What main changes in investment conditions and fiscal policy will be implemented in 2020?
We are shifting the existing economic paradigm from a productive-sector driven economy, in which state-owned companies are responsible for the main source of national income, to an innovation-oriented mixed model where the state diversifies its risk and revenues. The government is working to establish a sustainable economic plan that includes the private sector, promotes partnership models, and reduces the national debt. The expectation is to implement structural reforms that overhaul the existing model and re-arrange those national institutions that have grown to unsustainable bureaucratic levels into enablers that serve as point-of-contact and orchestrators of all economic stakeholders that include not only local corporations, state-owned companies, and foreign investment groups, but also SMEs and entrepreneurship promotion organizations. To sustain our dollarized economy, it is crucial that we diversify our exports, reduce dependency on oil and gas, and become friendlier to foreign investment in order to keep the flow of foreign currency open. Our focus is on prioritizing the productive sectors and empowering the private sector across the board by including it in our economic policy planning. The state needs to function as a catalyst for economic and social synergies rather than being a player itself. To sustainably transform economic growth into social development, we need to provide producers with the tools to increase productivity, rather than expand into expensive social programs that hand out benefits, thereby depleting state revenues. National production needs to grow only to the extent that it ensures the government has greater resources to support business promotion, tool development, and increase access to the instruments of economic advancement. The most significant progress we've achieved is complete harmony between our words and actions, and the private sector, both local and foreign, has noticed this. There is renewed trust in our public institutions, which has translated into over USD700 million in economic agreements and investment pledges signed over the past six months alone. We have proposed a new tax system that frees our lowest earners from large imposed charges, while increasing the collaboration of established economic groups that will ultimately benefit from a better skilled workforce. In broader terms, this policy stands to reduce inequality and close economic and social gaps.
The government is developing two main instruments for investment promotion: public-private partnerships and contracts of investments with the ministry. How are you expanding the scope of these tools?
These tools are meant to stabilize the investment climate through securing the specific set of conditions or incentives agreed upon at the time of negotiation for the duration of the contracts and operations. We need to guarantee the consistency of our legal framework, as predictability is the key indicator foreign companies look for when considering investment in any country. Securing long-term operations and production from foreign companies will allow us to shift away from dependence on the profitability of our public companies. That in turn will reduce our need to over invest in these organizations. This administration has aligned local, national, and social policy with foreign trade policy and set the roadmap to achieve shared objectives. Public and foreign policy based on political ideologies has been replaced with pragmatic integral sustainable policy based on key social and economic principles. Under the new scheme, APPs have benefits such as exemption from income tax (Impuesto de la Renta) for 10 years, or currency exit tax (Impuesto a la Salida de Divisas) in some cases. Notably, major projects such as the Port of Posorja by DP World or Port Bolívar of the Yildirim Group have been realized under this scheme