According to UNCTAD's World Investment Report 2022, FDI inflows increased from USD -1.1 billion in 2020 (due to the pandemic, political uncertainty in an election year, and commodity prices) to USD 594 million in 2021. Furthermore, the stock of FDI was estimated at USD 10.7 billion in 2021. The country's many natural resources offer investment opportunities (hydrocarbons, mining sector), as do the transport and communications sectors. Bolivia’s wealth of natural resources attracts significant investment, particularly from both Russia and China (the country has the continent's second largest gas reserve and the world's largest lithium reserve). Lately, the majority of significant foreign projects in Bolivia have come from China. In early 2023, a consortium led by the Chinese Contemporary Amperex Technology signed an agreement with the government to invest more than USD 1 billion in infrastructure construction the mining, refining, processing, and sale of lithium.
Even though the Bolivian government states that it would like to attract more FDI, it has done little to do so. One of the most significant policies established in order to attract investment was the enactment of an investment law in 2014, which says that each Ministry will provide incentives for sector-specific investment, stipulates that the government can encourage investment in certain sectors that contribute to the economic and social development of the country, and specifically aims to promote investments in the exploration and exploitation of hydrocarbons. Since then, no major laws, regulations, or judicial decisions impacting foreign investment came out. Additionally, the government declared that it is working to create an investment promotion agency. Still, even without significant policies to attract FDI, Bolivia’s macroeconomic stability, abundant natural resources, and strategic location in the heart of South America make it an attractive country for investors. However, a key reason for the low level of foreign investment is the current government’s restrictions and bias against foreign investors, which have harmed the country’s attractiveness. The instability of the legal framework, corruption, the weakness of the rule of law and the prohibition to resort to international arbitration are elements which continue to affect the business environment. But, since many investors see Bolivia as a difficult country to invest in and chose to spend their money elsewhere, competition is significantly reduced, making it easier for those who chose to invest there to make a success of their venture.
Bolivia | Latin America & Caribbean | Estados Unidos | Alemanha | |
---|---|---|---|---|
Index of Transaction Transparency* | 1.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 5.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Foreign Direct Investment | 2020 | 2021 | 2022 |
---|---|---|---|
FDI Inward Flow (million USD) | -1,129 | 584 | -26 |
FDI Stock (million USD) | 10,276.3 | 10,585.5 | 10,131.0 |
Number of Greenfield Investments* | 5.0 | 7.0 | 3.0 |
Value of Greenfield Investments (million USD) | 312 | 224 | 72 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Personal income tax |
13% (12.5% effective tax rate for individuals engaged in a profession or business activity) |
Bolivia | Latin America & Caribbean | Estados Unidos | Alemanha | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 42.0 | 28.2 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 1,025.0 | 327.5 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 83.7 | 46.8 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
Setting Up a Company | Bolivia | Latin America & Caribbean |
---|---|---|
Procedures (number) | 12.00 | 8.00 |
Time (days) | 39.50 | 25.22 |
Source: Doing Business.
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Latest Update: November 2023