Secretary Mosbacher leads mission to Venezuela; emphasis on private sector and market reforms points to promising business opportunities - Secretary of Commerce Robert A. Mosbacher led a Business Development Mission to Venezuela

Business America, Feb 25, 1991 by Kurt Wrobel

In the financial sector, foreign banks and insurance companies are still limited to less than 20 percent equity participation, although these limits may be increased to 30 percent. Similar limits apply to other professional services.

The mission expressed its hope that progress could be made to liberalize these sectors as well as to move forward in the areas of tax reform, privatization, and intellectual property rights protection and enforcement.

It was hoped that Venezuela's tax reform program would soon be passed into law so as to alleviate the tax burden on foreign investors, which are mostly subject to a combined 60 percent corporate income and dividends remittance tax. Even higher rates apply to investors in the mining and oil and gas sectors.

Privatization, a key element of the economic reform program, was also a matter of interest to mission members. In June 1990, the government of Venezuela announced its intention to privatize some 70 state-owned firms. This included the telephone monopoly, banks, cement companies, agro-business firms, metalworking plants, shipyards, textile plants, hotels, two airlines, and a racetrack. The telephone company (CANTV) has announced the privatization of cellular operations with an award of a contract to Bell South and plans to privatize functions such as data transmissions, rural telephone service, satellite communications, and others. In addition, CANTV has announced what will ultimately be the privatization of the company itself.

Mission members pointed out to the Venezuelan authorities the inadequacies of intellectual property rights protection and enforcement in Venezuela, and that it was essential to remedy this situation if Venezuela is to be successful in attracting foreign investors. The Venezuelan administration indicated it was preparing a bill calling for improvements in intellectual property rights that it would soon submit to the Congress. A bill protecting copyrights is already before Congress.

The private sector in Venezuela expressed its enthusiasm over the visit and the opportunity to work with U.S. representatives to carry out the goals and objectives of the Enterprise for the Americas Initiative. The Venezuelan private representatives emphasized the important role of the private sector in Venezuela and the need to strengthen its participation in the economy. They also expressed concern about the complexity of U.S. import regulations and their effect on Venezuelan exports to the United States. Secretary Mosbacher offered to send U.S. technical teams to Venezuela to help clarify U.S. trade regulations.

The Enterprise for the Americas Initiative aims to encourage countries in Latin America to move towards free trade. Its goal is to increase the potential for trade and investment. A bilateral framework agreement, now under negotiation, would formalize cooperation between Venezuela and the United States and establish a Trade and Investment Council to focus on activities to liberalize trade and investment. Problems would be discussed and efforts made to resolve them.