Lack of raw materials hits 83% of Venezuelan industries
According to a flash poll conducted by the Venezuelan Confederation of Industries (Conindustria) to assess economic performance in the third quarter, 83% of the industries surveyed believe the main obstacle hindering growth is the lack of domestic raw material, while 73% pointed to the difficulties to purchase foreign exchange
Obstacles are hitting the Venezuelan industrial sector, as lingering barriers continue to undermine their performance, according to data provided by the Venezuelan Confederation of Industries (Conindustria).
According to a flash poll conducted by Conindustria to assess economic performance in the third quarter, 83% of the industries surveyed believe the main obstacle hindering growth is the lack of domestic raw material, while 73% pointed to the difficulties to purchase foreign exchange. The study included 200 companies.
"For the first time in the last 10 years, the lack of raw material becomes the key factor that prevents the increase in production," said Carlos Larrazábal, the president of Conindustria.
Ever since the confederation started to conduct the study, political uncertainty always ranked first. Now, it ranked second, as it was cited by 82% of respondents.
Various areas of the manufacturing sector are affected by the lack of inputs from basic industries, the state-run petrochemical industry Pequiven or some of the companies that were expropriated by the Government in recent years, said Larrazábal.
"In the absence of raw material there is no supply for the domestic market. We can not increase production to exports products to (Common Market of the South) Mercosur," he added during the Outlook 2013 forum conducted by Conindustria.
The survey also found that the lack of foreign exchange is another obstacle. Larrazábal said that authorization of US dollars sales by the Foreign Exchange Administration Commission (Cadivi) take some 130-150 days. Consequently, the debt of Venezuelan industrialists with foreign suppliers has jumped to USD billion.
Larrazábal also stressed that in 2004-2012, the Government expropriated 1,171 companies, with 30% pertaining to the industrial sector. "As long as expropriation of companies continues, investments will not be attracted."
Further, economist José Guerra claimed that the productive apparatus has been "ravaged," and warned that devaluation is unavoidable. He added that over the last few years "production capacity has been seriously demolished," thus leading to a serious loss of establishments and jobs in the industrial sector.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.