learns to diversify after turbulent political times

Introduction - Infrastructure - Tourism - Diversification - Reforms and deregulation -
The states
- Technology - The information age - Business - Outlook

The states
open for business...

The pride of Sucre ........

"I don't want us to be an island. I want to do business," exclaims Ramon Martinez, Governor of Sucre, a state which has traditionally suffered from bad air, sea and land connections due to its position at the far eastern tip of Venezuela.

As a result of this isolation, few people know about Sucre's commercial and natural advantages.

Sucre sits atop a large percentage of Venezuela's 140 trillion cubic feet of gas reserves, the seventh largest in the world. Their fishermen bring in over 60% of the nation's fish and seafood and its tuna fleet is the largest in South America. The best cocoa in the world is also grown here with countries like Japan and Belgium paying large premiums to enjoy its exclusive flavour.

Martinez says he is looking to break with the state's geographic isolation by spending money to improve air, sea and land connections over the next five years.

The Governorship will begin an international bidding round to find construction companies to build a $500 million highway project to connect Sucre's capital Cumana with Puerto La Cruz in neighbouring Anzoategui state.

In addition, money will be ploughed into improving air connections with Caracas and other islands in the Caribbean. Two airports based in Cumana and Carupano currently serve Sucre state; Martinez hopes to convert these into international cargo terminals with capacity for landing large tourist jets.

Improving industrial output in the area is another challenge, which the government hopes to realize through tax breaks and fiscal incentives.

"In front of the airport in Cumana we have a 66 hectare site which is a free trade zone, we are looking for investors to take advantage of the benefits we can offer," he says.

A multi-billion dollar Liquid Natural Gas project called Cristobal Colon, located in Sucre's Paria peninsula is currently awaiting the go ahead from the government. Energy giants, Shell, Exxon-Mobil, Mitsubishi and state oil company PDVSA say they are ready to invest and Martinez says that this will be the catalyst for changing the region into an export powerhouse.

"We believe that Sucre is going to open up to infrastructure and industry," he says.

Away from the main coastal towns, Sucre looks like a picture postcard dream with colourful colonial villages, grandmothers snoozing in the shade and moss covered trees swaying in the breeze.

The biodiversity of the area including jungles that lead onto golden beaches and a mass of birds and wildlife mean that tourism is a natural match for the area. The state's tourism office is currently designing several tourist routes that will encompass specially chosen hotels and restaurants. One will follow in the footsteps of 19th century explorer and botanist Alexander Von Humboldt while the other will follow the so-called chocolate trail.

Venezuela currently exports around 10 million kilograms of premium organic cocoa annually from haciendas that have changed little in the last three centuries. Cocoa is still grown in the traditional way on rambling plantations with huge shade trees and tropical shrubs to protect the delicate process of fertilization and budding.

"What we now need is someone to make the connection between the tourism we can offer and the clients who can appreciate what we have," Martinez concludes.

Anzoategui state ... more than just petroleum

With a Caribbean coastline, which runs for 2,800 kilometres, Venezuela is a haven for beach lovers, divers and water sports enthusiasts.

Anzoategui`state, in eastern Venezuela was not only blessed with the miles of undulating golden sands but also a collection of pristine coral sand islands, the Mochima National Park as well as amazing reefs and marine life.

David de Lima, the state's Governor says that with the government's emphasis on pushing tourism to the forefront of economic activity, the time is right to push Anzoategui onto the world tourism stage.

"We have so much but not enough people know about it," he says.

While Anzoategui leads the country in petroleum exports, producing around 60% of Venezuela's three million barrel per day OPEC quota, the industry doesn't produce the equivalent in jobs.

"The industry has invested around $20 billion in oil production here but apart from the importance of this investment it gives very little added value to the local economy," he says.

With easy land and air access to Puerto La Cruz, the state's bustling tourist capital, it's easy to see why Venezuelans flood to the region.

Encouraging international visitors is now the main thrust of the state's tourism program with visits to international tourism fairs and coordination with government-funded tourism institutions such as Corpoturismo.

The Mochima Lodge Hotel, run by Venezuelan Hely Eljuri is located 45 minutes from the Barcelona-Puerto La Cruz airport, and is a good example of the excellent privately-run hotels that the area has to offer.

Built into a dramatic rock face, it overlooks the crystalline waters of the Caribbean and combines first class food and service with a relaxed and informal beach culture.

"Guests stay here because while there is an informal atmosphere, they receive individual attention and first class treatment," says Hely.

In addition to tourism, Anzoategui's largest port La Guanta currently operates seven terminals with direct access to Caribbean and Central American Markets.

De Lima hopes the number of terminals will increase to 25 in order to cope with the world's growing cruise line business and facilitate greater exports to its Caribbean neighbours.

Free trade status is also to be given to certain areas of the state in order to stimulate local business and manufacturing. "We are going to offer investors a whole range of benefits including tax breaks and incentives to create jobs," De Lima says.

The government has just invested around $40 million in a major industrial park in an effort to tempt business to the area so that they can take advantage of cheap primary materials from Southern Bolivar state.

"Steel, aluminium and other primary materials pass through before reaching their markets, any company could take advantage of that," he says.

Vargas ... successfully emerging from a tragedy

Antonio Rodriguez admits that few of his political allies or friends envy his role as Governor of Vargas state, which was devastated by floods in late 1999.
"People tell me that they would never want to be in my shoes," Rodriguez says. "I tell them that this is a great challenge because despite the problems, we are working as quickly as possible to find solutions."

Vargas state is the narrow strip of land stretching for 200 kilometres along the Caribbean coast, and backed by the mighty Avila mountain range, and is just a 30-minute drive from central Caracas.

It is the home of Venezuela's largest international airport and also the country's biggest port, La Guaira.
Unseasonably, heavy rains in December 1999 caused massive rock and mudslides that buried thousands and left around 90,000 people homeless.

The tragedy destroyed much of the state's infrastructure including roads, houses and the sewage and drainage systems. As rescue efforts receded, central government began to take in the true magnitude of the problem and the extent of the damage.

With this in mind, the government kicked off a $200 million reconstruction project to repair the damage and install storm drains and huge floodwater canals. It also issued a presidential decree creating Corpovargas, the institution charged with coordinating plans.

"Roads are fundamental along with public services such as water, the sewage system, power and telephones. Here we are making the effort to restore those services," Rodriguez says, adding that the government expects the final repair bill to be around $1 billion.

"Foreign investors naturally insist that public services are of the best quality, that is what we are aiming for so that private foreign and local investment can come to Vargas."

With those foreign investors uppermost in the Governor's mind, Rodriguez is looking to optimize the state's advantages, predominantly its airport and shipping terminals, by having the area declared a free trade zone.

Mr. Antonio Rodriguez San-Juan, Governor of the State of Vargas

"We are hoping to have that decision approved by the middle of the year," he says. "I have received calls from all over the world relating to this issue with companies saying they would invest if the measure was approved."

Founded 24 years ago Simon Bolivar international airport deals with seven million passengers a year and is a hub for access to the rest of Venezuela as well as a jumping off point for Latin American and Caribbean destinations.

It is currently undergoing a makeover as part of a plan to increase the airport's category rating and transform it into a centre for cargo in Latin America.

A local hotel company that operates several hotels in Caracas and owns the five-star Eurobuilding hotel is set to build another luxury hotel adjacent to the airport in the next year.

Rodriguez says that the image of the state is far removed from the frightening TV images of 18 months ago despite some criticisms from local media that the clean up operation is slowing.

New Governor Antonio Rodriguez wants to offer solutions to all small problems the people might have, without forgetting the major projects that are needed to obtain the complete reconstruction of this entity.

Keeping in mind the management disorder that reigned in the last administration, the regional leader pointed out that something so complex as the public administration and a government required a completely automatic process, where the resource management is clearly defined, so that in any given moment there would be a financial disposal of the resources being used, who participate in the reconstruction process, who are the private companies that carry out the projects that did not exist.

The Governor insists that for his government the first priority will be to fight against insecurity and unemployment without forgetting health care services and education.

"People that live here, know that we have done a lot and they are pleased. A problem of this magnitude cannot be solved overnight but we are well on our way."

Before the 1999 floods, Vargas received up to 500,000 visitors at the weekend, ranging from Venezuela's super-rich staying at private beach clubs to the working man taking advantage of great seafood and fresh air.

While tourists have steadily returned to the area, Rodriguez now wants to encourage large hotel chains to the area, as well as exploit the unspoilt and virgin eastern end of the state.

"We have beautiful colonial villages and unspoilt mountain views and beaches, it's an area that few go to but we hope to encourage more visitors through several hotel projects that we are sponsoring in the area.

PORTUGUESA - Agricultural homeland seeks investment

Portuguesa in central Venezuela is one of the few states where oil activity is all but absent from local economic life. For that reason it is known as the breadbasket of Venezuela producing much of the nation's dairy, products, beef, and vegetables.

Created in 1851, it is also the heartland of Venezuelan Catholicism as well as the gateway to the great planes of the southern llanos that cover almost 26% of Venezuela's territory.

Mrs. Antonia Elena Muñoz, Governor of the State of Portuguesa

Thanks to President Hugo Chavez' support, its Governor Antonia Muñoz is confident that the state can increase yields in many of its crops through increased local and foreign investment, but she wants to specifically increase the profile of the Venezuelan coffee bean, which is grown in abundance here.

"Up until now our growing practices have impeded high yields and roasting has not caught up with technology: they are things we are hoping to change," she says.
Grown throughout the state is the arabica coffee bean famed for its unique quality and flavour. "Over 12,000 families subsist on the crop and we need to promote the sector for them" Munoz says.

Aware that organic, origin-specific crops are fashionable on Western supermarket shelves and dining tables, she says that Portugesa offers the investor a coffee bean that is under-exploited and unknown in the West.

"We are trying to increase crop yields by using new technology and well-trained agronomists and I think we will succeed," Munoz adds.

When Pope John Paul II visited Portuguesa in 1996, he blessed and opened the nation's largest church Our Lady of Coromoto in Guanare, Portuguesa's capital.

This act of faith was seen as a summation of the religious history of the state, which is home to many of Venezuela's best examples of colonial catholic architecture.
The 17th century cathedral in Guanare's main square has secret tunnels running beneath to several former nobles homes in the neighbouring streets, which were used during the civil war for escaping royalists.

Annually on the 8th of September the virgin is remembered with local parades and feasting in order to commemorate the day when the virgin appeared to a local indian girl named Coromoto in 1652.

Far away from the Afro-Caribbean drum culture of the coast, the region plays host to the music and the culture of the horsemen of the llanos, only seen in a handful of states.

Portuguesa is the heartland of the national dance, the joropo, which is performed to the distinctive rhythms of the handcrafted four-string guitar, harp and maracas.
There are many family run posadas dotted throughout the state which provide comfortable lodgings with excellent local cuisine and access to horse riding and wildlife.

"We have an incredible history and truly original colonial architecture, it's something that we want to promote," Munoz concludes.

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© World INvestment NEws, 2002.
This is the electronic edition of the special country report on Venezuela published in Forbes Global Magazine.
April 2002 Issue.
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