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Cablegate: Medellin Dreams of Silicon Valley

VZCZCXYZ0001
RR RUEHWEB

DE RUEHBO #0001/01 3662145
ZNR UUUUU ZZH (CCY ADX0152642 MSI6179 611)
R 010001Z JAN 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 6341
INFO RUEHBR/AMEMBASSY BRASILIA 8576
RUEHCV/AMEMBASSY CARACAS 1472
RUEHLP/AMEMBASSY LA PAZ JAN LIMA 6860
RUEHQT/AMEMBASSY QUITO 7557
RUEHZP/AMEMBASSY PANAMA 2825

UNCLAS BOGOTA 000001

C O R R E C T E D C O P Y DTG CHANGE TO 010001Z JAN 09

SIPDIS
OES/STC FOR KDELAK; WHA/EPSC FOR FCOLON

E.O. 12958: N/A
TAGS: ECON ETRD KCIS PGOV EINV CO
SUBJECT: MEDELLIN DREAMS OF SILICON VALLEY

1. SUMMARY. The Department of Antioquia, through its
industrial hub Medellin, aspires to become the leading
science and technology (S&T) development area of Colombia.
The Medellin Mayor's Office has identified S&T as one of its
four growth sectors and a priority for channeling public and
private investment. As initial steps, the Department plans
to increase the budget of its S&T planning institution and
build a technological park. However, local and international
experts acknowledge turning Medellin into "Colombia's Silicon
Valley" remains difficult without significant investment from
foreign technology firms or increased central government
funding. END SUMMARY.
S&T as Priority Sector
----------------------

2. As part of its economic planning process, the Department
of Antioquia and the city of Medellin have identified S&T
development as one of four competitiveness/growth sectors for
investment along with infrastructure, human resources, and
commerce. According to Carlos Cano of ProAntioquia
(Antioquia's privately-funded promotion entity), Mayor Alonso
Salazar aims to transform Medellin into a city known for
scientific innovation rather than only manufacturing and
commerce. The Science and Technology Center of Antioquia
(CTA) -- a public-private partnership founded by the
municipal government in 1989 -- stands at the center of this
effort with responsibility for the development and
implementation of a regional S&T strategy. As evidence of
the Mayor,s commitment to promote S&T, Cano said the
municipal government will increase its funding of the CTA in
2009, but noted that the exact figure is still to be
determined.

Science & Technology Center Leads The Way
-----------------------------------------

3. The Director of the CTA, Santiago Echeverri, said that
CTA's role is to assist both the public and private sector to
implement S&T projects and plans. While the CTA has a
think-tank component, he said its primary role is to develop
and coordinate actual S&T projects within the Department of
Antioquia, such as promoting e-government and technologically
advanced water filtration and aqueduct systems. CTA projects
also focus on private sector innovation and competitiveness,
by introducing S&T best practices, and on S&T education
within primary and high schools. Echeverri emphasized that
no other department has an equivalent organization, which he
believes uniquely positions Antioquia to become Colombia's
primary S&T center.

Build Technology Park and FDI Will Come
---------------------------------------

4. Both Cano and Echeverri highlighted the developing
technological park in Medellin as the Department's main S&T
project. The Medellin Mayor's Office has purchased the
necessary land and designated USD 12 million for the
construction of two buildings to serve as a technological
center. The center will focus on promoting S&T development
in the health, energy and software sectors. Cano said the
Medellin Mayor's Office is reaching out to the private sector
and the national government for the additional funding needed
to complete construction. With such support, the municipal
government hopes to begin operations in mid-2010. The park
will offer incentives, such as reduced rent, lower taxes and
increased bandwidth speed, to attract a large foreign
tech-based company such as Unisys, Microsoft or Cisco.
Echeverri and the CTA will lead an Antioquia S&T delegation
to Silicon Valley during the first half of 2009, to make
contacts with potential U.S. investors, learn U.S. best
practices, and lay the groundwork for broadening the S&T
horizon of Medellin.

5. Despite the high hopes placed on the park as a catalyst
for S&T development, S&T development expert and USG-sponsored
speaker Brian Cabrera cautioned Medellin leaders about the
prioritization put on the park during his visit to Medellin
in September 2008. Cabrera noted that historically
government-created S&T centers rarely produced sustainable
clusters of technological advancement such as Silicon Valley.
In addition to physical structures, other factors including
thriving research centers, university-private sector
partnerships, and venture capital were also needed. Rather
than focusing on construction and building specifics, Cabrera
encouraged local leaders to clearly identify Medellin's
comparative advantage, establish a long-term business plan
outlining which products and customers to target, and then
seek out leading international S&T companies to invest in the
region. He also suggested that Medellin collaborate, rather
than compete, with Colombia's other nascent technology
centers--Bogota and Cali--to identify partnerships and
coordinate on development plans. Integrated into a broader
S&T strategy, Cabrera said the three regions stand a greater
chance of attracting international technology investment.

More National Funding Needed
----------------------------

6. According to Cano, S&T development in Colombia also
remains constrained by the current reliance on municipal
government support with only minimal help from national
institutions. Colombia's National Science and Technology
Development Institute (Colciencias) does provide
supplementary funding to municipal projects already underway,
but is focused primarily on supporting individual research
and has no consistent funding for broader initiatives.
Echeverri likewise complained that national support is
available only if an organization has already developed and
invested in a specific project. The lack of national
government funding is compounded by limited S&T investment
from Colombia's private sector and the nascent state of
venture capital in Colombian markets. In his meetings,
Cabrera underscored that venture capital is especially
important in Medellin's case, given that the majority of the
city's S&T funding is allocated to the tech park.

COMMENT: Noble Goals, But Attainable?
-------------------------------------

7. While Colciencias has identified the Department of
Antioquia as one of Colombia,s three leading S&T regions (in
addition to Cali and Bogota) based on Medellin containing
some of the country's finest science and engineering
universities and the existence of the CTA, Medellin faces
significant obstacles to fulfilling its goal of becoming
"Colombia's Silicon Valley". Attracting FDI and national
government support will be key to building on Medellin,s
impressive human capital and turning its S&T vision into
reality. The global economic slump will undoubtedly
complicate efforts to attract FDI in the near-term, but
passage of a new S&T law in early December 2008 elevating
Colciencias to quasi-ministerial status and increasing its
research budget (septel) offers at least some hope for
national government help in developing Medellin as a 21st
century S&T center.
BROWNFIELD

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