By Herbert Lindow

The outlook for U.S. suppliers of goods and services to Venezuela is for continued expansion of sales during 1992. With $10.2 billion in imports in 1991, Venezuela is the fourth largest market in the Western Hemisphere after the United States, Canada, Mexico, and Brazil.

U.S. exports 1991--$4.7 billion U.S. imports 1991--$8.2 billion

U.S. exports are projected to increase by at least 15 percent as Venezuela's oil-rich economy expands at a real estimated gross domestic product rate of 5 percent. In 1991, Venezuela had a banner but atypical year as the economy continued to recover from the sharp downturn of 1989 while also enjoying the benefits of higher international oil prices resulting from the Persian Gulf crisis. GDP grew about 9.2 percent while imports soared 54 percent.

In 1992, major stimulus is expected from the government sector--in oil, petrochemicals, aluminum, and steel--as major development projects continue or get under way. Furthermore, the government intends to undertake "social-mega" projects involving eventual expenditures of up to $4 billion. Targeted are housing, health, education, and an upgrading and modernization of public services, e.g., water systems.

In the oil sector, Petroleos de Venezuela (PDVSA), the state-owned oil company, recently announced a development plan calling for investments of $48 billion over the 1991-96 period. The plan includes expansion of oil producing capacity by nearly one million bpd, additions to refining capacity, diversification of petrochemicals, a $3.5 billion liquefied natural gas joint-venture project with foreign investors, and expansion of the tanker fleet. Full implementation will depend largely on financing availabilities. Foreign investors have been invited to participate. Privatization of government firms is giving the economy an additional stimulus. In 1991, the government received some $2 billion from privatization, with most of these funds coming from the sale of parts of the telephone monopoly and the VIASA airline. In November 1991, a GT&E-led consortium acquired 40 percent of the shares of CANTV, the telephone monopoly, for about $1.9 billion. The consortium intends to spend some $10 billion over the next decade to modernize Venezuela's telecommunications systems. The market for telecommunications equipment is expected to grow from $150 million in 1990 to about $700 million by 1995.

Venezuelan government trade policy is outward-oriented. Venezuela joined the GATT in 1990; supports the formation of an Andean Pact customs union; and has signed or is negotiating bilateral trade agreements with a number of countries in the hemisphere. The Venezuelan market remains open to imports. There are virtually no quantitative restrictions on nonagricultural goods. Most import tariffs are in the 5-20 percent range, with the top rate of 40 percent to be reduced to 30 and possibly to 20 percent this year. Foreign exchange is purchased in the free market at the prevailing daily rate and is readily available.

Product categories which have the best sales prospects include: oil and gas field machinery and equipment, automotive vehicles and parts, computers and peripherals, telecommunications equipment, machine tools and metalworking equipment, and construction equipment.

For additional information, contact the Commerce Department Desk Officer at (202) 482-4303.

Source: International Trade Administration, Business America Magazine