TBY talks to Diego Molano Vega, Minister of ICT, on growth drivers, the role of PPPs, and government support for the private sector.
THE BUSINESS YEAR What drove the 9.5% growth in the ICT sector last year?
DIEGO MOLANO VEGA We experienced remarkable growth in the ICT sector in 2011. The objective of President Santos in ICT is simple: to use the internet to reduce poverty and create jobs. That’s the focus. We want to expand internet penetration at the bottom of the socioeconomic pyramid. We are installing internet access in a large number of schools. We are also focusing on increasing technological awareness and teaching technological skills to teachers, students, and citizens. Thanks to our policies, Colombia is the fastest growing market in terms of internet penetration and computer sales in Latin America. The government’s aim is to increase internet connectivity four fold by 2014. In the first two years of this administration, internet use increased from 2.2 million to 5.5 million connections. If we continue at this pace, we will achieve our goal.
How is the ministry planning its ambitious connectivity targets?
We see the industry as an ecosystem with several elements. Our aim is to make that ecosystem grow. The first element of the ecosystem is infrastructure. Every country needs permanent investment in ICT infrastructure. At the beginning of this administration, only 200 towns had fiber-optic connections. Less than 20% of the municipalities were connected to the fiber-optic network. Fiber-optic technology is what we need to transmit the media we use today for videos, images, and teleconferencing. For us, the key was to expand the network. Now we have the network connected to 100% of all municipalities. Building a fiber-optic network depends on economic feasibility as well, and sometimes the government has to subsidize the network, which is what we do here.
What role do public-private partnerships (PPP) play in developing this infrastructure?
Initially, it is not a very profitable business, and so the best way to go about it was through public-private partnerships (PPPs). We put $230 million on the table, and we auctioned the money to the private company that offered the highest number of municipalities that would be connected to that network. Several international companies participated, and a Mexican company got the job. For every peso we put into this program, the private sector puts in four pesos. The PPP model is very important for the success of our efforts.
How is the government pushing to develop the ICT sector further?
The government is helping the industry grow through subsidies. Our first goal was to have the cheapest computers in Latin America so that more households have computer access. Now Colombia has much cheaper computers than the US, and we accomplished this by eliminating taxes on computers. There are no duties or VAT, and anyone can sell computers in Colombia; it’s a very open market. Colombia now has the fastest growing market for computers in Latin America. Fiscally speaking, reducing taxes for technological development increases revenues in the long run. If technology is cheaper, the economy moves faster and produces more revenue. This is why we eliminated VAT for computers at the base of the pyramid. We know that making the internet cheaper has both economic and social benefits.
The Ministry is focusing on increasing internet usage in schools. How are you going to achieve this?
We have attached great importance to spreading the internet and improving computer penetration in schools. Our Computadoras Para Educar program won a prize for being one of the most innovative programs in the world in 2012. We buy a lot of computers at auction and get the best prices. We aim for the most efficient procurement process possible, and we get those computers at half the market price. The Ministry also offers teacher-training programs, and a certification program called the Digital Citizen, which teachers receive upon passing a test. By the first quarter of 2014, 1 million children will have tablets provided by those operators, which is one of the conditions of these license auctions.
What other initiatives is the Ministry involved in?
The role of the government is to generate demand. We have a very comprehensive e-government plan for Colombia. We will have e-defense, e-justice, and other e-portals for government ministries. All ministries will be accessible by the internet for citizens. Other projects we are focusing on are mobile coverage and social penetration in the mobile phone industry as well as increasing internet use through for the mobile segment. We are replicating the telephony model for the internet. The way to increase internet use further will be through wireless. In 2012, 70% of rural communities were connected to the internet, and in 2013 it will be 100%. At the same time we are also supporting the development and use of applications for teachers, homemakers, public servants, and others.
What is your outlook for Colombia’s ICT sector in the medium term?
In five years, I see Colombia as a leader in the region in terms of application development. We have the people, the talent, the demographics, and we are strengthening that through our training programs. The government is also currently auctioning five licenses for 4G bandwidth. Colombia is growing in terms of data centers—the country is increasingly well connected. We have five sub-marine cables connecting Colombia to the world, and two new ones under construction, meaning we have excellent international connectivity.
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© The Business Year - September 2012