Cov­eted, crit­i­cized, Latin Amer­ica’s rich mul­ti­ply

The China Post - - WORLD BUSINESS - BY KATELL ABIVEN

They buy 10 Porsches a day and travel the world by pri­vate jet, tot­ing their Louis Vuit­ton bags and leav­ing be­hind a faint scent of Chanel.

They are Latin Amer­ica’s su­per- rich, and they are mul­ti­ply­ing faster than any­where in the world, cov­eted by lux­ury brands keen to tap their buy­ing power, but crit­i­cized for pay­ing low taxes in a re­gion plagued by in­equal­ity.

Latin Amer­ica, a re­gion of some 600 mil­lion peo­ple, is home to nearly 15,000 “ul­tra high net worth” in­di­vid­u­als, or peo­ple with for­tunes of at least US$ 30 mil­lion, ac­cord­ing to lux­ury in­dus­try con­sul­tancy Wealth- X.

The num­ber rose five per­cent last year, while the num­ber of bil­lion­aires rose to 151, a 38 per­cent in­crease.

That was the fastest growth rate for bil­lion­aires of any re­gion on Earth.

Natixis Global As­set Man­age­ment, a firm that spe­cial­izes in man­ag­ing large for­tunes, re­cently launched its first Latin Amer­i­can of­fices, in Mexico City and Mon­te­v­ideo.

“We’ve clearly iden­ti­fied one of the re­gions where it as indi- vid­ual wealth is in an ex­cep­tional growth phase,” said So­phie del Campo, head of the firm’s Ibe­rian di­vi­sion in Madrid.

En­sconced be­hind the high walls of their lux­ury vil­las, the min­ing mag­nates, tele­coms ty­coons, large land­hold­ers and oth­ers who make up Latin Amer­ica’s up­per­most crust can be less vis­i­ble than the re­gion’s poor.

But they are the flip­side of its in­tractable in­equal­ity prob­lem.

Their lav­ish lifestyles and grow­ing num­bers are at­tract­ing keen in­ter­est from the global lux­ury in­dus­try, ea­ger to ex­pand to new mar­kets and court new cus­tomers in ex­ist­ing ones.

Porsche is one ex­am­ple. Since ar­riv­ing in Latin Amer­ica 15 years ago, the Ger­man sports car maker has in­creased an­nual sales to the re­gion from less than 300 ve­hi­cles to nearly 3,900 ve­hi­cles, said Ge­orge Wills, pres­i­dent of Porsche Latin Amer­ica, which is based in Mi­ami.

The re­gion’s largest economies, Mexico and Brazil, re­main the “vol­ume driv­ers,” he said.

“But if you look in terms of the mar­kets them­selves, the mar­kets that are en­joy­ing good growth are mar­kets like Peru, Colom­bia, Panama ... with 60 per­cent growth in some of them.”

Ac­cord­ing to mar­ket re­search firm Euromon­i­tor, the Latin Amer­i­can lux­ury mar­ket will to­tal US$26.5 bil­lion in 2019, up 88.8 per­cent from 2014 — the strong­est growth in the world.

The boom ap­plies to big-ticket lux­u­ries, too.

Mexico is the world’s sec­ond­largest mar­ket for pri­vate jets, be­hind the United States, with Brazil poised to sur­pass it within the next decade, ac­cord­ing to a re­cent mar­ket study by Brazil­ian jet­maker Em­braer.

‘Fis­cal jus­tice’

The ul­tra-wealthy have var­ied pro­files, from Mex­i­can tele­coms mag­nate Car­los Slim, whose US$77 bil­lion for­tune is the sec­ond-largest in the world ac­cord­ing to Forbes, to Brazil­ian beer mag­nate Jorge Paulo Le­mann (net worth: US$25 bil­lion), Chilean min­ing scion Iris Font­bona (US$13.5 bil­lion), to Colom­bian banker Luis Car­los Sarmiento (US$13.4 bil­lion).

What is clear is that their num­bers are grow­ing, in some cases be­cause fam­ily for­tunes have been di­vided up among heirs, said Myko­las Ram­bus, the chief ex­ec­u­tive of Sin­ga­pore- based Wealth-X.

“The amount of wealthy peo­ple glob­ally is boom­ing and that is true in Latin Amer­ica: it’s grow- ing at a very good pace,” he said.

But the su­per-rich also face grow­ing scru­tiny in coun­tries like Nicaragua, where 42.5 per­cent of the coun­try lives be­low the poverty line but 210 ul­tra-wealthy in­di­vid­u­als con­trol a com­bined for­tune of US$30 bil­lion, equal to 2.5 times the coun­try’s an­nual eco­nomic out­put.

“The main char­ac­ter­is­tic of in­equal­ity in Latin Amer­ica is not that there are a lot of poor peo­ple, but that there are a few peo­ple who have a lot,” said Juan Pablo Jimenez, an economist at the U.N.’s Eco­nomic Com­mis­sion for Latin Amer­ica.

More­over, the lat­ter “pay very low taxes, both in in­ter­na­tional terms and com­pared to what they are sup­posed to pay,” he said.

“Taxes on wealth are very low in Latin Amer­ica, and in­her­i­tance taxes are al­most nonex­is­tent.”

Last year, hu­man­i­tar­ian group Ox­fam called for more “fis­cal jus­tice” in the re­gion to fight in­equal­ity. But it is eas­ier said than done. Ecuador’s so­cial­ist Pres­i­dent Rafael Cor­rea had to back down last week from plans to start tax­ing in­her­i­tances of more than US$35,400 af­ter an out­cry from the busi­ness world.

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