Economic Data
Total GDP: Purchasing power parity = $194.5 billion (1998)
GDP Growth: -0.9%
Per Capita GDP: $8,500
Inflation Rate: 29.9%
Trade Balance: $4.5 billion (surplus)
Trade with RI: Venezuela is Rhode Island’s 26th largest trading partner, with $3.7 million in exports in 1998.
Exports: $16.9 billion; petroleum, bauxite and aluminum, steel, chemicals, agricultural products, basic manufactures. Export trading partners: U.S. and Puerto Rico (57%), Colombia, Brazil.
Imports: $12.4 billion; raw materials, machinery and equipment, transport equipment, construction materials. Import trading partners: U.S. (53%), Japan, Colombia, Italy, Germany.
Best Prospects for Exports: Telecommunications Services; Telecommunications Equipment; Oil & Gas Field Machinery and Services; Electrical Power Systems; Automobile Parts and Service Equipment; Medical Equipment; Computers and Peripherals; Computer Software and Services; Pumps, Valves and Compressors; Security and Safety Equipment; Pollution Control Equipment; Water Resources Equipment; Franchising; Tourism and Travel; Avionics and Ground Support Equipment.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
Tariffs, Trade, taxes, trademarks
Trade Regulations and Tariffs: Venezuela generally adheres to the Andean Pact’s Common External Tariff, which has four tariff levels: 5, 10, 15 and 20 percent. Customs calculates duties on the landed (CIF) cost of the product and on the gross weight of the import. Customs authorities accept the value of the shipment as indicated on the documents, but recent regulations allow them to use a base price for customs valuation. Under-invoicing can result in heavy fines to the importer and forfeiture of the goods in question. Importer complaints about inconsistent customs treatment in various ports of entry have led to an effort to build a common information database, as well as coordination and adherence to uniform valuation principles by customs offices throughout the country.
Import licenses are rarely required, but many products still require permits, including those with negotiated WTO tariff rate quotas. Import certificates are required for certain products subject to special supervision. All import/export documents must be in Spanish. Exporters should quote CIF prices (not FOB), since import duties are calculated on the CIF price. Since Venezuelan customs procedures are cumbersome and involve many steps, most importers use the services of a customs agent. The Commercial Section of the U.S. Embassy can provide names of reputable agents.
Foreign Investment: The foreign investment climate was dampened in 1998 and 1999, when the economy fell into a deep and continuing recession. Many domestic and foreign investors are holding their investment decisions, pending the outcome of a constitutional reform process. A 1992 decree significantly lifted most restrictions on foreign investment, allowing 100 percent foreign participation in many sectors and the right to repatriate 100 percent of profits and capital.
Free Trade Zones: Venezuela has four free trade zones that allow any investor a 10-year reprieve from income taxes on all profits earned from goods produced for export, with a possible ten-year extension. The Paraguana Peninsula industrial Free Trade Zone is very small with infrastructure limitations, and is used by only a few enterprises. Margarita is another duty-free area. Merida is a free trade zone for the producers of goods and services within the cultural, scientific and technological areas. Santa Elena de Uairen in the State of Bolivar has important cross-border trade with Brazil. Duty-free bonded warehouses are available at ports, airports and in most major towns. Industrial establishments can also be declared in-bond if these are used for assembly, completion or improvement of products for re-export, as is the case with Puerto Cabello.
Trade Finance and Payment Methods: Financing is currently expensive but readily available. Current short-term borrowing rates are around 34 percent per annum. Longer-term financing is more difficult to obtain because the rate of inflation remains a concern, and financial institutions seek to interpret the Central Bank’s exchange rate policy and the strength of the bolivar. Demand for short-term trade financing in U.S. dollars has increased as foreign banks reopen credit lines to Venezuelan banks. Borrowers are once more able to obtain confirmed letters of credit.
Marketing and Selling Factors: All distribution channels are legally possible: manufacturer’s representative, commission agent, wholesale importing distributor, importing retailer, or direct sale to end-user. Many retailers administer their own imports, sometimes placing orders through commission agents or purchasing directly from foreign suppliers. A commission sales agent, or manufacturer’s representative, finds customers, passes the order to the foreign company and receives a 5-30 percent commission on the sale. The amount of commission will vary widely depending on the nature of the product and the amount of work or time required by the agent. Agents may be the most practical and efficient means of covering the market. Wholesalers often have minimal outside sales force, relying on advertising and on walk-in customers or buyers. Venezuelan companies at any step in the distribution channel tend to place repeated small orders. Foreign company minimum orders, or even minimum annual sales, requirements may meet with strong resistance from prospective distributors or agents. Distributors may be important where strong after-sale support is needed. It is not normally possible to sell equipment, whether industrial or durable consumer, without offering sales support, spare parts or service. Prospective agents or distributors must be able to provide this support or able to contract for it.
Marketing, through TV commercials, newspaper inserts, house visits or street vendors, is common. Mail orders are not an option because of low reliability of the postal system. Telephone orders with delivery by messenger are increasingly popular, and several such companies have been successful by placing their catalogs in newspapers as weekend-issue inserts.
U.S. companies often make the mistake of providing sales literature in English when selling to their agents or distributors.
Daily newspapers are the most common forms of advertising for most products, including machinery or industrial equipment. TV and radio commercials are used heavily to promote durable and non-durable consumer goods. Billboards are common as are distribution through leaflets, newspaper inserts, and in-store promotions.
When all expenses are factored in, product prices can be two to three times higher when sold to the end-user. In the past few years, discount stores have appeared for the first time in Venezuela.
Product Labeling and Marking: Labels must be in Spanish, using metric measurements. Labels must list all ingredients, the contents of the package in the metric system or in units, and any necessary registration number. Stickers are allowed in the case of imported products, and must identify the importer. Operating instructions or owners manuals must be in Spanish.
Patents/Trademarks/Copyrights: Intellectual Property Rights protection in Venezuela has improved significantly over the last few years, but U.S. companies continue to express concern about inadequacies in the enforcement of patents, trademarks and copyrights. Widespread piracy of well-known trademarks, videos, software and other protected works remains an issue. Venezuela remained on the Special 301 “Watch List.” The Andean Pact currently provides Venezuela’s legal framework for patent and trademark protection, with a new TRIPS-consistent customs law in process. Venezuela does not automatically recognize foreign patents, trademarks or logos, so foreign investors should register patents and trademarks appropriately and in as many categories as are applicable. The registration should not be made in the name of the agent or distributor, because the agent could claim that he/she is the registered owner of the trademark in question.
Republic of Venezuela
Location: Northern South America, bordering the Caribbean Sea and the North Atlantic Ocean, between Colombia and Guyana.
Geographic Area: 912,050 sq km, slightly more than twice the size of California.
Climate: Tropical; hot, humid; more moderate in highlands.
Major Cities: Caracas (capital), Maracaibo, Valencia, Barquisimeto.
Population: 23 million (1999).
Ethnic Groups: Spanish, Italian, Portuguese, Arab, German, African, indigenous people.
Languages: Spanish (official), numerous indigenous dialects
Workweek: Monday through Friday, 8:30 a.m.-12:30 p.m. and 2:30 p.m.-6:00 p.m.
Type of Government: Republic, Constitution: January 23, 1961
Head of State: President Hugo Chavez Frias.
Currency: Bolivar
Exchange Rate: 686.65 Bolivares per US$1 (July, 2000)
Current Economic and Political Conditions: Hugo Chavez Frias, leader of the February 1992 attempted coup, won the presidency in December 1998, after campaigning for far-reaching reform, constitutional change and a crackdown on corruption. His election resulted from deep popular dissatisfaction with the traditional parties, unbalanced income distribution, and the country’s continued economic crisis. The Chavez administration has promoted a rewriting of the country’s constitution through the election of a Constitutional Assembly on July 25, 1999 with a six-month mandate, as the only way to truly reform Venezuela’s discredited government and make it more democratic and participatory. Venezuelans voted on the new Constitution in a referendum in March 2000. Venezuela held an election on July 30, 2000 to “re-legitimize” public offices after the approval of the new Constitution. Chavez gained a comfortable election majority, as predicted. The Chavez administration has inherited a Venezuelan economy that has been battered by a combination of external and internal factors. Low international oil prices and voluntary production cuts have resulted in greatly reduced government revenues and expenditures. Uncertainty over the government’s economic policies and the National Constitutional Assembly has caused domestic and foreign investors to postpone investments. Budget cuts, new taxes, and delayed private sector investment have contributed to a decline in domestic demand. The result has been a deepening economic recession.
Key Contacts
John H. Chafee Center for International Business and World Trade Center, Bryant College
Raymond W. Fogarty, Director
Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416
E-Mail: postoffice@itdn.net
Website: http://www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123
E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsuhashi, International Trade Specialist
Telephone: (401) 528-5104
E-Mail: kyatsuha@mail.doc.gov
U.S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: 528-4585
E-Mail: marilyn.bogue@sba.gov
U.S. Embassy in Venezuela
Calle F con Calle e Suapure
Colinas de Valle Arriba
Caracas 1060, Venezuela
Telephone: 58-2-977-2011
Fax: 58-2-977-0843
Embassy of the Republic of Venezuela
1099 30th St. NW
Washington, DC 20007
Telephone: (202) 342-2214
Fax: (202) 342-6820
U.S. Department of Commerce
Office of Latin America
Thomas Welch, Desk Officer for Venezuela
Room 3025
14th Street and Constitution Avenue NW
Washington, DC 20230
Telephone: (202) 482-4303
Fax: (202) 482-0464
English Language Publications
The Daily Journal (the only English Language newspaper published in Venezuela)
Telephone: 58-2-237-96-44
Business Venezuela (published by The Venezuelan-American Chamber of Commerce)
Telephone: 58-2-263-08-33/267-64-81
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
