HomeReportsBureau of Economic and Business Affairs2022 Investment Climate Statements…Bolivia

# 					2022 Investment Climate Statements: Bolivia			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2.   Bilateral Investment Agreements and Taxation Treaties    
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Anti-Trust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics    
                -  14. Contact for More Information   

## Executive Summary

In general, Bolivia is open to foreign direct investment (FDI).  In 2021, gross FDI flows received reached USD 440 million, higher than in 2020 when Bolivia registered a significant divestment of USD 1,018 million. FDI flows were greatest in the sectors of hydrocarbons, manufacturing, industry, and commerce, together representing over 80 percent of the total. Additional sectors receiving some FDI included the transport sector, storage and communications, insurance companies, and real estate services.

The year 2021 was economically characterized as a rebound after the effects of the COVID-19 pandemic in 2020, in which Gross Domestic Product (GDP) fell by 8.9 percent, the largest contraction in over 50 years. The leading sectors were mining, construction, and transport, registering double digit growth rates. International financial institutions estimated GDP growth between 5-5.5 percent for 2021. Bolivia was the fastest growing economy in the continent from 2014-2016 and in the top three until the start of the pandemic.

Bolivia abrogated the Bilateral Investment Treaties (BIT) it had with the United States and several other countries in 2012.  The Bolivian government claimed the abrogation was necessary for Bolivia to comply with the 2009 Constitution.  Companies that invested under the U.S. – Bolivia BIT will be covered by its terms until June 10, 2022, but investments made after June 10, 2012, are not covered.

Notwithstanding the uncertain political situation, Bolivia’s investment climate has remained relatively steady over the past several years.  Lack of legal security, corruption allegations, and unclear investment incentives are all impediments to investment in Bolivia.  There is no significant FDI from the United States in Bolivia, and there are no initiatives designed to encourage U.S. investment specifically.  Bolivia’s current macroeconomic stability, abundant natural resources, and strategic location in the heart of South America make it a prospective country for investment.

During the COVID-19 pandemic, the Bolivian government took several economic measures to support families, such as authorizing postponement in the payment of basic services (water, electricity, natural gas, telecommunications) and credit payment deferral for the private sector. These measures ended in 2021.

Bolivia’s Mother Earth Law stipulates climate change mitigation and adaptation. Bolivia last updated its Nationally Determined Contributions (NDC) for implementing the Paris Agreement in 2015. Bolivia does not have any regulatory “green” incentives for investment.

In 2021, the investment rate as a percentage of GDP (18 percent) was in line with regional averages.  There has also been a shift from private to public investment.  In recent years, private investment was particularly low because of the deterioration of the business environment.  From 2006 to 2021, private investment, including local and foreign investment, averaged 7 percent of GDP.  During the same period, public investment grew significantly, reaching an annual average of 12 percent of GDP.

FDI is highly concentrated in natural resources, especially hydrocarbons and mining, which account for nearly two-thirds of FDI in Bolivia.  Since 2006, the net flow of FDI averaged 1.6 percent of GDP.  Before 2006, it averaged around 6.7 percent of GDP.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Towards Foreign Direct Investment

In general, Bolivia remains open to FDI.  The 2014 Investment Law guarantees equal treatment for national and foreign firms. However, it also stipulates that public investment has priority over private investment (both national and foreign) and that the Bolivian government will determine which sectors require private investment.

Bolivia abrogated the BIT it signed with the United States in 2012.  The government under former president Evo Morales claimed the abrogation was necessary for Bolivia to comply with the 2009 Constitution.  Companies that invested under the U.S.–Bolivia BIT will be covered under its terms until June 10, 2022, but investments made after June 10, 2012, are not covered.

Pursuant to Article 320 of the 2009 Constitution, Bolivia no longer recognizes international arbitration forums for disputes involving the government.  The parties also cannot settle the dispute in an international court.

Specifically, Article 320 of the Bolivian Constitution states:

- Bolivian investment takes priority over foreign investment.
- Every foreign investment will be subject to Bolivian jurisdiction, laws, and authorities, and no one may invoke a situation for exception, nor appeal to diplomatic claims to obtain more favorable treatment.
- Economic relations with foreign states or enterprises shall be conducted under conditions of independence, mutual respect, and equity.  More favorable conditions may not be granted to foreign states or enterprises than those established for Bolivians.
- The state makes all decisions on internal economic policy and will not accept demands or conditions imposed on this policy by states, banks or Bolivian/foreign financial institutions, multilateral entities, or transnational enterprises.
- Public policies will promote internal consumption of products made in Bolivia.

Article 262 of the Constitution states:

“The fifty kilometers from the border constitute the zone of border security.  No foreign person, individual, or company may acquire property in this space, directly or indirectly, nor possess any property right in the waters, soil or subsoil, except in the case of state necessity declared by express law approved by two-thirds of the Plurinational Legislative Assembly.  The property or the possession affected in case of non-compliance with this prohibition will pass to the benefit of the state, without any indemnity.”

The judicial system faces a huge backlog of cases, limited staffing, scarce resources. It is also believed to be influenced by political actors.  Swift resolution of cases, either initiated by investors or against them, is unlikely.  The Marcelo Quiroga Anti-Corruption law of 2010 makes companies and their signatories criminally liable for breach of contract with the government, and the law can be applied retroactively.  Authorities can use this threat of criminal prosecution to force settlement of disputes.  Commercial disputes can often lead to criminal charges, and cases are often processed slowly.  See our Human Rights Report as background on the judicial system, labor rights, and other important issues.

Article 129 of the Bolivian Arbitration Law No. 708, established that all controversies and disputes that arise regarding investment in Bolivia will have to be addressed inside Bolivia under Bolivian laws.  Consequently, international arbitration is not allowed for disputes involving the Bolivian government or state-owned enterprises (SOEs).

Bolivia does not have an investment promotion agency to facilitate foreign investment.

### Limits on Foreign Control and Right to Private Ownership and Establishment

There is a right for foreign and domestic private entities to establish and own business enterprises and engage in remunerative activity.

Investors may judge that preferential treatment is being given to their Bolivian competitors, for example, in key sectors where private companies compete with state-owned enterprises.  Additionally, foreign investment is not allowed in matters relating directly to national security.

The Constitution specifies that all hydrocarbon resources are the property of the Bolivian people and that the state will assume control over their exploration, exploitation, industrialization, transport, and marketing (Articles 348 and 351).  Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) is an SOE that manages hydrocarbons transport and sales and is responsible for ensuring that the domestic market demand is satisfied at prices set by the hydrocarbons regulator before allowing any hydrocarbon exports.  YPFB benefitted from government action in 2006 that required operators to turn over their production to YPFB and to sign new contracts that gave YPFB control over the distribution of gasoline, diesel, and liquid petroleum gas (LPG) to gas stations.  The law allows YPFB to enter joint venture contracts with national or foreign individuals, and with companies wishing to exploit/trade hydrocarbons or their derivatives.  For companies working in the industry, contracts are negotiated on a service-contract basis, and there are no restrictions on ownership percentages of the companies providing the services.

The Constitution (Article 366) specifies that every foreign enterprise that conducts activities in the hydrocarbons production chain will submit to the sovereignty of the state, and to the laws and authority of the state.  No foreign court case or foreign jurisdiction will be recognized, and foreign investors may not invoke any exceptional situation for international arbitration, nor appeal to diplomatic claims.

According to the Constitution, no concessions or contracts may transfer the ownership of natural resources or other strategic industries to private interests.  Instead, temporary authorizations to use these resources may be requested at the pertinent ministry (mining, water and environment, public works, etc.).  The Bolivian government needs to renegotiate commercial agreements related to forestry, mining, telecommunications, electricity, and water services, to comply with these regulations.

The Telecommunications, Technology and Communications General Law from 2012 (Law 164, Article 28) stipulates that the licenses for radio broadcasts will not be given to foreign persons or entities.  Further, in the case of broadcasting associations, the share of foreign investors cannot exceed 25 percent of the total investment, except in those cases approved by the state or by international treaties.

The Central Bank of Bolivia is responsible for registering all foreign investments.  According to the 2014 Investment Law, any investment will be monitored by the relevant ministry for each sector.  Each Ministry assesses industry compliance with the incentive objectives.  To date, only the Ministry of Hydrocarbons and Energy proposed incentives that were enacted by Congress to incentivize the exploration and production of hydrocarbons.

### Other Investment Policy Reviews

Bolivia underwent a World Trade Organization (WTO) trade policy review in 2017.  In his concluding remarks, the WTO Chair noted several WTO members raised challenges impacting investor confidence in Bolivia, due primarily to Bolivia’s abrogation of 22 BITs following the passage of its 2009 constitution.  However, some WTO members also commended Bolivia for enacting a new investment promotion law in 2014 and a law on conciliation and arbitration, both of which increased legal certainty for investors, according to those members.

### Business Facilitation

As of April 2022, the functions of FUNDEMPRESA, which used to register and certify new businesses, were turned over to the Servicio Plurinacional de Registro de Comercio (SEPREC). SEPREC is a public entity overseen by the Ministry of Productive Development and Plural Economy.

The steps to register a business are: (1) register and receive a certificate from SEPREC; (2) register with the Bolivian Internal Revenue Service (Servicio de Impuestos Nacionales) and receive a tax identification number; (3) register and receive authorization to operate from the municipal government in which the company will be established; (4) if the company has employees, it must register with the national health insurance service and the national retirement pension agency in order to contribute on the employees’ behalf; and (5) register with the Ministry of Labor (if the company has employees).  The process takes about 30 days from start to finish.  All steps are required, and there is no simplified business creation regime. A user can download the required forms from the website and fill them out online but then must either mail or deliver the completed forms to the relevant offices. The forms ask for a national identification card, but foreign users can enter their passport numbers instead.  The registration process takes between 2-4 working days after all requirements are submitted.

Bolivia does not have a national investment screening mechanism.

### Outward Investment

The Bolivian government does not promote or incentivize outward investment.  Nor does the government restrict domestic investors from investing abroad.

							2.   Bilateral Investment Agreements and Taxation Treaties 					

Bolivia abrogated the BIT it signed with the United States and 22 other countries. The BIT with Bolivia was the first to be terminated by a U.S. treaty partner.  In October 2007, Bolivia became the first country to withdraw from the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).  Bolivia does not have a bilateral taxation treaty with the U.S.  Bolivia has various agreements with other countries aimed at avoiding double taxation, including: Argentina, France, Germany, Spain, Sweden, the United Kingdom, and Andean Community countries.

Bolivia is not a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting.

							3. Legal Regime					

### Transparency of the Regulatory System

Bolivia has no laws or policies that directly foster competition on a non-discriminatory basis.  However, Article 66 of the Commercial Code (Law 14379, 1977) states that unfair competition, such as maintaining an import, production, or distribution monopoly, should be penalized according to criminal law.  There are no informal regulatory processes managed by nongovernmental organizations or private sector associations. Regulatory authority regarding investment exists solely at the national level in Bolivia.  There are no subnational regulatory procedures.

The Commercial Code requires that all companies keep adequate accounting records and legal records for transparency.  However, there is a large informal sector that does not follow these practices.  Most accounting regulations follow international principles, but the regulations do not always conform to international standards.  Large private companies and some government institutions, such as the Central Bank and the Banking Supervision Authority, have transparent and consistent accounting systems.

Formal bureaucratic procedures have been reported to be lengthy, difficult to manage and navigate, and sometimes debilitating.  Many firms complain that a lack of administrative infrastructure, corruption, and political motives impede their ability to perform. The one exception has been when registering a new company in Bolivia.

There is no established public comment process allowing social, political, and economic interests to provide advice and comment on new laws and decrees.  However, the government generally — but not always — discusses proposed laws with the relevant sector.  The lack of laws to implement the 2009 Constitution creates legal discrepancies between constitutional guarantees and the dated policies currently enforced, and thus an uncertain investment climate.

Online regulatory disclosures by the Bolivian government can be found in the Official Gazette ( ****http://www.gacetaoficialdebolivia.gob.bo/****).

Supreme Decree 71 in 2009 created a Business Auditing Authority (AEMP), which is tasked with regulating the business activities of public, private, mixed, or cooperative entities across all business sectors.  AEMP’s decisions are legally reviewable through appeal.  However, should an entity wish to file a second appeal, the ultimate decision-making responsibility rests with the Bolivian government ministry with jurisdiction over the economic sector in question.  This has led to a perception that enforcement mechanisms are neither transparent nor independent.

Environmental regulations can slow projects due to the constitutional requirement of “prior consultation” for any projects that could affect local and indigenous communities.  This has affected projects related to the exploitation of natural resources, both renewable and nonrenewable, as well as public works projects.  Issuance of environmental licenses has been slow and subject to political influence and corruption.

In 2010, the new pension fund was enacted increasing companies’ contributions from 1.71 percent of payroll to 4.71 percent.

### International Regulatory Considerations

Bolivia is a full member of the Andean Community of Nations (CAN), which includes Colombia, Ecuador, and Peru.  Bolivia is also in the process of joining the Southern Common Market (MERCOSUR) as a full (rather than associate) member.  The CAN’s norms are considered supranational in character and have automatic application in the regional economic block’s member countries.  The government does notify the WTO Committee on Technical Barriers to Trade regarding draft technical regulations.

### Legal System and Judicial Independence

Property and contractual rights are enforced in Bolivian courts under a civil law system, but some have complained that the legal process is time consuming and has been subject to political influence and corruption.  Although many of its provisions have been modified and supplanted by more specific legislation, Bolivia’s Commercial Code continues to provide general guidance for commercial activities.  The constitution has precedence over international law and treaties (Article 410) and stipulates that the state will be directly involved in resolving conflicts between employers and employees (Article 50).  Corruption within the judiciary is pervasive.  Regulatory and enforcement actions are appealable.

### Laws and Regulations on Foreign Direct Investment

No major laws, regulations, or judicial decisions impacting foreign investment came out in the past year.  There is no primary, central point-of-contact for investment that provides all the relevant information to investors.

### Competition and Anti-Trust Laws

Bolivia does not have a competition law, but cases related to unfair competition can be presented to AEMP.  Article 314 of the 2009 Constitution prohibits private monopolies.  Based on this article, in 2009 the Bolivian government created an office to supervise and control private companies (****http://www.autoridadempresas.gob.bo/). Among its most important goals are:

- regulating, promoting, and protecting free competition.
- trade relations between traders; implementing control mechanisms, social projects, and voluntary corporate responsibility.
- corporate restructuring, supervising, verifying, and monitoring companies with economic activities in the country in the field of commercial registration and seeking compliance with legal and financial development of its activities.
- qualifying institutional management efficiency, timeliness, transparency, and social commitment to contribute to the achievement of corporate goals.

### Expropriation and Compensation

The Bolivian Constitution allows the central government or local governments to expropriate property for the public good or when the property does not fulfill a “social purpose” (Article 57).  In the case of land, “Economic Social Purpose” (known as FES in Spanish) is understood as “sustainable land use to develop productive activities, according to its best use capacity, for the benefit of society, the collective interest and its owner.”  The Bolivian government has no official definition of “collective interest” and makes decisions on a case-by-case basis.  Noncompliance with the social function of land, tax evasion, or the holding of large acreage is cause for reversion, at which point the land passes to “the Bolivian people” (Article 401).  In cases where the expropriation of land is deemed a necessity of the state or for the public good, just indemnification is required by law. However, in cases where there is non-compliance in fulfilling this “Economic Social Purpose,” the Bolivian government is not required to pay for the land and the land title reverts to the state.

The Constitution also gives workers the right to reactivate and reorganize companies that are in the process of bankruptcy, insolvency, or liquidation, or those closed in an unjust manner, into employee-owned cooperatives (Article 54).  The mining code of 1997 (last updated in 2007) and hydrocarbons law of 2005 both outline procedures for expropriating land to develop underlying concessions.

The Bolivian government between 2006 and 2014, nationalized companies in the hydrocarbons sector, most of the electricity sector, some mining companies (including mines and a tin smelting plant), and a cement plant.  To do so, the government forced private entities to sell shares to the government, often at below market prices.  Some of the affected companies have cases pending with international arbitration bodies.  All outsourcing, private contracts were canceled and assigned to public companies (such as airport administration and water provision).

Countries affected included the United States, France, the United Kingdom, Spain, Argentina, and Chile.  Bolivian governments have previously nationalized private interests to appease social groups protesting.

### Dispute Settlement

#### ICSID Convention and New York Convention

In November 2007, Bolivia became the first country to withdraw from the ICSID.  In August 2010, the Bolivian Minister of Legal Defense of the State said the Bolivian government would not accept ICSID rulings in the cases brought against them by the Chilean company Quiborax and Italian company Euro Telcom.  However, the Bolivian government agreed to pay USD 100 million to Euro Telecom for its nationalization; this agreement was ratified by Supreme Decree 692 on November 3, 2010.  In 2014, a British company that owned the biggest electric generation plant in Bolivia (Rurelec) won a Permanent Court of Arbitration case against Bolivia for USD 28.9 million.  In 2014, an Indian company also won a USD 22.5 million international arbitration award in a dispute over the development of an iron ore project, but the Bolivian government appealed that award.

In another case, a Canadian mining company with significant U.S. interests failed to complete an investment required by its contract with the state-owned mining company.  The Canadian company asserted it could not complete the project because the state mining company did not deliver the required property rights.  The Canadian company entered into national arbitration (their contract does not allow for international arbitration) and in January 2011, the parties announced a settlement of USD 750,000, which the Canadian company says will be used to pay taxes, employee benefits, and pending debts — essentially leaving it without compensation for the USD 5 million investment it made.  It also retained responsibility for future liabilities.

#### Investor-State Dispute Settlement

Conflicting Bolivian law has made international arbitration in some cases effectively impossible.  Previous investment contracts between the Bolivian government and international companies granted the right to pursue international arbitration in all sectors and stated that international agreements, such as the ICSID and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, must be honored.  However, the government claims these rights conflict with the 2009 Constitution (Articles 320 and 366), which states international arbitration is not recognized in any case and cannot proceed under any diplomatic claim, and specifically limits foreign companies’ access to international arbitration in the case of conflicts with the government.  The 2009 Constitution also states that all bilateral investment treaties must be renegotiated to incorporate relevant provisions of the new constitution.  The Investment Law of 2014 was enacted in late 2015.  Under the 2015 Arbitration Law (Law 708), international arbitration is not permitted when the dispute is against the government or an SOE.

In 2014, former president Morales announced there would be no more nationalizations.

#### International Commercial Arbitration and Foreign Courts

Two Bolivian institutions have arbitration bodies: the National Chamber of Commerce (CNC) and the Chamber of Industry and Commerce of Santa Cruz (CAINCO).  To utilize these domestic arbitration bodies, private parties must include arbitration within their contracts.  Depending on the contract between the parties, the United Nations Commission on International Trade Law (UNCITRAL) or Bolivia’s Arbitration Law (No. 708) may be used.  Local courts recognize and enforce foreign arbitral awards and judgments.  There are no statistics available regarding SOE involvement in investment disputes.

### Bankruptcy Regulations

The average time to complete bankruptcy procedures to close a business in Bolivia is 20 months.  The Bolivian Commercial Code includes (Article 1654) three different categories of bankruptcy:

- No Fault Bankruptcy – when the owner of the company is not directly responsible for its inability to pay its obligations.
- At-Fault Bankruptcy – when the owner is guilty or liable due to the lack of due diligence to avoid harm to the company.
- Bankruptcy due to Fraud – when the owner intentionally tries to cause harm to the company.

In general, the application of laws related to commercial disputes and bankruptcy has been perceived as inconsistent, and corruption charges are common.  Foreign creditors often have little redress beyond Bolivian courts, and judgments are generally more favorable to local claimants than international ones.  If a company declares bankruptcy, the company must pay employee benefits before other obligations.  Workers have broad-ranging rights to recover pay and benefits from foreign firms in bankruptcy, and criminal actions can be taken against individuals the Bolivian government deems responsible for failure to pay in these matters.

No credit bureaus or credit monitoring authorities serve the Bolivian market.

In 2018, the Bolivian government enacted a new law (No. 1055) called the Creation of Social Enterprises.  The law allows for employees of a company to assert ownership rights over companies under financial distress heading into bankruptcy.  Passage of the law was controversial, with numerous business chambers asserting that the law could incentivize employees and labor unions to undermine the performance of companies in order to force bankruptcy and gain control of company assets.

							4. Industrial Policies					

### Investment Incentives

To attract more investment, the government enacted an investment law in 2014 stating each Ministry will provide incentives for sector-specific investment.

Article 14 of the 2014 investment law requires technology transfer from foreign companies operating in Bolivia to Bolivian workers and institutions.  The law also specifies that Bolivians should work in operational, administrative, and executive offices of foreign companies.  Finally, Article 14 states companies investing in Bolivia should donate equipment and machinery to universities and technical schools in the same area as the investment, and conduct research activities that will find solutions that contribute to public welfare.

Article 21 of the investment law stipulates that the government can incentivize investment in certain sectors that contribute to the economic and social development of the country.

Law 767 from 2015 aims to promote investments in the exploration and exploitation of hydrocarbons.  However, many companies considered this regulation as skewed to production and insufficient to incentivize new exploration.  In 2016, Supreme Decree 2830 was issued, providing a 12 percent reduction in the payment of the direct tax on hydrocarbons and other incentives in order to better incentive exploration.

The Bolivian government does not offer business incentives for direct foreign investment. It also does not offer any direct green investment or clean energy incentives. There are opportunities to obtain such green incentives through private funding.

### Foreign Trade Zones/Free Ports/Trade Facilitation

In 2016, Supreme Decree 2779 was enacted, approving regulations for a new system of free trade zones in Bolivia.  The decree establishes a period of one year for existing free trade zones to transform into free industrial zones, which allow for industrial operations and assembly.  Free industrial zones exist in El Alto, Patacamaya, Oruro, Puerto Suarez, and Warnes.  Cobija is the only remaining free trade zone under this new system, with operations approved until 2038.  Concessions within free industrial zones last 15 years and are renewable.  The decree also eased customs procedures for goods entering the zones and established stronger government support for the promotion of productive investments in the zones. Bolivia does not have special economic zones.

### Performance and Data Localization Requirements

Bolivian labor law requires businesses to limit foreign employees to 15 percent of their total work force and requires foreign hires be technical staff.  These workers require a work visa that can be obtained in any Bolivian consulate, and in the case that they work for a Bolivian company, both the company and the workers should also contribute to the Bolivian Pension System (Pension Law Article 104.1)

Supreme Decree 27328 regulates national and local level government procurement, which give priority to national sourcing.  If an item required is not produced in Bolivia, buying decisions are made based on price.  Supreme Decree 28271 (Article 10), establishes the following preference margins for sourcing with Bolivian products:

Except for national tenders, 10 percent preference margin for Bolivian products regardless of the origin of materials.

For national public tenders, if the cost of Bolivian materials represents more than 50 percent of the total cost of the product, the producers receive a 10 percent preference margin over other sellers.

In national and international public tenders, if Bolivian inputs and labor represent more than the 50 percent of the total cost of the product, the seller receives a 25 percent preference margin over other sellers.  If the Bolivian inputs and labor represent between 30-50 percent of the total cost of the product, the seller receives a 15 percent preference margin over other sellers.

Under the Bolivian Criminal Code (Article 226), it is a crime to raise or lower the price of a product based on false information, interests, or actions.  For those caught doing so, punishment is six months to three years in prison.  It is also a crime to hoard or conceal products in order to raise prices.  The Bolivian government has applied these provisions in a number of cases, applying regulations that allow them to request accounting records and audit companies’ financial actions looking for evidence of speculation.

							5. Protection of Property Rights					

### Real Property

Property rights are legally protected and registered in the Real Estate Office, where titles or deeds are recorded, and mortgages/liens are registered.  The recording system is reliable, although there have been complaints regarding the amount of time required to register a property.

The Office of Property Registry oversees the acquisition and disposition of land, real estate, and mortgages.  Mortgages usually take no more than 60 days to obtain a standard loan.  However, challenges to land titles are common due to bureaucratic delays encountered while registering properties, especially in rural areas.  Competing claims to land titles and the absence of a reliable dispute resolution process create risk and uncertainty in real property acquisition.  Nevertheless, illegal occupation of rural private property is decreasing since the passage of Law 477 combatting land seizures.

The Bolivian Constitution grants citizens and foreigners the right to private property but stipulates that the property must serve a social or economic function.  If the government determines that a given property is not sufficiently useful (according to its own unclear criteria), the constitution allows the government to expropriate.  The agricultural sector has been most hard hit by this policy due to uncertainty from year-to-year about whether farmland would be productive.  In 2015, the government eliminated annual productivity inspections, reducing their frequency to every five years.  There are other laws that limit access to land, forest, water, and other natural resources by foreigners in Bolivia.

The constitution also grants formal, collective land titles to indigenous communities, to restore their former territories (Article 394.3), stating that public land will be granted to indigenous farmers, migrant indigenous communities, Afro-Bolivians, and small farmer communities that do not possess or who have insufficient land (Article 395).  Foreigners cannot acquire land from the Bolivian government (Article 396).  Under law 3545, passed in 2006, the government will not grant public lands to non-indigenous people or agriculture companies.  The Mother Earth Integral Development Law to Live Well (Mother Earth Law, or Law #300) passed in October 2012 specifies that the state controls access to natural resources, particularly when foreign use is involved.  In action, the law limits access to land, forest, water, and other natural resources by foreigners in Bolivia.

According to Bolivia’s Agrarian Reform Institute (INRA), approximately 25 percent of all land in Bolivia lacks clear title, and as a result, squatting is a problem.  In some cases, squatters can make a legal claim to the land.  While the Criminal Code criminalizes illegal occupation, the judicial system is slow and ineffective in its enforcement of the law.  Financial mechanisms are available for securitization of properties for lending purposes, although the threat of reversion for properties failing to fulfill a social function discourages the use of land as collateral.

### Intellectual Property Rights

The Bolivian Intellectual Property Service (SENAPI) leads the protection and enforcement of intellectual property rights (IPR) within Bolivia.  SENAPI maintains and regularly updates a complete set of IPR regulations currently in force within Bolivia.  The list is available on SENAPI’s website: https://www.senapi.gob.bo/normas. SENAPI also maintains an updated version of the services they provide, along with associated costs, at: https://www.senapi.gob.bo/propiedad-intelectual/tasas.

The existing copyright law recognizes copyright infringement as a public offense and the 2001 Bolivian Criminal Procedures Code provides for the criminal prosecution of IPR violations.  However, it is not common for prosecutors to file criminal charges, and civil suits, if pursued, face long delays.  Criminal penalties carry a maximum of five years in jail, and civil penalties are restricted to the recovery of direct economic damages.  SENAPI has established a conciliation process to solve IPR controversies to prevent parties from going to trial, which is now the most common procedure to solve these disputes.

Bolivia does not have an area of civil law specifically related to industrial property, but it has a century-old industrial privileges law still in force.  Bolivia is a signatory of the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).  SENAPI is aware of Bolivia’s obligations under the TRIPS Agreement, and it sets out the minimum standards of IPR protection in compliance with this agreement.  SENAPI sustains its position that Bolivia complies with the substantive obligations of the main conventions of the World Intellectual Property Organization (WIPO), the Paris Convention for the Protection of Industrial Property (Paris Convention), and the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) in their most recent versions.  According to SENAPI, Bolivia complies with WTO’s dispute settlement procedures in accordance with its TRIPS obligations.  However, Bolivia falls short on the implementation of domestic procedures and providing legal remedies for the enforcement of intellectual property rights.

Bolivia is a signatory country of the 1996 WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty; however, it did not ratify any of those treaties domestically.  Bolivia is not a member of the Madrid Protocol on Trademarks, the Hague Agreement Concerning the International Registration of Industrial Designs, or the Patent Law Treaty.

Bolivia is a signatory of Andean Community (CAN) Decision 486, which deals with industrial property and trade secrets and is legally binding in Bolivia.  Decision 486 states that each member country shall accord the Andean Community countries, the World Trade Organization, and the Paris Convention for the Protection of Industrial Property, treatment no less favorable than it accords to its own nationals regarding IPR protection.  Besides its international obligations, Bolivia has not passed any domestic laws protecting trade secrets.

CAN Decision 486 also enforces patent registrations in Bolivia. SENAPI reviews patent registrations for form and substance and publishes notices of proposed registrations in the Official Gazette.  If there are no objections within 30 working days, the organization grants patents for a period of 20 years.  The registration of trademarks parallels that of patents.  Once obtained, a trademark is valid for a 10-year renewable period.  It can be cancelled if not used within three years of the date of grant.

Law 1134, the “Bolivian Cinema and Audiovisual Arts Law” created a fund to promote Bolivian cinema by charging foreign movie distributors and exhibitors’ three percent of their total monthly revenue.   Article 27 of the law strengthens IPR protections for visual works and allows Bolivian Customs to pursue criminal prosecution, but it is unlikely that foreign works would be protected in practice.

Bolivian Customs lacks the human and financial resources needed to intercept counterfeit goods shipments at international borders effectively.  Customs authorities act only when industries trying to protect their brands file complaints.  Moreover, the informal sector has a sense of unregulated capitalism regarding the sale of counterfeit goods.  Many importers believe the payment of customs fees will “legalize” the sale of counterfeit products.   Sellers either do not know about or consider IPR, particularly in the textile, electrical appliances, and entertainment markets.  Large quantities of counterfeit electrical appliances imported from China bearing well-known and clearly non-original brands are available for purchase in local markets.  There is also a flourishing market of textile products made in Bolivia and marketed using counterfeit labels of major U.S. brands.  While most counterfeit items come with the illegal brand already attached, brands and logos are available for purchase on the street and can easily be affixed to goods.

Although court actions against IPR infringements are infrequent, there have been some significant cases.  The Industrial Property Director at SENAPI reported that the number of indictments related to counterfeit products increased steadily over the years.  According to SENAPI, this does not necessarily represent an increase in the total volume of counterfeit products.  Rather, the increase in indictments is due to SENAPI’s emphasis on enforcement efforts and the public’s greater awareness of IPR rights.  Because of publicly reported problems of counterfeit COVID-19 medicines in 2020 and 2021, the Bolivian Police task force launched several raids to counter groups of counterfeit medicine smugglers. These groups reportedly smuggled products from Peru, Paraguay, and Brazil.

Bolivia is listed on the Watch List of the U.S. Trade Representative’s 2022 Special 301 Report and is not named in its 2021 Review of Notorious Market for Counterfeiting and Piracy.

****For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at ****http://www.wipo.int/directory/en/

							6. Financial Sector					

The government’s general attitude toward foreign portfolio investment is neutral.  Established Bolivian firms may issue short or medium-term debt in local capital markets, which act primarily as secondary markets for fixed-return securities.  Bolivian capital markets have sought to expand their handling of local corporate bond issues and equity instruments.  Over the last few years, several Bolivian companies and some foreign firms have been able to raise funds through local capital markets.  However, the stock exchange is small and is highly concentrated in bonds and debt instruments (more than 95 percent of transactions).  The number of total transactions in 2021 was around 28 percent of GDP.

From 2008-2019, the financial markets experienced high liquidity, which led to historically low interest rates.  However, liquidity has been more limited in recent years, and there are some pressures to increase interest rates.  The Bolivian financial system is not well integrated with the international system and there is only one foreign bank among the top ten banks of Bolivia.

In October 2012, Bolivia returned to global credit markets for the first time in nearly a century.  In 2017, Bolivia sold USD 1 billion at 4.5 percent for ten years, with U.S. financial institutions managing the deal.  The resources gained from the sales were largely used to finance infrastructure projects. A sovereign bond issuance of up to $2 billion was approved by the National Assembly for 2022 but had not yet occurred as of April 2022. The Bolivian government’s attempt to refinance $2 billion in sovereign debt in February 2022 fell short, with only $850 million sold. The government had also hoped the new issuance would be for a 10-year term but had to settle for eight years (a 2030 maturity) for all the resold bonds. The interest rate for the new bonds is 7.5%, compared to interest rates of approximately 5% for the original bonds.

The government and central bank respect their obligations under IMF Article VIII, as the exchange system is free of restrictions on payments and transfers for international transactions.

Foreign investors legally established in Bolivia can get credits on the local market.  However, due to the size of the market, large credits are rare and may require operations involving several banks.  Credit access through other financial instruments is limited to bond issuances in the capital market.  The 2013 Financial Services Law directs credit towards the productive sectors and caps interest rates.

### Money and Banking System

The Bolivian banking system is small, composed of 16 consumer banks, six banks specialized in mortgage lending, three private financial funds, 30 savings and credit cooperatives, and eight institutions specialized in microcredit.  Of the total number of personal deposits made in Bolivia through December 2021 (USD 30 billion), the banking sector accounted for 80 percent of the total financial system.  Similarly, of the total loans and credits made to private individuals (USD 29 billion) through December 2021, 80 percent were made by the banking sector, while private financial funds and the savings and credit cooperatives accounted for the other 20 percent.

Bolivian banks have developed the capacity to adjudicate credit risk and evaluate expected rates of return in line with international norms.  The banking sector was stable and healthy with delinquency rates at 1.6 percent in 2021. In 2021, delinquency rates rose after the government permitted clients to defer bank loan payments until June 2021 and to reprogram their debt through 2022 without penalty as a mitigating measure for the COVID-19 pandemic. While delinquency rates remain relatively low, there are concerns this measure could potentially harm the banking sector’s stability.

In 2013, a new Financial Services Law entered into force.  This new law enacted major changes to the banking sector, including deposit rate floors and lending rate ceilings, mandatory lending allocations to certain sectors of the economy and an upgrade of banks’ solvency requirements in line with the international Basel standards.  The law also requires banks to spend more on improving consumer protection, as well as providing increased access to financing in rural parts of the country.

Credit is now allocated on government-established rates for productive activities, but foreign investors may find it difficult to qualify for loans from local banks due to the requirement that domestic loans be issued exclusively against domestic collateral.  Since commercial credit is generally extended on a short-term basis, most foreign investors prefer to obtain credit abroad.  Most Bolivian borrowers are small- and medium-sized enterprises (SMEs).

In 2007, the government created a Productive Development Bank to boost the production of small, medium-sized, and family-run businesses.  The bank was created to provide loans to credit institutions which meet specific development conditions and goals, for example by giving out loans to farmers, small businesses, and other development focused investors.  The loans are long term and have lower interest rates than private banks can offer to allow for growth of investments and poverty reduction.

In September 2010, the Bolivian government bought the local private bank Banco Union as part of a plan to gain partial control of the financial sector.  Banco Union is one of the largest banks, with a share of 10.8 percent of total national credits and 12.7 percent of the total deposits; one of its principal activities is managing public sector accounts.  Bolivian government ownership of Banco Union was illegal until December 2012, when the government enacted the State Bank Law, allowing for state participation in the banking sector.

There is no strong evidence of “cross-shareholding” and “stable-shareholding” arrangements used by private firms to restrict foreign investment, and the 2009 Constitution forbids monopolies and supports antitrust measures.  In addition, there is no evidence of hostile takeovers (other than government nationalizations that took place from 2006-14).

The financial sector is regulated by ASFI (Supervising Authority of Financial Institutions), a decentralized institution that is under the Ministry of Economy.  The Central Bank of Bolivia (BCB) oversees all financial institutions, provides liquidity when necessary, and acts as lender of last resort.  The BCB is the only monetary authority and oversees managing the payment system, international reserves, and the exchange rate.

Foreigners can establish bank accounts only with residency status in Bolivia.

Blockchain technologies in Bolivia are still in the early stages.  Currently, the banking sector is analyzing blockchain technologies and the sector intends to propose a regulatory framework in coordination with ASFI in the future.

Three different settlement mechanisms are available in Bolivia: (1) the high-value payment system administered by the Central Bank for inter-bank operations; (2) a system of low value payments utilizing checks and credit and debit cards administered by the local association of private banks (ASOBAN); and (3) the deferred settlement payment system designed for small financial institutions such as credit cooperatives.  This mechanism is also administered by the Central Bank.

### Foreign Exchange and Remittances

#### Foreign Exchange

The Banking Law (#393, 2013) establishes regulations for foreign currency hedging and authorizes banks to maintain accounts in foreign currencies.  A significant, but dropping, percentage of deposits are denominated in U.S. dollars (currently less than 14 percent of total deposits).  Bolivian law currently allows repatriation of profits, with a 12.5 percent withholding tax.  However, a provision of the 2009 Constitution (Article 351.2) requires reinvestment within Bolivia of private profits from natural resources.  Until specific implementing legislation is passed, it is unclear how this provision will be applied.  In addition, all bank transfers in U.S. dollars within the financial system and leaving the country must pay a Financial Transaction Tax (ITF) of 2 percent.  This tax applies to foreign transactions for U.S. dollars leaving Bolivia, not to money transferred internally.

Any banking transaction above USD 10,000 (in one operation or over three consecutive days) requires a form stating the source of funds.  In addition, any hard currency cash transfer from or to Bolivia equal to or greater than USD 10,000 must be registered with the customs office. The maximum level of hard currency movements in and out of Bolivia must not exceed USD 20,000. Greater quantities must be transferred through financial system transactions.    The fine for underreporting any cash transaction is equal to 30 percent of the difference between the declared amount and the quantity of money found.  The reporting standard is international, but many private companies in Bolivia find the application cumbersome due to the government requirement for detailed transaction breakdowns rather than allowing for blanket transaction reporting.

Administrative Resolution 398/10 approved in June 2010 forces Bolivian banks to reduce their investments and/or assets outside the country to an amount that does not exceed 50 percent of the value of their net equity.

The Central Bank charges a fee for different kinds of international transactions related to banking and trade.  The current list of fees and the details can be found at: https://www.bcb.gob.bo/webdocs/01_resoluciones/RD%20146%202021.pdf

Law 843 on tax reform directly affects the transfer of all money to foreign countries.  All companies are charged 25 percent tax, except for banks which can be charged 37.5 percent, on profits under the Tax Reform Law. When a company sends money abroad, the presumption of the Bolivian Tax Authority is that 50 percent of all money transmitted is profit.  Under this presumption, the 25 percent tax is applied to half of all money transferred abroad, whether actual or only presumed profit.  In practical terms, it means there is a payment of 12.5 percent as a transfer tax.

Currency is freely convertible at Bolivian banks and exchange houses.  The Bolivian government describes its official exchange system as an “incomplete crawling peg.”  Under this system, the exchange rate is fixed, but undergoes micro-readjustments that are not pre-announced to the public.  There is a spread of 10 basis points between the exchange rate for buying and selling U.S. dollars.  The Boliviano (BOB) has remained fixed at BOB 6.96 /USD 1 for selling and BOB 6.86 /USD 1 for buying since October 2011.  The parallel rate closely tracks the official rate, suggesting the market finds the Central Bank’s policy acceptable.  To avoid distortions in the exchange rate market, the Central Bank requires all currency exchange to occur at the official rate ±1 basis point.

#### Remittance Policies

Each remittance transaction from Bolivia to other countries has a USD 2,500 limit per transaction, but there is no limit to the number of transactions that an individual can remit.  The volume of remittances sent to and from Bolivia has increased considerably in the past five years, and the central bank and banking regulator are currently analyzing whether to impose more regulations sometime in the future.  Foreign investors are theoretically able to remit through a legal parallel market utilizing convertible, negotiable instruments, but, in practice, the availability of these financial instruments is limited in Bolivia.  For example, the Bolivian government mainly issues bonds in Bolivianos and most corporate bonds are also issued in Bolivianos.

The official exchange rate between Bolivianos and dollars is the same as the informal rate.  The government allows account holders to maintain bank accounts in Bolivianos or dollars and make transfers freely between them.  Business travelers may bring up to USD 10,000 in cash into the country.  For amounts greater than USD 10,000, government permission is needed through sworn declaration.

### Sovereign Wealth Funds

Neither the Bolivian government nor any government-affiliated entity maintains a sovereign wealth fund.

							7. State-Owned Enterprises					

The Bolivian government has set up companies in sectors it considers strategic to the national interest and social well-being. It has also stated that it plans to do so in every sector it considers strategic or where there is either a monopoly or oligopoly.

The Bolivian government owns and operates more than 60 businesses, including energy and mining companies, a telecommunications company, a satellite company, a bank, a sugar factory, an airline, a packaging plant, paper and cardboard factories, and milk and Brazil nut processing factories, among others.  In 2005, income from SOEs in Bolivia other than gas exports represented only a fraction of a percent of GDP.  As of 2019, public sector contribution to GDP (including SOEs, investments, and consumption of goods and services) has risen to over 40 percent of GDP.

The largest SOEs can acquire credit from the Central Bank at very low interest rates and convenient terms.  Some private companies complain that it is impossible for them to compete with this financial subsidy.  Moreover, SOEs appear to benefit from easier access to licenses, supplies, materials, and land; however, there is no law specifically providing SOEs with preferential treatment in this regard.  In many cases, government entities are directed to do business with SOEs, placing other private companies and investors at a competitive disadvantage.

The government registered budget surpluses from 2006 until 2013 but began experiencing budget deficits in 2014. The 2009 Constitution requires all SOEs to publish an annual report and makes them subject to financial audits.  Additionally, SOEs are required to present an annual testimony in front of civil society and social movements, a practice known as social control.

### Privatization Program

There are currently no privatization programs in Bolivia.

							8. Responsible Business Conduct					

Bolivia has laws that regulate aspects related to corporate social responsibility (CSR) practices.   Both producers and consumers in Bolivia are generally aware of CSR, but consumer decisions are ultimately based on price and quality.  The Bolivian Constitution stipulates that economic activity cannot damage the collective good (Article 47).

Though Bolivia is not part of the OECD, it has participated in several Latin American Corporate Governance Roundtables since 2000.  Neither the Bolivian government nor its organizations use the OECD Guidelines for CSR.  Instead, Bolivian companies and organizations are focused on trying to accomplish the UN’s Millennium Development Goals, and they use the Global Reporting Initiative (GRI) methodology in order to show economic, social and environmental results.  While the Bolivian government, private companies, and non-profits are focused on the UN’s Millennium Development Goals, only a few private companies and NGOs focus on following the UN standard ISO 26000 guidelines and methodologies.  Another methodology widely accepted in Bolivia is the one developed by the ETHOS Institute, which provides measurable indicators accepted by PLARSE (Programa Latinoamericano de Responsabilidad Social Corporativa), the Latin American Program for CSR. The Bolivian government issued a 2013 supreme decree that requires financial entities to allocate six percent of profits to CSR-related projects.

The 1942 General Labor Law is the basis for employment rights in Bolivia, but this law has been modified more than 2,000 times via 60 supreme decrees since 1942.  As a result of these modifications, the General Labor Law has become a complex web of regulations that is difficult to enforce or understand.  An example of the lack of enforcement is the Comprehensive System for Protection of the Disabled (Law 25689), which stipulates that at least four percent of the total work force in public institutions, SOEs, and private companies should be disabled.  Neither the public nor private sectors are close to fulfilling this requirement, and most buildings lack even basic access modifications to allow for disabled workers.

In support of consumer protection rights, the Vice Ministry of Defense of User and Consumer Rights was created in 2009 (Supreme Decree 29894) under the supervision of the Ministry of Justice (which became the Ministry of Justice and Transparency in 2017).  Also in 2009, the Consumer Protection Law (Supreme Decree 0065) was enacted, which gave the newly created Vice Ministry the authority to request information, verify, and follow up on consumer complaints.

The Mother Earth Law (Law 071) approved in October 2012 promotes CSR elements as part of its principles (Article 2), such as collective good, harmony, respect, and defense of rights.  The Ministry of Environment and Water oversees the implementation of this law, but the implementing regulations and new institutions needed to enforce this law are still incomplete. Although there are no specific claims regarding improper allocation of land or natural resources, indigenous communities do object to the government giving mine concessions in national parks and in areas where indigenous communities live, contaminating their water and destroying the environment.

Even though Bolivia promotes the development of CSR practices in its laws, the government gives no advantage to businesses that implement these practices.  Instead, businesses implement CSRs in order to gain the public support necessary to pass the prior consultation requirements or strengthen their support when mounting a legal defense against claims that they are not using land to fulfill a socially valuable purpose, as defined in the Community Land Reform laws (# 1775 and #3545).

In April 2009, the Bolivian government reorganized the supervisory agencies of the government (formerly “Superintendencias”) to include social groups, thus creating the “Authorities of Supervision and Social Control” (Supreme Decree 0071).  This authority controls and supervises the following sectors: telecommunications and transportation, water and sanitation, forests and land, pensions, electricity, and enterprises.  Each sector has an Authority of Supervision and Social Control assigned to its oversight, and each Authority has the right to audit the activities in the sectors and the right to request the public disclosure of information, ranging from financial disclosures to investigation of management decisions.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices ;
- Trafficking in Persons Report ;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ; and;
- Xinjiang Supply Chain Business Advisory 

Department of the Treasury

- OFAC Recent Actions

Department of Labor

- Findings on the Worst Forms of Child Labor Report ;
- List of Goods Produced by Child Labor or Forced Labor ;
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
- Comply Chain .

### Climate Issues

Under the Mother Earth Law, the Ministry of Environment and Water oversees climate change mitigation, with a Sub-Secretary of Climate Change. Bolivia’s Intended Nationally Determined Contributions (INDC) include increasing water, energy, forest, and agriculture capacities.

Specifically, Bolivia intends to increase renewable energy use to 81 percent by 2030. Bolivia does not have a fossil-fuel phase out policy. Bolivia does not have regulatory incentives to achieve policy outcomes that preserve biodiversity or other ecological benefits. Public procurement policies do not include environmental and green growth considerations.

							9. Corruption					

Bolivian law stipulates criminal penalties for corruption by officials, but the laws are not often implemented properly.  Governmental lack of transparency, and police and judicial corruption, remain significant problems.  The Ministry of Justice and Transparency and the Prosecutor’s Office are both responsible for combating corruption.  Cases involving allegations of corruption against the president and vice president require congressional approval before prosecutors may initiate legal proceedings, and cases against pro-government public officials are rarely allowed to proceed.  Despite the court ruling that awarding immunity for corruption charges is unconstitutional, their rulings were ignored by the government.

Police corruption remains a significant problem.  There are also reports of widespread corruption in the country’s judiciary.In August 2021, the Interdisciplinary Group of Independent Experts (GIEI), formed from an agreement between the Bolivian government and the Inter-American Commission on Human Rights, found that the Bolivian government needs to implement profound reforms in its justice system to guarantee that the judiciary and attorney general’s office are not used for political purposes by the government in power, to guarantee due process, and so that preventive detention is only used as a last resort in criminal proceedings.   The 2021 Transparency International corruption perception index ranked Bolivia 128 out of 180 countries and found that Bolivian citizens believe the most corrupt institutions in Bolivia are the judiciary, the police, and executive branch,

Bolivia has laws in place that govern public sector-related contracts (Law 1178 and Supreme Decree 181), including contracts for the acquisition of goods, services, and consulting jobs.  Bribery of public officials is also a criminal offense under Articles 145 and 158 of Bolivia’s Criminal Code.  Laws also exist that provide protection for citizens filing complaints against corruption.

Bolivia signed the UN Anticorruption Convention in December 2003 and ratified it in December 2005.  Bolivia is also party to the OAS Inter-American Convention against Corruption.  Bolivia is not a signatory of the OECD Convention on Combating Bribery of Foreign Public Officials.

### Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Vice Minister of Justice and the Fight Against CorruptionMinistry of JusticeCalle Capitan Ravelo 2101, La Paz+591-2-115773http://www.transparencia.gob.bo/

							10. Political and Security Environment					

Bolivia is prone to social unrest, which can include violence.  Given the country’s reliance on a few key thoroughfares, conflict often disrupts transportation and distribution networks.  Most civil disturbances are related to domestic issues, usually workers pressuring the government for concessions by marching or closing major transportation arteries.  Bolivia held peaceful and transparent elections in 2020 that gave a victory to Movement Towards Socialism (MAS) presidential candidate Luis Arce with over 55 percent of the vote. During his administration, political tensions in Bolivia have remained high, but there have been relatively few multi-day protests. While Bolivia has low levels of personal crime, with a homicide rate well below the regional average, there is a growing concern about increased criminality, especially a recent increase in femicides. Production of coca leaf is legal in Bolivia, and the country is a known source and transit country for cocaine and other illicit drugs that are mostly destined for Brazil and Europe but may also find their way to the United States.

							11. Labor Policies and Practices					

Approximately two-thirds of Bolivia’s population is considered “economically active.”  Between 60 and 80 percent of workers participate in the informal economy, where no contractual employer-employee relationship exists.  Relatively low education and literacy levels limit labor productivity, a fact reflected in wage rates.  Unskilled labor is readily available, but skilled workers are often harder to find.

The labor market experienced a recovery during 2021. In June 2020, due to the pandemic and the quarantine from March-May, the unemployment rate reached almost 12 percent. During 2021, with the normalization of the economy, the unemployment rate dropped to 5.4 percent. Male unemployment was 4.8 percent while women’s unemployment reached 6 percent. There is a 26 percent gap in the labor market between men and women, with women taking the brunt of domestic duties and childcare. Most labor creation during the current recovery is in the informal sector.

Article 3 of the Labor Code limits to 15 percent the number of foreign nationals that can be employed by any business.  Due to the limited number of labor inspectors, enforcement of the law is uneven.

The 2009 Constitution specifies that unjustified firing from jobs is forbidden and that the state will resolve conflicts between employers and employees (Articles 49.3 and 50).  Bolivian labor law guarantees workers the right of association and the right to organize and bargain collectively.  Most companies are unionized, and nearly all unions belong to the Confederation of Bolivian Workers (COB).

Labor laws, including related regulations and statutory instruments, provide for the freedom of association, the right to strike, and the right to organize and bargain collectively.  The law prohibits antiunion discrimination and requires reinstatement of workers fired for union activity.   The law does not require government approval for strikes and allows peaceful strikers to occupy businesses or government offices.  General and solidarity strikes are protected by the constitution, as is the right of any working individual to join a union.

Workers may form a union in any private company of 20 or more employees, but the law requires that at least 50 percent of the workforce be in favor of forming a union.  The law requires prior

government authorization to establish a union and confirm its elected leadership, permits only one union per enterprise, and allows the government to dissolve unions by administrative fiat.  The law also requires that members of union executive boards be Bolivian by birth.  The labor code prohibits most public employees from forming unions, but some public-sector workers (including teachers, transportation workers, and health-care workers) were legally unionized and actively participate as members of the Bolivian Workers’ Union without penalty.

Freedom of association is limited by the government and under-resourced labor courts.  Moreover, the 20-worker threshold for forming a union proved an onerous restriction, as an estimated 72 percent of enterprises had fewer than 20 employees.  Labor inspectors may attend union meetings and monitor union activities.  Collective bargaining and voluntary direct negotiations between employers and workers without government participation was limited.  Most collective bargaining agreements were restricted to addressing wages.

Originally passed in 1942, Bolivia’s labor law has changed frequently due to new regulations.  Labor attorneys estimate that the law has been amended over two-thousand times, with many amendments directly contradicting others.  Attorneys comment that it is virtually impossible to understand the rules clearly, creating significant uncertainty for both employers and employees.

Bolivia has no unemployment insurance or employment-related social, safety net programs.  However, if an employee is laid off due to economic or technical reasons, employers are required to pay three months of salary as compensation.  Nevertheless, employees generally have more negotiating leverage in Bolivia than employers, and many employers choose to pay additional compensation to avoid retaliation.

The Ministry of Labor has labor-related conflict resolution mechanisms, but, these processes are skewed towards employees.  If parties cannot reach an agreement, employees are able to initiate legal proceedings, with appeals to Bolivia’s Supreme Court possible.

The National Labor Court handles complaints of antiunion discrimination, but rulings generally take a year or more.  In some cases, the court rules in favor of discharged workers and requires their reinstatement.  Union leaders state that problems are often resolved or are no longer relevant by the time the court rules.  For this reason, government remedies and penalties are often ineffective and insufficient to deter violations.

Violence during labor demonstrations continues to be a serious problem.  In August 2016, striking miners kidnapped and murdered Vice Minister Rodolfo Illanes during a conflict between miners and the government on the La Paz-Oruro highway.  Several miners were also shot and killed.  The case is still under investigation.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

DFC is not currently active in Bolivia.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics 					

* Source for Host Country Data: BEA, UNCTAD, World Bank

							14. Contact for More Information					

Maridela OrtizEconomic OfficerOrtizMM@state.gov

## View report by:

### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment                        -  Policies Towards Foreign Direct Investment 
                      -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                      -  Other Investment Policy Reviews 
                      -  Business Facilitation 
                      -  Outward Investment 
                    -  2.   Bilateral Investment Agreements and Taxation Treaties    
                    -  3. Legal Regime                        -  Transparency of the Regulatory System 
                      -  International Regulatory Considerations 
                      -  Legal System and Judicial Independence 
                      -  Laws and Regulations on Foreign Direct Investment 
                      -  Competition and Anti-Trust Laws 
                      -  Expropriation and Compensation 
                      -  Dispute Settlement                          -  ICSID Convention and New York Convention 
                        -  Investor-State Dispute Settlement 
                        -  International Commercial Arbitration and Foreign Courts 
                      -  Bankruptcy Regulations 
                    -  4. Industrial Policies                        -  Investment Incentives 
                      -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                      -  Performance and Data Localization Requirements 
                    -  5. Protection of Property Rights                        -  Real Property 
                      -  Intellectual Property Rights 
                    -  6. Financial Sector                        -  Money and Banking System 
                      -  Foreign Exchange and Remittances                          -  Foreign Exchange 
                        -  Remittance Policies 
                      -  Sovereign Wealth Funds 
                    -  7. State-Owned Enterprises                        -  Privatization Program 
                    -  8. Responsible Business Conduct                        -  Additional Resources 
                      -  Climate Issues 
                    -  9. Corruption                        -  Resources to Report Corruption 
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics    
                    -  14. Contact for More Information   

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#### The Lessons of 1989: Freedom and Our Future