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  HOME | Opinion (Click here for more)

VenEconomy: Through Thick & Thin

From the Editors of VenEconomy

Over the last three weeks, two different institutions monitoring the behavior of business activity and the investment in hundreds of world economies have released their yearly figures for 2013. Both of them showed the negative reality Venezuela has been taken to for the past fifteen years.

One of them is the International Property Rights Index, which analyzed the “legal and political environment,” “physical property rights” and “intellectual property rights” of 131 countries around the world. Unfortunately, Venezuela ranked 127th with 3.4 points out of 10, thus competing for with Haiti, Burundi and Libya for the “shameful” honor.

The other figures are from the World Bank, which measure regulations for doing business and their application in 189 economies, including small and poorer economies. The report, according to its executive summary, covers the regulations affecting eleven areas of a business life cycle, the handling of construction permits, electricity service, property registration, credits, investor protection, payment of taxes, cross-border trade, and contract compliance, among others.

This year, Venezuela went down one position with respect to 2012 by ranking 181th of 189 countries that now include Libya, Myanmar, San Marino and South Sudan. This outcome is due to higher costs and more formalities for exporting and importing goods, the increase of costs in electricity services and deterioration in the capacity of the judiciary system in resolving commercial disputes. The report also places Venezuela as the worst country to invest in Latin America since it takes about 144 days to start a business there.

It is impossible that these results did not have a negative impact for the country, taking into consideration a reactionary and obsolete kind of project the Castro-Chávez-Maduro trio wants to impose in Venezuela: Controls of all kinds, including a stranglehold on costs, prices and access to dollars that are indispensable to pay for the imports of supplies and spare parts in order to keep the production machinery operational. Also a destruction of the legal certainty and the Rule of Law, key elements to set and respect the rules of the game for the investors, and the persistence of the Government in centralizing all productive activity, by means of expropriations, confiscations or forced acquisitions of productive companies that subsequently die in the hands of an inefficient and corrupt State.

Yet, even amid this hostile environment to entrepreneurship, there are private initiatives investing in the country such as the case of foodmaker and brewery Empresas Polar, which despite all the harassments and threats from the Government announced three new production lines in Valencia, Carabobo state, with an investment of Bs.200 million ($31.74 million) and that of Nestlé of Bs.650 million ($103.1 million) in its new production facilities in El Tocuyo, Lara state, in a bid to increase production capacity by 50,000 tons a year up to 300,000 tons.

These are two private initiatives that, far from being promoting an “economic war” made up by President Nicolás Maduro, bet on the development of Venezuela through thick and thin.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

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