Roundup: Bolivian nationalization bid may affect foreign investmentComtex News Network
LIMA, Jul 09, 2012 (Xinhua via COMTEX) -- The Bolivian government has picked upits pace in nationalizing private corporations this year, a bidthat analysts said may have a limited negative impact on thecountry's worsening investment environment as feared bymultinational corporations.
The South American country has witnessed two waves of majornationalization in the past two months, as the Boliviangovernment, headed by President Evo Morales, has taken up theownership of the Colquiri Mines and an electric company.
The mining company had belonged to the Swiss GlencoreInternational AG while the electric company was owned by RedElectrica, the Spanish state grid.
The two acquisitions were seen as part of the Moralesgovernment's long-term effort to secure strategic resources andsectors, but the move has so far drawn only skepticism fromprivate owners.
Daniel Sanchez, president of the Bolivian Confederation ofPrivate Entrepreneurs (CEPB), said the nationalization process wasa "bad omen" for investors, as it will "breed doubts over theinvestment environment and distrust of the government."
Gary Rodriguez, general manager of the Bolivian Institute ofExterior Commerce (IBCE), said repeated merging would only scareoff foreign investment, as Bolivia had never ranked among the mostattractive destinations for investment.
Morales, who came to power in 2006, steered the country to theleft with his anti-liberalism and anti-colonialism ideology. Hemaintained that the state must control companies in the naturalresource sector to ensure that the country's resources benefitedthe people.
The profit of these strategic companies must be used to improveliving standards of the people instead of falling into privatepurses, he said.
In the six years with Morales in power, the nationalizationinitiatives have claimed more than 30 multinational companies,covering such sectors as petroleum and natural gas, metal mining,manufacturing, electricity and telecommunications.
Bolivian analyst believed the increased revenue generated bythe nationalization bid played an important role in enhancingsocial welfare and the medical, insurance and education network inthe country.
According to statistics from the Finance Department, 60.6percent of Bolivians lived in poverty in 2005, while the numberhas shrunk to 48.5 percent last year. The percentage of populationthat lived in extreme poverty also dropped from 38.2 percent to24.3 percent.
While trying to win the hearts of the general public, Moralesalso worked hard to soothe jittering investors, who both craved aslice of the country's rich mines and feared that they would getin the middle of the government and its leftist goals.
Bolivia maintains a policy that welcomes foreign investments,Morales reiterated, stressing that though the government needs tocontrol core corporations and resources in the economy, it willnot nationalize all natural resources in the country.
A new policy also states that Bolivian state-owned companiesmust be the major share-holder of any new investment projects andthat foreign companies may become no more than cooperationpartners, lowering the risk of any new projects being claimed bythe nationalization initiative.
Moreover, with its abundant oil, gas and mineral resources andits primitive infrastructure, Bolivia, as the poorest country inthe region, still proves to be a promising haven for foreigncapital, which encourages investors to seek fortune here amid asluggish global economy.