Business & Economy

Bolivian manufacturing faces triple threat: social unrest, contraband, Covid

By Gina Baldivieso

La Paz, May 31 (EFE).- Running a manufacturing operation in Bolivian regions like La Paz, a frequent site of protests due to its status as the country’s seat of government, is fraught with difficulties due to high levels of social unrest, economic losses from smuggled contraband and recently the Covid-19 pandemic.

In 2020, that Andean nation’s economy was battered by the health emergency, with sales and profits from industrial operations down 12 percent and 84 percent, respectively, the president of the National Chamber of Industries, Ibo Blazicevic, told Efe.

Exports of manufactured products fell 16 percent, while imports of capital goods declined by 32 percent and 70,000 jobs were eliminated, he said.

That means that for many enterprises there is an enormous lack of liquidity and a high risk of insolvency, Blazicevic added.

But beyond the health crisis, there are two longstanding threats facing Bolivian industry: social unrest and smuggled contraband.

Social conflicts are a constant feature of life in Bolivia and flare up with particular intensity at different times, including the so-called “gas war” of 2003, when La Paz and neighboring El Alto were brought to a standstill by strikes and roadblocks and many manufacturing operations migrated to the eastern department of Santa Cruz, the country’s most prosperous region.

Others stayed in La Paz department, such as Laboratorios Vita, a pharmaceutical company that was founded more than eight decades ago in La Paz and moved to the nearby city of El Alto in 2002.

Running a manufacturing enterprise in that region requires a “titanic effort, but our appreciation for the city and the department is great, and despite those negative circumstances there have also been positive aspects that have helped us keep going these 85 years,” Vita’s chief executive, Magna Cachi, said.

Laboratorios Crespal, which dates back 32 years, is another manufacturing enterprise based in El Alto that experienced particularly trying moments during the socio-political crisis of 2019, especially due to its location in a neighborhood – Senkata – that was one of the focal points of the unrest.

Crespal’s top executive, Raul Crespo, recalled that the site of its operations – and other nearby businesses – needed to be evacuated due to fears of an explosion at the Senkata refinery.

“We couldn’t work for 30 days. The company was closed and at the mercy of the crime that existed at that moment in time,” Crespo told Efe.

Under normal circumstances, “El Alto is a city that’s quite friendly, accessible, where you can very calmly go about your work,” he said. However, “what makes things difficult here is the political problems.”

“Nearly always having problems with roadblocks, marches, social demonstrations in the city and also in El Alto, on top of an enormously high level of informal work” ranging from between 70 percent and 81 percent, generates a “state of chaos” that “makes it difficult for formally established manufacturing enterprises to operate,” Blazicevic said.

Additionally, the problem of contraband goods – the eternal nemesis of Bolivian industry – was exacerbated by the pandemic.

“The medications market is now dominated by smugglers,” Crespo said, while Cachi added that counterfeit medicine is an additional concern. Both demanded greater action on the part of the government.

“To have strong industries, we need to work on (reducing social conflict), improving logistics with more and better roads and offering tax incentives,” Blazicevic said.

It is also important to combat contraband and promote the “Made in Bolivia” label, he added. EFE


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