Download - Investments opportunities in VENEZUELA
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Investments opportunities in
VENEZUELA
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
What is CONAPRI?
Why invest in Venezuela
Legal Framework
Investment opportunities: Chemical and Petrochemical sector
Contents
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
It´s a non-profit civil association, set up in 1990 as a mixed organization supported by the public and private sectors.
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Members
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Members and international partners
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Why Venezuela?Imagen
6,5” x 5”
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Our main advantages:
Natural Resources
Legal Framework
Infrastructure
Skilled Human Resources
Advantages
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
The world’s 6th largest light crude oil reserves
The world’s 1st largest heavy crude oil reserves
The world’s 8th largest gas reserves The 3% of world iron reserves Main exploitable raw materials:
petroleum, iron-ore, bauxite, gold, diamonds, copper, coal, phosphate, zinc
40.000 km. of cultivated lands Large basins The highest waterfall of the world
Natural resources
Advantages
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Advantages available to the investor
In the past three years, Venezuela has been one of the countries whose economy has demonstrated a high rate of recovery.
Source: Yearbook 2005. Institute of Management Development (IMD).
2,8
4,4
4,8
6
8,5
10,3
Brasil
Chile
México
Colombia
Argentina
Venezuela
GDP growth 2006
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Source: Yearbook 2005. Institute of Management Development (IMD).
• As for energy, Venezuelan has sizeable reserves of oil and gas, besides an electricity industry with an installed capacity of 20,399 MW, according to data from the Venezuelan Chamber of Electricity Industrialists (Caveinel).
• World competitiveness surveys put the Venezuelan energy infrastructure and its costs at very competitive levels compared to its competitors.
Cost of Electricity to Industry
0,021
0,046
0,056
0,064
0,073
0,028
Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
US$ per kilowatt
Quality of Energy InfrastructureMaximum Score: 10
4,4
5,91
2,97
5,68
2,59
6,68
Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
Adequate, Efficient Infrastructure
Advantages available to the investor
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Venezuela has high quality infrastructure compared with latinamerican average.
95.155 km of roads. 32.300 km of paved roads, superior to the rest of the region.
13 ports and more than 100 airports
369 fixed and mobile lines per 1.000 inhabitants, superior to the Latin American average (359).
Source: World Economic Forum 2003-2004, Cepal 2001.
Infrastructure
Percentage of paved roads
0 10 20 30 40
Bolivia
Colombia
Ecuador
Argentina
Venezuela
Port infrastructure development
0 1 2 3 4 5
Bolivia
Colombia
Venezuela
México
Chile
7= máxi ma puntuación
Advantages available to the investor
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
How to
invest?
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Opening up to foreign Investors, regardless of the country of origin of their capital.
There is no treatment discrimination among foreign and local investors.
Legislation establishes international standards for the protection of Investments.
Freedom to invest, without any prior authorization.
Investors have the right to transfer capital and benefits invested once they are in compliance with the foreign currency acquisition legislation.
MNT guarantees and equitable and fair treatment.
Legal Framework
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Freedom to hire staff, aliens inclusive..
Many options for using Disputes
Settlement mechanisms related to the
Investment and the commercial activity
bound to it.
Technical Assistance to the Investor
during all Investment stages.
Fostering of Legal Stability Agreement:
LSA.
Legal Framework
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Venezuela has suscribed 24 agreements with the following countries:
Protection and Promotion Investment Agreements
Sweden
Argentina
Portugal
Great Britain
Barbados
Czech Republic
Lithuania
Denmark
Switzerland
Netherlands
Belgium
Chile
Iran
Spain
Uruguay
Germany
Costa Rica
Canada
Paraguay
Brazil
Peru
Italy
France
Cuba
Ecuador
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Foreign investments Regulations
Constitution of the Bolivarian Republic of Venezuela (Article 301): Establishes equal conditions for local and foreign investments. The Constitution favors the unrestricted presence of both.
Decree 2095: develops content of Decisions 291 and 292.
Law for the Promotion and Protection of Investments (1999):
• System of general protection to the foreign and domestic investments.• Bilateral Investment Agreements.• Equal Treatment for local and foreign investors under similar circumstances with the
exceptions established in special laws.• Fiscal rationality in the imposition of tributes and rates to the industrial and
commerce activities• Incentives Policies and Promotion of Investments in certain sectors and regions to
contribute with specific development objectives.• Negotiable Incentives for the Investors that supports training of human capital,
productive development and inserting Venezuelan economy in the Global Market.
Other Relevant Regulations:Regulations of the Law to Promote and Protect Investments, Code of Commerce and Civil Code, Arbitration Law, tax, labor and other special laws
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
General:
Comercial Incentives:
• Draw Back return.
• Active and Passive perfection Regimes
• VAT return on production aimed at exportation.
• 10% reduction for new investments
• Income Tax Exoneration for investments in less economic development states and small and medium size industries located in industrial parks (13%)
• Tourism: reduction of 75% of the amount of new investment (infrastructure).
• Agriculture: reduction of 80% of the amount of new investments.
• Possibility of signing legal stability agreements.
Foreign investments Incentives
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
• Income Tax Law: This tax is levied on annual net and available income, in cash or kind, earned by individuals or businesses residing or domiciled in Venezuela, regardless of whether the origin or source of the income is located in Venezuela or abroad.
• In the case of parties engaged in profit-making activities, other than hydrocarbon-related activities, the tax will be levied based on the rates listed in the following table.
General legal framework
The Tax Unit for 2007 was set at Bs. 37.632.00
15%22%34%Portion over 3,000 tax units
Portion over 2,000 and up to 3,000 tax unitsPortion up to 2,000 tax units
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
• Value Added Tax (VAT) Law: Pursuant to Article Art. 3 of the law the following activities, transactions and operations are subject to this tax:
• The sale of tangible personal property• Definitive imports of personal property• The rendering of independent services carried out or used in the country in return for
consideration• Export sales of tangible personal property• Exports of services
• This tax is payable provided that during the previous fiscal year the party carried out transactions worth more than 6,000 tax units. The tax is levied on every transaction and must be paid in to the treasury on a monthly basis.
• The rate of this tax is set annually in the Budget Law and must be no lower than 8% nor higher than 16.5%. It is currently 11%. July 9%
General legal framework
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Trade Liberalization to Venezuela
Venezuela - Trinidad & TobagoPartial Preferences Agreement
Andean Community – EEUUTIC CAN – EEUU
General Preferences System
Andean Community- Canada TIC CAN – Canada
General Preferences System
Andean Community (*)Free
Non Tariff Reduction
Partially Free
Venezuela - ChileFree Trade Agreement (1993)
Venezuela (**) / Andean Community – MercosurFree Trade Agreement
(*) Venezuela retired from CAN in 2006. Tariff preferences will be in force for five (5) years.(**) Venezuela agreed to become a full member of MERCOSUR in 2006.
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Trade liberalization from Venezuela
Venezuela – Central AmericaPartial Preferences Agreements
Venezuela – CARICOMAgreement on Trade and
Investment
Venezuela - Guyana Partial Preferences Agreement
Andean Community Agreement (*)
Venezuela - ChileFree Trade Agreement (1993)
Free Trade Agreement CAN-MERCOSUR / Venezuela (**)
Free
Non Tariff Reduction
Partially Free(*) Venezuela retired from CAN in 2006. Tariff preferences will be in force for five (5) years.(**) Venezuela agreed to become a full member of MERCOSUR in 2006.
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Procedures
Company Founding : a minimum payment of 20% of the subscribed capital stock
Capital stock must be divided in common shares
To obtain the Fiscal Information Registry before (SENIAT)
To open a subsidiary company is allowed
All the employees must be registered in the Social Security
I the company has more than five (5) workers or employees it must contribute with the National Institute of Educational Cooperation (INCE) with 2% out of the total salaries.
Foreign investments must be registered at SIEX within sixty (60) calendar days.
Investor or the company shall updated annually (within 120 days of the new economic period) their investment information within SIEX.
Other entities in charge of the authorization, supervision and registry are: Superintendence of Bank (Sudeban), Superintendence of Insurances (Sudeseg) Ministry of Energy and Oil (MEP) and Ministry of Basic Industries and Mining (MIBAM)
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
How to set up a company
Visa Company RIF: Tributary Information Registry (SENIAT)
Investment Registration of the Company
Social Security Registration l
Registration of the company before INCE
Commercial Visa
Investment Visa
Choose legal form of the company
Checking of the company name
Opening a bank account and deposit the capital
Mercantile Registry
Publication
Banking Oil and Gas
InsurancesMining
Other
Writing up of the legal documents: statutes and
act of incorporation
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Where to invest?
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Oil producer of longstanding trajectory
The largest conventional reserves in the region and the sixth and ninth petroleum and gas reserves in the world
Currently produces 4% of the world’s crude oil production
The importance of the industry to the economy
Know-how in various activities: exploration production refining trading
Specialized labor
Participation by the private sector: major foreign and national private companies as well as foreign state oil companies in main as well as related activities
Major opportunities within the framework of Pdvsa’s Plan, especially the quantification and certification of extra heavy crude oil and bitumen reserves in the Orinoco Belt which it is estimated can add an additional 200 billion barrels
There are more than 850 service companies waiting to create joint ventures with national and foreign companies to add know-how and increase their operating capacity
Oil services sector
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Source: Cámara Petrolera
•Seismic studies•Geosciences and environment•Specialized technical services•Engineering and integrated
services•Oil and gas production facilities•Manufacturing of capital goods•Vendors: commercial strengths•Construction and assembly•Production – national capacity•Machinery and heavy equipment•Operations and maintenance of
facilities•Associated services
Oil services: Opportunities
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Oil services: Characteristics
Source: Asoquim
Segments
1. Thermoplastic olefins and resins (El Tablazo)
2. Basic petrochemicals (Paraguaná, Morón, Jose)
3. Fertilizers and inorganic products (Morón)
Basic
Chemicals
Number of Companies
Subsegments
Intermediate
Chemicals
Final
Chemicals
4. Organic intermediate products (Eastern & Western Venezuela)
5. Organic intermediate products (El Tablazo, Central Venezuela)
6. Fibers (Central Venezuela)
7. Auxiliary resins and plasticizers (Central Venezuela)
8. Specialty products (Central Venezuela)
9. End products.
15
15
20
200 more
15
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Source: Asoquim
RANK 2005
1 Methanol
2 MTBE
3 Urea
4 Propene (propylene)
5 Anhydrous ammonia
6 Ethyl glycol (ethanodiol)
7 PEAD
8 PCV suspension
9 Dodecylbenzene
10 Sodium tripolyphosphates
Principal export products
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Indicators
Source: BCV - Asoquim
The average product for the chemical and petrochemical industry during this period comes to 757 million dollars. The notable recovery in 2004 and 2005 places this indicator at its highest level in the past eight years.
Chemical and petrochemical GDP
in MM US$
800 803
722757
789
685635
868
753
0%
-10%
5% 4%
-13%
-7%
19%
15%
0
100
200
300
400
500
600
700
800
900
1000
1997 1998 1999 2000 2001 2002 2003 2004 2005
-0,15
-0,1
-0,05
0
0,05
0,1
0,15
0,2
0,25
PIB químico y petroquímico Crecimiento
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Industrial Indicators
The number of establishments has been dropping gradually since 1997. The number has not changed since 2000, despite higher production in the sector, a sign of higher productivity.
Source: Asoquim
Number of establishments
395365 358
330 320300 300 300 300
1997 1998 1999 2000 2001 2002 2003 2004 2005
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Following a sharp drop in 1998, the figure for manpower employed in the sector has remained fairly stable, with a 4% growth rate
Source: Asoquim
Manpower employed
30.500
21.350
26.000 25.000 24.000
21.000 20.000 20.000 20.300
1997 1998 1999 2000 2001 2002 2003 2004 2005
Industrial Indicators
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Crude oil, among other natural
resources.
Low cost energy
Access to main export markets.
Chemical-Petrochemical business
Advantages
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
According to 2004-2009 Pdvsa
business plan, crude oil production will
increase to 5 million barrels per day.
Pdvsa investment is estimated at US$
6,7 billion for 2005.
Pdvsa plans to invest in refination
activities 14.304 MMUS$ between
2006-2012
Sector Outlook
Chemical-Petrochemical business
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
We offer comparative advantages
(excelent natural resources
endowment) and many competitive
advantages (infrastructure, legal
framework and trade agreements).
MRE, MILCO, MIBAM, MINTUR,
SIEX, BANCOEX y CONAPRI can
help with the invesment
administrative process.
The array of profitable business
opportunities is unique.
Venezuela is your investment location
Consejo Nacional de Promoción de Inversiones (CONAPRI) - Copyright - 2007
Get our business profile!
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