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U.S. Department of State
Venezuela Country Commercial Guide
Office of the Coordinator for Business Affairs
VENEZUELA
COUNTRY COMMERCIAL GUIDE
FISCAL YEAR 1996
This Country Commercial Guide (CCG) represents a comprehensive look at
Venezuela's commercial environment through economic, political and
market analysis.
The CCG's were established by recommendation of the Trade
Promotion Coordination Committee (TPCC), a multi-agency task force, to
consolidate various reporting documents prepared for the U.S. business
community. Country Commercial Guides are prepared annually at U.S.
embassies through the combined efforts of several U.S. Government
agencies.
I. EXECUTIVE SUMMARY
II. ECONOMIC TRENDS AND OUTLOOK:
Major Trends & Outlook
Principal Growth Sectors
Government Role in the Economy
Balance of Payments situation
Infrastructure Situation
III. POLITICAL ENVIRONMENT:
Nature of Political Relationship with
the United States
Major Political Issues Affecting
Business Climate
Elections and Major Political Parties
IV. MARKETING U.S. PRODUCTS AND SERVICES:
Distribution and Sales Channels
Use of Agents and Distributors;
Finding a Partner
Franchising
Direct Marketing
Joint Ventures/Licensing
Steps to Establishing an Office
Selling Factors/techniques
Advertising and Trade Promotion
Pricing Product
Sales Service/Customer Support
Selling to the Government
Protecting Your Product from IPR
Infringement
Need for a Local Attorney
V. LEADING SECTORS FOR U.S. EXPORTS
AND INVESTMENT:
Best Prospects for Non-Agricultural
Goods and Services
Best Prospects for Agricultural
Products
Significant Investment Opportunities
VI. TRADE REGULATIONS AND STANDARDS:
Trade Barriers, Including Tariffs,
Non-Tariff Barriers and Taxes
Customs Valuation
Import Licenses
Export Controls
Import/Export Documentation
Temporary Entry
Labeling, Marking Requirements
Prohibited Imports
Standards
Free Trade Zones / Warehouses
Special Import Provisions
Membership in Free Trade Arrangements
VII. INVESTMENT CLIMATE:
Openness to Foreign Investment
Conversion and Transfer Policies
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership and
Establishment
Protection of Property Rights
Regulatory System: Laws and
Procedures
Bilateral Investment Agreements
OPIC and Other Investment Insurance
Labor
Foreign Trade Zones / Free Ports
Capital Outflow Policy
Major Foreign Investors
VIII.TRADE AND PROJECT FINANCING:
Brief Description of the Banking
System
Foreign Exchange Controls Affecting
Trade
General Financing Availability
How to Finance Exports / Methods
of Payment
Types of Available Export financing
and Insurance
Project Financing Available,
Including Lending from
Multilateral Institutions and
Types of Projects Supported
List of Banks with Correspondent U.S.
Banking Relationships
IX. BUSINESS TRAVEL:
Business Customs
Travel Advisory and Visas
Holidays
Business Infrastructure
X. APPENDICES:
A. Country Data:
Population
Pop. Growth Rate
Religion
Government System
Language
Work Week
B. Domestic Economy:
GDP
Est. 1996 GDP Growth Rate
GDP Per Capita
Gov. Spending as a percent of GDP
Inflation (pct)
Unemployment (pct)
FX Reserves
Avg. FX Rate per USD
Debt Service Ratio
U.S. Econ/Mil Assitance
(if applicable)
C. Trade:
Total Venezuelan Exports
Total Venezuelan Imports
U.S. Exports to Venezuela
U.S. Imports from Venezuela
D. Investment Statistics
E. U.S. and Country Contacts
F. Market Research:
Agricultural / Non-Agricultural,
FY95/planned FY96
G. Trade Event Schedule
I. EXECUTIVE SUMMARY
The government of Venezuela faces continued economic policy challenges
during 1995 and 1996. Despite this, Venezuela will continue to offer
many opportunities to U.S. suppliers and investors.
The effects of the economic crisis that struck Venezuela in 1993 and
1994 continue to be felt. A recession began in 1993 and deepened with
the failure of many banks. In mid-1994, the Government instituted tight
exchange controls to stop capital flight, and fixed the exchange rate.
Price controls were decreed on a basket of basic commodities.
Additional government measures, including utility rate controls, new
checks on government spending, an "anti-inflation pact," and delays in
exchange approvals for private debt and dividend remittances have cut
into free market advances of the past decade.
Over the long term Venezuela's strong "fundamentals" assure a return to
robust growth. It is rich in natural resources, enjoys relatively cheap
skilled labor, has extraordinarily advantageous energy costs and is
geographically located to take advantage of several major markets,
including the United States.
The United States has traditionally been Venezuela's most
important trading partner. It exported USD 4 billion worth of
merchandise to Venezuela in 1994, representing more than half of the
country's total imports. Preliminary indications are that this level
will be met or exceeded in 1995. The country's strongest markets are in
petroleum technologies and in infrastructure, particularly
telecommunications, followed by computer hardware and software,
vehicles, environmental, security and medical equipment, and engineering
services.
The key sector for foreign investment is petroleum. In July 1995, the
Venezuelan congress approved foreign participation in light and medium
oil exploration and development. Some government-owned aluminum
companies may also be opened to private investment. In other sectors,
privatization has been stalled since 1992.
Most foreign and domestic companies operating in Venezuela have learned
to live with delays and added paperwork brought by new government
controls, at least in the short term. Product entry is still relatively
simple in most cases. Import duties remain at a maximum of 20 percent
in almost all categories, although a 12.5 percent tax on the CIF value
is now also applied, and other "luxury" taxes may apply as well.
Businesses should familiarize themselves with the following when doing
business with Venezuela:
o Foreign exchange procedures, and how to maximize assurance of
payment or repatriation of profits.
o Price controls, consumer protection laws, intellectual property
protection, "quality standards" and phytosanitary restrictions as they
may affect their product or investment.
o Multi-tiered taxes which are applied over and above tariff rates,
sometimes adding more than 30 percent to the landed cost of a product.
o Labor laws which can add significant costs to establishing offices
or retaining representation.
II. ECONOMIC TRENDS AND OUTLOOK
Major Trends and Outlook
The short-term outlook for U.S. exports is decidedly mixed. The overall
business climate is dampened by recent banking and fiscal crises.
Government spending for major infrastructure projects has been sharply
restrained and economic policy appears more geared to produce a classic
"muddle through" than a dramatic economic reversal. 1995 is expected to
be the third straight year of GDP shrinkage. In the aggregate, private
sector demand is expected to remain somewhat depressed, although pent-up
demand and the perception of a possible future devaluation may drive
private sector demand upwards in certain sectors.
The sheer volume of U.S. exports to Venezuela, at about $4 billion per
year, and the relative ease with which U.S. products penetrate this
neighboring market, make Venezuela a market that U.S. exporters can ill
afford to ignore, despite the short-term downturn. U.S. sales to
Venezuela fell by 12 percent from 1993 to 1994, but are not expected to
register a further decline in 1995. There is early evidence that the
U.S. market share is increasing, which is surprising since Colombia--the
second most important supplier--is also gaining market share.
The investment climate has been depressed due to a range of unfavorable
factors. Recent memory of 1992-1993 political instability, debt service
concerns, the reintroduction of exchange controls and skepticism over
the government's ability to manage the economy together translate into
falling international investor confidence. Current economic
difficulties have added urgency to opening the hydrocarbons, mining and
metals sectors to foreign investment through strategic partnerships, and
raising revenues by privatizing state companies. Dramatic developments
in these areas could result in a significant new surge in foreign
investment in Venezuela in the medium-term. The number of major U.S.
and multinational companies watching progress in these areas is growing.
Longer term, the Venezuelan market is expected to fall back into line
with regional trends towards robust growth. The country's natural
resource wealth, low energy costs, and relatively skilled workforce
provide fundamental strengths. Short-term difficulties in the
Venezuelan business world are kept in perspective by a telling
statistic: not one of the hundreds of U.S. investor firms with
operations in Venezuela has withdrawn from the market since the economy
faltered in 1992.
Principal Growth Sectors
While the government hopes to develop "non-traditional" sectors, the
major near-term growth prospects remain in the extractive and
infrastructure-related areas; the growth industries are mining,
petroleum and other hydrocarbons, telecommunications and other
infrastructure-related areas, and power generation.
Government Role in the Economy
There has been a return to Government intervention throughout the
economy, reversing the 1989-1993 trend toward loosening of government
controls. The current government's measures originated in response to
the economic and financial crisis which came to a head in early 1994.
Subsequently, a myriad of measures have been introduced to eliminate
capital flight, soak up excess liquidity, reign in inflation, reduce the
Republic's debt burden, stabilize the financial sector, open the
petroleum sector to joint ventures with foreign firms, introduce
incentives for direct foreign investment in the non-petroleum sector,
and assist small- and medium-sized industry. In May, 1995 the
government negotiated an anti-inflationary pact with labor unions and
the private sector to hold down wages and retail prices. The Finance
Minister is expected to implement a series of fiscal measures, including
some tax reforms and cuts in central government spending to close the
1995 fiscal gap.
Fiscal Policy and Taxation: The Venezuelan government's bailout of the
financial sector led to a 15.2 percent deficit on a consolidated public
sector basis in 1994. For 1995, the government is trying to close a
central government administration budget deficit of 8 percent; the
consolidated public sector balance will depend primarily on additional
financial assistance the government provides to the banking sector, the
cost of servicing the domestic debt incurred in the 1994 bank bailout,
and the government's ability to rejuvenate its privatization program
(see below), including reprivatizing intervened financial institutions.
Over 50 percent of the commercial banking sector deposit base was
affected by the crisis. The government has intervened 17 financial
institutions, nationalizing 9 commercial banks and closing 7 others plus
one financial group. More intervention and consolidation is expected,
especially in the insurance industry.
Price Controls: The government imposed price controls in July 1994.
Price ceilings were decreed on a basket of basic goods and services.
Many prices have been revised upward since then. We expect an informal
pricing agreement to remain in place between government and business,
given the administration's intent to bring down the inflation rate in
1995.
Exchange Rate Policy and Foreign Exchange Controls: On June 27, 1994,
the Caldera administration implemented a fixed foreign exchange rate of
Bs. 170=$1 and foreign exchange controls to stem capital flight. The
Government created the Foreign Exchange Board (JAC) and the Office for
Technical Administration of Foreign Exchange (OTAC) that regulate and
process applications authorizing the sale of foreign exchange
respectively. The government is giving imports first priority, followed
by debt repayment. Thus little foreign exchange for repatriation of
capital, dividends, and profits has been made available. The
government's priority in providing for a consistent flow of basic food
products into the country is to avoid social instability. The state
petroleum company PDVSA is able to pay for goods and services because of
an established rotating fund that operates outside of the foreign
exchange control bureaucracy.
The competitive parity of the bolivar was believed to be between Bs. 230
and 240 to USD 1 as of July 1, 1995. Although there have been
discussions about implementing a multi-tiered foreign exchange system,
foreign exchange controls are expected to remain in place over the next
year.
The government plans to liberalize controls under the new
exchange control regime law approved by Congress on April 27, 1995. The
government is likely to restrict capital outflows for Venezuelan
citizens, residents, and corporations at least through the near term.
The government will also continue to carefully monitor foreign exchange
transactions to avoid a decline in its international reserves position.
Privatization: Venezuela achieved initial success in its privatization
program with partial sales of the state telephone company, CANTV, and
the state airline, VIASA, in 1991. The program has stalled as the
country has struggled with banking and economic crises. In 1993 and
1994, only six minor privatizations were completed generating revenues
of $22 million and $3 million respectively. The government's
privatization efforts were dealt a serious blow with its failed attempt
to sell the state-owned airline Aeropostal in May 1994. The Venezuelan
Investment Fund (FIV) began 1995 with an ambitious plan to generate $4
billion in privatization revenue for the government, but soon sharply
scaled back its plans.
It is important to note that in the current Venezuelan context, the term
"privatization" can be confusing. There is a clear trend towards
private participation in state-controlled industries through strategic
associations or limited equity sales, which is frequently mislabeled
"privatization" by the local media.
Export Incentives: Although Venezuela has reduced the number and type
of export incentives it offers over the last several years, new programs
may be introduced this year as the government attempts to promote
exports, especially non-petroleum exports. Venezuela currently
administers a partial duty drawback system and exporters may receive a
rebate of the wholesale tax paid on imported inputs. Exporters do not
have to seek prior government approval to use foreign currency earned
from export sales for expenses, including goods, services and payment of
debt.
Balance of Payments Situation
Venezuela's balance of payments position recovered in the second half of
1994 with the imposition of foreign exchange controls. The current
account registered a surplus because of the decrease in imports, caused
by strict foreign exchange controls and the devaluation of the bolivar.
At the same time, exports increased. Oil export volume and average
price rose. Non-oil exports reached a record $4.5 billion due to weak
domestic demand, competitive export pricing due to the maxidevaluation
of the bolivar, and a boost in trade created by regional trade
integration.
For 1995, Venezuela is expected to continue this trend,
registering a surplus in the current account and a deficit in the
capital account, leading to a small overall balance of payments surplus
for the year. These expectations are based on an average export
petroleum price of $13.50 a barrel, moderate increases in petroleum
production and non-traditional exports, a continuing depressed market
for imports, and restricted trade and services and capital outflows with
the continuation of foreign exchange controls.
Infrastructure Situation
The Venezuelan government recognizes the need for infrastructure
improvements, which are generally adequate (though deteriorating) in
urban areas, and thin in the interior -- especially the agricultural
flatlands and south of the Orinoco river.
Transport is mostly by road. The country has a total of 95,725 km of
roads, of which 32,800 are paved, 28,000 gravel-covered and the
remainder compacted earth. An ambitious road-building program to be bid
under the 1994 concessions law has been initiated. Venezuela has few
railroads, with the exception of a 160 km line from Puerto Cabello to
Barquisimeto to Acarigua and an iron ore transport rail system from iron
mines to Puerto Ordaz. The government plans for a 4,000 km rail system
to be built over a period of twenty years, again under a concessions
system.
Of the 280 authorized airports and landing strips, only about 40 have
scheduled commercial service, some by small regional airlines flying
airplanes of less than 20 passengers capacity. The airports are under
central government control, with the exception of two privately owned
international general aviation airports and one, on Margarita Island,
managed under a concession. The air traffic control system and
navigational aids are being operated by the Ministry of Transport and
Communications: that system's reliability is spotty and
suffering from insufficient budgets.
The only navigable river with significant traffic is the Orinoco, mainly
for bauxite and (in the delta) for the outgoing iron ore shipments. A
project for an Orinoco-Apure river transportation system to open up the
flatlands, connect Colombia, and to transport coal from Andean coal
mines to the steel plants on the lower Orinoco has been proposed but is
not being pursued as of writing. An older project, intended to connect
the Orinoco via the Rio Negro with the Amazon, is still being mentioned
in connection with a long-range development plan for the areas south of
the Orinoco river, rich in timber, bauxite, gold, diamonds and tourism
development possibilities.
The ports have now been turned over to the states in which they are
located. Some states have chosen to turn their ports over to private
companies for their operation, maintenance and further development,
while others are operating their ports as commercial companies. Port
efficiency has increased tremendously since this move.
Electric power is supplied by seven privately owned and five government
utilities. Installed generating capacity is 18,953 megaWatts, of which
10,765 are hydraulic, 8,131 steam and gas turbines and 47 diesel. The
distribution system is integrated and controlled by a central load
control center. Two new hydroelectric dams are under construction.
While demand has been increasing, there is surplus power, and
negotiations are underway to sell power to northern Brazil and to
Guyana.
The transportation system for natural gas for industrial and domestic
use via pipelines is constantly being enlarged and by now most
industrial concentrations of the country are being supplied with natural
gas as fuel.
Telecommunications have developed quickly since the partial
privatization of the national telephone company and the opening up of
the sector to private, including foreign, ownership. Two cellular phone
telephone companies are now competing and in 1994 and 1995 had the
highest growth rate in the world. Investments in this sector are
estimated to surpass the USD 1 billion mark annually. The regulatory
agency CONATEL sees its main role, in addition to normal regulatory
functions like frequency administration, as the stimulation and
promotion of new and additional services.
III. POLITICAL ENVIRONMENT
Nature of Political Relationship with the United States
Venezuela and the United States have long shared a cordial bilateral
relationship. Under President Caldera, the Venezuelan Government has
stressed the need for regional integration with other Latin American
states. Various bilateral treaty negotiations with the United States
have not progressed for the time being. Despite this, government
officials, and the country as a whole, have a generally pro-United
States attitude.
Major Political Issues Affecting Business Climate
Venezuela has endured a series of political challenges since 1989 which
have contributed to worsening political risk assessments by
international banking institutions. Major rioting in Caracas in 1989
was put down with military support. Two attempted military coups were
successfully fended off by President Carlos Andres Perez in 1992; but in
1993, he was constitutionally removed from office on grounds of misuse
of government funds. The interim government of Ramon J. Velasquez
upheld the country's traditions and held democratic elections in
December 1993, resulting in the presidency of Rafael Caldera.
The Caldera administration inherited a difficult economic
situation, exacerbated by the collapse of the banking system and
government measures to respond to the crisis. Frequent changes in
economic planning and in key economic decision-making posts have also
contributed to a contraction of the economy. The June 1994 decree
declaring temporary price and exchange rate controls has adversely
affected international business perceptions of the Venezuelan investment
climate.
However, the Caldera government has had success in restoring political
stability, and in particular, in resolving problems within the armed
forces and reestablishing military unity and discipline.
Political System, Schedule for Elections, and Major Political Parties
Venezuela is a republic with an active multiparty democratic system and
a longstanding commitment to democracy.
Since 1958, Venezuelan politics has been mostly dominated by two large
parties: the Democratic Action party (AD), associated with the Socialist
International, and the Social Christian Party (COPEI) which is
affiliated with the Christian Democratic movement. In recent years,
other political parties have challenged the political dominance of AD
and COPEI. These parties include: the Movement Towards Socialism (MAS),
consisting of democratic-leftists allied with Caldera; the Radical Cause
Party (Causa R), a working-class oriented group; and the Convergence
Party (Convergencia), a new party established in 1993 by Rafael Caldera.
Venezuela held presidential and congressional elections in December of
1993 and President Caldera began his current five- year term in February
1994. President Caldera represents a coalition of political factions,
incorporating most of the political spectrum from left to right,
distinct from the two parties - AD and COPEI - that have dominated
Venezuela's 40 year democratic history. Caldera emerged as the victor
in the 1993 four-way race with little more than a 30 percent plurality.
As a result of the 1993 national elections, the congress has evolved
from a bi-party system dominated by AD and COPEI to a more diverse five-
party system. This has complicated the legislative process.
Nonetheless, Caldera has had repeated success in securing from Congress
the major pieces of economic legislation which his administration has
proposed.
The election of mayors and governors took place for the first time in
1989. The direct election of state and local officials represents an
important development in the ongoing process of political
decentralization and transformation in Venezuela. State and municipal
elections to choose 22 state governors, over 320 mayors, state
legislators and city councilmen will be held in December 1995.
The next round of national elections are scheduled for 1998.
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Distribution is not limited by any existing laws or regulations. All
channels are possible: manufacturer's representative or commission
agent; wholesale importing distributor; importing retailer; or direct
sale to end-user. It is quite common to find Venezuelan companies
undertaking several of these functions simultaneously. No specific
business license is required for a local company or individual to be a
importer (exchange controls do require importers to be registered to
obtain dollars through the system to pay for imported goods or
services). Many retailers administer their own imports, sometimes
placing orders through commission agents or purchasing directly from
foreign suppliers.
Since parallel sources of supply are often used, true exclusivity of
distribution is difficult to enforce. Government agencies, however,
usually require that a seller of specific types of equipment be an
authorized seller for the foreign manufacturer and multiple bids by the
same manufacturer may result in disqualification. Authorization to
resell is especially important where after-sale support might be
needed.
Use of Agents/Distributors. Finding a Partner
A commission sales agent, or manufacturer's representative, finds
customers, passes the order to the foreign company and receives a
commission on the sale. The amount of commission will vary widely
depending on the nature of the product and the work or time required by
the agent. It can vary between 5 percent and 30 percent. The use of
agents where there are multiple levels of customers may be the most
practical and efficient means of covering the market. Wholesalers or
stocking distributors often have minimal outside sales force, relying on
advertising and on walk-in customers or buyers. Distribuotrs may be
important where there is strong after-sale support needed on the
product.
Venezuelan companies at any step in the distribution channel tend to
place repeated small orders. Foreign company requirements as to minimum
orders, or even minimum annual sales, may meet with strong resistance
from prospective distributors or agents. There are numerous ways to
find a business partner. The various US&FCS services, such as the
Agent/Distributor Service, Gold Key Service, Trade Missions, Catalog
Shows and USDOC-Certified trade shows are commonly used. No service or
list of potential leads can replace a visit to the country to study and
interview prospects. Venezuela has no set of laws or regulations which
protect a local agent, requiring indemnification regardless of what the
written agreement calls for.iuiatzation in case an agreement is
cancelled with or without cause. The written agreement in all
principal-agent, supplier -distributors arrangements is binding. It is
common practice to have medium- termn trial agreements with clear
performance objectivess when entering new business relationships.
On the other hand, placing a Venezuelan citizen on the company's
payroll can be unexpectedly costly in case of separation, since in that
case he is entitled to all benefits of the very generous labor laws.
Absent unusual circumstances, commission agents are not considered
employees.
Franchising
Franchising is allowed under the existing foreign investment laws.
Franchise payments, royalties, patent or technical assistance agreements
must be registered - but are not subject to re-negotiation or other
controls - with the Superintendent of Foreign Investment (SIEX). Certain
payments for the use of franchised rights may be subject to withholding
taxes. Decree 2095 guarantees the ability to remit funds for franchising
rights but exchange controls now require that the company remitting be
registered with SIEX and obtain approval of the exchange control
authorities (OTAC) in order to remit such funds.
From a marketing standpoint franchises will probably only be successful
if they bring technology, services or systems which are not generally
available in the country.
Direct Marketing
Marketing, through TV commercials, newspaper inserts, house visits or
street vendors, is common. Mail orders are impossible because of low
reliability of the postal system. Placing orders by phone with delivery
by messenger is becoming popular, and several such companies have been
successful by placing their catalogs in newspapers as weekend issued
inserts. As the telephone system continues to improve, direct marketing
by phone will become more common. Almost all businesses now use fax in
their day-to-day business.
Joint Ventures / Licensing
The formation of joint ventures by forming a new company with local
capital or by buying into an existing local company is quite common.
Only registration of the venture with SIEX is required. No limit on the
amount of dividends, reinvestment, or repatriation is imposed by law,
but these can only be remitted with the approval of OTAC under existing
exchange controls regulations. Similarly, manfuacturing under license is
permitted but to pay license fees, royalties or trademark and patent
fees the license mujst first be registered with SIEX and the then
approved by OTAC before remittance. See Investment Climate (Chapter
VII) below.
Joint ventures and wholly-owned subsidiaries of foreign companies are
treated the same as Venezuelan firms. Such enterprises as security
companies (guard services, armored cars, etc.), TV and radio
broadcasting and the publication of Spanish language newspapers are
restricted from foreign investment of more than 20% of the capital.
Professional services (attorneys, medical services, CPAs, architects,
etc.) are also restricted, falling under the Law of Professions.
Foreign professionals wishing to work in Venezuela must revalidate their
title at a Venezuelan university. This, however, does not eliminate
consulting services under contract for a specific project. Banking,
insurance and brokerage services and companies have recently been opened
to foreign investment.
Steps to Establish an Office
A business must first be registered with the Venezuelan "Commercial
Registry" to be legally established. The opening and operating of a
coordinating or reporting office is not considered foreign investment or
a business activity as long as the office does not sell and is being
financed from the home office. Any other more detailed activity would
fall under the Commercial Code. Business enterprises can be registered
as corporations, as limited liability companies, as partnerships or as
sole proprietorships.
It is advisable to have an attorney draft the registration documents.
Registration itself is fast and inexpensive. After that, a municipal
business license has to be obtained, which also requires the payment of
a small quarterly tax. The final step would be to obtain from the
Ministry of Finance the income tax registration number (the "R.I.F.")
which must be shown on all fiscal documents and serves generally as an
identification number for the entity.
Office space is widely available for rental or purchase. Real estate can
be purchased by foreing companies without restriction. Standard Lease
contracts do not cover utilities. While telephone lines are becoming
more available, there can still be a long wait depending on the area of
town and the exchange being used. Some office buildings do lease office
space with at least one phone line.
Selling Factors / Techniques
U.S. companies often make the mistake of providing sales literature in
English when selling to their agents or distributors. While many
businessmen speak English, much of their staff and customers will not.
Consequently, failure to prepare materialsin Spanish eliminates a key
selling tool. In most cases, support has to be given new agents or
distributors in the form of technical information on applications
especially if a product is new or entails new technologies. The average
Venezuelan business does not have sales engineers or specialists, and
some form of education is required. The same situation exists for
maintenance or repair technicians, and the agent might request that his
personnel be trained in the United States. Venezuelan end users of any
type of machinery or equipment require that spare parts, repair service
and after-sale support is available. Sales at the retail level are not
much different from those in the United States. Price haggling in
established stores is not common. Special offers are frequent but are
specifically saeasonal in nature. There are numerous malls, but few
department stores.
Advertising and Trade Promotion
While there are some specialized publications, the daily newspapers are
the most common form of advertising. This even includes machinery or
industrial equipment. TV and radio commercials are used heavily to
promote durable and non-durable consumer goods. Billboards are common
as well as distribution through leaflets, newspaper inserts, and in-
store promotions. There are numerous advertising companies, some being
subsidiaries of well-known U.S. companies.
There are many trade shows and expositions (see listing), some organized
on behalf of trade or industrial associations by capable local show
organizers. U.S. companies also have organized trade shows in Venezuela
directly. Normally they are widely advertised and, even if specialized,
visited by the public in general. These shows have proven to be an
excellent vehicle to promote a new product, or to find an agent or
distributor. Off-the-floor sales are not common, however, except for
pre- Christmas gift shows and toy and furniture shows.
Premiums are not widely used for trade promotion purposes, but are often
available in companies for their customers or business associates.
Business gifts are common around Christmas for steady customers, and can
be expensive.
MAJOR DAILY NEWSPAPERS:
El Universal
Edificio El Universal
Avda. Urdaneta
Caracas, Venezuela
Phone: (582)563-7511
Fax: (582)561-9639
El Nacional
Puente Nuevo a Puerto Escondido
Caracas, Venezuela
Phone: (582)408-3111
Fax: (582)793-4083
El Diario de Caracas
Avda. Principal de Boleita Norte
Caracas, Venezuela
Phone: (582)576-8211
Fax: (582)34-1927
Economia Hoy
Edificio Di Mase
Alcabala a Urapal
Caracas, Venezuela
Phone: (582)576-8211
Fax: (582)572-5470
Reporte
Edificio El Telar
Avda. Urdaneta
Caracas, Venezuela
Phone: (582)481-7441
Fax: (582)482-5275
The Daily Journal (only English language newspaper published in
Venezuela)
Avda. Fuerzas Armadas
Crucecita a San Ramon
Caracas, Venezuela
Phone: (582)562-1122
Fax: (582)562-1322
While many more newspapers are published both in Caracas and in all
major towns in Venezuela, those listed above have country- wide
distribution.
MAJOR MAGAZINES:
Automotriz (Automotive trade)
Avda. Los Mangos
No. 86, La Florida
Caracas, Venezuela
Phone: (582)74-3957
Fax: (582)74-4168
Business Venezuela (published by the Venezuelan-American Chamber of
Commerce)
Edificio Credival
2da. Avda. Campo Alegre
Caracas, Venezuela
Phone: (582)263-0833
Fax: (582)263-1829
Computer News
Edificio Tajamar
Piso 4, Parque Central
Caracas, Venezuela
Phone: (582)574-3313
Fax: (582)576-8858
Dinero (Finance, Business)
Edificio ACO
Avda. Principal Las Mercedes
Caracas, Venezuela
Phone: (582)993-5633
Fax: (582)993-0644
El Mundo de la Seguridad (safety and security market)
Edificio Cipriano Morales
Avda. Urdaneta
Caracas, Venezuela
Phone: (582)83-7310
Fax: (582)862-4448
Numero (Business)
Edificio Agfa
3ra. Transversal Los Ruices
Caracas, Venezuela
Phone: (582)238-3393
Fax: (582)203-9104
Pricing Products
In an effort to control inflation, the government has placed price
controls on an increasing number of products, particularly foods,
pharmaceuticals and services deemed "essential." Government and
industry have recently entered into an "anti- inflation" pact designed
to keep product prices in line with increased in productivity.
Government has also indicated that maintenance of lower prices may
result in priority for imports under exchange controls. Outside of
specific price controls pricing is left to market and competitive
forces. High mark-ups of 100 percent or more are not uncommon if the
market can bear it. Price fixing among manufacturers or dealers is
prohibited by law, and heavy fines can be levied on violators.
The cost of doing business in Venezuela is relatively high, because of
the very steep labor fringe benefits, and the high price of quality
labor where English language ability or technical know-how is needed.
Basically, prices are calculated on the basis of: cost of product in
Venezuela port (CIF), plus import duties, plus value added tax, plus
local transportation, plus warehousing costs, plus promotion,
advertising or marketing cost, plus sales commissions, plus mark-up for
profit and possible additional taxes. This can lead to a product
costing $100 CIF having a price tag of two to three times that when sold
to the end-user. In the past few years, discount stores have appeared
for the first time in Venezuela.
Sales Service / Customer Support
It is not normally possible to sell equipment, whether industrial or
durable consumer, without offering sales support, spare parts or
service. It is therefore extremely important that prospective agents or
distributors are able to provide this support or are able to contract
for it. Maintaining an adequate stock of spare parts may well be
considered essential.
Selling to the Government
The purchase of goods and services by government agencies is ruled by a
complex system of laws, decrees and regulations. The basic law of
procurement (Ley de Licitaciones) of July 20, 1990 establishes the
framework.
Venezuelan government officials are not permitted to conduct official
business in any language except Spanish. Replies or correspondence in
English are unlikely to get a response.
There is no specific Venezuelan agency in charge of government
procurement or which provides guidance to foreign bidders/sellers. The
purchasing agency within the government unit buying the goods or
services may be the vbest source of assistance, especially to foreign
companies with no previous experience in Venezuela.
Anyone wanting to sell to a Venezuelan governmental agency must be
registered in the National Register of Contractors, which is maintained
by the Central Office of Statistics and Informatics. This National
Register can open sub-registers, normally found in all ministries and
governmental agencies which regularly purchase goods or services.
Although it is acceptable practice to pay commissions, these cannot be
an additional item over the final sales price to the government (since
they are considered a part of the seller's cost of doing business and,
therefore, should not be charged to the buyer). Government comptrollers
frequently check the quoted price against the published export price
list to make sure that commissions are not added. The Venezuela gneeral
controller maintains offices in the United States to assist in verifying
pricing used in international bids.
Exporters are advised to proceed with caution if they are requested to
make changes in a contract after it has been signed. If such a request
is made, the agency's request, and the change in contract language or
terms, must be in writing. There have been occasions where changes were
requested by a governmental agency but these were not put into writing.
Later, it was difficult to collect payment, as the excuse was that the
terms of the contract were not followed. Litigation against the
government is most difficult and enforceability of any judgment
precarious at best.
GOVERNMENT TENDERS
Tenders may be opened:
a) Only to domestic companies
b) To domestic and foreign companies
c) Exclusively to foreign companies
In the case of public tenders open to foreign bidders, it is sometimes
stipulated that the foreign company must form a consortium with a
domestic firm.
Registration exemptions: If tenders are opened at an international
level with only foreign companies expected to participate, these are
exempt from prior registration but must register once pre-selected
(short-listed). Companies that expect to sell goods or services costing
less than 100,000 bolivars (US$590.)are exempt from having to register.
TYPES OF TENDERS
Purchases of up to 100,000 bolivars (US$590) are not subject to tenders.
All others fall under one of these three
classifications:
a) General tender
b) Selective tender
c) Direct purchase
A) GENERAL TENDERS (Licitacion General) are for:
- Purchase of goods or the contracting of services valued
at over 10 million Bs (US$59,000.).
- For construction projects of over 30 million Bs.
(US$177,000).
B) SELECTIVE TENDERS (Licitacion Selectiva) are used:
- For services or goods valued between one and ten
million Bs (US$5,900. to US$59,000.).
- For construction projects valued between ten and thirty
million Bs (US$59,000. to $177,000.).
- When there are less than ten qualified suppliers listed
in the National Register of Contractors.
- If the goods are only available outside of the country.
- For goods and services related to state security.
For all selective tenders, at least five suppliers must be invited to
bid with a minimum of three offers actually submitted, or the process
will be declared null and void.
C) DIRECT PURCHASE (Adjudicacion directa) is used:
- For purchases of less than 1 million Bs (US$5,900.).
- For construction projects of less than 10 million Bs
(US$59,000.).
- If needed for the completion of a project in process
- For purchasing artistic or scientific works
- When there is only one supplier
- In emergencies
- When determined that no other purchase methods are
possible.
THE BIDDING PROCESS
Bid proposals usually must be separated into two parts: The first part
consists of legal documentation regarding the supplier, description of
experience, list of prior clients, etc. The second part provides
information on the actual technical offer and price.
The bids are usually reviewed by a commission established by the buyer
and in the presence of a representative of the national Comptroller.
The review of the technical part may necessitate outside opinions, such
as from the College of Engineers, The National Council of Science and
Technology, or a Congressional Committee established for this purpose.
In all cases, the National Comptroller has the final word and may stop a
bidding process at any time if he feels that procedures have been
flawed.
The tender publication usually contains a time schedule for pre-
selection, submission of the final offer, and the date of the final
selection. When several organizations are involved in the final
selection, the deadline frequently slips and bidders are asked to
provide a date up to which they will hold their prices. If that date
passes, price increases may be accepted.
If a U.S. company feels that the bidding process of a foreign tender in
which it is participating is flawed or unfair, we suggest it contact the
American Embassy's Commercial Section for assistance.
Protecting Your Product from Intellectual Property Right
Infringement
Although intellectual property protection in Venezuela has improved over
the last year, U.S. companies continue to express concern about
inadequacies in enforcement of patent, trademark, and copyright
protection, particularly as applied to pharmaceuticals, computer
software, and motion pictures. Venezuela remained on the USTR's Special
301 "Watch List" for the review completed in Spring 1995.
Venezuela is an active member of the World Intellectual Property
Organization (WIPO) and a signatory to the Bern Convention For the
Protection of Literary and Artistic Works, the Geneva Phonograms
Convention, The Universal Copyright Convention and has ratified its
membership in the Paris Convention for the Protection of Industrial
Property. Venezuela is also a signatory to the Uruguay Round
intellectual property rights agreement, TRIPS.
Venezuela's legal framework for patent and trademark protection is
currently provided by Andean Pact Decision 344, superceding Venezuela's
national Patent and Trademark Law which dates from 1955. Decision 344
provides for patentability of pharmaceutical products, except those
listed on the World Health Organization list of essential medicines, and
recognizes the rights of "famous trademark" holders. Andean Pact
Decision 345 covers plant varieties specifically. New national patent
and trademark legislation is expected to be introduced in Congress this
year, and is likely to focus on implementation of the TRIPS agreement,
judicial reform, and enhanced border controls rather than changes to the
legal framework.
Venezuela's 1993 Copyright Law is modern and comprehensive and extends
copyright protection to all creative works, including computer software.
Andean Pact Decision 351 is complimentary to Venezuela's national law
for copyrights. These legal texts enhanced sanctions against copyright
infringement, but enforcement has not kept pace. Nevertheless, several
significant judicially-authorized seizures have taken place recently,
and copyright owners should be encouraged by these actions. The
Venezuelan government announced in June 1995 that is in the process of
establishing a National Copyright Office for the registration and
protection of copyrights.
Since Venezuela does not automatically recognize foreign patents,
trademarks or logos, foreign investors should be sure to register
patents and trademarks appropriately and in as many categories as are
applicable. It is necessary to register with the Autonomous Service of
the Industrial Property Registry of the Ministry of Development. It is
advisable not to have the agent or distributor do this in their name
because the agent or distributor then becomes the registered owner.
Registration should be done through a local attorney experienced in
these matters. Care should be taken to use the registered trademark.
Venezuelan regulations allow for cancellation of the registration if the
trademark is not used in at least one of the Andean Pact countries for
three consecutive years.
Need for a Local Attorney
Contracting a reputable local law firm is advisable for any U.S. company
wishing to establish a presence in Venezuela, from joint ventures,
register a trademark, or enter into any type of business relationship.
They cam provide essential start-up information on labor laws, tax
regulations, purchase of real estate and drafting by-laws of the local
subsidiary. Venezuelan laws are complicated, even more so since many
activities are regulated, not only by laws but also by presidential
decrees or specific regulations. The bureaucracy and paperwork is often
complicated. A number of large law firms have attorneys who have also
studied in the United States and are familiar with matching an American
company's requirements to the local law.
A list of Venezuelan law firms which specialize in various aspects of
commercial and investment law can be requested from the U.S. Embassy in
Caracas (See Appendix E for contact
information).
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Goods and Services
Rank Name of Sector ITA Code ---- --------------
-------- 1 Telecommunications Services TES
1994 1995 1996
A. Total Sales: 2,200 2,500 3,000
B. Total Local Firm Sales: N/A N/A N/A
C. Total Exports: N/A N/A N/A
D. Sales by Foreign Firms: N/A N/A N/A
E. Sales by U.S. Firms: 1,800 2,000 2,200
Comments: Billings from telecommunications services will continue
their long-term growth trend, although 1995 will continue the slow
growth of 1994. New telecommunications services are coming on stream,
and demand for such services is still unsatisfied. The privatized
national telephone company continues to add subscribers and services and
its billings will continue to rise, partly because of authorized rate
increases. The two cellular telephone companies continue to grow at a
rapid rate. All of the privately owned non-telephone companies (data,
voice, video, trunking etc.) have some U.S relationships, either through
full or partial ownership, or carrier or satellite contracts. They thus
contribute to sales by U.S. companies in this market.
2 Telecommunications Equipment TEL
1994 1995 1996
A.Total Market: 1,030 1,234 1,459
B.Total Local Production: 31 35 60
C.Total Exports: 1 1 1
D.Total Imports: 1,000 1,200 1,400
E.Total Imports from U.S.: 450 500 600
Comments: Investments in the burgeoning telecommunications industry
will continue at a high level, but slowed in 1994 due to general
economic conditions. Some recovery is expected for 1995. The expansion
of the sector will continue at a somewhat slower rate once the initial
new services allowed after liberalization and privatization are in
place. U.S. firms face growing competition by aggressive sales efforts
by European suppliers.
3 Oil and Gas Field Machinery and Services OGM
1994 1995 1996
A. Total Market Size: 304 387 471
B. Total Local Production: 137 154 171
C. Total Exports: - - -
D. Total Imports: 167 233 300
E. Total Imports from U.S.: 91 103 114
Comments: Preliminary figures indicate that Petroleos de Venezuela S.A.
(PDVSA), Venezuela's oil holding company, will allocate sufficient funds
for the production, refining and exploration activities. Aging oil
fields tend to require increasing investments and servicing to maintain
their production level. The exploration effort continues as the country
searches for more petroleum and gas. In addition, the marginal
oilfields reactivation program will go ahead, and recent government
discussions have included examining how to utilize a reopening to
private investors to expand the industry.
4 Automobiles and Light Trucks/Vans AUT
1994 1995 1996
A. Total Market: 1,630 1,670 1,720
B. Total Local Production:* 1,150 1,100 1,200
C. Total Exports: 20 30 80
D. Total Imports:** 500 600 600
E. Total Imports from U.S.:*** 480 250 450
* From imported kits with about 30 percent local component content.
** Includes kits for local assembly.
*** Include non-U.S. made cars sold through U.S.-based dealers.
Comments: The deteriorated value of the local currency will cause an
estimated 35 percent decrease in vehicle sales, with locally assembled
vehicles less affected than imports. Even with some improvement in the
economy, the high local cost of domestically assembled and of imported
vehicles will make these unaccessible to large sectors of the
population. New luxury taxes are also expected to result in a
restructuring of the Venezuelan demand picture. This situation will
give a great advantage to the manufacturers of small and less expensive
vehicles.
5 Automobile Parts and Service Equipment APS
1994 1995 1996
A. Total Market: 665 645 680
B. Total Local Production: 200 195 200
C. Total Exports: 35 50 70
D. Total Imports: 500 500 550
E. Total Imports from U.S.: 300 280 310
Comments: The domestic parts and components industry claims to be
supplying about 30 percent of the total needs of the country for such
products, which includes sales to the assembly plants. With decreasing
sales by the assemblers, local production should decrease, partly offset
by exports to Colombia and Ecuador under the common automotive industry
policy agreement. New car sales are decreasing, and with the growing
age of the vehicle population, sales and thus imports of replacement
parts should grow, offsetting the decreasing needs of the assembly
industry. The U.S. market share may decrease as foreign cars take a
larger share of the market.
6 Computers and Peripherals CPT
1994 1995 1996
A. Total Market Size: 230 241 280
B. Total Local Production: 0 0 0
C. Total Exports: 0 0 0
D. Total Imports: 230 241 280
E. Total Imports from U.S.: 200 191 216
Comments: The local desktop PC subsector (including PC's and
workstations) continues to grow, accounting for 62% of total sales in
Venezuela. Networks (both LAN and WAN) are gaining ground in the local
market due to various factors: improved telephone lines, greater use of
fiber optic cable, more powerful and better priced machines. Banks and
other leading private sector companies are making substantial
investments in networking systems. While the U.S. has the dominant
market share, competition is increasing, and Asian countries are
providing strong competition to U.S.-made computers.
7 Medical Equipment MED
1994 1995 1996
A. Total Market Size: 293 337 370
B. Total Local Production: 78 72 80
C. Total Exports: 7 10 10
D. Total Imports: 222 275 300
E. Total Imports from U.S.: 85 98 100
Comments: Domestic production of medical equipment consists primarily
of expendables and of hospital furniture. Japan and Germany are the
principal competitors to the U.S. for electro- medical equipment of all
types, while U.S. manufacturers are the major suppliers of surgical
instruments and appliances, radiation equipment, magnetic resonance and
tomography equipment and implant devices. Under present budgetary
restraints, there will be limits to the equipping and modernization of
existing and construction of new hospitals, despite the new government's
commitment to improving health care and facilities. The principal
market should continue to be private hospitals and individual
physicians. The U.S. Trade and Development Agency is funding a
feasibility study for the health sector. IDB and the World Bank will
finance a five-year hospital modernization project totalling over USD
400 million.
8 Electrical Power Systems ELP
1994 1995 1996
A. Total Market Size: 277 317 360
B. Total Local Production: 161 184 208
C. Total Exports: 24 27 29
D. Total Imports: 140 160 181
E. Total Imports from U.S.: 60 67 73
Comments: The Interamerican Development Bank is providing a loan of USD
500 million for the Caruachi Project. Over the next three years the
following systems may be privatized: Enelbar, Planta Centro, Enelco,
and Isla Margarita. Private sector companies also continue expansion
plans.
9 Computer Software and Services CSF
1994 1995 1996
A. Total Market Size: 135 175 200
B. Total Local Production: 11 12 16
C. Total Exports: 7 8 10
D. Total Imports: 131 171 194
E. Total Imports from U.S.: 112 147 165
Comments: This subsector maintains a steady upward growth as end-users
become aware of the need to modernize their businesses in order to be
competitive in international markets, especially as software programs
become much more user-friendly and cost effective. The United States
continues to be the major supplier of software to Venezuela
(approximately 90% of all imports). There is a small local production
sector, mainly in the area of accounting and business administration
applications, which is prospering due to price and adaption to local
practices. Local software companies have been exporting to other Latin
American countries and to the Spanish-speaking market in the United
States.
10 Pumps, Valves and Compressors PVC
1994 1995 1996
A. Total Market Size: 250 261 275
B. Total Local Production: 132 138 147
C. Total Exports: 7 7 8
D. Total Imports: 125 130 136
E. Total Imports from U.S.: 80 84 87
Comments: The United States' position as a supplier of pumps, valves and
compressors has traditionally been very strong, thanks to the special
historical relationship with Venezuelan petroleum and petrochemical end-
users. Projects in water supply systems -- upgrades, expansion and
refurbishment -- and in the electrical industry offer potential sales
opportunities. U.S. equipment will face competition from European and
Japanese suppliers.
11 Security and Safety Equipment SEC
1994 1995 1996
A. Total Market: 91 95 99
B. Total Local Production: 12 12 14
C. Total Exports: 0 0 0
D. Total Imports: 79 83 85
E. Total Imports from U.S.: 39 42 45
Comments: Growing crime, especially automobile theft and home break-
ins, has fueled a growing market for all security devices. Local
production and assembly of such products have shown steady small
increases and diversification, although the industry does not produce
electronic systems, closed circuit TV systems or elaborate equipment for
banks. The market for industrial safety equipment, fire prevention and
fire fighting does not appear to be growing, probably because of the
generally depressed economic conditions affecting industry and municipal
governments. The United States appears to be the major supplier of all
types of equipment in this sector, with the exception of video systems
which generally come from Japan.
12 Pollution Control Equipment POL
1994 1995 1996
A. Total Market Size: 72 76 80
B. Total Local Production: 6 8 10
C. Total Exports: 4 4 5
D. Total Imports: 70 72 75
E. Total Imports from U.S. 50 55 60
Comments: The market for the poolution control sector is presently
undergoing important changes. During the last couple of years the
sector showed moderate growth, but because of the 1992 passage of the
Criminal Environmental Law (CEL), this sector is expected to grow
considerably. CEL will give a definite boost to all pollution control
related investment: air, noise, water and toxic wastes. The U.S. is the
major supplier of pollution control equipment to Venezuela. Medium
term, market prospects will probably shoot up.
13 Mining Industry Equipment MIN
1994 1995 1996
A. Total Market Size: 60 66 68
B. Total Local Production: - - -
C. Total Exports: - - -
D. Total Imports: 60 66 68
E. Total Imports from U.S.: 42 45 46
Comments: There is a growing interest in the Venezuelan mining sector
due to two important new developments: a) the approval of a new law in
September, 1991 which significantly lowered the tax rate applied to
mining companies to a maximum of 30%, and b) the granting of mining
concessions to foreign owned companies, which had been restricted for
many years. This is certain to attract substantial investment from the
U.S. and other countries to develop Venezuela's impressive deposits of
coal, gold phosphates and other minerals. Most of this is open-pit.
U.S. products are highly regarded in this industry and continue to have
a high market share.
14 Water Resources Equipment WRE
1994 1995 1996
A. Total Market Size: 70 67 74
B. Total Local Production: 15 17 20
C. Total Exports: 5 5 5
D. Total Imports: 60 55 59
E. Total Imports from U.S.: 35 35 36
Comments: The Venezuelan water resources sector is expected to expand
rapidly in the next 5-7 years. Both the U.S. Trade and Development
Agency (TDA) and U.S. Eximbank are currently supporting projects and
U.S. suppliers may also wish to follow up with the Inter-American
Development Bank (IDB) and the World Bank, as these multilateral lending
institutions are considering funding Venezuelan water resource projects.
The decentralization process has brought about several regional water
companies which will be responsible for water supply, waste water
treatment, and sewage and sanitation related projects. Due to increased
demand for potable water, the water supply is expected to experience
significant growth which will require foreign sourced water supply and
operation equipment.
Best Prospects for Agricultural Products
The United States is the traditional supplier of 30 percent of
Venezuela's imports of agricultural products. Traditionally, two-thirds
of our agricultural exports are bulk commodities such as wheat, yellow
corn, soybeans and soybean meal. While it is unlikely that exports of
these commodities will grow in 1995- 1996, they still represent
significant U.S. exports, and are therefore listed below.
Units: Thousand Metric Tons
Name of Sector PS&D Code
Wheat 0410000
1994 1995 1996
A. Total Market Size 1060 1050 1060
B. Total local production 0 0 0
C. Total exports 0 0 0
D. Total imports 1036 1050 1060
E. Total Imports from US 700 605 605
Comments: Venezuela consumes 1 million metric tons of wheat per year on
the average, with no local production of relevance. Imports of U.S.
wheat will compete directly with Canadian and EC wheat, as well as
smaller amounts of Argentinean wheat and other sporadic sources. In MY
1992, an EEP program helped reach 838,000 MT of U.S. wheat imports,
which have since declined slightly due to the program no longer being in
effect, a local recession, and highly subsidized imports from the EC.
The prospects on the increase of U.S. share in this market are based on
improvement of the local economy, the relationship between the Bolivar
and the U.S. Dollar, and the presence or absence of an EEP program to
counterbalance Canadian and European subsidies.
YELLOW CORN (Feed Grains) 0440000
1994 1995 1996
A. Total Market Size 1900 2174 2190
B. Total local production 645 1000 1000
C. Total exports 0 0 0
D. Total imports 1210 1190 1190
E. Total Imports from US 800 780 800
Comments: Venezuela produces around 400,000 MT of feedgrains, and
requires approximately 1.2 to 1.5 MMT to supply the local animal feed
industry, a highly sensitive market that is
frequently hindered by local policies to buy local grain. Venezuela has
traditionally been a near monopoly for U.S. grain, despite small sales
by Argentina. Minimum expectations for U.S. grain imports seldom fall
below 450,000 MT.
SOYBEANS 2222000
1994 1995 1996
A. Total Market Size 209 243 288
B. Total local production 9 9 10
C. Total exports 0 0 0
D. Total imports 200 212 244
E. Total Imports from US 148 200 200
Comments: Venezuela's imports of soybeans averaged 125,000 MT of beans
for the period 1990-1993. Bolivian soybeans, which do not pay tariff
due to Andean Pact preferences, are currently the sole competition for
U.S. beans.
SOYBEAN MEAL 0813100
1994 1995 1996
A. Total Market Size 800 554 550
B. Total local production 125 178 222
C. Total exports 0 90 120
D. Total imports 560 258 308
E. Imports from US 270 219 241
SOYBEAN MEAL: Another component needed for the manufacturing of animal
feed; local production of soybean meal is from the
crushing of imported U.S. soybeans, and so follows the same trade
patterns as the beans. Imports of meal from the U.S. averaged 400,000
MT for the period 1990-1993. Prospects for imports are based on the
relationship between importing U.S. soybeans or soybean meal, and the
expansion of the animal feed/poultry industries.
Significant Investment Opportunities
(A) Petroleum - Foreign Company Participation
- Strategic Associations: the state-owned petroleum holding company,
Petroleos de Venezuela, S.A., and its operating companies Maraven,
Lagoven and Corpoven, have been actively pursuing foreign partners to
inject much-needed capital to develop oil and gas capacity. Deals
approved include the Cristobal Colon natural gas project, valued at USD
5 Billion, with Venezuelan partner Lagoven joined by Exxon, Shell and
Mitsubishi; a USD 2.0 billion Maraven-Conoco joint venture to produce
and upgrade heavy crude, and a joint study by Maraven and Chevron to
produce asphalt for extra-heavy crude.
- Profit-sharing Agreements: exploration and production
agreements for light and medium crudes are expected to be
announced by year-end 1995.
- Vehicle Gas Conversion: the Venezuelan government plans to convert
120,000 vehicles from gasoline to natural gas, aiming for in excess of
60,000 vehicles in the first three years.
(B) Privatization of State-Owned Heavy Industries
- The Corporacion Venezolana de Guayana (CVG) is seeking foreign
capital for its financially-troubled operations. The Venezuelan
Congress has given the go-ahead for private sector participation in six
CVG-owned businesses, primarily in the aluminum sector. In the longer
term, additional opportunities are expected in forestry, hospital
modernization, ports and airports and infrastructure.
The Government of the United States acknowledges the contribution that
outward foreign direct investment makes to the U.S. economy. U.S.
foreign direct investment is increasingly viewed as a compliment or even
a necessary component of trade. For example, roughly 60 percent of U.S.
exports are sold by American firms that have operations abroad.
Recognizing the benefits that U.S. outward investment brings to the U.S.
economy, the government of the United States undertakes initiatives,
such as Overseas Private Investment Corporation (OPIC) programs,
investment treaty negotiations and business facilitation programs, that
support U.S. investors.
VI. TRADE REGULATIONS AND STANDARDS
Trade Barriers, Including Tariffs, Non-Tariff Barriers and Import Taxes
All imports are assessed a one percent customs handling charge. The
import duties are calculated on the CIF value of the shipment.
Venezuela has adopted the harmonized tariff schedule. Beginning in
1995, Venezuela generally adheres to the Andean Pact's Common External
Tariff, which has four tariff levels: 5, 10, 15 and 20 percent.
Automobiles carry a duty of 35 percent, and motor oil bears surcharge of
Bs. 60 per kilogram. All imports also face a twelve and one-half
percent tax. A luxury tax, on a sliding scale of up to 20 percent, will
also apply to some goods, including, certain alcoholic beverages and
luxury cars.
Venezuela implemented the Andean Pact Price Band system for certain
agricultural products (includding wheat, feed grains, rice, pork and
poultry meat, oilseeds, fats and oils, oilseed meals and milk). This
system tracks the estimated landed price of certain marker commodities.
If the marker prices fall outside of the established price band, the
Venezuelan ad valorum tariff for the marker product and specified
related products is adjusted upward or downward. The implementation of
the new price band scheme has not been smooth, and there is a fair
amount of confusion among both importers and customs officials.
The Venezuelan Ministry of Agriculture has used its authority to issue
sanitary and phytosanitary import permits to unfairly prohibit the
importation of certain agricultural products which compete with domestic
products. This has not occurred for processed food products.
Customs Valuation
Customs calculates duties on the landed (CIF) cost of the product and on
the gross weight of the import, thus including the weight or value of
the packaging. Venezuela has recently established procedures for
imposing countervailing duties to avoid dumping and counteract
subsidies. Such duties have been levied on products, such as blue jeans
coming from Asia and some plastics. Typically customs authorities accept
the value of the shipment as indicated on the documents, but recent
regulations allow them to reference a base price for purposes of
determining mimimum base price for purposes of customs value. government
officials
indicated that this base price system is GATT-compliant. Underinvoicing
in any event can result in heavy fines to the importer as well as
forfeiture of the goods in question.
Complaints by importers of inconsistency in customs treatment in various
ports of entry have led to an effort by SENIAT, an agency of the
Ministry of Finance, to build a common data base of information and
otherwise coordinate and ensure uniform valuation principles by customs
offices in the country.
Import Licenses
Import licenses are rarely required, but there are a number of products
which still require permits. These include arms and explosives, which
require an import permit from the Ministry of the Interior. Import
certificates are required for certain products subject to special
supervision. Almost all foods and agricultural imports must have
sanitary or phytosanitary import certificates, issued by the Ministry of
Agriculture, to be allowed entry. Medicines, foods and cosmetics
require registration with the Ministry of Health. Customs will let
products pass without a label showing the registration number if the
importer produces the appropriate documentation from the relevant
Ministry.
In the case of imported alcoholic beverages, the tax "band" must be
affixed across the bottle closure before the shipment can leave the
customs premises. Imported cigarettes are also subject to this type of
measure and adhesive labels are not allowed.
Export Controls
In rare cases controls can be applied by the Foreign Trade Institute
(ICE). These are usually applied to avoid domestic shortages. Certain
mineral resources also are subject to export controls. The re-export of
capital goods is normally not allowed, unless the owner has made prior
arrangements (BEFORE importing) to the effect that the equipment is to
be used in Venezuela only for a specific project and are not to stay in
country (see Temporary Entry).
Import / Export Documentation
Venezuelan Customs requires that all documents be in Spanish. The
invoice must be typewritten; a photocopy will not be accepted. The
manifest of importation and declaration of value must be in
quadruplicate. The following documents may be required: commercial
invoice; bill of lading; packing list; certificate of origin (if
required); special certificates or permits when required (such as
phytosanitary or quality standards certificates or Ministry of Interior
permit for firearms). Exporters should consult with the Venezuelan
importer regarding what documentation is required in addition to the
invoice.
Exporters should quote CIF prices for Venezuela (not FOB) since import
duties are calculated on the CIF price. Insurance and freight must be
listed separately on the invoice.
The invoice must be in duplicate and list both the value per unit and
the total value of the shipment. Shipping and insurance costs are to be
listed separately. The description for the merchandise must include the
appropriate tariff number, which the importer can supply.
To simplify the import process for a large amount of cargo for one
project, there should be a single declaration for all items, and each
item then listed separately with its respective tariff number.
For new products, particularly those whose tariff number cannot be
readily identified, it is important to obtain a specific tariff number,
which the importer can obtain from customs.
More details on special requirements and documentation are available in
publications such as the following:
Shipper's Export Manual
Bureau of National Affairs
1231 25th Street N.W.
Washington, D.C. 20037
Phone: (202)452-4200
Fax: (202)822-8092
Exporter's Encyclopedia
Dun & Bradstreet International
140 Allen Street; Suite 200
Liberty Corner, N.J. 07938
Phone: (908)604-7900
Fax: (90)604-7958
All shipments must be made on a direct consignment basis. Customs
regulations stipulate that the consignee is the owner of the shipment
and is responsible for all customs payments. Thus, a consignee may make
the required payments and remove the merchandise from customs. It is
important to have a reliable and known consignee as the ownership status
allows the consignee to have complete control over the imported product.
Similiarly, some U.S. companies have had difficulties with sight draft
transactions. When Venezuelan companies either delay or refuse to claim
merchandise arriving in Venezuelan ports Customs will impounds goods not
claimed, and, if steep fines and storage fees are not promptly paid,
sell the goods at auction. In some instances, the original consignees
have successfully bid on the same goods at auction and obtained them for
well less than the CIF value. For this reason, exporters are advised to
investigate Venezuelan companies thoroughly and carefully evaluate the
advantages and risks of sight drafts versus irrevocable letters of
credit.
Since Venezuelan customs procedures are cumbersome and involve many
steps, most importers use the service of a customs agent. The Commercial
Section of the U.S. Embassy can provide names of reputable agents.
Venezuelan customs brokers typically charge one percent of the CIF
value, or less on regular orders. There are additional charges for
document preparation and incidentals. These expenses are normally paid
by the importer.
To the extent that an exporter expects to be paid through the
authoroized exchange controls, current regulations require authorization
by OTAC (see Sections V and VII) prior to importation of the products
for which hard currency to pay will be requested. This requires
additional import documentation (see which is also the responsibility
of the importer to obtain and submit.
Temporary Entry
The customs law and its regulations allow the import of merchandise on a
temporary basis for exhibitions, cultural purposes, demonstrations,
scientific purposes or specific contracts. The importer must request
permission for temporary entry, providing an exact description of the
merchandise, its number or volume, its value and its expected date of
re-export. Temporary entry forms may be requested from the Director
General de Servicios Aduanales (General Director of Customs Services) at
the Ministry of Finance in Caracas at fax number (58-2) 41-57-71. A bond
covering the full value of the duty payable in case the products stay in
the country must be obtained which will be returned once the products
have left the country. Normally, temporary entry permits are granted
for a maximum stay of up to six months. The one percent customs
handling charge must be paid and is not reimbursable.
Temporary entry of samples by visiting businessmen is allowed, but the
determination of what is a sample is left to the customs agent at the
port of entry. Samples arriving unaccompanied as freight are never
considered as such, unless declared as having no commercial value and
prepared in such a form that they cannot be sold commercially.
Labeling, Marking Requirements
Spanish is the official language of Venezuela, and the only official
measuring system is metric. Labels must list all ingredients, the
contents of the package in the metric system or in units, and the
registration number of the Ministry of Health or the Ministry of
Agriculture in the case of animal feeds or veterinary medicines.
Stickers are allowed in the case of imported products. These stickers
must also identify the importer. Operating instructions or owners
manuals must be in Spanish.
Prohibited Imports
At this time, imports of used autos, used clothing and used tires are
prohibited. Pork from most countries, and poultry from the United
States, is also banned. Some products can only be imported by
government agencies, such as cigarette paper (tax authorities calculate
cigarette tax on the volume of cigarette paper imported by the
manufacturers), bank notes, weapons of war and certain explosives. The
government can delegate authority to import on its behalf, and can place
orders for such products with the local sales agents of the foreign
manufacturers. Weapons for private use, such as shotguns, sporting
rifles, air rifles, non-military pistols and commercial explosives can
only be imported with authorization of the National Office of Arms and
Explosives of the Interior Ministry and of a company owned by the
Ministry of Defense named CAVIM (the latter can be delegated to
established stores and users of commercial explosives).
Standards
The Venezuelan standards agency COVENIN has established over 300
obligatory standards that apply to both domestic and imported products.
These standards are not necessarily in conformity with or based on US
Standards. In all cases involving products falling under such standards,
customs authorities require a Venezuelan certificate of compliance. The
certificate can on occasion be obtained with a letter of certification
confirming compliance issued by a recognized standards institute in the
country of origin. Importers have experienced some difficulty where no
recognized foreign standards exist and Venezuela requires such a
certificate of compliance. Exporters should consult with their
customers, since it is the responsibility of the importer to provide
such certificates.
COVENIN has compiled a list of recognized foreignprivate certification
institutes for customsto consult. Recently, some products with UL
listing from the United States have qualified for entry. Where no
qualifying certificate can be obtained, COVENIN willin some cases
arrange for local testing at the cost of theimporter, although this can
present difficulties when, forexample, the tester is a local competitor
of the imported product. Cost may also be prohibitive in the case of
small or mixed shipments. It does not appear that adherence to ISO9000
guidelines will be acceptable in place of a standardscompliance
certificate.
For updates and clarifications of COVENIN standards, contacteither the
Foreign Commercial Service at the U.S. Embassy inCaracas or COVENIN (See
Appendix E).
Free Trade Zones / Warehouses
Venezuela has two free trade zones. One, located on the Paraguana
peninsula, is for industrial purposes only, such asassembly, manufacture
for export (or maquila) and is very small. It is being used by only a
few enterprises. The other one is the duty-free area comprising the
entire island of Margarita.
The sale of duty-free merchandise from the island to themainland is
subject to quotas.
Duty-free bonded warehouses are available at ports, airports andin most
major towns. Industrial establishments can also bedeclared in-bond if
these are used for assembly, completion orimprovement of products for
re-export. Only clothing manufacturers are known to be using this
facility.
Special Import Provisions
There are no special requirements except those discussed above. It
should be noted that freight handling in ports and airports is somewhat
rudimentary and that damage might occur unless the products are well
packed. Containers are handled efficiently, but will not pass customs
as such unless their contents fall under one single tariff
classification number. If they contain consolidated mixed cargo,
customs will separate their contents to check each single item. In
order to alleviate congestion at ports and airports, Customs will
authorize this procedure to take place in a bonded warehouse or under
special arrangements at extra cost at the recipient's warehouse. The
containers must be sealed during the transfer.
Courier services such as UPS, Federal Express and DHL should not be used
to transport merchandise if packages exceed two kilograms in weight. In
those cases, the shipments are treated as air freight and could be
subject to delays in customs. These facilities should be used primarily
for the shipment of documents. Likewise, parcel post shipment using the
mails should be avoided. Venezuelan mail is very unreliable. If such a
parcel arrives, customs will send by mail a notification to the
recipient, who then has to reply by mail that he is willing to accept
the package. The recipient then has to go in person to the central post
office, where in the presence of a customs official the package is
opened. This entire procedure can take several weks or even months. In
short, the speediest procedure is air freight, or in the case of very
heavy shipments, sea freight.
Membership in Free Trade Agreements
Venezuela is a member of the Andean Pact with Colombia, Ecuador, Bolivia
and Peru, and as such is a member of the group's free- trade zone. The
Pact negotiated a common external tariff (CET) which entered into effect
in February, 1995, for Venezuela, Colombia and Ecuador.
Bilateral commerce with Colombia has increased substantially as a result
of Venezuela's free trade arrangement with its neighbor. Venezuela is
also expanding its relations with Mexico and Colombia through the Group
of Three free trade agreement, which became effeective January 1, 1995.
Venezuela has partial free- trade agreements with Chile, countries of
Central America and CARICOM.
Together with other Andean pact members, Venezuela is involved in talks
to establish a free-trade zone with MERCOSUR countries, replacing
partial free-trade agreements due to expire in early 1996. It has
expressed some interest in eventual membership in NAFTA, but discussions
on this are not likely to be advanced in the next few years.
VII. INVESTMENT CLIMATE
Openness to Foreign Investment
The Venezuelan government has eliminated legal barriers to foreign
investment in most sectors. It has also attempted to move toward a more
export-oriented and diversified economy. At this time, disincentives to
invest in Venezuela stem principally from government economic policies,
including its management at the macroeconomic level and the imposition
of price and foreign exchange controls.
LEGAL FRAMEWORK
Venezuela's main legal framework for foreign investment is provided in
Presidential Decree 2095, which was published in the Official Gazette
No. 34930 on February 13, 1992. The Decree implemented Decisons 291 and
292 of the Cartagena Agreement (Andean Pact) and made further
improvements to liberalize foreign investment regulations in Venezuela.
Decree 2095 expanded foreign investment opportunities in Venezuela by
lifting most restrictions on foreign participation. All sectors of
Venezuela's economy, except those specifically noted, are open to 100
percent foreign participation. Since 1992, foreign companies have been
able to operate in certain sectors formerly reserved to companies with a
Venezuelan majority interest, including retail sales, export services,
telephone and telecommunication services, electrical services, and water
and sewage services. Note, Decree 2095 does not cover investments in
the petroleum, petrochemical, coal, mining, banking and insurance
sectors, which are regulated by "special laws."
The process for making a foreign investment in Venezuela was also
simplified. Decree 2095 eliminated the requirement to obtain prior
government authorization for foreign investments in sectors covered by
Decree 2095. The decree only requires that investors register with the
Superintendent of Foreign Investment (SIEX) within 60 days of the date
the new investment is realized. Foreign companies may also establish
branch operations without prior authorization from SIEX. Proposals to
use new technology need only be registered as well. No prior
authorization is required for technical assistance, transfer of
technology, or trademark use agreements, provided they are not contrary
to existing legal provisions. Also, intangible technological
contributions are now accepted as foreign direct investments. The
Decree provides that shares of foreign companies may be sold publicly.
Decree 2095 also guarantees foreign investors the right to repatriate
100 percent of profits and capital, including proceeds from the sale of
shares or liquidation of the company, and allows for unrestricted
reinvestment of profits. Royalty payments to foreign companies, parent
company or otherwise, are also guaranteed without limit or prior
official authorization; subsequent registration must be made with SIEX.
Nonetheless, Venezuela's current exchange control system does establish
certain procedures and documentary requirements for investors wishing to
remit dividends, capital, and royalty payments (see the section on
Conversion and Transfer Policies).
Venezuela's new Banking Law (Extraordinary Official Gazette no. 4,649),
and Insurance Reform Law (Extraordinary Official Gazette No. 4,822)
opened the banking and financial services, and insurance and reinsurance
sectors to 100 percent foreign ownership at the beginning and end of
1994, respectively. Foreign banks may now enter the Venezuelan market
in one of three ways: acquisition of shares of existing commercial
banks or other financial institutions; creation of a new bank or other
financial institution wholly owned by foreign banks or investors; or
establishment of a branch of a foreign bank or financial institution.
Applications for entry into the sector are submitted to the Bank
Superintendency, which must seek an opinion from the Central Bank before
granting authorization.
In the insurance sector, foreign investors may now acquire shares of an
existing company or establish a branch of a foreign insurance or
reinsurance company. Applications for entry into the sector are
submitted to the Insurance Superintendency for authorization. The law
still requires that a majority of the executives of an insurance company
be Venezuelan citizens resident in the country. Foreign insurance
companies are also prohibited from offering insurance contracts realized
outside of Venezuela, unless the premiums are deposited and effectively
part of the net worth of an insurance company operating in Venezuela.
Venezuela has no special regulations governing joint ventures, aside
from the provisions of Decree 2095 which regulate foreign capital
participation in national and mixed companies, and the "special laws."
SECTORAL RESTRICTIONS
As stipulated in decree 2095, foreign capital is restricted to a maximum
of 19.9 percent in enterprises engaged in radio, television, the Spanish
language press, and professional services subject to licensing
legislation (e.g. attorneys, security services, architecture and
engineering, medical professions, veterinary practice, economists,
business administration/management, and accounting). Basic industries,
that is those designated as basic by the President in the Council of
Ministers, may be reserved for "mixed companies."
MINING: The mining sector is subject to a Mining Law, which dates back
to 1944, and a complex set of executive decrees. Under the present
structure, potential mining concessionaires are often faced with an
obscure investment regime, mainly due to the overlapping roles of the
Ministry of Energy and Mines (MEM) and the Corporacion Venezolana de
Guayana (CVG) regarding approval, registration, and oversight. However,
the government has reduced mining taxes (to 30 percent) and successfully
promoted more "mixed" companies, i.e., those with a maximum of 49
percent foreign capital. New mining legislation designed to promote
private participation and reduce red tape is being considered by the
Venezuelan Congress this year.
PETROLEUM: In July 1995, the Venezuelan congress approved a proposal by
PDVSA and the Caldera administration that would allow private firms to
participate as equity partners in profit-sharing contracts for the
exploration and production of light and medium crudes. This is the most
significant development in the Venezuelan hydrocarbons sector since
nationalization in 1976.
Venezuela's 1975 Hydrocarbons Law reserves exploration, production,
refining, transport, storage, and marketing of hydrocarbons to the
State. However, Article V provides that private companies may engage in
hydrocarbons related activities through operation contracts or, when
found to be in the public interest, through equity joint ventures
(generally referred to as "strategic associations") as long as the state
maintains control over the project, the contract is for a pre-determined
amount of time, and the congress has been made aware of all of the
pertinent circumstances and has granted its approval in joint session.
Operation of marginal or inactive fields by private companies under
service contracts does not require congressional approval. The private
firms commit themselves to investing a minimum amount of capital over a
fixed period of time. If the reactivation is successful, the operators
are paid a set fee per barrel of oil produced. However, the oil itself
is turned over to PDVSA. PDVSA has a number of service contracts with
private companies and might offer up new marginal field units in the
future.
Since 1993, PDVSA and its affiliates have entered into joint ventures
with foreign partners in liquid natural gas, and extraction and upgrade
of extra-heavy crude. In mid-1994, Maraven announced it was conducting
feasibility studies for joint ventures in the production of propylene
and propane, white oils and other specialty products, and lube base
oils. (Note: Joint ventures in the petrochemical and coal sectors do
not require congressional approval).
PRIVATIZATION
In June 1995, Congress approved reforms to Venezuela's 1992
Privatization Law granting the Venezuelan Investment Fund (FIV) greater
flexibility and freedom of action in conducting privatizations. Foreign
participation in privatizations is only limited to the extent provided
by any special laws regulating the sector in question (see the Sectoral
Restrictions section above). Although the Venezuelan Investment Fund
(FIV) had an ambitious plan to generate $4 billion in privatization
income in 1995, the result will undoubtedly fall far short. The only
significant privatization concluded so far this year has been the sale
of the government's 41.3 percent share in the milk company Indulac to
Italy's Parmalat for $14.7 million. Sales of various hotels, the
government's remaining 49 percent share in the national telephone
company (CANTV), and Planta Centro, the largest thermoelectric
generating plant in Latin America, and other electric utilities have
been delayed, principally due to lack of investor interest stemming from
uncertain economic and regulatory conditions. The state-owned CVG
industrial holding company is seeking "strategic associations" (joint
ventures) with private capital in its heavy industry. On March 15,
1995, the Venezuelan Congress gave the go ahead to seek private sector
participation in six CVG businesses: Alcasa, Fesilven, Sidor,
Carbonorca, Bauxilum and Venalum. The FIV may now proceed with studies
to evaluate each CVG company and decide on a privatization strategy.
Passage of a new "Organic Law of Concessions" in April 1994 has also
opened up investment opportunities for infrastructure and other public
works projects. Under the law, the state will guarantee up to 75
percent of the investment and under certain circumstances may raise this
guarantee to 90 percent. The president may also authorize 100 percent
income tax waiver and exoneration of all import duties and taxes on
equipment and services needed. The state will guarantee the
economic/financial health of the project if for reasons not attributable
to the concessionaire the conditions of the project change. Such
conditions could be social, war, uprising, natural disasters, and other
force majuere.
INVESTMENT INCENTIVES
Investment incentives take the form of tax credits for certain
industries, exemption from customs duties and some tax rebates.
Incentives are available to both domestic and foreign companies and
encourage production for the export market. Tax credits are usually for
five years. The only industry tax incentives presently available under
the income tax law are (1) a 10 percent credit on the value of new
investments in fixed assets, excluding land, for investments in mining
operations, forestry, generation and distribution of electricity,
tourism, telecommunications, and approved industrial activities other
than hydrocarbon exploitation; (2) a 10 percent credit on the value of
investments for research and technological development or for the
production of new goods; and (3) a 10 percent credit on the amount paid
for new investments to eliminate or avoid environmental contamination.
PETROCHEMICAL SECTOR: Decree 1058 dated April 2, 1986, established a
five-year tax holiday, beginning with the date of commercial operation,
for domestic and foreign companies investing in the petrochemical
sector. To qualify, the project must make extensive use of goods and
services produced in Venezuela; the foreign financing must not require
guarantees or securities from the Venezuelan government or a state-owned
company; and a portion of the capital raised must be offered to small,
private investors through the stock exchange, promoting private
ownership of the industry.
Conversion and Transfer Policies
On June 27, 1994, the Caldera administration implemented a fixed foreign
exchange rate of Bs 170=$1 and foreign exchange controls to stem capital
flight. Despite periodic pressure on the bolivar because of
inflationary expectations, the government appears intent on retaining
the current rate of exchange for the time being. Foreign exchange
controls are expected to remain in place over the next year. The
Foreign Exchange Regime Law, which codifies Venezuela's foreign exchange
controls, came into effect on June 17, 1995.
Although foreign investors, in both capital markets and direct
investment, are guaranteed the right to repatriate dividends and capital
under Decree 2095, foreign companies have in practice been unable to
repatriate since the imposition of currency controls in mid-1994.
Delays were initially caused by a lack of regulations covering foreign
exchange requests related to investment. These regulations were
eventually promulgated in late 1994. However, delays in obtaining
foreign exchange for remittance of dividends and capital have continued,
and have moved to the forefront among concerns of major foreign
investors. In response, the government has stated its intention to
facilitate access to foreign exchange for repatriation purposes.
Implementing regulations of the new Foreign Exchange Regime Law have
exempted strategic associations in the petroleum sector from controls.
In addition, regulations also published on June 17, 1995 have simplified
the foreign currency application process for other foreign investors and
have called for the establishment of a special foreign exchange fund for
repatriation requests. Foreign investors must still register their
investment with SIEX prior to applying for foreign exchange for
repatriation. Applications for foreign currency must be submitted to
the Technical Administration of Foreign Exchange (OTAC) through an
approved intermediary, i.e. banks, financial institutions.
The new law and regulations have also eased restrictions on importers
and exporters. Importers requiring less than $5,000 for the purchase of
imports no longer must seek prior approval from OTAC. Exporters may now
use foreign currency earned from export sales for all expenses,
including goods, services and payment of debt. Any excess foreign
exchange, however, must be sold to the Central Bank at the official
rate. Allowances may also now be sought by manufacturing importers for
priority in purchasing raw materials and consumables. Private debt
requiring payment in foreign currency must be registered with the
Finance Ministry (Hacienda) prior to making an application for foreign
exchange with OTAC. Limits still exist on the amount of foreign
exchange available for certain activities, such as foreign travel,
remittances to students studying overseas, and transfers to families
abroad, but travelers are now allowed to take $5,000 out of the country
and return with up to $10,000 without having make to declare it.
Persons holding transient working visas are not eligible to obtain
foreign exchange. Non-export transactions involving foreign currency
which does not enter Venezuela is not subject to sale to the Central
Bank and conversion into Bolivars. Currency transactions conducted
outside the official system are illegal and carry heavy penalties.
Dispute Settlement
Decree 2095 allows for arbitration of disputes as "provided by domestic
law."
ARBITRATION: A Code of Civil Procedure, effective March 17, 1989,
provides for the enforcement of arbitration clauses in commercial
contracts, as well as for the enforcement of arbitral awards as final
decisions of the court. Although still not common, Venezuela has
allowed dual jurisdiction or extra-territorial arbitration of commercial
disputes, and international arbitration has been approved for technology
licensing contract disputes in the past. All of Venezuela's bilateral
agreements for the promotion and protection of investments provide for
international arbitration of investment disputes under the auspices of
the World Bank's Center for the Settlement of Investment Disputes
(ICSID).
INVESTMENT DISPUTES: The foreign investor should note that contractual
arbitration clauses notwithstanding, Venezuela's legal system permits
criminal charges to be filed in what may appear to a U.S. investor as
strictly a commercial dispute. Although this has occurred in several
instances, investment disputes are not common.
Political Violence
There are no confirmed recent incidents of politically motivated damage
to foreign owned or operated companies, projects or installations in
Venezuela. Foreign interests, including some U.S. interests, in gold
mining have been affected by vandalism, hostilities and thefts by small-
scale local miners who oppose the granting of concessions to the larger
foreign firms.
Performance Requirements
AUTOMOTIVE INDUSTRY: An addendum to the Andean Pact Common Automotive
Policy, which became effective January 1, 1995, eliminated previous
Venezuelan exchange balancing requirements for local automotive
assemblers and modified the formula for calculating local content.
Local content requirement for category 1 vehicles (passenger cars, four-
wheel drive vehicles, vehicles for transporting up to 16 passengers, and
certain trucks) is 30 percent for 1995 and 1996; 32 percent for 1997;
and 33 percent for 1998. Category 2 vehicles (others) have a local
content requirement of 15 percent for 1995, plus an additional one
percent each year through 1998.
Right to Private Ownership and Establishment
Aside from restrictions contained in The 1975 Hydrocarbons Law, foreign
ownership is only restricted in the particular sectors noted above.
Protection of Property Rights
Foreign investors may pursue property claims through Venezuela's legal
system, but procedures are lengthy and judgements are uneven.
There have been no expropriations in the recent past.
Expropriations, particularly of foreign-owned property, are not
expected.
Regulatory System: Laws and Procedures
LEGAL ENVIRONMENT: As part of its economic reform program in the early
1990's, the Government of Venezuela adopted three new laws to promote
free market competition and prevent unfair trade practices: an anti-
trust law, an antidumping law, and a consumer protection law. Venezuela
also replaced its former government contract law, the "Buy Venezuela"
decree, with a new Law of Tenders dated July 20, 1990. The law provides
that for selection between offers within a reasonable range the
Venezuelan Government may choose the bid which offers the greatest
Venezuelan participation in technology and engineering, human resources,
and other factors.
Venezuela's Criminal Environmental Law (CEL), which entered into force
April 4, 1992, established rules comparable to those in the United
States and Europe. A major difference, however, is that the CEL has
criminalized Venezuela's environmental rules. Although the CEL more
seriously addresses environmental problems in Venezuela than an earlier
law, it has been criticized as too vague in certain sections and to have
extended overly broad criminal liabilities. Some investors have
expressed concern over provisions governing the disposal of industrial
and hazardous wastes, claiming that Venezuela's infrastructure is
inadequate to meet the new standards of the CEL.
A new Consumer Protection Law came into effect on June 17, 1995. The
law strengthens criminal penalties for ill-defined offenses involving
profiteering or manipulation of markets.
TAX TREATMENT OF FOREIGN-OWNED FIRMS: Except for the petroleum sector,
the current Venezuelan income tax law does not differentiate between
foreign-owned and Venezuelan-owned firms. The maximum and most widely
applicable individual and corporate tax rate is 34% under a new income
tax law which came into effect on July 1, 1994 for tax years commencing
on or after that date. For those paying tax on a calendar basis, it
became applicable from January 1, 1995. All companies and individuals
are required to register with the national tax authority. Income
received from any economic activity carried out in Venezuela is subject
to taxation.
There are several different corporate tax situations to which foreign
investors could be subject, depending upon the type of economic activity
in which they are engaged. Venezuela has international double taxation
agreements in the areas of air and sea transport with several countries,
including the U.S. Venezuela is currently negotiating a double taxation
agreement with the U.S. which covers most business sectors.
On December 1, 1993, a 1 percent business assets tax entered into force.
The assets tax is assessed on the gross value of assets (with no
deduction for liabilities) after adjustments for depreciation and
inflation. It is deductible for income tax purposes. A new wholesale
and luxury tax law, which became effective August 1, 1994, was published
on May 27, 1994 in the official Gazette No. 4.727. The wholesale tax,
which is applied at both the wholesale and import levels ranges from 5
to 20 percent. The wholesale tax rate is currently set at 12.5 percent,
but may be modified by the next budget law. The law also established an
additional luxury tax of 10 or 20 percent, to be levied on certain
items.
These are three basic taxes applied to the petroleum industry. First
there is a 16.7 percent royalty payment on production. Next, there is a
67.7 percent income tax, and finally an export reference value tax. The
export reference value can vary between 0 and 20 percent. The surcharge
is being phased out: it fell to 8 percent in 1994 and 4 percent in
1995, and will be eliminated entirely in 1996.
Joint ventures with the state oil company, PDVSA, in the development and
refining of heavy and extra-heavy crudes and the processing of
unassociated natural gas are subject to a reduced income tax rate of 34
percent in addition to the 16.7 percent royalty payment. However, joint
ventures with PDVSA for exploration and production of light and medium
crudes, which are expected to be subject to the full 67.7 percent income
tax and production royalty.
Bilateral Investment Agreements
The Venezuelan government has bilateral investment promotion and
protection agreements with the Netherlands, Switzerland and Ecuador and
is in the process of ratifying agreements with Chile, Argentina,
Portugal, Barbados, Denmark, and Great Britain. Negotiations are on-
going for investment agreements with Brazil, Spain, Canada, and Sweden.
Negotiations with the United States have not resumed following their
suspension in early 1993.
OPIC and other Investment Insurance Programs
Venezuela participates in the Overseas Private Investment Corporation
(OPIC) country program. The U.S. signed an Investment Incentive
Agreement with Venezuela on June 22, 1990, thereby granting investment
insurance and guarantees by OPIC. Also, on January 17, 1991, the
Government of Venezuela approved Foreign Government Approval (FGA)
procedures.
Venezuela has also joined the World Bank's Multilateral Investment
Guarantee Agency (MIGA). MIGA encourages foreign investment in
developing countries by providing investment guarantees against risks of
currency transfer, expropriation, war and civil disturbance, and breach
of contract by the host government; and advisory services to developing
member countries on means of improving their attractiveness to foreign
investment.
Labor
According to the government's Central Office of Statistics, unemployment
at the end of 1994 was 8.7 percent. However, the government includes
the underemployed in its statistics: the Workers' Center for
Documentation and Analysis estimates that unemployment reached 13
percent at the end of 1994 and 15 percent by February 1995. Government
estimates of that portion of the labor force in the informal sector
ranges form 50 to 55 percent. Employment statistics are calculated on a
total labor force of about 8 million. About 25 percent of employed
workers are covered by collective contracts.
According to the Labor Ministry, there was one legal strike in 1994,
although there were numerous, brief public sector stoppages. In early
1995, the air traffic controllers staged a work to rule slowdown and
were replaced by the military. Declining economic activity enforced a
sort of labor peace in the private sector.
Following the increase in the urban minimum wage to Bs. 15,000 per month
in May 1994, the Government decreed a Bs. 6,000 bonus in June 1994 for
the lowest paid workers that is not included in their base wage for the
calculation of final settlement should they be dismissed. In April
1995, the government announced a bonus of Bs. 500 per day for those
earning less than Bs. 150,000 monthly, again without affecting the base
wage.
The major labor organization in Venezuela is the Venezuelan Workers'
Confederation, which represents most of the unionized workers in
Venezuela; it claims a membership of 3 million, and is especially strong
is the public sector.
The labor law which took effect in 1991 expanded existing fringe
benefits, reduced the standard work week to 44 hours, and increased
rates of overtime and holiday pay. Critics of the legislation compare
it to a lengthy collective contract and claim its lack of flexibility
limits the ability of employers and unions to adapt to individual
circumstances. Many benefits--such as generous severance pay, profit
sharing, vacation bonuses, and employer contributions to social
security, housing funds, and unemployment insurance--are mandatory.
Others, including allowances for lunches, transportation, and health and
education services, depend on the workers' salary level and the number
of workers employed. The labor law includes a provision for 365 days of
sick leave in certain cases, as well as maternity leave. It also
provides employers with three options to provide child care: Build a
government-approved day care center; pay for the day care of each child
at a private day care center; or pay 15 percent of the minimum wage for
every worker to a children's foundation.
Venezuela's labor law places quantitative and financial restrictions on
the employment decisions made by foreign investors. Article 27 of the
law requires that the number of foreigners hired by an investor not
exceed 10 percent of employees, while salaries paid to foreigners may
not exceed 20 percent of the total company payroll. Article 28 allows
for temporary exceptions to Article 27 and outlines the requirements to
hire technical expertise when equivalent Venezuelan personnel is not
available. Bureaucratic procedures and corruption may hamper efforts to
seek an exception.
Foreign Trade Zones / Free Ports
In August 1991, the Venezuelan Congress approved a Free-Trade Zone Law.
The two existing zones are Paraguana (industrial), and Margarita Island
(commercial). Investors in the industrial free zone on the Paraguana
Peninsula on Venezuela's northwest coast can receive a 10-year
exoneration from income taxes on all profits earned from goods produced
for export. The government may extend such benefits for an additional
10 years. Few investors have taken advantage of the tax breaks in
Paraguana due to infrastructure problems in the region. Both Paraguana
and Margarita zones provide exemptions from most import and export
duties and offer foreign-owned firms the same investment opportunities
as host country firms. There is currently discussion of establishing
another free-trade zone in the western part of the country.
Capital Outflow Policy
Venezuela currently offers no incentives for investment outside the
country. However, the state-owned oil company, PDVSA, is the sole owner
of its U.S. subsidiary, CITGO, which represents the sixth largest
foreign investment in the United States.
Major Foreign Investors
Major U.S. investors in Venezuela include GTE, AT&T, American Cyanamid
Co., Aluminum Company of America (ALCOA), A.V.C.O. International, Avon
Product Corp., Bellsouth Enterprises, Black & Decker, Bristol Myers
Squibb, Colgate-Palmolive Co., Continental Can Co., Dow Chemical Co.,
Eastman Kodak Co., Firestone Tire and Rubber Corp., Ford Motor Co.,
General Electric Co., General Motors Corp., I.B.M., Kraft Inc.,Minnesota
Mining & Manufacturing Inc., Pfizer Corp., Philip Morris, Proctor &
Gamble Co., Ralston Purina Co., Revlon International Corp., Reynolds
International Inc., Warner Lambert & Company, and Westinghouse Electric
Corp. Major third-country investors in Venezuela include AGA A.B.,
Allied-Lyons Netherlands B.V., Atlas Copco Venezuela, British American
Tobacco, Ciba-Geigy, Citadel Corp., Fiat, Guiness Distillers, Hitachi de
Venezuela, Hoechst, Kobe Steel, Mitsubishi Corp., Nestle, Shell, Showa
Denko K.K., Siemens, Sony, Sumitomo Aluminum, Toyota, The Unilever
Group, and The Vestrey Group.
VIII. TRADE AND PROJECT FINANCING
The Banking System
The Venezuelan financial system is small and seriously undercapitalized.
At present, it is experiencing a severe structural crisis, with many of
its institutions already intervened by the government. Many of the
assets held by intervened banks have been shown to be undervalued or
non- existent. It is not at all clear whether total financial systems
now exceed the value assigned to them (US$25.6Billion)at the end of
1993.
The Venezuelan banking industry is characterized by the dominance of
financial groups. There is a trend toward consolidation and
concentration, which is expected to continue.
Recent banking legislation has reinforced the autonomy of the Central
Bank and strengthened the powers of the Bank Superintendency. The
Superintendency can now require greater disclosure and higher levels of
capitalization. Actual regulatory supervision is still intermittent and
not comprehensive in nature or effect.
The continuing difficulties of the banking sector have led to the
creation of a new Banking Council and an Emergency Board , with
significant powers (for example, over dispositionof reserves) which
affect the autonomy of all banks, including those in which the
Government has not intervened.Recen t legislation has given the
Presdient and the Council of Ministers significant powers over monetary
matters in cases of emergency and thus impinged the autonomy of the
Central Bank. This Legislation is the foundation for the imposition of
exchange controls and fixed exchange rates. It is not clear whether this
law will withstand consitutional challenge in the Supreme Court.
Because of past discriminatory practices, the U.S. presence in the
banking sector remains small. Currently, Citibank is the only U.S. bank
with a presence in the retail banking sector. Many other U.S. banks have
representative offices. The large Dutch- based bank ING has recently
opened offices in Venezuela and intends to offer merchant banking and
trade financing services. Venezuelan banking legislation have provided
for full national treatment for U.S. banks since January 1, 1994, and
allow foreign investors to take controlling interests in local banks, or
to establish new banks or branches.
Foreign Exchange
In July, 1994, the Venezuelan government enacted strict emergency
exchange controls to halt the decline of the bolivar against the dollar
and prevent further capital flight. The controls, first described as
"temporary" by the Government, have recently been the subject of
extensive codification in the Exchange Control Law and accompanying
Regulations made effective on June 17, 1995. While improvements,
liberalization of whole sectors and many clarifications were made, the
documentation and authorizations required for most forms of exchange
continue to delay fundamental commercial activities such as imports,
debt payments, and all forms of capital transactions and license fees.
(for details of the system at time of writing, see"Conversion and
Transfer Policies" in section VII above).
General Financing Availability
Financing of any type is currently very expensive and difficult to find.
Real domestic borrowing rates are very high, currently in excess of 40%
per annum. Since the inception of the banking crisis in 1994,many
foreign banks, including those in the United States, reduced or
cancelled trade credit lines to Venezuelan banks. Importers have
continued to have trouble finding banks which will confirm their letters
of credit.
How to Finance Exports / Methods of Payment
The recommended methods of selling to Venezuelan buyers remain letters
of credit or prepayment, although Venezuelan buyers may have difficulty
using either of these because of exchange controls and the general
economic uncertainty besetting Venezuela. Other methods, such as sight
payment, may not provide sufficient legal protection in Venezuela to the
exporter unless all parties to the transaction are well-known to the
exporter. Suppliers may also be able to use one of the several programs
listed below.
Types of Available Export Financing and Insurance
Agriculture: Venezuela benefits from several USDA programs which assist
U.S. agricultural exports. The primary such program is the Export
Credit Guarantee Program, or GSM-102. This provides coverage of
commercial credits extended to finance exports, for credit periods up to
3 years. The FY 1994 program provides for coverage of up to $220
million for U.S. exports to Venezuela of wheat, feedgrains, oilseeds,
oilmeals, and other products. Venezuela also benefits from USDA's Export
Enhancement Program (EEP), the Dairy Export Incentive Program (DEIP),
the Sunflower Oil Assistance Program (SOAP), and the Cottonseed Oil
Assistance Program (COAP).
Merchandise: The U.S. Export-Import Bank (Eximbank) is active in
Venezuela, providing guarantees and insurance for exports to Venezuela.
Minimum transaction sizes, exposure fees charged based on the
creditability of Venezuela and other requirements may limit the
applicability of Eximbank support.
Project Financing
The International Bank for Reconstruction and Development (IBRD), Inter-
American Development Bank (IDB) and the Andean Development Corporation
(CAF) are all active in Venezuela. For information on multilateral bank
related business opportunities, one should contact:
Office of Multilateral Development Banks
U.S. & Foreign Commercial Service
U.S. Department of Commerce, Room H-1107
Washington, DC. 20230
Tel: (202) 482-3399
Fax: (202) 273-0927
The IBRD, a member of the World Bank group makes long-term loans at
market-related rates primarily to developing countries. Loans are
extended to promote broadly based economic growth and frequently focus
on structural adjustment, sectoral reform and individual project
lending. Typically, the World Bank does not finance the entire cost of
a project, but instead covers components of a project purchased with
foreign exchange, which on average is about 40 percent of the total
project cost. Each project may cover a wide variety of sectors and can
involve anywhere from one to hundreds of separate contracts providing
export business opportunities for suppliers worldwide.
For further information on IBRD business opportunities please contact:
U.S. Department of Commerce Liaison
Office of the U.S. Executive Director
International Bank for Reconstruction and Development
1818 H Street, NW, Room D-13004
Washington, DC. 20433
Tel: (202) 458-0118
Fax: (202) 477-2967
The Inter-American Development Bank (IDB) provides funding to primarily
public sector entities for the design and execution of projects. IDB
projects afford U.S. suppliers of goods and services significant export
opportunities, mainly in the
transportation, environment, health, education, urban
development, tourism, agriculture, and energy sectors. U.S. firms
seeking information on IDB-financed commercial
opportunities should contact:
U.S. Department of Commerce Liaison Officer
Office of the U.S. Executive Director
Inter-American Development Bank
1250 H Street, NW, 10th Floor
Washington, DC. 20005
Tel: (202) 942-8265
Fax: (202) 942-8275
List of Venezuelan Commercial Banks
The following commercial banks are listed by asset size, largest to
smallest. Those marked by an * have been intervened by the government.
While Banco de Venezuela and Banco Latino are being restructured and
will continue operations, the fate of other intervened banks was
uncertain at the time this report was written.
Banco Provincial
Banco de Venezuela*
Banco Latino*
Banco Maracaibo*
Banco Mercantil
Banco Industrial de Venezuela
Banco Union
Banco Consolidado*
Banco Metropolitano*
Banco Progreso*
Banco Construccion*
Banco Republica*
Banco Principal*
Banco la Guaira*
Banco Italo Venezolano*
Banco del Caribe
Banco de Lara
Banco Bancor*
Banco International
Banco Exterior
Banco Caracas
Banco Barinas*
Banco del Orinoco
Banco Venezolano de Credito
Banco Banesco
Banco Occidental de Descuento
Banco Federal
Banco Profesional*
Banco del Caroni
Banco de Fomento Regional de Los Andes (BANFOANDES)
Citibank
Banco Sofitasa
Banco Amazonas*
Banco de Occidente
Banco Andino*
Banco Exterior de los Andes y de Espana (EXTEBANDES)
Banco Capital
Banco Plaza
Banco de Fomento Regional Coro (BANFOCORO)
Banco Guayana
Banco Empresarial
Banco Canarias de Venezuela
Banco Noroco
Banco Ganadero
Banco Tequendama
Banco do Brasil
Banco Popular
IX. BUSINESS TRAVEL
Business Customs
U.S. companies interested in selling to the Venezuelan Government should
note that, according to Venezuelan law, all correspondence must be in
Spanish. Companies that write to a government agency in English will
probably not receive a reply. Government officials are not permitted to
conduct official business in any other language than Spanish.
Venezuelan importers prefer to buy directly from the manufacturer,
instead of going through intermediaries. U.S. exporters that are not
manufacturers should try to associate themselves closely with a
manufacturer, whenever possible. Weekends and holidays are generally
off-limits for business meetings with Venezuelans; these times are
reserved for family. Travel Advisory and Visas
U.S. travelers may obtain current information on conditions in Venezuela
by calling the U.S. Department of State's Bureau of Consular Affairs at
(202) 647 5225.
To obtain a Venezuelan business visa you should contact nearest
Venezuelan Consulate. Visitors with business visas are required to pay
local income taxes if their stay in the country goes beyond 180 days.
All visitors are required to pay an exit tax of 2,800 Bs.
Holidays
Following is a list of the official Venezuelan Government
holidays. There are also many bank holidays, where businesses remain
open although banks are closed.
Date Day Holiday
Oct 12 Thursday Columbus Day
Dec 25 Monday Christmas Day
Jan 1 Monday New year's Day
Feb 19 Monday Carnival
Feb 20 Tuesday Carnival
April 4 Thursday Good Thursday
April 5 Friday Good Friday
April 19 Friday Signing of Independence
May 1 Wednesday Labor Day
June 24 Monday Battle of Carabobo
July 5 Friday Independence Day
July 24 Monday Bolivar's Birthday
In addition to the holidays listed above Maracaibo, Estado Zulia, will
observe the following regional holidays:
Oct 24 Tuesday General Urdaneta's Birthday
Nov 18 Saturday Virgin of Chiquinquira Day
* Dates vary year to year.
Infrastructure:
Transportation.
Public transportation in Caracas consists of buses, the metro (subway),
and taxis. Taxis are widely available in Caracas. Taxi service at
hotels runs about 50 percent higher than street taxis. Several
companies operate a radio-dispatched pick-up service. During the
morning rush hour, at mid-day and again in the early evening, it can be
extremely difficult to find a taxi.
The Metro is open Monday through Sunday from 5:30 a.m to 11:00 pm., and
offers a cheap, efficient alternative to taxis.
Existing lines are limited, primarily running east-west through the
city.
Many foreign airlines serve Venezuela, most through Caracas, and a few
through Maracaibo. Domestic flights are available to almost all towns
of any size. Maiquetia, the international airport serving Caracas, is
about 40 minutes from downtown. Expect to pay USD 25-30 in local
currency for taxi service from Maiquetia to the city.
Language.
Spanish is the official language of the country. Executives speak
English.
Communications.
Local mail service is not dependable and important correspondence should
not be sent by mail. International courier service should only be used
for papers and documents and not include anything else or it will be
delayed by Venezuelan customs. Most correspondence is by fax.
Messenger delivery is frequently used within Caracas and other large
cities in lieu of the mail (for correspondence, invitations to
receptions, etc).
Important documents can be sent via international courier (such as DHL
or Federal Express, and more recently, UPS) and are usually received in
Caracas within a few days.
U.S. companies should note that Venezuela does not have daylight savings
time. The time is the same as U.S. east coast time from April 5 to
October 25, and one hour later the rest of the year. When attempting to
contact someone in Venezuela, it is useful to know usual hours of
operation:
a) Offices... (Mon-Fri) 8:30-12:30 and 2:30-6:00
b) Stores.... (Mon-Sat) 9:00-12:30 and 3:00-7:00
c) Factories. (Mon-Fri) 7:30- 4:30 (often closed
for vacation December 15 - January 15)
Newspapers
Newspapers are a very effective medium for advertising a product and
attracting an audience to an event (such as a trade show or trade
mission).
Caracas has many daily newspapers. "El Universal" and "El Nacional" are
the most widely read. There is an English language daily--"The Daily
Journal", which often carries ads for imported products that would
appeal to foreigners residing in Venezuela.
Housing
There are only three "five star" hotels in Caracas. Stars are awarded
by the Venezuelan Government, and do not correspond to any international
standards. Four star hotels are available at much lower rates, but
service is at a lower standard.
Following is a list of the main hotels in Caracas:
Hotel Tamanaco Intercontinental
Las Mercedes
Tel: (582)91-4555
Fax: (582)208-7004
Hotel Eurobuilding
Calle La Guairita
Chuao
Tel: (582)907-1111
Fax: (582)907-2189
Hotel Caracas Hilton
El Conde
Tel: (582)503-5000
Fax: (582)503-5003
X. APPENDICES
A. COUNTRY DATA
Population (1994 est.): 21.3 Million
Population Growth Rate: 2.3 pct
Religion: Roman Catholic
Government System: C