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CIVETS Watch: Colombia Becomes Safer for Business as Rebels Renounce Kidnapping


Once the world capital of kidnapping, Colombia gets welcome news from the rebel leaders of its long-running civil war.

Colombia is rapidly emerging as an economic powerhouse in the Latin world, but it may have just gotten its best business headline yet: The guerrillas who have been waging a civil war there for 48 years issued a press release Sunday saying they've decided to stop kidnapping civilians.

The Revolutionary Armed Forces of Colombia, or FARC, also hinted that they would like to reopen negotiations for an end to the civil war for the first time since 2002.

The government dismissed any notion of negotiations for now. The FARC announcement didn't suggest they were giving up their other revenue sources, which include international drug trafficking and widespread extortion from small businesses and individuals.

Nevertheless, the decision to stop kidnapping citizens is the latest sign that FARC has lost strength and numbers over the last several years. They once ruled vast areas of Colombia, effectively halting economic development and foreign investment. Colombia's economic success story is largely due to its successful efforts to wrest control from the rebels.

Several of Colombia's business executives told Colombia Reports that the announcement should lead to more foreign investment, and give a boost to local businesses. Both foreign companies and locals were long discouraged from starting expensive projects by the risks of terrorist "tax" demands or outright violence.

Nobody can be sure that the FARC rebels aren't lying about giving up kidnapping. But Steven Dudley, an expert on organized crime, writes in The Christian Science Monitor that the group may well have concluded that kidnapping has ceased to be a lucrative business in Colombia.

CIVETS Watch in Brief:

Nomura Sees Upside in Indonesia
A new report from Nomura Holdings predicts that Indonesian infrastructure stocks will benefit this year from the government's $18 billion plan to improve the nation's roads, rails and airports.

According to Bloomberg, the report from Nomura's branch in Indonesia cites companies including PT Jasa Marga (PTJSF.PK), PT Semen Gresik (PSGTF.PK), and PT Perusahaan Gas Negara (PPAAY.PK) as big beneficiaries of the government spending program.

The investment firm said the construction boom could drive the benchmark Jakarta Composite Index to a 15% gain in 2012.

Indonesia Moves From Oil to Gas
Four years after Indonesia lost its membership in OPEC, the nation has become the world's second-largest exporter of liquefied natural gas, behind Qatar.

In fact, Indonesia's natural gas production has surpassed its crude oil output since 2001, according to a report in The Jakarta Globe.

With reserves of natural gas that are believed to be the largest in Asia, Western energy companies have invested deeply.

The local unit of Chevron (CVX) recently discovered an offshore pocket of 2.3 trillion cubic feet of natural gas in the Makassar Strait. The site is expected to produce one billion cubic feet of natural gas per day. Development is expected to be expensive-up to $7 billion--because of the site's offshore location.

In addition, Exxon Mobil (XOM) and Total (TOT) have formed a consortium with the state-owned Pertamina oil and gas company to exploit the East Natuna field, in the South China Sea. The site is believed to contain 46 trillion cubic feet of extractable gas.

Exxon Mobil already operates two older sites that apparently are past their peak, but still produce 225 million cubic feet per day.

Light Ahead in Egypt
Quarterly earnings from Egypt Telecom were far from stellar, but the comments of company executives offered hope of better times ahead.

The company, which has a monopoly on land lines in Egypt, said revenues rose 0.5% in the fourth quarter of 2011 from a year earlier. Reuters calculates that the company's earnings were down 3.2% for the year.

However, the company's chief executive said an uptick in new business at the end of the year suggested that business customers are finally moving ahead, in anticipation of an improved business climate.

During a year of political turmoil following the ouster of former dictator Hosni Mubarak, foreign investment fled Egypt and its key tourism industry evaporated. A new prime minister is expected to be selected this spring.

Turkey Has Unfinished Business in Libya
Turkey's government appears to be preparing the way for a return to business as usual in Libya, where Turkish companies abandoned 214 construction projects worth $15 billion during the country's revolution last year.

Libyans, though awash in oil and free of long-time dictator Muammar Gaddafi, are enduring a difficult transition.

Libyan interim leader Abdel Rahim al-Keib, in Ankara last weekend to meet with Turkish Prime Minister Tayyip Erdogan, publicly invited Turkish companies to return to finish their projects. That also could mean the return of 25,000 Turkish workers who were evacuated during the revolt.

At a press conference, Erdogan reiterated his country's support for Libya, but urged Libya's transitional leaders to disband the militia forces that led the revolt. The militias appear to be reluctant to retire from political power.

Turkey is increasingly taking a leadership role in the Middle East, on the side of the "Arab Spring" movement towards democratic reform.

Not surprisingly, the US also is ready to open ties with the new Libya. US Sen. Jeff Sessions, an Alabama Republican, joined other members of the Senate Armed Services Committee on a Libyan trip last week that included a meeting with the transitional leaders.

It turns out that both Prime Minister Abdurrahim el-Keib and Deputy Prime Minister Mustafa Abushagur were formerly professors at the University of Alabama. Among other topics, Sessions told an Alabama news site, they talked college football.
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