Colombia sees FDI rising to $10 billion in 2011

Colombia's Trade Minister Sergio Diaz-Granados speaks during a Reuters interview in Bogota, March 30, 2011. Picture taken March 30, 2011.

BOGOTA (Reuters) - Colombia's foreign investment should climb to above $10 billion this year and exports will grow to more than $43 billion driven by new markets even as the country waits for a U.S. trade deal, its trade minister said on Thursday.

The Andean country is reaching out to Asia and to new Latin American markets while its long-delayed free trade accord with top trade partner the United States remains on hold and commerce with neighboring Venezuela stalls.

Trade Minister Sergio Diaz-Granados told the Reuters Latin American Investment Summit that the government expects exports this year to grow around 8 percent to $43 billion from $39.8 billion last year as the country diversifies its markets.

Colombia was recently awarded an investment grade credit rating by Standard & Poor's, and other key rating agencies are expected to upgrade in the near future as the Andean country enjoys strong economic growth.

"I believe we are going to surpass $10 billion in foreign direct investment in 2011 and that we go should beyond $43 billion in exports," Diaz-Granados said. "Trade is going well with important growth in all sectors," he said.

Foreign direct investment last year was $9.5 billion.

FDI in the first quarter this year rose 57 percent from a year ago to $2.8 billion, Diaz-Granados said. Exports for the first three months of this year were up 12 percent from a year ago, he said.

Once seen as a failing state mired in guerrilla war, Colombia is enjoying a surge in foreign investment as violence from the conflict eases, and oil and mining companies explore in areas that had been dismissed as unsafe.

Colombia is now Latin America's No. 4 oil producer, the world's No. 5 coal exporter and the top producer of mild, washed arabica coffee. It also is a major flower exporter and textile producer.

But its stymied trade deal with the United States remains a hurdle in the country's trade policy. Democrats in the U.S. Congress have blocked the trade deal saying Colombia has not made enough progress in protecting union workers.

U.S. Trade Representative Ron Kirk told Reuters on Wednesday that the United States and Colombia were now moving toward agreement in their talks over anti-union violence.

Democrats also oppose renewing the expired Andean Trade Preferences Act, which had provided many Colombian exports with duty-free access to the U.S. market.

"We are in the worst of both worlds in our trade relationship with the United States. We have no extension of the preferences and there is uncertainty over the free trade agreement; that is the reality," Diaz-Granados said.

But he said Colombia was seeing more interest among U.S. lawmakers to get the deal through Congress.

"Hopefully, this year they approve the deal, which is in the interest of both countries," he said.

Diaz-Granados said, meanwhile, as part of President Juan Manuel Santos diversification, Colombia was looking to China and other Asian markets and planned to form a trade block with Chile, Mexico and Peru. Already the stock markets of Colombia, Peru and Chile are integrating to bring more opportunities.

Colombia's trade with Venezuela collapsed two years ago during a diplomatic spat after reaching highs of $7 billion in 2008. Colombia exporters are slowly returning, but many remain wary of the Venezuelan market and are looking elsewhere.

"I think we are going to have a recovery compared to 2010 but we will never reach the levels of 2008," Diaz-Granados said.

(Editing by Jack Kimball and Leslie Adler)