Page 52 - STRATEGY Magazine (G)

INTERVIEW: CODACA
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STRATEGY
SPECIAL REPORT
DANILO SIEKAVIZZA
President CODACA Group
With the promise of a Central American common market nowhere in sight and protectionist legislation often standing in the way, Guatemalans are yearning for space in the global economy. Danilo Siekavizza, President of Codaca Group, a firm that distributes, sells, and services large commercial trucks, identifies three issues holding the country back economically.
PRESSING PROBLEMS
While patterns of the past are crumbling in Guatemala, cooperation from government institutions, investors, and the people themselves will be required to enter the international economy. Siekavizza believes, “You have to change the rules of the country to make it attractive for foreign investors.” Before Guatemala can become a player in the global market, he contends that the nation must deal with issues such as security, more education for the workforce, and the alignment of industries to international standards in order to draw investment.
STRENGTHENING PUBLIC INSTITUTIONS
Corruption and crime are a problem. Government institutions are weak and public servants are underpaid. Siekavizza cites cartel bribery as an example, saying that judges make less than US $2,000 per month and are therefore vulnerable. Police are targets, as well. The cartels offer huge sums of money, and there can be threats of violence, making bribes hard to turn down.
Guatemala has turned to external expertise to solve the twin specters of corruption and crime. Last year, former New York City mayor Rudolph Giuliani and the well-known and influential Colombian Chief of Police Óscar Serrano came to Guatemala to analyze patterns and frequency of crimes and to discuss a program that would dismiss corrupt public servants and officials systematically to facilitate change.
While bringing in experts from other nations helps, professionals like Siekavizza want to see reforms of the judicial system. He explains, “The problem is that the judicial system is corrupt, inefficient, and politically oriented.”
Like the justice system, the level of education of the average Guatemalan needs improvement. Even though Guatemala has well-respected universities, many young Guatemalans receive only a few years of education, leading to an unskilled
workforce. Siekavizza attributes this to an ever-widening gap between the levels of education in developed nations and those in developing nations. One solution is for companies to invest in internal training programs until public education can catch up.
SOURCES OF SUCCESS
Despite its problems, Guatemala has one of the best macroeconomies in the world, especially since the currency is very stable. Nevertheless, growth is not strong enough to “decrease our poverty level or generate enough jobs,” says Siekavizza. The potential for growth and development exists if the region can lower its crime rate and strengthen its institutions. Attracting foreign investors, however, requires a better business climate, and industries must adhere to international standards.
Currently, three sectors are catching the eye of local and international investors alike: energy, mining, and tourism. Guatemala currently generates more power than it needs, leading Siekavizza to speculate that “we are possibly going to become the [energy] exportation hub for all of Central America and the southern part of Mexico.”
Another powerfully performing sector is mining. “We have to develop mining here in a very responsible way,” notes the logistics expert. He points out that, in this traditionally corrupt industry, new laws, taxes, and social investment will continue to reform mining and make it into a target for foreign investment.
“We have a third cluster that could be developed very strongly,” asserts Siekavizza,“and that’s tourism.” Abundant historical sites, a thriving indigenous culture, and landmarks such as volcanoes and springs make Guatemala a destination that is waiting to be discovered internationally. Stabilizing the entire region of Northern Central America could mean that Guatemala might become the next vacation hot spot in Latin America.
Focusing on the country’s strengths and emulating the success of other nations could be a winning combination. Since making significant reforms, the energy, mining, and tourism industries could serve as a solid platform for jumping into the global marketplace while the country works out its internal problems.
“Consumers are the ones who decide whether or not they want to participate in the global market. And, it’s like a train. If you don’t climb on the train, it will pass by you. It’s as simple as that.”
Breaking Barriers and Overcoming Obstacles
Guatemala must overcome crime and corruption, increase its educational attainment, and attract foreign investors to reap the benefits of globalization. A combination of reforms and external influences could help this unique country develop, especially in the energy, tourism, and mining industries, which are poised for take-off.