...problem we have seen in Colombia is that the private sector is just now beginning to understand the importance of going to capital markets,” he says. “With respect to many in the infrastructure sector we have to inform them better of the opportunities for investment.”

While the government is limited in the amount it can directly invest in infrastructure projects, it has taken an active role in making Colombia more attractive for financial investments. The IMF commended the Uribe administration’s economic reform efforts in knotty areas of the economy that have previously hindered growth–pensions and taxes. The country’s primary economic reform for 2005 dealt was in the area of pensions with the goal of controlling the deficit. In April, the International Monetary Fund set the deficit at 2.5% of the GDP as part of an 18-month, $613-million loan agreement–a target the country is expected to meet.

“Many think that Colombia has come from being one of the worst area for investment to one of the best,” says Franchesco Fernandez, economic counselor with the U.S. embassy in Bogota. “Everything indicates a very positive situation in the future.”

In part, the economic strength is part of a region-wide improvement pushed primarily by rising oil prices.

In 2003 Colombia had 4,350 km of gas pipelines, 6,134 km of oil pipelines, and 3,140 km of refined-products pipelines. An accord to begin exploration activities offshore Colombia was signed by Exxon Mobil Corp. with Brazil's Petrobras and Colombia’s state oil company. The initial exploratory phase could reach $130 million, officials say.

A key force pushing domestic growth has been the surge in consumer spending and internal investment due to the success of Uribe’s efforts fighting guerrillas, paramilitaries and drug traffickers. Since taking office, Uribe has taken a hard line on security issues, bolstering the country’s military and taking an active role in the peace process.

Crime continues to be a problem. According to the Presidential Program for Human Rights, more than 1,250 persons were abducted in 2004 , a big drop from the year prior. And, since 2000, coca cultivation in Colombia has been more than halved to about 197,700 acres. Cocaine production is way down, too, according to the United Nations Office on Drugs and Crime.

“It is getting better but it is not going to end,” Aguirre says. “And it is very dependent on where you are. If you are working near Bogota, you won’t have that great a problem but if you are working in the jungle, there is going to be risk involved.”

In the past, such economic and security success stories have been short-lived. But many are optimistic the positive trends will continue due to the presidential election this year. Uribe, who took office in August 2002, is running for re-election in April and most observers believe he will win. Recent polls show his approval rating is high.

Typically, elections in South America are a source of anxiety for investors but and the prospect of a second term for Uribe are very good, said Andres Escobar, chief economist for LatinSource. “We are seeing the confidence effect still in place and reelection optimism,” he says. “And, on the other hand, we also have good opposition candidates.”

Despite the good news, real hurdles remain for Colombia as it tries to move forward. Most observers say there are still huge problems with the legal and financial regulation foreign firms face when doing business in Colombia. And despite tax reforms, the system remains complex and relatively hostile for foreign investment. The legal system also presents many complex hurdles for private investors since it lacks clear rules and those that do exist are constantly changing.

Another concern is the concession system. Initially reformed in the 1991, the first generations of contracts were marked by problems that cost the government millions and left contractors wary of the system. Now on the third generation of concessions, both sides are optimistic that the problems have been greatly resolved.

And the lessons of Colombia’s economic misadventures live on in many minds. ConConcreto, Colombia’s largest construction company, was forced into bankruptcy by the recession. Jose Torres, the company’s regional infrastructure director, says the company is now poised to take an active role in the push to improve Colombia’s infrastructure but it remains pragmatic about the situation.

“The government is going to say everything is fine but we have to take a realistic view of what may happen,” he says. “When the risks are very great, when you do not see that the conditions of the game are clear, when there too many risks and you have to assume the cost of the project, finally you decline to do it.”