Venezuela Launches 12 New State Enterprises to Substitute Imports

The Chavez government inaugurated 12 new state-owned enterprises, which will help the country to become less dependent on imports and use the country's raw materials, instead of exporting these.

Caracas, Venezuela, February 2, 2006—Venezuela’s President Chavez presented a board of directors on Monday, for a new state-owned holding company that will direct 12 new industrial enterprises that are to substitute numerous products Venezuela currently imports. The industries will cover everything from paper, aluminum lamination, textiles, and steel pipes and parts production. The new company will be called Coniba, which stands for National Company of Basic Industries.

Coniba will be funded with a $3.5 billion investment from the country’s National Development Fund FUNDEN, which was created with money from a portion of the Central Bank’s foreign currency reserves. According to Venezuela’s Minister of Basic Industries and Mines, Victor Alvarez, the new company will create 20,000 direct and indirect jobs.

The creation of Coniba, “forms part of the sowing of the oil and of the policy of endogenous development,” of the Chavez government, said Alvarez during the company’s inauguration.

Endogenous development is the term the Chavez government has used to describe the project of developing the country’s economy “from within,” that is, without relying primarily on outside investors. The plan to “sow the oil,” an expression borrowed from Venezuela’s oil boom years in the 1970’s, is a plan to use the country’s oil wealth for investment in and diversification of the country’s economy.

The 12 new companies that will belong to Coniba will be constructed as Social Production Enterprises (EPS), by which the government means that they will not be exploitative and oriented exclusively towards making profits. Rather, according to Alvarez, “work [in these enterprises] will lose its alienated character and will become an element of conscience.” Also, “Its products will be sold at solidarity prices. They will be completely oriented towards endogenous development.”

President Chavez, who also spoke during the inauguration, said that Social Production Enterprises, such as those of Coniba, would work towards eliminating hierarchies and inequalities within the workplace, in contrast to capitalism, where one discriminates on the basis of the type of work one does. “We are all equal … there should not be hierarchical privileges at work,” said Chavez.

The main objective, though, of the new enterprises is to produce industrial products that are currently being imported, for which Venezuela has the raw materials. As such, they will support the country’s energy, construction, infrastructure, rail, and textile industries, explained Alvarez.

Venezuela currently imports approximately 70% of the products it consumes, largely because Venezuela’s large oil revenues have made it relatively easy to purchase imports and expensive to manufacture products within Venezuela. The Chavez government has repeatedly stated that it is committed to diversifying the country’s economy. While non-traditional exports, such as agricultural products, have increased in the past two years, increasing oil revenues have left the ratio between non-traditional exports and oil exports more or less the same.

In one of the first concrete moves to reduce Venezuela’s reliance on imports, Minister Alvarez announced yesterday that the country would reduce its exports of aluminum to zero by the year 2012, so that the domestically produced aluminum could be used for products manufactured in Venezuela.

According to the Associated Press, “The objective is that we will not export even a gram of aluminum or a kilogram of wood,” Alvarez said, adding, “In 2012, 2013, we should be processing 100 percent of our raw materials, our basic products in this country.” “Our goal is for Venezuela, in the next six years, to declare itself an industrialized country.”