Bolivia. A. Definitions and sources of data

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1 Bolivia A. Definitions and sources of data There is no obligation to register Foreign Direct Investment (FDI) in Bolivia. The Central Bank (Banco Central de Bolivia) is responsible for collecting FDI data. A national definition of FDI is not contained in the Bolivian Investments Law (Law No. 1182, Article 21). As a member state of the commission of the Cartagena Agreement and in accordance with Decision 291 (Common Regime for the Treatment of Foreign Capital and of Trademarks, Patents, Licenses and Royalties), the Bolivian Government defines FDI as inputs of capital into a domestic enterprise owned by a foreign individual or corporate body with legal domicile outside the national boundaries. The foreign investor needs to hold at least 10% of the voting stock in a company, and is expected to maintain that participation for over a year in order to be considered FDI. Inputs of capital that are regarded FDI can be in the form of: freely convertible currency; physical or tangible goods (industrial plants, new and reconditioned machinery and equipment, spare parts, raw materials and intermediate products); the capitalization of external loans or intra-company debt granted by parent companies to their subsidiaries, associates or affiliates; national currency inputs drawn from resources authorized for remittance abroad (accrued royalties, retained dividends, etc.); the capitalization of reinvested earnings and other equity capital reserves. Reinvested earnings are defined as all or part of undistributed earnings and other patrimonial resources arising from FDI. In addition, the share capital of public international financial institutions, defined as neutral capital, is considered FDI regardless of their legal status, provided that the institutions are neither from a member state of the Cartagena Agreement nor a development cooperation institution of a foreign government. Data on FDI flows and stocks are calculated on the basis of quarterly surveys sent to the companies with FDI in Bolivia. These companies were identified in a census carried out in 1998 and are updated on a regular basis.

2 B. Statistics on FDI and the operations of TNCs

3 Table 1. Summary of FDI Variable Inward Outward 1. FDI flows, (annual average) FDI flows as a percentage of GFCF, (annual average) FDI stock, FDI stock as a percentage of GDP, Sources : Based on tables 3b and 4 and UNCTAD, FDI/TNC database.

4 Table 3a. FDI flows, by type of investment, Year Equity Inward investment Intracompany Reinvested earnings loans Total Equity Outward investment Intracompany Reinvested earnings loans Total Source: Banco Central de Bolivia, Asesoria de Politica Economica, Sector Externo. Note: Totals in this table may be different from those shown in tables 3b, 5 and 6 as the data in each table have been revised at different times.

5 Table 3b. FDI flows, by type of investment, Inward investment Outward investment Reinvested Reinvested Year Equity earnings Other Total Equity earnings Other Total Sources: UNCTAD, FDI/TNC database. FDI inflows are based on information from Banco Central de Bolivia. For FDI outflows, data are based on Banco Central de Bolivia for ; for , data were retrieved from the balance-of-payments tape of the International Monetary Fund in January Note: Inflow totals in this table may be different from those shown in tables 3a, 5 and 6 as the data in each table have been revised at different times.

6 Table 3c. FDI flows, by type of investment, Inward investment Outward investment Reinvested Reinvested Year Equity earnings Other Total Equity earnings Other Total Source: Inward and outward flow data were retrieved from the balance-of-payments tape of the International Monetary Fund in January 2004.

7 Table 4. FDI stocks, by type of investment, Year Equity Inward investment Reinvested Other Total Equity earnings Outward investment Reinvested Other earnings Total Sources: UNCTAD, FDI/TNC database. FDI instock are based on information from the Banco Central de Bolivia for For FDI outstock, data are based on UNCTAD estimates for and Banco Central de Bolivia for Both instock and outstock data for were retrieved from the balance-of-payments tape of the International Monetary Fund in January Note: Instock totals in this table may be different from those shown in tables 11 and 12 as the data in each table have been revised at different times.

8 Table 5. FDI flows in the host economy, by industry, Sector / industry Total Primary Agriculture, hunting, forestry and fishing Mining, quarrying and petroleum Mining and quarrying Petroleum Secondary Coke, petroleum products and nuclear fuel Unspecified secondary Tertiary Source: Banco Central de Bolivia, Asesoria de Politica Economica, Sector Externo. Note : Totals in this table may be different from those shown in tables 3a and 3b as the data in each table have been revised at different times.

9 Table 6. FDI flows in the host economy, by geographical origin, Region/economy Total world Developed countries Western Europe European Union Austria Belgium Denmark France Germany Italy Luxembourg Netherlands Spain Sweden United Kingdom Other Western Europe Switzerland North America Canada United States Other developed countries Australia Japan New Zealand Developing economies Africa Other Africa Liberia Latin America and the Caribbean South America Argentina Brazil Chile Colombia Ecuador Paraguay Peru Uruguay Other Latin America and Caribbean Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Costa Rica Mexico Panama US Virgin Islands Asia South, East and South-East Asia Democratic People's Rep. of Korea Republic of Korea Central and Eastern Europe Serbia and Montenegro Source: Banco Central de Bolivia, Asesoria de Politica Economica, Sector Externo. Note : Totals in this table may be different from those shown in tables 3a and 3b as the data in each table have been revised at different times.

10 Table 9. FDI flows abroad, by geographical destination, Economy Chile China Colombia Costa Rica Ecuador France Japan Peru United States Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the recipient economies listed above. Data for Japan are on an approval basis.

11 Table 12. FDI stocks in the host economy, by geographical origin, Economy Australia Austria Bulgaria Canada China Colombia Czech Republic Denmark Finland France Germany Iceland Japan Malaysia Netherlands New Zealand Portugal Republic of Korea Sweden Switzerland Taiwan Province of China Tunisia United Kingdom United States Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the recipient economies listed above. Data for China and Taiwan Province of China are on an approval basis.

12 Table 15. FDI stocks abroad, by geographical destination, Economy Brazil Colombia New Zealand Peru United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the recipient economies listed above.

13 Table 23. The number of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Italy Republic of Korea United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above. Table 35. Employment of affiliates of foreign TNCs in the host economy, by geographical origin, (Thousands of employees) Economy Germany United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above. Table 45. Sales of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Italy United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above.

14 Tables 30,40,50,55. Assets, wages and salaries, value added and profits of affiliates of United States TNCs in Bolivia, Table no. Variable Assets Wages and salaries Value added Profits before taxes Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the United States and refer to majority-owned affiliates only.

15 Table 86. Largest home-based TNCs, 2002 (Millions of dollars and number) Company Industry Sales Employees A. Industrial Industria Metalurgica Sud Americana Electrical and electronic equipment Fayser Electrical and electronic equipment 6 65 B. Tertiary Decidir.Com Other business services C. Finance and Insurance Assets Employees Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003); and information from ECLAC.

16 Table 87. Largest foreign affiliates of home-based TNCs, 2002 (Millions of dollars and number) Company Host economy Industry Sales Employees A. Industrial.... B. Tertiary Anthony International Corp United States Trade Marco's International Limitada Chile Trade.. 30 C. Finance and Insurance Assets Employees.... Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003).....

17 Table 88. Largest affiliates of foreign TNCs in the host economy, 2002 (Millions of dollars and number) Company Home economy Industry Sales Employees A. Industrial Cerveceria Boliviana Nacional SA Argentina Beverages Transportadora de Electricidad, SA Spain Machinery and equipment Plasmar, SA Brazil Chemicals Empresa de Envases de Aluminio Boliviano Argentina Metals 5 62 Corporacion Boliviana de Bebidas, SA Peru Beverages Vidrio Lux Sa Mexico Non-metallic mineral products Petrobras Bolivia SA Brazil Petroleum Nestle Bolivia SRL Switzerland Food.. 59 Pennzoil Company Bolivia S. A. Netherlands Petroleum.. 50 Bg Bolivia Corporation United Kingdom Petroleum.. 45 Andean Silver Cayman Islands Mining and quarrying.. 40 Beiersdorf SRL Germany Pharmaceuticals.. 9 Cerveceria Boliviana Nacional Santa Cruz Argentina Beverages.... Baker Hughes Oil Tools United States Machinery and equipment.... Vintage Petroleum Boliviana United States Petroleum.... B. Tertiary Empresa de Luz y Fuerza Electrica de Oruro Spain Electricity, gas and water Agricultura En Evolucion, CA Colombia Trade 1 6 Telefonica Celular de Bolivia, SA Luxembourg Telecommunications Nuevatel Pcs de Bolivia SA United States Telecommunications Compania Boliviana de Energia Electrica, SA United States Electricity, gas and water Xerobol Ltd. United States Trade.. 90 Dhl International SRL United States Transport and storage.. 80 Ericsson de Bolivia Telecomunicaciones SA Sweden Other business services.. 53 IBM de Bolivia, SA United States Trade.. 50 Sts Bolivia Germany Trade.. 45 Gms Distribuidora Grafica, SRL Chile Trade.. 35 Salur, SRL United States Trade.. 25 Servicio Agricola Comercial United States Other business services m Chile SA Sucursal Bolivia United States Trade.. 18 Sika Bolivia SA Switzerland Trade.. 17 C. Finance and Insurance Assets Employees Banco BISA SA Panama Finance a Banco Santa Cruz, SA Spain Finance La Boliviana Ciacruz de Seguros y Reaseguros Switzerland Insurance Tamrock Bolivia SRL Sweden Finance.... Afp Prevision Bbv SA Spain Insurance.... Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003); and information from ECLAC. a December 2001.

18 C. Legal framework for FDI I. National policy framework Decree Law No establishing the Charter of the Bolivian Development Corporation 1967 Source: Gaceta Oficial (Official Gazette), 12 April 1967 Investment Law No of 17 September 1990 Source:Ibid., 26 September 1990 Law of Privatization 1992, regulated by Decree No of June 1992 Source: Ibid., 5 May 1992 Foreign Investment Law of Supreme Decree No approving the Adherence of Bolivia to the Agreement on Settlement of Differences Related to Investment between States and Nationals of other States adopted by the Member Countries of the International Bank for Reconstruction and Development (IBRD) 1991 Source: Ibid., 13 December 1991 Supreme Decree No creating the "Secretaria General del Medio Ambiente" 1991 Source: Gaceta Official (Official Gazette), 28 January 1991 Decree Law No on Fiscal Incentives Granted to Promote the Exportation of Non-Traditional Products 1977 Source: Ibid., 9 August 1977 Supreme Decree No accepting the Establishment of New Foreign Investment and Commercial Banks and Branches of Foreign Banks 1977 Source: Ibid., 22 June 1977 Decree Law No on Consultancy Services to Promote Pre-Investment Activities, Applicable to both National and Foreign Consulting Firms 1979 Source: Ibid., 31 July 1979 Law 1834 Stock Market Law 1998 Source: The National Law Centre for Inter-American Free Trade, 24 Feb 2004 Financial Sector Law 2001 Source: framework, 6 March 2004 Law 2427 establishing CONAPFI (National Council on Financial Policy) 2002 Source: Ibid., 6 March 2004 Bankruptcy Law 2003 Source: Ibid Law 1770 on Arbitration and Conciliation 1997 Source: 24 Feb 2004 Decree Law No. 843 enacting the Reformed Tax Code 1986, (effective 1 Jan 1987) Source: Gaceta Official (Official Gazette), 28 May 1986 Regulated by: Supreme Decree No of 28 November 1986 Source: Ibid., 28 November 1986

19 Supreme Decree No on Corporate Income Tax 1986 Source: Ibid., 3 November 1986 Supreme Decree No on Regulating Tax on Corporate Source 1987 Source: Ibid., 28 February 1987 New Tax Code 2003 Source: framework, 6 March 2004 Law No of 13 April 1992 on Copyright Law Source: Gaceta Official (Official Gazette), 27 April 1992 Supreme Decree No of 21 July 1992 Source: Ibid., 14 September 1992 Customs Law 1990 Source: 24 Feb 2004 Trade Code 1997 Source: framework, 6 March 2004 Law 1883 of Insurance Source: 24 Feb 2004 Decree Law No promulgating the Mining Code 1965, (effective 22 August 1968) Source: Gaceta Official (Official Gazette), 23 June 1968 Amendment: Law 1297 of 27 November 1991 Source: Ibid., 13 January 1992 Amendment: Law 1243 of April 1991 Source: Ibid., 23 April 1991 Law 1777 Mining Code 1997 Source: 24 Feb 2004 Decree Law No of 11 August 1978 creating a Special Tax Treatment for Mining Exploration Projects carried out through the National Mining Exploration Fund Source: Gaceta Official (Official Gazette), 18 August 1978 Law 1632 of Telecommunications 1995 Source: 24 Feb 2004 Supreme Decree No of 26 July 1989 creating the "Consejo Promotor de Exportaciones, Inversiones y Turismo de Bolivia" (PROBOL) Source: Gaceta Official (Official Gazette), 26 July 1989 Amendment: Supreme Decree 22,395 of 16 December 1989 Source: Ibid., 6 January 1990 Law 2074 of the Promotion and Development of Tourism in Bolivia 2000 Source: 24 Feb 2004

20 II. International framework 1. Multilateral instruments Bolivia is a party to the following multilateral and regional instruments Convention establishing the Multilateral Investment Guarantee Agency (MIGA) of 11 October 1985, signed on 26 September 1991 Source: Depository of the original conventio; World Bank; International Legal Materials, vol. XXIV (November 1985), p Convention on the Settlement of Investment Disputes between States and Nationals of Other States signed on 3 May 1991, (effective 23 July 1995) Source: 24 Feb 2004 Paris Convention for the Protection of Industrial Property, 1995 Source: 24 Feb 2004 Agreement on Trade-Related Aspects of Intellectual Property Rights 1994, (effective 1 January, 1995) General Agreement on Trade in Services 1994, (effective 1 January, 1995), Fourth Protocol to the General Agreement on Trade in Services 15 February 1997, Fifth Protocol to the General Agreement on Trade in Services 12 December 1997 The ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, adopted 16 November 1977 Andean Subregional Integration Agreement 25 June 2003 Decision 291 of the Commission of the Cartagena Agreement on Common Code for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses and Royalties Decision No. 291 of 21 March 1991 Source: Commission of the Cartagena Agreement, Lima, Peru, March 1991 ALADI, Latin American Integration Association established by the Treaty of Montevideo 1980, (effective March 1981) 2. Bilateral treaties Bilateral investment for the promotion and protection of foreign direct investment with: Germany1987, Switzerland 1987, United Kingdom 1988, France 1989, Belgium / Luxembourg 1990, Italy 1990, Spain 1990, Sweden 1990, China 1992, Netherlands 1992, Peru 1993, Argentina 1994, Chile 1994, Cuba 1995, Denmark 1995, Ecuador 1995, Romania 1995, Korea, Republic of 1996, Austria 1997, United States 1998, Paraguay 2001, Spain 2001 Source: UNCTAD database on BITs and DTTs Bilateral treaties for the avoidance of double taxation with: Argentina1976, Income and Capital United States 1987 Air and Sea Transport, Germany 1992 Income and Capital, France 1994 Income and Capital, Sweden 1994 Income and Capital, United Kingdom 1994 Income and Capital, Spain 1997 Income and Capital Source: UNCTAD database on BITs and DTTs

21 D. Sources of information Official 1. Central Bank of Bolivia: 2. Ministry of Foreign Trade and Investment: 3. Center for the Promotion of Bolivia C- PROBOL: 4. National Institute of Statistics: 5. Bolivian Confederation of Private Entrepreneurs: Secondary 1. Cherol, Rachelle L. and Jose Nunez del Arco, Andean multinational enterprises: a new approach to multinational investment in the Andean group, Journal of Common Market Studies, June 1983, Vol. 21, Iss. 4; pp ECLAC (Economic Commission for Latin America and the Carribean), Characteristics of foreign direct investment (FDI) in Latin America ( 3. Flexner, Nikolai, Foreign direct investment and growth in Bolivia, , Econpapers, April 2000 ( 4. Golbert, Albert S. and Yenny Nun Gingold, Latin American economic intergration (sic): an overview of trade and investment developments in ANCOM, CACM, and LAFTA, Syracuse Journal of International Law and Commerce, Winter , Vol. 7, Iss. 2, pp Grosse, Robert, The Andean foreign investment code's impact on multinational enterprises, Journal of International Business Studies, Winter 1983, Vol. 14, Iss. 3, pp Hojman, David E., The Andean pact: failure of a model of economic integration?, Journal of Common Market Studies, December 1981, Vol. 20, Iss. 2, pp Instituto de Investigaciones Socio Economicas, Foreign direct investment: the case of Bolivia ( 8. Shatz, H.J., Expanding foreign direct investment in the Andean countries, CID Working paper No 64, March 2001, (