Sustainable development
During the presentation of the Economic and Social development plan for 20162020, Bolivian President Evo Morales announced that USD 12.681 million would be invested into the fossil fuel sector. Taking into account the low price of oil on the world market at present, the plan also includes industrialization projects for further natural resources such as lithium, natural gas and iron, as well as significant investments into exports of gas and electricity, aiming to turn Bolivia into a major player of South American energy production. According to Luis Alberto Arce Catacora, Minister for Economic Affairs and Public Finances: “Since 2006 we have been applying a new economic model in Bolivia which aims to use our natural resources to generate development by distributing wealth amongst all Bolivians, reducing poverty and creating opportunities. This is working and is one of the basic reasons why Bolivia is doing well”. The Bolivian government has been developing the basic heavy industry,
mainly petrochemicals, but also steel. There are projects to industrialize lithium and gas, and a new urea plant. Regarding lithium, Bolivian VicePresident García Linera had his facts ready: “Bolivia holds the world’s largest reserves, we are the Saudi Arabia of lithium, and this commodity’s price keeps rising whilst others like tin and oil are falling drastically. Lithium prices have risen from USD 5 thousand to USD 11 thousand per ton and will keep going up, because there is an increasing generalization of lithium consumption for several appliances we use in our daily lives. Bolivia will only produce 99.6% pure lithium carbonate which is needed for batteries, and later we’ll go for cathodes and batteries, from there it will be the private sector’s role to increase the added value. They know that we hold the world’s largest lithium stocks but they don’t know that we have been investing and investigating for the past 7 years to prepare for market launch from 2018 onwards. This is when the State’s mission will end and the private sector will have to use those intermediate products to add some more value”. Economic Affairs Minister Arce Catacora explained that “What Bolivia needs, to keep going forward in this context, is a private sector which understands that the State is leading economic growth by promoting interest rates of 6% for productive projects, tourism and more. The private sector needs to invest in the Bolivian industry, in the transformation towards producing added value products which can be exported as well as consumed locally”. Meanwhile, the State will keep investing in infrastructure (roads, electricity, railways) to create optimal conditions for investors. Bolivia holds three big assets for entrepreneurs: Political stability, legal certainty and rapid growth. Minister Arce Catacora showed himself to be convinced of his country’s assets: “Anybody who comes to live in Bolivia has a future here, which you cannot see in other countries at the moment because of their political, economic and social complications. Bolivia is an oasis in the desert, a fountain of opportunities”. One international corporation that has found its way to Bolivia is SAExploration, whose corporate head office is currently located in Houston, Texas. “We work in the seismic sector, we are explorers, looking for the potential of the areas we work in. As one of the few North American companies to be established here, we are betting on Bolivia, we believe in this country”. This is how General Manager Jorge Urcullo described
SAExploration. When the company arrived in Bolivia, their first contract represented USD 6 million. The second was already USD 32 million, then came the landmark project, Huacaya, with USD 54 million. “We have always been growing, this also has to do with new projects” said Mr. Urcullo. SAExploration prides itself in using state of the art technology in its work. From 2013 to 2014, SA Exploration took on Huacaya Norte 3D and 2D in the Subandean lowlands for Repsol. They managed to reach up to 21.000 recorded channel counts per record with the wireless Geospace GSX system, which they were the first ones to use in Bolivia. The Huacaya project alone needed 7 helicopters and over 2000 people to be completed. “We always want to exceed our clients’ expectations”, said Mr. Urcullo, “Whilst keeping our workers’ health and safety in mind. We use the latest technology, and
where necessary we’ll bring in expertise from abroad”. At the moment, SA Exploration is rising to a new challenge by undertaking a project for over USD 70 million for an English company with the highest standards in terms of security and quality, which he hopes will give them a competitive edge for further projects in the coming years. “There is only one way forward for Bolivia, and that’s exploration” said Mr. Urcullo, adding enthusiastically: “This is a very mystic country, maybe the Himalayas of this region, it’s well worth discovering”.
Técnicas Reunidas is a Spanish multinational corporation present on every continent. It has been working in Bolivia for 7 years and specializes in engineering and infrastructure construction for the oil and gas industries. It counts most National Oil Companies and multinational corporations amongst its clients. The first Bolivian project, in 2009, was for Repsol, on the Margarita oil fields. So far Técnicas Reunidas has accomplished 7 major projects, all related with the oil industry. They also took part in the largest Bolivian industrialization project to date, the Gran Chaco natural gas liquids separation plant, inaugurated in 2015, and in the modernization of two refineries. Despite being part of a major corporation, Técnicas Reunidas takes pride in its local anchoring. It finances a communitybased social program aimed at indigenous populations. Also, the company’s policy is not to take away any work from qualified local companies – they prefer to hire them as subcontractors. In busy times, their own workforce has risen to 400 employees, 90% of which were Bolivians. Some projects can employ over 8000 people, such as the Gran Chaco site. According to Luis Maria del Villar, the General Manager: “Our main objective is to bring industrialization to Bolivia. By contributing our main assets, our employees, we offer a service with good engineers and technology, for the country’s benefit”. Being the only Spaniard in the company, he added that “this has been a fantastic and enriching experience, a lot more so here in Bolivia, which is a unspoilt country with everything left to explore”. The team at Servipetrol would certainly agree – they have been serving the Bolivian oil industry for over 50 years, headed for 38 years by Carlos Ortiz Mercado, now retired, followed by his son, present General Manager Juan Carlos Ortiz. The company rests on three pillars: Selling material such as pipes and valves to the oil industry represents 90 percent of its activity. The second pillar is non-destructive testing, which they carry out for YPFB, Repsol and Petrobras. The third one is plants and construction, mainly of drilling rigs. In the coming years, Servipetrol will maintain its focus on oil whilst exploring new opportunities like mining and industry, which are expanding in Bolivia. As Juan Carlos Ortiz said: “Servipetrol is certainly amongst the ten major players of the oil industry and has to keep growing, it can do so because Bolivia has everything that’s needed. It has access to the two biggest markets in Latin America, it’s connected via pipelines, holds known stocks and a vast potential still left to be discovered. Big industrialization projects are under way in areas such as urea and polypropylene”. The Ortiz family is ambitious and farsighted: Servipetrol aims to grow in a sustainable way.
Another major player in the energy sector is Cooperativa Rural de
Electrificación, CRE, which distributes electricity to over 1 million people. It participates in generating electricity for the national grid and holds a market share of 30 percent. CRE’s peculiarity lies in the fact that it is a very large cooperative, comprising 680 thousand members. It began 53 years ago with 10 thousand members. Its market value is over 500 thousand USD. Today, CRE is the main electricity provider (by far) in 14 of Santa Cruz’ 15 provinces and in the city itself. Booming Santa Cruz consumes 40 percent of Bolivia’s energy, with a 7 percent annual growth rate, requiring CRE to anticipate future needs. Electrifying the provinces matters – bringing energy to remote areas prevents villagers from migrating to cities. People are at the heart of CRE’s mission – besides producing energy, it finances over 20 social programs. There are university scholarships for the best 100 students of every year, as well as a program to improve detection of uterine cancer, the major cause of death in Bolivia. Another project focuses on electricity generators to prevent power cuts in hospitals and other important service providers. When CRE turned 50, people came from all over the United States to ask about the secret of its success. CRE has a close relationship with the US, as they helped found it with training and funding. CRE is an honorary member of the National Rural Electric Cooperative Association (NRECA), the organization that represents the interests of over 900 electric cooperatives in the United States. Miguel Castedo, chairman of CRE’s board, told us that “NRECA are proud of us because in terms of members we are one of the largest rural electric cooperatives worldwide. Usually when a cooperative reaches 70 thousand members, it closes, because it becomes unmanageable, but we are still doing well. Our reward is to give back to people, we turn our benefits into social programs”. CRE is considered the best cooperative in Bolivia and one of Latin America’s best companies. Mr. Castedo’s goal for the future is clear: “My main objective is for every inhabitant of Santa Cruz and every Bolivian to have electricity”.
With such an abundant supply of animal feed products already at hand, only 1% of the composition of livestock feed is imported – the vitamins and minerals added to the grains and oilseeds. This has allowed the poultry production to flourish. Bolivian poultry products and eggs exceed 484.000 tons annually, which contributes to food security for the population. The poultry industry would be able to grow further, but is currently hampered by the international food safety laws regulating Newcastle disease. Although all poultry producers vaccinate their animals, they have not yet received international clearance, which limits export opportunities. The government is currently helping producers to overcome this obstacle, and the entire industry is working towards achieving certification within 3 or 4 years.
CAICO stands out in the agribusiness as a company founded by Japanese-Bolivian immigrants in 1971. Before other industries reached Santa Cruz, they were pioneers. Until the mid-1980ies they dominated the seed production market, then came the soybean boom, which also attracted Brazilians. CAICO had started off with rice and corn, but with the introduction of machinery, they were able to switch to soybeans. CAICO commercializes most of its production in the country, and whatever surplus arises is exported to Peru. At the moment, CAICO is looking for investors to accompany their expansion in oil and soybeans. As Mr. Kiyotaka Ota, president of the board, explained, “It’s quite hard to grow alone, with a strategic partner we can develop our plan more quickly”. He is eager to convince potential partners of his family’s adopted country’s assets: “Bolivia’s agriculture is an opportunity to be explored, the recent growth has its roots in the 1980ies, before that there was no agribusiness to speak of. Ours is practically a new sector, where there is still much to do, because there is enough land, you just need to know how to manage it and to plan its use. This is a country of opportunities”. Also in Santa Cruz, the poultry sector has consolidated itself into a leading productive activity for the country, generating over 10.000 direct jobs and 50.000 indirect ones. It also consumes 665.026 metric tons of agricultural products and mobilizes over 100 high tonnage trucks per day between silos and farms.
Sofía Ltda. was created in 1976 with a strict focus on poultry production for the Santa Cruz area. In 1986, after a major growth process, it developed into an integrated and interdependent company coordinating its work with different providers and agricultural producers, such as reproduction farms, pork farms and cattle ranches, as well as poultry incubation sites. Sofía currently spreads over five sites: farms, cooling houses, sausage processing and frozen-food factories. It is one of the country’s biggest poultry and pork producers with 4200 employees. Mr. Mario Anglarill Salvatierra, Granja Avícola Integral Sofía’s Executive President, told us that he and his wife started the company from scratch: “At first we were part of another company where we produced fertile eggs and then chicks. Then we had the opportunity to become independent and were lucky that the bank trusted us and financed what we needed to begin with bird reproduction. Then we expanded into fattening the birds. One thing led to another and soon we were producing chickens and keeping the meat cool, but in the beginning we weren’t processing the meat, which is where the added value comes from, and we soon understood that this was where we had to go in order to be independent of price fluctuations on the poultry market. In 2000, we started to produce stuffed chicken, fillets, ham, sausages and more. Then we expanded into some products which are only sold deep-frozen, like hamburger meat and nuggets, all of this happened over time”. With sausages came the need to buy different meat, and since pork was difficult to source, Sofía began to produce their own, which went very well. “Commercially, we would like to expand and export not only poultry, but also pork and beef. We are eager to meet potential partners, we are experienced and open to foreign capital to help us grow”. Mr. Anglarill believes that Santa Cruz, with its tropical climate and its soil, has great production capacity, and he points out that there are guarantees and incentives for people who want to work the land, transform it and add to its value. Likewise, Santa Cruz’ gastronomical industry has experienced a dynamic growth of 20 percent in 2014, with 100 new restaurants and franchises. Of the roughly 380 gastronomical enterprises the country holds, around 300 are now based in Santa Cruz. One of the local brands is CISA Ltda., better known as “Pollos Chriss”, founded in 1991. It now counts 16 retailers in the city, offers 17 types of mostly poultry-based products and employs between 400 and 500 people, with seasonal fluctuations. Pollos Chriss currently numbers 33 franchised outlets all over the country, but its goal is to reach 150. They are planning to expand internationally to Colombia, Chile and Peru. As founder José Luís Suárez Yamal explained,
“The arrival of the international big players has been great for the national brands because it has helped us improve, at the moment we are in a fair and healthy competition and this benefits the clients”.
Over the past ten years, Bolivia has been awakening to entrepreneurship. The creation of new companies between 2005 and March 2015 reached an impressive growth rate of 661%. In 2005 there were 19.774 registered businesses and by March 2015 their number had soared to 150.535, of which 85 percent are individual enterprises. Bolivian companies have their eyes on neighboring countries, but also on the North American market, especially Los Angeles, San Francisco and Miami, where significant Latin American communities live. According to the Office of the US Trade Representative, Bolivia is currently The United States’ 79th largest goods trading partner with USD 1.9 billion in total (two way) goods trade during 2015. Bolivia mainly exports precious metal and stone (gold), tin, cereals (quinoa), edible fruit & nuts (brazil nuts), and miscellaneous grain, seeds, and fruit to the United States, whereas the latter send machinery, aircraft, electrical machinery, optical and medical instruments as well as mineral fuels to Bolivia. Some companies, like Casa Real, are managing to expand internationally despite the fact that they offer a niche product. Such as winemaker Casa Real, from the Santa Ana region, which commercializes its typically Bolivian white Muscat spirit, the singani, in New York, Los Angeles, San Francisco and even Virginia. “Small volumes so far, but important for our industry”, commented General Manager Luis Pablo Granier. The service sector is also expanding.
CEMTER, which specializes in Business Process Outsourcing (BPO), offers a wide array of services from human resources to catering, transportation, health, bodyguards, payroll, branding and more. Over the last 3 years, Cemter has grown by 400% and they are projecting a further 110% for this year. 70% of its clients are international companies. Most of Cemter’s clients belong to the industrial sector, but consumer products and the oil industry are also well represented. General Manager Juan Pablo Jimenez’ goal is that both national and international entrepreneurs operating in Bolivia will adopt the culture of outsourcing for their business model. “The service provider sector used to be monopolized”, he explained, “And we managed to change that with our integrated services, so we are now experiencing significant growth”
Over 70 percent are already built and the rest will be finished this year, including all services like surfacing, sewerage systems, gas, drinking water and telecommunications. The plot sales for PILAT are subject to two conditions: The first one is that buyers need to build their enclosure within a year of buying; the second is that within seven years the business needs to be functioning. This was imposed to avoid speculation. As Julio Novillo, the Executive President of Grupo Empresarial Lafuente explained, “Without those conditions, sales would have gone much faster, but now we can safely estimate that within 7 or 8 years the industrial complex will be 100 percent up and running”. Mr. Novillo is a self-made entrepreneur who saw the potential in Santa Cruz at a time when he was managing the water cooperative in the south of the city. Many years ago he started small, borrowing money to acquire 15 hectares of land which he developed himself and turned into a success, selling 254 plots in under two months. Over 50 percent of the 600 industries that have already bought a plot in PILAT are foreign – from Peru, Brazil, Ecuador, Argentina and Germany. A German company hast started producing beer. There is a processing plant from Afghanistan and a Chinese foundry. Some companies, many of them foreign, have asked for 10MW of monthly energy consumption. 120 000 families have already bought plots in residential areas developed by Grupo Lafuente around the industrial complex. This will be in important source of labor at the complex’s doorstep. Northern Santa Cruz, close to Viru Viru airport and the town of Warnes, includes a rapidly expanding area where the group plans to build a modern and “intelligent” city in which workers and executives will live together. PILAT will also contribute to generating over 200.000 direct and indirect jobs, and work opportunities for over 120.000 local families.
“The other day I was talking to a Chinese foundry,” said Mr. Novillo, “It needs a whole army of people to collect scrap metal and other material, which will then be sent to the processing plant. So on top of it, this type of industrial project will contribute to the environment, because it will clean up the city”. He truly believes in the environmental benefits of the project: “We are offering the companies a sustainable, ecologic complex, with a treatment system for liquid and solid waste. We are taking great care of every aspect of the environmental side of things, we have a large perimeter of 80 m width where we will plant trees, there will be a green curtain around the complex, every avenue will be tree-lined. At the moment we already have around 40 000 palm trees that we will be transferring this year. We want this complex to be an ecological benchmark for the region, with a guaranteed energy supply for large industrial plants”. The implementation of the Warnes thermoelectric plant next to PILAT, which currently functions at 200 MW and has received authorization to expand to 480 MW, will be pivotal for the local energy supply to the project. Grupo Lafuente is in permanent contact with entrepreneurs in Bolivia and abroad. Mr. Novillo and his team have visited potential partners in the US, Brazil, Argentina, Peru and other countries, and have received visitors curious to know more about their plans. The group is very interested in possible joint ventures as it firmly believes in the potential of its projects. Another potential partner for international investors is COBOCE, which exports its products to Chile, Peru and Argentina and has plans to expand to all of South America. It received a price as the best exporter for stones, cement and ceramics. The cooperative was created in 1966, so it celebrates its 50th anniversary this year. It has 28 000 members, currently holds over USD 200 million in assets, employs 900 people permanently, and generates direct work for over 1500 people. This is how Javier Flores, General Manager, presented the cooperative: “We take part in the Bulo Bulo complex, which has the urea and ammonia transformation plant the government is working on with Samsung. We also built the Quimome – Tinto bridge, which completed the bi-oceanic corridor between the ports of Santos and Arica. At the moment we are building the UNASUR parliament in San Benito. With all these projects, we contribute to Bolivia’s development”. Also in the ceramics industry, Cerámica
Gladymar S.A. is a Bolivian Company dedicated to the production and commercialization of all kinds of ceramics products (decks, coatings, ornaments) for any type of setting. Gladymar belongs to Grupo Roda, which has a long tradition in the country with a strong presence in diverse sectors of the economy. Gladymar itself is over 30 years old and its philosophy is based on innovation, growth and team work. As General Manager Carlos Rupay said, “Many of our workers have been employed by the company for a long time and feel committed to us because they are treated with much dignity here. We combine a mix of people who have been here forever with some new professionals that give our company a breath of fresh air and will allow us to take things to the next level”. Gladysmar is always at the forefront of the market’s evolution, with a special focus on Europe and the intention to innovate, because their philosophy is to show new developments at competitive prices. They employ over 500 workers at the national level, working in five cities through their show rooms. They are well positioned in La Paz, Cochabamba, Santa
PILAT’s concept is meant to attract a diverse local, national and international population. Foreign buyers are already proving that this is realistic.
Cruz, Tarija, Sucre and Potosí. They also cooperate with some distributors where they generate indirect employment. The group is betting on new technologies and innovation. Family-run construction company Constructora Mancilla is also contributing to the expansion of Santa Cruz, where they are currently looking for strategic partners to build residential estates and serviced apartments.
Monterrey is also a family-run business. It specializes in steel-based solutions for the private building industry, priding itself in providing high quality products and expert advice, as well as having a major supporter, global player ArcerlorMittal. Nancy Campero de Gonzales, the executive vice-president, explained that the landmark step for her company was when they decided to expand to Peru, where they are now amongst the top three distributors. They are still expanding in the North, deemed most promising for their objectives, with networks opening in Trujillo, Pucallpa and Tarapoto. Next, they are working on entering the Colombian market, despite the uncertainties due to the exchange rate issue: all business in Colombia needs to be conducted in the local currency. They are receiving help from Arcelor Mittal, who are pushing them to expand there. In 2015, they exceeded USD 100 million in sales and are currently employing around 400 people directly. They are also present in Trinidad and Beni and about to open in Sucre and Tarija, because they want to operate at the national level in Bolivia. But their biggest project at the moment is Torres Monterrey, through which Mrs. Campero’s husband wants to accomplish his dream of a building that would challenge everything Bolivia has known so far. The project has been well received, is currently in the planning stages and will be launched at Expocruz in September. The Torres buildings will be mixed-use, with the lower floors dedicated to shops and offices and the higher ones reserved for flats. The idea is for people to buy fully furnished flats in which they could move in as if they were in a hotel. The highest floor will be a viewing platform from which visitors will be able to admire the panorama of Santa Cruz. The same floor will also hold a restaurant, and Mrs. Campero hopes it will become a must-visit landmark for anyone coming to the city. Apart from this mega-project, the company is focusing on opening new branches all over Bolivia and consolidating growth in Santa Cruz. A branch is under construction in Warnes, close to where the above-mentioned PILAT complex is being finalized. Regarding the country’s new focus on railroads, Ricardo Fernández, general manager of Ferroviaria Oriental, described how the provider has grown into an integrated logistics operator of international standards. mentioned Mr. Fernández Durán,. Their main offices are located in Santa Cruz. The railway has invested over USD 100 million in the past five years to increase its transport capacity by acquiring new locomotives and wagons. It supports the growth of Bolivia’s production and foreign trade. The modernization of the technological platform and different areas of the supply chain will help the company to consolidate as an integrated logistics operator. Thanks to these investments, the cargo capacity will exceed three million tons per year in the near future. “We will be prepared to face the challenges created by ongoing major national projects, such as the production of cement, urea, minerals and fuels. Last year, we transported over 1.6 million tons”. As for short and medium term plans, the general manager said that in the past four years they have worked intensively on integration with Argentina and Brazil. They spoke with the Argentinian government to rehabilitate the branch connecting with Bolivia, and this is now under way, which will allow the rail traffic between Bolivia and Argentina to continue. Through a trade agreement with the Belgrano Cargo Railway and Logistics, Ferroviaria Oriental currently manages and operates the Pocitos station on the Argentine side, where it has built a central cargo transfer from wagon to truck. In Brazil, at the railway station in the border city of Corumbá, the terminal cargo transfer was developed in agreement with the Brazilian Railway Rumo -ALL and in partnership with the Transaco company, The terminal has the infrastructure and equipment needed for the operation of transshipments of steel products. “We have developed trade agreements with International Freight Forwarders, specialists in general cargo, project cargoes and leading companies for river waterways, which guarantee our services door to door”, commented Fernández. “Our goal is to provide products with high added value that contribute to the competitiveness of our customers in the demanding international markets, the vision of Ferroviaria Oriental is to be a true ally in integrated logistics”, concluded the general manager. In a different sector, Grentidem S.A. is the company which invested into building recreational megacenters all over the country. Grentidem covers real estate, advertisements, cash administration, maintenance and construction. In April this year, a multiplex Cine Center opened in Tarija, representing a USD 14 million investment. It is built on three levels, with ten movie screens, food courts, a mall and a gym. President Jorge Chaparro José reminisced: “When I arrived in this country, there were 15 movie theaters. The first one we built was in Santa Cruz in 2004, everybody told me we were crazy but it worked out fine. I am proud of having brought the entertainment industry to Bolivia, there used not to be any. In all of Santa Cruz you could see three movies in three months, and there was nowhere for kids to play. It was the situation of a country with no right to recreation. That Cine Center was a huge success, and the one in Cochabamba too; when I presented the one for La Paz, I was told it was very big and that Bolivians are used to smaller venues, but it is now full”. At the moment his company holds 5 malls, the sixth one opened in June, and they are leaders in this sector as well as in the movie theater segment. They hold over 50 percent of the market. According to Mr. Chaparro, “People in Santa Cruz have discovered movies through the Cine Center. We are technological leaders, we brought the digital 3D in 2008, at the time there was no competition in the market and we were asked why we were investing more, since we had no competitors, but we wanted to offer the latest technology in Bolivia”. Mr. Chaparro insists that his movie theaters are similar to the ones in Miami and that his seats are the most comfortable anywhere. “My mission is to look for the best in order to invest. We have spent USD 750 000 in new technology in every theater, I keep investing because I want Bolivian movie theaters to be the world’s best”. He is expecting 2016 to be a great year for entertainment, with some excellent movies coming out which should allow the market to grow further.
“In recent years, Ferroviaria Oriental has evolved from a railroad in the heart of South America to a large-scale integrated logistics operator, implementing the vision of connecting Bolivia to the world”,