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

Commercially-oriented programs now exist between Venezuela and the United States. These include:

* The U.S. Trade and Development Program (TDP) is financing feasibility studies in Venezuela on major projects (e.g., water facilities, electric power, tourism) and provides technical assistance in sectors undergoing restructuring/privatization. The program provides opportunities for increased U.S. exports of goods and services.

* Under a bilateral agreement with Venezuela, the Overseas Private Investment Corporation (OPIC) provides a variety of investment services, financing, and unique risk assurances to U.S. businesses investing in Venezuela.

* The U.S.-Venezuelan Tourism Project Agreement is being developed by bringing together potential investors and other services providers.

* Science and technology agreements call for exchanges of information, joint conduct of research, and exchanges of scientists and technical experts.

* An exhibition in June 1991 of U.S. equipment called USA TECH will be the largest exhibition ever of U.S. products in Venezuela.

The Venezuelan economy is expected to register encouraging growth rates in the near term, estimated at 6-8 percent in 1991, barring unforeseen developments. This follows the economic recovery which began in 1990.

The expansion is being driven by exports of oil and oil products which have benefitted from favorable international oil prices and higher output. Venezuela increased its production by some 500,000 barrels per day during 1990 to help offset oil output lost because of the Persian Gulf crisis. Non-oil exports also participated impressively in the export expansion, rising to about $4 billion from $3.1 billion. Meanwhile, imports probably declined further to $6 billion. Thus, Venezuela registered a substantial trade surplus estimated at about $10 billion. Foreign exchange reserves increased about $4 billion.

There are other clear signs that the economy is reactivating. Inventories are being rebuilt, automotive sales are recovering, there is some reflow of capital from abroad for investment purposes, import tariffs are declining, and government spending for economic projects (e.g., the so-called mega projects in petrochemicals, aluminum, and basic industries) is now under way. While the economy will still face relatively high inflation for Venezuela, estimated between 30 and 35 percent, and a new labor law will tend to raise business costs, the overall economic outlook remains positive for most industries.

Imports should recover strongly in 1991 by at least 25 percent. The best prospects for sales are the following product categories: oil exploration and refining equipment, automotive parts, accessories and services, telecommunications equipment, computers and peripherals, medical equipment, metalworking equipment, industrial instrumentation, security and safety equipment, chemical production equipment, and household consumer goods.

For further information on the markets for the above products, contact the nearest district office of the U.S. Department of Commerce or the Venezuela Desk Officer, Herbert A. Lindow, tel. (202) 377-4303.