Bilateral relations

General:
India-Bolivia relations have remained cordial, albeit with limited content. Neither country maintains resident
diplomatic missions – the Indian Embassy in Lima is concurrently accredited to Bolivia while the Bolivian Mission to
the UN in New York is accredited to India. There are two  Honorary Consul Generals of India one in La Paz and one
in Santa cruz.

There has been no major bilateral visit. In May 2000, MOS(C&I) met with Bolivian Vice President in Rio de Janeiro on
the margins of a Mercosur meeting. From the Bolivian side, Education Minister attended the “Dialogue among
civilizations” conference in July 2003 in New Delhi, while the Bolivian Vice Minister for Health participated in the
Indo-LAC health summit in Delhi in September 2002. An agreement for holding regular Foreign Office Level
Consultations has been signed and the first round was held in 2006.

Bolivia has been supportive to various Indian candidatures to international organisations.

Trade & Investment:

Bilateral economic relations with Bolivia maintained a steady pattern. Economic relations are on the upswing
especially with the entry of Jindal Steel & Power Ltd. to Bolivia. Many Indian companies including Jindal and
Reliance are interested to invest in the mining, hydrocarbons and hydroelectricity sectors.

Indo-Bolivian trade (US $ mn)

2006 2007 2008 2009

Head
Exports from India (cif) 15.85 20.16 26.331 33.823
Imports to India (fob) 2.57 3.17  4.921 2.784
Total trade 18.42 23.33 31.252 36.607
Major items of trade with India: Principal Indian exports to Bolivia are pharmaceuticals including vaccines, yarns,
iron & steel laminated products and new rubber tyres. Major Indian imports from Bolivia include borates and raw
leather

Mutun Iron Ore Project:

Jindal Steel and Power Ltd., who have got the mining license for exploitation of 20 billion tons of iron ore deposits
of El Mutun mine in Bolivia with a total investment of over US $ 2.1 billion, have completed preliminary
exploratory, licensing (including environmental clearances) and infrastructure building processes. Jindal Steel and
Power Ltd. Bolivia (JSB), has got the mining license for exploitation of 20 billion tons of iron ore deposits of El
Mutun mine. The Bolivian Government signed an agreement with JSB for the construction of an important roadway
from Puerto Suarez to Puerto Busch via the Mutun Iron Ore project area, which would facilitate the transportation
of the Iron ore and the various products produced by the project to the Atlantic Ocean. While the entire project
work would be carried out by JSB, Bolivia-based ESM, a government-owned entity, would help with land, other
infrastructure and manpower. The steel firm would set up an integrated steel plant, a pellet plant and a captive
power plant.

Line of Credit: 
In 2006, GOI has extended a US$ 30 million LOC to Bolivia for purchase of items from India and projects to be
extender by Indian companies. Bolivia is keen on utilizing the US $ 30 million Line of Credit (LoC) given by the
Indian government by buying heavy machinery and mining equipment.

Visa Procedure: (click here) 

Bolivia, along with other Andean countries, enjoys duty free access to the US market for various products under the
US ATPDEA law. In this regard, the Bolivian Government is keen for Indian investment in areas like textiles /
clothing, leather, jewellery, woodwork, etc, in order to utilise this advantage. Bolivian authorities have also
expressed their interest in having Indian companies enter Bolivia in the IT sector. Agriculture is a further potential
area of cooperation.

Agreements:
While a cultural agreement has been signed, overall cultural interaction is limited. The first ever Indian dance
troupe went to Santa Cruz in August 2003.

ITEC: 
Bolivia has been allocated 5 slots annually for civilian training under ITEC.

Humanitarian Aid: 
In 2007, India has donated medicines worth U$ 200000 as humanitarian aid in wake of the landslides in Bolivia and
U$ 100,000 as aid in wake of floods due to La Niña Phenomenon in 2008. 

Indian Community:
The Indian community in Bolivia is very small. Around 50 Indians, mainly from Punjab, are living in Bolivia engaged
in retail trade, transportation, agriculture etc

Political overview

Political system

Bolivia is a democratic republic with a directly elected President who serves a five year term. Consecutive re-election is now permitted under

Bolivia's new constitution. Bolivia has a bicameral system of government: the Senate has 27 members (nine departments elect three

members each); the Chamber of Deputies has 130 members (half of whom are directly elected and half who are elected indirectly through

party nominations).

Bolivia attained independence from Spain in 1825 but then suffered a period of economic decline and the loss of territory in disputes with

neighbouring nations, most notably the loss of coastal areas to Chile. This occurred during the War of the Pacific, which Bolivia fought with

Peru against Chile in 1879, and remains an ongoing source of resentment, with Bolivia strongly pushing the issue of its maritime aspirations

in the form of a ‘corridor' to the sea.

After a long period of instability marked by coups and military rule, democratic civilian rule was established in 1982. However, the

proliferation of political parties since has resulted in political fragmentation. Organised labour has historically been strong, and organises

large demonstrations in opposition to free-market reforms. The church has played a significant intermediary role between the government

and social groups.

Recent political developments

Bolivia's most recent presidential elections were held on 18 December 2005, with the candidate for the left-wing Movimiento al Socialismo

(MAS), Evo Morales, winning 53.7 per cent of the vote. Morales' vote was unprecedented and constituted the first majority won by a

candidate since the return of democracy. Morales is the first candidate of indigenous origin to have become President in Peru. The candidate

for the major opposition party, Podemos, ex-President Jorge Quiroga, received 28.7 per cent of the vote. The MAS won a majority in the
Chamber of Deputies with 72 out of 130 seats but only won 12 of the 27 seats in the Senate. Morales was sworn in as Bolivia's President in

January 2006.

During his time in office, President Morales has eschewed the free market policies espoused by his predecessors and sought to increase

state involvement in the economy. He announced the nationalisation of Bolivia's hydrocarbon sector in May 2006 and required multinational

companies to sign new contracts with the Government, which saw ownership of the underlying hydrocarbons resources revert to the Bolivian

state.

Another key issue in Morales' agenda is the promotion of indigenous rights – a grouping that represents approximately 60 per cent of

Bolivia's population. To this end, the Government set up a Constituent Assembly, whose delegates were elected in August 2006. The

assembly was tasked with drawing up a new constitution in an attempt by the MAS to enshrine indigenous rights, and to allow the possibility

of consecutive presidential election and the removal of a bicameral parliamentary system.

In November 2007, a draft Constitution was approved in a controversial process which excluded opposition parties. This sparked violent

protests which left four people dead and over 130 injured in clashes between opposition supporters on the one hand, and police and

government sympathisers on the other.

The draft Constitution was approved by a relatively strong majority (59% to 41%) in a referendum held in January 2009. It formally promotes

the official use of the country's 35 indigenous languages, sets aside a number of indigenous seats in the legislature, provides for increased

‘autonomy' for indigenous communities and supports new restrictions on private agricultural land holdings to a maximum size of 5000

hectares. It also grants the national government greater involvement in the Bolivian economy (thus opening the way for further

nationalisations),

The Constitutional reform process has highlighted a growing polarization in Bolivian society between the rural poor (concentrated in the

highlands) and those better off (mostly located in the eastern low-land provinces and urban areas). The growing divide is not just

geographical but increasingly ideological: opposition provinces favour a more neo-liberal, open market philosophy whilst Morales' support

base endorse greater state control of resources and centralised administration.

Ongoing tensions between pro-Morales and opposition supporters erupted again in violence in September 2008. Thirty people were killed

when demonstrations organised to oppose the 2009 referendum clashed with indigenous supporters of President Morales. Opposition

provinces had earlier voted to have autonomous governments from La Paz and thus refused to endorse a new Constitution that consolidated

power in the hands of the national Government. The disharmony drew the attention of President Lula of Brazil who called on Morales to

govern for all the country including the business sector and not only the poor and underprivileged.

Economic overview

The Bolivian Government faces considerable challenges to its economic health, not least from declining foreign investment in critical sectors

of the economy. Some analysts have pointed to populist Government rhetoric and a general lack of policy pragmatism as the principal

deterrents to investment, particularly in the key hydrocarbons and mining sectors. In recent times, for example, Bolivia has failed to meet

contractual supply obligations to Brazil and Argentina and has suffered supply restrictions from other nations. This has seen annual foreign
investment in hydrocarbons fall from US$581 million in 1999 to US$149 million in 2007. The net effect has seen capacity, output, and

Bolivia's international competitiveness in these sectors fall.

The Global Financial Crisis

The effects of the global financial crisis have begun to flow through the Bolivian economy. The deterioration in the global economy helped to

slow Bolivia's GDP growth from 6 per cent in 2008 to an expected 1 per cent in 2009. Slower growth amongst key trading partners

(particularly Brazil and the United States) has also resulted in lower foreign investment, reduced private consumption and rising

unemployment.

The Morales administration has sought to increase public spending in an attempt to stimulate the economy (as well as to solidify support in

the run up to the December 2009 election). Yet this task is complicated by high inflation and a drop in its current account position due to the

falling price of oil. This means that Bolivia will find it increasingly difficult to fund many of its programs. To date, Bolivia has relied heavily on

borrowings from Venezuela, but with the public debt to GDP ratio expected to rise from 42.9 per cent in 2008 to 43.5 per cent in 2009

analysts hold growing concerns that Morales' plan to boost public investment to create jobs and lift the economy may fail.

Trade policy directions

As well as its membership of the WTO and the Cairns Group, Bolivia is also a member of the Andean Community (CAN) with Colombia, Peru

and Ecuador (Chile as an associate member). Bolivia also looks at developing markets through membership in the Bolivarian Alternative for

the Americas (ALBA) whose members include Venezuela, Cuba and Nicaragua and is also a member of the newly created Union of South

American Nations (UNASUR). Bolivia is an associate member of Mercosur.

Until recently, the US Andean Trade Promotion and Drug Eradication Act (ATPDEA) allowed numerous Bolivian products to enter the United

States duty-free, including alpaca and llama products and, subject to a quota, cotton textiles. In December 2008, the US suspended Bolivia's

participation in the program based on its failure to meet international counternarcotics obligations. The ATPDEA was an expansion of the

Andean Trade Preferences Act of 1991. The ATPDEA initially came into effect in August 2002 for four years, and was extended in December

2006 for a further six months.

Bolivia has an Economic Complementation Agreement with Chile that was established in 2006 that allows some 6,600 Bolivian products

duty-free access to Chile.

In April 2006, Bolivia signed a 'People's Trade Agreement' with Cuba and Venezuela as a "means toward development with social justice in

the framework of genuine fraternal Latin American and Caribbean integration". The Agreement provides for the export of Venezuelan and

Bolivian natural resources in exchange for Cuban medical servic

http://www.dfat.gov.au/geo/bolivia/bolivia_brief.html

In Bolivia, Jindal Steel and Power has committed $2.3 billion to the El Mutún iron ore mine on the border with Brazil,
Bolivia's largest FDI project ever and India's largest one in the region

OIL AND GAS

Oil and gas extraction accounted for close to 6.8% of Bolivia's estimated GDP in 2008 (up from 4.9%
in 1999), but generated almost one-half of total export earnings and was the largest contributor to
central government revenues, partly reflecting steadily increasing production of natural gas for export,
but also very high international prices. Total proven and probable oil reserves of 856.6m barrels were
independently certified at the end of 2004, the last time reserves were officially measured. Major
discoveries of natural-gas reserves since 1996 boosted proven and probable gas reserves by ten times
to 48.7 trillion cubic feet at the end of 2004.

However, subsequent exploration work has revealed that early estimates for reserves were over-
optimistic and a low level of investment in new exploration since then means that reserves may now
be a third less than previously estimated. In an effort to boost reserves and output, particularly of oil,
state-oil company YPFB returned to exploration activities in 2008 in a joint-venture partnership
arrangement with other state-owned oil companies known as PetroAndina.

Bolivia's natural gas reserve levels still represent a huge surplus of potential supply over foreseeable
domestic demand. All recent governments have therefore sought to promote gas export projects to
supply neighboring and distant markets. However, progress has been hampered by popular
resentment of private natural resource ownership. There is also an argument that Bolivia should not
become permanently locked into the production of primary materials for export, but should seek to
develop industrialization projects to create higher value-added exports, such as petrochemicals and
electricity for export. Industrial projects using gas as a raw material to produce plastics, fertilizers and
for metal refining are also all medium term goals. Provided that new markets for gas are developed,
oil as a by-product of gas extraction is expected to increase in the long term, provided that existing
markets for gas are maintained and new markets opened up. Prospects for selling large volumes of
natural gas to Argentina exist and would require significant new investment in gas fields to meet the
demand.

Major foreign investors in the sector include, Petróleo Brasileiro (Petrobras, Brazil's state-controlled oil
company), Repsol YPF (Spain), BG Group (UK) and Total (France). More recent entrants at an early
stage of developing projects are Venezuela's Petroleós de Venezuela (PDVSA) and Russia's Gazprom.

Gas demand from Brazil took off following the completion in 1999 of a US$2bn gas pipeline between
Rio Grande in Bolivia and Campinas in Brazil. However it took until 2007 before the pipeline's full 30.1
million cubic meters per day (cmpd) capacity was reached. The pipeline accounted for 80% of Bolivia’s
total production of natural gas and supplied 50% of Brazil's gas demand in 2008.

After a four-year hiatus, gas exports to Argentina resumed in June 2004. Bolivia previously sold gas to
Argentina for 27 years until 1999. Transport infrastructure limitations mean exports to Argentina are
currently restricted to a maximum of 7.7 million cmpd. A project to construct a major gas pipeline in
north-eastern Argentina supplied with gas from Bolivia is moving ahead. A 20-year supply agreement
was signed with Argentina in 2006 with an additional 20m cmpd to be added to current export
capacity when a new pipeline is brought on stream.

Although large-scale private investment in the sector has fallen sharply since 2003 —initially owing to
a lack of new markets for gas and latterly due to regulatory uncertainty— opportunities to invest in
developing new natural gas based businesses are available. A government program to convert vehicles
to use compressed natural gas is under way and will continue to expand in 2010, alongside the rolling
out of a gas grid to supply residential homes. Large-scale investments will also be needed in the
development of petrochemical industries and possibly for the conversion of natural gas to liquids
(GTL). Equipment suppliers may also encounter opportunities to supply the re-founded state oil sector,
which encompasses diverse activities from exploration, production, transport and storage to refining
and distribution. Government spending on the sector through YPFB will be stepped up significantly in
2010 and official estimates indicate the intention to invest US$8 billion in the sector over the next five
years, which would make hydrocarbons Bolivia’s most dynamic sector.

MANUFACTURING
Manufacturing mainly serves the export market for semi-manufactures, such as processed soybean
and refined metals, and the local market. Bolivia’s export earnings from manufactured goods
(including refined oil, processed soya and metals) has grown rapidly in recent years, rising close to a
record high of US$1.5 billion in 2009 despite the difficult international climate and lower prices for
many exports. The total value of manufactured exports to the United States in 2009 is estimated at
US$235 million, a 16% fall on the 2008 level of US$280 million but still a very robust figure given the
sharp US recession and slacker US demand in 2009.

The development of manufacturing is constrained by the relatively small size of the domestic market
preventing major economies of scale. A burdensome bureaucracy and competition from contraband
trade are other hindrances. Bolivia’s membership of Comunidad Andina de Naciones (CAN) and its
association with Mercosur provide some export opportunities. Non-durable consumer goods such as
food, beverages, tobacco, detergents, textiles, leather goods and shoes account for around one-half of
all manufacturing activity; artisan crafts, jewelry and intermediate goods, such as processed soya,
refined metals, timber products and petroleum refining make up most of the remainder.

The textile and apparel industry continues to develop and has recently been making strides to enter
new regional and European markets as recession in the US and the ending of ATPDEA trade
preferences have made the US market less lucrative. Use of exotic materials such as wool and leather
sourced from alpaca, vicuña, and llama are an area of expansion. Exporters rely heavily on
preferential market access programs to remain competitive against producers in Asia and the region.
Bolivian textile and apparel manufacturers have large spinning and weaving facilities and export much
of their production. Smaller firms often produce yarn and fabrics for subsequent domestic sale. Many
raw fibers are exported to Peru, where they are processed and re-exported to Bolivian clothing
manufacturers. Bolivia’s largest apparel firms export millions of units of clothing annually, supplying
goods to many major US brand names.

TELECOMMUNICATIONS

Many hundreds of large, medium and small companies service the telecommunications sector.
Telecommunications has been a key sector in driving growth over the last decade and will continue to
offer opportunities for investment in years to come. However, much will depend on the government's
approach to fostering investment in the sector, and whether or not it will continue to encourage
private capital. A review of telecommunications legislation is currently under way.

The telecommunications sector has undergone major expansion since 1995 following the introduction
of new legislation and the privatisation of the Empresa Nacional de Telecomunicaciones (Entel) by a
subsidiary of Telecom Italia. In May 2008 the government decreed the compay's re-nationalisation of
ENTEL, but private investors have been unaffected and continue to roll out new services and
technological innovations. Local telephone services in all major urban areas are provided by local co-
operatives, the largest of which are in La Paz, Santa Cruz and Cochabamba. Bolivia’s telecom market
was opened to full competition in 2001. Ten long-distance and international telecoms operators have
been formed since then.

Competitors are mainly from within the 16 existing co-operatively owned local telephone providers, all
of whom have expanded their range of services. One telecom company, Bolivia's AXS, has invested in
developing an independent fiber-optic cable network in direct competition with Entel for international
telecom and Internet traffic.

The application of regulated standards for service provision has steadily improved telecoms reliability
since 1996. Liberalization and technological advances have also boosted sector growth, mainly driven
by increased cellular telephony, corporate services, Internet use, and lower call costs. Between 2000
and 2005 international call rates more than halved in real terms and have since stabilized, rising only
marginally in 2006-2009.  Increased competition following the opening of the telecom market resulted
in a significant reduction in the cost of national and international long distance telephony. National call
charge rates fell by one-third, while international rates halved from their pre-liberalization levels. In
2008, a weighted average index for both domestic and international call charges prepared by the
National Statistics Institute (INE) showed call charges were 19% lower in 2008 than in 2001.

As elsewhere in Latin America, investment and competition has led to explosive growth in the use of
cellular or mobile telephony. The number of cellular phone subscribers had already outstripped the
number of fixed line subscribers by the end of the 1990's and growth has continued apace. The
number of cellular lines in use rose to over 5 million in 2008, more than twenty times the number a
decade earlier and over seven times the number of fixed lines. Rural telephony is still relatively poor,
but has also benefited from new investment in the market. In 2008, there were 21,478 rural
telephone lines compared with 10,708 at the start of the decade.

Use of e-mail and the Internet have developed rapidly, the number of Internet subscribers reached
335,586 in 2008 up from just 82,818 in 2003. Domestic Internet use remains below the regional
average according to official data, but Internet use is disguised as there is widespread use of the
Internet via Internet Cafes, by those who cannot afford a home or business connection. Bolivia's
Internet penetration rate is slightly higher than in Ecuador but less than one-third of the level found in
neighboring countries such as Argentina, Chile or Peru, providing ample opportunities for expansion of
the market.

BANKING & FINANCIAL SERVICES

Banking reforms and improved regulation has led to a gradual strengthening and steady consolidation
of the banking system. There were nine domestic retail banks operating in 2009 down from 14 in
1995. Three foreign banks have a presence in some larger cities and mainly engage in corporate
lending and providing trade credits and other services to multinational companies. The financial
system regulator —Autoridad de Supervision del Sistema Financiero (ASFI)— supervises all deposit
taking institutions to differing degrees, including the numerous non-bank and microfinance service
providers within the regulated financial services system.

After a difficult start to the decade for banking the outlook for the sector has markedly improved.
Since 2005, the banking system has enjoyed robust growth and firm profitability on the back of the
economic upturn and greater political stability. Improved confidence has seen deposits in the banking
system reach successive record levels in 2007-2009, to stand at over US$6.9bn at the end of 2009. As
a result, bank lending has been expanding steadily since 2005, rising from US$1.8bn to US$3.7bn in
2009.

Banking system deposits were previously almost entirely held in US dollars. However, a gradual de-
dollarisation has been taking place since 2004. This trend is attributed to strong currency appreciation
in 2007-2008 and greater exchange-rate stability thereafter, as a result of recent weakness of the US
dollar. Policies to encourage the holding of local currency have also played a part, such as the
introduction in July 2004 of the Impuesto a las Transacciones Financieras, a tax on foreign-currency
denominated banking transactions. The percentage of foreign currency holdings in the banking system
fell to below 50% for the first time in 2008. Boliviano deposits rolled back slightly in 2009 ending the
year at 47% of total deposits, but this is still a far cry from the under 10% of deposits held in
bolivianos a decade ago. Bolivia's monetary authority has pledged to maintain a strong currency policy
in 2010, although further currency appreciation is unlikely given the increased cost to exporters that
this implies at a time when export demand looks set to remain weakened by the fallout from recession
in many major developed markets in 2009. A return to a mild depreciation of the boliviano cannot be
ruled out in 2010 as the need to maintain export competitiveness, but much will depend on currency
trends among Bolivia's major trading partners.

PENSION FUNDS & STOCK MARKET

All current personal and employers' contributions are made on an individual basis to privately
managed Administradores de Fondos de Pensiones (AFPs), which also cover contributions for
mandatory professional and common risks insurance. However, the government has declared its
intention to reintroduce a state-run pension system. Proposals to replace existing private provision are
under active consideration by the government and congress and future opportunities for private
pension providers are extremely uncertain.

Until the late 1990's, trading on Bolivia's stockmarket was limited to short-term money market
instruments and government bonds. The 1998 Ley del Mercado de Valores (stockmarket law)
facilitated corporate bond placements, many of which have now taken place, usually for relatively
modest sums of under US$20m, although issues of up to US$150m have been made by energy
companies. Maturities on bonds varies widely but do not normally exceed ten years. Bond issuance
has allowed private pension and investment funds to diversify their portfolios.

MINING

Metals mining and smelting have traditionally been Bolivia's economic mainstays and the country
hosts large reserves of silver, zinc, lead, tin, iron, gold, tungsten, antimony, copper, lithium and
ulexite. The increase in the international market price of Bolivia's main mineral outputs has
encouraged the mining sector to increase production since 2005, and breathed new life into projects
that had remained dormant during a previous prolonged period of weak metals prices. Mining was a
major contributor to Bolivia’s recent above-average GDP growth rates. The value of earnings from
minerals more than quadrupled between 2006 and 2008 to US$

The mining industry has been affected by popular disenchantment with privatizations carried out in
the 1990s. Two privately operated tin mines, Huanuni and Caracoles, were returned to state hands
after protests by miners in 2001 and 2004 respectively. The government went further, decreeing the
re-nationalization of mining assets in February 2007, but this applied only to the handful of former
state assets being operated by private partners and did not extend to private-sector mines,
development projects, or exploration concessions; which covers most active mining projects in Bolivia.

Despite uncertainties generated by the new rules governing the mining sector and increased taxation,
mining has undergone a renaissance. Strongly rising international prices for most of Bolivia's main
mineral outputs, zinc, tin, silver, gold, lead and antimony have boosted earnings from minerals
resulting in a mining boom in 2007-2008, encouraging investment in new mining capacity which will
ensure this mining bonanza continues in 2010.

A resurgence of interest in silver has been the main driving force behind two of the largest recent
investment projects Construction of the biggest mining venture ever undertaken in Bolivia was
completed in 2007. US-based Apex Silver Mines, and partner investors, have ploughed around
US$850m into the polymetallic San Cristóbal mine. With a capacity to treat 40,000 tonnes of mineral
ore daily. Empresa Minera Manquiri (a subsidiary of Canada's Coeur d'Alene Mines) is another major
silver-zinc project that began operating in early 2008.

In 2007 the government and a private investor, Jindal Steel and Power of India, agreed terms on a
contract to develop one-half of the major El Mutún iron ore deposit in eastern Bolivia. The company is
to develop an iron-smelting facility with an initial investment cost of US$2.3bn and produced its first
mineral ore concentrates in 2008.  Bolivia is also host to the largest salt flat in the world, Salar de
Uyuni, which has long been known to contain high concentrations of lithium. The government is
building a pilot project to test the potential of brines extracted from the vast salt pan starting in 2010,
in anticipation of a boom in lithium demand in response to interest from the global automotive
industry in developing lithium-ion batteries for cars. Other elements that could be extracted include
potassium and borax. Other smaller projects that have recently taken off is the Corocoro copper
project, a joint-venture between the state and Korea Resources Corp.

AGRICULTURE

An estimated 15% of Bolivia's 1.1m km2 land area is considered appropriate for farming, divided
roughly equally between grazing and arable crops The amount of land cultivated by modern farming
techniques has increased rapidly in the Santa Cruz area, where the climate allows for two harvests per
year. Highland farming largely remains small-scale and rustic. Soybeans are the major cash crop,
along with sunflower, maize, sugar cane, rice, sorghum and sesame. Agriculture accounted for an
estimated 10.4% of Bolivia's GDP in 2008.

The top crop for Bolivian farmers and agricultural exporters is soy. Mainly cultivated in the eastern
lowland regions around the city of Santa Cruz, in excess of 1.2m hectares of soy is under cultivation in
an average year. Exports of Soy and derived products were worth an estimated US$520m in 2009,
twice the average value achieved in years prior to 2008 owing to firmer international prices. The other
main processed and semi-processed farm products are ethanol, edible oils (sunflower, maize and soy),
sugar, leather, Brazil nuts, coffee, fruit, sesame, cotton and wool.

AVICULTURE & CATTLE RANCHING

Poultry raising in Bolivia benefits from ample local supplies of high quality feedstuffs such as soy and
corn, which gives poultry producers a natural advantage and has lately encouraged an expansion into
exports. Cattle ranching is a major industry, particularly in the eastern lowlands. Bolivian beef quality
has risen due to improvements in breeding and ranching methods, and is now well sought after by
consumers in neighboring countries. Bolivia has participated in regional efforts to eradicate foot and
mouth disease with vaccination programs and permanent monitoring and control of herds. Various
zones in Bolivia have now been declared free of foot and mouth disease by Senasag, the national
organization that certifies sanitary conditions in cattle and farming. This has encouraged meat exports
to Peru and Brazil. The production of camelid meats (alpaca and llama) has also expanded in recent
years.

HOUSING

The population of Bolivia grew by 2.4% annually between 1992 and 2001, to 8.3m, according to the
last population census taken in 2001. Subsequent official estimates for population growth indicate this
number had grown to over 10m in 2008. At the same the population spread has shifted dramatically
as a result of migration to urban areas from the countryside, raising the proportion of urban dwellers
to around two-thirds of the population. The effect of this demographic trend has been to create a
strong demand for urban housing. The estimated housing deficit currently is around 500,000 homes,
although more conservative estimates quote 200,000. Successive governments have sought to boost
the stock of housing available to those on low incomes, with varying degrees of success. However, the
bulk of the new housing stock that built over the past decade has been provided by the private sector.
Current government policy is to provide a mix of solutions, from a house building program on vacant
land to loans on soft terms to encourage self-build options. However, an acceleration of the public
house building program is contemplated under the budget for 2010.

FORESTRY

The importance of the Bolivian timber industry lies in the richness of the country's forests, which cover
53 million hectares and account for more than 43% of the country's territory, around 10% of South
America's total tropical forest. Bolivia has only recently started exploiting the economic potential of its
forests but it is a world leader in sustainable natural tropical forest management. More than two
million hectares of forest have been certified as adhering to internationally recognized forest
management standards, and exports of certified wood products have increased dramatically in recent
years. Wood exports were worth approximately US$76m in 2009.

The main markets for Bolivian timber products are the United States, United Kingdom and Argentina.
Wood furniture and timber products for the construction industry, such as doors and windows, are an
increasingly important component of sector export.

INFRASTRUCTURE & CONSTRUCTION

Rapid migration to urban areas and increased public spending on infrastructure, particularly for road
building and maintenance, has underpinned construction activity over the last decade. Construction of
oil and gas field infrastructure and pipelines has also provided an important boost. The construction
industry suffered a temporary downturn in 2001-2003 as a result of a housing bubble and subsequent
tightening of credit conditions, which contributed to the contraction of the industry. However, a
recovery began in 2002 and this has gathered pace since 2006, with sales of cement and other
building materials and products increasing annually at double-digit rates. Residential construction has
been boosted by strong growth of remittances —income sent home by the growing number of
Bolivians working abroad in recent years.

http://www.amchambolivia.com/Camara/Bolivia/Investment%20Outlook.html
Bolivia Demands India’s Jindal Make Promised Investments

LA PAZ – Bolivian President Evo Morales’ government

called on India’s Jindal Steel & Power to make good on
pledges to invest in a massive iron ore and steel project in
the eastern province of Santa Cruz.

A 2007 joint-venture agreement between Bolivia’s socialist

administration and Jindal requires the steelmaker to invest
$300 million each year of the first five-year period and
$200 million annually over the next three years, for a total
of $2.1 billion in direct investment over eight years.

“We see that there’s a delay in the investments. We trust

that Jindal will understand that it has to respect its
commitments; we’re demanding fulfillment of those
commitments,” Vice President Alvaro Garcia Linera told
reporters Tuesday.

Jindal has a contract to develop one half of the El Mutun

iron ore deposit, while the Bolivian government is to
exploit the other 50 percent.

The contract went into effect in May of this year and Bolivian authorities plan to evaluate the firm’s
compliance with its investment obligations beginning that same month of 2011.

The state-run ABI news agency quoted Bolivia’s mining director, Freddy Beltran, as saying that if Jindal
has not made the investments stipulated under the contract by that time the Bolivian government could
enforce an $18 million performance bond and “cancel the contract for non-compliance.”

Total investment by the Indian company this year in Bolivia’s mining and hydrocarbon sector amounts
to roughly $60 million.

For his part, Jindal’s director in Bolivia, Arvind Sharma, told ABI that the steelmaker has had “some
technical problems” related to lack
of electricity supplies that have
caused a “small” delay in approval
of the investment plan submitted
months back.

He said the joint venture’s board of

directors will meet in early January
to set a timetable for the company’s
first exports and also to consider a
new version of the investment plan
that, according to local media, the
Bolivian government has rejected
on two occasions.

El Mutun is located in Puerto

Suarez, a town near Bolivia’s
border with Brazil, and contains
some 40 billion tons of reserves of
mainly iron and magnesium.

Jindal began developing the deposit this year with two mineral processors with a 400-ton-per-hour
capacity and is awaiting approval of its investment and advance development plans so it can export the
iron ore.
 The delays affecting the project have included extra time needed by the government to expropriate
lands needed by Jindal.

In addition, an investigation was opened last month into the former president of Bolivian state
steelmaker Esem, Guillermo Dalence, and 32 other government officials for allegedly overpaying for
lands to be used for the project. EFE