or state monopoly?
Four weeks ago, the government gave yet another blow to private
enterprise in its race to impose communism in Venezuela. Gaceta
Oficial of October 19 published Presidential Decree No. 4,909
authorizing the creation of a new state-owned company to be called
Suministros Venezolanos Industriales, C.A. (Suvinca).
At first glance, it would seem to be a constructive initiative.
Officially, the purpose of this company is to “support and
favor micro, small and medium-size enterprises as well as cooperatives
and other forms of productions organized as associations,”
ensuring their viability and sustainability by the timely, adequate
supply of raw materials and inputs, technical assistance, quality
improvement and financing.
The new company’s business will be the marketing of raw
materials, inputs, capital goods, and intermediate and finished
goods “in the interests of the country’s endogenous
development.” And to do this, it will develop and operate
–with an extremely broad mandate of control and supervision-
a National Industrial Supplies System, which will consist of an
input bank, transportation, storage, quality control, financing,
trading and technical consulting services.
Suvinca will be a stock company attached to the Ministry of Light
Industries and Commerce (MILCO) and will open with capital stock
of Bs.100 billion, contributed by the Bolivarian Republic.
So far, everything looks fine, but a second reading reveals the
government’s autocratic intentions.
Since Suvinca is a state-owned company, it will, implicitly, have
greater control over all private business in the country. With
this company, the government will be usurping attributes and functions
that do not fall within its sphere of competence and will be in
fierce, disloyal competition with the already hard-hit private
To begin with, it is assumed that this company will have and make
use of broad, discretionary privileges such as access to preferential
dollars, tax exonerations, and access to soft loans, and that
it will benefit from an endless list of laws that exclude it from
a series of bureaucratic requirements and permits.
More relevant still is that its business will affect other companies
in different ways, one being disloyal competition. Suvinca could
sell at a loss, as part of its declared mission and vision, to
the detriment of private companies. Another is that Suvinca could
end up being the main customer of many Venezuelan producers and
importers and, as such, would have them by the short hairs and
could force them to sell at below cost or with slim profit margins,
with the consequent disinvestment and obsolescence in their industrial
If to this we add the considerable delays the government allows
itself to pay what it owes, using this as a political weapon,
capital depletion and bankruptcy are what the future will most
likely hold for these businessmen. This situation looks even bleaker
if account is taken of the fact that this decree introduces barter
as a means of trade.
This would come as no surprise from a government that has the
fixed idea in its head of imposing on Venezuelans an out-of-date
communism that involves destroying private enterprise and exercising
control over citizens in all spheres of activity.
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Note: This commentary was originally published by VenEconomy,
on 11/14/2006. Petroleumworld reprint this article in the interest
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