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.

Saturday, November 17, 2012

November 16th, 2012

Economics & Finance

Chavez mulls revamping currency controls as bolívar plunges
Venezuela is weighing changes to a central bank system used to control the foreign-exchange rate after the bolivar fell to a record in black-market trading, fueling speculation the currency will be devalued. The central bank is selling fewer dollars on the SITME system at a rate of 5.3 bolivars per U.S. dollar to limit its losses as the Venezuelan currency is trading above 13 in the unregulated market, said a government official with direct knowledge of the matter who spoke on condition of anonymity because no final decision has been made. The person declined to provide additional details other than saying scrapping the SITME was a possibility. An official source reports that economic authorities have ruled out the option of having the public exchange organization replace SITME. The decision still stands to keep SITME at a minimum operations level until a new devaluation takes place in January. (Bloomberg, 11-14-2012;; and more in Spanish: El Nacional;; El Universal,

US dollar supply through SITME lowest since 2010
Financial sources report a downturn in the supply of foreign exchange through the Transaction System for Foreign Currency Denominated Securities (SITME) due to insufficient bonds. Operations recorded by the Central Bank last Monday were U$D 18.79 million in debt bonds, the lowest figure since December 31, 2010, when U$D 18.26 million were traded. The amount ranks among the ten lowest transactions in the 596 days of operations so far through SITME, a system that has been running since June 9, 2010. (El Universal, 11-14-2012;

Government and National Assembly discuss fiscal reform
Planning and Finance Minister Jorge Giordani again urged the National Assembly "to undertake an in-depth fiscal reform. Those who earn more will have to pay more." Immediately, the chair of the AN Finance Committee, Ricardo Sanguino, announced they are already working on such reform. "We are evaluating the best proposal to conduct the fiscal reform. We are taking a look at the effective tax laws and other laws that may be added so as to obtain funds from those who earn more. This does not mean income is insufficient. We are just making an assessment. We have not made any decision about the right timing," Sanguino elaborated. (El Universal, 11-14-2012;

Venezuela will show full economic growth”, says Chávez
President Hugo Chávez says he has positive GDP data from the Central Bank, saying "Venezuela's economy continued to strengthen and will continue to strengthen". He did not reveal the final GDP figure for 2012. More in Spanish: (El Mundo, 11-16-2012;

Venezuela among the least competitive nations
Chile is the leader for competitiveness among 18 Latin American countries, according to the Competitiveness Index established in October 2012 by the ADEN Competitiveness Institute. The information was disclosed by the Argentine research institution. Venezuela and Bolivia appear at the bottom of the ranking, "with different economic and social realities, yet with common problems of macroeconomic instability and institutional mishaps." Both countries have remained in these positions since the estimations began. (El Universal, 11-15-2012;

93% of business polled sees negative investment climate; 83% of industry hit by lack of material
A flash survey conducted by the National Industrial Council (CONINDUSTRIA) shows 93% of those polled believe Venezuela has a negative climate for investment. 37% said their level of investment remains the same, 33% lowered investment, and 32% increased investment during the second half of 2012. 62% of those polled says SITME is deficient in meeting their requirements. The Council also reports that 83% of the industries surveyed believe the main obstacle hindering growth is the lack of domestic raw material, while 73% pointed to the difficulties to purchase foreign exchange. The study included 200 companies. "For the first time in the last 10 years, the lack of raw material becomes the key factor that prevents the increase in production," said Carlos Larrazábal, the president of CONINDUSTRIA. More in Spanish: (El Nacional;; El Universal, 11-15-2012;


Oil industry aims to contribute over U$D 400 billion dollars over the next six years
Oil production will contribute over U$D 400 billion dollars to National Treasury over the next six years, says Rafael Ramirez, president of state oil company PDVSA. With the goal of producing 4 million barrels of oil per day (bpd) and reaching the 6 million barrels by 2019, oil industry aims to achieve within the next six years a tax revenue similar to the U$D 450 billion dollars recorded over the past few years. (AVN, 11-15-2012;

PDVSA plans to raise daily natural gas production to 9.214 million cubic feet by 2014, says company planning director Faddy Kaboul, who also said the goal is to reach 11.947 cubic feet by 2019. More in Spanish: (AVN, 11-16-2012;á-producción-diaria-gas-9214-millones-pies-cúbicos-2014; El Mundo,

ISLA refinery in Curazao is operating at one third capacity, according to statements made by Angelo Meier, President of the company´s union. More in Spanish: (El Nacional, 11-16-2012;; Ultimas Noticias;; El Mundo,

International Trade

MERCOSUR customs agreement will be ready by December, according to Isabel Delgado, Executive Secretary of the Presidential Committee for entry into the organization, in order to be signed at the December 7th MERCOSUR presidential summit. She did not disclose which areas were agreed to by consensus. More in Spanish: (El Nacional, 11-16-2012;

51% of local industry views MERCOSUR as a threat, according to a poll taken by the National Industrial Council (CONINDUSTRIA) which shows 51% of respondents believe their business will be hurt by competition from Brazilian products. More in Spanish: (El Universal, 11-16-2012;

Logistics & Transport

Offloading takes 3 times as long at Venezuelan ports
33 ships at bay at Puerto Cabello are forcing the shipping community to double up on work schedules in order to meet requirements needed to bring in cargo. This means cargo ships at Venezuelan ports take three times the hours needed for offloading operations.  In addition to schedule disruption, shippers also have added personnel and maintenance expenses for excess hours at dock. At ports such as La Guaira, with slower operations due to work at 11 of their docks, ships take more than 96 hours offloading, despite having requested 26-30 hours from the port authority for such operations. Carabobo State Assemblyperson Neidy Rosal, a member of the Oversight Committee, says the Port of Puerto Cabello should declare a state of emergency, "which means it should work 24 hours daily in three shifts" due to increased imports. Rosal adds that "ships remain at bay for an average 12 days, waiting for docking facilities to be assigned; and when it finally docks, offloading takes around 72 hours".  More in Spanish: (El Carabobeño, 11-16-2012;; El Nacional;; Notitarde;ía/2012/11/15/147097)

Contingency plans established at La Guaira port after talks between authorities and shippers, include joint inspections
by port, tax and exchange control authorities. Eddy Meayke, President of the Shippers Association says this has increased daily dispatch of containers from 440 to 650. More in Spanish: (El Universal, 11-16-2012;

International airport resumes operations after fire event
Venezuela's Simón Bolívar international airport resumed full operations after a fire broke out on Wednesday morning in the conveyor belt area forcing authorities to close the airport for nearly five hours, causing delays, suspensions, and diversion of at least 12 flights to other terminals.  (El Universal, 11-15-2012;


Opposition and government met discuss political prisoner release and the return of exiles, says National Assembly member Edgar Zambrano, who head the Acción Democrática Party caucus in the Assembly, after meeting for 3 hours with Vice President Nicolás Maduro. (Veneconomy, 11-14-2012;

US says there are substantial issues to discuss with Venezuela
For the United States, getting diplomatic relations back to normal is an important issue, William Ostick, spokesperson of the US Department of State for Latin America, said on Tuesday. "We have important issues to discuss with the Government of Venezuela," the spokesperson told AFP. "I cannot anticipate when both governments will be prepared to exchange ambassadors." (El Universal, 11-14-2012;

Chavez rules out call for Constituent Assembly
President Chavez has called upon middle classes to help build the five areas of the Second National Socialist Plan for 2013-19, and says "the invitation is also for those who are not revolutionaries but have intellect to contribute, middle class professionals". He said the opposition is lying as it tries to stop the "constituent process" and said his regime does not seek to call a Constituent Assembly in order to eliminate state governments and municipal authority. More in Spanish: (El Nacional, 11-16-2012;

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