[from Pete Kofod, 30 March 2011]
I flew Aerosur roundtrip from Miami, through Santa Cruz, Bolivia, to Salta, & returned the same way I came. The experience was largely without incident. Aerosur is a smaller airline, compared to other national carriers like American, Aerolineas, and LAN. To the best of my understanding, their only US destination is Miami, and I believe they serve the route 4-5 times per week. The flight is a red-eye in both directions, leaves around 11 PM, and lands 5:30 the following morning.
The only drawback was the 9 hour layover in Santa Cruz (both times), but the Internet was fast, the food good, and the atmosphere very relaxed, so I only considered it a minor inconvenience. The airport has modern regional airport feel to it with a gentle stream of business people and backpackers passing through the terminal throughout the day.
It is clear that the US DEA heavily subsidizes law enforcement in Bolivia. On my return to the US, my carryon bags were inspected with the ardor typically reserved for forensic scientists with OCD. This level of personalized attention was extended to everyone flying in to the US, not just yours truly. The poor chap next to me had his bag of trail mix opened and sampled. Ah yes, the War on Drugs. We may not be winning, but we can sure blow a bunch of money in the process.
Aerosur's website is a hopeless mess. It goes down continuously, and when by chance it happens to be available to the public, it provides no useful information. In the days leading up to my travel, I found myself hoping that the level of effort put to website management was not reflective of Aerosur's commitment to keeping its fleet safely maintained. Thankfully, my fears were unfounded. On my flight down, there were many Brazilians on board. Apparently it is cheaper to fly from Miami through Santa Cruz to Sao Paulo than to catch the direct flight.
I booked my reservation through travelocity, but later found the best prices at cheapOair (yes, that is the name of the company). Miami - Salta roundtrip is $750 or about $200 less than I paid. Because Aerosur doesn't fly to/from Miami every day, I entered a travel window of +/- 3 days for both departure and return to make sure the flight showed up in the search listing.
The onboard service was OK. The flight attendants were competent and polite. The meal was good, but certainly not memorable. Apparently, the service delivery model is to feed you and put you to sleep, so bring a DVD player if you want to watch a movie. I, for one, was exhausted from a week of revelry in Cafayate, so I succumbed to Morpheus' advances shortly after dinner.
On balance, I find the Aerosur option far more attractive than flying through Buenos Aires and will probably do it again, even with the whole family (my kids are 10 and 13). Candelaria indicated that Aerosur honors its Latin American relationship to punctuality and as such may not be an ideal choice for first time visitors arriving from the US or Canada. That said, the ability to check luggage from Miami directly to Salta, not having to deal with the Ezeiza-Aeroparque transfer, and shaving about four hours of flight time makes it my choice for the time being.
As a final note of interest, the Aerosur magazine showed a flight from Santa Cruz to Tucuman. I was unable to find the flight anywhere else, including on their dysfunctional website, though I will keep my eyes peeled for it.
One more observation: the immigrations desk at Salta airport does not charge US/Canadians/Brits the reciprocal visa fee. When I landed with the Tessaris, the immigration official just stamped their passport and waved them through. As Canadians they are supposed to pay every time, yet there wasn't even a booth to collect the fee like there is in Ezeiza. Sometimes inefficiency plays in your favor!
Thursday, March 31, 2011
Wednesday, March 30, 2011
Carol & Mike's House Tour
Rudi Goldman asked for a house tour, & Carol & Reg Chappell & Ted Harrison & his wife Louise Andrew came along, too. Rudi video'd it:
Tuesday, March 29, 2011
gringos in Latin America
[from Paco Ignacio Taibo II's Four Hands, tr. Laura C. Dail, St. Martin's Press, 1990]
To be a U.S.-citizen-born-gringo in Latin America is a pastime for the unconscious, economic gangsters, commercial missionaries, radicals on the verge of jubilation, freaks, dreamers or crusaders. They all furnish the continent south of the border with their own demons. They travel with their ghosts. Then there are the others, us dreamers, those who believe there are no borders or countries, just landscapes and song sometimes sung in unknown languages. Of all the monsters who travel south, we are the most dangerous because we believe we don't have the original sin that has to be forgiven; because we rationally think that we are not excessively different, that we can coexist with the natives on fair terms: You give to me, I give to you, you smile at me, I smile at you, even though at night we have nightmares in which half-naked, starving children, the live Latin American ghosts, point their fingers at us.
Going south is, as Malcolm Lowry and Joseph Conrad and Ambrose Bierce knew, a descent into hell itself. Leaving the deceptive North American Paradise, the true hell, the demons attack, they attempt to escape from the skin and gush forth. One knows it when traveling south, one knows the Martians who play Ping-Pong inside our heads. And in the end, one is grateful that it is so and not any other way. Anyone who doesn't have hells will be content to die kneeling in front of a television in a place as ludicrous as Indianapolis.
To be a U.S.-citizen-born-gringo in Latin America is a pastime for the unconscious, economic gangsters, commercial missionaries, radicals on the verge of jubilation, freaks, dreamers or crusaders. They all furnish the continent south of the border with their own demons. They travel with their ghosts. Then there are the others, us dreamers, those who believe there are no borders or countries, just landscapes and song sometimes sung in unknown languages. Of all the monsters who travel south, we are the most dangerous because we believe we don't have the original sin that has to be forgiven; because we rationally think that we are not excessively different, that we can coexist with the natives on fair terms: You give to me, I give to you, you smile at me, I smile at you, even though at night we have nightmares in which half-naked, starving children, the live Latin American ghosts, point their fingers at us.
Going south is, as Malcolm Lowry and Joseph Conrad and Ambrose Bierce knew, a descent into hell itself. Leaving the deceptive North American Paradise, the true hell, the demons attack, they attempt to escape from the skin and gush forth. One knows it when traveling south, one knows the Martians who play Ping-Pong inside our heads. And in the end, one is grateful that it is so and not any other way. Anyone who doesn't have hells will be content to die kneeling in front of a television in a place as ludicrous as Indianapolis.
Brazil's new tax
[from MercoPress, 29 March 2011]
Brazil plans to tax local corporations overseas bond issues, says financial media
The Brazilian government is planning to impose a financial operations tax on overseas bond issues by Brazilian companies, local financial daily Valor Economico reported Monday.
The tax is part of a government drive to reduce U.S. dollar inflows and arrest the appreciation of the Brazilian Real against the U.S. dollar. The Real has gained 45% against the dollar over the past two years, hurting exports.
According to the newspaper, which cited an unnamed person close to the government, officials are also concerned about a recent increase in dollar-denominated debt among Brazilian companies. The government is planning to impose a financial operations tax of 6% on such operations.
In the first two months of the year, local companies increased overseas debt by 16.4 billion US dollars to 190.3 billion USD, according to the central bank.
In 2008, some local companies suffered huge financial losses when dollar-denominated debt ballooned because of a rapid depreciation of the Brazilian real against the U.S. dollar. The Real depreciated strongly against the dollar from 2008 to 2009 because of the global financial crisis. In 2009, the Real began a swift recovery.
Brazil plans to tax local corporations overseas bond issues, says financial media
The Brazilian government is planning to impose a financial operations tax on overseas bond issues by Brazilian companies, local financial daily Valor Economico reported Monday.
The tax is part of a government drive to reduce U.S. dollar inflows and arrest the appreciation of the Brazilian Real against the U.S. dollar. The Real has gained 45% against the dollar over the past two years, hurting exports.
According to the newspaper, which cited an unnamed person close to the government, officials are also concerned about a recent increase in dollar-denominated debt among Brazilian companies. The government is planning to impose a financial operations tax of 6% on such operations.
In the first two months of the year, local companies increased overseas debt by 16.4 billion US dollars to 190.3 billion USD, according to the central bank.
In 2008, some local companies suffered huge financial losses when dollar-denominated debt ballooned because of a rapid depreciation of the Brazilian real against the U.S. dollar. The Real depreciated strongly against the dollar from 2008 to 2009 because of the global financial crisis. In 2009, the Real began a swift recovery.
the best pasta in Buenos Aires
According to Brando, Buenos Aires has great pasta restaurants because so many porteños (people who live in Buenos Aires) are of Italian descent. Here's Brando's map of fine pasta restaurants:
Read today's Brando article to learn more.
Read today's Brando article to learn more.
Anna Paquin
The New Zealand Actress Anna Paquin
Personal Details
Full name: Anna Helene Paquin
Born on: July 24, 1982
Place in: Winnipeg, Manitoba, Canada
Profession: Actress
Year’s active: 1993–present
Spouse: Stephen Moyer (2010–present)
Biography
The one of the famous celebrities Anna Helene Paquin is a Canadian-born New Zealand film actress. She is first seriously successful film was The Piano, for which she won the Academy Award for Best behind Actress in 1994 at the age of 11 the second youngest winner in history. Her acting profession took off roughly half a decade later when she come into view in a string of triumphant films with She's All That, Almost Famous and the X-Men franchise.
Awards and Nominations
| Academy Awards, USA (Won: 1, Year: 1994 & Nominations: 0, Year: - ) | |||
| Year | Result | Award | Category/Recipient(s) |
| 1994
| Won
| Oscar
| Best Actress in a Supporting Role For The Piano (1993). |
|
| |||
| Golden Globes, USA (Won: 1, Year: 2009 & Nominations: 3, Year: 1994, 2008, 2010 ) | |||
| 2009
| Won
| Golden Globe
| Best Performance by an Actress in a Television Series - Drama For "True Blood" (2008). |
|
| |||
| Gotham Awards (Won: 1, Year: 2005 & Nominations: 0, Year: - ) | |||
| 2005
| Won
| Best Ensemble Cast
| For The Squid and the Whale (2005). Shared with: Jeff Daniels Laura Linney |
|
| |||
| Satellite Awards (Won: 2, Year: 2008, 2009 & Nominations: 1, Year: 2010 ) | |||
| 2009
| Won
| Special Achievement Award
| Best Ensemble, Television For "True Blood" (2008). Shared with: Chris Bauer Mehcad Brooks |
| 2008 | Won | Satellite Award | Best Actress in a Series, Drama For "True Blood" (2008).
|
|
| |||
For More Awards
For More News About: Anna Paquin
Monday, March 28, 2011
Allende's Chile
During Salvador Allende's presidency, Marxist Edward Boorstein was an assistant & close friend of Jaime Barrios, an economic advisor to Allende. Boorstein's Allende's Chile: An Inside View is the author's report on what happened, what Allende achieved, & why he failed.
I knew nothing of this history & found the book well worth the read.
Boorstein's proposition is that Allende failed because he behaved honorably, while everyone else – Chilean political parties, Chilean armed forces, Chilean press, international corporations with Chilean interests, United States government (Nixon, Kissinger) & CIA – behaved dishonorably wherever dishonor served them well.
Sunday, March 27, 2011
Spiritual Symbols Graphics,Religious Symbols Pictures, Coexist Photos
Free graphics and pictures of spiritual symbols of every religions on earth. you can use these images on your website and social networking sites like facebook, hi5, friendster, myspace etc.These religious symbols include swastik, sikhism,jesus cross, ying yang, kabalaa etc. All religions coexist photos animation, clipart that you can save on your blog and also display the pics on your website design.
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| Earth Religions |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| yin yan,cross,jainism,kaabala,star of david |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| Spiritual symbols all religions of world |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| Hindu religious symbol swastika |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| Spiritual mask photos africa |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| Coexist all religions graphics pictures |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
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| Jesus cross religious symbol christianity |
Links to this Picture (Html Codes) (Copy/Paste into your own Website or Blog):
GPS in Argentina
Greg Utas offers this information about using a Garmin GPS in Argentina:
I took my Garmin 255W to Argentina and it worked great. Very useful for driving around the city of Salta. The maps were loaded onto a small memory card that goes into a slot on the side of the Garmin. I ordered a preloaded card from travelbygps.com.
You can download the maps yourself, but for $20 I didn't want to spend time on it. The maps also include Chile, Uruguay, and Paraguay.
Not everything went smoothly. My 12V (cigarette lighter) adapter would often fall out when driving over a bump. You can imagine the hassle, so I travelled around Salta in search of a new adapter. Marc Chagall, located at Florida 11 in the pedestrian mall area just south of the Hotel Alejandro I, had a 12V adapter with a USB port. They also had a USB cable to plug into this port, one with the right connector for the Garmin at the other end. This adapter could still fall out, but twisting a car key under the spring clips widened their grip to the point where they would hold.
The maps don't know about La Estancia's roads yet, apart from the southern service road. And a couple of times, they wanted to send me the wrong way down a one-way street. So pay attention.
On 2 April 2011, Jeremy commented: You can find Garmin-compatible maps of Argentina and Uruguay at www.proyectomapear.com.ar. It's free, by the way, and it works.
I took my Garmin 255W to Argentina and it worked great. Very useful for driving around the city of Salta. The maps were loaded onto a small memory card that goes into a slot on the side of the Garmin. I ordered a preloaded card from travelbygps.com.
You can download the maps yourself, but for $20 I didn't want to spend time on it. The maps also include Chile, Uruguay, and Paraguay.
Not everything went smoothly. My 12V (cigarette lighter) adapter would often fall out when driving over a bump. You can imagine the hassle, so I travelled around Salta in search of a new adapter. Marc Chagall, located at Florida 11 in the pedestrian mall area just south of the Hotel Alejandro I, had a 12V adapter with a USB port. They also had a USB cable to plug into this port, one with the right connector for the Garmin at the other end. This adapter could still fall out, but twisting a car key under the spring clips widened their grip to the point where they would hold.
The maps don't know about La Estancia's roads yet, apart from the southern service road. And a couple of times, they wanted to send me the wrong way down a one-way street. So pay attention.
On 2 April 2011, Jeremy commented: You can find Garmin-compatible maps of Argentina and Uruguay at www.proyectomapear.com.ar. It's free, by the way, and it works.
special report on La Estancia de Cafayate
[from Jeff Berwick's The Dollar Vigilante, 25 March 2011, published here under special permission from the author]
Special Report: La Estancia de Cafayate
Sitting Out TEOTMSAWKI In Galt's Gulch
I accepted an invitation (all at my own expense) to go down to Doug Casey’s, La Estancia de Cafayate, in Salta Province, Argentina without quite understanding what I was about to discover. I even told friends and those who asked that, “I doubt I’ll buy a place.”
Why? For starters, I like living in larger cities – or at least not “out in the country” somewhere. I like shops, restaurants, bars and discos. And secondly, I had the complete misperception that this was some sort of typical, planned gated community. Not my style.
What I discovered has excited me so much that I am, as I write, working on purchasing a lot on which I will build a small home. As well, I am telling all my like-minded friends that if they can, they must come down and see what is being developed there.
GALT’S GULCH
It’s Galt’s Gulch. There is no better way to describe it. For those who haven’t read Atlas Shrugged, the long awaited movie based on the book is coming out next month (see the movie trailer here).
Galt’s Gulch, in the book, was a place where many of the most productive, intelligent and industrious people of the world esconded when the rest of the world was thrusting socialism/communism upon them.
The parallels to Galt’s Gulch are numerous, including the fact that Galt’s Gulch was built far away from civilization at a high altitude.
ABOUT CAFAYATE
Founded in 1840 and protected by incredible red rock formations that frame the drive in from Salta, Cafayate is internationally known for its wines - of which we tasted many on this particular tour.
It is a high altitude valley, 1600 meters (5800 ft) above sea level, which offers ideal conditions for producing world-class wines, and is known for its Torrontes and Malbec which grow easily inside of the temperate climate and over 320 days of sunshine each year - something which I consider crucial to health - free, daily Vitamin D.
One of the nicest features of La Estancia is that it is just outside the city boundary of Cafayate - about a 2 minute drive from town. So, you are out-of-town, but within minutes of dozens of world-class restaurants and shops.
WHAT IS LA ESTANCIA DE CAFAYATE?
La Estancia is an ultra-modern, luxury development in Salta Province, Argentina. It was conceived by best-selling author Doug Casey (The International Man, Crisis Investing and founder of Casey Research) and partners as the quintessential retreat for discerning individuals looking for an amenities rich lifestyle in the company of a diverse community of residents from around the globe (at this point, owners come from more than 20 different countries - off the top of my head, of owners I met: Germany, Lithuania, Mexico, Romania, US, Canada...).
La Estancia de Cafayate is simply massive in size, stretching over 1,360 acres - a meandering collection of vineyards, horse pastures, and the brand new Bob Cupp links style golf course. All of the properties enjoy stunning views of the surrounding mountains, then, depending on personal tastes, also benefits from golf course or polo field frontage, or surrounding vineyards or pastures.
It will be home, upon completion, to 360 housing lots. Already 200 are sold and, in my opinion, it won’t be much longer for the rest to sell. And once they are sold, that is that. They will not be building more.
WHAT MAKES LA ESTANCIA SPECIAL?
La Estancia De Cafayate is the brainchild of Doug Casey – an avid fan and past friend of Ayn Rand – who scoured much of the world looking for the perfect place to sit out The End Of The Monetary System As We Know It (TEOTMSAWKI). According to him and his wife they spent years looking for a place that had all the right characteristics.
What characteristics?
It had to be far from “civilization”. Cafayate meets that, in that the closest large city is a thousand miles away. But that doesn’t mean it isn’t “civilized” – it is, in fact, ultra-civilized in this remote location in Salta Province. However, it should be noted, even if there were large population centers nearby, La Estancia would still be one of the safest places on Earth. Why? Nearly everyone I spoke with who intends on living in La Estancia are the type of people who consider self-defense their responsibility and not the responsibility of the state.
It also had to be fairly self-sufficient. Cafayate meets that in that it is built atop a giant aquifer where much of the Andes drains into. Water? No problem. Electricity? The power comes from hydroelectric so even in the event of serious supply chain collapse there is very little chance that the waterfalls and rivers supplying the power will come to a halt. Coal fired, natural gas and nuclear plants could see their supply of energy get cut-off for a period of time as supply chains grind to a halt – but this is very unlikely to happen to hydro plants.
As well, La Estancia is home to hundreds of acres of vineyards (which are owned by home owners in the project) – so no shortage of wine. And on or near the estate almost any and every form of agriculture and farm animals are nearby. Doug Casey, in fact, owns a very large cattle ranch just a few hours north of Salta. So, in the event of parts of the world being forced into a famine situation as supply chains seize, those at Cafayate will be dining on steak, fresh vegetables and fine wines.
Another important factor for locating La Estancia in Cafayate is that it needed to be situated in a country where government is not much more than a nuisance. Argentina fits the bill here. In fact, the ex-Governor of Salta Province is a partner in the development so, even if the government in Argentina begins to try to appropriate land or wealth from residents (something it has never done) it is highly unlikely that La Estancia de Cafayate will be targeted.
WHAT AMENITIES WILL LA ESTANCIA OFFER?
La Estancia de Cafayate has been designed from the ground up to support an incredibly rich lifestyle.
These are just a few of the amenities:
§ 60-100 hectares of shared-ownership vineyards – As a property owner you legitimately pick up bragging rights as owning a vineyard in Argentina!
§ Vintner’s Heath Golf Course – An 18-hole Bob Cupp-designed golf course with a clubhouse, driving range and short game practice facility. When completed, this will be one of the finest golf courses in all of Argentina, and even South America - and from what I understand, owners play at $12/round!
§ Authentic Argentine equestrian experience – With stabling and pasturing facilities for private and community horses.
§ Polo fields and associated facilities
§ A network of riding trails, also used for nature walks and mountain biking - as well as horse riding - many people even ride their horses into town... that's just normal for this part of the world
§ Tennis, squash, bocce & parcours facilities;
§ Heath Club – offers a bar, restaurant and asado, as well as locker rooms, a pro-shop, viewing tower, wide patios, WiFi and more.
§ Social clubhouse with all the amenities for civilized living – featuring a bar and lounge, wine cellars, game room, library (only stocked with the best in libertarian, anarcho-capitalist, austrian finance classics), cigar lounge, business center and even a poker room!
§ Full-service Spa – With multiple swimming pools, locker rooms, fitness center and treatment rooms; this is one of the most important features to me: the Gym - I spoke with Doug Casey on this and he intends to make it a world class gym! He is even likely putting in Power Plates - something I wrote up in the September Issue of TDV (Premium/Basic)
§ Kids clubhouse – With game room and more;
§ Pueblito – A small village center with asado (barbeque) cabin, small shops with crafts and conveniences, gathering and game spaces;
§ Cafayate Concierge – A dedicated staff which can help you with anything you need
COSTS
There are 3 types of lots available:
§ Chacra: 5,000-10,000 Square Meters (averaging 1.5 acres) - cost $320-$400k USD
§ Quinta: 4,000 Square Meters (averaging 1 acre) - cost $235k-$295k USD
§ Jardin: 2,000 Square Meters (averaging 1/2 acre) - cost $135k-$195k USD
Home building costs in Cafayate today range from $800 - $1300 per square meter (about $80 - $130 per square foot). As in most places, building costs do not include design and engineering, earthwork, landscaping, and furnishings. “All-in” building costs are likely to run from $1100 - $1500 per square meter (about $110 - $150 per square foot) for high quality homes that include natural stone and wood, in-floor radiant heat, high ceilings, outside verandas and gracious patios.
Annual dues are assessed to each owner to pay for the management and maintenance of all the common elements and services, including golf, vineyards, equestrian facilities, roads, landscaping, and other amenities. The current estimate for the fees is a very reasonable $3500 -$5000 per year per property. However, Doug Casey has stated that it is his intention to have the vineyard profits get those fees to as close to zero as possible.
In the meantime, at normal production levels, it is anticipated that approximately 10 - 15 cases or 60 - 90 bottles per year will be distributed to each owner. Once fully mature, the property vineyards will have the potential to produce about 550,000 bottles of wine each year.
The wine allocation to all the owners will equate to approximately 5% of the total grape production.
SCHOOLING
The schooling system in Argentina offers two options, public and private. The Elementary stage is called primary and children attend from the age of 6 to 12. The next stage is called secondary and it is attended from the age of 13 to 18.
Cafayate has 6 primary public schools, 4 secondary and 2 private schools. Private schools offer an 8-hour day with a secondary language, which is typically English.
However, of the owners I talked to who have children, nearly all do home school or plan to home school. This brings up the next topic: business opportunities.
BUSINESS OPPORTUNITIES
If you can't afford to buy a place in La Estancia and/or you need some sort of income to live there, I lost track of all the business opportunities I came up with over just a few days.
This is going to be a community of about 300 homes - and almost every person there will be well off or outright wealthy. They will need and want a multitude of specialized services.
As example, most of the families want to home school, but I am sure many of the mothers would love to have a VERY private, almost home school style school in Cafayate which only teaches the subjects the parents want their children to learn... Austrian Economics, as example.
As well, a smart young entrepreneur would be wise to go down to Cafayate, rent an apartment in the town of Cafayate itself (for $300/month or less in many cases) and spend some time surveying the landscape and talking to new owners at La Estancia about products or services they would be interested in - and then offer that to them.
Not to mention, buying real estate in the town of Cafayate will almost, without doubt, be an excellent speculative investment. Think of it like buying real estate or land in Aspen, Colorado, fifty years ago.
NEGATIVES
No place is perfect but it wasn't easy to come up with too many negatives for La Estancia:
§ Weather - While there is rarely a cloudy day in Cafayate it can definitely get chilly. It never snows but overnight there can definitely be nights where a sweater and even a jacket are needed. Many people have the misconception that most of South America is hot/tropical but this isn't the case. But if you don't mind chilly evenings and having some warm weather clothes then you'll be fine.
§ Distance - This is both a positive and a negative - depending on perspective. If one of your biggest concerns is the unforeseen risks of TEOTMSAWKI then Cafayate's distance from virtually anywhere is a big plus. However, if you see Cafayate as being a place where you might visit for a week or so from time to time, unless you live in South America plan on spending a full day (24 hours) in transit. There are two main ways to get there... through Buenos Aires or through Santa Cruz, Bolivia (onAerosur) but even once you get to Salta you still have a 3 hour drive - or another short flight. This isn't a "weekend getaway" kind of place. But, again, that can be a positive as you don't get the weekend tourist crowd
§ There is no local international school (yet)
§ Everyone at La Estancia speaks English but you will be hard pressed to find anyone in the town of Cafayate who speaks English. However, one of the best investments you can make, in my opinion, is to learn Spanish. It is one of the best languages to know, with over 20 countries that speak it and more native Spanish speakers in the world than native English speakers.
CONCLUSION
Of course, if it is Galt’s Gulch, then I am breaking one of the sacred rules - as was written in Atlas Shrugged. To liken it to Fight Club: “First rule of Galt’s Gulch, Don’t talk about Galt’s Gulch!”
However, I am so excited about this project that I am putting my money where my mouth is and buying a place there. And I recommend to anyone looking for something of this sort that you take a look ASAP. I will be surprised if there are many lots left by October/November when they are having their next big celebration.
In a recent blog post I called La Estancia, "the world's first libertarian enclave". I used the word "libertarian" because that was the best one-word label I could put on it. However, it is more than that. The people who are gravitating to La Estancia can best be described as non-conformists. They tend to be individualistic, non-statist, free-minded and free willed people who refuse to accept and live life the way they are told to live it.
This, more than anything, is why you should consider having a place there. There is no other place in the world, that I know of, where you can live amongst a group of people like this.
CONTACT
During my time at La Estancia de Cafayate I got to know virtually everyone - all the salespeople, concierges, developers and planners. They have set-up a special email just for TDV subscribers:tdv@lec.com.ar. They understand that TDV readers are going to be quite a bit more intelligent and savvy in regards to wanting a place in a spot like La Estancia than just regular off-the-street enquiries, so you'll get priority attention by contacting them through that email.
Or if you contact them directly through their website (www.laestanciadecafayate.com), just mention you heard about it from The Dollar Vigilante and they'll give you prompt attention.
Special Report: La Estancia de Cafayate
Sitting Out TEOTMSAWKI In Galt's Gulch
I accepted an invitation (all at my own expense) to go down to Doug Casey’s, La Estancia de Cafayate, in Salta Province, Argentina without quite understanding what I was about to discover. I even told friends and those who asked that, “I doubt I’ll buy a place.”
Why? For starters, I like living in larger cities – or at least not “out in the country” somewhere. I like shops, restaurants, bars and discos. And secondly, I had the complete misperception that this was some sort of typical, planned gated community. Not my style.
What I discovered has excited me so much that I am, as I write, working on purchasing a lot on which I will build a small home. As well, I am telling all my like-minded friends that if they can, they must come down and see what is being developed there.
GALT’S GULCH
It’s Galt’s Gulch. There is no better way to describe it. For those who haven’t read Atlas Shrugged, the long awaited movie based on the book is coming out next month (see the movie trailer here).
Galt’s Gulch, in the book, was a place where many of the most productive, intelligent and industrious people of the world esconded when the rest of the world was thrusting socialism/communism upon them.
The parallels to Galt’s Gulch are numerous, including the fact that Galt’s Gulch was built far away from civilization at a high altitude.
ABOUT CAFAYATE
Founded in 1840 and protected by incredible red rock formations that frame the drive in from Salta, Cafayate is internationally known for its wines - of which we tasted many on this particular tour.
It is a high altitude valley, 1600 meters (5800 ft) above sea level, which offers ideal conditions for producing world-class wines, and is known for its Torrontes and Malbec which grow easily inside of the temperate climate and over 320 days of sunshine each year - something which I consider crucial to health - free, daily Vitamin D.
One of the nicest features of La Estancia is that it is just outside the city boundary of Cafayate - about a 2 minute drive from town. So, you are out-of-town, but within minutes of dozens of world-class restaurants and shops.
WHAT IS LA ESTANCIA DE CAFAYATE?
La Estancia is an ultra-modern, luxury development in Salta Province, Argentina. It was conceived by best-selling author Doug Casey (The International Man, Crisis Investing and founder of Casey Research) and partners as the quintessential retreat for discerning individuals looking for an amenities rich lifestyle in the company of a diverse community of residents from around the globe (at this point, owners come from more than 20 different countries - off the top of my head, of owners I met: Germany, Lithuania, Mexico, Romania, US, Canada...).
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| Doug Casey speaking at La Estancia lunch |
La Estancia de Cafayate is simply massive in size, stretching over 1,360 acres - a meandering collection of vineyards, horse pastures, and the brand new Bob Cupp links style golf course. All of the properties enjoy stunning views of the surrounding mountains, then, depending on personal tastes, also benefits from golf course or polo field frontage, or surrounding vineyards or pastures.
It will be home, upon completion, to 360 housing lots. Already 200 are sold and, in my opinion, it won’t be much longer for the rest to sell. And once they are sold, that is that. They will not be building more.
WHAT MAKES LA ESTANCIA SPECIAL?
La Estancia De Cafayate is the brainchild of Doug Casey – an avid fan and past friend of Ayn Rand – who scoured much of the world looking for the perfect place to sit out The End Of The Monetary System As We Know It (TEOTMSAWKI). According to him and his wife they spent years looking for a place that had all the right characteristics.
What characteristics?
It had to be far from “civilization”. Cafayate meets that, in that the closest large city is a thousand miles away. But that doesn’t mean it isn’t “civilized” – it is, in fact, ultra-civilized in this remote location in Salta Province. However, it should be noted, even if there were large population centers nearby, La Estancia would still be one of the safest places on Earth. Why? Nearly everyone I spoke with who intends on living in La Estancia are the type of people who consider self-defense their responsibility and not the responsibility of the state.
It also had to be fairly self-sufficient. Cafayate meets that in that it is built atop a giant aquifer where much of the Andes drains into. Water? No problem. Electricity? The power comes from hydroelectric so even in the event of serious supply chain collapse there is very little chance that the waterfalls and rivers supplying the power will come to a halt. Coal fired, natural gas and nuclear plants could see their supply of energy get cut-off for a period of time as supply chains grind to a halt – but this is very unlikely to happen to hydro plants.
As well, La Estancia is home to hundreds of acres of vineyards (which are owned by home owners in the project) – so no shortage of wine. And on or near the estate almost any and every form of agriculture and farm animals are nearby. Doug Casey, in fact, owns a very large cattle ranch just a few hours north of Salta. So, in the event of parts of the world being forced into a famine situation as supply chains seize, those at Cafayate will be dining on steak, fresh vegetables and fine wines.
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| The Vineyards at La Estancia de Cafayate |
Another important factor for locating La Estancia in Cafayate is that it needed to be situated in a country where government is not much more than a nuisance. Argentina fits the bill here. In fact, the ex-Governor of Salta Province is a partner in the development so, even if the government in Argentina begins to try to appropriate land or wealth from residents (something it has never done) it is highly unlikely that La Estancia de Cafayate will be targeted.
WHAT AMENITIES WILL LA ESTANCIA OFFER?
La Estancia de Cafayate has been designed from the ground up to support an incredibly rich lifestyle.
These are just a few of the amenities:
§ 60-100 hectares of shared-ownership vineyards – As a property owner you legitimately pick up bragging rights as owning a vineyard in Argentina!
§ Vintner’s Heath Golf Course – An 18-hole Bob Cupp-designed golf course with a clubhouse, driving range and short game practice facility. When completed, this will be one of the finest golf courses in all of Argentina, and even South America - and from what I understand, owners play at $12/round!
§ Authentic Argentine equestrian experience – With stabling and pasturing facilities for private and community horses.
§ Polo fields and associated facilities
§ A network of riding trails, also used for nature walks and mountain biking - as well as horse riding - many people even ride their horses into town... that's just normal for this part of the world
§ Tennis, squash, bocce & parcours facilities;
§ Heath Club – offers a bar, restaurant and asado, as well as locker rooms, a pro-shop, viewing tower, wide patios, WiFi and more.
§ Social clubhouse with all the amenities for civilized living – featuring a bar and lounge, wine cellars, game room, library (only stocked with the best in libertarian, anarcho-capitalist, austrian finance classics), cigar lounge, business center and even a poker room!
§ Full-service Spa – With multiple swimming pools, locker rooms, fitness center and treatment rooms; this is one of the most important features to me: the Gym - I spoke with Doug Casey on this and he intends to make it a world class gym! He is even likely putting in Power Plates - something I wrote up in the September Issue of TDV (Premium/Basic)
§ Kids clubhouse – With game room and more;
§ Pueblito – A small village center with asado (barbeque) cabin, small shops with crafts and conveniences, gathering and game spaces;
§ Cafayate Concierge – A dedicated staff which can help you with anything you need
COSTS
There are 3 types of lots available:
§ Chacra: 5,000-10,000 Square Meters (averaging 1.5 acres) - cost $320-$400k USD
§ Quinta: 4,000 Square Meters (averaging 1 acre) - cost $235k-$295k USD
§ Jardin: 2,000 Square Meters (averaging 1/2 acre) - cost $135k-$195k USD
Home building costs in Cafayate today range from $800 - $1300 per square meter (about $80 - $130 per square foot). As in most places, building costs do not include design and engineering, earthwork, landscaping, and furnishings. “All-in” building costs are likely to run from $1100 - $1500 per square meter (about $110 - $150 per square foot) for high quality homes that include natural stone and wood, in-floor radiant heat, high ceilings, outside verandas and gracious patios.
Annual dues are assessed to each owner to pay for the management and maintenance of all the common elements and services, including golf, vineyards, equestrian facilities, roads, landscaping, and other amenities. The current estimate for the fees is a very reasonable $3500 -$5000 per year per property. However, Doug Casey has stated that it is his intention to have the vineyard profits get those fees to as close to zero as possible.
In the meantime, at normal production levels, it is anticipated that approximately 10 - 15 cases or 60 - 90 bottles per year will be distributed to each owner. Once fully mature, the property vineyards will have the potential to produce about 550,000 bottles of wine each year.
The wine allocation to all the owners will equate to approximately 5% of the total grape production.
SCHOOLING
The schooling system in Argentina offers two options, public and private. The Elementary stage is called primary and children attend from the age of 6 to 12. The next stage is called secondary and it is attended from the age of 13 to 18.
Cafayate has 6 primary public schools, 4 secondary and 2 private schools. Private schools offer an 8-hour day with a secondary language, which is typically English.
However, of the owners I talked to who have children, nearly all do home school or plan to home school. This brings up the next topic: business opportunities.
BUSINESS OPPORTUNITIES
If you can't afford to buy a place in La Estancia and/or you need some sort of income to live there, I lost track of all the business opportunities I came up with over just a few days.
This is going to be a community of about 300 homes - and almost every person there will be well off or outright wealthy. They will need and want a multitude of specialized services.
As example, most of the families want to home school, but I am sure many of the mothers would love to have a VERY private, almost home school style school in Cafayate which only teaches the subjects the parents want their children to learn... Austrian Economics, as example.
As well, a smart young entrepreneur would be wise to go down to Cafayate, rent an apartment in the town of Cafayate itself (for $300/month or less in many cases) and spend some time surveying the landscape and talking to new owners at La Estancia about products or services they would be interested in - and then offer that to them.
Not to mention, buying real estate in the town of Cafayate will almost, without doubt, be an excellent speculative investment. Think of it like buying real estate or land in Aspen, Colorado, fifty years ago.
NEGATIVES
No place is perfect but it wasn't easy to come up with too many negatives for La Estancia:
§ Weather - While there is rarely a cloudy day in Cafayate it can definitely get chilly. It never snows but overnight there can definitely be nights where a sweater and even a jacket are needed. Many people have the misconception that most of South America is hot/tropical but this isn't the case. But if you don't mind chilly evenings and having some warm weather clothes then you'll be fine.
§ Distance - This is both a positive and a negative - depending on perspective. If one of your biggest concerns is the unforeseen risks of TEOTMSAWKI then Cafayate's distance from virtually anywhere is a big plus. However, if you see Cafayate as being a place where you might visit for a week or so from time to time, unless you live in South America plan on spending a full day (24 hours) in transit. There are two main ways to get there... through Buenos Aires or through Santa Cruz, Bolivia (onAerosur) but even once you get to Salta you still have a 3 hour drive - or another short flight. This isn't a "weekend getaway" kind of place. But, again, that can be a positive as you don't get the weekend tourist crowd
§ There is no local international school (yet)
§ Everyone at La Estancia speaks English but you will be hard pressed to find anyone in the town of Cafayate who speaks English. However, one of the best investments you can make, in my opinion, is to learn Spanish. It is one of the best languages to know, with over 20 countries that speak it and more native Spanish speakers in the world than native English speakers.
CONCLUSION
Of course, if it is Galt’s Gulch, then I am breaking one of the sacred rules - as was written in Atlas Shrugged. To liken it to Fight Club: “First rule of Galt’s Gulch, Don’t talk about Galt’s Gulch!”
However, I am so excited about this project that I am putting my money where my mouth is and buying a place there. And I recommend to anyone looking for something of this sort that you take a look ASAP. I will be surprised if there are many lots left by October/November when they are having their next big celebration.
In a recent blog post I called La Estancia, "the world's first libertarian enclave". I used the word "libertarian" because that was the best one-word label I could put on it. However, it is more than that. The people who are gravitating to La Estancia can best be described as non-conformists. They tend to be individualistic, non-statist, free-minded and free willed people who refuse to accept and live life the way they are told to live it.
This, more than anything, is why you should consider having a place there. There is no other place in the world, that I know of, where you can live amongst a group of people like this.
CONTACT
During my time at La Estancia de Cafayate I got to know virtually everyone - all the salespeople, concierges, developers and planners. They have set-up a special email just for TDV subscribers:tdv@lec.com.ar. They understand that TDV readers are going to be quite a bit more intelligent and savvy in regards to wanting a place in a spot like La Estancia than just regular off-the-street enquiries, so you'll get priority attention by contacting them through that email.
Or if you contact them directly through their website (www.laestanciadecafayate.com), just mention you heard about it from The Dollar Vigilante and they'll give you prompt attention.
interview with Dionisio Borda, Paraguay's minister of finance
[from Silvia Pavoni @ The Banker: Global Financial Intelligence since 1926, 20 August 2010]
Paraguay banks on natural resources
The government of Paraguay has faced many challenges when striving to implement democratic reform and social policies while maintaining economic stability and promoting growth. The country's minister of finance, Dionisio Borda, outlines the government's efforts to make the most of its natural resources, attract private investment and build up Paraguay's infrastructure.
Q: In what areas does Paraguay have opportunities for growth?
A: Paraguay has several very important competitive advantages. The country is a food producer, involving agriculture and cattle-raising. We're also a clean energy producer; we're the largest energy exporter in the region. We consume only about 6% of the output of Itaipú [a hydroelectric plant on the border between Paraguay and Brazil] and we're now in discussion with a foreign company [Rio Tinto Alcan of Canada] over the installation of an aluminium plant, which is very energy-intensive. The [aluminium] project is being studied by an economic team within the government, formed by the finance minister, the central bank governor and the industry, agriculture and public works ministries. It is a signal of the level of interest in the country.
The third advantage that Paraguay has is its low population density: 11 inhabitants per square kilometre - this is a density you don't see very often.
The country has another very important natural resource: water. The Guarani aquifer [one of the world's largest sources of fresh water that lies beneath the surface of Argentina, Brazil, Paraguay and Uruguay], which is underground and suitable for human consumption, has hardly been developed at all and has huge strategic value.
Paraguay is also defined by its rivers. If you look at a map of Paraguay, you'll see how the rivers look like the veins of a body. A friend of mine, who is a hydrologist, went into that profession because, when he was a child, he opened the encyclopaedia and looked at what it said about Paraguay. Against the many pages of information about other countries, what it said about our country was this: 'it is a country permeated by rivers; it is the country of water'.
This is a country of great inequality but of great [social] integration. We don't have direct access to the sea, but this is one of the challenges that this government has undertaken: the development of infrastructure and logistics.
Another advantage for Paraguay is being part of Mercosur [a regional trade agreement between Argentina, Brazil, Paraguay and Uruguay]. Paraguay has taken advantage of its membership, although it has its negative sides too. But in the medium to long term, membership of Mercosur offers many advantages and that's one of the reasons why Rio Tinto Alcan wants to put its plant here: low-cost energy and access to the markets of Brazil and Argentina.
Q: Paraguay has a very low tax/gross domestic product (GDP) ratio. If this increases, it might create more funds for infrastructure and education. What are the government's plans?
A: Yes, we have very few fiscal pressures. Our value-added tax (VAT) is the lowest in South America: 10% against 21% in Argentina, 23% in Uruguay, 19% in Brazil and 18% in Chile. Our corporate profit tax is 10%, while in the region the average is about 30%. We have yet to introduce a personal income tax; we have been trying to do so since 2003, but there is resistance.
Since 2003, though, we have had an expansion of the [corporate] taxpayer base from 100,000 to 500,000 today. We reduced the tax rate and this became an incentive for people in the 'informal' sector to join the formal sector. The tax/GDP ratio used to be 9%, then it went up to [the current] 12%, and we hope it will reach 15% [by 2013]. This would give us a better chance of funding our infrastructure and public works.
We keep on finding resistance from [Paraguay's] congress against the implementation of a personal income tax but we keep on fighting for it. It is going to be difficult to introduce it this year, but hopefully we can do so next year.
There are three objectives behind the introduction of a personal income tax: one is to increase the government's revenue. The second is to formalise the economy; people would be able to deduct VAT from their taxable personal income, so they'd have an incentive to ask for a receipt when they purchase items. The third objective is to fight illegal activities. Paraguay doesn't have a good reputation in this area, and the more we clarify how large someone's assets are, the more we can see where their income comes from. This should help resolve the issues of prestanombres [an individual who lends his or her name as owner of assets to circumvent regulations].
Also, we think that public-private partnerships (PPPs) will help develop the country's infrastructure. Right now, there is a legislative proposal to give the private sector a highway management concession. The roads concerned connect Asunción to Ciudad del Este and Encarnación in a triangle. This would be the country's most serious infrastructure plan to date through concessions to private investors.
We're also working on a PPP scheme for airports, which would be a first for Paraguay. There are already [smaller] private airports here and we need to work on a framework that would guarantee fair competition between all of them and guarantee that the government can comply with its obligations [in all of them].
Q: One of this government's promises was to enact stronger social policies but some say that the introduction of wider benefits has discouraged people from looking for jobs. What have been the results of the welfare strategy?
A: In reality, there isn't a true unemployment benefit scheme, but what the government did was to accelerate its conditional money transfer policy. This means that the government gives a small subsidy to people in extreme poverty [earning less than $1 per day]. Families in this situation receive about $50 per month on the condition that their children go to school and that the children go for medical check-ups once a month.
The government didn't have 100% control over the success of these measures but fundamentally I believe the impact has been positive. From 17,000 families in this programme in 2008, there were 103,000 families in 2009. This has complemented the [poor families'] income from remittances from their relatives in the US and Europe, which decreased last year.
We want sustainable growth that will generate employment and will not destroy the environment. We're working on some important environmental regulations in agribusiness.
We also want to promote private and public investment and attract foreign investors. Paraguay is a safe country in terms of security. It is an amicable country. It is welcoming towards foreigners. We have a law that gives incentives to foreign investors and says that they don't need to pay taxes until they start production - no VAT is charged on the installation of machinery and no tax is charged on capital imported. Glass companies, beverage companies and textiles companies from the wider Latin American region and from Europe have taken advantage of this.
Q: Do both Paraguay and its government have a perception problem?
A: Paraguay is not a country that does much promotion of itself abroad. We are a government with a social mission. We have a very high degree of poverty but there are no other restrictions. We work really well with businesses and their associations.
We are trying to eliminate the preconceptions about this government as populist because it has a social mission - this is not a populist government. This government wants to combine social policies with market policies for the sustainable growth of the country.
Companies that are present in Paraguay recognise that this government has improved the security situation. Social spending has increased, much of which has been directed towards the security of the country. Direct investment in security and education are also objectives. We also need to improve the institutions of the state - to ensure that the government, as an institution, works.
Q: The government has not played a significant role in developing Paraguay's infrastructure in the past, leaving the private sector to fill the gaps - building schools and roads that connect companies to highways, for example. Is there a risk that the private sector will increasingly become disaffected with the public sector?
A: In the past, during the dictatorship and early post-dictatorship period, public resources were not what they should have been. If the private sector is not provided with infrastructure or schools, it will try to create them itself, but this is not the correct approach. What we believe is that we should work in harmony with the private sector, that people should pay their taxes and that they should receive services from us. We are now working with the private sector on PPP programmes.
We have not had a very democratic government in Paraguay or a government committed to social issues. Being committed to social issues doesn't mean going to war with the private sector. We need to work with the private sector and deal with these issues. These are the conditions for [economic] growth. If you have social instability, none of the government's or private sector's efforts will produce any results: this is the history of central America. Countries where there was a lack of social policies had social instability in the end, and that hinders the development of the private sector too.
Q: You were finance minister for the first two years of the previous government, held by the right-of-centre Colorado party. How does this government differ from its predecessors?
A: There is more effort in this government. For 61 years, no government has handled this kind of public policy [focusing on social issues]. There is a learning curve, the bottom of which coincided with the international financial crisis. This made our efforts to meet our objectives much harder.
The international financial crisis and a terrible drought, combined with new people being brought into government and therefore lacking in public administration experience - all of this called for more communication and presentation [of our programmes and policies].
We solved some of the fiscal issues in the previous government term. First, we had to renegotiate the [public debt] maturity and the rate for internal debt; second, we implemented a partial reform of the fiscal base - we reduced corporation tax from 30% to 10% because in practice that was the actual rate that was being paid. We wanted to introduce a personal income tax.
We reformed the five cajas [savings banks] and the pension funds, so that their deficit would be reduced. We also created a 'second floor' bank, the Agencia Financiera de Desarrollo [financial development agency].
Q: You are known to be very strict with the budget. How do other ministries react when you do not accommodate their requests for additional funds?
A: It is not just one person's decision, it has to do with the availability of resources. At the beginning, it was difficult to establish a certain discipline; everybody wanted funds. Another part of the problem is efficiency. Initially, people thought that problems could be solved only with additional funding, but one also needs to develop the ability of doing things more efficiently. People understand this now.
Having a deficit gives a country inflation problems and affects its negotiating power for external loans. Since 2003, Paraguay has not had a deficit. Even during the crisis, in 2009, with a gross domestic product contraction of -3.8%, Paraguay increased the amount of tax collected. This is because there has been a big jump in the management of tax administration since 2003.
Q: What's the biggest challenge for the Ministry of Finance?
A: There is still much to be improved. We need to make all parts of the public administration more efficient; we need to invest more and to improve the service. Unfortunately, the political effort is not sufficient for the economic effort. If we have stronger political parties, they will make better public policies and better economic policy, and this means creating a better environment for growth and investment.
We need to work a lot with congress [to get our reforms approved]. It's a challenge. The political side of things needs to mature more. On the other hand, this society needs to create a stronger middle class, which would be the engine for growth. Our entrepreneurial class needs to look beyond Paraguay. Paraguay has a future in the export market. We need to learn from the emerging markets that have a good policy of investment distribution, such as Chile, Uruguay, Brazil and countries in Asia; [we must focus on] greater social justice, production geared for exports and investment in infrastructure.
The largest sector of employment in Paraguay is currently in family agricultural companies that have fewer than 50 employees. We need to generate employment and invite investments into Paraguay.
Paraguay banks on natural resources
The government of Paraguay has faced many challenges when striving to implement democratic reform and social policies while maintaining economic stability and promoting growth. The country's minister of finance, Dionisio Borda, outlines the government's efforts to make the most of its natural resources, attract private investment and build up Paraguay's infrastructure.
Q: In what areas does Paraguay have opportunities for growth?
A: Paraguay has several very important competitive advantages. The country is a food producer, involving agriculture and cattle-raising. We're also a clean energy producer; we're the largest energy exporter in the region. We consume only about 6% of the output of Itaipú [a hydroelectric plant on the border between Paraguay and Brazil] and we're now in discussion with a foreign company [Rio Tinto Alcan of Canada] over the installation of an aluminium plant, which is very energy-intensive. The [aluminium] project is being studied by an economic team within the government, formed by the finance minister, the central bank governor and the industry, agriculture and public works ministries. It is a signal of the level of interest in the country.
The third advantage that Paraguay has is its low population density: 11 inhabitants per square kilometre - this is a density you don't see very often.
The country has another very important natural resource: water. The Guarani aquifer [one of the world's largest sources of fresh water that lies beneath the surface of Argentina, Brazil, Paraguay and Uruguay], which is underground and suitable for human consumption, has hardly been developed at all and has huge strategic value.
Paraguay is also defined by its rivers. If you look at a map of Paraguay, you'll see how the rivers look like the veins of a body. A friend of mine, who is a hydrologist, went into that profession because, when he was a child, he opened the encyclopaedia and looked at what it said about Paraguay. Against the many pages of information about other countries, what it said about our country was this: 'it is a country permeated by rivers; it is the country of water'.
This is a country of great inequality but of great [social] integration. We don't have direct access to the sea, but this is one of the challenges that this government has undertaken: the development of infrastructure and logistics.
Another advantage for Paraguay is being part of Mercosur [a regional trade agreement between Argentina, Brazil, Paraguay and Uruguay]. Paraguay has taken advantage of its membership, although it has its negative sides too. But in the medium to long term, membership of Mercosur offers many advantages and that's one of the reasons why Rio Tinto Alcan wants to put its plant here: low-cost energy and access to the markets of Brazil and Argentina.
Q: Paraguay has a very low tax/gross domestic product (GDP) ratio. If this increases, it might create more funds for infrastructure and education. What are the government's plans?
A: Yes, we have very few fiscal pressures. Our value-added tax (VAT) is the lowest in South America: 10% against 21% in Argentina, 23% in Uruguay, 19% in Brazil and 18% in Chile. Our corporate profit tax is 10%, while in the region the average is about 30%. We have yet to introduce a personal income tax; we have been trying to do so since 2003, but there is resistance.
Since 2003, though, we have had an expansion of the [corporate] taxpayer base from 100,000 to 500,000 today. We reduced the tax rate and this became an incentive for people in the 'informal' sector to join the formal sector. The tax/GDP ratio used to be 9%, then it went up to [the current] 12%, and we hope it will reach 15% [by 2013]. This would give us a better chance of funding our infrastructure and public works.
We keep on finding resistance from [Paraguay's] congress against the implementation of a personal income tax but we keep on fighting for it. It is going to be difficult to introduce it this year, but hopefully we can do so next year.
There are three objectives behind the introduction of a personal income tax: one is to increase the government's revenue. The second is to formalise the economy; people would be able to deduct VAT from their taxable personal income, so they'd have an incentive to ask for a receipt when they purchase items. The third objective is to fight illegal activities. Paraguay doesn't have a good reputation in this area, and the more we clarify how large someone's assets are, the more we can see where their income comes from. This should help resolve the issues of prestanombres [an individual who lends his or her name as owner of assets to circumvent regulations].
Also, we think that public-private partnerships (PPPs) will help develop the country's infrastructure. Right now, there is a legislative proposal to give the private sector a highway management concession. The roads concerned connect Asunción to Ciudad del Este and Encarnación in a triangle. This would be the country's most serious infrastructure plan to date through concessions to private investors.
We're also working on a PPP scheme for airports, which would be a first for Paraguay. There are already [smaller] private airports here and we need to work on a framework that would guarantee fair competition between all of them and guarantee that the government can comply with its obligations [in all of them].
Q: One of this government's promises was to enact stronger social policies but some say that the introduction of wider benefits has discouraged people from looking for jobs. What have been the results of the welfare strategy?
A: In reality, there isn't a true unemployment benefit scheme, but what the government did was to accelerate its conditional money transfer policy. This means that the government gives a small subsidy to people in extreme poverty [earning less than $1 per day]. Families in this situation receive about $50 per month on the condition that their children go to school and that the children go for medical check-ups once a month.
The government didn't have 100% control over the success of these measures but fundamentally I believe the impact has been positive. From 17,000 families in this programme in 2008, there were 103,000 families in 2009. This has complemented the [poor families'] income from remittances from their relatives in the US and Europe, which decreased last year.
We want sustainable growth that will generate employment and will not destroy the environment. We're working on some important environmental regulations in agribusiness.
We also want to promote private and public investment and attract foreign investors. Paraguay is a safe country in terms of security. It is an amicable country. It is welcoming towards foreigners. We have a law that gives incentives to foreign investors and says that they don't need to pay taxes until they start production - no VAT is charged on the installation of machinery and no tax is charged on capital imported. Glass companies, beverage companies and textiles companies from the wider Latin American region and from Europe have taken advantage of this.
Q: Do both Paraguay and its government have a perception problem?
A: Paraguay is not a country that does much promotion of itself abroad. We are a government with a social mission. We have a very high degree of poverty but there are no other restrictions. We work really well with businesses and their associations.
We are trying to eliminate the preconceptions about this government as populist because it has a social mission - this is not a populist government. This government wants to combine social policies with market policies for the sustainable growth of the country.
Companies that are present in Paraguay recognise that this government has improved the security situation. Social spending has increased, much of which has been directed towards the security of the country. Direct investment in security and education are also objectives. We also need to improve the institutions of the state - to ensure that the government, as an institution, works.
Q: The government has not played a significant role in developing Paraguay's infrastructure in the past, leaving the private sector to fill the gaps - building schools and roads that connect companies to highways, for example. Is there a risk that the private sector will increasingly become disaffected with the public sector?
A: In the past, during the dictatorship and early post-dictatorship period, public resources were not what they should have been. If the private sector is not provided with infrastructure or schools, it will try to create them itself, but this is not the correct approach. What we believe is that we should work in harmony with the private sector, that people should pay their taxes and that they should receive services from us. We are now working with the private sector on PPP programmes.
We have not had a very democratic government in Paraguay or a government committed to social issues. Being committed to social issues doesn't mean going to war with the private sector. We need to work with the private sector and deal with these issues. These are the conditions for [economic] growth. If you have social instability, none of the government's or private sector's efforts will produce any results: this is the history of central America. Countries where there was a lack of social policies had social instability in the end, and that hinders the development of the private sector too.
Q: You were finance minister for the first two years of the previous government, held by the right-of-centre Colorado party. How does this government differ from its predecessors?
A: There is more effort in this government. For 61 years, no government has handled this kind of public policy [focusing on social issues]. There is a learning curve, the bottom of which coincided with the international financial crisis. This made our efforts to meet our objectives much harder.
The international financial crisis and a terrible drought, combined with new people being brought into government and therefore lacking in public administration experience - all of this called for more communication and presentation [of our programmes and policies].
We solved some of the fiscal issues in the previous government term. First, we had to renegotiate the [public debt] maturity and the rate for internal debt; second, we implemented a partial reform of the fiscal base - we reduced corporation tax from 30% to 10% because in practice that was the actual rate that was being paid. We wanted to introduce a personal income tax.
We reformed the five cajas [savings banks] and the pension funds, so that their deficit would be reduced. We also created a 'second floor' bank, the Agencia Financiera de Desarrollo [financial development agency].
Q: You are known to be very strict with the budget. How do other ministries react when you do not accommodate their requests for additional funds?
A: It is not just one person's decision, it has to do with the availability of resources. At the beginning, it was difficult to establish a certain discipline; everybody wanted funds. Another part of the problem is efficiency. Initially, people thought that problems could be solved only with additional funding, but one also needs to develop the ability of doing things more efficiently. People understand this now.
Having a deficit gives a country inflation problems and affects its negotiating power for external loans. Since 2003, Paraguay has not had a deficit. Even during the crisis, in 2009, with a gross domestic product contraction of -3.8%, Paraguay increased the amount of tax collected. This is because there has been a big jump in the management of tax administration since 2003.
Q: What's the biggest challenge for the Ministry of Finance?
A: There is still much to be improved. We need to make all parts of the public administration more efficient; we need to invest more and to improve the service. Unfortunately, the political effort is not sufficient for the economic effort. If we have stronger political parties, they will make better public policies and better economic policy, and this means creating a better environment for growth and investment.
We need to work a lot with congress [to get our reforms approved]. It's a challenge. The political side of things needs to mature more. On the other hand, this society needs to create a stronger middle class, which would be the engine for growth. Our entrepreneurial class needs to look beyond Paraguay. Paraguay has a future in the export market. We need to learn from the emerging markets that have a good policy of investment distribution, such as Chile, Uruguay, Brazil and countries in Asia; [we must focus on] greater social justice, production geared for exports and investment in infrastructure.
The largest sector of employment in Paraguay is currently in family agricultural companies that have fewer than 50 employees. We need to generate employment and invite investments into Paraguay.
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