Venezuela: Some multinational companies undeterred by political, economic turmoil

By Industries FOXBusiness

Venezuela's President Nicolas Maduro speaks during a meeting with ministers at Miraflores Palace in Caracas, Venezuela December 17, 2016. Miraflores Palace/Handout via REUTERS (Copyright Reuters 2016)

Despite massive social and political unrest preceding a controversial election on Sunday in Venezuela, orchestrated by President Nicolas Maduro, some multinational companies are not shaken by the turmoil—or the economic instability.

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Leading up to a referendum to elect a National Constituent Assembly—which will have the authority to rewrite the country’s constitution—Venezuela has banned demonstrations through the weekend after the death toll over the course of four months’ worth of protests surpassed 100 on Thursday, according to the Associated Press.

Still, some international companies are not ready to cease operations in the embattled South American country.

“We continue to closely monitor the situation in Venezuela. Despite the challenging environment and scarcity of raw materials in the country, all our plants in the market continue to produce our brands and products for consumers. We remain focused on maintaining our operations in the market, where we have proudly operated for more than 85 years,” a spokesperson for Mondelez International (MDLZ) told FOX Business.

To dilute the impact of Venezuela’s economic challenges on its earnings, in February 2016 Mondelez announced it would no longer include net revenues, earnings or net assets of its Venezuelan subsidiaries within its consolidated financial statements.

Venezuela is experiencing its worst economic crisis in history. Inflation is expected to jump 720 percent and unemployment to reach 28 percent this year, according to a report by the International Monetary Fund. Despite sitting on top of the world’s largest proven oil reserves, the Venezuelan economy shrank by more than 18 percent in 2016.

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But Mondelez isn’t alone in its decision to maintain operations in Venezuela. Fiat-Chrysler (FCAU) said it hopes its regional production will help the country’s auto sector rebound.

“FCA is maintaining its production plans in Venezuela in support of efforts to rebuild the country’s automotive sector,” the company said in a statement.

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Even though the Venezuelan government seized control of a General Motors (GM) plant in the country in April, forcing the automaker to pull the plug on its operations there, fellow automaker Toyota Motors (TM) also said it has no plans to exit the country.

“Our operations in Venezuela have not been affected so far. Our team members, dealers and customers remain our top priorities, and we are monitoring the situation closely,” Toyota said in a statement.

Meanwhile, the Trump administration has said it will target Venezuela’s finances if the Maduro administration follows through with Sunday’s election.

“The Venezuelan people again made clear that they stand for democracy, freedom, and rule of law,” President Trump said last week. “If the Maduro regime imposes its Constituent Assembly on July 30, the United States will take strong and swift economic actions.”

Earlier this week the United States sanctioned 13 current or former senior officials in Venezuela, who are suspected of human rights abuses, suppressing democracy and corruption. President Trump has said he would weigh additional sanctions against individuals who are elected to the National Constituent Assembly, as well as other punitive measures.

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