Venezuela Investment Road Show

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Road show presentation on the benefits of investing in Venezuela, specifically the oil industry.

Created for: Outsourcing and Offshoring: Multinationals, Technology, and Globalization: Brandeis International Business School: MBA

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Venezuela Investment Road Show

  1. 1. Think Venezuela<br />Kim Fraser and Ilan Dee<br />March 14, 2011<br />1<br />
  2. 2. Think Venezuela<br />Brief overview of Venezuela<br />Improvements in Venezuelan Business Environment<br />Venezuela’s oil industry<br />Potential investment concerns<br />Future potential<br />2<br />
  3. 3. Brief Overview of Venezuela – Political<br /><ul><li>Military rule, promoting oil industry in first half of 20th century
  4. 4. Democratic elections since 1959
  5. 5. Hugo Chavez, “21st Century Socialism” </li></ul>1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html<br />3<br />
  6. 6. Brief Overview of Venezuela – Social<br /><ul><li>45th largest population in the world (93% urban)
  7. 7. Labor force: 13.3 million
  8. 8. 13% agriculture, 23% industry, 64% services
  9. 9. ~12% unemployment rate
  10. 10. Decreasing Gini index from 49.5 in 1998 to 41 in 2009</li></ul>1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html<br />4<br />
  11. 11. Brief Overview of Venezuela – Social<br />Human Development Index Trends, 1980-2010<br />1UNDP. International Human Development Indicators. Bolivarian Republic of Venezuela: Country profile of human development indicators. 2010. http://hdrstats.undp.org/en/countries/profiles/VEN.html<br />5<br />
  12. 12. Brief Overview of Venezuela – Economic<br /><ul><li>GDP: $354.1 billion in 2009 to $344.2 billion in 2010
  13. 13. Per capita: $12,600 (2010 est.)
  14. 14. 4.1% agriculture, 34.9% industry, 61.1% services
  15. 15. Agriculture: corn, sorghum, sugarcane, rice, bananas, vegetables, coffee; beef, pork, milk, eggs; fish
  16. 16. Industries: petroleum, construction materials, food processing, textiles; iron ore mining, steel, aluminum; motor vehicle assembly</li></ul>1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html<br />6<br />
  17. 17. Brief Overview of Venezuela – Economic<br />7<br />1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />
  18. 18. Brief Overview of Venezuela – Economic<br /><ul><li>8th in world for oil exports
  19. 19. Imports include agricultural products, raw materials, machinery and equipment, transport equipment, construction materials
  20. 20. U.S. primary trading partner</li></ul>Trade balance (Billions USD)<br />1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html<br />8<br />
  21. 21. Brief Overview of Venezuela – Economic<br /><ul><li>Fixed exchange rate: 4.3 bolivars per dollar
  22. 22. In the first half of 2010, sales of Venezuelan goods to the United States totaled USD 16.35 billion, 35 percent above the same period in 2009.
  23. 23. “The Venezuelan businessman has higher profit margins than any other country in Latin America and additionally has ways of recovering investment in the very short terms,” said economist AsdrubalOliveros. </li></ul>1 Venezuelan exports to the United States up 35 percenthttp://www.conapri.org/english/ArticleDetailIV.asp?articleid=362949&CategoryId2=14985<br />2 How Do You Survive Inflation: Ask Venezuela http://business.financialpost.com/2011/02/25/how-do-you-survive-inflation-ask-venezuela/<br />9<br />
  24. 24. Improvements in Venezuelan Business Environment – Dealing with Construction Permits1<br />1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />10<br />
  25. 25. Improvements in Venezuelan Business Environment – Paying Taxes1<br />1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />11<br />* Venezuela abolished the tax on financial transactions<br />
  26. 26. Improvements in Venezuelan Business Environment – Enforcing Contracts1<br />1 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />12<br />
  27. 27. Invest In Venezuela’s Oil Industry<br /><ul><li>Petroleum accounts for more than 75% of the dollar income and approximately 40-50% of fiscal revenues
  28. 28. Revolution in the Middle East = Oil Instability = Rising Oil Prices
  29. 29. Oil Opportunities: BP, Shell, Exxon not in market</li></ul>1Invest In Venezuela The Best Way To Invest: http//www.bestwaytoinvest.com/venezuela<br />2Oil majors such as Shell not anymore interested to invest in Venezuela<br />http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />13<br />
  30. 30. Potential Concerns<br /><ul><li>Continuing private company nationalization
  31. 31. Political instability and weakening democratic institutions
  32. 32. Drug-related violence along the Colombian border
  33. 33. Overdependence on oil industry
  34. 34. Oil Windfall Profit Law</li></ul>1 The CIA World Factbook: Venezuela. https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html<br />2 The World Bank. Doing Business. Ease of Doing Business in Venezuela, R.B. 2011. http://www.doingbusiness.org/data/exploreeconomies/venezuela<br />14<br />
  35. 35. Future Potential for Venezuela<br /><ul><li>Depreciated currency to help further export growth
  36. 36. General Motors: Venezuela has good prospects in 2011
  37. 37. Investment: $93m in Science + Tech in 2010
  38. 38. Opportunities: Turkey invests $2.4bn, Russia $800m in Agriculture & $20bn in oil field development</li></ul>1General Motors: Venezuela has good prospects in 2011http://www.conapri.org/english/ArticleDetailIV.asp?articleid=378217&CategoryId2=16009s<br />2Venezuela to invest 200 million bolivares in science and technology in 2010. http://www.conapri.org/english/ArticleDetailIV.asp?articleid=356829&CategoryId2=15325<br />15<br />

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