Venezuela: Gov't to impose profit limit, more than 100 businesspeople jailed for speculation
The Venezuelan government is planning to implement profit limits across the economy as part of a crackdown on overpricing, Venezuela Analysis said on November 18.
The plan is in response to revelations of mass price speculation by retailers earlier this month. Some companies were found to be taking advantage of cheap imports at the government’s official exchange rate, then marking up prices and making profits of more than 1000%.
On November 17, Vice-President Jorge Arreaza said that a deadline would be announced by which retailers must adjust their prices “in line with reality and fairness”.
President Nicolas Maduro has suggested such profit limits would be around 15% - 30%, which he said would make profit margins similar to other Latin American countries such as Argentina and Chile.
A new register of small and medium companies is also being designed in order to monitor these companies’ supply costs and maintain “fair costs” along the production chain. A national fund will support companies that respect the new price limits.
A crackdown against overpricing is underway this month. Consumer agency officials and the National Guard have forced electronics and other retailers to lower prices judged as speculative and sell their stock to the public.
Due to inspections and agreements reached with industry sectors, since the start of this “economic offensive” retailers of electronic appliances, auto parts, toys, clothes and hardware have reportedly lowered prices from between 30% – 70%.
On November 15, Maduro said more than 100 businesspeople had been arrested for usury and price speculation, and 1400 shops had been inspected. Inspections continued in big name stores like Traki, EPA and General Import on November 17.
“The discount margins are a protection measure so that a fair price exists for the consumer and a fair profit for the retailer,” said Luis Dominguez, a government development minister, during an inspection that day.
The crackdown is part of the government’s response to what it says is an “economic war” being waged against it by business federations aligned with the conservative opposition. Officials say such groups hoard products and speculate on prices to create shortages and drive inflation.
The country is experiencing a tenfold gap between the official and black market dollar price, annual inflation of 54%, and shortages of some food and household products.
Maduro vowed to continue course against the “economic war”.
“I congratulate everyone; vice president, ministers, high military command and the entire people, for the success of the economic offensive. Down go prices,” he wrote on twitter on November 17.
[Abridged from Venezuela Analysis.]