Colombia - Cartagena Industrial Export Processing Zone Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9018 PROJECT COMPLETION REPORT COLOMBIA CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT (LOAN 1593-CO) SEPTEMBER 25, 1990 rade, Finance and Industry Division epartment III atin America and the Caribbean Region document has a restricted distribution and may be used by recipients only in the performance of official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Colombian Peso (Col$) Average Rate during year of: 1977 US$l = 42.9 Col$ 1978 US$l = 48.9 Col$ 1979 US$1 = 55.0 Col$ 1980 US$l = 61.5 Col$ 1981 US$l = 64.3 Col$ 1982 US$1 = 70.8 Col$ 1983 US$1 = 84.3 Col$ 1984 US$1 = V13.3 ColS 1985 US$1 = 144.5 Col$ 1986 US$1 = 227.9 Col$ 1987 US$1 = 313.7 Col$ 1988 US$1 = 402.1 Col$ FISCAL YEAR OF THE GOVERNMENT OF COLOMBIA January 1 - December 31 GLOSSARY OF ABBREVIATIONS CDI Consortium of Engineers and Researchers CFZ Cartagena Industrial and Commercial Free Zone MED Ministry of Economic Development SENA National Service for Vocational Training  FOR OMCILu USE ONLY THE WORLD BANK Washington, DC 204 3 3 USA Office of ODiectnmt-nti Opivatms WValuation September 25, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Colombia - Cartagena Industrial Export Processing Zone Project (Loan 1593-CO) Attached, for information, is a copy of a report entitled "Project Completion Report on Colombia - Cartagena Industrial Export Processing Zone Project (Loan 1593-CO)" prepared by the Latin America and the Caribbean Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution "Ind may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT COMPLETION REPORT COLOMBIA CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT (LOAN 1593-CO) TABLE OF CONTENTS Page No. PREFACE .. .............. ........ i EVALUATION SUMMARY ....iii Part I - Bank Review of the Proiect ... 1.1 Project Identity . ........ 1 1.2 Background.... 1 1.3 Project Objectives and Description ... 2 1.4 Project Implementation.... 3 1.5 Project Results and Sustainability.... 6 1.6 Project Design and Organization... . 7 1.7 Bank Performance.... 8 1.8 Borrower Performance . ... 8 1.9 Conclusions 9 .......... 9 Part II - Borrower's Review of the Proiect . .10 2.1 Project Design and Implementation . .10 2.2 Project Benefits and Financial Performance of CFZ 12 2.3 Conclusions. . ...... . I ...14 Part III - Statistical Data ........... .. ............15 Table 1: Project Timetable .. 15 Table 2: Loan Disbursements . ...... . .16 Table 3: Project Implementation.. . I7 Table 4: Project Costs and Financing . . .18 Table 5: Project Results ....20 Table 6: Use of Bank Resources . ...21 Table 7: Status of Key Covenants .. . .22 Figure 1: Design of the CFZ Export Processing Zone .25 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.  PROJECT COMPLETION REPORT COLOMBIA CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT (LOAN 1593-CC) PREFACE This is a Project Completion Report (PCR) for the Cartagena Industrial Export Processing Zone Project (CFZ) in Colombia for which Loan 1593-CO of US$15.0 million was approved by the Executive Directors on May 24, 1978. US$14.7 million was disbursed by the third and final closing date of June 30, 1.987, and the associated Bank-executed UNDP technical assistance component was completed in December 1988. About US$8.0 million has been repaid by the Colombian Government under the Guarantee Agreement. The PCR was prepared by the Trade, Finance and Industry Division of Country Department III of the Latin America and Caribbean Region. The CFZ has submitted its own assessment of the Project, which is excerpted in Part II of this Report. The PCR was compiled on the basis of information available in the LAC Information Center, the Staff Appraisal Report, reports produced by CFZ and consultants whtich it engaged, correspondence with the Bank, staff Supervision Reports and a visit by a consultant to the CFZ to help prepare the PCR.  - iii - PROJEUT COMPLETION REPORT COLOMBIA CARTAGENA INDUSTRIAL EXPORT PROCESSING ZONE PROJECT (LOAN 1593-CO) EVALUATION SUMMARY Project Objectives 1. The Cartagena Industrial and Commercial Free Zone (CrZ) was created by decree 2077 of October 1973 as a Public Establishment attached to the Ministry of Economic Development (MED), one of six such zones previously authorized under Law 105 of 1958. Its basic purpose was to foster the economic and social development of the region surrounding the port of Cartagena, one of two ports along the Caribbean coast of Colombia. The specific objectives of the Prt-,:ct were to: (a) support the Government's industrial decentralization policy by creating a fully serviced export processing zone near Cartagena; (b) expand non-traditional manufactured exports; (c) improve income and living standards among the unemployed and underemployed by providing some 5-6,000 mainly low-skilled jobs from an estimated 30 enterprises; and (d) provide an economic base for a proposed urban poverty program in the Cartagena area. CFZ put strong emphasis on attracting industrial enterprises which would develop substantial links to the Colombian economy rather than purely enclave activities. Therefore, its main criteria to appraise potential private investors were employment generation, use of local raw materials, exports outside the Andean Pact area, new technology and pollution control. Implementation and Results 2. The Project consisted of three components: an industrial area to house industrial and related service facilities, supporting infrastructure (a water transmission line and rehabilitation of a municipal road), and a vocational training center. The implementation of all three components ran considerabl, behind schedule and, overall, the Project came to a close about five years after its original completion date of 1983. The road and water works were completed as planned, though about 2-2.5 years behind schedule, and the water supply was extended to reach the community of Pasacaballos (about 3 km) to provide it with treated water. The vocational training center was completed five years behind schedule in 1987. Only 22 of 55 industrial buildings which had been expected to be constructed by 1983 were in fact completed by 1989. 3. Overall, the plan to construct industrial buildings was not attained because of a lack of investor demand. To a lesser extent, the slow pace was due to organizational and procurement problems, and to delays in the provision of counterpart financing. The lack of clearly d