Currently, Colombia and Venezuela are working on the reactivation of border agreements to activate the region's economy. Did you know that this is beneficial for investors in Venezuela? Learn about the reality of the current context of the Venezuelan market and the implications of the opening of the border with Brazil. As well as the different scenarios posed by the economic reactivation of land borders in the Caribbean region.
Current context of the Venezuelan market for foreign investors
In previous articles we have talked about the industries that are successfully developing in Venezuela. As well as we have analyzed together, different reasons to invest foreign capital in our country. Although it is true that the region lacks economic stability, different commercial, legal and business strategies can be implemented that allow fluctuating drastic changes. Currently, there are different commercial areas that are making the economy rebound in the country. The Venezuelan Observatory of Finance has estimated a growth of 12%The Economic Commission for Latin America and the Caribbean estimated 5%, as opposed to the International Monetary Fund, which estimated 1.5%.
The truth is that thanks to the increase in oil prices, the export of raw materials to international markets, the commercialization of foreign products, and the inflow of remittances in foreign currency, among others, economic activities have been able to remain stable in spite of inflation. Although business growth has been focused on services and direct sales to consumers, there are different investment opportunities.
Reality of the market within the Colombia-Venezuela border
As a result of the arrival of Colombia's new ambassador, Armando Benedetti VillanuevaIt is known that one of the main tasks proposed by the new Colombian government is to reactivate commercial activities. To this end, conversations have been put on the table regarding the reactivation of the most active border in Latin America in 2008, which achieved a record exchange of seven billion dollars.
From Cúcuta, the government is preparing for the reactivation by discussing vehicle registrations within the zone. For them it is essential to begin to establish the mechanisms that will restore the rights that Venezuelan vehicles had when entering Colombia before 2015. So it seems that the good business climate may be on both sides, only the necessary legal reforms are needed for the reactivation to take place.
Market reality on the Brazil-Venezuela border
Seven months after the opening of the border between Venezuela and Brazil, the effects of trade growth do not seem to be very evident. After two years of pandemic, the commercial and tourist reactivation has not been as expected. Although there has been a considerable growth in food imports and transportation services required to move around the country. This has undoubtedly allowed the economy in the State of Bolivar to be maintained, at the same time that lodging operators in the area have been reactivated.
Although this is an area where road conditions are a disadvantage for commercialization, there are many opportunities for the exchange of goods and services between the two countries. Brazil has managed to position different industries such as telecommunications and food in Venezuela. It is expected that soon opportunities will be reopened for Venezuela to do the same in other industries. Since Brazil's border cities are closer to Venezuela than to other cities in Brazil, the business opportunities are almost endless.
Benefits of the reactivation of border agreements between Colombia and Venezuela
Some of the immediate benefits that the reactivation of border agreements brings is first the hope for the development of the area. The Colombian ambassador affirms that a special economic zone with tax exemptions is expected to be implemented in the future, in addition to investing in border municipalities with schools, bridges, hospitals, etc. In addition, this opening also encourages the establishment of new companies on both sides of the border, which help to appease the needs of nearby populations. This is essential in terms of products and services that improve the quality of life of the people in the area.
At the legal level, the main benefit is the simplification of trade and service provision regulations in both countries. This is due to the fact that once the border is opened, faster registration mechanisms will be established that will improve the flow of pedestrians and transportation in the region. This is beneficial for Venezuelan investors who need to acquire raw materials in the neighboring country. This is expected to alleviate Venezuela's economic constraints.
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