When was CIEN established and what was the reasoning and the importance of an institution like this to develop?
CIEN was established in 1983 with the purpose of trying to influence the public policy and to make this policy driven in a market economy and try to change the way the government implements the public policy in the economic and the social area. With this idea CIENwas established by four entrepreneurs and they looked for young people that were technical in the economic and the legal side of the country. We started just in the idea of trying to push for some change in the public policy, but in 1991 we felt that we should not only push the ideas but to try to make new proposals. In 1991 we presented some proposals to try to privatize some of the public services in electricity, telecommunications, aviation, water and waste disposal and also to change the system in the education system. In 1996 we were involved with the commission that was in charge of the new telecommunication law which basically opened the market to private enterprises to private investment, to change the way the electrical spectrum was managed. Basically we changed the system in trying to make a property right model for these resources. So after 4 years, now we see the effects we had for large operators in cellular, we have doubled the coverage for telecommunication services and basically we have competition. At the same time we were pushing the electricity reform and we started by changing the monopoly sector that was INDE and EEGSA. Right now we have a competition system also in three sectors generation distribution, transmission and generation. We have more than doubled the energy generation and we have a space for investment. In the case of aviation we were aware not only of the way the infrastructure was built but in trying to open the market by adopting for the country the Open Sky policy in 1988. Probably in the infrastructure is where we feel right now the country is probably the most attractive for investment in the long run, especially in telecommunications, electricity and probably in aviation, however we do not know because the government has not gone ahead with the privatization process in the airport infrastructure. We feel there is a very big space for private investment and also in the tourism sector. CIEN has been pushing all these reforms in the areas where we can open the market and try to have more security from the property side.
What is your relationship with the government?
I wouldn't tell you that we are like a consultant because we are more like a team. We are the ones that push for these reforms. So the government sometimes looks at us as someone who can help the reforms meanwhile in other ways they are looking at us as someone that criticize the things they do. But in general, we have like a contribution relationship with the government in the sense that we can push the public opinion the way they are trying to reform the country if we think they are in the way of a market economy.
Are they?
Right now I didn't think so.
What is needed to be done by this country in order to bring in investment to make the market competitive?
I would say that probably besides having monitory stability which we have been successful, we should have political certainty about the policies the government has taken. Probably one of the main reforms is to have institutional reform because of a new law where one can have open markets and private investment for locals and foreigners. But we do not have the capacity from the institutional side to go ahead to implement these laws. This especially means to form the legal side of the guarantee that the law is going to be respected, that the contracts are going to be guaranteed and if you make a business that what you have on contract is going to be respected in the future and this is where we have a weakness.
How much influence do you have over the government proposals, how do they bring in the money, what has to be done? Who should take responsibility for this country right now, the government or the private sector?
I think both. The government has to guarantee that the rules are going to be secured. The government has a big responsibility from the legal side in the way that they have to make certain that the legal frameworks are going to be respected and that they are going to follow a market economic system which were the ones in which the previous government based these reforms. From the private sector I would say there also is a big responsibility because we have to learn how to compete, we have to go globalize, and we have to integrate regionally with all the other Central American countries and that we have to start exporting more and have more open markets. We have to improve the productivity and this means to invest, capitalize and educate. I would say the responsibility has to be combined but the certainty has to come from the government.
Are there any potential privatizations being planned?
Yes, I think the services are offered by the Municipal. There are good opportunities in waste disposal, public transport and water.
Is there a possibility in electricity for privatizing or opening up the sector more?
Yes. I think the government is trying mostly on the distribution side where we have achieved some results in the previous years and they are also thinking about trying to get private participation in the transmission. In fact we have one small experience in the North of the country where we already have private participation in the transmission.
Who is in charge of this?
The Electrical Commission |
What do your statistics tell you about the next five years and the economy in this country?
Five years is a long period for us. Probably in the short run, next year, is going to be difficult but we are going to be pushed to make some deep reforms and the country is going to grow probably in a very slow level. We are being pushed by the international competition and the local needs. Especially in 1996 when the government signed the peace agreement, we were committed as a country to have some improvements from the economic and the social side. So even if we do not want to and probably and we are trying to resist ourselves, but in the next five years we are going to look at an economy that is going to be growing probably not as fast as we want. We want to compete as a region and with the other countries because very recently we have signed a commercial trade agreement with Mexico and the United States and even this is a big opportunity to improve our commercial relationship and our exports. This is giving high pressure to have internal reforms.
You are creating a free market with the EU, how is that going?
It is going very slowly but the government is very interested in trying to have some results because for us the banana is a very important product and the European countries are one of the main consumers for us so they are trying to make commercial improvements.
Do you think the relationship needs improvement?
Yes, definitely.
Who are the people who are the most influential in making this country go global?
Probably part of the private sector, not all, because there is a part of the private sector that wants to keep the economy closed because they still think that they are going to be treated by the international enterprises. Also some people of the government, like the Ministry of Economy.
From an international perspective, do you think Guatemala needs to promote its image?
Absolutely. It needs a strategy on how to sell the country and needs reliable information on the negative things but also on the positive reforms we have achieved for the country and on where you have opportunities for investment. This also requires that the government have people that know what the country is serving and who are the interested people.
What is going to happen, in your opinion, with the economy itself?
Probably, even the private sector, is trying to adopt more like a productive activity in the economy. Right now everybody knows that the government is in a bad situation in a very deteriorated image internationally. So I would say that we are trying to choose that alternative that will be more positive, and we have seen from the private sector a productive way to approach the problems. They are trying to have communication with the government and are trying to influence the policies which are not in the way we feel is the correct one.
How do you generate budget at CIEN, how do you survive?
We have several sources. 30% comes from a group of entrepreneurs who donate money because they agree with the principals of the institution and they also agree that we influence the public policy based on this principals. People like Carlos Paiz, Mario Latucios from Cemaco, people of the banking system, people from small companies like Jabón La Luz. Another 20% comes from publications and participation in seminars and the other 50% are projects that are self financed. Also we are part of some international networks where we provide information and in exchange we get some budget for our projects.
Does Guatemala have forms of obtaining finance?
Yes we have: Donors who work with the government directly.
How long have you been with CIEN?
Ten years.
Is the country going through institutions like CIEN in the right direction?
I think we are helping but sometimes the government doesn't want to listen.
Who puts pressure on the government?
I think little groups. The media is one, institutions like us, private sector but right now it is weak.
What will be your final message for our readers?
I would say that we have big problems as any emerging market. We have a lot of advantages and probably these kind of opportunities: infrastructure is one where you have a big opportunity in new markets. Even if we see a disadvantage of low coverage, this is a big opportunity for investors because there is a big space to do things. Also the position of Guatemala in the region could be an opportunity from the commercial side. We have Mexico and NAFTA and we are trying to obtain commercial trade with the South. We have a lot of advantages but we have to work internally with reforms in order to have potential in this area. I would say we have opportunities and especially if the investors are choosing where to put their money and here there are low development markets and this means big opportunity to do things.
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Centro de Investigaciones Económicas Nacionales 