Interview: Bruce Mac Master
What is needed for small and medium-sized enterprises (SMEs) to play a bigger role in the economy and have a stronger share of GDP?
BRUCE MAC MASTER: The most important thing is to make SMEs part of the country’s economic strategy. Competitiveness and innovation need to be strengthened for SMEs, as well as encouraging businesses, easing access to new markets and easing access to long-term credit. Another alternative under consideration is the development of linkages with anchor companies, which has been successful at the individual level. It is important to bear in mind that commercial linkages and productive chains generate benefits for both large and small enterprises, and therefore a broader focus should be given to fostering these productive chains. In addition, under the recent tax reform, the government created a simplified tax that is a unique tax for small businessmen with the potential to expand formalisation.
What actions have been successful in furthering the country’s labour formalisation?
MAC MASTER: With the tax reform of 2012 great strides were made to reduce the country’s rate of labour informality. Two of the parafiscal taxes related to the remuneration of workers – which represented 5% of the cost of the payroll – were eliminated. In addition, it made it possible to extend the working day from 6pm to 10pm so that employers were able to reduce costs associated with overtime pay. These measures were effective and managed to reduce the labour informality rate, which stood at around 53% in 2012, to a rate close to 48% in 2016. These and other measures also contributed to the reduction of the unemployment rate, from an average of 10.2% in 2012 to an average rate of 9.2% at the end of 2016. We are determined to build a model that makes labour formality attractive and benefits the country.
How did the economic slowdown impact social development indicators?
MAC MASTER: Despite the economic slowdown and the slower growth of the real economy, social indicators have not been affected. Poverty has declined considerably in recent years; while in 2008 we had 42% poverty and 16.4% extreme poverty rates, today poverty has been reduced to below 30% and extreme poverty is below 10%. In addition, the formality of work has increased and, in general terms, it has lead to an improvement in the quality of life of the employees. Currently, Colombia’s GDP per capita is just above $6000. Over the next 10 years we expect it to reach $10,000 and for poverty levels to fall to 20%. While both are immense challenges, these goals must define public policy in the coming years.
How can Colombian products gain presence in global trade and reach more destinations?
MAC MASTER: We have a great opportunity in the food and agri-business sector; in agriculture and livestock; and in products with components of biodiversity. However, the food chain is very wide, so we must clearly decide at what stage we want to be and focus on that. The advantages that Colombia has in land, water, location and human talent, offers the country a privileged position in today’s world. This is a great basis for building high value-added chains related to food. The strategy must be clear and decisive; the market alone will not act fast enough. Priorities range from the adaptation of public policies and regulation, to the needed investment in and training of human talent, and to the country’s public-private business dealings with potential partners, allies and buyers. This action must involve top managements, investors and those in high positions of government. It is essential that this strategy and its implementation be a national purpose, where all feel the commitment to move it forward.
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