Fernando Aguirre of Bufete Aguirre in La Paz provides a guide for doing business in Bolivia

1. What attributes does your country have that makes it a unique investment destination?
We wonder if there is anywhere in the globe, any jurisdiction, that has the attributes to make it a “unique investment destination”. Advantages and disadvantages can be found everywhere, jurisdictions compete. In any case, well reputed international publications do conduct surveys resulting in rankings of countries as to conditions of favourability for investments. Bolivia does not enjoy much sympathy from said analysis given its nationalistic policies. However, the current administration of President Morales has been insisting on the need of private investment, whether national or foreign, to complement public investment which is projected for this year 2015 to be the substantial amount (for a small economy as that of Bolivia) of $3 billion. The private sector has in turn responded to the challenge and is confident that it can match said amount.

2. What are the main drivers of investors moving to Bolivia over the last year? / What have been the key growth sectors and market opportunities of the last 12 months?
Despite the drop in the international price of oil (in turn affecting natural gas and related products’ prices) the Bolivian hydrocarbons sector has continued to be one of the main drivers for investors though with a more cautious approach. Other economic sectors showing growth include construction and certain commercial activities. Importation of machinery and vehicles has continued to be significant. Ups and downs have been seen in the agro livestock sector, which is traditionally active. Some industries have received significant investments, particularly in the beverage and food sectors.

3. Can you identify the key economic risks that international investors have faced when doing business in Bolivia in the last year?
Bolivia has been - and continues to be - one of the most stable economies of Latin America because of the following factors: stability in the free foreign exchange market; low inflation; increase in banking deposits and banking activity; small fiscal deficit; manageable commercial trade; substantial international reserves and; a consolidated financial system. This results in very little economic risk except for the impact of reductions in international oil and gas prices. Despite the negative impact, particularly on fiscal income, the administration is confident that the situation is manageable in all respects. A strong focus is being placed on the so called “bolivianization” of the currency (extensive use of local currency instead of foreign currency, particularly US dollars).

4. What are the main political risks/developments affecting inward investment that you have observed recently?
No significant political risks have been observed recently. The policies of nationalisation from previous years continue to have an impact on assessments of future political risk. A new Investment Law and a new Arbitration Law have brought some comfort, but no big satisfaction, to current and prospective investors.

5. What are the key regulations that govern in-bound FDI?
There is a general freedom of investment. Requisites depend on the economic sector involved. In regulated sectors prior administrative approvals are needed. Registration of investments with the Bolivian Central Bank is in all cases is required. Foreign companies must be registered with the Bolivian Commercial Registry.

6. Which free trade agreements does your country currently enforce? Are there any prospective additions for the next 12 months?
Bolivia has been and is a traditional member of the Latin America Integration Association (ALADI) and of the Andean Community and has recently become a full member of MERCOSUR though ratifications by various parliaments, including that of Bolivia, are pending.

7. Are there any exchange controls that affect the flow of capital in your territory?
No, though certain administrative rules are to be followed.

8. What incentives are in place to attract foreign investors?
Under the new Investment Law, incentives can be granted for certain projects involving state participation and considered to be of strategic interest, as may be the case in the future for mining. Incentives are to be established on a case by case basis. No other specific incentives are currently established though new rules to that purpose may be forthcoming for certain strategic sectors, except that incentives for hydrocarbons activities, especially for exploration, have already been anounced

9. What pitfalls should international investors be conscious of?
Other than those which are commonly evaluated as part of a decision making process, which is quite sophisticated nowadays especially for large projects, certain changes in the political process should be considered. This has to do with the relevant power which social movements (unions, indigenous people and organizations, etc) enjoy as strategic allies of the current administration.

10. What is the main advice that you would give to a prospective investor interested in Bolivia?
Read this column and follow up on its relevant issues!

11. Are there any restrictions which govern the involvement of international counsel?
The legal profession can be exercised only by Bolivian lawyers or foreign lawyers with Bolivian recognised degrees. Only said lawyers can set up professional lawyers’ companies and all have to be registered with the Ministry of Justice and voluntarily with bar associations.

12. Which areas of corporate law do you feel are currently the most under-developed?
E-commerce – internet regulations

13. What trends have you observed in the role of laws governing contracts?
In the mining sector, a new law has laid down a complete set of new rules, including on mining contracts.

14. Are there any regional bodies or associations (legal, financial or political) active in this and neighbouring jurisdictions which investors may encounter or should be aware of?
None in particular.

15. What are the key compliance issues that in-house counsel should be aware of when doing business in Bolivia?
Abide by a new law governing the legal profession, which has been recently enacted.

16. How mature/stable is the banking industry in Bolivia?
As mentioned above, very mature and stable.

17. Which key long term developments should investors be aware of in Bolivia?
Changes in political conditions, though the current situation is very stable. Legal changes: taxation; general commercial legal framework (new Commercial Code) and a new Labour Code.

18. How does the culture affect the way that business is conducted?
Quite a bit. Bolivia is a country with a majority indigenous population well organised and politically represented. Their cultural vision impacts legislation and practice.

19. How is competition governed in this territory?
There are quite a number of standard rules whose enforcement is entrusted to a specialised supervisory and regulatory entity. A more complete Free Competition Law can be expected in the future. There are also rules governing consumers protection.



Fernando Aguirre


Bufete Aguirre

La Paz