Political Risk Advisory: Latin America and the Fuel Industry

“Never has there been a better time to seek investment into the Venezuelan market. The country is on its economic knees, and according to the World Bank, will get worse before it gets better. Investment would be of mutual benefit for prospective FDI, the Venezuelan economy and in turn, have a positive effect on Venezuelan citizens. Market opportunity in the oil and gas industry is wide open and could be an excellent place to invest with the country’s rich reserves and capacity for production. However, Venezuela’s dark side is exacerbated by its despotic state, and so businesses wishing to enter this market must explore the terrain armed with due diligence.”

Grey Area Dynamics (GADS) identified: Latin America has a possible risk score of 5

GAD business risks
Corruption – bribery patronage, nepotism, cronyism and favouritism, political and economic corruption, vested interests and disguised beneficial ownership.
Bureaucracy – navigating vested interests, deliberate and/or enforced delays, political influence and government interference/action.
Cultural issues – business and cultural perspectives of what is acceptable or not, navigating corporate culture of bribes, extortion, motivation and civil unrest.
Security – business/asset damage, threat to human assets.
Legal safeguards – government policies, customs and border issues, regulations and tax.
Organised crime – kidnap, extortion and syndicate criminal threat (firearms) and theft/robbery.

Unfair trade – hidden barriers to entry (documents, waiting time and apathetic insufficient/corrupt staffing) and unfair pricing.
Unfair competition – vested interests, favouritism, corporate espionage, and local government interference.
Extremism – terroristic activity, OCG’s, left- and right-wing activity and civil unrest.

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