3 Aug 2018
Bolivia: Market Profile
- A landlocked country in western-central South America, Bolivia offers easy access to Brazil to the north and east, Paraguay and Argentina to the south, Chile to the southwest and Peru to the west.
- Blessed with abundant natural resources, Bolivia is particularly rich in mineral deposits, most notably hydrocarbons (petroleum and natural gas), gold, silver and tin, while also having the world’s largest lithium reserve. With two-thirds of its territory classed as tropical and more than 75% of it suitable for agricultural use. Bolivia grows a large variety of crops, as well as tropical fruits and vegetables, with soybeans and Brazil nuts being particular specialities.
- Its economy has enjoyed a period of sustained growth over the past decade. From 2008 through to 2017, the Bolivian economy grew at an average yearly rate of 5%. This not only compares favourably to the 2% regional average for the same period, but has also resulted in the dramatic expansion of its middle-class demographic in terms of both numbers and spending power. It has also seen three million of the country’s poorest citizens raised out of abject poverty.
- Bolivia has also established trade agreements with countries throughout Latin America, including Antigua and Barbuda, Chile, Cuba, Dominica, Ecuador, Grenada, Mexico, Nicaragua, Saint Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines and Venezuela. Its membership of the Andean Community (CAN) and its associate partnership status within the Common Market of the South (Mercosur) have also deepened its overall economic integration with its neighbours, resulting in greater economies of scale and enhanced opportunities to attract skilled personnel and capital investment, while also giving it access to a wider range of goods and services.
- In order to attract heightened levels of FDI, a key means of sustaining its economic growth, Bolivia has adopted a free exchange system and simplified its tax regime, while imposing no restrictions on capital flows and the remittance of dividends abroad. Typically. resident Bolivian corporations pay income tax at a rate of 25%.
- Under the government of President Evo Morales, the country's first Indigenous President, investment in education has been a priority. This has seen illiteracy reduced from its 2001 rate of 13% to just 3% by 2016, the lowest rate in the country’s history. As a mark of its progress, the United Nations declared the country illiteracy free in 2008. Currently, in Latin America, it is ranked second only to Cuba in terms of the state’s financial commitment to the public education sector.
- After reaching a high of US$2.1 billion in 2014, Bolivia’s FDI inflows moderated to US$1.2 billion in 2016. Consequently, the Bolivian government has become the prime engine of investment in the country, with the state contributing some US$7.4 billion in 2017.
- According to the mainland Ministry of Commerce (MOFCOM), China’s total stock (flows) of FDI in Bolivia exceeded US$370 (US$55) million as of the end of 2016, up from US$29 (US$4) million in 2008. Investment from Hong Kong, however, has remained minimal.