April 23, 2004

Bolivia and its malice

MABB is a registered TM.

Thanks to Eduardo for his April 23rd comment. He is absolutely right. Corruption touches every aspect of Bolivian life. One of the clearest examples is its cancerous effects on the Bolivian economy, or for that matter in any economy, in the form of "contrabando" (smuggling). It is a simple process. People, for various reasons, buy goods in another country and smuggles them into their own country, without paying any duties (taxes) required by the local government. This way, they can turn around and sell them at much lower prices, almost always to the detriment of goods produced locally.

In Bolivia, there are many incentives to engage in such a questionable trade. None of them, of course, justifies smuggling as a legitimate trade. However, many of them have strong arguments. One example is the dispute about the "autos chutos" or smuggled cars. In the last six years alone car smuggling has cost the government Bs 480 million ($59 million) in revenue and the downtrend keeps going. However, the administration is reluctant to clamp down on the activity, because it is not prepared to offer an alternative source of income. The government very well knows that if it were to strictly enforce current law, there would be another sector from where political heat would emanate to further destabilize the country. The citizens engaged in this activity, see such work as the only alternative to earn income. One only needs to look at the creation of jobs and unemployment statistics to, perhaps, understand where are these citizens coming from. This is a politically loaded topic for the administration. Perhaps that is why the government keeps extending the deadline to register the cars and legalize them.

Nevertheless, the government has, since July 1999, implemented an agency-wide reform to help the Aduanas Nacionales (national customs agency) to become more efficient and rid itself of corruption. The reform has two goals:

1. To eliminate internal corruption and thus become more efficient in the collection of contributions.

2. To fight against external (outside agency) corruption; fight against smuggling and stream-line the process of transfer of collected funds to the national treasury.

The reform process is not yet finished, but some results are already evident, according to the agency. But the issue is not how much they collect, but whether they can successfully transform themselves from a slow, inefficient and corrupt laden
institution into a modern, efficient and relatively un-corrupt agency.

C'mon Bolivia, you can do it!

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