[News] Maduro Strikes against Speculators, Proposes Profit Limits in Venezuela
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Tue Nov 12 13:59:46 EST 2013
Maduro Strikes against Speculators, Proposes Profit Limits in Venezuela
<http://venezuelanalysis.com/printmail/10158>http://venezuelanalysis.com/news/10158
<http://venezuelanalysis.com/print/10158>
By Ewan Robertson
Mérida, 11^th November 2013 (Venezuelanalysis.com) -- President Nicolas
Maduro has proposed setting maximum profit margins for businesses across
the Venezuelan economy following the discovery of "grotesque"
overpricing in the electric appliance sector.
The speculative practices were revealed last week after authorities
inspected the pricing structures of chain stores selling electronic and
household appliances. Like many businesses in Venezuela, these stores
import goods from abroad using dollars granted by the government at the
fixed rate (US $1 = 6.3 bolivars) and then sell these goods to local
consumers.
However these stores, including the country's largest electronic
appliance chain Daka, were found to be marking-up products by up to
1200% from the import cost, charging consumers what President Madruo
called "grotesque prices".
Officials cited one example of a washing machine which cost 4,200
bolivars to import at the official exchange rate being offered for sale
at 47,000 bolivars. The current monthly minimum wage is 4,137
bolivars, including food tickets.
In response, on Friday Maduro announced the temporary occupation of the
Daka chain and the enforced sale of all its goods at a "fair price"
related to their import cost. Other electronics chains such as JVG also
had to open their doors and sell their products at a significantly
reduced price.
Various managers of the Daka chain were arrested for their alleged role
in the affair. Control of the stores will be returned to company owners
once the goods have been sold, although regular price inspections will
continue.
The announcement resulted in long queues outside stores as consumers
sought to take advantage of the lower prices, with the National Guard
and other authorities maintaining order.
However damages and looting were reported to have occurred in one Daka
store in the city of Valencia on Saturday morning when some people
forced entry into the shop. The Attorney General condemned the incident,
and reported that arrests had been made.
The government has informed citizens that those who bought domestic or
electric appliances at the speculative prices have the right to their
money back.
"Each person who was robbed by those grotesque prices will get their
money back, which belongs to the working person," President Maduro said
from the presidential palace in Caracas yesterday.
Maduro also proposed that if granted temporary enabling law-making
powers by parliament he will implement a limit on profit margins on
sectors across the Venezuelan economy.
"Economic freedom means that I produce and sell with a minimal profit
and I respect the consumer. Furthermore I receive the dollar that the
state gives me, I bring the product and I sell it at a fair price, and I
don't add an extra 1000% of grotesque profit," he explained.
Further, the Venezuelan head of state proposed tougher sanctions for
those engaged in price speculation using state granted dollars,
including prison sentences, saying that such individuals "are robbing
the people".
In the televised address to the nation, the president also confirmed
that a package of reforms <http://venezuelanalysis.com/news/10151> will
come into effect this week to attempt to tackle shortages and price
speculation.
These include a beefed-up price inspection force, the new state-run
National Corporation of Logistics and Transport to aid the supply of
goods to factories and stores, and the new National Centre of Foreign
Commerce to better coordinate the allocation of foreign currency to
businesses and individuals.
*Economic problems continue*
Venezuela has been suffering some economic difficulties this year in
part related to the "black market" dollar, which unofficial currency
websites say has risen in value to almost ten times the official rate.
Other problems include shortages in a few basic foodstuffs and other
goods, with the scarcity index
<http://venezuelanalysis.com/analysis/10071> for October at 22.4%, the
highest so far this year, and the annual inflation rate for Nov. 2012 --
Oct. 2013 at 54%. The minimum wage has increased 45% since April.
The government argues that this situation is the result of an "economic
war" being waged by opposition-aligned business sectors in conjunction
with actors opposed to the Bolivarian revolution in Colombia and the
United States.
Officials say that Venezuelan business federations are behind strategies
to hoard or deviate products to provoke shortages, while speculating on
prices to drive inflation and cause discontent.
They also argue that unofficial currency websites such as dolartoday.com
speculate on the value of the bolivar to create pricing distortions in
the economy and to try and provoke a further devaluation of the official
rate.
Yesterday Maduro argued that the pricing practices of electronic
appliance chains form part of this "economic war".
"There aren't economic reasons for the phenomena of shortages and vulgar
price increases that we have in the real economy. They're not economic,
it's not because of the lack of granting foreign currency," he argued.
In October the government's Vice Minister for the Economic Area, Rafael
Ramirez, said that this year the government is granting 2.6% more
dollars to the private sector for imports than last year, when there
were fewer shortages.
"Parasitic capitalism is responding to its class nature. It is a chain
reaction directed by [Venezuelan business federations]...against the
country's economy to try and destroy the Bolivarian revolution, roll
back the inclusive model and [re]capture political power for the factors
that led this country for 100 years" argued Maduro.
Some economists and critics of the government have disputed this thesis,
arguing that current economic problems are due to imbalances caused by
interventionist policies such as currency and price controls. They
suggest that macroeconomic monetary and fiscal solutions are required.
Opponents of the Maduro presidency also blame "government mismanagement"
for failure to resolve the country's economic problems. "Maduro,
desperate because of his failure and incapacity to direct the country,
takes measures that don't solve the economic crisis," tweeted opposition
leader Henrique Capriles on Saturday.
Published on Nov 11th 2013 at 8.54pm
--
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