The Myth of the Bs.6.30 Dollar

Nothing’s as rojo rojito as the tape…

Here’s a ditty that came in from a reader who, for obvious reasons, would prefer we don’t name him. It gets at something people continually miss: in the real world, even CADIVI dollars cost way, way more than Bs.6.30.

Take it away, reader:

This is the candid testimony of a non-enchufado businessman who imports and sells retail merchandise through CADIVI. I want to make sure people actually grasp what it’s like to import under our perverse currency control system, because there are a lot of misconceptions out there.

People think we have it easy. Let me show you just how easy we have it.

It all starts long before you start to put together your carpetas. Just to register in RUSAD and gain the olympian privilege of submitting a request to CADIVI, you need to tick a long series of boxes. Needless to say, you need to register your company, which is not as straightforward as you might think. Then you need to gather slew of stamps and certificates: a labor “solvencia” showing you’re in compliance with a thicket of labor rules, the INCES certificate, RIF, your IVA solvencia, your ISLR solvencia, your Fondo de Ahorro Obligatorio para la Vivienda (?!) solvencia, your municipal tax solvencia, etc. etc. etc. By the time you get the last solvencia on your list, the first one has probably already expired: go back and get it again. 

For the masochists among you, this is the 24-page document explaining what you need to get on RUSAD. It includes crucial details like exactly how you may and may not bind the pages to the folder. Just so we’re clear, this isn’t what you need to do to get dollars, this is what you need to do to register to be able to ask for them. 

But say you’ve managed this marathon-to-the-starting-line: great! Hope you have some breath left, though, because this is where the real fun starts.

Assuming you want to import anything other than chemicals, fertilizers, live animals and some minerals, you must obtain a “Certificate of no –or insufficient– production” (CNP in the Cadivese) from the Ministry of Light Industry and Commerce (MILCO).

To score a CNP, you need to either be exceedingly lucky or hire a fixer, (a.k.a., a gestor). This will cost you anywhere from 0.30 to 10 Bs per US$ requested, depending on the product. The process takes from 2 to 3 months, and you bear the risk of being rejected at any time for any reason all on your lonesome.

In some cases, you may also need a SENCAMER certificate – don’t even ask – that’ll add another couple of months and 0.30 to 5 Bs per US$ to your tab.

We’re just getting going here. The next step is securing the Authorization to Acquire  Foreign Currency – AAD, in Cadivese. That one takes about a month. After this you are allowed to import under a set of very strict and always-changing CADIVI deadlines and requirements. Not complying with any of these can lead to your import being disapproved by MILCO and/or CADIVI, in which case you and your overseas provider won’t get paid.

By now, you’ve grasped that, as a business-owner, you’ll need to hire a number of people to handle all this paperwork. In SMEs you’re talking perhaps 10 people, in larger companies as many as 100, doing nothing but this stuff: all day, every day. Also, you better be ready to spend most of your time supervising every step of the process, as a misplaced coma can – and will – cost you hundreds of thousands of dollars.

Now the big day is here, and your import shipment has actually reached a Venezuelan port. Breathe. Every single time you try to get anything through custom control, there will be “issues”.

This means you have to bribe the officials (usually something between 0.50 to 2 Bs per US$). Of course, after this the unworthy-of-capital-letters national guards will also want their share (here we’re talking 0.50 to 5 Bs per US$). Occasionally you might also have to bribe the CADIVI official at customs (maybe 0.30 to 2 Bs per US$).

So you’ve done all that, and now you have your actual stuff: fantastic! Now you’re done, right?

Silly you.

Remember at this point CADIVI hasn’t actually disbursed any dollars yet. In the best case scenario, that’ll take another year. Since no foreign supplier is willing to wait that long you have a choice.

You can (1) hire a very expensive fixer (5 to 20 Bs per US$) to speed it up or (2) buy dollars in the black market to pay the international provider, in the understanding that he’ll remit you the dollars CADIVI hands him back to you, when they do come. Both options are risky: there are any number of fake, swindling “gestores” pullulating around CADIVI, and  the black market route could end up with the provider running off with both your dollars and the ones CADIVI pays him, or, worse, with you rotting in jail for ilícitos cambiarios.

So, how do businesses cover themselves against such large risks/costs? Basically, everyone asks their foreign partners to pump up some of the prices and/or put made up fees/charges on the invoice, as a way to get obtain extra dollars. Of course, you can also sell the products using the parallel rate as reference (good luck with that.)

The time it takes from processing the CNP to the final disbursement from CADIVI can be anywhere from 15 to 24 stressful months, at a cost that could be anywhere between Bs.7 (if you’re totally zanahoria, very patient and unfathomably lucky) and Bs.30 per greenback. How long and how much it will be in the end is up to the stars.

You might want to read your horoscope, that’s my advice.

That, at any rate, was the system as it existed until last week, when President Maduro had one look at the CADIVI behemoth and decided that what it really needed to overcome its deficiencies was…two more layers of bureaucracy.

¡En serio!