Venezuela businesses up in arms over moves to limit profits

Feb. 6, 2014 at 5:11 PM   |   0 comments

CARACAS, Venezuela, Feb. 6 (UPI) -- Venezuelan government moves to put a cap on business profits triggered protests Thursday with business leaders threatening to take the issue to court.

Business leaders say they are upset over President Nicolas Maduro's moves to limit the amount of profit firms can earn.

If necessary, business representatives say they will take their quarrel to the Supreme Court, Jorge Roig, president of Venezuelan Federation of Chambers of Commerce and Industry told news media.

Critics say the measures are ill-timed as the country's industries need more government help, including a less stringent foreign exchange policy, to allow them to buy raw materials and import consumer goods not available from domestic firms.

More than half of the processed food consumed in Venezuela is imported but recent foreign currency curbs have created shortages.

Representatives of the farming, livestock and agro-industrial sectors met this week to discuss moves to ease shortages and counter inflationary trends, el Universal reported.

Business leaders have written to Maduro asking for his intervention to help ease shortages.

Central Bank data estimates scarcity of consumer goods at 22 percent of demand, with dairy products even harder to find. As much as a 90 percent shortfall in supplies is affecting basic items like cooking oil and milk, the data indicate.

Oil-rich Venezuela has been battling an economic downturn since 2011. Government critics blamed government policies under Maduro and, before he took office last April, during the administration of former President Hugo Chavez, who died of cancer in March.

Roig was scathing in published comments on the government's handling of the economy.

"It is not possible to control the national economy from your desk. It has never been so," el Universal quoted him as saying.

Business leaders say some of the recent decrees are unconstitutional and should be scrapped. These include a "Law on Costs and Fair Prices" decree that sets a 30 percent ceiling on company profits and warns of new penalties and huge fines. It also threatens nationalization though officials say any punitive state takeover may be temporary and designed to be a deterrent.

Roig said the law would lead to a worsening of the Venezuelan economy. He lamented the government went ahead with the decree without consulting senior business leaders.

Maduro, like his predecessor Chavez, has accused senior business leaders of plotting against his government, a charge the businessmen deny.

Officials say the measures are necessary to stem inflation, said to be running at more than 56 percent. Officials contest the industry's analysis of the economy, including the current inflation rate. No other independent data on the economy's true state is available.

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