December 6th, 2010

Economics, Trade & Business

Venezuela, Colombia develop new commercial agreement

The governments of Venezuela and Colombia are negotiating to boost a new commercial accord upon the basis of complementariness and joint economic development. The information was given by Venezuelan Foreign Minister Nicolas Maduro to state-run television VTV at the end of the 20th Ibero-American Summit, which took place in Mar del Plata, Argentina. According to the press office, Maduro detailed part of the bilateral meeting held with his Colombian counterpart Maria Angela Holguin about the new economic accord. According to him, they are structuring joint teams to broaden specific cultivation projects and to develop the national coffee production plan, with Colombian investment and Venezuelan experience. (AVN, 12-06-2010; http://www.avn.info.ve/node/32439)

China, Venezuela pledge to boost cooperation

China and Venezuela Friday pledged to boost bilateral relations and cooperation. The pledge came out of a meeting between Chinese Vice Premier Li Keqiang and a Venezuelan government delegation, which is in China for the ninth meeting of the China-Venezuela Senior Mixed Committee. Hailing the fast growth of China-Venezuela relations in recent years, Li said the two sides have enjoyed fruitful cooperation in areas including energy, agriculture, culture and infrastructure. (China Economic Net, 12-04-2010; http://en.ce.cn/National/Politics/201012/04/t20101204_22021861.shtml)

Transparencia Venezuela says government to increase IVA

Transparencia Venezuela said that the draft 2011 budget estimated revenues with the largest non-oil tax burden in recent years, reaching spending of 57.9%. It was 53.1% in 2010. They estimate there will be an IVA (Value Added Tax) increase from 12% to 15%. (El Nacional, 12-06-2010; http://www.el-nacional.com/www/site/p_contenido.php)

Inflation, inflation! The big headache

Inflation has become the government’s "headache" because it has not been able to solve it so far, and neither seems to have a solution for the near future, meaning 2011 and 2012. This impacts with greater force and depth those who earn less and, of course, purchases of goods and services, including food. This Government has recorded an average inflation of about 21%, which may not be alarming, but, as we said, erodes daily wages, with the aggravating circumstance that the average results from an irreversible increase which, instead of showing a downward trend, is rising. (Tal Cual, 12-06-2010; www.talcualdigital.com/index.html)

New CADIVI rule requires updated data from companies

Companies registered in the Foreign Exchange Administration Commission (CADIVI) must perform a data update between 3 January and 3 March next year under a new order released today by the agency in Official Gazette No. 39,566. Order No. 106, repealing No. 010, "regulates the requirements and procedures to be followed by applicants for registration or users to update data in the Members of the Foreign Exchange System Administration Registry (RUSADIR)", the document says. (El Mundo, 12-06-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=11169)

Capitalism and socialism coexist

Economist Ronald Balza says that while Carlos Andres Perez turned policy towards a social market economy without anesthesia, Chavez took from 1999 to 2005 to admit he is a socialist. His aspiration of a socialist system has been implemented gradually and in some cases, two systems, capitalism and socialism coexist as needed. In the meantime, the legal scaffolding to generate the social fabric in which communes and other structures of the people can be created is being put into place. (El Mundo, 12-06-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=39319)

Former government official repeats claim that BBVA is for sale

A former top official in Venezuela's government Sunday repeated his claim that the local unit of Spanish bank Banco Bilbao Vizcaya Argentaria S.A. is being offered up for sale, leading the bank to once again deny it. Jose Vicente Rangel, who was President Hugo Chavez vice president until 2007 and now hosts a Sunday talk show, said a week ago that BBVA's Venezuela unit, BBVA Banco Provincial, was up for sale at a price tag of about $2 billion. BBVA quickly denied it and called Rangel's comments "irresponsible." On Sunday, Rangel stood by his initial comments and said the source who gave him the information is reliable. (Fox Business, 12-05-2010; www.foxbusiness.com/markets/2010/12/05/venezuela-government-official-repeats-claim-bbva-unit-sale/)

“Temporary occupation” of Alvenca

On Thursday, after an inspection by INDEPABIS along with regional authorities, it was decided to “temporarily occupy” Aluminios de Venezuela C.A. (Alvenca), which processes aluminum frames and is located in La Victoria Industrial Zone in Aragua state. Its 101 workers had paralyzed the company 12 days ago to protest the discussion of labor benefits and alleged administrative and operational irregularities. (Veneconomy, 12-04-2010; www.veneconomy.com/site/index.asp?ids=44&idt=24166&idc=3)

Politics

Venezuela moves flood-hit families into resort hotels

Venezuelan security forces have started housing families displaced by floods in tourist hotel rooms following an order by President Hugo Chavez to make use of vacant accommodation, local media said on Monday. Heavy rains have killed at least 32 people and forced more than 100,000 from their homes in recent days. Emergencies have been declared in various states, and the country's Caribbean coast has been particularly hard hit by mudslides. In a televised broadcast from one flooded area on Sunday, the president told the National Guard to begin moving families into vacant hotel accommodation. (Reuters, 12-06-2010; http://www.reuters.com/article/idUSTRE6B54IS20101206)

Venezuelans elect 11 mayors, 2 state governors

An opposition candidate won the mayorship of Venezuela's second-largest city of Maracaibo Sunday, claiming the big prize in regional elections seen as a test of President Hugo Chavez's popularity, according to initial results.

Venezuelans also elected governors in two rural states that have traditionally favored pro-Chavez candidates and mayors in 10 municipalities besides Maracaibo. Candidates from Chavez's ruling party captured 7 of the 11 mayorships and one state, according to official results released by local election authorities. (Miami Herald, 12-05-2010; http://www.miamiherald.com/2010/12/05/1958375/venezuelans-to-elect-11-mayors.html)

Diplomatic frictions between US and Brazil due to Chávez

According to diplomatic cables leaked by the whistleblower website Wikileaks and published by the French newspaper Le Monde, US and Brazilian diplomats consider Venezuela to be a threat to the region, although they agreed that isolation was not the solution. They also said that Hugo Chávez is like the proverb: a barking dog doesn't bite. The US diplomatic cables reveal the different positions of the Brazilian politicians with regard to Venezuela's President Hugo Chávez. (El Universal, 12-06-2010; http://english.eluniversal.com/2010/12/06/en_pol_esp_diplomatic-frictions_06A4821213.shtml)

Paraguayan President urges politicians "not to equate Chávez with Venezuela"

President Fernando Lugo requested the country's political elite "not to equate" President Hugo Chávez with Venezuela. Lugo reiterated his support to Venezuela's entry into Mercosur. "Unfortunately this issue has become highly politicized and Venezuela has been compared with (President Hugo) Chávez," Lugo said in an interview published by the newspaper Tiempo Argentino. (El Universal, 12-06-2010; http://english.eluniversal.com/2010/12/06/en_pol_esp_paraguayan-president_06A4821651.shtml)

Transport & Logistics

One hundred and forty-three roads have been affected nationwide by the rains, informed Transport and Communication Minister Francisco Garcés. Sixty-four of those are the result of landslides, 12 are fallen bridges with partial damages and the rest is mostly roads that gave way and other problems. Yesterday evening, the La Ranita Bridge on the Morón-Coro road collapsed. (Veneconomy, 12-04-2010; www.veneconomy.com/site/index.asp?ids=44&idt=24165&idc=3)

Petroleum & Energy

PDVSA's refineries are a bargain for Germany

In the framework of his most recent tour through Asia, the Middle East and Europe, President Chávez, on 14 October announced on a visit to Moscow the signature of 30 bilateral agreements, the sale for an amount 1,600 million dollars to the Russian oil firm Rosneft of all PDVSA shares in the four refineries in the Ruhr Oel German company, whose crude processing capacity is of more than 216 000 barrels per day. Currently, PDVSA still has a 50 percent stake in the joint venture (Ruhr Oel), while the other half belongs to British Petroleum. The refineries are located in the cities of Gelsenkirschen, Neustadt, Karlsruhe and Schwedt. (Tal Cual, 12-06-2010; http://www.talcualdigital.com/index.html)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.