The Venezuelan Confederation of Industries (Conindustria) is afraid that seizures drives investments away
From 2002 to date, the Venezuelan government has seized 988 companies, according to data from the Venezuelan Confederation of Industries (Conindustria).
An in-depth analysis of the annual number of seizures found that, far from diminishing, government's seizures have increased. So far this year, 401 companies were taken over by Venezuelan authorities, which is 41 percent more than the 284 companies expropriated in 2010.
The faster pace of expropriations is also shown in the fact that between 2009 and 2010 there were 422 seizures of companies, almost the same amount of expropriations than in the first eight months of 2011.
According to Conindustria, this scenario "only creates legal uncertainty; drives investments away; and reduces the possibility of increasing production," and results in less opportunity to solve problems such as supply and the high cost of living.
Meanwhile, Jorge Botti, the president of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), thinks that the Executive Office "has not measured" the effect of seizures in the domestic economy. "Every time a company is seized, this decision acts as an inhibitor, as a fear factor for millions of Venezuelan who intended to invest."
Data from the Central Bank of Venezuela (BCV) show that in the in the second quarter of 2011, investment fell to its lowest level in five years (3.6 percent). Foreign investment is not very encouraging either; in the first six months of the year it amounted to USD 1.18 billion.
"Economy has come to a standstill for these reasons. Governments should dedicate to inaugurate (works), they should not seize (companies) ... It is a bad signal for the attempts at investment of the Venezuelan people," the president of Fedecámaras insisted on saying.The construction sector has been the hardest hit by the expropriation policy. According to Conindustria, 408 of 988 seizures carried out since 2002 have been in the building sector, a 41.3 percent of the total.
Translated by Gerardo Cárdenas
Following a wave of nationalizations carried out by the late President Hugo Chavez between 2007 and 2012, Venezuela has become the second most frequent respondent to investment treaty arbitration in the world (38 cases in total), after Argentina.