Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, July 10, 2012

July 10th, 2012

Economics & Finance

56% of reported foreign investment is non repatriated dividends
According to an UNCTAD (UN Commission for Trade and Development) report on foreign investment in 2012, Venezuela received foreign investments of U$D 5.3 billion. However, more than half the amount - some 56% is due to repressed earnings by multinational corporations that have not been able to repatriate dividends because they have not been authorized by the local currency board. Eduardo Porcarelli, executive director of the National Investment Promotion Council says "Venezuela has exchange controls and part of the earnings must be reinvested locally as they cannot be repatriated. It is difficult to ascertain which companies have an investment policy and which do so as they have no other choice." More in Spanish: (El Nacional, 07-10-2012;

Price adjustments frozen in order to contain inflation
Executive Vice President Elias Jaua has conceded that the slowdown in inflation this year is the result of "a correct policy of regulation and subsidies" on the part of the government. Official anti-inflation strategy has been to freeze price adjustments, not only on regulated items, but also on other products that impact the National Consumer Price Index. More in Spanish: (El Universal, 07-10-2012;

Government spending is up  by 24% in real terms, according to information supplied by the Ministry of Finance for the first half of 2012. (El Universal, 07-09-2012;

International reserves rose 12% in four days, from U$D 25.238 billion to U$D 28.393 billion, which increases the amount of currency disposable for imports and FONDEN programs in advance of October elections. More in Spanish: (El Universal, 07-10-2012;


Chavez sees oil stabilizing at U$D100 per barrel
President Hugo Chavez says that "The price of oil is going to stabilize around U$D100 per barrel. Everything seems to indicate that," he told a news conference. International reserves were dropping, Chavez said, except in a few countries like Venezuela, Iran and Saudi Arabia. "And the needs are going to keep growing," he said. (Reuters, 07-09-2012;

Venezuela’s export barrel recovered significantly, gaining U$D 6.70/bbl. or 7.77% to U$D 92.87/bbl., during the week that concludes today, informed the Oil and Mining Ministry in its Twitter account. The Venezuelan oil has thus put an end to eight consecutive weeks of losses during which it lost over 20% of its price. (Veneconomy, 07-09-2012;

TOTAL aims to triple output at Venezuelan gas field
French oil major TOTAL said on Monday it would boost capacity later this year at the Yucal Placer gas field in Venezuela as part of a plan to triple its output by the end of 2014. The Yucal Placer field, a project whose owners also include Spanish energy company REPSOL YPF and Venezuela's INEPETROL and OTEPI, came on stream in 2004. Work on the new development phase of the field will start later this year to increase production to around 300 million cubic feet per day, or approximately 55,000 barrels of oil equivalent, by the end of 2014, TOTAL said. That is three times its current production. (Reuters, 07-09-2012;

Cement production dropping
Spokesmen for the National Cement Workers Union are warning that cement production - in an industry taken over by the government in 2008 - has dropped from 10,000 metric tons per year to 7.9 million tons, which is 20% less than production capacity. More in Spanish: (Ultimas Noticias, 07-10-2012;

International Trade

Paraguay sues to prevent Venezuela's entry into MERCOSUR
Paraguay has presented the MERCOSUR Permanent Tribunal with a suit against its suspension as a member of the trading group, as well as against Venezuela's incorporation without the approval of the Paraguayan Senate. A spokesman for the legal team says "Our action points to the violation of treaties such as the Asunción Agreement, the Ouro Preto and Ushuaia Protocols, as well as international law tenets on equal justice and non intervention." More in Spanish: (El Nacional, 07-10-2012;

Uruguay's Vice President says MERCOSUR is "seriously wounded" by Venezuela's entry
Uruguayan Vice President Danilo Astori, who is responsible for his government's economic team, considers Venezuela's entry into MERCOSUR negative for the region, and says it was "agreed to at a summit held in Mendoza by the Presidents of Argentina, Brazil and Uruguay, without regard for current institutions". He calls the event the most serious institutional wound suffered by MERCOSUR in all its history. More in Spanish: (El Universal, 07-10-2012;

Venezuela in conflict with MERCOSUR doctrine
If Venezuela enters MERCOSUR as full member next July 31 it will have to change into a free-market economy instead of one controlled by the government. This is opposite of what Venezuela has been doing, but the Asunción Treaty  which establishes a Common Market between Argentina, Brazil, Paraguay and Uruguay requires "the free movement of goods, services and factors of production between countries through, inter alia, the elimination of customs duties and non-tariff restrictions on the movement of goods, and any other equivalent measures." (El Universal, 07-09-2012;;

Chavez will travel to Brazil for MERCOSUR entry
President Hugo Chavez confirms he will travel to Río de Janeiro on July 31st for his country's incorporation into MERCOSUR. More in Spanish: (Últimas Noticias, 07-10-2012;

Logistics & Transport

Shippers report "widespread congestion" at local ports, apply surcharges
Shipping companies have notified Venezuelan clients of a surcharge for bringing cargo into the country due to "widespread congestion". A local client has received a message from a shipping company which says "We must advise you that due to the general situation at Venezuelan ports we will a Congestion Surcharge/Destination starting July 1st, 2012". The surcharge will be U$D 50 on 20 foot containers; U$D 100 on 40 containers and an equal amount for "high-cube" equipment. This is not an isolated case as there is "great concern among worldwide shippers due to enormous delays on vessels when they come to Venezuela", says a source close to maritime transportation. The increase in incoming vessels bearing imported food is one of the key causes for delays. "We have had ships waiting up to 30 days in order to dock. The government has become the main importer and does so without any planning", says another source. The situation has become further aggravated at Guanta, where - according to sources close to the terminal - a group of "pirates" assaulted cargo at a one of the ships at dock. More in Spanish: (El Universal, 07-08-2012;


Chavez will not debate Capriles or sign pre-election game rules
In his first campaign press conference President Chavez called any pre-election rules agreement "illegal", and refused to debate Henrique Capriles. He has announced he will start touring the country in his reelection bid. "That proposal for not co-opting all mass media, not using public resources, and respecting election results, would be a part of  a destabilizing strategy", he said. More in Spanish: (El Nacional, ;

Chavez again claims he is "totally free" of cancer
This Monday President Hugo Chavez again declared himself fully recovered from cancer and ready to return to the streets for his re-election campaign ahead of an October vote. "Free, free, totally free," an ebullient Chavez told reporters when asked if he was free of the disease that struck a year ago. (Reuters, 07-09-2012;; Latin American Herald Tribune,; The Washington Post,; Fox News,

DATANALISIS: Pro Chavez voting intention at 57.22%
The latest survey by polling firm DATANALISIS, carried out between May 29 and June 28, 2012, shows voting intention in favor of Hugo Chavez Frias at 57.22%. A pro government television analyst has said that -according to the survey- if elections took place on Sunday, Chavez would have 47% and his nearest contender Henrique Capriles Randonski 30%, with undecided voters at 23%. (AVN, 07-09-2012;

Chavez congratulates Mexico’s Peña Nieto on election victory
President Hugo Chavez has congratulated Mexico’s president-elect on his victory in the July 1 balloting and expressed his willingness to deepen bilateral ties, according to a statement by the Venezuelan Foreign Ministry. (Latin American Herald Tribune, 07-07-2012;

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