Attacks on Patents and Expropriations of Shopping Malls are Undermining Venezuela’s Property Rights
Last month Latin Business Chronicle published this story about the status of Venezuela’s commercial real estate market. NAI Global’s Venezuela-based member, NAI Ferca, is featured in the story. Copyright, and republished with permission from, Latin Business Chronicle. Part 2 will appear tomorrow.
Venezuela’s president Hugo Chavez announced Sunday that he planned to change the rules on patents, a move that could hurt companies like Swedish packaging firm Tetra Pak as well as pharmaceutical producers.
The new threats come as Chavez has been attacking physical property rights, confiscating plants and even shopping malls. Last month, he declared that there was no private property as far as land went. "The land is not private,” he said. “It is the property of the state.”
”The worry at this moment is basically that we don’t have a clear definition of what private property is,” says Francisco España, director of real estate company NAI Ferca. “There is private property in urban areas [but] there’s a lot of concern in the construction sector and among citizens about real estate property, the fruit of their labor.”
On June 11, Chavez ordered his designated representative in Caracas, Jacqueline Faria, to expropriate the new Sambil La Candelaria shopping mall in a poor downtown area of the capital. The mall was almost completed and was expected to open shortly.
The latest actions come as Venezuela is already falling on the International Property Rights Index produced by the Property Rights Alliance. The index of 115 countries looks at three key factors that indicate property rights: legal and political environment, physical property rights and intellectual property rights (IPR).
Venezuela ranks in 109th place, according to the 2009 index. That means it tied with countries like Zimbabwe, Chad and Burundi. It also means Venezuela was among the seven worst countries worldwide when it comes to property rights.
Its total score of 3.2 points is a decline from 3.3 points in 2008. Its 2009 PPR score was 4.5 (down from 4.6 in 2008), while its IPR score was 3.2 points (down from 3.4 points in 2008).
The new threats against IPR, coupled with recent attacks against physical property, will impact its score for the 2010 index, says Kelsey Zahourek, the executive director of the Property Rights Alliance. “The score will be negatively affected,” she says.
However, more importantly, a worsening in property rights deters economic development, Zahourek adds. “With nationalizations you only decrease foreign direct investment [while IPR violations] lowers access to medicine,” she says.
Meanwhile, the latest global software piracy report from the Business Software Alliance (BSA) shows that Venezuela is among the 10 worst countries worldwide and the worst in Latin America. Its rate last year was 86 percent, which translated into losses of $484 million for software companies, the BSA estimates. In 2004, the rate stood at 79 percent, while losses amounted to $71 million.
The threat against patents now could lead to reduced access to medicines in Venezuela, according to Venezuela's pharmaceutical business chamber. "This could create obstacles to importing the newest medicines," the chamber’s president Edgar Salas told AP after Chavez’ comments.
When it comes to copyrights, Venezuela is also seen as a serious violator, according to the International Intellectual Property Rights Alliance. “The Venezuelan government seems to be fostering piracy by its unwillingness to enforce copyright law and stop the sale of pirate products,’ the IIPA said in its last report on Venezuela, issued two years ago. “The streets of Caracas are plagued with pirated music, movies, games and software and the copyright industries’ ability to engage in commercial distribution and conduct anti-piracy campaigns safely and effectively has been limited. Enforcement, both on the streets and at the borders, by Venezuelan authorities remains ineffective.”
I think real estate market will take around three four yrs more to show some consistent growth. The effect of economy downtrend is has just started to be observed in small countries who used to be favorite destinations for off-shoring.
Posted by: John Beck Property Vault | September 11, 2009 at 04:36 AM