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Is the Venezuelan legal market changing?

Posted by: Laurence Simons 25/06/14

The socialist South American state of Venezuela may not seem like a natural area for investment. However, a new report from the Law Gazette has suggested that international firms may wish to consider setting up a base in the country.

World Bank data highlights how little foreign investment currently flows into the nation, especially when compared to its neighbours like Brazil, Chile and Argentina.

The natural-resource rich country offers plenty of business for companies that can get their feet under the desk, despite the fact that this will always prove difficult given its current volatility.

Venezuela has the world’s largest proven oil reserves, ahead of Saudi Arabia, and the second largest natural gas reserves in the western hemisphere. It is also rich in diamonds and gold, as well as nickel.

Earlier this year, the post-Chavez government introduced a new currency exchange system for the dollar, dubbed Sicad II, with the aim of improving its economic position. Understandably, this has been embraced by the international business community.

"Once a country starts showing signs that it wants to reform, the financial community gets behind it and things start moving forward, and you begin to see the change in attitude to investment and risk-taking in the country," declared Globalaw immediate past president and a Gordon Dadds partner Michael Hatchwell.

He pointed to Mexico and Brazil as exemplars of this, indicating that their economies have improved in recent years through liberalisation and investment (although there is no doubt both countries still face huge problems, especially in terms of wealth inequality).

Carlos Delgado, managing partner in the Caracas office of Baker & McKenzie, was among those clamouring for the Sicad II development.

It is "a huge step forward in terms of creating confidence among investors" - who in turn will call upon international law firms for guidance on compliance and litigation, concluded Mr Delgado.