croston, marketing director at Manzanillo International Terminal. “Th e

next step,” he adds, “was to tell multinational companies to come. For

them, Central America and the Caribbean is a complicated market.

We’re telling them that our logistics operators understand those markets,

so they can set up storage and added-value centers.”

So far, more than 100 foreign companies, including Adidas, Hewlett-

Packard, Caterpillar, Procter & Gamble and L’Oreal, have switched their

regional operations centers to Panama. “Th ese companies add value to

the port’s transshipment operations and, by extension, to Panama’s com-

mercial route. It is important to understand the symbiosis between the

Canal, the ports, and Panama as a logistics hub, because as one of us gets

stronger, so do the rest,” says Croston.

Ángel Ricardo Martínez reported from Panama City.


Panama City

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The airline, Copa, which has played a key role in Panama’s rapidly expanding

economy in recent years, will continue to be an important fac-tor in the country’s future growth and development after the expansion of the Panama Canal is completed, Pedro Heilbron, CEO of Copa Holdings, told Latin Trade.

“Following the canal expansion, canal-related business-es, including banking and other services, will experience new growth and present us with new opportunities,” said Heilbron, who has served as CEO since 1988 and who led the conversion of Copa from a small national carrier to a major player among Latin America’s international airlines. “Panama will gain importance as a logistics center, and we will be ready to meet the challenges of this new eco-nomic situation.”

As Panama’s economy grew, Heilbron and his executive team took advantage of the country’s geographical location in the “middle” of Latin America to provide a wide range of connections between the United States, Central America, the Caribbean and South America.

Focusing on international fl ights, Copa developed the Hub of the Americas at Tocumen International Airport in Panama City as its base of operations, added new fl ights to underserved destinations, invested in modern aircraft and employee training, established a strategic relationship with

Continental Airlines (now United Airlines) and applied the best practices of Continental to its rapidly expanding system. Copa continues its alliance with United and in 2012 joined the Star Alliance global airline network.

Copa also took over Aero República in Colombia in 2005 (now Copa Colombia), adding new routes in another fast grow-ing market.

Today, Copa offers more than 280 daily scheduled fl ights to 63 destinations in 29 countries through its Panama hub and expects to carry about 10.3 million passengers this year. The airline currently has 83 modern aircraft, including 39 Boeing 737-800s, 18 737-700s and 26 Embraer 190s, and is adding seven new 737-800s next year.

Copa invests $150 million to $200 million a year, mostly in new aircraft, and currently has more than 8,000 employees, with around 6,500 in Panama. For the past two years, the air-line has grown so quickly that it has added an average of 100 new workers each month.

In the third quarter of 2012, Copa Holdings, which trades on the New York Stock Exchange, posted operating revenue of $590.4 million, up 24.5 percent over the same period in 2011, and had net income of $111.9 million, a 59.1 percent increase over the third quarter of last year. Copa expects capacity growth of 24 percent this year, and 14 percent in 2013–the slowdown a result of adding fewer passenger aircraft in 2013 than in 2012.

Panama, a Hub for the Americas

BY JOSEPH A. MANN, JR.


PANAMA WILL GAIN IMPORTANCE AS A LOGISTICS CENTER, AND WE WILL BE READY TO MEET THE CHALLENGES OF THIS NEW ECONOMIC SITUATION. Pedro Heilbron, CEO of Copa Holdings

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Copa Airlines airplanes in Panama City


BY MARK CHESNUT

Panama’s current and future infrastructure projects read like a wish list for any global travel hub: airport expansion, new road-

ways, a new rail system, thousands of new hotel rooms, large-scale event venues and fast-growing mega-malls. But Panama’s growing importance on the business and tourism grid brings its own set of challenges.

The number of foreign visitors to Panama grew between 7 and 8 percent between 2011 and 2012, according to Ernesto Orillac, sub-director for the gobernment tourism agency, known as the Autoridad de Turismo de Panamá, or ATP. “Panama will end 2012 with 2.2 million visitors,” he said, a staggering number considering Panama’s actual population is just 3.5 million.

But Orillac is even more optimistic when it comes to growth trends at Tocumen International Airport, the nation’s primary in-ternational gateway. The rate of travelers using the facility surged 17 percent between September 2011 and September 2012, and more passengers now pass through this hub every year than the entire population of Panama (5.8 million in 2011). As more people get out of the airport and into Panama, according to Orillac, the nation’s business and leisure tourism segments will expand further.

Building the appropriate infrastructure for a surge in visitors is a constant challenge. Tocumen, which serves as a hub for Copa Airlines, recently debuted a new northern concourse, and a $670-million con-tract has been awarded to build a southern concourse with at least 20 new gates within the next three years.

Within the city limits, the government aims to alleviate intense traf-fi c congestion with projects that include the construction of Central America’s fi rst urban rail system - the Metro is slated to open its fi rst line in 2014 - and the extension of the Cinta Costera waterfront bou-levard, which will wrap around the historic Casco Antiguo district–a move that some critics fear will jeopardize the neighborhood’s status as a UNESCO World Heritage Site.

Investment in infrastructure is “extremely important” to keep Panama competitive, according to Al Petrone, CEO of Bristol Hospi-tality Group. The group owns the Bristol Panama, a luxury hotel that opened a new 111-room tower in 2012, and the Bristol Buenaventura, a beachfront resort that was due to become a JW Marriott property by press time. “Panama is competing with other countries in the area for corporate investment in local regional offi ces, large trade shows, and global conferences,” he explained. “Panama must be an easy

Panama’s Travel and Tourism BoomInvestment in tourism and hospitality in Panama is at an all-time high. What does that mean for investors?


View of the Museum of Diversity under construction at the inlet of the Panama Canal, in Panama City. The museum, located in an old US military base, was designed by Canadian architect Frank Gehry and will be opened in the fi rst half of 2013.

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place in which to do business, with minimal disruption and limited bureaucracy. If Panama does not offer world-class level investment in infrastructure, we will see meeting planners, corporate travel manag-ers, and large groups going elsewhere to avoid the hassle, lost time, and frustration in dealing with the basic needs of the 21st century traveler.”

New meeting and event space, including a new convention center and the fi rst Frank Gehry-designed museum in Latin America, both slated to open near the mouth of the Panama Canal, are also expected to lure more visitors to Panama, according to Orillac. “All of these ele-ments foster corporate tourism [and] business tourism,” he said.

MORE ROOM AT THE INNSThere was a time when Panama City was dotted with mediocre hotels that charged infl ated rates. That was when demand exceeded inven-tory. But times have changed, and the debut of a slew of internation-ally branded luxury hotels as well as mid-level chains is likely to put pressure on existing properties to either spruce up or drop prices. The new offerings inlcude the TRYP by Wyndham Panama Centro, which offers amenities like a rooftop pool, free gym access, free Wi-Fi and free breakfast.

“In the last four years, there has been an increase of between 4,000 and 5,000 hotel rooms, with a total offering of 14,000 rooms,” said Ori-

llac. “It’s expected that by 2014, Panama City will have 18,000 rooms in hotels in the ‘gran turismo’ category.”

In addition to the 92-room TRYP, recent hotel openings include the 1,500-room Hard Rock Hotel Panama Megapolis, the 111-room Le Me-ridien Panama, the 137-room Holiday Inn Panama Canal and the 369-room Trump Ocean Club International Hotel & Tower, set in a 70-story


Puente Centenario in Panama

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tower that also houses residences. In addition, several small luxury hotels have opened their doors in the historic Casco Antiguo district. In the case of many large hotels, developers rely on condos and casinos to complement revenue produced by the hotel itself. Newland Interna-tional Properties, the developer of the Trump Ocean Club, announced in November that Sun International would spend $45.5 million to buy the hotel’s casino, slated to open in 2014.

Still in the works are hotels that will fl y the fl ags of Hilton, Sonesta, W and Waldorf Astoria, as well as a Westin that will complement the recently opened 611-room Westin Playa Bonita, a convention-oriented beachfront property just outside the city.

Hoteliers are already adjusting their forecasts to take into account the increased competition. When it comes to room rates, “We’re ap-proaching next year very conservatively,” said John A. Cardona, direc-tor of sales and marketing at the Trump Ocean Club International Hotel & Tower, which opened in 2011.

“There’s no doubt that the hotel industry in Panama City is experi-encing a challenging time, as thousands of rooms have opened in the marketplace in the last three years,” said Daniel del Olmo, Wyndham Hotel Group’s senior vice president and managing director for Latin

America. “In the late 1990s, Panama City had a very limited supply of hotel stock—less than 2,000 hotel rooms. Today, the city boasts more than 10,000 rooms, with more underway. Overall, we anticipate occu-pancy levels will not come back to pre-2012 levels until 2016 because of this rapid boom.”

Diversifi cation will help keep hotel rooms full, according to Petrone. “Travel, tourism, construction, trade, infrastructure investment, bank-ing, and the Panama Canal all play a key role in making sure Pana-ma’s economy is not solely dependent on one sector,” he said.

Panama’s economic success, which has resulted in a low unem-ployment rate, presents another challenge for the hotel industry, according to del Olmo. Panama “needs a stronger emphasis on educa-tion and service culture,” he said. “Panama’s unemployment rate is low right now — approximately 4 percent — so, as a result, there are challenges across the entire industry in attracting skilled workers that will not only be loyal to an employer, but will also exude the highest levels of service culture that is expected of the hospitality and tourism sectors.”

For travelers, the biggest challenge may be just deciding among all the new hotel options.

Diversifi cation will help keep hotel rooms full, according to Al Petrone, from Bristol Group. “Travel, tourism, construction, trade, infrastructure investment, banking, and the Panama Canal all play a key role in making sure Panama’s economy is not solely dependent on one sector.”


Westin Playa Bonita, Panama

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BRAVO BUSINESS

AWARDS 2013

www.bravo.latintrade.com

NOMINATIONS

NOW OPEN

RECOGNIZING EXCELLENCE AND ACHIEVEMENT IN THE AMERICAS

The deadline for nominations is March 25, 2013

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• LIFETIME ACHIEVEMENT

• LEADER OF THE YEAR

• INNOVATIVE LEADER OF THE YEAR

• FINANCIER OF THE YEAR

• DISTINGUISHED SERVICE IN THE HEMISPHERE

• CEO OF THE YEAR

• PIONEERING CEO OF THE YEAR

• SOCIAL RESPONSIBILITY CEO OF THE YEAR

• INTERNATIONAL CEO OF THE YEAR

• TECHNOLOGY LEADER OF THE YEAR

• EMERGING CEO OF THE YEAR

• ENVIRONMENTAL LEADER OF THE YEAR

• HUMANITARIAN OF THE YEAR

2012 BRAVO AWARD HONOREES


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The dockyard of iron ore in Qingdao in East China’s Shandong province

China’s voracious appetite for commodities has revived the growth

engine in Latin America for years, turning Brazilian iron ore and

Chilean copper into cold cash.

But now that China’s economy is cooling, weakening demand for the

raw materials that go into building its skyscrapers and laying its roads,

how will Latin America fare?

Many analysts forecast China’s GDP will dip below 8 percent this

year, coming off two decades of growth in the 10 percent range. While

that fi gure still blasts past growth projections for the United States and

Europe, analysts warn the downshift could be especially detrimental to

Latin America, which has become hooked on revenue from iron ore,

copper, soy and zinc, but hasn’t had much success moving up the value-

added chain.

Th e Economic Commission for Latin America and the Caribbean

(Eclac) recently revised its forecast for regional growth to 3.8 percent in

2013, down from 4.3 percent in 2011, but higher than the 3.1 percent in

2012. Th e revision was based on a gloomy global economy, in part due to

China’s slowdown.

“Th e region has been benefi tting from the rapid growth in China

and I have no doubt that the current slowdown is going to be impacting

quite a bit,” said Mauricio Mesquita Moreira, chief trade economist at

the Inter-American Development Bank (IDB).

Pointing to Brazil, he said the eff ects are already being felt. Brazilian

exports to China — its No. 1 trading partner — grew a whopping 40

percent last year. But that rate slipped to about 4 percent for the fi rst

semester of 2012, he said. Th e deceleration comes as Brazil emerges from

a cycle of government stimulus and credit expansion, making it all the

more diffi cult to tackle. It also puts a damper on Brazil’s eff orts to raise

investment rates.

“Th is is a clear sign there has already been a strong impact and the

question is, ‘How big will the slowdown be in China?’” Moreira said.

FOUR COUNTRIES, THREE COMMODITIES

Experts say a failure to diversify trade compounds the problem. Just three

commodities — iron ore, soy and copper — account for about 70 percent

of Latin America’s exports to China.

Iron ore, a steel-making ingredient, has been especially hard-hit;

prices had slumped by more than 23 percent on the year when the

BY RUTH MORRIS

INVESTMENTS: CHINA’S SLOWDOWN

China’s economy is cooling, weakening demand for the raw materials that go into building its skyscrapers and laying its roads. How will Latin America fare?

CHINESE SHADOWS


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INVESTMENTS: CHINA’S SLOWDOWN

Chinese government announced in September it would pump an

estimated 1 trillion yuan, or $158 billion, into construction proj-

ects, including roads, rails and runways. Th e stimulus has boosted

prices somewhat.

Latin America’s exports to China are also concentrated by country,

with about 80 percent of the region’s exports to the Asian giant coming

from Brazil, Argentina, Chile and Peru.

Of these four, Moreira said, Argentina was in the most precarious

position. A major soy exporter to China, among other agricultural

products, Argentina’s high infl ation gives the country less wiggle

room to manage any adverse eff ects from China’s downshift, he said.

“In Brazil, if the Chinese economy slows down even more probably

you’ll see the real (currency) devaluing and it’s going to work as a buf-

fer to this impact. But the government in Argentina can’t allow that to

happen or else they can lose control of infl ation… I think it’s a pretty

diffi cult situation for them.”

URBANIZATION DRIVES DEMAND

Erik Bethel, co-founder of SinoLatin Capital, a Shanghai-based fi nan-

cial advisory and private equity fi rm, said Latin America can take heart

from China’s stampede towards the cities — the driving force behind its

need for raw materials in the fi rst place.

Nearly half of China’s 1.3 billion people still live in rural areas and

about 20 million Chinese move to urban areas every year. (In some cases,

the cities grow so fast that they actually swallow up farmers, who become

city dwellers without leaving home.)

Given this migratory tsunami, Bethel says China will look to Latin

America for raw materials for decades to come.

“When they move to the city they eat higher protein, and that comes

from a cow or pig, and that pig needs to have animal feed and that

animal feed comes from soybeans and there’s not enough soybeans in

China, so they have to go to Brazil and buy it,” Bethel said.

Urbanites also tend to have higher incomes and buy more stuff , like

refrigerators. Bethel describes the common refrigerator as a box made

from a series of commodities (like aluminum nickel and zinc), with a lot

of perishable commodities inside, running off electricity that’s transmit-

ted along cables containing yet another commodity-copper.

If prices for these commodities edge lower, he added, China will see

a good buying opportunity, meaning increased asset purchases in Latin

America’s mining and agriculture sectors.

“I think you’re going to see China going on a buying spree in Latin

America,” he said.

VALUE UP, TARIFFS DOWN

Moreira, of the IDB, agreed that natural resources and goods will make

up “the core of trade” between Latin America and China for years.

“Th at idea that Latin America can replicate the Asian development

model in terms of being a major exporter of manufactured goods, I

don’t think that’s on the table any more. Th is market is so congested,”

he said. “So they will have to go in this direction of trying to add value

to natural resources.”

He called on Latin governments to write their trade agendas along

the same lines, addressing Chinese tariff escalation regimes that impose

higher duties on goods as they move up the value-added scale.

And he advocated more direct access to Chinese consumers. Depend-

ing on the product being sold, Latin American companies exporting to

China often must rely on Chinese distributors once they get there. Oth-

ers partner up with a Chinese fi rm.

On the other hand, experts note that even at its slower pace, the Chi-

nese economy is still growing much faster than the United States and

Europe. Plus, Asia has lots more room to grow.

China is also in good shape to weather an economic storm. Its infl a-

tion is fairly low, and its foreign currency reserves are extremely high-

above $3 trillion.

“You have to put the slowdown in perspective,” said Bethel. “A slow-

down in China means the economy grows 7 percent instead of 10 per-

cent, which is not necessarily a catastrophe.”

Ruth Morris reported from Shanghai.

“That idea that Latin America can replicate the Asian development model

in terms of being a major exporter of manufactured goods, I don’t think that’s

on the table any more.” -MOREIRA

Workers harvest soybean on a farm in the city of Tangara da Serra in Cuiaba, Brazil


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“We’re capable of ensuring stability, democracy and peace

in this country, whatever any threats we might face, and

we can say that absolutely for sure,” Nicolás Maduro, Venezuela’s

vice-president, said in an interview with the journalist, José Vi-

cente Rangel. And he added: “Th is year will be an extraordinary

one. Economic growth will be at least 6 percent for everyone.”

Despite Maduro’s claims, the climate of political and social

uncertainty appears to be generating a malignant growth in the

Venezuelan economy that seems heading for a profound crisis.

Th at is a view in which fi nancial and political analysts, the rat-

ing agencies, the World

Bank, and others all agree.

With or without Chavismo,

Venezuela’s economic fu-

ture would appear to be

a labyrinth for which the

sole exits are the unpopular

measures of a devaluation,

a removal of exchange con-

trols, increases in taxes and

reductions in subsidies in

the domestic economy, not to mention cuts in the external subsi-

dies. According to the Washington Post, Venezuela hands out $500

million a year to Nicaragua, the equivalent of 7 percent of the

Central American nation’s gross domestic product. It provides

Cuba 100,000 barrels a day of oil, the equivalent of 5 percent of

its GDP.

As a result, it comes as no surprise that the credit rating agen-

cies have pointed to the increase in risks facing Venezuela. As

Aaron Friedman of Moody’s says: “We have a negative perspec-

tive on Venezuela that points to an increasing probability of a

downgrade in the rating for the current period. What usually

happens is that the negative perspective increases the likelihood

of it changing. Th e perspectives are not only founded on political

uncertainty. Th e rating incorporates the weakness of institutions,

the concentration of power in the hands of Chávez. Uncertainty

brings with it a deterioration of the economy.”

Many experts point out that the next Venezuelan government

will have to confront drastic adjustments in order to return the

country to economic health. Will that be possible?

SETTING THE SCENETaking a look at the economic panorama on fi ve fronts, fi rst

is the paradox of Venezuela’s oil: Th e country has the biggest

reserves on the globe — 17.9 percent of all the crude in the

world — but it has to import gasoline. Th at is due to ineffi cient

management of resources and the government’s big spending.

Th is includes the delivery

of subsidized Venezuelan

oil to the Caribbean and

Latin America, in par-

ticular to Cuba; the loan to

China — money that has

already been spent — paid

by Venezuela in exchange

for oil; imports of gasoline

at high international prices

following the explosion of

one of its major refi neries; and a reduction in demand from the

leading customer of Venezuela’s oil, the United States, thanks

to new discoveries in the land of Uncle Sam. According to the

Washington Post, in the 13 years in which Chávez has run Ven-

ezuela’s government, oil exports have halved. Oil exports generate

94 percent of Venezuela’s dollar earnings. “For the government,

the cost has been high and the economic distortions substantial,”

Barclays said in a January 18 report. And, while the offi cial rate

for the dollar is 4.3 bolivars, it is running at 17.5 in the unoffi cial

market. Barclays reckons that infl ation this year will close at 30

percent.

Th e third point is that total imports have risen from $13 bil-

lion in 2003 to $54 billion, according to Coindustria, the Ven-

ezuelan confederation of private industry.

Fourthly, the nation’s production has slowed down for a range

of factors. On the one hand, there were price controls and the

BY ÁNGELA MARÍA RIAÑO

INVESTMENTS: VENEZUELA OUTLOOK

Venezuela’s economy will close this year with infl ation of 30 percent and growth of only 1.8 percent. Can that forecast be altered? Opposition will not be in power in 2013.

VENEZUELAIN ITS LABYRINTH

Venezuela gives Nicaragua $500 million a year, the equivalent of 7 percent of Nicaragua’s GDP. It

sends Cuba 100,000 barrels a day of oil, 5 percent of its GDP.


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INVESTMENTS: VENEZUELA OUTLOOK

availability of cheap imports; on the other, the nationalization of

a thousand companies, according to the Christian Science Monitor.

As a result, people have adapted to a constant shortage of basic

food supplies, such as sugar, fl our, chicken, beef, milk and others.

Week after week, many of these products have been missing at

family meal times in Venezuela.

Finally, the fi scal defi cit is reported to have stood at the close

of 2012 between 11 and 20 percent. “Th e indicators deterio-

rated in 2012. Our best estimate is 11 percent of GDP (it’s our

estimate because of the lack of transparency in last year’s fi s-

cal results). Th e lack of transparency seems to be getting worse.

Government spending was the principal reason for its increase in

GDP… but this level of spend-

ing is not sustainable. Chávez

recognizes that,” says Aaron

Friedman of Moody’s.

World Bank reports show that

Venezuela’s economy will grow

by only 1.3 percent this year. Th e

“Doing Business 2013” report by

the World Bank and the Inter-

national Finance Corporation

rated Venezuela as number 180

of 185 countries in the global

ranking of the ease of doing

business. Th at marks a signifi cant

drop in competitiveness.

DEVISING A WAY FORWARDWith this as the background, it

is worth checking out the pos-

sible scenarios for Venezuela’s

short-term future. Th e big ques-

tion is: What happens if Chavis-

mo continues in power?

Experts reckon that this is a highly probable scenario. Th e

question then is whether there would be more of the same or a

change of direction. “Th e fact that Chávez has appointed Nico-

lás Maduro will reduce the competition for the leadership of

Chavismo and makes it hard for other sectors of the movement

to reject the legacy,” says Cynthia Aronson, director of the Latin

American program for the Woodrow Wilson Center. Despite

being the heir, critics of Maduro believe that he lacks the cha-

risma to achieve the unity he needs to impose himself within the

Chavismo factions, that his relationship with the government is

weak and, given the large number of problems that the regime

has to tackle, the diffi culties in imposing his leadership will rep-

resent a serious political defi cit.”

For his part, Michael Shifter, president of the Inter-American

Dialogue says: “In this scenario, Chavismo will continue, the

power quotas will be shared out as well as the resources. With oil

prices remaining high, the movement will take moderate mea-

sures, suffi cient to provide room for maneuver and hang on. Th is

scenario cannot be ruled out,” says Shifter.

But what happens if the country faces a thorough economic crisis

and takes drastic measures to manage it? In Shifter’s view, “Th is

would create an enormous level of disorder. Obviously, there are

several factions within Chavismo. Th ere would be in-fi ghting for

the resources, and a lot of trouble. Some economists suggest that

the next government is going to make adjustments for devaluation.

Drastic measures generate major social upheavals.”

And, what if elections are held and the opposition wins? “I

don’t see that as a major possibility, but I wouldn’t rule out such

a scenario,” says Shifter. “Governance would face a complex situ-

ation and, in economic terms, moderate and gradual measures

would have to be implemented.”

In terms of the transition alone, the nation is very polarized,

with Chavismo the dominant political force and the opposition

representing 40 percent or more of the population, which means

that tensions are running very high. Any economic measure will

have to take into account that perspective.

In the words of Cynthia Aronson, “Th e terms of the Constitu-

tion have been interpreted with such creativity by the Supreme

Court that nobody knows the next step in the transition. In Ven-

ezuela, the only certainty is uncertainty.”

Ángela María Riaño reported from Washington, D.C.

Oil pump and storage tanks at Zulia State, Venezuela


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Demonstrators in Valencia protesting cuts in social programs.

At the inauguration of the 13th Latin American Summit in Cadiz,

Spain, one thing was clear for King Juan Carlos: Th e relationship

between Spain and Latin America has changed dramatically. “Spain

needs more Latin America,” the King said.

Spain has lived through many crises since the fi rst Summit, 22 years

ago, in Guadalajara, Mexico. Back then, Spain presented itself as a strong

democracy with a healthy economy, while Latin America presented itself

as a region of young democracies and hefty debts.

Today, as Spain continues to sink into recession, Latin America

expects to grow 3.2 percent in 2012, and 4 percent in 2013. Gone are

the days when Spanish companies saw the region as an opportunity to

expand and create multinational groups. Today, Latin America represents

the hope of survival. A study by IE Business School shows that by 2015,

Spanish companies with operations in Latin America will generate most

of their revenues in the region, instead of the Spanish market.

For telecom company Telefónica, it’s already happening. Span-

ish investment in the region has reached more than 90 billion euros,

mostly in Brazil, Mexico, Chile, Colombia, Peru and Argentina, and is

likely to grow.

INFRASTRUCTURE, THE NEW LATIN AMERICAN GOLDWhen Spanish companies started to arrive in Latin America during a

privatization wave in the early nineties, most of them had their eyes set

on the energy, telecoms and fi nancial sectors. At the time, a real estate

boom had helped Spain to become the eighth largest economy in the

BY SERGIO MANAUT

INVESTMENTS: SPAIN IN LATIN AMERICA

SPAIN RECONQUERS LATIN AMERICARecession has turned the heads of Spanish companies to Latin American markets and infrastructure projects. How are these fi rms faring in their reconquest?


INVESTMENTS: SPAIN IN LATIN AMERICA

world. Construction companies were popping champagne corks, but

eventually the boom became a bubble, and after it burst, they had no

choice but to take their bricks elsewhere.

Sacyr Vallehermoso is a good example. With projects worth a total of

40 billion euros, it ended the third quarter of the year with 2 billion euros

in growth. Th is includes new construction and infrastructure projects in

Chile, the company’s main market in Latin America. Sacyr Vallehermo-

so’s operations in Chile are worth

1 billion euros in public works and

another 1.7 billion in concessions.

In 2009, when the Spanish crisis

caused many construction compa-

nies to collapse, Sacyr Vallehermoso

landed a 700-million-euro deal to

expand the Panama Canal.

During the second half of the year,

the company started operations in

Colombia and Bolivia. In Spain,

meanwhile, the company’s results

dropped 23 percent.

Spain’s fi gures are frightening.

All together, the country’s six main

construction fi rms – Acciona, ACS,

FCC, Ferrovial, OHL and Sacyr

Vallehermoso – lost 973 million

euros during the fi rst nine months of

the year. In contrast, during the same period last year, their revenues to-

taled 1.97 billion euros. Today, over 80 percent of their new projects to be

developed are outside Spain. Th e international projects of these six fi rms

add up to 72.84 billion euros, most of them in Latin America.

Th e fi rms’ success is based on a regional infrastructure defi cit of $250

billion a year, which includes railway, electricity and communications

projects, according to the InterAmerican Development Bank.

Brazil is the region’s crown jewel. Th e country’s president, Dilma

Rousseff , has announced plans to invest some 66 billion dollars in

railway and highway infrastructure. Even though the works are to

take place over the next 25 years, half of the investment must be made

within the next fi ve, and concessions are slated to be assigned to

companies by September of 2013.

Th is explains why construction companies are eager to get involved.

During the fi rst week of December, Albertis, Spain’s largest highway

builder, closed a joint deal with Canada’s Brookfi eld. Together, they

acquired Partícipes, which owns 60 percent of OHL Brazil, the com-

pany that owns the Brazilian concessions of Spain’s OHL.

Albertis and Brookfi eld will pay 10 percent of Albertis’s shares (884

million euros at market rates), plus 10.7 million euros cash and will

acquire over 504 million euros in debt. Albertis will control 51 percent,

while Brookfi eld will take the remaining 49 percent of the 60 percent

total. OHL Brazil is handing the Spanish company a total of nine con-

cessions, with 3,226 kilometers of road projects to be built.

After this transaction, Albertis will not only become the world’s lead-

ing highway construction company, but it will also reduce its Spanish

market share, which currently accounts for 27 percent of its revenue.

Telefónica’s results up to September of 2012 also show the growing

contribution of the Latin American market. Today, 49 percent of the

company’s revenue comes from

Latin America, representing 22.6

billion euros. Th e fi gure overtakes for

the fi rst time that of the European

operations of Telefónica, now at 48

percent. Brazil alone accounts for

22 percent of Telefónica’s income.

Santiago Fernández, president

of Telefónica for Latin America,

confi rmed that he would move

from his Madrid offi ce to Sao

Paulo. Moving the company’s

Latin American headquarters to

Brazil is the fi rst step in merging

Telefónica’s regional activities into

a single company, which would

allow it to trade on the stock market

independently from the corporation’s

structure. Meanwhile, new Spanish

companies continue to arrive on Latin American shores.

Spain’s third largest fi nancial group, CaixaBank, arrived in the region

thanks to its 20 percent stake in Grupo Financiero Inbursa, and will soon

open offi ces for corporate clients in Chile.

Th e biggest hotel chains from Spain also seem unstoppable in their

expansion, particularly in Colombia, Brazil, Peru and Chile, where the

urban hotel concept is still underdeveloped. Th e chains are looking to

copy the same model used in the Caribbean 20 years ago.

Alberto Nuñez Feijóo, president of the Xunta of Galicia, recently

traveled to Brazil for contract talks between Galician shipyards and Sete

Brasil, which already has contracts with Petrobras for the construction of

sounding lines for exploring oil wells.

Also arriving in the region are companies related in other ways to

construction and infrastructure. For instance, sanitation company Grupo

Roca began operations in Brazil in 2009. By 2011, the country had

become its main source of income. In just three years, boosted by Brazil

revenue of 310 million euros, Grupo Roca became the leading company

in its sector.

Just as Grupo Roca is writing its own success story, so is Latin

America, and Spanish companies want to contribute with at least some

of the ink.

Sergio Manaut reported from Madrid.

Brazil’s president, Dilma Rousseff, has announced plans to invest

some 53.5 billion euros in railway and highway infrastructure. Even

though the works would take place over the next 25 years, half of the investment must be made

within the next fi ve.


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Brazilian companies have made headway in Africa with the

active support of former President Luiz Inácio Lula da

Silva, who frequently visited the continent when he was in

power between 2003 and 2012, and

with the diplomatic support of Ita-

maraty, the Brazilian external affairs

ministry that has opened numerous

embassies south of the Sahara in re-

cent years.

For sure, Brazil’s presence in mineral-

rich Africa can hardly compare with

that of China, whose banks have al-

ready set up shop in the fast growing

region. And the African adventure has

not come without some bumps on the

way, or even upsets. Vale, for instance,

the world’s largest iron ore producer, just decided to halt its huge

investment in the West African state of Guinea only months

after describing the Simandou project as one of the biggest

reserves of iron ore on the planet. But there have been some

incredible success stories, and Brazil has started to become rel-

evant in business terms. Activities now range from commodities

to cosmetics.

Africa will continue to provide fertile ground for Brazilian

businesses in many areas. Take trade, usually a good measure of

one country’s involvement with another. It shot up from a mere

$4.3 billion in 2002 to $27.6 billion in 2011. Africa’s share of

Brazilian trade is still relatively small (around 5 percent), but

it has been growing. “The funding deficit is a great challenge,”

said Luciano Coutinho, president of the Brazilian Development

INVESTMENTS: BRAZIL IN AFRICA

Brazilian fi rms have increased their presence in Africa. In the process, they have seen heaven and hell. Where are the opportunities for other Multilatinas?

UNDER THE AFRICAN SUN

Bank (Bndes). But the powerful Bndes has been flexing its ex-

port financing muscle. African loans barely amounted to $150

million five years ago, compared with $550 million last year.

Loans from January to November of 2012 hit $561 million, and

according to Bndes officials, the portfolio is increasing. “This is

in line with the interest of Brazilian companies in the continent,

especially in lusophone Africa.” This is especially true for civil

engineering corporations, due to reconstruction opportunities

in various (post conflict) countries. “Those firms tend to use

Brazilian equipment and brands, so other companies from other

sectors also follow suit and achieve some notoriety in Africa,

too,” said Luciene Machado, foreign

trade director at the Bndes in Rio.

Investments have soared. Long-

time business partners in Africa like

Odebrecht are familiar with such

credit lines. Angola and Mozambique,

which both endured decades of civil

war after independence from Portu-

gal, have become prime targets for

Brazilian firms. “Brazil was the first

country to acknowledge Angola’s in-

dependence (in 1975) and maintained

good relations with the country even

during the most intense period of the civil war, so it ’s natural

that companies that have been here for a long time enjoyed some

advantage during the reconstruction era,” she said.

Odebrecht can also cash in some of its receivables in dollars

outside Angola, including 10 percent upfront, thanks to its long-

standing relationships with officials in the oil-rich southwestern

country. On the Angolan government’s request, Odebrecht has

also been operating a retail chain, quite a unique experience for

the engineering group.

Beyond maintaining good relations with governments, anoth-

er important lesson from the Angolan experience is to be able to

respond to the huge infrastructure demand all over Africa, said

Machado. But she added that it would be a mistake to general-

ize. “We need to take into account the differences among coun-

Africa will continue to provide fertile ground for Brazilian businesses in many areas. Take trade, it shot up from a mere $4.3 billion in 2002 to $27.6 billion in 2011.


tries,” she said. In non-Portuguese speaking countries, the Bndes

has been active in the oil-rich Ghana and Equatorial Guinea,

as well as South Africa. Petrobras is also present in Nigeria and

Tanzania, although it is more focused on its domestic interests

right now.

Air transportation has also been identified as another “stra-

tegic” area for Brazil and one of its star global firms, Embraer.

“The continent’s infrastructure challenge renders air transport a

potential leapfrogging technology akin to mobile phones,” said

the African Development Bank in a statement, as it signed a

cooperation agreement with the Bndes last year.

The continent has also enjoyed high growth rates in recent

years, around 5 percent, excluding 2009, although regional busi-

ness is still hampered by poor regional connections, especially

since the demise of Air Afrique in 2002. Embraer, which has

already sold military aircraft to several African countries, could

achieve a breakthrough in civil aviation there. “The adoption of

regional jets was highly catalytic for the growth of aviation in

Brazil and we believe that the same can happen in Africa,” said

Marcio Migon, head of aircraft financing at the Bndes.

CHALLENGESYet some Brazilian companies have had a hard time overseas, such as

Marcopolo, the bus body manufacturer whose Egyptian plant in Port

Said saw disruptions related to political instability. Th e Caxias do

Sul-based company has been more successful with its investments in

South Africa, including during the latest football World Cup.

Th e widest contrasts in outcomes, though, have been experi-

enced by one of the largest Brazilian multinationals, Vale (the

company declined to comment on its African business). On the

one hand, it has been exploring a profi table coal mine in Mozam-

bique. “It is one of the best projects they have outside Brazil,” said

Denis Demange, head of metals and mining at the investment

bank Credit Agricole in São Paulo, who has visited the Moatize

site twice. “Roger Agnelli (then CEO of Vale) was treated like a

prince in Mozambique,” said a former company director.

But on the other hand, Murilo Ferreira, Agnelli’s successor, has

faced a near-hellish experience in Guinea, one of the poorest countries

in the world, where Vale pledged to invest $2.5 billion to buy a 25.5

percent stake in the promising Simandou iron ore mining project in

2010. Th e potential was great: Guinea, which is already the world’s

largest producer of bauxite, could achieve a leap forward if the Siman-

dou mine, which contains the word’s largest non-explored iron ore

reserves, was put to work. But the experience soon turned sour.

Vale signed the deal during a transition period between the

death of former dictator, Lansana Conté, and the democratic

election of Alpha Condé, a longtime opponent who decided

to implement a new mining code and a review of existing

contracts. These included contracts signed by Vale and its Is-

raeli partner Benny Steinmetz. Condé, a former Sorbonne law

lecturer, also called on former British Prime Minister Tony

Blair and the mega-investor George Soros to advise him. The

Brazilian investment bank BTG Pactual, which is allied in a

joint venture with Agnelli, also teamed up with Condé. Under

pressure, and after months of dithering, Vale finally decided

to pull the plug on Simandou in December 2012 and focus on

domestic investment in iron ore instead. “They have already

spent $1 billion in Simandou,” said Demange. “But the project

is doomed.”

This is the kind of experience that undoubtedly leaves a bitter

taste in the mouth. But business is business–even in Africa.

Thierry Ogier reported from Sao Paulo.

Air transportation has also been identifi ed as another “strategic” area for Brazil and one of its star global fi rms, Embraer. “The continent’s infrastructure challenge renders air transport a potential leapfrogging technology akin to mobile phones,” said the African Development Bank in a statement, as it signed a cooperation agreement with the Bndes in 2012.

INVESTMENTS: BRAZIL IN AFRICA

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70 LATIN TRADE JANUARY-FEBRUARY 201370 LATIN TRADE JANUARY-FEBRUARY 2013

At Belgrano Day School in Buenos Aires,

teachers use computers, interactive white-

boards and video screens in the classroom, and

the students seem attentive.

“One teacher uses technology in 90 percent

of her lessons,” said Federico Johansen, overall

deputy director of the K-12 school, with an

enrollment of 1,200.

Teachers can quiz students online and let

the computer do the grading, while students

can study texts accompanied by interactive

programs and videos that build on in-class les-

sons. Can’t fi gure out a math problem at home?

Watch a video demonstration or chat with

classmates over the school’s e-learning platform.

Johansen, a 40-year education veteran, speaks

glowingly of technology’s advance in education.

“Technology is a tool so effi cient that it is

going to change the existing model of school

like the printing press transformed education

from an oral foundation,” he said.

Th e promise is creating opportunities for

suppliers of e-learning content, hardware, soft-

ware and services across Latin America. Gov-

ernments are handing out laptops to students;

private schools are asking their ranks to bring

in their own computers, tablets or other de-

vices. Corporations are rolling out e-learning

platforms for employees to hone their skills.

Th e e-learning business has had fi ts of ac-

tivity and slumps over the past decade in Latin

America. Schools have stocked up on interac-

tive whiteboards only to see use falter as un-

trained teachers couldn’t fi gure out how best to

use them. Workers have trudged through dull

online courses, and companies have demanded

better courses.

Gustavo Grobocopatel, president of Grupo

Los Grobo, said e-learning should help his

1,000 employees gain new knowledge and

skills for his agriculture business in Argen-

tina, Brazil and Uruguay. But, he’s not found

products to fi t his needs, and instead prefers

in-fi eld training.

E-learning developers are taking note, and

blended learning is gaining traction by com-

bining computer time with classroom debate

and hands-on practice.

Colombia’s National Open and Distance

University (Unad) is doing something of the sort.

Students can take courses online and via video-

conferencing at any one of 60 centers around

the country and in Florida, where they can hang

out with peers. Th e Siglo 21 Business University

(UES 21) has 140 such centers in Argentina.

Blended learning proponents say the

approach is cheaper and democratic: stu-

TECH TRENDS

dents can study from anywhere, and at

30-70 percent less than on campus.

For their part, universities can fatten enroll-

ment beyond the campus, helping to bolster

profi ts without pushing up costs much.

With computer programs, teachers spend

less time grading and more time teaching –

and more eff ectively, said Ursula Eyherabide,

director of the Ibero-American Association

of Blended Learning. Th e digital content also

makes it easier to monitor progress, allow-

ing teachers to attend to the needs of slower

students and off er additional material to those

making faster strides, she said.

GROWTH PROSPECTS

Sam Adkins, chief research offi cer at Ambient

Insight, a market research company in Mon-

roe, Washington, estimates that e-learning

revenues in Latin America will almost double

to $2.29 billion in 2016 from $1.16 billion in

2011, or 15 percent annual growth.

Brazil will grow fastest at 21.5 percent,

trailed by Colombia and Bolivia at 18.6 per-

cent and 17.8 percent, respectively, he said.

“Brazil could easily have more than two

million online higher education students by

the end of 2013, more than twice the number

of online enrollments in 2010,” Adkins said.

While schools are on top in Brazil, corpora-

tions dominate e-learning in Argentina and

consumers do in Chile and governments in

Colombia, Mexico and Venezuela, Adkins said.

Underpinning the growth is the rapid digi-

tization of academic content across the region,

such as with such government initiatives as

Bolivia’s Educational Technology Revolution

or Venezuela’s Canaima Program, he said.

Th is is opening up opportunities for sup-

pliers. So far, global suppliers such as Apollo

Group, McGraw-Hill and Pearson dominate

the fi eld in Latin America, yet a domestic con-

tingent, including Aura Interactiva, Competir

and Kuepa is gaining ground.

Pearson recently teamed up with Mexican

educational technology and curriculum devel-

oper Inite to create Utel, an online university

in Mexico.

Adkins expects Pearson and other big for-

eign players to dominate the business in Latin

America for the next fi ve years, including by

buying domestic players to build market share.

But as the business matures, the interna-

tional suppliers could fi nd themselves slug-

E-LEARNING FORTHE TWITTER GENERATION

BY CHARLES NEWBERY

Brazil will grow fastest at 21.5 percent, trailed

by Colombia at 18.6 percent and Bolivia at 17.8 percent - Adkins.

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With strong North-South trade

lanes, the Jacksonville Port

Authority — a full-service,

international trade seaport in the

Southeastern United States —

is your gateway to more than

55 million U.S. consumers.

JAXPORT and its maritime

partners handle containerized

cargo, automobiles, recreational

boats and construction

equipment (Ro/Ro), dry and

liquid bulks, breakbulk

commodities, and over-sized

and specialty cargoes. In 2012,

JAXPORT’s cargo throughput

ranked No. 1 in vehicle exports

in the U.S., and Jacksonville

was hailed as the top container

port in the State of Florida.

JAXPORT terminals feature

18 container cranes, on-dock

refrigerated and freezer

warehousing, Foreign Trade

Zone status and outstanding

intermodal connections.

To discover how your business

can benefit from a shift to

JAXPORT, visit jaxport.com/shift

or call JAXPORT Trade

Development toll-free at

1-800-874-8050.

Importers,ExportersBenefitingfrom a Shiftto JAXPORT

SPECIAL ADVERTISING FEATURETECH TRENDS

ging it out on price to sustain sales in the

larger markets of Argentina, Brazil, Mexico

and Venezuela, something already happening

in the corporate segment in Argentina and

Mexico. Th is could lead companies to target

the smaller markets of Bolivia, Chile and Co-

lombia, and it could create opportunities for

Latin American players to off er tailored solu-

tions, not the one-price-for-all packages of the

international suppliers.

“Smaller suppliers may not have the brand

awareness and the marketing muscle of some

of the larger players, but they can modify

products and prices to meet the needs of local

buyers,” Adkins said.

Another challenge for local and foreign e-

learning companies is the advance of Mountain

View, California-based Coursera and other com-

panies off ering free courses taught by teachers

from universities such as Harvard. Coursera now

has 60 percent of its students outside the United

States, 4 percent of them in Brazil.

Latin American suppliers also are starting to

export. Sao Paulo-based Imaginologia sells on-

line courses for the healthcare industry to Por-

tuguese-speaking African countries, while Sao

Paulo State University and the Catholic Univer-

sity of Brasilia off er online Portuguese courses in

Mozambique and Angola, respectively.

CREATE YOUR OWN CONTENT

A market preference in Latin America is to

create your own content, in particular at cor-

porations and tertiary education. Th is likely

will keep demand for tools and platforms

steady, including open-source e-learning plat-

forms such as Blackboard, Desire2Learn and

Moodle. About 45 percent of corporations

and most tertiary schools in the region are

purchasing cloud-based tools and platforms to

create their own content.

Adkins also expects the latest trends in the

United States – content-as-a-service (CaaS)

and school-as-a-service (SaaS) – will catch on

in Latin America. With CaaS, content is rent-

ed, a cheaper option for parents and students

than buying e-learning courses. SaaS allows

a school to launch a large-scale e-learning

program in days by rebranding the third-party

supplier’s platform.

In primary and secondary schools, Kuepa is

making strides in selling services in its home

market of Argentina and in Colombia. Cole-

gio Buenos Aires has tapped the supplier for

the country’s fi rst blended-education program

for secondary students.

Gonzalo Pulit, who runs Kuepa, said it takes

time to land buyers. Th e market is big and frag-

mented, so lots of meetings must be scheduled

and time spent on convincing seasoned educa-

tors to overcome any technological skepticism.

Th at is happening. Parents and K-12

schools are starting to jump on board attracted

by the lower cost of e-learning, its ability to

track performance more easily, and the zeal

of students who, growing up with Facebook,

Twitter and YouTube, view e-learning as akin

to their era, Pulit said.

Dual-diploma programs are popping up.

Kuepa has hooked up Belgrano Day School

with Somerset Virtual Academy in Pembroke

Pines, Florida for such a program at a fee of

$800-900 per student a semester. Students

take additional online courses to receive a US

high school diploma while completing one at

their school at home, widening their educa-

tion and opportunities for getting into a US

university. Th e school can market the dual

diploma at no fi xed costs.

Back at Belgrano Day School, Johansen

sees e-learning as a way to curb state education

spending by reducing costs, and also to reel

in dropouts by fi nishing their studies through

distance learning.

But, he warns that any technological push

must start with training teachers. “When they

see that technology is very effi cient for teach-

ing, then they will use it,” he said. “Th ey will

get committed.”

Charles Newbery reported from Buenos Aires.

E-learning revenues in Latin America will almost double to $2.29 billion in 2016 from $1.16 billion

in 2011, or 15 percent annual growth.

LT CFO MEXICO D.F.


Latin America and Mexico

are well-positioned head-

ing into 2013, despite risks in

China, Europe and the United

States, which must contemplate

its looming fiscal cliff, participants

at the Latin Trade CFO Event in

Mexico City were told.

The reasons for optimism

include solid macroeconomic

indicators, especially in Mexico,

said Kathryn Rooney Vera,

senior macroeconomic strategist

at Bulltick Capital Markets in

Miami. The average debt-to-

GDP ratio is 30 percent in Latin

America, compared to 80 percent

in the developed world, to cite

one metric. The region’s banking

system is better capitalized, too,

and not over-leveraged.

Mexico shows especially

positive signs, with its export-

oriented economy, solid currency

and relatively low inflation, which,

Vera said, should come in at

3.6 percent in 2013, alleviating

pressure on the central bank

to raise interest rates until at

least the end of that year. The

peso, meanwhile, “is the most

undervalued currency in the

region.”

The United States, Mexico’s

main trading partner, raises

concern with its “fiscal cliff,”

which, if unresolved, could cut

1.5 percent from GDP in the

first half of 2013. Vera expects

politicians to solve the prob-

lem, saying, “It doesn’t benefit

anyone not to do so.” Longer

term risks remain, such as debt

and fiscal trends, and a need to

fix entitlement programs. But in

other areas, 2013 could be bright

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CONNECTING LATIN AMERICA’S CFO COMMUNITY

MEXICO Well-positioned despite the extra region panorama

Gustavo Ardila, vice president, productive & fi nancial sectors, CAF

Victor González Bernal, director of treasury and accounting, Volkswagen Mexico

Edgar Shaadi, CFO, Premium Restaurant Brands; Mayela de La Paz Rincón, CFO, Bio Pappel; José Manuel Carrillo, fi nance director, Burger King

Kathryn Rooney Vera, senior emerging markets macroeconomic strategist & partner, Bulltick Capital Markets

MEXICO D.F. LT CFO


for the United States, producing

favorable follow-on effects for

Mexico. Vera forecasts US growth

of 2.2 percent in 2013 and says

it will be driven by housing and

consumption. Housing, she says,

“is a virtuous cycle,” in which

consumers feel better since their

main asset is increasing in value.

Boosting consumption means

more manufacturing – much of

it in Mexico, especially in the

expanding automotive sector.

The average age of a car in the

United States is 11 years old, Vera

said, explaining that consumers

haven’t been purchasing due to

the downturn. That’s something

she expects to change, meaning “a

boom for Mexico.”

Vera shared her forecasts at a

Nov. 15 event that Latin Trade

organized for CFOs. The event

acknowledged Víctor Bravo Mar-

tín of Empresas ICA as “CFO of

the Year.”

Bravo, CFO for one of

Mexico’s biggest construction

companies, shared equally upbeat

expectations for Mexico, which

recently approved an overhaul

to its labor laws and is expected

to finally make progress toward

opening its state-run energy

sector – a move that Bravo says

would add “1 percent to 2 per-

cent” to annual GDP.

Mexican President-elect

Enrique Peña has said Mexico

must spend 5 percent of its GDP

on infrastructure. A new public-

private partnership law also bodes

well for ICA and its investors,

Bravo said, explaining the new

rules lend more judicial certainty

to projects and allow companies

to pitch their proposals to the

government. “The outlook is

positive,” he said.

Managing risks can be a

key part of a CFO’s responsi-

bilities. Nelson E. Telemaco, vice

president and regional head of

client management and global

risk solutions at Chartis/AIG

Latin America, gave a workshop

on multinational risk manage-

ment. Multinationals, Telemaco

says, “have depended on local

subsidies to manage risk.” That’s

changing as “multinationals

see value in changing how they

manage risk,” he said.

The changes include imple-

menting a controlled master

program that “combines the

best of both worlds: local and

global policies.” This offers the

benefits of control, compliance,

value and limiting potential costs.

“We shouldn’t reserve this as a

last-minute response to a crisis,”

Telemaco said.

Another way to avoid crises

is to take advantage of card pro-

grams that can track how employ-

ees are spending company money,

provide advanced data on whether

it’s being spent properly, and

benchmark performance against

peers in the same industry, said

Luis Emilio Fortou, head of LAC

multinational program, VISA. It

also can provide KPIs for improv-

ing company performance.

David Agren reported from

Mexico City.


Nelson E. Telemaco, VP regional head of client management group and global risk solutions, Chartis/AIG Latin America; Luis Emilio Fortou, head of LAC multinational program, Visa; Rogelio Flores, fi nance director, SAS Latin America North; Francisco Sánchez, fi nance manager & legal representative, SAP Mexico and Central America; Víctor Bravo Martín, CFO, Empresas ICA; Rodrigo Llop, business development director, SAS; Santiago Dawson, head, treasury & corporate fi nance, América Móvil

LT CFO Event in Mexico

Paolo Patrone, fi nance director, Hamburg Süd


LT CFO MIAMI

The fiscal cliff – the combi-

nation of tax increases and

automatic spending cuts decreed

by US Congress – presents a

serious threat to the US economy

this year, but full execution of

the measures is unlikely since it

would drive the economy into

recession, Kathryn Rooney

Vera, director of macroecono-

mic research at Bulltick Capital

Markets, told participants during

December’s Latin Trade CFO

Forum held in Miami.

The US economy has the po-

tential to grow by 2.3 percent this

year, but is likely to grow by less

than 2 percent, she told the forum.

The full impact of the fiscal

cliff, already affecting the eco-

nomy, would equal more than

$607 billion in 2013 or 4 percent

of nominal GDP, she noted, and

if fully implemented would push

the economy into a recession

during the first half of the year.

The economy would return to

growth in the second half of 2013,

posting marginal growth for the

year as a whole.

Rooney Vera said then that it

was logical to expect tax increases

as a result of the fiscal cliff nego-

tiations, since the Democrats have

the stronger hand in talks. The

top 2 percent of earners will see

taxes increase.

Moving to another key interna-

tional player, the Bulltick executive

said she believed that a hard lan-

ding in China over the next few

years was unlikely. China’s GDP

growth should reach 8 percent in

2013 and the future outlook de-

pends on how quickly China can

harness the consumption model,

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Carl Occhipinti, VP fi nance, FedEx Express Latin America and Caribbean Division

Carlos Vaitman, business leader small business, Latin America & Caribbean, Visa; Steve Horton, fi nancial planning and analysis manager Latin America & Caribbean, Wendy’s International Latin America; Eduardo Vera, real estate fi nance manager, Real Assets Capital Partners; Kathryn Rooney Vera, director and partner, macroeconomic research, Bulltick Capital Markets

Alexandre Chourmert, controller, Latin America & Caribbean, Ferragamo Latin America; Seher Samilgil, manager, fi nance & business support Latin America & Caribbean, Inter-Continental Hotels Group

Philippe Schrader (2011 Latin Trade “CFO of the Year - Multinational”), vice president, CFO & strategy, Latin America, at Walmart Latinoamérica; Ignacio Corral (2012 Latin Trade “CFO of the Year - Multinational”), fi nance director of Latin America and the Caribbean, Diageo.

Unlikely to fall from the fiscal cliff US:


LT CFO MIAMI

as opposed to its current export

model, she said.

Latin America, meanwhile,

has shown itself to be quite

elastic in absorbing economic

shocks, and should post GDP

growth of 1.4 percent in 2013,

down from this year’s IMF

estimate of 1.5 percent.

Mexico is set to outperform

Brazil, with projected GDP

growth of 4 percent in 2012.

For 2013, Mexico should grow

by 4 percent.

Brazil, which at 5 percent

unemployment is at full

employment, has the potential

to show GDP growth of 3.7

percent this year, but will likely

grow by just 1 percent, Rooney

Vera forecast, even with a big

government stimulus and

reduced taxes on durable goods.

Currently, Brazil has a

consumption-driven, govern-

ment stimulus model. It must

increase investment and move

to a competitive model, she said.

Investments in education and

research and development could

prove to be a powerful driving

force for growth in this South

American counrty.

In addition to the economic

outlook, Ignacio Corral, finance

director of Latin America and the

Caribbean for beverage company

Diageo, received the Latin Trade

“CFO of the Year” Award in

the multinational category from

Philippe Schrader, vice president,

CFO & strategy, Latin America,

at Walmart Latinoamérica, who

was last year’s winner.

Corral noted that the Latin

American and Caribbean region,

one of five Diageo geographical

units worldwide, was among the

three fastest growing regions.

“With seven million new, affluent

consumers, mostly stable national

economies and the average age

at 30, this is the land of oppor-

tunity,” he said. The company

has about 3,000 employees in

the region and, Corral added, he

expects strong growth to continue

until 2020.

Last year, the company achie-

ved the No. 1 spot in Mexico

in its market. One of the main

drivers of this growth has been

Diageo’s commitment to making

regular investments in the region

for more than 15 years, he said.

Also making presentations at

the Miami forum were: Laura

Maydón, senior business leader,

Commercial Solutions, Visa; Alex

Russell, CFO, Emerson Process

Latin America; and Carl Occhi-

pinti, vice-president of finance,

FedEx Express Latin America

and Caribbean Division.

Speaking on the topics of

working capital management,

DSO, procure-to-pay and DIO,

Visa’s Maydón told participants

that a clear focus on accounts

payable can help companies meet

their targets. Automation using

Visa cards and processes can lead

to savings and improve working

capital, she said.

Using cards for B2B payments

in Latin America offers great po-

tential, she added, and can provide

financial officers with precise data

on expenses.

Joseph A. Mann, Jr. reported from

Miami .


Deidre Lloyd, LAR business fi nance manager, Eastman Chemicals Latin American; Alex Russell, VP of fi nance for Emerson Process Latin America, Emerson

LT CFO Event in Miami

Rogelio Flores, fi nance director, SAS Latin America North; Ignacio Corral, fi nance director Latin America & Caribbean, Diageo; Rodrigo Llop, business development director, SAS; Rosemary Winters, CEO, Latin Trade Group; Peter David, regional CFO, SAP Latin America & Caribbean; Juan Felipe Gómez, manager of SAP financing, SAP Latin America


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Selling Colombia as a tourist destination in

the international market has been a diffi -

cult task in the past. Right-wing paramilitaries,

left-wing rebels and drug-traffi cking cartels

all gave the country a negative and dangerous

image, diffi cult to tackle through campaigns or

communication strategies.

For many foreigners, images of drug

violence eclipsed the Colombia of Juan

Valdez, Shakira and Gabriel García Márquez,

whose hometown of Aracataca served as the

inspiration for Macondo. Not even the lure of

pristine Caribbean waters was enough to help

boost tourism to desired levels.

Th at was until Proexport, the government

agency charged with promoting exports,

foreign investment and tourism, decided to

take the bull by the horns and asked Sancho

BBDO design agency to come up with a cam-

paign to attract tourists from specifi c

markets around the world. (Sancho is no

longer working with Proexport, but the agency

was responsible for creating and developing

the tourism campaign.)

Th e agency took a gamble: it decided to

include the word “risk” in the campaign’s

slogan. After all, it represented what was fore-

most in everyone’s mind, and the very concept

the agency wanted to counter. And so, three

years ago, the campaign “Colombia, the only

risk is wanting to stay,” was born.

COLOMBIA BY PAULA ANCERY

“Th e eff ect of the phrase was so powerful,

it’s even been used by the government when

trying to attract direct foreign investment,”

said Marcelo Arango Gómez, vice president of

strategic planning at Sancho BBDO. “Th anks

to exposure in international television (adver-

tisements), the campaign has surely reached

business travelers.”

Th e brief for the campaign was based on

studies showing that despite tremendous

changes in the country, the rest of the world

still associated it with civil confl ict and drug

traffi cking. “Th at’s why we designed a cam-

paign that not only showed nice things, but

would be hard-hitting. Th at’s when we decided

to use the word ‘risk,’ something never before

done when trying to design a campaign to

attract tourists,” explained Arango.

Th e campaign focused on attracting tour-

ism to specifi c places like Bogotá, Barranquilla,

Huila, Amazonas, Cartagena and San Andrés.

Activities such as bird watching, scuba diving

and golf also were highlighted. Th e campaign’s

narrative style presented foreigners who “came

across” Colombia, or just happened to go to

the country without knowing what to expect.

Th e visitors recount how they were pleasantly

surprised by Colombia and fell so deeply in

love with the country that they decided to stay.

Th e campaign was released on television but

had a much more aggressive presence in digital

SPOTLIGHT

media and international tourism fairs.

“Colombia has changed a great deal,” said

Arango. “We have stopped being a question,

and we have now become an answer. Th e

sun has defi nitely started to shine on us.” He

added: “Colombians want to be a part of the

global scene, and creativity in advertising is a

part of that. What’s more, last year Colombia

had its best performance at the Cannes Film

Festival, with a wide range of awards and truly

wonderful ideas.”

Paula Ancery reported from Buenos Aires.

THE ONLY RISK IS WANTING TO STAY…

Caribbean Coast in Colombia

Ecohabs at Tayrona National Park

HSBC Best Bond House 2012Recognized as a leader in Latin America and Emerging Markets. This achievement would not be possible without the partnership and support from our clients.

Deals of the Year 2012 – HSBC acting as Bookrunner:

Best Sovereign Liability Management (Latin Finance):Republic of Uruguay USD2.0 billion equiv. New UYU Notes (UI-indexed), USD1.0 billion Tender andUSD725 million equivalent Exchange

Best Sovereign Bond (Latin Finance):United Mexican States USD2.0 billion New 4.75% 2044 Notes

Best Global Local Currency Financing (Latin Finance):Pemex MXN10 billion New 7.65% 2021 Cebures/GDNs

Best Financing Innovation (Latin Finance):Banco do Brasil USD1 billion Hybrid Tier I Perpetual Notes

Best Emerging Markets Bond (IFR):Banco do Brasil USD1.0 billion Hybrid Tier I Perpetual Notes

Best Corporate High-Grade Bond (Latin Finance):Mexichem USD1.15 billion Dual-tranche (2022, 2042) Notes

Best Structured Financing (Latin Finance):Global Bank USD200 million 4.750% 2017 Covered Bond

Best Syndicated Loan (Latin Finance, IFR):Ternium USD700 million 5-year Term Loan

Best Debt House in Latin America

Best Global EmergingMarket Debt House

Best Latin America Bond House

Best Emerging MarketBond House

Latin America Bond House of t he Year

IFR, LatinFinance and Euromoney’s awards granted to HSBC in 2012. HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc, authorised and regulated by the Financial Services Authority, The Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC. 13-003

Latin Trade (English Edition) - Jan/Feb 2013

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