Daily Archives: September 21, 2012

Extract or produce? Which is better for Bolivia?

Development dilemma? It certainly proved elsewhere, value added to primary commodities will bring wealth to a nation. El Diario publishes this interesting reality…

To the detriment of higher levels of growth

Extraction model does not lead to the productive according to economists

In the case of the cooperative mining companies, there is the need for an audit to ascertain how many became private companies.

Since the first time, the Cerro Rico, Potosi, where mineral was extracted to date, the Bolivian economy has been extractive basically  and in recent years little has been made to change this model and move to the productive economy.

Two analysts agree that a real economic growth depends on that the State focuses on the empowerment of the productive sector employment generator, since currently, the economy continues based on the dependence on export raw materials without added value, which in recent years, although they positively influence on macroeconomic data, the majority of the population does not benefit from the so-called “boom” Which can terminate at any time, due to fluctuations in international prices [which we have absolutely no control of, however, remaining in a mining/drilling mode is easier and politically useful to those who have little if any experience in sustained economic growth].

The analyst, Humberto Vacaflor explained that the Bolivian economy is not out of the extractive model because the legislation in force, has not been changed to give clear rules of the game for all sectors.

“We’ve never paid attention to the laws.” The mining law is not approved in six years of Government, nor the investment law, then it would seem that we are not interested in the investment. Moreover that foreign investors do not come to Bolivia not only because there is no law, but because the mining field is too small. “And if there are companies, the Government undertakes [its best] to discourage them, chase them, run them out, as it is,” said.

On the other hand, uneven recovery in terms of taxes, make more profitable than the employee cooperative mining extractive activity. Against the current price of minerals, which experienced a considerable rise during the first fortnight of September, the Bolivian economy is missing many steps to become a productive economy, he said.

AUDIT TO CREDIT

For his part, analyst Julio Alvarado explained that the growth of the gross domestic product (GDP), will remain stagnant and very small in comparison to other countries in the region while the main actors of the economy, remain in the extractive [segment of the economy].

Currently mining cooperatives do not pay tax profits, nor social benefits to their employees, but they hire labor and have employees, so it points out that these actions, cause they will no longer be under a cooperative sector and become private companies.

“Should be an audit to all cooperatives, to see if they are really cooperative or private companies”, he said.

“In this case we are seeing a privatization of natural resources and mineral elements.” “They are removing from the State company, Comibol, they are removing from the smaller companies and [all] is being delivered to the cooperative mining companies, which are capitalist companies that do not contribute [taxes] as they should provide”.

The analyst explained that the current amount that brings this sector to the national economy is more or less one-tenth of what they should bring.

He recalled that according to the figures, who contribute most to the country are companies with 88%, while the rest, is the contribution of cooperatives and Comibol. [nevertheless those who contribute 88% are slowly driven out of business…]

“From the Government, what should be done is to charge more in these time of rising prices, because you can not ask more taxes when prices are low.” Greater amount of tax must be charged in moments of bonanza. What brings the private mining does not exceed 12%, but these 12% must differentiate because there are companies that provide 40% while cooperatives contribute only 4% “.”

http://www.eldiario.net/noticias/2012/2012_09/nt120919/economia.php?n=15&-modelo-extractivista-no-da-paso-al-productivo-segun-economistas

Interesting article, unfortunately chances are that current government will not amend its undoings…