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flag Venezuela Venezuela: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Venezuela | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

Despite the attractiveness of the country due to its godsend oil, the large size of its domestic market and the richness of its natural resources, the inflows of FDI in Venezuela have been smaller in the last few years. The economic and political crisis set off by the international financial crisis of 2008-2009 has provoked a significant back-flow of FDI between 2009 and 2011. The uncertain climate born from the "Bolivarian" reforms (infringement of private property rights, foreign currency control, increasing regulations, nationalizations, etc.), Chavez's anti-American speech and the ineffectiveness of the port system are some of the many hindrances to investment.

Venezuela is combining regional and revolutionary politics, without closing its doors to foreign investment, which it needs badly. Still, the "Bolivian" socialism pursued by very interventionist the government hinders the increase of FDI flows. Nevertheless, FDI reached over 3,2 billion USD in 2013.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Venezuela Latin America & Caribbean United States Germany
Index of Transaction Transparency* 3.0 4.0 7.0 5.0
Index of Manager’s Responsibility** 2.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 2.3 5.0 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 3,7783,2167,040
FDI Stock (million USD) 44,57649,07955,766
Performance Index*, Ranking on 181 Economies 148--
Potential Index**, Ranking on 177 Economies 41--
Number of Greenfield Investments*** 91225
FDI Inwards (in % of GFCF****) 6.74.29.5
FDI Stock (in % of GDP) 14.112.814.9

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Venezuela

Strong Points
Ports and airports are being privatized and important markets should develop in these sectors. The oil sector is very dynamic, prospecting and exploitation remain attractive, even if the government has made the conditions of exploitation more difficult. Numerous markets remain unexploited in the country, mainly those concerning the production of finished products which are mostly imported. The technological sector has developed very little. In the recent years, a policy of aid to production has given a new impetus to the agro-food industry: coffee, tropical fruits, rice, tobacco, cacao, alcoholic drinks, as well as to the car industry and audiovisual production.
Weak Points
The control of the state developed and promoted by the current government could steer into an unattractive commercial environment to foreign investors. Inflation, corruption, unemployment, the importance of the informal sector, poverty and violence are all restraints to the establishment and prosperity of a business.   
Government Measures to Motivate or Restrict FDI
Venezuela has adopted the Decree 2095 on foreign investment, which is encouraged and protected by a new legal framework. In addition to this, there is a policy supporting production activities that are particularly dynamic or potentially good for exports. The government also gives fiscal bonuses, ranging from tax exemptions to special credit treaties, in order to encourage investment in the so-called "strategic" sectors, or in order to stimulate the establishment of businesses in the country's five least developed states.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Freedom of establishment is guaranteed, but new barriers have been set up, notably in the oil sector (a percentage taken off the highest profits).
Acquisition of Holdings
Acquisition of a majority stake in a local company's capital is authorized in Guatemala. There are however restrictions concerning certain sectors such as the press, aviation, shipbuilding, for the obvious reasons of security and independence.
Obligation to Declare
Foreign investments are encouraged in Venezuela, and protected by a new legal framework, especially through the dispositions stipulated in the Decree 2095.

The country's agency promoting foreign investment provides information about the permits necessary to business establishment.

Competent Organization For the Declaration
Venezuelan Council for Investment Promotion
Requests For Specific Authorizations
None. In strategic sectors a special authorization is needed.

Learn more about Foreign Investment in Venezuela on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Venezuelan Council for Investment Promotion
Website for investment aid
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Venezuela
Globaltenders, Tenders & Projects from Venezuela
Inter-American Development Bank, Tenders in South America
DgMarket, Tenders Worldwide
 
 

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Learn more about Investing in Venezuela on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: October 2014