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					Financial Environment : Statistical Bases



      STATISTICAL SUMMARY                 2006     2007
      Population (million)                 27.0    27.4
      GDP Growth (%)                       10.3     8.0

      International reserves *            37,440   35,247
      Inflation Rate (%)     2003 27%      17.0      -
      Balance of Payments: Export FOB *   66,669     -
      Balance of Payment: Import FOB *    35,843     -
      Country risk (EMBI)                 +212     +228
      External Debt *                      26,8    26,3


      *million US$
      Source: BCV
                                                                        Venezuela
Yearly GDP Growing                                            Land of opportunities

     %
   20
                                                              17,3

   15

                                                                        10
   10                                                                         6-7

     5                             3,7   3,4
            0,3
     0
                       -0,6
                                                                       2005 2006
    -5


  -10                                                  -7,7
                                                -8,9

  -15
           1998        1999       2000   2001   2002   2003   2004
  Source: Banco Central de Venezuela
Gross Domestic Product                                                                                                                                                       Venezuela
                                                                                                                                                                   Land of opportunities
   %

  40,0
                                                                                                                                                         35,0



  30,0




  20,0                                                                                                                                                          14,3
                                                                                                                                                                      14,2
                                                                                                                                                                             12,1
                                                                                                                                                                                          10,7         10,2 9,4
                                                                                                                                                                                                 9,5
  10,0    7,6
                                                                                                                                                   6,6                              6,6
                                                                          5,4               5,6
                2,7                                         3,3 3,6 2,3         2,1
                                                                                      3,7
                                                                                                  2,1

   0,0

                                                     -2,0
                     -3,5                     -4,3                                                      -4,4
                            -4,7
                                                                                                                      -5,9             -5,0 -7,1
 -10,0                                 -8,7
                               -8,9                                                                            -8,7



                                                                                                                        -15,8
 -20,0



                                                                                                                                -24,9
 -30,0
           I    II    III IV       I   II     III IV         I   II   III IV     I    II    III IV        I     II    III IV      I     II   III   IV      I     II    III    IV     I     II    III   IV     I
         1998                  1999                     2000                   2001                     2002                    2003                     2004                      2005                     2006

Source: Banco Central de Venezuela
Annual Inflation             Venezuela
                   Land of opportunities
Bank Interest Rate Variation             Venezuela
                               Land of opportunities




     Source: BCV
FOREIGN INVESTMENT IN VENEZUELA
                                  Registro de Nuevas Inversiones Extranjeras Directas
                              Por Actividad Económica Enero-Diciembre Año 2004 en USD

                                                                                                                                                        Industria Manufacturera



                  415.888.346,82                                                                                                                        Inv. Inmob., Serv. Finan. y
    450.000.000                                                                                                                                         Otros Serv. a las Empr.

    400.000.000                                                                                                                                         Comercio


    350.000.000
                                                                                                                                                        Serv. Sociales, Comunales y
                                                                                                                                                        Personales
    300.000.000
                                                                                                                                                        Transporte, Almacenam., y
                                   55.165.203,95




    250.000.000                                                                                                                                         Comunicac..
                                                   14.374.437,55


                                                                   1.938.064,07




                                                                                                                1.152.037,39
    200.000.000                                                                                                                                         Electricidad,

                                                                                  1.595.168,55




                                                                                                                               563.878,12
                                                                                                 1.243.447,13




                                                                                                                                            12.738,85
                                                                                                                                                        Gas y Agua
    150.000.000
                                                                                                                                                        Construcción
    100.000.000
                                                                                                                                                        Agricultura
     50.000.000

             0                                                                                                                                          Explotación de
                                                                                                                                                        Minas y Canteras
Exports – Imports: Venezuela -World                                               Venezuela
                                                                        Land of opportunities




    Commercial        1999       2000     2001       2002     2003     2004     2005
    Exchange
    (Millions US $)
    Exports (FOB)     20.963     33.529   26.667     26.781   27.170   38.748   40.498

    Imports (CIF)     14.492     16.865   19.211     13.360   10.687   17.318   17.589


               Distribution of Total Commercial Exchange (Exp.+ Imp.)

                               Imports: 30 %
                                                   Oil exports: 60 %
  No oil exports: 10 %


    Source: BCV
Principal Commercial Partners Imports Values * 1998-2005




       Source: SENIAT
       *Free on Board
       Not included: iron and oil (public sector)
Principal Commercial Partners Exports Values * 1998-2005




    Source: SENIAT
    *Free on Board
NEDERLAND – VENEZUELA: EXPORTS



  Nederlandse export. to Venezuela                                          TOTAL 2001-2004
  (Unidad:1000.000,-- euro)               2001       2002    2003   2004    MM €         %

  TOTAL                                   151,1     114,3      84   104,6        454    100%

  TOTAL AGRO                               41,1      30,4    13,4    24,8       109,7   24%
  TOTAL INDUSTRIAS                         110       83,9    70,6    79,8       344,3   76%

  Alimentos y animales en pie              37,8      28,4    11,8    21,7        99,7   22%
  Bebidas y Tabaco                          1,7       0,9       1     0,8         4,4    1%
  Materiales no comestibles, excl.          2,2       1,4     1,4     2,8         7,8    2%
  Minerales Inflamables,                    1,5       7,7    19,1     3,4        31,7    7%
  Productos químicos                       32,1      29,2    19,7     28         109    24%
  Manufacturas, clasificados en            16,7       13      5,9    10,6        46,2   10%
  Máquinas y Materiales de transporte      50,6      27,9     17     28,4       123,9   27%
  Diversos Bienes prefabricados             7,7       5,3     7,8     8,5        29,3    6%


  Fuente: CBS (Oficina Central de Estadísticas) en Holanda
NEDERLAND – VENEZUELA: IMPORTS



  Nederlandse import. from Venezuela                                         TOTAL 2001-2004
  (Unidad:1000.000,-- euro)               2001      2002     2003    2004    MM €         %

  TOTAL                                  195,3     149,6     153,3   169,1       667,3   100%

  TOTAL AGRO                               3,8       2,9       2,7     7,7        17,1    3%
  TOTAL INDUSTRIAS                       191,5     146,7     150,5   161,4       650,1   97%

  Alimentos y animales en pie              3,5       2,9       2,6     7,2        16,2    2%
  Bebidas y Tabaco                         7,6       5,2       4,3     3,5        20,6    3%
  Materia Prima no comestible, excl.       30       27,1      32,1     46        135,2   20%
  Minerales Inflamables,                  132       84,2      52,9    62,7       331,8   50%
  Productos químicos                      15,4       6,1      16,2    25,7        63,4   10%
  Manufacturas, clasificados en              5      22,8      40,2    22,1        90,1   14%
  Máquinas y Materiales de transporte        1       0,9       4,5       1         7,4    1%



  Fuente: CBS (Oficina Central de Estadísticas) en Holanda
Foreign Investments Principles


                       National Treatment
             Same treatment to the foreign and the national
                               investors.

                              Universality
           Foreign investment is allowed in any area of the national
          economy, with the exception of the TV, broadcasting, and
             spanish-language newspapers, and also professional
                services which are regulated by national laws.

           Non authorization, only registration
             A foreign investment in Venezuela does not require
           authorization by any administrative organization, except
          authorization provided by the Defense Ministry in order to
           be owner of any property located in the Security Border
                                 Line Zone.
Legal Framework for Investments


       Free of remission of the dividends and capitals.
         The investors are authorized to send their profits product of the stock
       sales overseas, and also the amounts originated by any capital reduction
                                     or bankrupt.

       Free access to national and international loans
         The investors won’t have, in the beginning, any access restrictions to
                      loans neither in the country nor overseas.

                      Free Tariff Program Benefit
       The foreign companies can participate in the Free Tariff Program of the
         Andean Community, in that way they can export to the countries
            members in the same conditions as the nationals companies.
Legal Framework for Investments

 • National Constitution.
 Article 301. The State reserves the use of the trade policy to defend the financial activities of national
 companies, both public and private. Any individual, body corporate or foreign entity shall not obtain more
 beneficial regimen than those established for the nationals. Foreign investment is subject to the same conditions
 set forth for the national investment.”


 • Law for the Promotion and Protection of Investments.
 Decree 356 as of 10/3/1999 with status and force of law. This Decree-Law aims at providing investments and
 investors, both national and international, with a stable and foreseeable legal framework in which the firsts and
 latter may work in an safe environment, by regulating the performance of the State in view of such investments
 and investors, aimed at harmoniously increasing, diversifying and complementing investments in favor of the
 objectives of national development.
    Regulations of the Law, Decree 1867 as of 07/22/2002


 •   Law of Land and Agriculture Development.
 •   Law of Fishing.
 •   Law of Forest and Water.
 •   Law of Seeds, Animal Reproduction and Biological Supplies.
Legal Framework for Investments



     • Resolution 195, Certification of Insufficiency of Production and non
     Production.
     • Resolution 2192, Register of Investments (1995).
     • Decree of Reorganization of the Position and Use of the Agricultural
     Land.
     • Exchange Agreement Nº 1, Central Bank of Venezuela (2003)
     • Andean Regulations on Investments.
     Decision 291 and 292 of the Andean Community (CAN)
     • Policies and Government Programs.
     Tax, credit and financial incentives
     Incentives to the industrial and tourist sector



                                          Bilateral Agreements

     •Incentive and Protection Agreement for the Investment.
     •Anti-double Taxation and Income Tax Evasion Agreement.
Tax Incentives



      Temporary Admision for Assets Optimization (ATPA)
       Admission of raw materails, parts and pieces, merchandise to the country
       suspending payment of Import Rights and Value Added Tax.
      DrawBack
       Import tax reimbursement when import merchandise directly paid by exporter is
       incorporated to the export of goods.
      Recovering of the Value Addedd Tax
       Recovering tax credits supported by the acquisiton and reception of goods and
       services due to the export activity carry out by taxpayers.
      Depósitos Aduaneros (In Bond)
       Foreign, national or nationalized merchandise is deposited in a place destined
       therefore, under the control and autority of Customs, without being subject to
       import tax payment and rate for customs services, for their selling in national
       and international markets.
Tax Incentives




     Establishing Companies in Duty-Free Zones
      Exempt payment of Income Tax, Value Added Tax, Import Tax, Municipal and
      Regional Tax as well as rates and any other; they are granted to promote national
      development through activities that mainly strengthen foreign trade and help
      transfer technology, generate job posts and regional development.

     Export Bonds
      Allow exporting agricultural products in their primary state, facilitating
      competitiveness of non-traditional exports and increasing participation of exports.
Financial Incentives




       Credit to the Exporter
       Aims at meeting the needs of cash flow and capital required to cover the production
       costs destined to exports; it is offered through different methods: Working Capital,
       Early Bird Payment, Investment in Fixed Assets and Credits for Investment Export
       Projects


       Credit to the Purchaser
       Aims at financing the purchaser of Venezuelan goods and services through credit
       lines with banking and direct credits
Industrial Sector Incentives


                         1.   Imports, goods sales and performed services had
                              been done on Duty Free of State Nueva Esparta,
                              in the Free Trade to the turistic investment at the
                              Peninsula de Paraguana in Falcon state; and too
                              in cultural, cientist & technological os the Merida
    ADDED                    state, at the duty free of Santa Elena de Uairen
    VALUE TAX                 and industrial, comercial & services free zone of
                              Atuja (ZOFRAT)
    LAW
          Official
     Newspaper n°
         5.601
     extraordinary
     date 08/30/02       2. The imports of the following goods: Foods and
                             products for human consumption, fertilizers,
                             medicines and agrochemicals, fuels, wheel chairs,
                             pasemarks, catheters, valves, artificial organs and
                             implants; newspapers, periodic paper for its
                             editions; books, magazines or pamphlets; single
                             they enjoyed the exemption in case there is
                              not national production.
Benefits of Investing in Venezuela



    • Favorable Macro-economical Conditions.

    • Right to Repatriate the Capital and Delivery of Dividend.

    • Agreements of Legal Stability with a ten years term:
       -Register of Investment.
       -Access to the capital market.
       -Arbitration for the solution of legal disputes.

    • Stable Bilateral Agreements.

       Source: CONATEL
Agroindustrial Sector




       •Venezuela has good quality soils to develop agricultural
       activities; represented by 1,800,000 hectares, 53% of which are
       being used and distributed as follows:
       • Mountain area: 240,000 has. (30-35 % in use)
       • Foothills area : 60,000 has. (40% in use)
       • Plain area: 1,500,000 has. (60% in use)

       •Abundant hydro, superficial and underground resources in several
       uses.

       •Agricultural items with possibilities to expand to world markets
       or with industrialization purposes: fruits, tubers, cereals,
       oleaginous, coffee, cocoa, sugar cane, vegetables and a great
       variety of plants for the medicine and cosmetic industry.
Agroindustrial Sector



                      Agro industry: Cocoa
        •As an example, the “Fundación Proyecto Paria” (FPP) is one of
        the most interesting production and promotion experiences of
        cocoa development in Venezuela. The FPP operates in Rio
        Caribe, Arismendi Municipality, of Sucre State.

        •For the term 1998 - 2002, the “Fundación Interamericana”
        allocated US$ 127,213 to the “Fundación Proyecto Paria” (FPP).

        •14th country producer of cocoa, with a participation of 0.50% in
        the world and 2.88% of the American Continent.

        •Venezuela covers 5% of the international demand of the fine or
        aromatic cocoa market.
Forest Sector

          Venezuela Advantages in the Forest Sector


       •Our advantages are more favorable than those of the two main pulp
       producers in the world, Canada and the United States, Because:

       •We have better conditions for crops.

       •We have plenty of water.

       •We have highly-competitive energy costs.

       •There is a Forest Inventory Plan with a cost in dollars up to the year
       2007.
Forest Sector


       Advantages of Venezuela in the Forest Sector

       •Venezuela has a forest surface calculated in 49.37 million hectares
       occupying 54.2% of the total surface of the country; 11 areas were
       decreed forest reserve, 8 areas wooded plots and 39 wooded areas,
       destined to permanent forest production, totalizing a surface of 16.3
       million hectares.
       •Forest plantations : 9.3 million hectares
       •Reforest and plantation programs: 736 thousand hectares, established
       by the official sector (80%) and the remainder by the initiative of the
       private sector.
       •The forest activity in Venezuela is made using two methods: In areas
       under the ordinary regime annual permits are granted to individuals;
       and forest concession by bids, framed within the Zoning and Forest
       Management Plan for forest reserves, wooden plots and wooden areas
       under protection.
Forest Sector

                       Forest Business Opportunities
                                         (in million USD)



               PROJECT                    LOCATION          INVESTMENT   CONTACT
          Pulp and Paper Plant            Bolívar State        675       www.cvg.com
           (Orinoco Project)



     Construction and operation of a     Anzoátegui State      600       www.cvg.com
    pulp and paper plant. National and
      foreign capital will be included


               Board Plant                Bolívar State        118       www.cvg.com
Forest Sector



         Forest Plantations

                 •Production: 3.3 MM m3/A from the year 2008
                  Investment: for an amount equivalent to 62.5 million US$
                  Special Areas of Industrial Processing (Zepi)

                 •Wood Forest Sector
                  Production: finished products
                  Investment: to be defined

                 •Industrial Carpentry
                  Production: Table, doors, window moldings
                  and furniture.
                  Investment: 1.2 million US$
Forest Sector



           Recovery of the Foreign Investment


                •Favorable market perception

                •Political stability

                •Adaptation of the legal framework

                •Opening of financial sectors
Coffee Production
Cocoa Production
Sugar Cane Production
Rice Production




       Source: CVG
Corn Production
Sorghum Production
Oil Palm
Special Development Zones                      Venezuela
                                 The Best Investment Option




    1.   Barlovento
    2.   Camatagua-El Sombrero
    3.   Sur del Lago
    4.   Caura
    5.   Boconó-Masparro
    6.   Mesa de Guanipa
    7.   El Baúl-Turén
    8.   Caribe
    9.   La guajira



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Agricultural Sector


  •Strengthening of double purpose (milk and
  meat) cattle breeding.
  •Plan for acquisition of breeding.
  •Strengthening of cattle breeding (buffalos).
  •Promotion and development of sheep and
  goat breeding.
  •Support for poultry industry (eggs
  production)
  •Strengthening of fishing activity.
  •Impulse to poultry farms.
Agricultural and Vegetable Sector
 •Development of oil palm.

 •Development of cocoa crop.

 •Financing for short cycle fruits crops (melon, papaya,
 passion fruit, and others).

 •Sowing and processing of sugar cane.

 •Sowing of roots and tubers (cassava, suite potato,
 new cocoyam, yam).

 •Soy crop.

 •Development of beans (black beans and kidney
 beans).
Agro Industrial Sector


      •Installation of agro industrial enterprises.

      •Reactivation and recovery of agro industrial
      enterprises.

      •Programs for machinery acquisition and
      irrigation equipment.

      •Technical service programs.

				
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