venezuela investment road show

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Think Venezuela

Kim Fraser and Ilan DeeMarch 14, 2011

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Brief overview of Venezuela

Improvements in Venezuelan Business Environment

Venezuela’s oil industry

Potential investment concerns

Future potential

Think Venezuela

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Brief Overview of Venezuela – Political

Military rule, promoting oil industry in first half of 20th century

Democratic elections since 1959

Hugo Chavez, “21st Century Socialism”

1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html

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Brief Overview of Venezuela – Social

45th largest population in the world (93% urban)

Labor force: 13.3 million 13% agriculture, 23% industry, 64% services ~12% unemployment rate

Decreasing Gini index from 49.5 in 1998 to 41 in 2009

1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html

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Brief Overview of Venezuela – Social

1 UNDP. International Human Development Indicators. Bolivarian Republic of Venezuela: Country profile of human development indicators. 2010. http://hdrstats.undp.org/en/countries/profiles/VEN.html

Human Development Index Trends, 1980-2010

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Brief Overview of Venezuela – Economic

GDP: $354.1 billion in 2009 to $344.2 billion in 2010 Per capita: $12,600 (2010 est.) 4.1% agriculture, 34.9% industry, 61.1% services

Agriculture: corn, sorghum, sugarcane, rice, bananas, vegetables, coffee; beef, pork, milk, eggs; fish

Industries: petroleum, construction materials, food processing, textiles; iron ore mining, steel, aluminum; motor vehicle assembly

1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html

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Brief Overview of Venezuela – Economic

1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela

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Brief Overview of Venezuela – Economic

8th in world for oil exports

Imports include agricultural products, raw materials, machinery and equipment, transport equipment, construction materials

U.S. primary trading partner

1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html

Exports Imports$0

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Trade balance (Billions USD)

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Brief Overview of Venezuela – Economic

Fixed exchange rate: 4.3 bolivars per dollar

In the first half of 2010, sales of Venezuelan goods to the United States totaled USD 16.35 billion, 35 percent above the same period in 2009.

“The Venezuelan businessman has higher profit margins than any other country in Latin America and additionally has ways of recovering investment in the very short terms,” said economist Asdrubal Oliveros.

1 Venezuelan exports to the United States up 35 percenthttp://www.conapri.org/english/ArticleDetailIV.asp?articleid=362949&CategoryId2=149852 How Do You Survive Inflation: Ask Venezuela http://business.financialpost.com/2011/02/25/how-do-you-survive-inflation-ask-venezuela/

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Improvements in Venezuelan Business Environment – Dealing with Construction Permits1

1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela

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Improvements in Venezuelan Business Environment – Paying Taxes1

1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela

* Venezuela abolished the tax on financial transactions

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Improvements in Venezuelan Business Environment – Enforcing Contracts1

1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela

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Invest In Venezuela’s Oil Industry

Petroleum accounts for more than 75% of the dollar income and approximately 40-50% of fiscal revenues

Revolution in the Middle East = Oil Instability = Rising Oil Prices

Oil Opportunities: BP, Shell, Exxon not in market

1 Invest In Venezuela The Best Way To Invest: http//www.bestwaytoinvest.com/venezuela2 Oil majors such as Shell not anymore interested to invest in Venezuelahttp://www.doingbusiness.org/data/exploreeconomies/venezuela

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Potential Concerns

Continuing private company nationalization

Political instability and weakening democratic institutions

Drug-related violence along the Colombian border

Overdependence on oil industry

Oil Windfall Profit Law

1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html2 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela

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Future Potential for Venezuela

Depreciated currency to help further export growth

General Motors: Venezuela has good prospects in 2011

Investment: $93m in Science + Tech in 2010

Opportunities: Turkey invests $2.4bn, Russia $800m in Agriculture & $20bn in oil field development

1 General Motors: Venezuela has good prospects in 2011http://www.conapri.org/english/ArticleDetailIV.asp?articleid=378217&CategoryId2=16009s2 Venezuela to invest 200 million bolivares in science and technology in 2010. http://www.conapri.org/english/ArticleDetailIV.asp?articleid=356829&CategoryId2=15325