For our readers, can you briefly come back on the reasons that pushed IBM to set up in Venezuela and what you have achieved in the country so far?
IBM has been in the country since 1938. We have a very strong presence in Latin America. Venezuela has been very unstable in the past years but we have not let this discourage us. We are part of the community and all key associations, chambers, and the social life of the country. We act as an institution in Venezuela. It is a large company with almost a thousand people. It is among the top twenty-five or fifty companies in the country. We work with million dollar operations. Our staff is made up of professionals. We have a data center in the building, a factory as well. It is fully equipped, there are branches in Puerto La Cruz, Maracaibo, Valencia, Puerto Ordaz and we have experts in the service area all over the country. We service customers in all areas of the country.
Your strategy is today focused on developing new products and services, and especially in the e-business. Knowing that in Venezuela, the total incomes generated by the e-business should increase from 15 to 300 million dollars until 2004, what do you expect in terms of growth of your e-business activity?
The focus on services is not new, as a corporation we have always paid great attention to this. Services represent more than forty percent of the total income of IBM; it is a thirty nine billion dollars operation. Few people know this but IBM is the worlds' largest service company since 1995. It is also the largest consulting company in the world, and it is growing each day. The stock closed at 123 yesterday. Service here has acted as a major push; it is part of the demand in the market place. No one wants to be concern about the components, pieces, and solutions. When a person buys something they should not have to preoccupy themselves with all the details; they are more interested in the overall, and leave the details up to us. Every single strategy, announcement, business within this company whether it be in Venezuela or any other place in the world it is all connected one way or other with e-business. IBM is the e-business company in the world, and not only selling the e-business but as an e-business itself. We sold 14 billion dollars last year through Internet. We bought over 14 billion dollars last year through the Internet as well. We save around 250 millions dollars in service cost last year assisting people through the Internet. It is a huge accomplishment. We are not doing this because it is what everyone else is doing but because, we are a living reference of what this business is all about. Our shares multiplied by twelve since 1993 and this due to the fact that this company is completely different. Even though we have been around for 62 years the average of my team is of thirty-seven years of age, I just turned thirty-eight; it is a young experienced company. Even though we have history, we remain young. We participate in social actions. As a company we are not just interested in extracting money, but we think it is important to give back to the country anyway we can. We work with the government, the private sector; I am part the board in the DIVIDENDO VOLUNTARIO (social organization). We do not do this with the interest of our actions being tax deductible, sixty percent of our team every single month takes a percentage of their salary and gives it to charity, including me. We focus on basic education.
The government plans to increase technical and Internet applications within its administration, but also to provide every school with Internet access. Do you expect to take advantage of those measures?
We hope so. We have not been waiting around for the government to take the first actions, we have been working on a joint project with Procter & Gamble, it is called "Mision Futuro", where points are accumulated through the Procter & Gamble products bought, and then these points are given to the schools. The school can be private or public; the World Investment News Ltdrs of the contest win supplies from the sponsors. This year the winning school, gets a fully equipped IBM internet lab, with top of the lines PCs, cameras, printers, scanners, and the following five World Investment News Ltdrs will get smaller labs. The next 150 finalists will get a full top of the line PC, scanner, camera, and printer. It is about improving access to Internet and technology for the schools. We are developing with some schools a special program for children of the ages three to seven with low income. They learn math, science, basic education using the Internet using the PC, and special teachers will supervise them.
We have mainly been talking about your activity in Venezuela, but do you have some sort of interaction with the regional market?
IBM in Latin America has operations in almost every country. I am responsible for only the ones that take place in Venezuela. We are part of the same team, we follow the same strategies all over Latin America, and of course this is the kind of business where personal characteristics are the ones that make the difference, we may notice different levels of development, and success. Our regional approach would be through Latin America. We have more than ten thousand people in IBM in Latin America. We have a huge network of business partners and we have a very formal process-taking place with them. We have the distribution network that are complimentary to IBM and are integral part of our marketing. We have several ways of attacking the market place. We have a face-to-face sales force, business partners that represent IBM for some of the clients, e-commerce, telesales soon we are going to blend all our telecommunications areas. | In 1999, Venezuela incurred a fall of 7,2 % of its GDP. The Central Bank just announced a growth of 1,5% for the first semester of 2000; do you believe this will give confidence to potential investors looking at the Venezuelan market?
I do not think that GDP numbers are real indicators of investment climates. The key parameters for investment are a long staying history of delivering commitments, a legal framework and political stability. Venezuela has everything to improve on the investment climate; the political reform should now be on its way. The political ambience should be much calmer now that all the elections are finally done. The legal framework must still settle regulations so they can be developed and improved to compliment what the new constitution has defined as a framework. The double tax agreement was signed. These are good signs that things are more stable. We just introduced two weeks ago with Venamcham together with others associations of chamber a project for e-commerce and now I am acting out as the President of the committee of the e-commerce in the Venezuelan chambers commence. The idea was not to create any new legislation but a new framework, where anyone could address this business. We need to create pointers to existing laws and when there is a gap to be filled we need to $ make sure to take care of it. This will create stability and credibility for investment, so one knows how the contract will be treated, how to arbitrate and dispute. The bigger returns the investors want, the bigger the risk he will have to take. We need to think long term. The last months have been filled of political transformation and this has improved the investment climate, what we need is more time so that everyone will feel assured. The investors can begin to feel protected and this is because the government is showing more maturity on the matter.
You have gotten personally involved in helping the government to improve the regulations through your positions in CONAPRI and VENAMCHAM, what would be now your personal great achievement as President of IBM and President of the IT committee of VENAMCHAM?
VenAmcham wants to accomplish several objectives in the e-commerce. We have set up three important goals for us. First to really help the government and the business community to define rules, and the beginning of this was seen through the presentation of project law, we are discussing with the government. When we reach an agreement that we hope will be within the next weeks, we can then introduce it to the new assembly. Our second battle would be with taxes, we need to define a national policy demonstrating how taxes will be handled, we are trying to get Venezuela to use the same policy that is used in the United States in the past. Try to eliminate any inhibitors. We have to evaluate the infrastructure of the country, and publicize it more. We now have proof that Venezuela has one of the best infrastructures for e-commerce in Latin America. The Internet penetration in Venezuela is not very large. The other area, which we are going to work on, is creating the correct environment for e-commerce. Our committee is structuring three sub-groups, one is in charge of infrastructure, and filling the absences that might exist there. We have joined forces with IBM Harvard; we did an adaptation for developing countries. We try to treat every level of the infrastructure. The second team works with the legal and tax issues, it is made up of lawyers mainly. The last sub-group is communications and marketing and it plays a key role for us because it is very important, we need to dismiss the myths surrounding e-commerce. In several speeches I made, people asked me about the security in Internet. I let them know that through the simplest of things like making reservations in a hotel or buying through the phone, the risk is higher than that of Internet. One should not avoid the opportunity because of the security reasons. We try to put out articles in order to educate people about electronic business. I do not believe in figures yet, the method is insufficient, the statistics are not good enough, what is more important are the trends. According to statistics Venezuelans spend more per Internet transaction on average than other Latin Americans. We have wireless communications growing higher; everyone in the country has a mobile phone. The penetration is enormous. Everyone is a potential buyer for Internet, even the ones earning minimum wage. The presence in the last e-commerce invent promoted by VENAMCHAM, where I was chairman, lasted from eight in the morning until five in the afternoon and two hundred and seventy people assisted through out the day. There was a lot of participation. Although last year Venezuela had the most recessive economy in Latin America, IBM in Venezuela was the second largest group in Latin America. We have to think small and be simple. I try having the best skilled people here in Venezuela working for me. We are one of the best employers in the country. I test every single candidate extremely carefully. Since we do not manufacture things here what makes us stand out is the quality of our staff. Corporate image, we try to stand by a profile. We must educate everyone, including the media of what is occurring. We have to transform every accomplishment into a reality. Global processes are important, we want to have a global view of the business. This way we can deliver the right message. We want to run this company efficiently. We are meeting all the worldwide standards.
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