Colombia - Cartagena Industrial Export Processing Zone Project

Document of FILE CuPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2342-CO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ZONA FRANCA INDUSTRIAL Y COMERCIAL DE CARTAGENA WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT May 31, 1978 This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Average Calendar 1977 March 31, 1978 Currency Unit = Peso - Col $ Col $ US$1 = Col$36.985 38.42 Col$1 = US$0.027 0.002603 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS BOR - Banco de la Republica CFP - Corporacion Financiera Popular DFC - Development Finance Company EPMC - Empresas Publicas Municipales de Cartagena EPZ - Export Processing Zone ICB - International Competitive Bidding IDA - International Development Agency IDB - Inter-American Development Bank IERR - Internal Economic Rate of Return INSFOPAL - Instituto Nacional de Fomento Municipal PROEXPO - Export Promotion Fund SENA - Servicio National de Aprendizaje ZFIC - Zona Franca Industrial y Comercial de Cartagena FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY Page 1 of 2 COLOMBIA CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT LOAN AND PROJECT SUMMARY Borrower: Zona Franca Industrial y Comercial de Cartagena (ZFIC). Guarantor: The Republic of Colombia. Amount: US$15 million equivalent. Terms: Repayment in 17 years including 4 years of grace and interest of 7.5% per annum. Project Description: The project seeks to increase and diversify exports as well as foster employment in one of the poorest regions of Colombia. The project consists of: (a) the development of 38 ha of land, construction of buildings and auxiliary infrastructure for industry; (b) construction of a power distribution line to the project site; (c) technical assistance for international promo- tion; (d) rehabilitation and widening of a road from the project site to the port connecting highway; (e) construction of a water trans- mission main from an existing treatment plant; and (f) construction and equipping of a small training center. Achievement of project benefits is dependent upon adequate demand by industries for space in the proposed export processing zone (EPZ). Cartagena's comparative advantages should ensure that even with reduced international demand for space in EPZs, a substantial portion of project benefits would be achieved. This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page 2 of 2 Estimated Cost: Local Foreign Total --US$ Million Equivalent--- Export Processing Zone 9.5 7.2 16.7 Technical Assistance 0.1 0.2 0.3 Road and Water Supply 2.2 1.8 4.0 Vocational Training 0.1 0.2 0.3 Physical Contingencies 1.2 0.9 2.1 Price Contingencies 3.2 2.6 5.8 Total Project Cost 16.3 12.9 29.2 Interest during Construction - 2.1 2.1 Total Financing Required 16.3 15.0 31.3 Financing Plan: Local Foreign Total (US$ Million Equivalent) Government 4.2 - 4.2 Internal Cash Generation of the Free Zone Authority (ZFIC) 7.2 - 7.2 Contribution of the Vocational Training Service (SENA) 0.1 - 0.1 Contribution of the Municipal Public Utility Company (EPMC) 0.1 - 0.1 Bank - 15.0 15.0 Domestic Borrowing 4.7 - 4.7 Total Project Cost 16.3 15.0 31.3 Estimated Disbursements: FY79 FY80 FY81 FY82 FY83 ------- (US$ Million Equivalent) ------- Annual 5.3 4.7 2.3 1.7 1.0 Cumulative 5.3 10.0 12.3 14.0 15.0 Economic Rate of Return: 36% Appraisal Report: No. 1973a-CO, dated May 24, 1978.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO ZONA FRANCA INDUSTRIAL Y COMERCIAL DE CARTAGENA (ZFIC) WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT 1. I submit the following report and recommendation on a proposed loan to the Zona Franca Industrial y Comercial de Cartagena (ZFIC) with the guarantee of the Republic of Colombia for the equivalent of US$15 million to help finance an export processing zone project. The loan would have a term of 17 years, including 4 years of grace, with interest at 7.5% per annum. PART I: THE ECONOMY 1/ 2. The latest economic report on Colombia (1548-CO) was distributed to the Executive Directors in May 1977. It assesses current developments and provides a medium-term perspective of the Colombian economy. An updating report is being prepared and is scheduled for distribution to the Executive Directors in August 1978. Country data sheets are provided in Annex 1. Background 3. During the past two decades substantial structural transformation has taken place in the Colombian economy. The country has made impressive progress in the transition from a predominantly rural and agricultural economy made up of largely self-contained regions to a more integrated urban industrial economy oriented increasingly toward international trade. This broadening of the country's productive base has been accompanied by rapid growth of nontraditional exports and development of a modern sector which relies to a considerable etxtent on imported inputs. From 1967 to 1974 GDP rose by an average of 6.5% per annum in real terms, well above the historical average of less than 5% (1950-67). Accelerated economic growth coupled with a decline in population growth brought about a rapid increase in per capita incomes. Increased investment and relaxation of the foreign exchange con- straint were the major factors responsible for this acceleration in growth. Merchandise exports expanded more than four-fold during this period, and, most significantly, nontraditional exports became an increasingly important source of foreign exchange earnings, in large part compensating the slow growth of receipts from coffee exports. Much of this increase in non- traditional exports was the result of both product and market diversifica- tion attributable to the Government's export promotion program. Substantial medium- and long-term capital inflows to the public and private sectors for 1/ Substantially unchanged from President's Report, San Carlos I Hydro Power Project (Report No. P-2239-CO).  development projects helped sustain investment levels and enabled Colombia to maintain the favorable structure of its external debt. However, despite the substantial progress made during the past two decades, Colombia still has a long way to go on the road toward modernization; it still is essentially an underdeveloped country with a limited modern sector superimposed on a broad, traditional and poor base. 4. When the present Government took office in August 1974, the country was faced with a generally deteriorating economic situation--weakening balance of payments, loss of self-sufficiency in petroleum production, accelerating inflation, deterioration of the public finances, and reduced public invest- ment. GDP growth showed signs of slowing and unemployment was increasing, especially in the urban areas, reaching a peak of 13% in 1974. As a con- sequence, the new administration moved rapidly to introduce an economic stabilization program along with a set of reforms aimed at restoring the basis for long-term economic growth. In line with these goals, it initiated basic reforms of the fiscal, monetary and price systems. 5. To help strengthen the public finances, the new Government undertook a comprehensive tax reform designed to achieve a substantial improvement in the progressivity and elasticity of the tax system. Steps were also taken to correct major distortions which existed in the price system. Price controls on a number of important agricultural products were removed, thereby providing greater stimulus for increasing farm production. Far-reaching modifications in petroleum pricing policy aimed at regaining self-sufficiency in production of crude petroleum by improving incentives for exploration and exploitation were introduced. Concurrently, measures were taken to reduce the subsidy on local consumption of petroleum products, with the dollar equivalent price of gasoline being raised in successive steps by 150% between August 1975 to January 1977. 6. Economic growth slowed in 1975 and 1976, with real GDP increasing by less than 5% in both years. This was the result of the stabilization measures adopted at the end of 1974, the effects of the world recession, reduced private investment, and, in 1976, a poor harvest stemming from adverse weather conditions. The stabilization program succeeded in reducing inflation from 27% in 1974 to 18% in 1975, but the expansionary impact of rising inter- national reserves caused by higher coffee prices and shortages of basic food items produced an acceleration of inflation to 26% in 1976. Private invest- ment declined in real terms during this period as a consequence of attempts to stabilize the economy through tighter fiscal and monetary measures. Public sector revenues and savings were strengthened as a result of the tax reform and of increased revenue from coffee export taxes. The balance of payments improved substantially in 1976, mainly as a result of an increasing trade surplus caused by higher world coffee prices. Consequently Colombia's net international reserves rose by nearly threefold, from US$437 million in 1974 to US$1,166 million in 1976. Recent Economic Performance 7. Growth and employment picked up significantly in 1977, largely is a result of increased internal demand generated by the income effects of  exceptionally high export receipts from coffee. GDP is estimated to have increased by 5.4%. This higher level of growth was distributed evenly over all sectors of the economy except non-coffee agriculture which was affected by the continuation of the severe drought which began in the second half of 1976. High world coffee prices during 1977 produced a record trade surplus and the balance of payments registered an overall surplus for the year of US$686 million. By year end, Colombia's net international reserves stood at US$1,852 million, equivalent to seven months' imports, the highest level in the country's history. Increased export receipts from coffee contributed to a further strengthening of public finances over that which had occurred in 1975-76. Increased receipts from taxes on coffee exports caused a substantial increase in the current surplus of the Central Government, more than off- setting unexpected slower growth in some of the country's other major taxes. 8. Expansion of coffee earnings combined with the shortages of basic food items led to an unprecedented acceleration of inflation during the first half of 1977. For the twelve month period ending in June 1977 infla- tion reached 45%. In an attempt to reduce inflationary pressure the Govern- ment introduced a number of fiscal and monetary measures aimed at curbing growth of coffee producers' disposable income, at further strengthening public finances and at slowing the growth of the monetary aggregates. Legal reserve requirements were increased, limits were placed on external borrowing, and Central Bank rediscounts were reduced. The coffee retention tax rate was doubled from 23% to 46%, and the system of delayed payments to coffee pro- ducers was used to further limit growth of coffee producers' disposable in- come. In order to increase aggregate supply and stem the rapid accumulation of foreign exchange reserves, import duties were reduced and the import licensing system was liberaLlized. In an effort to curb upward pressure on prices, the authorities temkporarily discontinued their policy of periodic adjustments in the foreign exchange rate and in prices of petroleum products. The last two measures were only a temporary expedient to break the infla- tionary spiral. From July 1977, the Government has resumed periodic ex- change rate adjustments and in January 1978 increased the price of gasoline by 20%. The Government intends to continue to pursue policies that maintain Colombia's international competitiveness and that help regain petroleum self-sufficiency. 9. Another conflict between short-term and long-term objectives exists in the Government's interest rate policies. To avoid cost push effects, nominal interest rates were frozen during the period of accelerating inflation and real interest rates declined rapidly and became sharply negative. As a consequence there was a growing unwillingness on the part of the public to hold medium- and long-term financial assets, and investment funds had to be increasingly allocated by cumbersome administrative controls. The problem has become less serious as inflation has abated, but will require further attention by the Government. 10. The stabilization measures taken earlier in the year, the gradual decline of world coffee prices from June 1977 on, and the availability of more ample agricultural supplieis on the domestic market resulting from both improved  weather and increased imports, produced a dramatic slowdown in inflation in the second half of 1977. For the full year 1977, inflation was reduced to 29%. The Government's contractionary fiscal and monetary policies are contributing to further declines in the rate of inflation (through end- April 1978 the annual rate of inflation has declined to 16.5%). Lower inter- national coffee prices and rapid increases in imports are expected to lessen inflationary pressures from the external sector. Prospects for this year's agricultural output appear good; it is expected that in the coming months the rate of inflation will continue to slow down. Development Strategy and Prospects 11. The Government's development strategy, embodied in the 1975-78 development plan, aims at creating the conditions necessary for substantially increasing employment opportunities, particularly for the poorest segments of the population. It provides incentives for private sector investment in the least developed areas of the country and for the use of more labor intensive production techniques. Public sector investment specified in the Plan concen- trates on expanding and improving infrastructure and on socially oriented projects designed to alleviate rural and urban poverty. This includes compre- hensive integrated rural development and nutrition programs which directly benefit the lowest income groups of the population. Because of the importance of commercial agriculture in generating employment and expanding exports, Colombia's development plan assigns a high priority to providing farmers with credit and technical services required to increase output. In order to alleviate urban poverty, the Plan places emphasis on reducing migration to the cities by increasing employment in agriculture and through provision of improved services in slums of Colombia's major cities. These efforts are being complemented by policies and programs to encourage the development of small- and medium-scale enterprises and to decentralize industry away from the three largest cities. Special priority is given to the development of domestic energy sources to reduce the country's growing dependence on imported oil. 12. In the past three years substantial progress has been made in carrying out this strategy despite the economic dislocations occasioned by the world recession and the need to concentrate on short-term economic management. Most of the Government's development efforts during this period have focussed on improving the standard of living of the poorest 50% of the population, with a substantial share of the benefits of public sector expenditures accruing to this segment of the population. Provision of improved social services has been a major objective of the current administration. This is reflected in the increase in expenditures on education, health, water and sewerage, which rose from 33% of total expenditures in 1974 to 37% in 1976. Preliminary estimates show an even higher share spent on such programs in 1977. 13. Projections of Colombia's energy balance indicate an expanding deficit which could reach significant proportions by the early 1980s. To avoid the constraint on growth that shortages of energy would entail, the Government is giving high priority to the development of alternative energy  sources. Major projects are being developed to expand hydroelectric power generation and incentives are being provided private companies for accele- rated exploration and exploitation of the country's hydrocarbon potential. Coal and natural gas are expected to provide an increasing contribution to the country's energy needs in the future. An energy development program, which would neacly triple power generation by 1986, has been drawn up by the Government, with estimated investment requirements of between US$6.0 and US$8.0 billion in constant 1976 prices. Given the long gestation periods of power projects, their execution must be initiated without delay if energy constraints on future growth are to be avoided. 14. The Government is making a major effort to accelerate growth of the agricultural and industrial sectors. In the past, Colombia has been largely self-sufficient in basic foodstuffs. However, an increasing food deficit is projected for the years ahead in the absence of major advances in food pro- duction. The Government is attempting to meet these needs through integrated rural development programs directed towards small farmers, through expanded farm credit, research, extension and marketing facilities and through improved farm management practices, including farm investment planning. Industry has been singled out as the leading growth sector for the future and the Government has adopted exchange rate, fiscal incentive, credit allocation, and locational policies intended to assure that the sector fulfills its role as a major con- tributor to employment growth and exports. 15. Based on its strong resource base and its high level of international reserves, Colombia should be able to sustain annual real growth of no less than 6% over the period 1978-82. Private sector investment is expected to recover as inflation subsides and fiscal and monetary policies are eased. Public sector investment is expected to increase as restraints on such spending are lifted and major energy projects enter the execution stage. Non-inflationary increases in public sector investment spending depends to a large degree on continuing Government efforts to maintain high levels of public sector savings. In this regard, timely and adequate adjustments of tariffs on public services is especially important, and the Government has already gone a long way in the adoption of such policies. 16. Less buoyant terms of trade as world coffee prices decline from the high 1977 level and rapidly increasing imports to meet the requirements of expanding investment are expected to lead to a renewed widening of the resource balance beginning in 1978. Assuming that economic growth accele- rates in the industrialized countries and that appropriate incentives-- particularly continuation of periodic exchange rate adjustments--are provided, nontraditional exports should resume the high rate of growth achieved in the early 1970s. Colombia is projected to require gross capital inflows of about US$3.7 billion during the five year period 1978-82, of which US$340 million should be disbursed from commitments made through the end of 1976. This inflow would enable Colombia to maintain an adequate level of foreign exchange reserves during ithe period. A significant increase in capital requirements is expected in the early 1980s when major additional projects in the energy sector will have to be initiated. To achieve these targets, annual gross capital inflow will have to increase from US$600 million in  1976 to over US$1.0 billion in 1982. While about half of Colombia's capital inflow is expected to be provided by official multilateral and bilateral sources, financing from commercial sources is expected to become increasingly important during the period as Colombia gains greater access to international capital markets. 17. Colombia's public external debt repayable in foreign currency amounted to US$3.3 billion at the end of 1976, or about US$2.4 billion exclud- ing undisbursed commitments. The Bank/IDA share of this external debt was 28.5% and is expected to decline to about 25% by 1982. Although the public debt service ratio fell during the past two years as export growth accelerated, this ratio is projected to increase from 9.5% in 1976 to about 11% by 1982. Balance of payments prospects beyond 1980 will depend among other factors on the timely development of domestic energy sources and on progress made in executing several natural resource-based export oriented projects currently under preparation. As a developing country, it is normal to expect Colombia to be a net capital importer, i.e. to have a deficit in its balance of payments on current account. However, to avoid an excessive growth in this deficit over the next few years, careful management of internal demand will be required. Given such management, it should be possible to prevent the external sector from again becoming a constraint on economic growth, and to maintain Colombia's present creditworthiness for external borrowing of substantial amounts on conventional terms. PART II: BANK GROUP OPERATIONS IN COLOMBIA 18. The proposed loan, the 74th to be made to Colombia, would bring the total amount of Bank loans to Colombia to US$1,778.2 million (net of cancella- tions). Of this amount, US$1,165.5 million is now held by the Bank; IDA made one credit of US$19.5 million for highways in Colombia in 1961. Disbursements have been completed on 46 loans and the IDA credit. IFC has made effective investments and underwriting commitments of US$53.7 million in 24 enterprises and now holds US$19.0 million. Annex II contains a summary statement of Bank loans, the IDA credit, and IFC investments as of March 31, 1978. The Annex also contains summaries on the execution of the 23 on-going projects. 19. Since FY68, Bank lending in Colombia has become more diversified and has been concentrated on production-oriented programs and activities which carry social as well as economic benefits. Eight of the eleven agricultural loans have been made since then, seven of the ten loans for industry, all three loans in the education sector, all seven loans for water supply and sewerage and, most recently, one nutrition and one urban project. This compares with only nine loans since FY68 in the power and transport sectors. 20. Bank lending to Colombia in FY77 consisted of loans for rural devel- opment, agricultural credit, telecommunications, highways and small-scale industry, totalling US$281 million equivalent. In addition to this proposed project, the FY78 program includes the recently approved loans for nutrition  improvement, water supply and sewerage, urban development, power generation and transmission, and a proposed industrial finance project. Work is also under way in further urban development, water supply and sewerage, transportation, mining, power, small farm development and agricultural credit for land reform benefi- ciaries for possible consideration by the Executive Directors during the next two years. 21. The proposed Bank lending conforms closely with the Government's development strategy. To help Colombia develop domestic sources of energy, a substantial part of the proposed lending would be for hydropower. The Bank would also attempt to assist in the development of coal mines, which hold poten- tial in helping Colombia meet part of its energy requirements. Bank involvement in the energy sector would help mobilize additional external financing as some of the projects would require cofinancing. Other future loans would finance agriculture and industry to assist the Government in its efforts to raise overall productivity, income and employment and to strengthen and diversify exports. Closely related to these objectives would be the proposed Bank lending for transport infrastructure which aims to integrate more backward areas of the country into the modern economy. In this context, work is under- way on a project to improve domestic airports. Finally, a relatively large number of loans in support of the Government's efforts to help the lowest 50% of the Colombian populationi is under preparation. Recently approved urban development and water supply and sewerage projects as well as future urban, water supply and agriculture projects under preparation, are principally designed to improve the poor's standard of living. 22. The operations of external lenders in Colombia are shown in Annex I. While IBRD, IDB, and AID provided about 75% of total external financing to Colombia in the 1961-72 period, their share has decreased since then to approximately 40%. Like the Bank, IDB and AID have given increased emphasis to social projects. For inistance, the IDB has assisted projects in low cost housing, urban and rural development, agrarian reform, university education, water supply, and land erosion; in the future IDB proposes to assist Colombia in its plans to develop sources of domestic energy and to expand the activity of the productive sectors to help generate increased employment. AID has supported programs in education, urban development and small farm development. More recently, it has moved to small project loans aimed chiefly at improving the distribution of income. It is expected to phase out its aid program in Colombia in 1979 with the commitment of a US$6 million nutrition loan. PART III: INDUSTRY, MANUFACTURED EXPORTS AND THE CARTAGENA REGION Industrial Performance 23. In the last 30 years, manufacturing industry has been the leading growth sector of the economy. During that period the sector's output has expanded by an annual rate of over 7% and its share of GDP has risen from 11.5% to over 21%. Colombian manufacturing industries now supply more than 80% of the domestic requirements and contribute approximately 25% of total exports. The largest manufacturing subsectors are food, beverages, textiles, chemicals and mechanical machinery, which together account for more than 50%  of the total value added in the sector. Employment in industry has grown correspondingly, reaching 18% of the approximately 6.5 million people employed by the mid-1970s. 24. Prior to 1967, Government policies encouraged import substitution. Extensive protection was given to industry and while these policies succeeded in expanding industry and reducing imports, they led to a good deal of ineffi- ciency as well. By the 1960s, the opportunities for import substitution had become limited and growth in industrial output slowed down from 8% annually between 1945 and 1960 to 5.5% annually during 1960-67. Nevertheless, by 1967 as a result of these policies, Colombia had achieved a significant level of import independence, with 98% of consumer goods, 68% of intermediate goods and 51% of capital goods produced domestically. Manufactured exports, however, were insignificant (about 2% of manufacturing output and 6% of merchandise exports). 25. In 1967, the Government reduced incentives for import substitution and adopted policies aimed at promoting manufactured exports. Consequently, manufacturing exports grew by nearly 50% annually (in current US dollars) and amounted to 7% of industrial output in 1974. Whereas manufacturing accounted for less than 8% of merchandise exports through 1967, it has ranged between 21 and 27% of exports from 1974 to 1977. Export led growth has helped re- activate manufacturing activity which grew by more than 8% annually between 1967 and 1974 and by more than 6% in 1976 and 1977 after the 1975 worldwide recession. Export Policies 26. The 1967 changes in economic policies were designed to promote non- traditional exports and thereby reduce the dominance of coffee whose price was the main exogenous variable in Colombia's economic activity. They included the introduction of a regular system of exchange rate adjustments, a reduction and increased uniformity of tariff levels and tax credits and reduced import restric- tions for exporters. Along with these measures, the Government set up the Export Promotion Fund (PROEXPO) to provide increased and concessionary financing with technical assistance to export industries and to promote Colombian exports in foreign markets. PROEXPO also finances short-term credit in local currency for exporters at preferential rates of interest (10% per annum compared to 27% for commercial credit); as of the end of 1976, about US$170 million were outstanding, of which 70% had gone to manufacturing firms. PROEXPO has been successful in promoting Colombian exports in Europe and North and Scuth America; it advises Colombian exporters on marketing strategy, transportation, packaging and storage. Industrial Location 27. While industrial activity in Colombia is more decentralized than in any other Latin American country, Colombian industry is concentrated in the four largest cities, Bogota, Medellin, Cali and Barranquilla, which account for nearly 70% of industrial production. The rapid growth of these cities has created problems of congestion and pollution and has severely strained the capacity of urban infrastructure. A Government policy paper estimates that the cost of providing the same public services to new migrants  in the largest cities could be 20 to 30% greater than in the secondary cities, and therefore, recommends stimulating urban growth in secondary cities. Since 1975, the Government has restricted foreign private investment in Bogota, Medellin and Cali and is encouraging industrial investment in other areas of the country by the following measures: (a) provision of increased credit on more favorable terms to industries outside the major cities; (b) allocation of an increasing proportion of infrastructure investment for the smaller cities; (c) increased manpower training and technical assistance; and (d) where appro- priate, establishment and promotion of industrial parks and free zones. Industrial Export Processing Zones 28. In order to stimulate export growth, attract foreign capital, target industrial growth to specific areas and stimulate employment, the Government has authorized the establishment of six industrial and commercial free trade zones 1/. Thus far, most have concentrated on commercial activities including storage and transport of goods. Only the Barranquilla Zone has attempted to develop industry in any substantial way, with 26 manufacturing enterprises having located there since 1972. The zone, however, has not attracted signif- icant foreign investment as a result of inadequate promotion, poor management and inefficient transport infrastructure. With the initiation of its indus- trial decentralization policy, the Government has given greater importance to export processing zones (EPZs) 2/. Cartagena, with its existing fairly developed infrastructure, high unemployment and attractive location, was selected as the city where an EPZ would have a high probability of success and where a stimulus was requiLred to increase employment and industrial development. Cartagena 29. With a population of 400,000, Cartagena is Colombia's fifth largest city and a major port. In addition to the commercial activities resulting from the port, Cartagena has developed a sizeable tourism industry and is Colombia's largest petrochemicals center. While in 1975 Cartagena accounted for 4.4% of the value added by industry in Colombia, less than 2% of indus- trial employment was located there as a result of the capital intensive nature of its industry. Petrochemicals dominate the area's industry with more than 50% of value added. Other local manufacturing includes liquor, glass, netting, soap, and sacks for coffee. Between 1960 and 1974 Cartagena industrial value added grew by 9.6% annualLy in real terms led by petrochemicals. 30. Cartagena's population has grown at an annual 5.6% for the past two decades as a result of high levels of migration from the surrounding regions. 1/ Free zones are geographic areas within which tariffs and other import restrictions would not apply. 2/ EPZs are industrial parks set up within free zones. Imports to and exports from an EPZ do not pass through customs. However, goods produced in an EPZ and sold in Colombia are subject to import duties, except on the local value added.  - 10 - The department of Bolivar of which Cartagena is the capital is one of the poorest in Colombia, with an estimated unemployment rate of 24% (excluding Cartagena whose rate is 19%) compared to a national average of 14%, and with 60% of its communities among the 30% of rural communities in Colombia with lowest incomes and public services. Although tourism has created an estimated 12,000 jobs since the mid-1960s and direct manufacturing employment rose an estimated 5.6% or an average of 400 new jobs annually between 1969 and 1975, job creation has not been adequate. 31. Furthermore, Cartagena has one of the lowest coverage rates for public utility services of medium and large cities in Colombia. As of 1973, approximately 52% of households had water supply connection (compared to over 70% for all medium and large cities) and only 22% had sewerage connection. As of December, 1975, there were a total of 12,500 telephone lines (4.3 lines per 100 persons) with demand for new lines roughly 1-1/2 times that amount. Bank financed projects in telecommunications (Loan 1450-CO) and water supply (Loan 1072-CO) are, inter alia, strengthening Cartagena's municipal institu- tions, would more than double the number of telephone lines in the area and would meet the city's water supply needs through 1982. The proposed Third Multi-City Water Supply and Cartagena Southeast Zone Urban projects, would also expand water supply and sewerage services in Cartagena. The public entity which owns and operates the EPZ in Cartagena, the Zona Franca Industrial y Comercial de Cartagena (ZFIC), also maintains a small department concerned with community welfare and plans to play a guiding role in the programs to upgrade adjacent settlements. 32. An EPZ in Cartagena would combine a number of advantages of the Colombian economy with the city's existing potential to attract industry. Besides its location on the Caribbean close to Panama, Cartagena has easy access to major agricultural and industrial areas of Colombia, and thereby to potential raw materials and intermediate goods. At the same time, Colombia has the advantage of a sophisticated economy with fairly well-developed infrastructure and yet moderate wage levels, easily competitive with most Caribbean and Central American countries. Cartagena has a pleasant ambience, good port and international airport, extensive commercial and travel services, and is well served by river and highway transport systems. Also sizeable domestic and Venezuelan markets would provide alternative outlets to export- oriented industries located in the zone if changes in world market demand were to create a short-term need to sell in the region. Hence, a well managed and designed EPZ in Cartagena should be in a favorable position to attract export-oriented enterprises. Bank Role in the Industrial Sector 33. The first Bank industrial loan to Colombia in 1963 financed Colombia's largest steel plant, Paz del Rio (Loan 345-CO). In subsequent years, Bank assistance to the industrial sector was premised on a strategy of developing local institutions which could effectively select, appraise and finance large numbers of investments with high returns to the economy. Since 1966, six Development Finance Company (DFC) loans (totalling US$242.5 million  - 11 - equivalent) have assisted in building up seven DFC's and in strengthening the Banco de la Republica (IIOR) to supervise their activities. These loans financed some 500 subprojects, the great majority of which provided high returns to the Colombian economy, particularly in terms of increased employ- ment and exports. A seventh DFC project, to be presented to the Executive Directors within the next few weeks would further support the seven DFCs, incorporate new ones, provide required long-term credit resources for indus- trial growth, and promote the mobilization of domestic and foreign financial resources. 34. The Bank is following a complementary strategy in small-scale industry. Two loans totalling US$20.5 million have been channelled to Corporacion Financiera Popu:Lar (CFP), which specializes in providing financial and technical assistance to small firms. The first loan of US$5.5 million benefitted 300 small-scale enterprises two-thirds of which had total assets of less than US$85,000. CFP is also expected to assist smaller enterprises and artisan firms under the recently approved first Urban Development Project (Loan 1681-CO) and under a proposed Cartagena Southeast Zone Urban Project. Additionally, the Second Agricultural Credit Loan (Loan 1357-CO), which is supporting the development of agro-industries generally, is also expected to help increase value added and employment in small scale agro-industries as well as in the rural sector. PART IV: THE PROJECT Background and Objectives 35. The project was prepared by the Zona Franca Industrial y Comercial de Gartagena (ZFIC), proposed for Bank financing in 1977 and appraised in January of 1978. His Excellency Virgilio Barco Vargas, Ambassador of Colombia to the United States, led the Colombian delegation in negotiatons which were held in Washington in May, 1978. A report entitled "Colombia: Appraisal of the Cartagena Industrial Export Processing Zone Project" (Report No. 1973a-CO dated May 24, 1978) is beirtg circulated separately to the Executive Directors. The main features of the proposed loan and project are summarized in the Loan and Project Summary and in Annex III of this report. 36. The proposed project would support the Government's efforts to reduce industrial concentration, to generate employment and to expand and diversify non-traditional exports. It would promote industrial growth and thereby employment in a region outside of the four major industrial centers with one of the highest raltes of unemployment in Colombia. Through increased foreign exchange savings, ithe project would help to reduce the country's foreign exchange dependence on coffee. The project would also complement other Bank financed efforts to increase public services and to meet the basic necessities of the urban poor in the EPZ's area of influence.  - 12 - Project Description 37. The project would develop 38 ha of swamp and undeveloped land into on area suitable for the necessary buildings and services for an estimated 30 export-oriented industries employing about 6,000 workers. It would comprise the first 5-year stage of a 92 ha EPZ to be built over a 12-year period. This stage was designed to be self-contained and to provide a sufficient rate of return even if further expansion of the zone does not take place. The project consists of the followings components: I. Export Processing Zone EPZ - (a) civil works for land improvement, building construction and infrastructure in the zone, including water, power, sewerage, telecommunication networks, and roads; (b) construction of a power distribution line from an existing substation to the EPZ; and (c) technical assistance for international promotion of the EPZ. II. Supporting Infrastructure - (a) rehabilitation and widening of the highway from the project site to the national trunk road, and (b) construction of a water transmission main from an existing municipal treatment plant to the EPZ. III. Vocational Training - construction and equipping of a small training center for the EPZ. The Borrower, ZFIC 38. ZFIC was created in 1973 as a public establishment attached to the Ministry of Economic Development. ZFIC owns the Cartagena commercial free zone, located near the port of Cartagena, and would own the proposed export processing zone (EPZ). The Minister appoints the Chairman of the Board of ZFIC, while local public and private institutions appoint four Board members each. The manager of ZFIC is appointed by the President of the Republic. ZFIC currently has a staff of 65, organized into five departments with a well-staffed technical department supervising the physical construction and an industrial department responsible for promoting the EPZ to investors, and managing the EPZ. To ensure efficient project execution ZFIC would designate a project engineer, project accountant and industrial promoter whose terms, conditions and qualifications are acceptable to the Bank (Section 7.01(d) of the Loan Agreement) and hire consultants to supervise construction. 39. ZFIC procedures and policies are set out in various resolutions and should be consolidated into a single document. A condition of effective- ness would be that ZFIC's Board approve a single comprehensive Statement of Policies acceptable to the Bank (Section 7.01(b) of the Loan Agreement). In order to maximize economic benefits, ZFIC would select industries based on the following criteria which would be incorporated in the ZFIC policy statement: the extent of employment generation; the use of Colombian raw materials; the location of markets (giving preference to industries making inroads in export markets new to Colombia); the kind of technology (with preference for tech- nology new to Colombia); and the likely tenure of firms in the zone.  - 13 - 40. ZFIC would also carry out the rehabilitation of the Pasacaballos- Ceballos road (see map). The Empresas Publicas Municipales de Cartagena (EPMC), under the supervision of the Instituto Nacional de Fomento Municipal (INSFOPAL), would be responsible for the water supply component, while the Servicio Nacional de Apredi.zaje (SENA) would manage the vocational training center. Specific responsibilities of each executing agency would be spelled out in subsidiary agreements, satisfactory to the Bank. The execution and delivery of agreements between ZFIC and (a) EPMC, and (b) the Municipality of Cartagena, would be condit:Lons of effectiveness (Section 7.01(a) of the Loan Agreement). Detailed Project Description 41. The EPZ is to be constructed on four adjacent islands of 27 ha to be interconnected by internal roadways and bridges and on 11 ha for a general services area including the vocational training center. About 55 industrial plots with standard factory shells of between 1,200 and 1,800 m2, including an uncovered patio area would be developed by 1983. The standard factory design permits flexibility so that most types of equipment and production lines and large or small firms can utilize it. The project also includes construction of internal roads and an internal water, telephone and electricity distribution system. In addition, four warehouses of 800 m2 to provide intermediate storage and auxiliary facilities would be constructed. ZFIC would also arrange for construction of a power transmission line designed to meet the demand at full occupancy from an existing power station to the EPZ. To ensure that the zone does not pollute the area, industries in the EPZ will be obliged to remove or neutralize all aggressive waste and excessive suspended matter. ZFIC's policy statement would provide for further water treatment in line with standards to be set by the Ministry of Health, and if required, an overall treatment plant to process waste would be built. 42. The project would provide about four man-years of technical assist- ance for the carrying out of an international promotion campaign. Effective promotion is critical to generating demand for space in the Cartagena EPZ, and requires specialized skill in advertising, use of different media and techniques and detailed knowledge of industrial subsectors in various countries. Based on preliminary studies, ZFIC has identified industries based on agricul- tural, textile, leather, wood and petrochemical inputs as the subsectors most likely to locate in the EPZ. ZFIC is carrying out further studies to identify specifically the variety of industries and firms at which it would target promotional campaigns. Already, PROEXPO has facilitated meetings between ZFIC personnel and industrialists in different countries, and would continue to provide assistance to ZFIC's promotion efforts. The UNDP has funded the training of ZFIC staff and consultants to help formulate promotional policies and develop general publicity material. Before the proposed loan would be declared effective, ZFIC would deliver a detailed promotion plan, which would be updated every six months and on each occasion satisfactory to the Bank, stipulating, inter alia, its specific program for promoting the EPZ and the role of consultants and of PROEXPO (Section 7.01(c) of the Loan Agreement).  - 14 - 43. ZFIC would rehabilitate the 14.6 km Pasacaballos-Ceballos road to a national standard of 7.3 m wide carriageway, 3 m wide shoulder on each side and a design speed of 80 km per hour. Detailed engineering designs are being prepared and would be reviewed by the Bank. The Government would finance the improvement and maintenance of the road linking the project financed road to the port and to the national highway network. A 12 km water transmission main from Cartagena's municipal water treatment plant to the project site would be constructed by the EPMC. The ongoing and proposed Bank Multi-City Water Supply projects would enable EPMC to meet the needs of the entire metropolitan area through at least 1988. To be certain that all of the EPZ's utility service requirements would be met, arrangements would be made, satisfactory to the Bank, that would ensure prompt and adequate supply of water, power, trans- port and telecommunications facilities by the respective municipal companies (Section 3.01(g) of the Loan Agreement). 44. SENA would develop a vocational training center to meet the specific manpower needs of the EPZ. The project would finance the construction, fur- nishing and equipping of a 60-place training center which would train primarily skilled electro-mechanics and welders and instrument and control systems maintenance workers and supervisors who would be needed regardless of the industries which locate in the EPZ. The center would also provide instructors and assistance for the in-factory training of the regular production work force. Project Costs and Financing 45. Total project costs are estimated at US$29.2 million with foreign exchange content of US$12.9 million or 44% of total costs. Cost estimates are based on prices in September, 1977 and include physical contingencies of 10% for all works except the road component where a 20% contingency was used because of difficult terrain. Price contingencies amount to 19% of base costs and are based on estimates of yearly domestic and international price increases. 46. The proposed Bank loan of US$15 million equivalent would finance the foreign exchange costs of the project as well as interest during construc- tion of up to US$2.1 million, which is required to ensure ZFIC's liquidity. ZFIC would contribute US$7.2 million equivalent or 23% of total financing requirements from internally generated funds in addition to a US$2.8 million credit to ZFIC provided by Fondo Financiero de Desarrollo Urbano. SENA would finance US$100,000 equivalent for the vocational training center and the EPMC would provide US$60,000 equivalent for the water transmission main. The Government of Colombia would finance US$4.2 million equivalent, including US$3.4 million in equity for ZFIC and US$0.8 million for the EPMC. About US$2 million of local financing would be arranged to cover the local costs of road construction. A breakdown of project costs and financing is presented in the Project and Loan Summary.  - 15 - Procurement and Disbursement 47. Contracts with an estimated cost above US$100,000 for equipment and US$1,000,000 for civil works would be subject to international competitive bidding (ICB) in accordance with Bank Guidelines. Given the number of competent contractors and suppliers iLn Colombia, all contracts are likely to be won by local bidders, including local representatives of foreign suppliers. Procure- ment below the ICB limit would take place according to local procedures satis- factory to the Bank. Civi:L works up to an aggregate cost of US$400,000 or about 2% of total works may be carried out by forced account. The Bank would review ex ante all tender documents above US$25,000 for equipment, and US$125,000 for civil works. The Bank would review ex ante awards for those contracts subject to ICB, and would review all contracts proposed for Bank financing prior to authorizing disbursements. 48. Disbursement would follow standard Bank procedures, with the Bank disbursing for 100% of documented foreign exchange costs or the estimated direct and indirect foreign exchange costs averaging 44% of project costs for civil works and equipment. As considerable time is required for the landfill to settle before beginning construction, and in order to avoid delaying overall project execution, the Loan would make available retroactive financing of up to the equivalent of US$500,000 for payments made after February 1, 1978 for EPZ land filling. The design and construction schedule for each building would also be approved by the Bank before ZFIC undertakes any capital expen- ditures for such building construction (Section 3.01(h) of the Loan Agreement). Financial Analysis and Cost Recovery 49. A detailed financial analysis has been performed for the EPZ portion of the project. Projected income statements show that ZFIC's net earnings on the EPZ will be positive by 1980 and rise to US$1.4 million by 1984. Revenues would commence in 1979 aVd would derive from rental of industrial space at US$1.50 to US$2.00 per m per month (estimated 1979 prices) from rental of 2 general service space (coummercial banks, post office, etc.) at US$4.00 per m per month, and from fees for storage in EPZ's warehouse. Rental rates were designed and would be adjtLsted to ensure a financial rate of return of 10% on the funds invested, and would be competitive with rates charged by other EPZs in the Caribbean area. The Government has provided assurances that, in order to avoid destructive price competition between Colombian EPZs, rental would be set at levels that would recover the full cost of their investments and would generate funds to cover a major portion of future investment costs (Section 3.05 of the Guarantee Agreement). The operating costs of the EPZ include maintenance, estimated at 2% per annum of investment costs, promotion expenditures, depreciation and the EPZ's shares of the ZFIC's central office staff and overhead costs. 50. To ensure adequate liquidity for the project, the interest on the Bank loan would be capitalized and ZFIC would secure a total of US$3.0 million  - 16 - of bridge financing in 1979 and 1980 (Section 5.10 of the Loan Agreement). Revenues generated by the commercial zone and the EPZ would be sufficient to ensure project liquidity after 1980 and, by 1982, continued cash generation of L.e EPZ would be sufficient to meet local costs. ZFIC has agreed to maintain a debt:equity ratio no greater than 65:35 to assure its financial soundness (Section 5.05 of Loan Agreement). Additionally, it would obtain Bank concurence before making any capital expenditure which is not a part of the project and which would result in an aggregate of such expenditures exceeding US$150,000 in any given year (Section 5.07 of the Loan Agreement). Also, beginning 1981, ZFIC would maintain a liquidity ratio of not less than 1.25 to 1 (Section 5.06 of the Loan Agreement). ZFIC has also provided assurances that its account would be audited by an independent audit firm acceptable to the Bank and in a form also acceptable to the Bank (Section 5.02(a) of the Loan Agreement). 51. The financial return for the EPZ investment over 25 years is esti- mated at 10.6% in real terms. This is satisfactory and is close to the 10% return on investment which has been established in this project as a guideline for pricing policy. Even using a pessimistic set of assumptions of a slippage of one year in rental revenues and capital cost increases of 10% on all items, the financial rate of return is 8.0%, which would still be accept- able in view of the economic benefits discussed below. In order to recuperate the total investment with no return, ZFIC needs to earn only 43% of the projected revenue stream from the EPZ over the 25-year assumed project life. 52. The investment costs of the reconstruction and rehabilitation of Pasacaballos-Ceballos road would be recovered from the industries and landowners along the road through a system of valorization taxes to be specified in the relevant subsidiary agreement, which must be acceptable to the Bank (Section 5.08 of the Loan Agreement). EPMC would recuperate an amount in excess of the costs of constructing the water transmission main, through water charges to the various industries in the area. Similarly, SENA's income from the 2% payroll tax on the EPZ industries would more than offset the initial investment costs in the training center. SENA's added revenue would then be used for other vocational training programs, while the rates charged by EPMC would cross subsidize low income water users less able to pay for such services. Benefits, Justification and Risks 53. The project is justified as an effort to diversify exports and increase foreign exchange flows to the country. By providing appropriate facilities in a favorable investment environment, the project expects to attract foreign investment that in the absence of the project would largely not have accrued to Colombia. Simultaneously, the project would provide a necessary boost to employment and the economy of a region and city with high rates of unemployment and poverty. 54. The project is expected to result in the net inflow to Colombia of an estimated annual US$50 million equivalent (in 1977 prices) in the form of rent, taxes, wages, and purchases in Colombia. Based on experience in other EPZs about 6,000 jobs would be created in the zone which would increase manufacturing employment in the Cartagena area by more than 50%.  - 17 - 55. The estimated internal rate of return (IERR) on the EPZ component, which is 81% of project costs, is 36%, and on the road component 37%. The weighted average IERR for the two components which account for 95% of project costs is estimated to be 36%. The cost of investment and operation of the EPZ is calculated at border prices and economic wages. Benefits considered in the IERR calculation include the direct return on EPZ investment as well as the tax payments by the firms to Colombia and the benefits of increased employment induced by the EPZ investment. The investment and returns of predominantly foreign firms in the EPZ were not included in the analysis since it is expected that a large portion of the investments would be incremental foreign capital with no opportunity cost. The return on the private firms' investments is expected to be adequate to justify their investments. Income tax revenues are computed conservatively by applying the 40% tax rate to only one-half of the projected profits which are based on existing profit rates for manufacturing firms in Colombia with foreign participation. Employment benefits calculated for the estimated 6,000 new jobs created in the zone are the expected wage bill less the opportunity cost conservatively assumed to be 75% of the estimated wage bill. Rental benefits are the revenues received by ZFIC, which are to be priced to yield a minimum 10% rate of return. 56. The IERR for the road component is estimated to be 37%, based on current traffic volumes for other users, a 35% volume increase resulting solely from EPZ use and vehicle operating costs as estimated by MOPT. The IERR corresponds closely to the rates calculated for similar works in Colombia. Although the IERR could not be calculated for the remaining 5% of project costs, the benefits of the vocatiLonal training expenditure on worker productivity and improved operational maintenance of production facilities clearly outweigh the relatively low cost of that component, while the water supply component, essential for the EPZ, would also benefit other industries in the area and would provide the financial basis to subsidize low income users in Cartagena. 57. Increased worldwide protectionism combined with a proliferation of EPZs on a world or region;al scale could cause an oversupply of EPZ facilities. With its comparative advantages mentioned above, however, the Cartagena EPZ should be able to compete effectively with other zones even if demand for space in EPZs is low. Under such circumstances though, ZFIC would relax some of its selection criteria for industries seeking entrance into the zone (see paragraph 39). In any case, the project would still achieve its intended objectives and maintain an acceptable return. PART V: LEGAL INSTRUMENTS AND AUTHORITY 58. The draft Loan Agreement between the Bank and ZFIC, the draft Guarantee Agreement between the Republic of Colombia and the Bank, and the report of the Committee provided for in Article III, Section 4(iii) of the Bank's Articles of Agreement are being distributed to the Executive Directors separately.  - 18 - 59. Special conditions of the loan and for effectiveness are listed in Section III of Annex III. Conditions of effectiveness would be that: (a) ZFIC's Board of Directors has approved a statement of operating policies and procedures and a detailed plan of action for carrying out a promotion campaign for attracting export oriented industries to the Zone, both satisfactory to the Bank (Section 7.01(b) and (c) of the Loan Agreement). (b) Subsidiary agreements satisfactory to the Bank between ZFIC and the Municipality of Cartagena and ZFIC and EPMC have been signed and delivered to the Bank (Section 7.01(a) of the Loan Agreement). (c) ZFIC has appointed a project engineer, accountant and industrial promoter, all of whom have qualifications, terms and conditions satisfactory to the Bank (Section 7.01(d) of the Loan Agreement). 60. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI: RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 31, 1978  ANNEX I Page 1 of 4 COLOM8IA - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KM2) ---------------------------__ ----- --------- --------------^ COLOMBIA REFERENCE COUNTRIES (1970) TOTAL 1138.9 MOST RECENT AGRIC. 224.8 1960 1970 ESTIMATE TURKEY BRAZIL MEXICdC* GNP PER CAPITA (USS) 210.0 350.0 640.0 500.0 550.0 690.0 POPULATION AND VITAL STATISTICS POPULATION (MID-YR, MILLION) 15.4 20.6 24.2 35.6 92.8 50.4 POPULATION DENSITY PER SQUARE KM. 14.0 18.0 21.0 46.0 11.0 26.0 PER SQ. KM. AGRICULTURAL LAND 11.0 93.0 108.0 65.0 49.0 52.0 VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) 416.1 44.3 40,6 40.6 36.4 43.9 CRUDE nEATH RATE (/THOU,AV) 14.7 11.0 8.8 14.4 9.9 10.2 INFANT MORTALITY RATE (/THOU) IW0.0/a 70.0 /a . 153.0/a 110.0 68.5 LIFE EXPECTANCY AT BIRTH (YRS) 54.7 - 58.5 60.9 .4 4- 59.4 62.4 GROSS REPRODUCTION RATE 3.2 3.2 3.1 2.6/b,c 2.6 3.1 POPULATION GROWtH RATE (%) TOTAL 2.9 2:/.9 2 :,8 2.5 2.9 3.5 URBAN 6.0 /b 5 5/ 4.9 4.9/d 5.0 4.8 URBAN POPULATION (% OF TOTAL) t3.0/C 60.3 70.0/a 36.7 56.0 58.7 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 46.6/C 46.6 44.1 41.7 42.0 46.2 15 To 64 YEARS SiO,4/E 50.4 52.7 54.0 55.0 50.1 65 YEARS AND OVER 3.0/rC 3.0 3.2 4.3 3.0 3.7 AGE DEPENDENCY RATIO t.O/C .0 0.9 0.9 0.8 1 ECONOMIC DEPENDENCY RATIO 1.8/c 1'6/c '16/b I-1/e 1.5 2.0 FAMILY PLANNING ACCEPTOPS (CUMULATIVE. THOU) 0.5 306.9 955.1 ,, 25o00 55.5 USERS (% OF MARRIED WOMEN) ,. .. 31.0 8.2 1,6 EMPLDYMENT TOTAL LABOR rORCE (THOUSAND) 51DO.O/c 6200.0 6800.0 14000.0/f 29400.0 13000.0 LABOR FORCE IN AGRIC:LTURE (X) 47.0 / 39.0 , . 63.4 - 40.4 450 UNEMPLOYED (X OF LABOR FORCE) 8*0/Fd, 7.0 10.2/c 11.9/e 7.5 INCOME DISTRIBUTION % OF PRIVATE INCOME REC O BY- HIGHEST 5% OF HOU5EHOLDS 41 .2/c f 31 9/d 27.2 32.8 /h 35 0/a 27.2 HIGHEST 20% OF HOUSEHOLDS 67.7 /W1 60:1 / 54.4 60.6 /h 62.0/a 86 .3 LOWEST 20% OF HOUSEHOLDS 23t/c f3- 5.2 2.9 / 3 LOWEST 40% OF HOUSEHOLDS 6.8 10.1 934 /a 10.5 lC,f Ia 14.3 a 0.~ DISTRIBUTION OF LAND OWNERSHIP X OWNED BY TOP 10% OF OWNERS .. .. 80.0 39.0 /i 45.0 37.1 S OWNED BY SMALLEST 10% OWNERS .. .. 0.2 0.7 ' 1.5 0.3 HEALTH AND NUTRITIQN POPULATION PER PHYSICIAN 2400.0 2110.0 2100.0/d 2250.0 1910.0 1480.0 POPULATION PER NURSING PERSON 3520.0/ ., 1450.0/ 1770.0 /i 3220.0/b 1620.0/a POPULATION PER HOSPITAL BED 580.0 430.0 470.0 500.0 260.0 - 9860.0 PER CAPITA SUPPLY OF - 92.0 94.0 112.0 109.0 105.0 CALORIES (% OF REQUIREMENTS) 94.0 920 4.