21 June 2011
Latin America represents a wealth of opportunity, but businesses must be proactive about working with the region’s governments to minimize regulatory hurdles and maximize growth.
That was a key takeaway from World City’s Government Affairs Connections event on June 17 at the Hyatt Regency in Coral Gables. The breakfast discussion was held exclusively for key executives of major corporations doing business in Latin America. Eduardo Santos, MasterCard International’s VP of Public Policy for Latin America and the Caribbean, served as the discussion leader.
Santos said that Latin American governments typically want their citizens to have access to credit card services, but the industry needs to partner with governments to insure they don’t stifle that goal with well-intentioned measures intended to protect consumers.
In the age when stolen credit card information can be bought with relative ease on the internet, electronic transactions face challenges everywhere, Santos acknowledged. But, as Latin American economies continue to develop, it’s important to balance security concerns with growth.
To that end, he recently met with members of Mexico’s congress, which is considering what he characterized as cumbersome legislation that would require credit cards to have the holder’s picture and thumbprint.
Salvador Perez-Galindo, Visa International’s VP of Government Affairs for Latin America and the Caribbean, said he was concerned that some countries may copy elements of the U.S.’s financial regulation overhaul legislation of 2010, better known as the Dodd-Frank bill.
He noted particular concern about Dodd-Frank’s provision that caps the fees that can be charged on debit card transactions – long a sore spot with merchants.
“What is happening in the U.S. is really a breaking point,” he said. “It will have a spillover effect in Latin America.”
Regardless of your business, one way to get ahead of the regulatory environment is to actively promote the company’s image instead of waiting for bad press, said Marco Malfavon, Communications and Public Affairs Director for telecom giant Alcatel-Lucent’s Latin America and the Caribbean division.
“Are we being a bigger player in the larger society, with political issues?” he asked. “We want to be part of the conversation and, in some instances, to change the conversation.”
Positive messaging should always be a concern in order to get people and governments to understand that companies aren’t inherently bad, added Fernando Figueredo, chair of the Public Relations and Advertising Department at Florida International University.
A marketing approach to working with Latin American governments should also be coupled with a strong legal strategy, Santos said. There are many benefits to involving the company’s legal department since marketing departments may be too focused on meeting sales goals in the near term and ignoring long term trends, he said.
WorldCity President Ken Roberts asked the attendees what Latin American trends were “keeping them up at night.”
Stan Clement, Federal Express’ Senior Regulatory Affairs Advisor for the Latin America and Caribbean division, said that there’s been progress in how goods are processed through Customs, but inefficiencies remain. He said that Brazil developed a new customs system that sometimes creates more work for shippers and customs officials alike.
In some cases, developing countries in the region are just now adopting computerized technology for their Customs processing.
“It’s not really the latest and the greatest,” he said. “They’re going from manual processing to 1990’s computer technology.”
But, with giant economies like Brazil and Mexico continuing to develop, the outlook is positive, Santos noted.
In the United States, almost everyone has a credit card but only about one in five people in Latin America do, he said. And, considering how mobile phones may ease the use of electronic transactions, the potential for growth is very promising.
“Hopefully, as people utilize new technologies, they will also become customers of ours,” he said.
Government Connections is one of seven event series organized by WorldCity to bring together multinational executives on international business topics. The next meeting is set for Aug. 26.