The situation in Venezuela is now widely documented. But what is it like to do business with Venezuela? Is the instability all political or are real businesses suffering?
We are delighted to hear from a global sales rep for a paint accessories manufacturer. He has been working with Venezuela for 16 years, and also lived in the country for six years, managing a small business. We have decided to protect this person’s anonymity, but shall you want to make contact with him, please let us know and we will put you in touch. This is what he says…
“From commercial perspective, recent unrest is nothing new but an ongoing revolution started by Chavez in1999. Unfortunately, the political agenda has always been the only priority of the current government since then and the economic agenda has always been a low priority. The business community has been suffering.
Since CADIVI (control over foreign exchange) was introduced, the business community has always been depending on the government for cash to afford imported goods. Depending on the situation, CADIVI can take around 2-4 months to approve imports and the approval can come with significant reduction in the quantity from what is requested. Apart from that, after going through the difficult task of getting the goods through customs clearance, an importer in Venezuela needs to comply with various formalities in order to submit the request for release of funds for payment. Recently CADIVI has been taking around 200 days for approval, which makes it impossible for the importers to pay their debts for a long time and forcing their future imports to be delayed, too.
From time to time there have been some “release valves” introduced by this government to reduce the pressure on businesses and the supply chain but at this moment all of them are scrapped.”
At the same time, UKTI states that “Venezuela is a country of vast economic potential. It has significant economic potential with the Oil and Gas sector dominating the market’s economy. Promising sectors for UK companies include, power generation, infrastructure, telecommunications, education and training, Healthcare, Alternative Energy, Waste Management and the Environment.” So what’s your experience of trading with this country? We’d love to hear from you.
There are many questions surrounding trading with Venezuela. Keep an eye on our blog, since soon we will discuss the implications of Venezuela joining the Mercosur, the trade bloc comprising Brazil, Argentina, Uruguay and Paraguay (currently suspended). Watch this space!