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Investing in Bolivia: The most important sectors

by | Jun 24, 2023

The most attractive economic sectors for investing in Bolivia are jewelry, agribusiness, energy, finance, manufacturing, telecommunications, transportation, and tourism. The text below contains general information on each of these sectors.

Jewelry

Bolivia, a mining country by tradition, has enormous resources of raw materials for the jewelry industry. It has large mining deposits that allow the supply of gold, silver, copper, tin, and others, and significant deposits of precious and unique stones. These resources offer extensive investment opportunities yet to be exploited.

There are companies (domestic and foreign) in the departments of La Paz and Santa Cruz dedicated to producing jewelry and costume jewelry for export.

Cooperatives from the highland departments (La Paz, Oruro, and Potosí) provide gold and silver to goldsmiths and industrial jewelers, who combine state-of-the-art technology and an innate skill to produce jewelry of high quality to be marketed abroad.

Agribusiness

Agricultural and livestock production and its derivative products vary and are subject to particular characteristics and determining conditions. Climate and rainfall are two conditions that play an essential role in growing crops and raising livestock. Three large regions have different climatic characteristics when investing in Bolivia in the agroindustrial sector.

They are:

  • The Altiplano is a region with an average altitude of 12,464 feet above sea level and an average rainfall of 17 inches.
  • Los Valles is at an average altitude of 9,153 feet above sea level and an average rainfall of 20 inches.
  • Los Llanos has an average altitude of 2,670 feet above sea level and an average rainfall of 52 inches.

Within these large regions are 14 sub-regions with particular characteristics and a defined production pattern.

In the northern highlands, maize, quinoa, and tubers are produced, and sheep and camelids are raised. In the valleys, large plots of vegetables and fruits are cultivated; Likewise, dairy cattle are raised. Cotton, sugar cane, soybeans, and similar products are grown on the Santa Cruz plains. This area has large grazing areas for raising cattle.

Agroindustrial development has entered a considerable market expansion based fundamentally on high-quality Bolivian raw materials, abundant and qualified labor, and acceptable competitive conditions through transportation rates and preferential trade agreements.

The agroindustrial sector in eastern Bolivia has a modern dynamic. It uses capital-intensive production techniques that result in internationally competitive levels of productivity. It is one of the sectors that has contributed the most to the country’s non-traditional export growth.

The agroindustrial products produced in Bolivia include sugar, soybean seed (soybean), soybean oil, and white rice.

Agricultural Subsector

Agriculture in Bolivia is developed through two systems, a traditional one practiced in the highlands and part of the valleys, and a modern one found in the plains area (also called the eastern area).

The traditional system tills the land by animal traction, and no supplementary irrigation is used. Under this system are farmers of potatoes, barley, and similar products. In recent years, some peasant groups have begun to grow crops using solar tents and fairly sophisticated irrigation systems, allowing them to increase their products’ variety, quantity, and quality.

Modern agriculture investing in Bolivia is characterized by specialized machinery, fertilizers, and supplementary irrigation, practiced in part of the country’s valleys and the eastern region.

Among the immense variety of agricultural products produced in Bolivia, we can include:

  • Cereals include corn, rice, wheat, barley, quinoa, and oats.
  • Tubers include cassava, sweet potato, and a wide variety of potatoes.
  • Vegetables and greens such as peas, broad beans, garlic, onion, beans, tomato, carrot, squash, chard, and other similar products.
  • Stimulants like cocoa, coffee, cocoa, and tea.
  • Fruits include banana, pineapple, orange, tangerine, grapefruit, strawberry, grape, apple, custard apple, avocado, peach, pear, and other exotic varieties.

Livestock subsector

Investing in Bolivia in the livestock-producing regions is subject to the type of natural grassland in the territory and the aforementioned agricultural areas.

Investing in livestock production in Bolivia is classified as follows:

Bovine cattle is comprised of the raising of this cattle throughout the Bolivian national territory, constituting the east as the most crucial breeding area due to the ease with which the animals adapt to the natural conditions of the plains and the important levels of export made from that region to Brazil and Peru.

Breeders in that region of Bolivia pay particular attention to breed improvement techniques, such as artificial insemination.

Cattle is intended for reproduction, general consumption, and milk production. In this sense, the central valley of Cochabamba and the joint area of Santa Cruz, La Paz, the valleys of Tarija, and Chuquisaca have the most significant number of dairy cattle.

Sheep are generally raised in the highlands and valleys.

Swine cultivation is destined mainly to produce meat for mass consumption and the industrial production of sausages. The main breeds cultivated are the Duroc Jersey, Poland Chine, Landrace, and Hampshire. The Creole pig is an additional alternative to raising this type of animal.

Camelids have their center of origin in the Andean Cordillera, the highlands, and part of the valleys, with many llamas, alpacas, vicuñas, and guanacos. The vicuña is an animal with very fine wool, but hunting it is prohibited. Despite its meekness, it is an animal that cannot bear life in captivity. The llama and alpaca wool fiber are valued for making garments. Llamas and alpacas are used as pack animals.

Goat farming is mainly centered in the southern part of the country, in the valleys of Tarija and Potosí.

Equine animals are found in the eastern plains and are used as mules to care for livestock.

Rabbit farming is one of the most developed activities in recent years, especially in the departments of Tarija, Cochabamba, Oruro, and La Paz. The raising of these animals is intended mainly for the manufacture of clothing.

Poultry resources in Bolivia are vital, with several modern and well-equipped farms supplying meat and eggs. The departments of Santa Cruz, Cochabamba, and La Paz are at the forefront of poultry production.

Investing in Bolivia: The Energy Sector

Bolivia’s energy potential is enormous. Added to this is the fact that Brazil – the most important economy on the sub-continent – represents a market with almost unlimited demand for electricity and derivatives. Hence, the possibilities for private investment in this sector are significant.

Bolivia has the potential to generate 39,500 MW of hydroelectricity. This figure has been certified by the Latin American Energy Organization. This means that 176,000 GWh could be generated annually. Only 4% of this hydroelectric potential is being used to generate electricity. So the opportunities for more business in the power generation sector are plentiful.

The country also has significant potential to generate geothermal electricity in the Laguna Colorada area, located in the southwest of Bolivian territory. In January 1998, the Federal Electricity Commission of Mexico (FEC) certified that the potential of this area was approximately 120 MW for 25 years. After carrying out the respective studies, the FEC recommended the implementation of the project through the installation of two generating plants with an individual capacity of 60 MW.

The construction of the gas pipeline to Santa Cruz – São Paulo has also enabled the creation of alternative projects, including electrical and hydroelectric projects, all to supply the demand in the Brazilian market. Since the exploitation of gas in Bolivia possibly exceeds the volumes demanded by Brazil, the production surpluses may be used to generate electricity and, therefore, for greater possibilities for investing in Bolivia in this sector.

Financial Investing in Bolivia

The financial sector in Bolivia mainly comprises banking institutions, insurance companies, pension funds, private monetary funds, and stock brokerage agencies, which mobilize the resources of the financial system. Said institutions are regulated by the Central Bank of Bolivia, the Superintendence of Banks and Financial Entities, and the Superintendency of Pensions, Securities, and Insurance.

The financial policy adopted in Bolivia has as central objectives macroeconomic stability, strengthening of the financial system, a sustained increase in the levels of internal savings, and efficient administration of external savings (all part of macroeconomic stability ).

The Bolivian financial system has evolved rapidly in recent years and is catching up with those of the most important Latin American countries. It offers a wide range of services, including lines of credit, foreign exchange markets, trusts, leasing, safe deposit boxes, teleprocessing, credit cards, ATMs, brokerage services, etc.

The country has fourteen commercial banks and several other financial entities with unique characteristics. Among the commercial banks, four are branches of multinational financial institutions (Citibank, Banco Real, Banco de la Nación Argentina, and Banco de Crédito del Perú), and the rest (more than 50 % of their capital stock) are owned through foreign private participation.

Manufacturing

Manufacturing industrial activity has grown significantly in recent years as the country enters a stage of greater competitiveness and expansion of markets for manufactured products. In this sense, the following three subsectors can be highlighted:

Textiles and Clothing

Taking advantage of the variety of cotton, alpaca, angora, and llama fibers, Bolivia has been significantly increasing the production of fabrics and clothing, gradually achieving tangible quality improvements.

Bolivia is very competitive in clothing due to the low labor cost and high quality of raw materials. Taking advantage of national genres, some foreign companies are producing and acquiring the following types of garments:

  • Knitted fabrics in different gauges.
  • Hand-woven garments.
  • Garments are made with special alpaca, angora, sheep, and

The leather processed in Bolivia has optimal characteristics of thickness, color, texture, and finish so that it can be used to manufacture products destined for the international market.

Most of the leather processed in the country comes from the eastern zone, and approximately 50% is used for manufacturing footwear, 30% for manufacturing clothing, and the remaining 20% for producing leather goods.

In short, investing in Bolivia has evidenced that industrial manufacturing is experiencing sustained growth and offers exciting investment opportunities.

Telecommunications

With the capitalization of the state company ENTEL, Bolivia has taken a significant step toward modernizing telecommunications services throughout the country. Among other things, the transfer of the administration of this company to Italian control has led to levels of investment in state-of-the-art technology, training of human resources, and infrastructure never before experienced in the sector.

The capitalized ENTEL has linked most of the national territory with fiber optics, making the country a South American ” Hub ” for telecommunication services. The objective of the present administration is to make the conversion of the country into the “distributor and liaison center” of services in the sector a reality. The new ENTEL investment has given this objective strength and realism.

Finally, telephone service cooperatives throughout the country will pass into the hands of the private sector. This situation will only reinforce the many changes that have already taken place in the industry and will improve the country’s ability to attract private capital, not only to the sector but also to others that depend on an agile and efficient telecommunications service with a wide range of products designed to meet the demanding demands of the business sector. Among the new services that will be provided in the country soon, there is Fixed Cellular Telephony. This is a service subject to international bidding in the immediate future.

Transportation

Bolivia is investing considerable financial resources in road infrastructure. Bolivia will be connected by first-rate road infrastructure with all neighboring countries, so its goal of becoming the link and transit point of the subcontinent can become a reality.

The General Law of Concessions of Public Transport Works is a legal instrument allowing private interests to participate in the construction, rehabilitation, and administration of public works (roads, bridges, airports, etc.) throughout the country. It is expected that private participation in the sector will increase considerably.

Through this Law, the State will allow the private investor to recover their investment in public works through the collection of tolls, administration of supplementary hotel services, administration of gas station services, and others. Private activities in the sector will enable efficient administration of the road infrastructure and facilitate further development of the sector and other industries in the national economy.

The Integration Corridors (five in total) will integrate the country with its neighbors and facilitate the transportation of products, particularly for the export of national goods. The Corridors require more than 5,000 miles of roads to link Bolivia with neighboring countries. More than 70% of this total has been built. Completing the corridors will increase trade with the subcontinent countries and generate more significant business opportunities and activities within the country.

Bolivia has road connections to neighboring countries and access to ports on both the Pacific Ocean and the Atlantic Ocean.

Tourism

Located in the heart of South America, Bolivia is a land of contrasts, with regions of high mountains, prodigious valleys, and vast Amazonian plains. Therefore, its tourist attraction is based on its great variety of natural, archaeological, architectural, artistic, and folkloric resources and the multiculturalism expressed in its people.

The city of Potosí was designated a World Heritage Site by UNESCO due to its invaluable contribution to the history and culture of the New World and Spain. It was the most important city in the Americas in the 16th century. Its silver production during the colonial era was of such magnitude that, to date, it has not been possible to quantify accurately. On the other hand, the city of Oruro is considered the capital of Bolivian folklore for its incomparable carnival. On the other hand, Sucre is the city that preserves the most beautiful colonial style. It is a reflection of the dawn of the Republic.

La Paz is a city where the Aymara influence and the reality of a modern town come together. It is surrounded by majestic snow-capped peaks, among which the Illimani stands out clearly, standing over the city like a motionless sentinel. Approximately 45 minutes from the city is Lake Titicaca, the highest in the world and cradle of great cultures, whose archaeological legacies are shown in the important ruins and offer an idea of the high degree of civilization reached by the inhabitants of this region.

Santa Cruz, Beni, and Pando, cities with tropical characteristics, are considered future cities. The enormous business activity in Santa Cruz confirms this prediction and suggests a promising future for the inhabitants of these beautiful lands.

Cochabamba and Tarija, cities located in the Bolivian valleys, are calm and pleasant places with a pleasant climate, many tourist attractions, and the particular hospitality of the locals. Investing in Bolivia will encompass investment in the country’s tourism sector.

 

 

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

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