According to UNCTAD's World Investment Report 2021, disinvestment in Bolivia accelerated from USD -217 millionin 2019 to more than USD -1 billion in 2020, due not only to the Covid-19 pandemic but also to political uncertainty in an election year, as well as commodity prices, especially for hydrocarbons, metals and potash. The stock of FDI is estimated at USD 10.5 billion in 2020. The country's many natural resources offer investment opportunities (hydrocarbons, mining sector), as do the transport and communications sectors. Bolivia’s wealth of natural resources attracts significant investment, particularly from both Russia and China (the country has the continent's second largest gas reserve and the world's largest lithium reserve). Lately, the majority of significant foreign projects in Bolivia have come from China. In February 2019, the Bolivian Government announced that a Chinese consortium would be its strategic partner on new $2.3 billion lithium project, giving China a potential foothold in the country’s huge untapped reserves of the metal. The Chinese TBEA Group Co Ltd along with Bolivia’s state lithium company YLB, will seek to produce lithium and other materials from the Coipasa and Pastos Grandes salt flats in the coming years.
Bolivia ranked 150th out of 190 countries in the World Bank’s last Doing Business report, published in 2020, gaining six positions compared to the previous year. However, even though the Bolivian government states that it would like to attract more FDI, it has done little to do so. One of the most significant policies established in order to attract investment was the enactment of an investment law in 2014, which says that each Ministry will provide incentives for sector-specific investment, stipulates that the government can encourage investment in certain sectors that contribute to the economic and social development of the country, and specifically aims to promote investments in the exploration and exploitation of hydrocarbons. Additionally, the government declared that it is working to create an investment promotion agency. Still, even without significant policies to attract FDI, Bolivia’s macroeconomic stability, abundant natural resources, and strategic location in the heart of South America make it an attractive country for investors. However, a key reason for the low level of foreign investment is the current government’s restrictions and discrimination against foreign investors, which have harmed the country’s attractiveness, such as the nationalisation of a Spanish electricity company, the threat to expel Coca-Cola in 2012 and the expropriation of SABSA in 2013. The instability of the legal framework, corruption, the weakness of the rule of law and the prohibition to resort to international arbitration are elements which continue to affect the business environment. But, since many investors see Bolivia as a difficult country to invest in and chose to spend their money elsewhere, competition is significantly reduced, making it easier for those who chose to invest there to make a success of their venture.
Bolivia | Latin America & Caribbean | United States | Germany | |
---|---|---|---|---|
Index of Transaction Transparency* | 1.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 5.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Foreign Direct Investment | 2019 | 2020 | 2021 |
---|---|---|---|
FDI Inward Flow (million USD) | -217 | -1,129 | 594 |
FDI Stock (million USD) | 11,710.3 | 10,350.7 | 10,733.6 |
Number of Greenfield Investments* | 12.0 | 5.0 | 7.0 |
Value of Greenfield Investments (million USD) | 2,905 | 309 | 241 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Personal income tax |
13% (12.5% effective tax rate for individuals engaged in a profession or business activity) |
Bolivia | Latin America & Caribbean | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 42.0 | 28.2 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 1,025.0 | 327.5 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 83.7 | 46.8 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
Setting Up a Company | Bolivia | Latin America & Caribbean |
---|---|---|
Procedures (number) | 12.00 | 8.00 |
Time (days) | 39.50 | 25.22 |
Source: Doing Business.
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Latest Update: April 2023