August 19, 2014

International Trade

Inbound cargo at Puerto Cabello:

• Over 1500 tons of automobile parts in 186 containers from China for Corporación Automotriz ZGT.
• Over 2,200 tons of beans from China for Comercializadora El Verdugo.
• Over 2000 livestock from Brazil for the National Agricultural Health Institute.
• 47 public transportation vehicles from China for the government' National Urban Transport Foundation (FONTUR). 

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-al-puerto-mas-de-mil-500-toneladas-de-autopartes-2218380/2014/08/18/346810; and Ultima Hora Digital; http://ultimahoradigital.com/news/noticiaunica.php?id=49195)

Customs agents protest "unfair competition" by CORPOVEX

The National Association of Customs Agents (ASONAGA) and the Vargas State Chamber of Trade and Customs Agents (CADUAINCO) are protesting "unfair competition" by the government's Venezuelan Foreign Trade Corporation (CORPOVEX). "We have a long list of customs agents, cargo consolidators, and transport services charging that officials from CORPOVEZ, VEXIMCA and other government agencies have visited their clients offering an express privileged delivery service and guarantee the supply of FOREX from CENCOEX and SICAD 1, if they are given a power of attorney to handle their cargo", says a joint statement issued by both organizations. They additional charge that "conditions are created for blackmail, unfair competition, and the end of private agencies, proxies, transport and storage services". At La Guaira there are an estimated 350 customs agents, that provide 2000 direct jobs; and another 450 companies that provide such services at Puerto Cabello. More in Spanish: (El Universal: http://www.eluniversal.com/economia/140819/denuncian-competencia-desleal-de-corpovex)

Chinese company to ship heavy duty trucks to Venezuela

China, the Venezuelan Ministry of Transport, and the Venezuelan Foreign Trade Corporation (CORPOVEX) have signed a contract to import 5,239 heavy duty trucks - worth US$ 274 million - from JAC Motors.

JAC will also provide Venezuela with technical assistance and automotive training for the Venezuelan staff. This is the largest order of heavy duty trucks a Chinese automobile manufacturer has received outside mainland China. (El Universal, http://www.eluniversal.com/economia/140818/chinese-company-to-ship-heavy-duty-trucks-to-venezuela)

Logistics & Transport

US FAA group to inspect airlines operating toward Venezuela

General Luis Graterol, Minister for Air and Aquatic Transportation, says a group from the US Federal Aviation Authority will visit Venezuela to inspect airlines serving this country. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Oil & Energy

Venezuela oil price drops to lowest level since 2012 even as Mid-East and Ukraine simmer

Venezuela's weekly oil basket fell to its lowest since June of 2012 as oil prices around the world moderated even as crises in Ukraine, Syria, Libya, Iraq and Israel boiled over as international oil markets seemed well-supplied.

According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 15 was US$ 91.95, down US$ 0.27 from the previous week's US$ 92.22. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2347836&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40654&idc=4)

Commodities

Pasteurized milk production is down 90% in two years

Roger Figueroa, President of the Dairy Industry Chamber (CAVILAC) reports that production of pasteurized milk has dropped 90% over the past two years due to frozen prices on natural milk. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/produccion-de-leche-pasteurizada-ha-caido-90-en-do.aspx#ixzz3Apxcr1hg; El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/produccion-de-leche-pasteurizada-ha-caido-90--en-d.aspx

SIDOR workers will evacuate administrative staff in order to paralyze the state-owned plant completely, as per a decision taken in a workers’ assembly held outside SIDOR - in which they also burned the SIDOR’s newsletter that published an agreement reached by SUTISS’ Organization Secretary and the regime. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40652&idc=3; El Universal, http://www.eluniversal.com/economia/140818/venezuelan-iron-and-steel-company-sidor-resumes-operations)

Economy & Finance

Central Bank disposable reserves have dropped 44%

Central Bank accounts for the first semester 2014 show disposable FOREX is now at US$ 1.752 billion, a drop of 44% from the same period in 2013. This implies there is no way to meet market demand for FOREX. In addition, PDVSA is only providing the bank with half the amount of oil dollars as production is stagnant and crude oil sales at a discount reduces FOREX income. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140819/se-reducen-44-las-reservas-liquidas-en-el-banco-central)

Ramirez now says Venezuela may have two foreign exchange rates by the end of the year

Economic Affairs Vice President Rafael Ramírez is now saying the nation may have two different exchange rates - as opposed to the current three - by the end of the year, in order to simplify matters. However, he said that before doing so the government would seek to curb inflation, raise the price of gasoline, and promote a "fiscal revolution" - of which no details have been provided. He added "this (situation) is unsustainable, because we must take decisions to balance our affairs or we will have disturbances in our economy". More in Spanish: (Infolatam)

Priority sectors face distortions amid economic controls in Venezuela

The Venezuelan government has not managed to correct the distortions resulting from FOREX and price controls. Serious difficulties in accessing foreign currency are increasingly hitting productive capacity and jeopardizing the supply of priority goods. Price controls have undermined both production and the supply of food. This translates into shortages that have reached other priority sectors such as healthcare, where shortages of medicines have become more obvious. Economist Luis Vicente León, president of the DATANÁLISIS polling firm believes that "fear of the political and economic costs involved" are the reason why the Executive Office has delayed the necessary decisions to set the economy straight, because of their negative consequences in the short term. (El Universal, http://www.eluniversal.com/economia/140818/priority-sectors-face-distortions-amid-economic-controls-in-venezuela)

Politics

Maduro cabinet resigns "to contribute to the government's transformation process"

Executive Vice President Jorge Arreaza says Venezuela's cabinet has tendered their resignation in order to contribute to the process of transforming government, which President Nicolás Maduro has called "the shakeup". More in Spanish: (AVN; http://www.avn.info.ve/contenido/gabinete-ministerial-pone-cargos-orden-para-contribuir-proceso-transformaci%C3%B3n-del-estado; El Universal, http://www.eluniversal.com/nacional-y-politica/140819/ministros-ponen-cargos-a-disposicion-de-nicolas-maduro)

Survey shows Venezuela's poorest sectors blame problems on the government

Venezuela's poorest sectors believe President Nicolás Maduro has the main responsibility for the country's problems.

According to a survey conducted by research firm DELPHOS among Venezuelans belonging to strata C, D, and E, six out of ten people blame the President or his government for the two main problems in the country: Insecurity (73%) and the economy (64%), including shortages, unemployment, and inflation. When asked about the main problems facing the communities, people's main complaint refers to public utilities (78%), followed by insecurity (57%), shortages (27%), garbage disposal (18.5%), and roads (17.6%). (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/venezuelas-poorest-sectors-blame-problems-on-the-government)

Opposition reaffirms unity, agrees on key points aiming at parliamentary elections

Representatives of the 25 parties and groups that make up the Democratic Unity Conference (MUD) have agreed on seven key points to continue their united effort after months of divisive language and changes at the head of the coalition. They agreed to a politically acceptable unity movement, with all individual initiatives subject to consensus, the end of separate projects, a non-aggression agreement among all parties, and targeting the regime as the common rival. They reportedly established the key guidelines for a strategic plan to renew their popular, democratic, peaceful and electoral goals, and to remain united beyond elections. More in Spanish: (Infolatam)

Mayors' association reports decentralization may end in Venezuela

The Board of Directors of the Venezuelan Association of Mayors denounced that the central government is seeking to eliminate regional decentralization here. Carlos Ocariz, mayor of Sucre municipality in Caracas, reports that the 335 mayoralties in Venezuela have budget deficits due to cutbacks in central government contributions, and voiced concerns that local municipal expenditures exceed income. (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/mayors-association-reports-decentralization-might-end-in-venezuela)

Venezuelan aircraft with humanitarian supplies for Palestine has arrived in Egypt

An aircraft bearing 12 tons of humanitarian supplies from countries within the Bolivarian Alliance for the Peoples of Our America (ALBA) for the Palestinian people has arrived in Egypt, to be transferred to the Gaza Strip. (AVN, http://www.avn.info.ve/contenido/venezuelan-plane-humanitarian-supplies-palestine-arrived-egypt; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40666&idc=1)

Colombians demonstrate against Venezuela's actions on the border

Access through Simón Bolívar de San Antonio and Francisco de Paula Santander de Ureña bridges on the Venezuelan-Colombian border has been restrained by demonstrators in rejection to strict security measures carried out by Venezuelan authorities in an attempt to deter smuggling. Workers from the informal sector claim they have been hit by the decision to restrain access on the border at night. (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/colombians-demonstrate-against-venezuelas-actions-on-the-border)

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.

December 13th, 2011

Economics & Finance

Morgan Stanley projects Venezuela inflation around 28% until 2014

The Morgan Stanley investment banking firm pegs inflation at 28% over the next three years, 2012 to 2014. It indicates any reduction will not have a price variation beneath 18%. More in Spanish. (El Nacional, 12-13-2011; http://www.el-nacional.com/)

Food inflation at 34%; November CPI at 2.2%

While the Government forecasts lower future inflation numbers, repressed price increases and increased monetary liquidity keep fueling inflation with the November national index, the INPC, coming in at 2.2%, higher than the 1.8% of the month of October. With this, 2011 inflation has now reached 25.4% with one month to go, while twelve-month inflation as of November 2011 reached 27.6%, higher than the 27% in November 2010. (Latin American Herald Tribune, 12-12-2011; http://www.laht.com/article.asp?ArticleId=451566&CategoryId=10717)

Supreme Court rules land takeovers are not a crime, decision called unconstitutional

The Supreme Court’s Constitutional Chamber has depenalized property invasion as established by the Penal Code. Court President Luisa Estella Morales said the decision was taken when reviewing the case of two peasants accused of property invasion in Guárico State. The Supreme Court sentence overturns two key articles of the Penal Code in cases where “there is a conflict between private parties derived from agricultural activities” and weakens the right to private property. More in Spanish: (Tal Cual, 12-13-2011; http://www.talcualdigital.com/index.html;  El Universal; http://www.eluniversal.com/economia/111213/ley-de-tierras-regira-sobre-las-invasiones-en-zonas-agrarias; El Nacional; http://www.el-nacional.com/)

Land Institute has taken over 8.89 million acres in seven years

The Government has taken over 2,340 estates with an area of 9,073.790 acres in 23 states between 2004 and 2011, through a policy which "combats large estates." After 10 years of implementation of the Law on Lands and Agrarian Development, the INTI has handed over 175,129 agrarian titles through the Zamora Mission which "have directly benefited more than 170,000 peasant families," according to the Ministry of Agriculture and Lands (MAT). (El Universal, 12-12-2011; http://www.eluniversal.com/economia/111212/lands-institute-has-taken-over-889-million-acres-in-seven-years)

The country has been regressing economically for 13 years

After 13 years of the initial election of Hugo Chavez as President, oil income provides 95% of hard currency and over 50% of public spending; oil production has gone down 22%; and the share of non oil related products has gone from 30% to 5% of total exports. Over 40% of industries operating in 1998 have gone bankrupt. Agricultural production has gone from exporting and self sufficiency to importing coffee, rice, beef, chicken, milk and many other foodstuffs. More in Spanish: (Tal Cual, 12-13-2011; http://www.talcualdigital.com/index.html)

PDVSA transfers to social development fund up 954%

Throughout the first half of this year, crude oil prices averaged U$D 98 per barrel, a situation that generated growth in both revenues (37%) and earnings (64%). Under this scenario and also as a result of tax adjustments, state-run oil company PDVSA also raised its social development expenses by 954%. (El Universal, 12-10-2011; http://www.eluniversal.com/economia/111210/pdvsas-transfers-to-social-development-fund-up-954)

Commodities

PDVSA gets official financial support

Financial statements of state-run oil holding Petroleos de Venezuela (PDVSA) reflect that since 2007 several government entities have provided financial aid to PDVSA, as the oil giant's cash flow falls short of meeting its obligations. PDVSA has received U$D 40 billion in four years through the issuance of bonds and in loans from the National Treasury Office, the Central Bank of Venezuela (BCV), state-run Venezuelan Bank for Economic and Social Development (BANDES), Banco del Tesoro and Banco de Venezuela, as well as the Bank Deposit Guarantee and Protection Fund (FOGADE). (El Universal, 12-12-2011; http://www.eluniversal.com/economia/111212/pdvsa-gets-financial-assistance-from-govnt-agencies-since-2007)

Pasteurized milk production down 37,5%

According to Edecio Pineda, president of the Milk Processing Industry Association (ASOPROLE) price controls, lower productivity and unfair competition have brought down production of pasteurized milk 37,5%, down from 1.200 million liters a day in 2010 to an average 750 liters daily in 2011. Half is produced by state owned Lacteos Los Andes. More in Spanish: (El Universal, 12-13-2011; http://www.eluniversal.com/economia/111213/produccion-de-leche-pasteurizada-se-redujo-375)

International Trade

Trade agreements increased an import-centered economy in Venezuela

Carlos Larrazabal, president of the Venezuelan Confederation of Industries (CONINDUSTRIA) says agreements reached at the meeting of the Community of Latin American and Caribbean States (CLACS), recently held in Caracas, will increase Venezuela's dependence on imports. He says: "The agreements were purchase orders" of goods that will be imported by the State. (El Universal, 12-12-2011; http://www.eluniversal.com/economia/111212/trade-agreements-worsen-imports-centered-model-in-venezuela)

Logistics & Transport

Government has destined $50 million to improve harbors in Venezuela

The Government of Venezuela is investing U$D 50 million to purchase machinery for the modernization and rehabilitation of the 6 ports in the country (Puerto Cabello, La Guaira, Maracaibo, El Guamache, Guanta and La Ceiba). The ports are managed by the state company Bolivariana de Puertos (BOLIPUERTOS). The announcement was made by the Maritime and Air Transport minister, Elsa Gutierrez, who said all the investment has come from the profits generated by the own harbors. (AVN; 12-09-2011; http://www.avn.info.ve/contenido/government-has-destined-50-million-improve-harbors-venezuela)

Politics

Chavez claims he canceled trip to Argentina, Brazil because of rains

President Hugo Chavez said he canceled a trip to Argentina and Brazil to deal with the heavy rains hitting the South American country. “Fortunately, I’m fine, my recovery continues,” Chavez said by telephone in comments carried on state television. “The trip was suspended because of the reasons I gave. The meteorological prognosis indicates that the situation continues to be unstable. It may continue raining.” It was to be his first trip outside of Venezuela since returning from Cuba Oct. 20 and declaring himself cured of cancer. (Bloomberg, 12-10-2011; http://www.bloomberg.com/news/2011-12-10/chavez-says-he-canceled-trip-to-argentina-brazil-on-rains-3-.html)

Chavez launches cash giveaway for poor kids

President Hugo Chavez launched on Monday a program to provide U$D 100 a month to poor Venezuelan children in the latest of a plethora of social "missions" that have underpinned his popularity. Chavez, who seeks re-election in 2012, says such measures show the tangible benefit of socialist rule in the South American OPEC member nation. But critics argue it is a pre-election ploy masking broader economic failure. Under the new program low-income households will be able to claim 430 bolivars (U$D 100) per month from the government for each child up to a maximum of three. Disabled dependents will qualify for 600 bolivars. (Reuters, 12-12-2011; http://www.reuters.com/article/2011/12/12/us-venezuela-chavez-idUSTRE7BB15A20111212)

MERCOSUR seeks Venezuela incorporation

According to inside sources, the next meeting of MERCOSUR heads of state in Montevideo will seek different options for the incorporation of Venezuela, which remains stalled due to lack of approval by the Paraguayan Senate. They will also discuss the future incorporation of Ecuador and Bolivia, currently associate members. More in Spanish: (Tal Cual, 12-13-2011; http://www.talcualdigital.com/index.html)

Venezuela is no model for the U.S.

Mary Anastasia O'Grady's "Chavez's 40-Year Plan to Conquer Vice" (Americas, Dec. 5) describing how Venezuela's buffoonish dictator Hugo Chávez intends to cure all the vices of mankind and thus create a socialistic utopia sounds a lot like "change you can believe in." The Obama Democrats/liberals/progressives/socialists subscribe to Jane Addams's words, "we must demand that the individual shall be willing to lose the sense of personal achievement and shall be content to realize his activity only in connection to the activity of the many." Their "vision" enshrines the notion that since not everyone is gifted with an entrepreneurial nature, the government is obligated to enact policies that limit personal enrichment and thus inequality. Such a society can never function unless man's baser instincts are brought under control, and it will never produce an Edison, Ford or Jobs. Thus, such a society can never have enough wealth to pay for the promised vast social entitlements, and even with its enormous oil income, we will soon witness the total collapse of Venezuela's economy. (The Wall Street Journal, http://online.wsj.com/article/SB10001424052970203413304577086281545201896.html?KEYWORDS=Venezuela)

"Chavez Nativity" creates controversy in Venezuela

In the Bible, shepherds and wise men paid homage to the newborn baby Jesus. In Venezuela, it seems Hugo Chavez turned up in the manger, too. A Nativity scene in Caracas showing the socialist president standing before the traditional crib-in-a-manger has stirred up a pre-Christmas controversy in the politically polarized country. The model stands in a concourse of residential and business towers in central Caracas, has the traditional Christian scene at its heart. In the middle -- in front of and below Jesus's crib -- stands Chavez next to a model of his hero, South America's 18th century independence fighter Simon Bolivar. (Reuters, 12-09-2011; http://www.reuters.com/article/2011/12/09/us-venezuela-chavez-nativity-idUSTRE7B81I020111209)

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.