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  HOME | Venezuela (Click here for more Venezuela news)

VenEconomy: Good Morning, Communism!

From the Editors of VenEconomy

The impending threat of communism in Venezuela is now a reality with the “Decree with Range, Value and Force of Fair Prices” published in the country’s Official Gazette on January 24, issued by President Nicolás Maduro thanks to the special powers granted through an enabling law by lawmakers of the chavismo regime in November of last year.

The destructive power of this decree over businesses is enormous when compared to other similar laws passed by Congress over the last 15 years, and that’s a lot to say.

Not in vain the goal of that decree is quite explicit: Consolidating the economic order of socialism as dictated by the Plan for the Homeland (a project for a country first conceived by the late Hugo Chávez).

With this decree, Maduro is imposing communist-style norms on private companies as he takes away the right from all business owners to run their businesses, no matter the size, the way it should be done in a democracy. This is because this law is applied on “all national, international and transnational companies as well as all natural persons exercising commercial activities in the country.” In sum, this means the entire value chain.

No person or business (small, medium, and large as much as every independent entrepreneur) will have the liberty to operate their business or set their profit margins and capital return. Since January 24, when this law entered into force, no wholesalers or retailers are allowed to set their own prices. From that day on the National Executive took over helped by a new bureaucratic apparatus, the “National Superintendence for the Defense of Social-Economic Rights (Sundde), a governmental body that not only will fix prices of goods and services, but also profit margins per economic sector, which in any case can exceed 30%, but these may be lower than that if Sundee believes that to be necessary.

And if this were not enough evidence to confirm the communist nature of this decree, let’s just analyze the following two points:

1) This decree declares of public and social interest all goods and services that are required to develop any kind of activity regarding production, manufacturing, imports, stockpiles, transportation, distribution and marketing of goods and provision of services. This means all activities are subject to expropriation just as a Land Law did a few years ago when it devastated the entire agricultural industry of the nation.

2) It contemplates strong sanctions and penalties that affect owners, partners and managers all the same. These include costly fines ranging from 200 tax units to 50,000 tax units; prison terms from 8-14 years; occupation and temporary closure of companies and commercial establishments, with the possibility of permanent closure; confiscation of goods and revocation of licenses, permits, authorizations, certificates, among other administrative actions dictated by Sundde.

And if Venezuelans think they can avoid all this, they can forget about that: First of all, because it is mandatory to sign up for the so-called Central Registry of People who Develop Economic Activities, or Rupdae. Second of all, because this decree issues a Fair Prices Certificate, also mandatory and indispensable for the request of foreign currency to the State, as much as for any kind of formalities the National Executive establishes at its discretion. For getting this certificate, every company will need to prove before Sundde they are complying with the parameters established by law and others imposed by this superintendence.

It seems communism is here to stay.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

Click here to read this in Spanish

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