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 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.
III. 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. However, the government has said that it is working to create an investment promotion agency in order to attract investment in the non-traditional and industrial sectors. The government has also recently launched an investment promotion website ( ) in order to provide information about investment opportunities in Bolivia.
The government does maintain ongoing dialogue with the private sector through several working groups, one of which addresses the investment climate.
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. And only the government can own most natural resources.
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 for limited periods 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 is still renegotiating 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 (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 concluding remarks by the Chairperson, 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 2019 rankings, Bolivia ranks 156 out of 190 countries on the ease of doing business, much lower than most countries in the region. Bolivia ranks 178 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 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.
Resources to Report Corruption
Contact at government agency or agencies are responsible for combating corruption:
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. In September 2014, former Transparency Minister Nardy Suxo reported that the Ministry was investigating 388 complaints against public servants. The Ministry has obtained 100 convictions since 2006. 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 2017 Transparency International corruption perception index ranked Bolivia as 112 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. Over the past year, there has been no political violence that targeted foreigners. While protests and blockades are frequent, they only periodically affect commerce. Several conflicts in La Paz directly affected distribution of essential services or travel in and out of the city for periods greater than 24 hours during 2018. However, numerous others caused businesses to close for short periods or impeded business operations. To date, the situation remains as such. The environment is becoming increasingly politicized in the run up to general elections in October 2019.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
* Source for Host Country Data: BEA, UNCTAD, World Bank
Table 3: Sources and Destination of FDI
|Direct Investment From/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||12,211||100%||Total Outward||736||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
|Portfolio Investment Assets|
|Top Five Partners (Millions, US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||5,667||100%||All Countries||919||100%||All Countries||1,748||100%|
|United States||2,356||41.6%||Other Countries (not specified)||442||48.1%||United States||2,290||48.2%|
|Cayman Islands||410||7.2%||United States||66||7.2%||Japan||150||3.2%|