Ricardo Alemán Z, partner at Carrasco Firma de Abogados in Bolivia looks at the prospects for investors in one of South America’s most vibrant economies.
Doing business in Latin America and particularly in Bolivia, turns out to be not only interesting but also a challenge. It is not easy for the local or foreign investor to decide to make a capital investment hoping that in the short, medium or long term it will make an eventual profit.
There are several obvious factors that an entrepreneur or investor must investigate and evaluate regarding the current political, social and economic context of the country so as to be aware of the benefits or possible contingencies to which their business will be subject.
In more specific terms, the interested party must know what procedures must be carried out for the operation of the company and how bureaucratic the procedure may be or what are the most relevant contingencies they need to consider.
Our experience advising companies, shows that their requirements are mainly focused on questions related to the political situation, the type of procedures that should be managed in order to operate legally (and how bureaucratic these procedures are), what are the regulations that exists in Bolivia regarding labour and social matters and, logically, the tax treatment.
Currently, the political factor is a preponderant element to consider. In recent years, most of the countries in Latin America have undergone changes of government resulting in wide swings: from right-wing parties to left-wing parties and vice versa.
Bolivia was no stranger to these changes. Since 2005 and for 14 continuous years, the MAS (Movement for Socialism) has been in government, headed until 2019 by president Evo Morales Ayma.
Fortunately, this change has not limited the economic growth of Bolivia, which was mainly driven by international prices in the hydrocarbon and mining sector. Bolivia is one of the only countries in the region that maintained annual growth.
The reorientation of government to a socialist regime did not involve the revocation of one of the most important steps taken in 2001 – the Commerce Registry System (Sistema de Registro de Comercio).
In this regard, Law No 2196 of May 04, 2001 (Law on Special Fund for Economic Reactivation and Strengthening of Financial Intermediation Entities) stated that the public service of Commerce would be the ‘object of temporary concession by the executive power in favor of national individuals or legal entities under private non-profit law’, assigning to the concessionaire the competence to carry out all the acts pertaining to the commerce registry.
Thus, the Commerce Registry – a public service normally administered by the State – was subject to a concession contract in 2002 in favour of the Foundation for Business Development (Fundación para el Desarrollo Empresarial or FUNDEMPRESA), which is made up of the main industrial and commerce chambers from the country.
In other words, the Commerce Registry was concessioned to a private person, who formed a collective non-profit organisation (foundation).
Since then to date, the Commerce Registry has become one of the few public services (concessionaires) that is an example of effectiveness, efficiency, zero tolerance for corruption and de-bureaucratisation of procedure. It also has a clear tendency to deepen electronic government and the digitisation of its procedures (modernisation).
As an example of the positive effects of the concession to a private entity, it should be noted that, in Bolivia, investors and entrepreneurs can form a company or society – whatever its nature or denomination may be- in just one business day (computable from the beginning of the process). However, this is only the first step. There are a series of authorisations, permits and/or licenses in relation to the corporate purpose that must be processed and that allow them to carry out their activities (for example an NIT tax identification number, an operating license etc).
Thus, the Commerce Registry work done by FUNDEMPRESA, manages to implement the necessary procedures and mechanisms so that all users can register any of the registrations and any of the procedures for the registration in just one day.
Obviously the projects have to be complete. Thus, the suitability of the personnel, the investment in physical and technological infrastructure, and the quality of customer service allowed the generation of these types of services, which clearly constitute a positive factor to consider for any investor or entrepreneur.
Statistically, the increase in services and companies legally constituted in the country was notable. At the beginning of the concession granted to FUNDEMPRESA (year 2002), 9,940 companies were incorporated and registered in Bolivia. In 2015, there were 272,249 registered companies. As of February 2020, there were 330,168 companies legally constituted and empowered to provide their services and products.
Technologically, FUNDEMPRESA has implemented the possibility of carrying out several of its procedures online, allowing the user, from home or office, to manage and complete their own procedures, saving time and financial resources.
In conclusion, the Commerce Registry in Bolivia becomes an effective and agile tool for all investors and entrepreneurs.
The experience of give in concession the Commerce Registry to a private entity, such as FUNDEMPRESA, should be classified as a highly positive experience.
Firm profile
The law firm, was founded by Dr Raul Carrasco Riveros more than 40 years ago under the name of Estudio Jurídico Carrasco & Carrasco Abogados Asociados, now Carrasco Firma de Abogados specialises in labour law, and has earned the trust of clients to whom the firm has provided solid support and advice both in administrative and contentious issues. In recent years, the law firm has managed to expand and consolidate its services in areas of business interest, providing services in corporate, commercial, civil, administrative, intellectual property and litigation law.
This personalised advice, as well as the adoption of preventive and timely legal strategies in the event of controversy, has allowed Carrasco Firma de Abogados to become one of the main firms for legal advice to companies and entities in Bolivia.
The director of the law firm, Dr Pablo Carrasco Quintana, is currently chairman of the Committee on Legal Affairs of the Confederation of Private Businessmen of Bolivia, and an institutional representative before the International Labor Organization (ILO), as well as being head of the Commission on Labor Affairs of the National Chamber of Industry.