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Investments opportunities in VENEZUELA

Investments opportunities in VENEZUELA

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Investments opportunities in VENEZUELA

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  1. Investments opportunities in VENEZUELA

  2. Contents • What is CONAPRI? • Why invest in Venezuela • Legal Framework • Investment opportunities: Chemical and Petrochemical sector

  3. It´s a non-profit civil association, set up in 1990 as a mixed organization supported by the public and private sectors.

  4. Members

  5. Members and international partners

  6. Imagen 6,5” x 5” Why Venezuela?

  7. Advantages Our main advantages: • Natural Resources • Legal Framework • Infrastructure • Skilled Human Resources

  8. Advantages Natural resources • The world’s 6th largest light crude oil reserves • The world’s 1st largest heavy crude oil reserves • The world’s 8th largest gas reserves • The 3% of world iron reserves • Main exploitable raw materials: petroleum, iron-ore, bauxite, gold, diamonds, copper, coal, phosphate, zinc • 40.000 km. of cultivated lands • Large basins • The highest waterfall of the world

  9. Advantages available to the investor GDP growth 2006 In the past three years, Venezuela has been one of the countries whose economy has demonstrated a high rate of recovery. Source: Yearbook 2005. Institute of Management Development (IMD).

  10. Advantages available to the investor • As for energy, Venezuelan has sizeable reserves of oil and gas, besides an electricity industry with an installed capacity of 20,399 MW, according to data from the Venezuelan Chamber of Electricity Industrialists (Caveinel). • World competitiveness surveys put the Venezuelan energy infrastructure and its costs at very competitive levels compared to its competitors. Source: Yearbook 2005. Institute of Management Development (IMD).

  11. Advantages available to the investor Infrastructure • Venezuela has high quality infrastructure compared with latinamerican average. • 95.155 km of roads. 32.300 km of paved roads, superior to the rest of the region. • 13 ports and more than 100 airports • 369 fixed and mobile lines per 1.000 inhabitants, superior to the Latin American average (359). • Source: World Economic Forum 2003-2004, Cepal 2001.

  12. How to invest?

  13. Legal Framework • Opening up to foreign Investors, regardless of the country of origin of their capital. • There is no treatment discrimination among foreign and local investors. • Legislation establishes international standards for the protection of Investments. • Freedom to invest, without any prior authorization. • Investors have the right to transfer capital and benefits invested once they are in compliance with the foreign currency acquisition legislation. • MNT guarantees and equitable and fair treatment.

  14. Legal Framework • Freedom to hire staff, aliens inclusive.. • Many options for using Disputes Settlement mechanisms related to the Investment and the commercial activity bound to it. • Technical Assistance to the Investor during all Investment stages. • Fostering of Legal Stability Agreement: LSA.

  15. Protection and Promotion Investment Agreements Venezuela has suscribed 24 agreements with the following countries: Sweden Argentina Portugal Great Britain Barbados Czech Republic Lithuania Denmark Switzerland Netherlands Belgium Chile Iran Spain Uruguay Germany Costa Rica Canada Paraguay Brazil Peru Italy France Cuba Ecuador

  16. Foreign investments Regulations • Constitution of the Bolivarian Republic of Venezuela (Article 301): Establishes equal conditions for local and foreign investments. The Constitution favors the unrestricted presence of both. • Decree 2095: develops content of Decisions 291 and 292. • Law for the Promotion and Protection of Investments (1999): • System of general protection to the foreign and domestic investments. • Bilateral Investment Agreements. • Equal Treatment for local and foreign investors under similar circumstances with the exceptionsestablished in special laws. • Fiscal rationality in the imposition of tributes and rates to the industrial and commerce activities • Incentives Policies and Promotion of Investments in certain sectors and regions to contribute with specific development objectives. • Negotiable Incentives for the Investors that supports training of human capital, productive development and inserting Venezuelan economy in the Global Market. Other Relevant Regulations: Regulations of the Law to Promote and Protect Investments, Code of Commerce and Civil Code, Arbitration Law, tax, labor and other special laws

  17. Foreign investments Incentives General: • VAT return on production aimed at exportation. • 10% reduction for new investments • Income Tax Exoneration for investments in less economic development states and small and medium size industries located in industrial parks (13%) • Tourism: reduction of 75% of the amount of new investment (infrastructure). • Agriculture: reduction of 80% of the amount of new investments. • Possibility of signing legal stability agreements. Comercial Incentives: • Draw Back return. • Active and Passive perfection Regimes

  18. Portion up to 2,000 tax units 15% Portion over 2,000 and up to 3,000 tax units 22% Portion over 3,000 tax units 34% General legal framework • Income Tax Law: This tax is levied on annual net and available income, in cash or kind, earned by individuals or businesses residing or domiciled in Venezuela, regardless of whether the origin or source of the income is located in Venezuela or abroad. • In the case of parties engaged in profit-making activities, other than hydrocarbon-related activities, the tax will be levied based on the rates listed in the following table. The Tax Unit for 2007 was set atBs. 37.632.00

  19. General legal framework • Value Added Tax (VAT) Law:Pursuant to Article Art. 3 of the law the following activities, transactions and operations are subject to this tax: • The sale of tangible personal property • Definitive imports of personal property • The rendering of independent services carried out or used in the country in return for consideration • Export sales of tangible personal property • Exports of services • This tax is payable provided that during the previous fiscal year the party carried out transactions worth more than 6,000 tax units. The tax is levied on every transaction and must be paid in to the treasury on a monthly basis. • The rate of this tax is set annually in the Budget Law and must be no lower than 8% nor higher than 16.5%. It is currently 11%. July 9%

  20. Trade Liberalization to Venezuela Andean Community- Canada TIC CAN – Canada General Preferences System Andean Community – EEUU TIC CAN – EEUU General Preferences System Venezuela - Trinidad & Tobago Partial Preferences Agreement Venezuela (**) / Andean Community – Mercosur Free Trade Agreement Free Andean Community (*) Partially Free (*) Venezuela retired from CAN in 2006. Tariff preferences will be in force for five (5) years. (**) Venezuela agreed to become a full member of MERCOSUR in 2006. Non Tariff Reduction Venezuela - Chile Free Trade Agreement (1993)

  21. Trade liberalization from Venezuela Venezuela – CARICOM Agreement on Trade and Investment Venezuela - Guyana Partial Preferences Agreement Venezuela – Central America Partial Preferences Agreements Free Trade Agreement CAN-MERCOSUR / Venezuela (**) Andean Community Agreement (*) Free Venezuela - Chile Free Trade Agreement (1993) (*) Venezuela retired from CAN in 2006. Tariff preferences will be in force for five (5) years. (**) Venezuela agreed to become a full member of MERCOSUR in 2006. Partially Free Non Tariff Reduction

  22. Procedures • Company Founding : a minimum payment of 20% of the subscribed capital stock • Capital stock must be divided in common shares • To obtain the Fiscal Information Registry before (SENIAT) • To open a subsidiary company is allowed • All the employees must be registered in the Social Security • I the company has more than five (5) workers or employees it must contribute with the National Institute of Educational Cooperation (INCE) with 2% out of the total salaries. • Foreign investments must be registered at SIEX within sixty (60) calendar days. • Investor or the company shall updated annually (within 120 days of the new economic period) their investment information within SIEX. • Other entities in charge of the authorization, supervision and registry are: Superintendence of Bank (Sudeban), Superintendence of Insurances (Sudeseg) Ministry of Energy and Oil (MEP) and Ministry of Basic Industries and Mining (MIBAM)

  23. How to set up a company RIF: Tributary Information Registry (SENIAT) Registration of the company before INCE Company Visa Choose legal form of the company Investment Visa Commercial Visa Checking of the company name Investment Registration of the Company Social Security Registration l Writing up of the legal documents: statutes and act of incorporation Oil and Gas Banking Opening a bank account and deposit the capital Mining Insurances Other Mercantile Registry Publication

  24. Where to invest?

  25. Oil services sector • Oil producer of longstanding trajectory • The largest conventional reserves in the region and the sixth and ninth petroleum and gas reserves in the world • Currently produces 4% of the world’s crude oil production • The importance of the industry to the economy • Know-how in various activities: exploration production refining trading • Specialized labor • Participation by the private sector: major foreign and national private companies as well as foreign state oil companies in main as well as related activities • Major opportunities within the framework of Pdvsa’s Plan, especially the quantification and certification of extra heavy crude oil and bitumen reserves in the Orinoco Belt which it is estimated can add an additional 200 billion barrels • There are more than 850 service companies waiting to create joint ventures with national and foreign companies to add know-how and increase their operating capacity

  26. Oil services: Opportunities • Seismic studies • Geosciences and environment • Specialized technical services • Engineering and integrated services • Oil and gas production facilities • Manufacturing of capital goods • Vendors: commercial strengths • Construction and assembly • Production – national capacity • Machinery and heavy equipment • Operations and maintenance of facilities • Associated services Source: Cámara Petrolera

  27. Oil services: Characteristics Segments Subsegments Number of Companies • Thermoplastic olefins and resins (El Tablazo) • Basic petrochemicals (Paraguaná, Morón, Jose) • Fertilizers and inorganic products (Morón) 15 Basic Chemicals 15 • Organic intermediate products (Eastern & Western Venezuela) • Organic intermediate products (El Tablazo, Central Venezuela) • Fibers (Central Venezuela) Intermediate Chemicals • Auxiliary resins and plasticizers (Central Venezuela) • Specialty products (Central Venezuela) • End products. 15 20 200 more Final Chemicals Source: Asoquim

  28. Principal export products Source: Asoquim

  29. Indicators Chemical and petrochemical GDP in MM US$ The average product for the chemical and petrochemical industry during this period comes to 757 million dollars. The notable recovery in 2004 and 2005 places this indicator at its highest level in the past eight years. Source: BCV - Asoquim

  30. Industrial Indicators The number of establishments has been dropping gradually since 1997. The number has not changed since 2000, despite higher production in the sector, a sign of higher productivity. Source: Asoquim

  31. Industrial Indicators Following a sharp drop in 1998, the figure for manpower employed in the sector has remained fairly stable, with a 4% growth rate Source: Asoquim

  32. Chemical-Petrochemical business Advantages • Crude oil, among other natural resources. • Low cost energy • Access to main export markets.

  33. Chemical-Petrochemical business Sector Outlook • According to 2004-2009 Pdvsa business plan, crude oil production will increase to 5 million barrels per day. • Pdvsa investment is estimated at US$ 6,7 billion for 2005. • Pdvsa plans to invest in refination activities 14.304 MMUS$ between 2006-2012

  34. Venezuela is your investment location • We offer comparative advantages (excelent natural resources endowment) and many competitive advantages (infrastructure, legal framework and trade agreements). • MRE, MILCO, MIBAM, MINTUR, SIEX, BANCOEX y CONAPRI can help with the invesment administrative process. • The array of profitable business opportunities is unique.

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