Producing items in Venezuela is three times more expensive than manufacturing them, according to a report this week from the Venezuelan Confederation of Industrialists (Confindustria).
The cost of production versus importation is reflected in shops and factories across the crisis-stricken country, most of which have been filled with imported products as it is more cost-effective.
This trend is causing serious problems for business owners, who are facing greater competition from abroad than in their country. It is also leading to chronic inefficiencies, with the industry sector operating at just 20.6 percent of its maximum capacity.
Results of a recent Joint Survey by Confindustria, collected in the third quarter of 2019, show that competition from imported products was one of the main factors that drove down the production of goods between July and August of this year.
“This trend is favoring producers abroad who bring in various products to the country that often do not even meet our standards,” said Adam Celis Michelena, president of Conindustria. “Meanwhile, we have to comply with a series of sanitary standards that many of these products do not have and pay taxes on them as well.”
Factors driving the inability to produce their own products include a lack of access to necessary financing, political and economic instability, the precariousness of basic services (electricity, water, telephone, and Internet) and low national demand. According to Conindustria, the purchasing power of Venezuelan industry fell 86 percent last year alone.
Another factor behind the growing importation of products from abroad was the decision taken by Nicolás Maduro’s socialist regime last year to remove tariffs on a variety of imported products. The measure was intended to last until the end of last year, but has since been extended to the end of 2019 and is likely to be extended further.
Meanwhile, industrial production is continuing to plummet, with 82 percent of companies stating that their productivity fell between July and September this year, while five percent had not produced anything at all. Under the current circumstances, over two-thirds of companies do not even believe they can survive longer than the next 12 months.
Such grim reading has become standard for Venezuela’s shattered economy, which has collapsed under the pressure of over two decades of mismanagement under socialist revolutionary Hugo Chávez and his successor Nicolas Maduro.
Although all areas of the economy are suffering, possibly the main reason behind the country’s collapse is the staggering levels of hyperinflation, which have seen over 99.99 percent of the country’s bolivar currency wiped off since 2010, rendering it effectively worthless.
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