1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
In general, Bolivia remains open to FDI. The 2014 investment law guarantees equal treatment for national and foreign firms. However, it also stipulates that public investment has priority over private investment (both national and foreign) and that the Bolivian Government will determine which sectors require private investment.
U.S. companies interested in investing in Bolivia should note that in 2012 Bolivia abrogated the BIT it signed with the United States and a number of other countries. The Bolivian Government of former President Evo Morales claimed the abrogation was necessary for Bolivia to comply with the 2009 Constitution. Companies that invested under the U.S. –Bolivia BIT will be covered until June 10, 2022, but investments made after June 10, 2012 are not covered.
Pursuant to Article 320 of the 2009 Constitution, Bolivia no longer recognizes international arbitration forums for disputes involving the government. The parties also cannot settle the dispute in an international court. However, the implementation of this article is still uncertain.
Specifically, Article 320 of the Bolivian Constitution states:
- Bolivian investment takes priority over foreign investment.
- Every foreign investment will be subject to Bolivian jurisdiction, laws, and authorities, and no one may invoke a situation for exception, nor appeal to diplomatic claims to obtain more favorable treatment.
- Economic relations with foreign states or enterprises shall be conducted under conditions of independence, mutual respect and equity. More favorable conditions may not be granted to foreign states or enterprises than those established for Bolivians.
- The state makes all decisions on internal economic policy independently and will not accept demands or conditions imposed on this policy by states, banks or Bolivian or foreign financial institutions, multilateral entities or transnational enterprises.
- Public policies will promote internal consumption of products made in Bolivia.
Article 262 of the Constitution states:
“The fifty kilometers from the border constitute the zone of border security. No foreign person, individual, or company may acquire property in this space, directly or indirectly, nor possess any property right in the waters, soil or subsoil, except in the case of state necessity declared by express law approved by two thirds of the Plurinational Legislative Assembly. The property or the possession affected in case of non-compliance with this prohibition will pass to the benefit of the state, without any indemnity.”
The judicial system faces a huge backlog of cases, is short staffed, lacks resources, has problems with corruption, and is believed to be influenced by political actors. Swift resolution of cases, either initiated by investors or against them, is unlikely. The Marcelo Quiroga Anti-Corruption law of 2010 makes companies and their signatories criminally liable for breach of contract with the government, and the law can be applied retroactively. Authorities can use this threat of criminal prosecution to force settlement of disputes. Commercial disputes can often lead to criminal charges and cases are often processed slowly. See our Human Rights Report as background on the judicial system, labor rights and other important issues.
Article 129 of the Bolivian Arbitration Law No. 708, established that all controversies and disputes that arise regarding investment in Bolivia will have to be addressed inside Bolivia under Bolivian Laws. Consequently, international arbitration is not allowed for disputes involving the Bolivian Government or state-owned enterprises.
Bolivia does not currently have an investment promotion agency to facilitate foreign investment.
Limits on Foreign Control and Right to Private Ownership and Establishment
There is a right for foreign and domestic private entities to establish and own business enterprises and engage in remunerative activity.
There are some areas where investors may judge that preferential treatment is being given to their Bolivian competitors, for example in key sectors where private companies compete with state owned enterprises. Additionally, foreign investment is not allowed in matters relating directly to national security.
The Constitution specifies that all hydrocarbon resources are the property of the Bolivian people and that the state will assume control over their exploration, exploitation, industrialization, transport, and marketing (Articles 348 and 351). The state-owned and operated company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) manages hydrocarbons transport and sales and is responsible for ensuring that the domestic market demand is satisfied at prices set by the hydrocarbons regulator before allowing any hydrocarbon exports. YPFB benefitted from government action in 2006 that required operators to turn over their production to YPFB and to sign new contracts that gave YPFB control over the distribution of gasoline, diesel, and liquid petroleum gas (LPG) to gas stations. The law allows YPFB to enter into joint venture contracts with national or foreign individuals or companies wishing to exploit or trade hydrocarbons or their derivatives. For companies working in the industry, contracts are negotiated on a service contract basis and there are no restrictions on ownership percentages of the companies providing the services.
The Constitution (Article 366) specifies that every foreign enterprise that conducts activities in the hydrocarbons production chain will submit to the sovereignty of the state, and to the laws and authority of the state. No foreign court case or foreign jurisdiction will be recognized, and foreign investors may not invoke any exceptional situation for international arbitration, nor appeal to diplomatic claims.
According to the Constitution, no concessions or contracts may transfer the ownership of natural resources or other strategic industries to private interests. Instead, temporary authorizations to use these resources may be requested at the pertinent ministry (Mining, Water and Environment, Public Works, etc.). The Bolivian Government needs to renegotiate commercial agreements related to forestry, mining, telecommunications, electricity, and water services, in order to comply with these regulations.
The Telecommunications, Technology and Communications General Law from 2012 (Law 164, Article 28) stipulates that the licenses for radio broadcasts will not be given to foreign persons or entities. Further, in the case of broadcasting associations, the share of foreign investors cannot exceed 25 percent of the total investment, except in those cases approved by the state or by international treaties.
The Central Bank of Bolivia is responsible for registering all foreign investments. According to the 2014 investment law, any investment will be monitored by the ministry related to the particular sector. For example, the Mining Ministry is in charge of overseeing all public and private mining investments. Each Ministry assesses industry compliance with the incentive objectives. To date, only the Ministry of Hydrocarbons and Energy has enacted a Law (N 767) to incentivize the exploration and production of hydrocarbons.
Other Investment Policy Reviews
Bolivia underwent a World Trade Organization (WTO) trade policy review in 2017. In his concluding remarks, the Chairperson noted that several WTO members raised challenges impacting investor confidence in Bolivia, due primarily to Bolivia’s abrogation of 22 BITs following the passage of its 2009 constitution. However, some WTO members also commended Bolivia for enacting a new investment promotion law in 2014 and a law on conciliation and arbitration, both of which increased legal certainty for investors, according to those members.
According to the World Bank’s Doing Business 2020 rankings, Bolivia ranks 150 out of 190 countries on the ease of doing business, much lower than most countries in the region. Bolivia ranks 175 out of 190 on the ease of starting a business.
FUNDEMPRESA is a mixed public/private organization authorized by the central government to register and certify new businesses. Its website is www.fundempresa.org.bo and the business registration process is laid out clearly within the tab labeled “processes, requirements and forms.” However the registration cannot be completed entirely online. A user can download the required forms from the site and can fill them out online but then has to mail the completed forms or deliver them to the relevant offices. A foreign applicant would be able to use the registration forms. The forms do ask for a “cedula de identidad,” which is a national identification document; however, foreign users usually enter their passport numbers instead. Once a company submits all documents required to FUNDEMPRESA, the process takes between 2-4 working days.
The steps to register a business are: (1) register and receive a certificate from Fundempresa; (2) register with the Bolivian Internal Revenue Service (Servicio de Impuestos Nacionales) and receive a tax identification number; (3) register and receive authorization to operate from the municipal government in which the company will be established; (4) if the company has employees, it must register with the national health insurance service and the national retirement pension agency in order to contribute on the employees’ behalf; and (5) if the company has employees, it must register with the Ministry of Labor. According to Fundempresa, the process should take 30 days from start to finish. All steps are required and there is no simplified business creation regime.
The Bolivian Government does not promote or incentivize outward investment. Nor does the government restrict domestic investors from investing abroad.
4. Industrial Policies
In an effort to attract more investment, the government enacted an investment law in 2014, which says that each Ministry will provide incentives for sector-specific investment.
Article 14 of the 2014 investment law requires technology transfer from foreign companies operating in Bolivia to Bolivian workers and institutions. The law also specifies that Bolivians should work in operational, administrative, and executive offices of foreign companies. Also, companies investing in Bolivia should donate equipment and machinery to universities and technical schools in the same area as the investment, and conduct research activities that will find solutions that contribute to public welfare.
Article 21 of the investment law stipulates that the government can incentivize investment in certain sectors that contribute to the economic and social development of the country.
Law 767 from 2015 aims to promote investments in the exploration and exploitation of hydrocarbons. However, many companies considered this regulation as skewed to production and insufficient to incentivize new exploration. In 2016, Supreme Decree 2830 was issued, providing a 12 percent reduction in the payment of the direct tax on hydrocarbons and other incentives in order to better incentive exploration.
Foreign Trade Zones/Free Ports/Trade Facilitation
In 2016, Supreme Decree 2779 was enacted, approving regulations for a new system of free trade zones in Bolivia. The decree establishes a period of one year for existing free trade zones to transform into free industrial zones, which allow for industrial operations and assembly. Free industrial zones exist in El Alto, Patacamaya, Oruro, Puerto Suarez, and Warnes. Cobija is the only remaining free trade zone under this new system, with operations approved until 2038. Concessions within free industrial zones are 15 years in duration and renewable. The decree also eased customs procedures for goods entering the zones and established stronger government support for the promotion of productive investments in the zones.
Performance and Data Localization Requirements
Bolivian labor law requires businesses to limit foreign employees to 15 percent of their total work force and requires that such foreign hires be part of the technical staff. These workers require a work visa that can be obtained in any Bolivian consulate, and in the case that they work for a Bolivian company, both the company and the workers should also contribute to the Bolivian Pension System (Pension Law Article 104.1)
Supreme Decree 27328 regulates national and local level government procurement, which give priority to national sourcing. If an item required is not produced in Bolivia, buying decisions are made based on price. Supreme Decree 28271 (Article 10), establishes the following preference margins for sourcing with Bolivian products:
Except for national tenders, 10 percent preference margin for Bolivian products regardless of the origin of materials.
For national public tenders, if the cost of Bolivian materials represents more than 50 percent of the total cost of the product, the producers receive a 10 percent preference margin over other sellers.
In national and international public tenders, if Bolivian inputs and labor represent more than the 50 percent of the total cost of the product, the seller receives a 25 percent preference margin over other sellers. If the Bolivian inputs and labor represent between 30 percent and 50 percent of the total cost of the product, the seller receives a 15 percent preference margin over other sellers.
Under the Bolivian Criminal Code (Article 226), it is a crime to raise or lower the price of a product based on false information, interests, or actions. For those caught doing so, punishment is six months to three years in prison. It is also a crime to hoard or conceal products in order to raise prices. The Bolivian Government has applied these provisions in a number of cases, applying regulations that allow them to request accounting records and audit companies’ financial actions looking for evidence of speculation.
5. Protection of Property Rights
Property rights are legally protected and registered in the Real Estate Office, where titles or deeds are recorded and mortgages/liens are registered. The recording system is reliable, although there have been complaints regarding the amount of time required to register a property.
The Office of Property Registry oversees the acquisition and disposition of land, real estate, and mortgages. Mortgages usually take no more than 60 days to obtain a standard loan. However, challenges to land titles are common due to bureaucratic delays encountered while registering properties, especially in rural areas. Competing claims to land titles and the absence of a reliable dispute resolution process create risk and uncertainty in real property acquisition. Nevertheless, illegal occupation of rural private property is decreasing since the passage of Law 477 combatting land seizures.
The Bolivian Constitution grants citizens and foreigners the right to private property but stipulates that the property must serve a social or economic function. If the government determines that a given property is not sufficiently useful (according to its own unclear criteria), the constitution allows the government to expropriate. The agricultural sector has been most hard hit by this policy due to uncertainty from year to year about whether farmland would be productive. In 2015, the former government agreed to do away with the annual productivity inspections and reduce their frequency from every two to every five years. There are other laws that limit access to land, forest, water and other natural resources by foreigners in Bolivia.
The constitution also grants formal, collective land titles to indigenous communities, in order to restore their former territories (Article 394.3), stating that public land will be granted to indigenous farmers, migrant indigenous communities, Afro-Bolivians, and small farmer communities that do not possess or who have insufficient land (Article 395). Foreigners cannot acquire land from the Bolivian Government (Article 396). Under law 3545, passed in 2006, the government will not grant public lands to non-indigenous people or agriculture companies. The Mother Earth Integral Development Law to Live Well (Mother Earth Law, or Law #300) passed in October 2012 specifies that the state controls access to natural resources, particularly when foreign use is involved. In action, the law limits access to land, forest, water and other natural resources by foreigners in Bolivia.
According to Bolivia’s Agrarian Reform Institute (INRA), approximately 25 percent of all land in Bolivia lacks clear title, and as a result, squatting is a problem. In some cases, squatters may be able to make a legal claim to the land. While the Criminal Code criminalizes illegal occupation, the judicial system is slow and ineffective in its enforcement of the law. Financial mechanisms are available for securitization of properties for lending purposes, although the threat of reversion for properties failing to fulfill a social function discourages the use of land as collateral.
Intellectual Property Rights
The Bolivian Intellectual Property Service (SENAPI) leads the protection and enforcement of intellectual property rights (IPR) within Bolivia. SENAPI maintains and regularly updates a complete set of IPR regulations currently in force within Bolivia. The list is available on SENAPI’s website: https://www.senapi.gob.bo/normas. SENAPI also maintains an updated version of the services they provide, along with associated costs, at: https://www.senapi.gob.bo/propiedad-intelectual/tasas.
SENAPI reviews patent registrations for form and substance and publishes notices of proposed registrations in the Official Gazette. If there are no objections within 30 working days, the organization grants patents for a period of 20 years. The registration of trademarks parallels that of patents. Once obtained, a trademark is valid for a 10-year renewable period. It can be cancelled if not used within three years of the date of grant.
The existing copyright law recognizes copyright infringement as a public offense and the 2001 Bolivian Criminal Procedures Code provides for the criminal prosecution of IPR violations. However, it is not common for prosecutors to file criminal charges, and civil suits, if pursued, face long delays. Criminal penalties carry a maximum of five years in jail, and civil penalties are restricted to the recovery of direct economic damages. SENAPI has established a conciliation process to solve IPR controversies in order to prevent parties from going to trial.
Bolivia does not have an area of civil law specifically related to industrial property, but has a century-old industrial privileges law still in force. Bolivia is a signatory of the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). SENAPI is aware of Bolivia’s obligations under the TRIPS Agreement, and it sets out the minimum standards of IPR protection in compliance with this agreement. SENAPI sustains its position that Bolivia complies with the substantive obligations of the main conventions of the World Intellectual Property Organization (WIPO), the Paris Convention for the Protection of Industrial Property (Paris Convention), and the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) in their most recent versions. According to SENAPI, Bolivia complies with WTO’s dispute settlement procedures in accordance with its TRIPS obligations. However, Bolivia falls short on the implementation of domestic procedures and providing legal remedies for the enforcement of intellectual property rights.
Bolivia is a signatory country of the 1996 WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty; however, it did not ratify any of those treaties domestically. Bolivia is not a member of the Madrid Protocol on Trademarks, the Hague Agreement Concerning the International Registration of Industrial Designs, or the Patent Law Treaty.
Bolivia is a signatory of Andean Community (CAN) Decision 486, which deals with industrial property and trade secrets and is legally binding in Bolivia. Decision 486 states that each member country shall accord the Andean Community countries, the World Trade Organization, and the Paris Convention for the Protection of Industrial Property, treatment no less favorable than it accords to its own nationals with regard to the protection of intellectual property. Besides its international obligations, Bolivia has not passed any domestic laws protecting trade secrets.
On December 20, 2018, Bolivia’s National Assembly passed Law 1134, the “Bolivian Cinema and Audiovisual Arts Law.” The law creates a fund to promote Bolivian cinema by charging foreign movie distributors and exhibitors three percent of their total monthly revenue. Contacts contend that the law could help the Bolivian Government target piracy networks that currently operate with impunity. Article 27 of the new law strengthens IPR protections for visual works and allows Bolivian Customs to pursue criminal prosecution, but it is unlikely that foreign works would be protected in practice.
Bolivian Customs lacks the human and financial resources needed to intercept counterfeit goods shipments at international borders effectively. Customs authorities act only when industries trying to protect their brands file complaints. Moreover, there is a sense of unregulated capitalism with regard to the sale of goods in the informal sector. Many importers believe the payment of customs fees will “legalize” the sale of counterfeit products. Sellers either do not know about, or do not take into consideration, intellectual property rights, particularly in the textile, electrical appliances, and entertainment markets. Large quantities of counterfeit electrical appliances imported from China bearing well-known and clearly non-original brands are available for purchase in local markets. There is also a flourishing market of textile products made in Bolivia and marketed using counterfeit labels of major U.S. brands. While most counterfeit items come with the illegal brand already attached, brands and logos are available for purchase on the street and can easily be affixed to goods.
Although court actions against those infringing upon IPR are infrequent, there have been some significant cases. The Industrial Property Director at SENAPI reported that the number of indictments related to counterfeit products increased steadily over the years. According to SENAPI, this does not necessarily represent an increase in the total volume of counterfeit products. Rather, the increase in indictments is due to SENAPI’s emphasis on enforcement efforts and the public’s greater awareness of IPR rights. Because of publicly-reported problems of counterfeit Covid-19 medicines in 2020, the Bolivian Police task force launched several raids to counter groups of counterfeit medicine smugglers These groups reportedly smuggled products through the border with Peru
Bolivia is listed on the Watch List of the U.S. Trade Representative’s 2021 Special 301 Report and is not named in its 2020 Review of Notorious Market for Counterfeiting and Piracy.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/
6. Financial Sector
Capital Markets and Portfolio Investment
The government’s general attitude toward foreign portfolio investment is neutral. Established Bolivian firms may issue short or medium-term debt in local capital markets, which act primarily as secondary markets for fixed-return securities. Bolivian capital markets have sought to expand their handling of local corporate bond issues and equity instruments. Over the last few years, several Bolivian companies and some foreign firms have been able to raise funds through local capital markets. However, the stock exchange is small and is highly concentrated in bonds and debt instruments (more than 95 percent of transactions). The amount of total transactions in 2020 was around 35 percent of GDP.
From 2008-2019, the financial markets experienced high liquidity, which led to historically low interest rates. However, liquidity has been more limited in recent years, and there are some pressures to increase interest rates. The Bolivian financial system is not well integrated with the international system and there is only one foreign bank among the top ten banks of Bolivia.
In October 2012, Bolivia returned to global credit markets for the first time in nearly a century, selling USD 500 million worth of 10-year bonds at the New York Stock Exchange. The sovereign bonds were offered with an interest rate of 4.875 percent and demand for the bonds well surpassed the offer, reaching USD 1.5 billion. U.S. financial companies Bank of America, Merrill Lynch, and Goldman Sachs were the lead managers of the deal. In 2013, Bolivia sold another USD 500 million at 5.95 percent for ten years. HSBC, Bank of America, and Merrill Lynch were the lead managers of the deal. In 2017, Bolivia sold another USD 1 billion at 4.5 percent for ten years, with Bank of America and JP Morgan managing the deal. The resources gained from the sales were largely used to finance infrastructure projects. A sovereign bond issuance of up to $3 billion was approved by the National Assembly for 2021 but had not yet occurred as of May 2021.
The government and central bank respect their obligations under IMF Article VIII, as the exchange system is free of restrictions on payments and transfers for international transactions.
Foreign investors legally established in Bolivia are able to get credits on the local market. However, due to the size of the market, large credits are rare and may require operations involving several banks. Credit access through other financial instruments is limited to bond issuances in the capital market. The 2013 Financial Services Law directs credit towards the productive sectors and caps interest rates.
Money and Banking System
The Bolivian banking system is small, composed of 16 banks, 6 banks specialized in mortgage lending, 3 private financial funds, 30 savings and credit cooperatives, and 8 institutions specialized in microcredit. Of the total number of personal deposits made in Bolivia through December 2020 (USD 29 billion), the banking sector accounted for 80 percent of the total financial system. Similarly, of the total loans and credits made to private individuals (USD 28 billion) through December 2020, 80 percent were made by the banking sector, while private financial funds and the savings and credit cooperatives accounted for the other 20 percent.
Bolivian banks have developed the capacity to adjudicate credit risk and evaluate expected rates of return in line with international norms. The banking sector was stable and healthy with delinquency rates at less than 2.0 percent in 2020. In 2020, delinquency rates rose after the government permitted clients to defer bank loan payments until June 2021 without penalty as a mitigating measure for the COVID-19 pandemic. While delinquency rates still remain relatively low, there are concerns this measure could potentially harm the banking sector’s stability.
In 2013, a new Financial Services Law entered into force. This new law enacted major changes to the banking sector, including deposit rate floors and lending rate ceilings, mandatory lending allocations to certain sectors of the economy and an upgrade of banks’ solvency requirements in line with the international Basel standards. The law also requires banks to spend more on improving consumer protection, as well as providing increased access to financing in rural parts of the country.
Credit is now allocated on government-established rates for productive activities, but foreign investors may find it difficult to qualify for loans from local banks due to the requirement that domestic loans be issued exclusively against domestic collateral. Since commercial credit is generally extended on a short-term basis, most foreign investors prefer to obtain credit abroad. Most Bolivian borrowers are small and medium-sized enterprises (SMEs).
In 2007, the government created a Productive Development Bank (Banco de Desarrollo Productivo) to boost the production of small, medium-sized and family-run businesses. The bank was created to provide loans to credit institutions which meet specific development conditions and goals, for example by giving out loans to farmers, small businesses, and other development focused investors. The loans are long term and have lower interest rates than private banks can offer in order to allow for growth of investments and poverty reduction.
In September 2010, the Bolivian Government bought the local private bank Banco Union as part of a plan to gain partial control of the financial sector. Banco Union is one of the largest banks, with a share of 10.8 percent of total national credits and 12.7 percent of the total deposits; one of its principal activities is managing public sector accounts. Bolivian government ownership of Banco Union was illegal until December 2012, when the government enacted the State Bank Law, allowing for state participation in the banking sector.
There is no strong evidence of “cross-shareholding” and “stable-shareholding” arrangements used by private firms to restrict foreign investment, and the 2009 Constitution forbids monopolies and supports antitrust measures. In addition, there is no evidence of hostile takeovers (other than government nationalizations that took place from 2006-14).
The financial sector is regulated by ASFI (Supervising Authority of Financial Institutions), a decentralized institution that is under the Ministry of Economy. The Central Bank of Bolivia (BCB) oversees all financial institutions, provides liquidity when necessary, and acts as lender of last resort. The BCB is the only monetary authority and is in charge of managing the payment system, international reserves, and the exchange rate.
Foreigners are able to establish bank accounts only with residency status in Bolivia.
Blockchain technologies in Bolivia are still in the early stages. Currently, the banking sector is analyzing blockchain technologies and the sector intends to propose a regulatory framework in coordination with ASFI in the future.
Three different settlement mechanisms are available in Bolivia: (1) the high-value payment system administered by the Central Bank for inter-bank operations; (2) a system of low value payments utilizing checks and credit and debit cards administered by the local association of private banks (ASOBAN); and (3) the deferred settlement payment system designed for small financial institutions such as credit cooperatives. This mechanism is also administered by the Central Bank.
Foreign Exchange and Remittances
The Banking Law (#393, 2013) establishes regulations for foreign currency hedging and authorizes banks to maintain accounts in foreign currencies. A significant, but dropping, percentage of deposits are denominated in U.S. dollars (currently less than 14 percent of total deposits). Bolivian law currently allows repatriation of profits, with a 12.5 percent withholding tax. However, a provision of the 2009 Constitution (Article 351.2) requires reinvestment within Bolivia of private profits from natural resources. Until specific implementing legislation is passed, it is unclear how this provision will be applied. In addition, all bank transfers in U.S. dollars within the financial system and leaving the country must pay a Financial Transaction Tax (ITF) of 2 percent. This tax applies to foreign transactions for U.S. dollars leaving Bolivia, not to money transferred internally.
Any banking transaction above USD 10,000 (in one operation or over three consecutive days) requires a form stating the source of funds. In addition, any hard currency cash transfer from or to Bolivia equal to or greater than USD 10,000 must be registered with the customs office. Amounts between USD 20,000 and USD 500,000 require authorization by the Central Bank and quantities above USD 500,000 require authorization by the Ministry of the Economy and Public Finance. The fine for underreporting any cash transaction is equal to 30 percent of the difference between the declared amount and the quantity of money found. The reporting standard is international, but many private companies in Bolivia find the application cumbersome due to the government requirement for detailed transaction breakdowns rather than allowing for blanket transaction reporting.
Administrative Resolution 398/10 approved in June 2010 forces Bolivian banks to reduce their investments and/or assets outside the country to an amount that does not exceed 50 percent of the value of their net equity.
The Central Bank charges a fee for different kinds of international transactions related to banking and trade. The current list of fees and the details can be found at:
Law 843 on tax reform directly affects the transfer of all money to foreign countries. All companies are charged 25 percent tax, except for banks which can be charged 37.5 percent, on profits under the Tax Reform Law, but when a company sends money abroad, the presumption of the Bolivian Tax Authority is that 50 percent of all money transmitted is profit. Under this presumption, the 25 percent tax is applied to half of all money transferred abroad, whether actual or only presumed profit. In practical terms, it means there is a payment of 12.5 percent as a transfer tax.
Currency is freely convertible at Bolivian banks and exchange houses. The Bolivian Government describes its official exchange system as an “incomplete crawling peg.” Under this system, the exchange rate is fixed, but undergoes micro-readjustments that are not pre-announced to the public. There is a spread of 10 basis points between the exchange rate for buying and selling U.S. dollars. The Peso Boliviano (Bs) has remained fixed at 6.96 Bs/USD 1 for selling and 6.86 Bs/USD 1 for buying since October 2011. The parallel rate closely tracks the official rate, suggesting the market finds the Central Bank’s policy acceptable. In order to avoid distortions in the exchange rate market, the Central Bank requires all currency exchange to occur at the official rate ±1 basis point.
Each remittance transaction from Bolivia to other countries has a USD 2,500 limit per transaction, but there is no limit to the number of transactions that an individual can remit. The volume of remittances sent to and from Bolivia has increased considerably in the past five years, and the central bank and banking regulator are currently analyzing whether to impose more regulations sometime in the future. Foreign investors are theoretically able to remit through a legal parallel market utilizing convertible, negotiable instruments, but, in practice, the availability of these financial instruments is limited in Bolivia. For example, the Bolivian Government mainly issues bonds in Bolivianos and the majority of corporate bonds are also issued in Bolivianos.
The official exchange rate between Bolivianos and dollars is the same as the informal rate. The government allows account holders to maintain bank accounts in Bolivianos or dollars and make transfers freely between them. Business travelers may bring up to USD 10,000 in cash into the country. For amounts greater than USD 10,000, government permission is needed through sworn declaration.
Sovereign Wealth Funds
Neither the Bolivian Government nor any government-affiliated entity maintains a sovereign wealth fund.
8. Responsible Business Conduct
Bolivia has laws that regulate aspects related to corporate social responsibility (CSR) practices. Both producers and consumers in Bolivia are generally aware of CSR, but consumer decisions are ultimately based on price and quality. The Bolivian Constitution stipulates that economic activity cannot damage the collective good (Article 47).
Though Bolivia is not part of the OECD, it has participated in several Latin American Corporate Governance Roundtables since 2000. Neither the Bolivian Government nor its organizations use the OECD Guidelines for CSR. Instead, Bolivian companies and organizations are focused on trying to accomplish the UN’s Millennium Development Goals, and they use the Global Reporting Initiative (GRI) methodology in order to show economic, social and environmental results. While the Bolivian Government, private companies, and non-profits are focused on the UN’s Millennium Development Goals, only a few private companies and NGOs focus on following the UN standard ISO 26000 guidelines and methodologies. Another methodology widely accepted in Bolivia is the one developed by the ETHOS Institute, which provides measurable indicators accepted by PLARSE (Programa Latinoamericano de Responsabilidad Social Corporativa, the Latin American Program for CSR). The Bolivian Government issued a 2013 supreme decree that requires financial entities to allocate 6 percent of profits to CSR-related projects.
The 1942 General Labor Law is the basis for employment rights in Bolivia, but this law has been modified more than 2,000 times via 60 supreme decrees since 1942. As a result of these modifications, the General Labor Law has become a complex web of regulations that is difficult to enforce or understand. An example of the lack of enforcement is the Comprehensive System for Protection of the Disabled (Law 25689), which stipulates that at least 4 percent of the total work force in public institutions, state owned enterprises, and private companies should be disabled. Neither the public nor private sectors are close to fulfilling this requirement, and most buildings lack even basic access modifications to allow for disabled workers.
In support of consumer protection rights, the Vice Ministry of Defense of User and Consumer Rights was created in 2009 (Supreme Decree 29894) under the supervision of the Ministry of Justice (which became the Ministry of Justice and Transparency in 2017). Also in 2009, the Consumer Protection Law (Supreme Decree 0065) was enacted, which gave the newly created Vice Ministry the authority to request information, verify and follow up on consumer complaints.
The Mother Earth Law (Law 071) approved in October 2012 promotes CSR elements as part of its principles (Article 2), such as collective good, harmony, respect and defense of rights. The Ministry of Environment and Water is in charge of overseeing the implementation of this law, but the implementing regulations and new institutions needed to enforce this law are still incomplete.
Even though Bolivia promotes the development of CSR practices in its laws, the government gives no advantage to businesses that implement these practices. Instead, businesses implement CSRs in order to gain the public support necessary to pass the prior consultation requirements or strengthen their support when mounting a legal defense against claims that they are not using land to fulfill a socially valuable purpose, as defined in the Community Land Reform laws (# 1775 and #3545).
In April 2009 the former Bolivian Government reorganized the supervisory agencies of the government (formerly Superintendencias) to include social groups, thus creating the “Authorities of Supervision and Social Control” (Supreme Decree 0071). This authority controls and supervises the following sectors: telecommunications and transportation, water and sanitation, forests and land, pensions, electricity, and enterprises. Each sector has an Authority of Supervision and Social Control assigned to its oversight, and each Authority has the right to audit the activities in the aforementioned sectors and the right to request the public disclosure of information, ranging from financial disclosures to investigation of management decisions.
Department of State
- Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);
- Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/);
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;
- North Korea Sanctions & Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf).
Department of Labor
- Findings on the Worst forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings);
- List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods);
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab) and;
Comply Chain (https://www.dol.gov/ilab/complychain/).
Resources to Report Corruption
Contact at government agency or agencies are responsible for combating corruption:
Vice Minister of Justice and the Fight Against Corruption
Ministry of Justice
Calle Capitan Ravelo 2101, La Paz
Bolivian law stipulates criminal penalties for corruption by officials, but the laws are not often implemented properly. Governmental lack of transparency, and police and judicial corruption, remain significant problems. The Ministry of Justice and Transparency and the Prosecutor’s Office are both responsible for combating corruption. Cases involving allegations of corruption against the president and vice president require congressional approval before prosecutors may initiate legal proceedings, and cases against pro-government public officials are rarely allowed to proceed. Despite the fact that the courts found that the awarding of immunity for corruption charges is unconstitutional, their rulings were ignored by the government.
Police corruption remains a significant problem. There are also reports of widespread corruption in the country’s judiciary.
There is an Ombudsman appointed by Congress and charged with protecting human rights and guarding against government abuse. In his 2014 annual report, the Ombudsman cited the judicial system, the attorney general’s office, and the police as the most persistent violators of human rights due to widespread inefficiencies and corruption. Public opinion reflected the Ombudsman’s statements. The 2020 Transparency International corruption perception index ranked Bolivia as 124 of 180 countries and found that Bolivian citizens believe the most corrupt institutions in Bolivia are the judiciary, the police, and executive branch institutions.
Bolivia has laws in place which govern public sector-related contracts (Law 1178 and Supreme Decree 181), including contracts for the acquisition of goods, services, and consulting jobs. Bribery of public officials is also a criminal offense under Articles 145 and 158 of Bolivia’s Criminal Code. Laws also exist that provide protection for citizens filing complaints against corruption.
Bolivia signed the UN Anticorruption Convention in December 2003 and ratified it in December 2005. Bolivia is also party to the OAS Inter-American Convention against Corruption. Bolivia is not a signatory of the OECD Convention on Combating Bribery of Foreign Public Officials.
10. Political and Security Environment
Bolivia is prone to social unrest, which can include violence. Given the country’s reliance on a few key thoroughfares, conflict often disrupts transportation and distribution networks. The majority of civil disturbances are related to domestic issues, usually workers pressuring the government for concessions by marching or closing major transportation arteries. Protests in late 2019 surrounding fraudulent elections and the subsequent resignation of long-serving president Evo Morales did get violent, but none of the political violence targeted foreigners. Outside of the volatile months of October and November 2019, while protests and blockades are frequent, they only periodically affect commerce. In November 2019, however, election-related conflicts and protests led to two weeks of significant interruption to commerce in La Paz and elsewhere, directly affecting distribution of essential services or travel in and out of the city. In 2020, strict quarantine and lockdown measures severely affected commerce economy-wide and caused numerous businesses to close or otherwise impeded business operations. In addition, during approximately ten days in August 2020 during the midst of the COVID-19 pandemic, protestors blocked key highways, denying resident access to foodstuffs, fuel, and badly needed oxygen supplies.