What are foreign firms doing to survive the lucrative, but highly difficult, market of Venezuela?
BY JOACHIM BAMRUD
Political and economic uncertainty may seem like the most pressing challenge facing foreign companies operating in Venezuela these days, but there are actually others just as important. “The import process can be lengthy,” says Luis Paez-Pumar, general manager for Venezuela for U.S.-based Avon, the worlds largest door-to-door seller of cosmetics. “There are many steps, including several solvency certificates and applications, which delay our ability to access dollars at the official exchange rates. …Other regulatory processes, such as dividends repatriation, can also take some time, risking the speed of foreign investment in the country.
Luis Kolster, director of public policy at the Latin America, Africa and Middle East division of U.S. auto giant General Motors, agrees, and adds a particular challenge to the auto sector – the new import restrictions implemented last year. “Two challenges we have been facing are the new Venezuelan automotive policy instituted in January 2008 and our accessibility to foreign exchange,” he says.
The new law, which restricted imports to one vehicle per two produced locally, was aimed at boosting national production. However, the result has been the opposite. National production has fallen, thus affecting imports.
Nationally-produced cars fell by 13.2 percent to 135,042 units last year, according to Venezuelas Automotive Chamber (Cavenez). Meanwhile, sales of imported cars declined by 59.7 percent to 135,499 cars. All in all, a total of 271, 622 cars were sold in Venezuela last year, a decline of 44.8 percent.
The decline came at a time when...
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