Reasons Why You Should Invest And Do Business In Bolivia.
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Introduction
Despite a drop in FDI between 2013 and 2016, Bolivia’s FDI increased to $725 million in 2017, more than doubling the previous year’s levels. Increased investment in marketing, transportation, ICT, and mergers and acquisitions in the country’s mining sector has helped it recover. According to UNCTAD’s World Investment Report, Bolivia’s stock of FDI has surpassed US$12 billion, indicating a growing worldwide interest in the country.
Investing in Bolivia sooner rather than later will pay off as an entrepreneur. Huge influxes of foreign direct investment, as we’ve seen in other Latin American territories, can raise market expansion costs, raise salaries, and satisfy demand – it’s your obligation to recognise possibilities and gaps in the market and expand as quickly as possible.
With so many chances to consider in the Andean Latin American region when expanding, we look at some of the most compelling reasons to do business in Bolivia.
Why Should You Invest In Bolivia? Product Demand Is High
One of the most compelling reasons to establish a business in Bolivia is to capitalise on the high demand for high-quality goods and services. According to the Observatory of Economic Complexity, the country imports more than US$9.4 billion in products and services each year, with cars, buses, pesticides, and refined petroleum being the most popular. Although the Latin American countries of Peru, Colombia, Paraguay, Ecuador, and Mexico are becoming bigger import players in the country, signalling growth, the country imports primarily from China ($1.93 billion), Brazil ($1.52 billion), Chile ($999 million), the United States ($706 million), and Argentina ($698 million).
Importing into Bolivia offers huge untapped potential for firms trying to sell more items throughout the world, but you must act quickly if you want to make an effect before your competitors can. Expansion, competitive pricing, and year-round availability of commodities, particularly in the outlying areas, are the keys to dominance in Bolivia.
Export Market Is Strong
Bolivia exported over $8 billion in products and services in 2017, with the top export destinations being Brazil ($1.41 billion), Argentina ($1.24 billion), South Korea ($574 million), India ($552 million), and the United States ($542 million). Zinc ore, gold, precious metal ore, lead, raw tin, soybeans, coconuts, brazil nuts, and cashew nuts account for 32.1 percent of the country’s total exports. Bolivia’s export market accounts for over 25% of the country’s Gross Domestic Product, or around $700 per citizen, according to the CIA’s World Factbook.
Demand for quality goods in Bolivia will only grow as Latin American countries continue to perform well on the global stage, with countries like Mexico and Brazil reporting growth and rising middle-class citizenship. However, demand for petroleum gas may decline as countries around the world shift their focus to renewable energy.
Exporting And Importing
Bolivia will become more visible in the trade market, particularly in the agriculture industry, now that the Bolivian government is reducing export restrictions. This would allow the country to collect more revenue, which would help to economic growth while also allowing the government to reinvest in particular industries. Furthermore, Bolivian demand for Northern American items is robust, allowing for increased import quantities. We can deduce from this that Bolivia will be a major trading player.
Bolivia’s largest export product is petroleum gas, which accounts for 32 percent of overall exports. Zinc ore comes in second, accounting for 17 percent of all Bolivian exports.
Bolivia’s imports are primarily automobiles, accounting for 5.7 percent of overall imports. The import of refined petroleum accounts for 4.4 percent of total imports.
Large construction vehicles are in high demand in Bolivia’s mining industry. This demand might be a fantastic investment opportunity for investors.
Bolivia has a lot of nonrenewable resources. Mining and hydrocarbons are Bolivia’s two main export sectors. This market still has a lot of room for expansion. Bolivia has the world’s largest lithium reserve, which is currently underutilised, in addition to previously mined minerals such as silver, lead, zinc, natural gas, and tin.
Access To Low-Cost Labor
Bolivia, with a GDP per capita of US$3,393.96 USD (2017) and an average salary of BOB 106,950 (about US$15,000), provides very cheap labour to enterprises, notably in manufacturing and customer service. Although unemployment remains low, it has risen from 2.3 percent in 2014 to 3.4 percent in 2018, indicating that there are more high-value individuals on the market and access to experienced employees who can help businesses grow quickly.
Agreements On Trade
Entering a market where you can trade with other countries is always a plus when expanding a firm overseas. Bolivia has been a member of the World Trade Organization since 1995, and of the Andean Community since 1969, a customs union that brings Bolivia, Colombia, Ecuador, and Peru together, allowing for the free flow of people with an Andean Migration Card (Tarjeta Andina de Migración), which is encouraging trade and business development between the nations and effectively allows businesses operating in each of the four countries access to each other’s people and resources.
Bolivia and Mexico also have a free trade agreement (ACE 66) that fosters the expansion of trade between the two countries, removes trade barriers, and facilitates the free movement of commodities between the two nations, providing opportunities for Mexican businesses.
Finally, as of 2015, Bolivia is an associate country of the Southern Common Market (Mercosur), reducing tariff and non-tariff obstacles and allowing Bolivia to trade freely with Argentina, Brazil, Paraguay, and Uruguay, as well as access to a market worth US$4.437 trillion.
Entrance Barriers
When starting a new business in Bolivia, there are several substantial challenges to overcome. Not only does forming a business take time, but taxes can be complicated to grasp, and dealing across borders can be time-consuming and costly. But it isn’t all doom and gloom; businesses and investors regard Bolivia as a tough country to invest in, preferring to spend their money elsewhere. This minimises competition and makes it easier for intelligent entrepreneurs with previous expertise in Latin American regions to expand and succeed.
Major Industries
Mining, oil and gas, and textiles are three of Bolivia’s most important industries. Bolivia’s mining industry accounts for 4% of the country’s GDP, according to Economy Watch, while Business Monitor International (BMI) estimates that Bolivia will produce 18 billion cubic metres of natural gas in 2019, down from 2014 and 2015, indicating the need for new gas and oil investments to capitalise on the country’s natural resources. Bolivian textiles have brought in more than $30 billion in export revenue over the last few decades. Bolivia’s tourism industry is also one to monitor, with over a million visitors every year.
Bolivia’s Untapped Market Provides Opportunities For Entrepreneurs To Do Business
In terms of development and business, Bolivia now falls behind several of its neighbours. Bolivia, on the other hand, is climbing back up the World Bank’s Doing Business 2020 rankings to 150. (improving 6 places from 2019).
Foreign entrepreneurs have a huge opportunity to fill the gaps in this developing country’s underserved market.
Bolivia is displaying its ambition to enter the corporate world as a more enterprising and inventive nation. Different groups are assisting and forming a growing community of young entrepreneurs. The purpose is to inspire and promote young Bolivians’ innovative brains so that they might make a beneficial effect on their country, or better yet, the world.
Northern American Brands Are Preferred
Northern American corporations find it easier to do business in Bolivia because Bolivian consumers perceive North American items to be high-quality and innovative. As a result, the American brand has a significant effect in the Bolivian market.
Because of warranties, strong customer service standards, and maintenance plans, local governments prefer to purchase products and services from the United States.
Agriculture Will Continue To Expand
Bolivia’s increasing agricultural sector is the most important sector in the economy, accounting for over 13% of GDP and just under 30% of total employment.
In the agriculture industry, there will be a greater demand for innovative technology. Because Bolivia lacks technological skills, the agriculture sector’s growth is increasing need for more foreign knowledge and technological sophistication.
Such technology can be used to boost productivity, efficiency, and even food security in Bolivia. As a result, investors with experience in such technology may discover significant commercial prospects in Bolivia.
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
