1. Executive summary:

The main purpose of the following report is to provide information about the profile of The Bolivarian Republican of Venezuela; in order to study the current situation of the country for further investigations in the future that may help to understand the opportunities and risk involve in importing and opening new markets in Venezuela.

The analysis includes reviews and an extensive research about: First the geography and global information to introduce the country; second, the History since the arrival of the Spaniards. The Political analysis will be explained as much detailed as possible due to its specifics characteristics in the recent decades with the Hugo Chavez’s government. He report draws special attention in the Social analysis is one of the main issues to be reviewed due to its importance at the time of making any decision. The economic aspect of course will be in consideration with both: the Official’s figures and the international observer’s ones, the graphics will be analyzed. It will be also mentioned the Business environments and the principal sectors to invest or that could be interesting to sell. To support all the information in the report before any conclusion, it will be used THE SWOT tool to demonstrate why Venezuela is an interesting place to import, especially in the last 5 years.

It is not just a country of striking natural beauty, which ranges from the snow-capped Andean peaks in the west, through the Amazonian jungles in the south, to the beaches of the north, Venezuela is among the most highly urbanized countries in Latin America with the 4th GDP per capita in Latin America. It is the 4th largest oil exporting country in the world with the largest reserves of heavy crude oil at an estimated 99.4 billion barrels (1.580×1010 m3) as of 2010 and more than 3 million barrels of crude oil per day.

At the end of the report, the conclusion and some recommendations are shown.

2. Global information and Map:
2.1 Flag:
After the name of the country was change in the year of 1999 and after long debates and controvertial, the Congress approved the change of the flag including the 8th star. The rest of it remains the same. Figure 1: Venezuelan Flag. Source: Wikypedia

2.2 Geographical position:
Venezuela is located in the northern part of South America and it lies between Guyana, Brazil and Colombia. There are 5 well defined and principal geographical divisions in Venezuela. The Maracaibo lowlands lie in the northeast, llanos or the vast Orinoco Plains occur in the central part, Andes on the west side, Caribbean Sea at north and the Amazonian region at the south.
The geographical location represents the diversity of South America itself. Sitting in the north of the continent, it is a Caribbean, Andean and Amazonian country. Due to the strategic position and proximity to the Panama Channel, connects North, Central and South America to all those countries bordering the Pacific Ocean. It has a surface of 916.445 km2 including the insular region, 1.493 km length from east - west and 1.271 km north – south. It also has a wide Caribbean coast line of 2.183 km length. It has 23 states, one federal district (Caracas), and one federal dependency (72 islands).
At the eastern part of the country there is a territory in dispute since the “1966 Ginebra Treat” with U.K, The Guayana Esequiva with a territory of 159.540 km2. Figure 2: Llanos picture (lowlands) Figure 3: Bolivar Peak 5007 mts. Andes Figure 4: World’s tallest waterfall. Amazonia. Sourc: google images Figure 5: Los Roques Islands. Source: google images
2.3 General facts:

Population (February 2012 est.): 28,900,000.
Annual population growth rate: 1.6%.
Religion: Roman Catholic 96%, Protestant 2%, other 2%.
Language: Spanish (official), some minority indigenous dialects.
Education: Years compulsory--9. Literacy (2009)--98.7%.
Health: Infant mortality rate (2008)--16 deaths/1,000 live births. Life expectancy (2009)--73.94 years.
Ethnic groups: Spanish, Italian, Portuguese, Arab, German, African, Amerindian.
Source: INE
According to the 2001 census, almost 80% of the population lives in urban areas. The Capital is the Metropolitan Caracas, the country's largest city, that has an estimated of 5.2 million inhabitants. Venezuela is proud of its tradition as a melting pot, and the majority of its citizens have a mixed racial heritage of Caucasian, African, and American Indian elements. Other major cities are Maracaibo, Valencia, Barquisimeto, Maracay, Merida, Ciudad Bolivar.
The country is well known for its Misses, having the record guiness of the most beauty contest awards, 6 Miss Universes and several Miss worlds, it is also famous because of the soap operas (telenovelas) and baseball players.

2.4 Climate:
Varies from tropical to temperate, depending the elevation. There are mainly two seasons, the rainy from July to November and the dry one the rest of the year.

2.5 Map:

Figure 6: Map of Venezuela. Source: http://www.mapsofworld.com

3 History:
Before the arrival of Christopher Colombus who landed in Venezuela in 1498, the population was composed by Indians Timotocuicas, Arawaks, Wayuu, Caribes and others, not as advance as the Incas or Mayas Civilizations for example in some others parts of the continent. The real Spanish Colonization started 38 years after that. From 1925 to 1938 The King of Spain leased Venezuela to a German Bank to pay some debts.

TIMELINE:
- 1550 African slaves were shipped to work in the plantations
- 1700 Venezuela was part of the Viceroyalty of New Granada or Gran Colombia with Ecuador, Colombia and Panama.
- 1811 the sign of the independence from the Kingdom of Spain but it was in the year 1821 when Venezuela defeat for complete on command of Simon Bolivar the Spanish troops, how fled abroad after that to obtain also the Independence for Colombia, Bolivia and Ecuador.
- 1830 Venezuela Leaves the Gran Colombia to become totally independent. Figure 7: Gran Colombia.
Source: www.alternatehistory/venezuela

- Much of Venezuela's 19th-century history was characterized by periods of political instability, dictatorial rule, and revolutionary turbulence. With a large period of civil war that ended in the 1870
- 1908 – 1935. Gomez ruled Venezuela with a strong Dictatorial military support.
- 1950: Marco Perez Jimenez became a new powerful Dictator, in a period marked by a strong persecution and killing of the opponents to the Regime. Most of the modern important infrastructures were constructed during his Government when the country got a transition from being an agricultural to an oil exporter Nation.
- 1958: The beginning of the Democracy.
- 1976. The first of January the President Carlos Andres Perez Nationalized the oli industry, modernizing the country and the industries.
- 1989: Venezuela's prevailing political calm came to an end, when Venezuela riots in which 200 people were reportedly killed in Caracas. The so-called “Caracazo” was a response to an economic austerity program launched by then-President Carlos Andres Perez.
- 1992: in February, a group of army officers led by then-Lt. Col. Hugo Chavez mounted an unsuccessful coup attempt with the result of more than 100 deaths, claiming that the events of 1989 showed that the political system no longer served the interests of the people. Chavez was convicted of rebellion and jailed for his role in the coup, but was released in 1994. A second unsuccessful coup attempt by other officers affiliated with Chavez followed in November 1992, while Chavez remained in jail. A year later, Congress impeached Perez on corruption charges. Figure 7: Coup attempt 1992 outside the government’s palace
- 1998: Due to the popular dissatisfaction with the traditional political parties, income disparities, and economic difficulties expressed by Venezuelans following Perez's impeachment. In December 1998, Hugo Chavez Frias won the presidency on a campaign for broad reform, constitutional change, and a crackdown on corruption.
- 1999: new constitution.
- 2002: after a general strike for more than 2 months claiming the President’s resignation, widely supported by the privates industries, including the National Oil Company PDVSA, Chavez was removed from the Presidency for a few days but the loyal Military officers took the President back to power in unknown circumstances. The economy suffered the consequences for several months.

Figure 8: March against the President during the general strike. Approximately 100 people died in these days from both sides.

- 2003: For a presidential recall to occur, the promoters must obtain signatures for 20% of all registered voters. After months of intense deliberations that included two conflicting signature drives overseen by the CNE, deep disagreements and occasional violence over the CNE’s disqualification of signatures on the petition, and the intervention of international electoral observers, the CNE certified that the opposition had obtained sufficient signatures to trigger the vote mechanism and set the date of the recall referendum for August 15, 2004. According to the CNE, President Chavez won 56% of the vote. The political consequences and retaliations against the opponents in the Tascon List Data Base will be discus later more detailed.
- 2006: Hugo Chavez won the reelection for 6 more years. Though international observers found no evidence of election fraud, they did note concerns over abuse of government resources used to support the Chavez campaign, voter intimidation tactics, and manipulation of the electoral registry.
- Source: http://www.history-timelines.org.uk/places-timelines/42-venezuela-timeline.htm

4 Political analysis:
Venezuela, since its independence from Spain in 1821, has had a rocky political culture. The government has changed numerous times from military dictatorships to quasi democratic rule. Populist leaders, such as the current president of Venezuela, Hugo Chavez, have attempted to push the country in a socialist direction with the nationalization and expropriation of several key industries. The large amount of natural resources at the disposal of Venezuela, including oil, natural gas, and various metals, has made the first world countries very interested in the fate of Venezuela's political and economic future.
Chavez came to power with wide support from the poor population of Venezuela by promising wealth redistribution and to stop the high levels of corruption. While Chavez rose to power on a populist socialism platform, his policies have not obtained great economic results. From 1999 to 2006, Venezuela's economy did not grow; in fact the GDP fell by 45 percent, the value of its currency fell 292 percent, inflation rose to 16 percent, and "households in extreme poverty rose 4.5 percent" (El Universal Journal, May 2006). Chavez's problems dealing with the elite and middle classes has led him to being more interested in international politics, giving aid to neighboring countries, including "giving oil away to Cuba, buying Argentina's debt, from 2005 to 2006, Venezuela had bought more than $5 billion bonds from Argentina, issued by the Argentine government following the debt restructuring. " (El Universal, Castaneda 2006) and establishing alliances with Cuba, Russia, Bolivia, Nicaragua and Iran. Socialist promises are very popular for the Venezuelan poor people. Nationalization of the petroleum industry, redistribution of agricultural land, has been used as tools by the Venezuelan government since the first democratic regime.
The political situation in Venezuela is now days the most important subject for the citizens, the country faces a deep division that is becoming more and more radical every day. The private sector is mainly against the President including the press, TV and Radio, the middle and high class while the rest of the population supports unconditionally Chavez.
The so called “Tascon list” (Congressman surname) was used by officials to ensure the people who signed the petition wouldn't be hired by the government and in some cases would be fired and they were not allowed to get any kind of Government’s contracts or subsidies. Just checking The Tascon List on his web anyone could check with the ID number if they signed against Chavez for the referendum. It also happens the other way around when private companies sometimes fired employees in favor of the President. Personalities around the president are not allowed or could have a hard time entering in many private places, restaurants, theaters, stadiums, etc…

After 14 years of presidency, Chavez will face his most difficult election the next October 7th of this year against the young Candidate and former Miranda’s state Governor Henrique Capriles Radonski. In May 2004 Capriles was arrested on the grounds that he might flee out of the country; he was released on probation in September, pending his trial. In December 2006, he was acquitted of the charge of fomenting violence in a siege of the Cuban embassy during the coup attempt, but five months later, his acquittal was annulled by the court of appeal, and the case was re-opened in October 2008. Some Human Rights ONG’s reported the denial of a fair public trial, he was part of the political prisoners of the regime. Capriles was ultimately cleared of all charges.

The President is still strong in the surveys but is losing adepts; Opposition to Chávez is still fragmented but the level of violence in the country has escalated dramatically during Chavez's reign and the revelation that Chavez has cancer has created much uncertainty in political circles, as some specialists affirm is terminal.

Political prisoners, corruption, Government’s politicians involve in drug dealing, support of the FARC, lack of freedom of speech (several radio and TV channels closed), violence, health system problems and many others reasons, have been pushing many companies and Venezuelans to leave the country.
The well known Petro Dollar is the best ally of the Government with high prices of the oil barrel. Chavez has influenced some other presidents such as Evo Morales in Bolivia, both Kichners in Argentina, Ortega in Nicaragua, etc… The anti Yankee movement is growing fast with organizations such as The ALBA. The Bolivarian Alliance for the Peoples of Our America (Spanish: Alianza Bolivariana para los Pueblos de Nuestra América) is an international cooperation organization based on the idea of social, political, and economic integration between the countries of Latin America and the Caribbean. It is associated with socialist and social democratic governments and is an attempt at regional economic integration based on a vision of social welfare, bartering and mutual economic aid, rather than trade liberalization as with free trade agreements. The member nations are Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, Saint Vincent and the Grenadines and Venezuela. ALBA nations are in the process of introducing a new regional currency, the SUCRE. It was intended to be the common virtual currency by 2010 and eventually a hard currency. On Tuesday, July 6, 2010, Venezuela and Ecuador conducted the first bilateral trade deal between two ALBA countries using the new trading currency, the Sucre, instead of the US dollar. In the other hand commercial relationships with Colombia, Chile, Panama and others not left Allies is deteriorating slowly.
According to the MERCOSUR web page, Venezuela has been accepted to join and in is in the process of total integration.
Government facts:
• Type: Bolivarian Federal Republic.
• Constitution: December 20, 1999.
• Branches: Executive President (head of government and chief of state; 6-year term); Council of Ministers (cabinet, appointed by president). Legislative unicameral National Assembly (5-year term). Judicial--32-member Supreme Court (elected by National Assembly; 12-year term). Electoral--National Electoral Council (elected by National Assembly; 7-year term). Citizen Power--Prosecutor General, Public Defender, Comptroller General (elected by National Assembly; 7-year term).
• Suffrage: Universal, age 18 and over.
• Principal Government Officials
President--Hugo CHAVEZ Frias
Vice President--Elias JAUA Milano
Minister of Foreign Affairs--Nicolas MADURO Moro
Minister of Defense--Henry Rangel Silva
Ambassador to the Organization of American States--Roy CHADERTON Matos
Ambassador to the United Nations--Jorge VALERO Briceno.

5 Social Analysis:
As in most of the Latin American countries the difference between classes is very notorious, the majority of the inhabitants live in the Cities and the agricultural activity is very low. The wealth is not well distributed and the Oil industry income is not perceive for many people and reflected at all in the basic services such as Hospitals, Schools, Infrastructure and others. Figure 9: Slums in Caracas.
Source: www.noticias24.com
In 2011, Venezuela had a Misery Index reading of 35%, down from a high of nearly 39% in 2008 but still dramatically higher than the 23.6% registered in 2006. High Misery Index readings were driven in large part by high inflation rates. In 2011, the inflation rate was nearly 27% (down from over 29% in 2010) while the unemployment rate was nearly 8%.

South America Rank Country Unemployment rate (%):

Chile 7.2
Peru 7.43
Bolivia 8.4
Argentina 8.95
Venezuela 9.16
Uruguay 9.27
Suriname 9.58
Brazil 9.89
Ecuador 9.810
Colombia 10.611
Paraguay 11.4
Source:www.indexmundi.com
Food prices increased by 33.1% between January 2010 and January 2011. According to Bloomberg, Venezuela‟s inflation rate is one of the highest in the world.
In 2011, unemployment was just under 8%, down from 8.5% in 2010. The joblessness rate remains much higher among young people than it does for older people. For the group aged 15 to 24 years-old, the unemployment rate is nearly 17%. There are simply not enough jobs for new arrivals into the workforce. As a result, some young people are postponing entering the labor market and, instead, continuing their studies (or staying at home). The number of people employed in the formal sector of the economy has increased, according to the INE (Instituto Nacional de Estadísticas) but more than one-half of the people who have jobs are working in the informal economy. Many of the newly employed have found jobs in the public sector. The danger is that these jobs are unlikely to be permanent.

The incidence of extreme poverty has fallen from 21% in 1999 (when Chavez first came to power) to 6.9% in 2010. Venezuela had the second highest rate of poverty reduction in Latin America from 2002 to 2010 according to the UN. This statistics do not reflect the lack of proper places to live with limited basic services such as water and electricity.
Source: Instituto Nacional de estadística

Facts:
• 49.7 % percent of the population is Male and 50.3 % female.
• 27 % ages between 0-14 years old, 66% 15 – 64 years old and 5.8 % older than 65 years old.
• 26.4 % of the people older than 20 is married.
• Indigenous population 2.8 %
• Venezuela's savings ratio has been negative for several years. In 2011, savings were a negative 2.1% of disposable income. The savings will fall to 1.9% in 2012.
• Consumer expenditure per capita was US$5,875 in 2011 and real gains of 3.5% are forecast for 2012.
• The average annual consumption of alcohol per person in the region was found to be 5.5 litres, but in Venezuela, it was 8.9 litres. One of the first Whiskey and Rum consumers in the world.
• Venezuela has the highest crime rate in Latin America, also had the highest proportion of companies (59.4%) that perceived crime as a serious impediment to their operations in the domestic market.
• The fuel price is extremely cheap and does not change, less than 0.1 cents USD per liter. To fuel up a 50 lts car is cheaper than buying a soft drink.
• According to a study by Unesco in 2009, Venezuela occupies the fifth position worldwide for its university registration rate, above countries like the USA, France, Spain, Italy, Japan and China. The same study also indicates that it is the second country in Latin America, behind Cuba. According to the study, Venezuela‟s university registration rate is 2.5 times higher than the regional average. Venezuela is followed by Argentina, Uruguay, Chile, Panamá, Perú, Colombia, Brasil, México, El Salvador and Guatemala.

Figure 10: On the left “Sells 3.2 millions of oil barrels daily, obtaining more than 100 thousand millions USD per year” on the right “sells 2.8 millions of oil barrels, obtaining more than 80 thousand million USD per year”

6 Economical Analysis:
Venezuela is a rich country in natural resources which includes the biggest proved oil reserve in the world and the seventh in natural gas, based on the OPEC Data from 2011. Also, abundant minerals resources, hydroelectricity and others.
The Real GDP is expected to rise by 4.7% in 2012 with somewhat lower rates of growth in the longer term. Increases in government spending and investment inflows from China provide modest support for the struggling economy. The drop in oil prices during 2012 has raised some concerns about the economy's prospects.

Just a Few official figures are available on Venezuela's budget deficit but it was thought to be about 10.9% of GDP in 2011. The deficit is expected to rise in 2012. China has lent Venezuela more than US$30 billion, making it the country's biggest foreign source of financing. In exchange, China is to receive a substantial amount of oil for an undetermined period.
Venezuela's rate of inflation is one of the highest in the world. It was 26.1% in 2011 and prices are expected to rise by 31.6% in 2012. The recent devaluation has only added to existing inflationary pressures.
Unemployment was 8.2% in 2011 and it should edge upward to 8.3% in 2012. More than half of those who have jobs are working in the informal economy and many of the newly employed have found jobs in the public sector.

Venezuela has the fourth GDP per capita in Latin America, behind Argentina, Chile and Uruguay.

Rank Country 2010 GDP per capita
US dollars (World Bank)

1 Argentina
14,559
2 Chile
14,331
3 Uruguay
13,208
4 Venezuela
12,341
5 Brazil
10,427
6 Colombia
8,870
7 Suriname
8,800
8 Peru
8,600
9 Ecuador
7,300
10 Bolivia
4,600
11 Paraguay
4,100
12 Guyana
3,9
Figure 10: GDP per capita Source: Wikipedia

According to the OPEC, Venezuela’s oil revenues account represents the 94% of export earnings, more than 50% of federal budget revenues and around 30% of GDP. A nationwide strike between December 2002 and February 2003 had far-reaching economic consequences: real GDP declined sharply in 2002-2003, but since then economic output has recovered strongly. Fuelled by high oil prices, record government spending greatly helped boost GDP in 2006- 2008, before a sharp drop in oil prices caused a contraction in 2009-10. According to Venezuelanalisis, Venezuela‟s central bank (BCV) has released GDP data for the first quarter of 2011 pointing to an accelerating GDP recovery, growing by 4.5% over its first-quarter 2010 level. This spending, combined with recent minimum wage hikes and improved access to domestic credit, has created a consumption boom, but it has come at the cost of higher inflation.

The estimated public debt by the end of 2011 is U$D 128 billion by the end of 2011, no official information is provided. Source: noticias 24/Nelson Bocaranda

6.3 Economic Structure and Major Industries:

Agriculture is fragmented and lacking in investment. The sector employs 7.9% of the workforce. Farmers produce cotton, coffee, cocoa, rice, sugar, tobacco and bananas, both for domestic consumption and for export. Half the country's 500,000 farms occupy just 1.6% of the arable land. At the other end of the scale, 1% of all farms account for over 46% of the land. Strict price controls reduce profit margins for farmers and create food shortages. More than two-thirds of all food consumed in the country is imported.

The petroleum industry is the mainstay of Venezuela's economy, accounting for about half of total government revenue and about one-quarter of GDP. The Venezuelan government maintains that crude oil production (including synthetic fuels) is 3.2 million barrels per day. However, industry sources estimate that total output is just 2.3 million barrels per day.

The share of manufacturing in GDP has been steadily falling for more than five years. Many of the problems faced by manufacturers can be attributed to erratic government policies and energy shortages.

Consumer expenditure per capita totaled BsF 25,199 (US$5,875) in 2011.

6.4 Foreign Trade :

The share of exports in GDP was just 29.3% in 2011, down from 30.1% in 2008. The country's dependence on oil is reflected in the composition of exports. In 2011, oil represented 94.6% of total exports. The USA takes the largest portion of Venezuela's exports (39.9% in 2011), though Chávez would like to reduce this level of dependence.

The Foreign direct investment; net inflows (% of GDP) in Venezuela was last reported at -0.36 in 2010, according to a World Bank report released in 2011. The Foreign direct investment; net inflows (% of GDP) in Venezuela was -0.95 in 2009, according to a World Bank report, published in 2010. Figure 11: foreign direct investment. Source: Economic Commission for Latin America and the Caribbean (ECLAC), estimates on the basis of preliminary official figures as at 24 May 2010 Figure 12: Imports of goods and services (BoP; US dollar) in Venezuela. Source: http://www.tradingeconomics.com
Driven by the rising price of oil, the value of exports (in dollars) rose by 40.9% in 2011. Supported by higher prices, the pace of growth should continue in 2012.

The current account surplus was 8.6% of GDP in 2011 and it will narrow to 5.0% in 2012. Imports rose by 48% in the first quarter of 2012, according to the central bank.

Manufacturing contributed about 15% of GDP in real terms in 2009, according to the Central Bank of Venezuela. The manufacturing sector remained hindered by a marked lack of private investment and a highly overvalued official exchange rate that inhibits exports and makes it difficult to compete against imports. Venezuela manufactures and exports steel, aluminum, textiles, apparel, beverages, and foodstuffs. It produces cement, tires, paper, fertilizer, and assembles cars both for domestic and export markets.
Agriculture accounts for about 5% of GDP, 10% of the labor force, and at least one-fourth of Venezuela's land area. Venezuela exports cigarettes, fish (primarily domestically raised crab and shrimp), tropical fruits, cocoa, and manufactured products. The country is not self-sufficient in most areas of agriculture. Venezuela imports about two-thirds of its food needs

FACTS:

GDP
$344.2 billion (2010 est.)

GDP growth 4.2% (2011 est.)
GDP per capita $12,600 (2010 est.)
GDP by sector agriculture: 4.1%, industry: 34.9%, services: 61.1% (2010 est.)
Labour force 12.67 million (2009 est.)
Main industries petroleum, construction materials, food processing, iron ore mining, steel, aluminum; motor vehicle assembly, real state, tourism and ecotourism
Exports $57.6 billion (2009 est.)
Export goods petroleum, chemicals, agricultural products, basic manufactures
Main export partners US 35.18%, Netherlands Antilles 8.56% (2009)
Imports $38.44 billion (2009 est.)
Import goods food, clothing, cars, technological items, raw materials, machinery and equipment, transport equipment, construction material
Main import partners US 23.66%, Colombia 14.43%, Brazil 9.13%, China 8.44%, Mexico 5.47%
Exchange Rate bolivars (VEB) per US dollar -
4.428 (2011 est.)
4.1336 (2010 est.)
2.147 (2009)
Figure 13: economic chart. Source: Wikipedia

Venezuela has an extensive road system. With the exception of air service, transportation has failed to keep pace with the country's needs. Much of the infrastructure suffers from inadequate maintenance. Caracas has a modern subway but only one functioning rail line serves the rest of the country. Venezuela’s ports, recently nationalized, do not currently match the country’s status as a trader
Despite political tensions between the United States and Venezuela, the United States remains Venezuela's most important trading partner. In 2011, bilateral trade topped U.S. $55.6 billion. The exports to the United States were about U.S. $43.3 billion (accounting for at least 42% of total Venezuelan exports), and U.S. exports to Venezuela were $12.4 billion (or 24.2% of total Venezuelan imports). The United States is the single most important customer for Venezuelan oil. Venezuela shipped an average of 987,000 barrels of crude oil and petroleum products per day to the United States in 2010, a figure which accounted for at least half of Venezuelan oil exports and 8.3 % of U.S. oil imports.

2012 : U.S. trade in goods with Venezuela
NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding.
Month Exports Imports Balance
January 2012 1,175.6 3,224.7 -2,049.1
February 2012 1,213.9 3,067.7 -1,853.8
March 2012 1,326.0 4,062.8 -2,736.8
April 2012 1,385.5 3,526.8 -2,141.3
May 2012 1,335.4 2,927.4 -1,592.0
TOTAL 2012 6,436.4 16,809.4 -10,372.9
Source: VENANCHAM (Venezuela American Chamber Asociation)

The International Monetary Fund said in its World Economic Outlook that Venezuelan economy is expected to grow in 2012 and 2013, but it showed concerned about the country's high inflation rate.

The IMF forecast that the Venezuelan economy will grow 4.7% in 2012, with a slowdown in 2013 (3.2%).

The IMF estimates that the average inflation in Latin America will stand at 7.4%, while in Venezuela it would reach 31.6% and 28.8% in 2013
.
The IMF also stressed that for oil exporting countries "risks revolve around the price of oil —which, on the downside, is predominantly tied to the possibility of an intensified crisis in Europe that spills over into slower growth in the rest of the world." The report also stated that in these countries "government expenditures have risen to such a degree that a relatively modest fall in the price of oil can lead to budget deficits." Eluniversal.com/jan21/20012.

7. BUSINESS OPPORTUNITIES:

The state is steadily increasing its influence and control over the economy. The government has bought the country's third-largest bank and now controls at least a quarter of the banking system. It has also confiscated at least three million hectares of farmland and has taken over a number of private firms. After nationalizing all the country's ports in 2009, the government raised port fees in 2011 by 250%. The move is expected to add to Venezuela's inflation. A new windfall tax on oil companies was imposed in 2011. The persistent threat of nationalization deters foreign investors.

Chávez has banned privatization of social security, healthcare and the state oil company. Other laws have made it harder for private firms to invest.

Foreign companies and organizations find it increasingly difficult to attract personnel to Venezuela due to the growing level of crime and violence.

On the other hand, the imports are enjoying a considerable increase mainly because of the growth of the economy, the reduction of the poverty and the lack of national production to supply the local demand.

Another important opportunity rise for the construction sector, the obstacles to buy new places to live has forced the costumers in new directions like remodeling old places, improving the current one, redecorating, etc… All kind of materials, furniture and equipments are required to supply the high demand. Also sectors such as the health industry, electronics, technology and food could be easily introduced and sell in the country.

Indicators of Business Environment: 2011

Ease of doing business rank (out of 183) 177
Starting a Business
Cost (% of GNI per capita) 26.1
Time (days) 141
Dealing with construction permits
Time (days) 381
Cost (% of GNI per capita) 161.9
Employing workers
Minimum wage for a 19-year old worker or an apprentice (US$/month) 303.5
Ratio of minimum wage to average value added per worker 0.2
Tax rate
Total tax rate (% profit) 63.5
Labour tax and contributions (% of commercial profits) 18
VAT (%) 12
Exporting
Documents for export (no.) 8
Time to export (days) 49
Cost to export (US$ per container aprox) 2,590
Importing
Documents for import (no.) 9
Time for import (days) 71
Cost to import (US$ per container) 2,868
Protecting investors
Strength of investor protection index (0-10) 2.3
Closing a Business
Time (years) 4
Cost (% of estate) 38
Source: Euromonitor International based on the World Bank
Venezuela imports were worth 13.180 Millions USD in the fourth quarter of 2011. Historically, from 1997 until 2011, Venezuela Imports averaged 6661 Million USD reaching an all time high of 14740.0000 Million USD in December of 2008 and a record low of 2099.0000 Million USD in June of 2003. Venezuela imports mostly raw materials, machinery and equipment, transport equipment and construction materials. Its main import partners are United States, European Union, Brazil, Colombia and China. This page includes a chart with historical data for Venezuela Imports. Source: FEDECAMARAS.
Besides all the information above, the strength point about importing to Venezuela is the lack of local production in many sectors. A high demand of food, medicines, spare parts, cars, construction materials, electronic devices and many others things; are constantly needed, as a result, some products are overprice or sold in black markets.

List of the main Italian companies established in Venezuela:
ALITALIA
ASTALDI SPA SUC. VENEZUELA, construction equipment
BTICINO DE VENEZUELA , electronic products
BYO LATIN AMERICA, heatlh sector
ENI VENEZUELA B.V, oil sector
GHELLA SOGENE C.A, infraestructure company
IMPREGILO SPA, infrastructure
IMPRESUB VENEZUELA C.A., oil company
ITALFERR SPA, industrial materials
INDUSTRIAS RULMECA S.A, metal mechanic
IVECO VENEZUELA C.A, automotive
JAS FORWARDING C.A,logistic
LAGOSTINA DE VENEZUELA S.A. (Frentana), home appliances
MASTER V.D.E. C.A, electric products
NUOVO PIGNONE, Gas and petroleum
PARMALAT DE VENEZUELA
PIRELLI DE VENEZUELA C.A, tires
SIAE MICROELETTRONICA VENEZUELA S.A, telecommunications
SNAM PROGETTI SPA, oil sector
SUPERMETANOL C.A. (ECOFUEL), petroquimich
SUPEROCTANOS C.A. (ECOFUEL)
TREVI CIMENTACIONES C.A., construction
VIMAR DE VENEZUELA S.A., electronic products
Information provided by the Italian Chamber of commerce in Venezuela: CAVENIT

6.5 Foreign Currency especial case: The Venezuelan government implemented a comprehensive foreign exchange control regime in March 2003 which restricts access to foreign currency by Venezuelan people, importers and foreign investors.
The foreign exchange control regime will be administered and controlled by a newly-established Foreign Exchange Administration Commission known by its Spanish acronym CADIVI.
Venezuelan importers must submit their first request for foreign currency together with the paperwork required to register their company with the Registry of Foreign Exchange Administration System known as RUSAD. This government agency will verify the documentation presented by the importer and issue a certificate of registration. The registration with RUSAD is only done once, but importers must make a new request to CADIVI for each import transaction. The importer must notify CADIVI when the goods arrive in Venezuela as these are subject to a special verification process. The goods must then clear normal Customs procedures before the importer can submit documentation to CADIVI, which then gives approval to the bank to pay for the imports.
For natural Citizens, it works more and less in the same way, before any travel is needed to send the request to CADIVI to buy international currency, the maximum amount allowed is 3000 USD per year.
As a consequence of this, the black market and parallel Dollar is widely use in the country, even though is illegal; obviously the exchange rate 3 times higher than the official one but it represents the only to obtain foreign currency in many cases.

7 SWOT: STRENGHS WEAKNESSES
Internal • Proven quality of Italian products
• Competitive prices compare with national production..
• Production capacity and experience • Price in comparison with less quality items.
• Unknown market
• Not a big market
• Global crisis.

OPPORTUNITIES THREATS
External • High demand
• Economy growth
• Lack of local production
• Oil Country exporter (stable economy)
• Reduced number of competitors
• Easy to open a new business and not so expensive.
• Buying behavior, low saving rate.
• Good relationship between both countries

• High Inflation
• Exchance currency policy
• Political stability
• Cheaper competence from allies such as Iran, China, Brasil, Libia, etc…
• Crime and violence
• Political connections are important depending of the product.

The results from the SWOT analysis show us the strengths points from the Italian companies in general.

The main STRENGHS points are:
• Italy is worldwide known as a brand itself; innovation, design and quality are the main characteristics that represent them; the perception in Venezuela of European country is very positive.
• As mentioned before in the economical analysis, the erratic politics, fixed prices, difficulty to import row materials and social situation in Venezuela in the last decade has impact negatively in the national production, being cheaper importing than producing.
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• In a case of positive business relationship, the companies from the region of Friuli Venezia Giulia have the capacity to produce the desired products and in most of the cases many years of experience.
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WEAKNESSES
• Venezuela has changed significantly in the last years and the demands are different than before, those habits in the costumers are new for the companies not working already there , it could be a problem the capability of adapting quickly to the market requirements.
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• In terms of population is not big country, taking into consideration that a percentage of the citizens coukld not afford certain kind of buys.
• Even Venezuela is not so affected by the global crisis, the company importing from Italy probably is struggling with financial problems that obligate them to act fast with low error margen.

OPORTUNITTIES
• Low savings rate reflects in the costumer behaviors in Venezuela like in the rest of Latin America, constant purchases. If we add the fact of the low national industries production and the lack of many products, the opportunities are huge to sell a wide variety of items.
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• The economical review in terms of GDP shows the growth of the country, the rise of the basic salary and the reduce of the poverty in the last years, has increased the demand. Also the fact that Oil Barrel is “stable” at the moment guaranties a good economy.
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• Depending of the product, there is not so much competence
• The business environment in the economical chapter; is the prove that to start the commerce with Venezuela is not so complicated, the cost is not too high and relatively fast in terms of days.
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• The commercial relationships between Italy and Venezuela are historically pretty strong.

THREATS
• The main problems importing to Venezuela are: first at all, the high inflation produce in part because of the special currency exchange system imposed by the Government.
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• The political situation has been stable for a long time in terms of Democracy, but the foreign affairs adopted by Hugo Chavez in many cases contradict with the will of fair and transparent business.
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• An important matter for European and Western companies, is the competence regarding prices. Countries like China, Brasil, Iran or India for example could import cheaper items; even though the products are not always the same in terms of quality or characteristics, the price sensibility affects everybody.
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• The crime and the violence is one of the main causes for some companies to leave the country, the level of insecurity is alarming. Is advice to take extra safety measures such as private security companies to protect the products and personal.
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• Some areas of production are priority to the Nation, being necessary to have connections in the Government to obtain the permits related.

CONCLUSIONS

It is difficult to summarize in a few pages all about a country like The Bolivarian Republic of Venezuela but after analyzing many aspects about the country profile, history and social –economics, it became easier to extrapolate some important data to the SWOT analysis. This tool provides us with the essential information to develop any kind of business with the South American country.
In the middle of a global economical crisis, Venezuela, being a big Oil importer is not so affected, actually is growing up reducing also the poverty levels. As we can see in the SWOT analysis, besides all the external threats and internal weaknesses, the opportunities and strengths are huges, in a market with high level of imports and not so many competitors. The oil dependence, and erratic policies are good allies to importers companies willing to sell in the country. It is cheaper to bring products from outside than producing them locally. Also the quality of those are not best in some cases.
To conclude, the principal recommended products to import are the ones related to the construction, remodeling industry, health sector, electronics and spare parts for the automotive sector.