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
Yearly GDP Growing Venezuela
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 INVESTMEN CONTACT
T
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
Volver
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.