Venezuela

1
Venezuela

• Jeff C. Chang

2
Venezuela

• Statistics
• Recent political development
• Social programs
• Trade unions
• Effect on Nationalization on FDI
• Hero or Villian

3
Venezuela

• Statistics (as of end of 2005)
• Population 26.5 million
• GDP 140.2 billion
• 80 of export revenue and 25 of GDP comes from
  crude oil
• 67.6 of exports goes to U.S. and 32 of imports
  from U.S.

4
Venezuela

• Corporate Tax rate
• 34 for non-oil companies and 50 for oil
  companies
• 30 of oil royalty rate for oil extraction
• 14 taxes on goods and services

5
Venezuela

• Recent political development
• Minimum 51 state own entity on all oil
  extraction joint venture (Petroleos de Venezuela
  SA)
• Raised royalties and taxes on the joint venture
• Reduce drilling acreage
• Seize oil field for those FDI companies that
  didnt comply
• Total, and Eni SpA

6
Venezuela

• Recent political development (cont.)
• Selling of F-16 to Iran
• Plan purchase of Russian jet fighters to replace
  F-16
• Just agreed to spend 2.7 billion on arms and
  additional funds to purchase replacement fighter
  jets
• Voted twice to support Irans nuclear ambitions
• Threaten to stop supplying U.S. with oil
• Rewrote new documents to enable President Chavez
  to gain control of all branches of government and
  allow re-election more than two terms of six
  years.

7
Venezuela

• Recent political development (cont.)
• Tightening international relationship with
  Bolivia
• Encourage nationalization of Bolivias natural
  resources
• Bolivia have South Americas second-biggest
  natural gas reserves
• Pledge to provide 200,000 barrel of crude oil a
  month
• Purchase 200,000 tons of soybean a year
• 5,000 scholarships and 1,000 advanced intern
  ships to Bolivians to study in Venezuela
• Help to develop a new iron-ore deposit in El Mutun

8
Venezuela

• Social Programs
• National healthcare
• 14 million now have access to national
  healthcare
• Education/Literacy program
• 1 million children in poorest area of Venezuela
  received free education
• 1.2 million illiterate adults learns to read and
  write
• 250,000 children received secondary schooling
  was excluded before due to social-economic
  condition
• Ambassador Bernardo Alvarez Herrera, Envoy to
  the U.S.
• washingtonpost.com January 18, 2006 Wednesday
  1200 PM

9
Venezuela

• Trade Unions
• Union of South American Nations (Unasur)
• Minersur
• A joint Bolivian-Venezuelan mining venture
• South Atlantic Treaty Organization
• To rival NATO

10
Venezuela

• Effect of Nationalization of Industries on FDI
• Surprisingly most foreign companies stayed
• Discovery of Orinoco tar belt with potential of
  270 billion barrels of reserves
• Firms that didnt stay
• ExxonMobil will be compensated for their
  investments

11
Venezuela

• Hero or Villian?
• Hugo Chura, a Bolivian Official
• Previous governments here never cared about you,
  but the new President does. And he has friends
  like Fidel Castro and the Venezuelans who cares
  about you, too.
• Election is in early July
• Where President Moraless approval rating is over
  80. Where he wants to elect new assembly to
  rewrite the constitution.
• Wall Street Journal, May 25th 2006 by Jose De
  Cordoba and David Luhnow

12
Venezuela

• Conclusion/Questions