15 December 2010

Here’s a challenge that multinationals will face in Latin America in 2011: As fast-growing nations roll out new investment programs, from broadband to airports, companies must find ways to work with governments on planning, purchasing and regulations for those new ventures.

One tip to help reach key Latin American officials: Team up with the embassy of your company’s home country within that Latin American nation. A U.S.-based multinational, for example, might join with staff from the U.S. embassy in Chile to meet with Chilean officials on regulatory issues there.

Participants at WorldCity’s Government Affairs Connections shared those insights and other forecasts, concerns and tips on government relations at their meeting in Coral Gables on Dec. 10.

Overall, the group sees strong opportunities for business ahead, as Latin American economies are expected to grow 6 percent in 2010 and 4 percent in 2011, according to U.N. estimates. That’s faster growth than the U.S. rate and one of the best performances ever for the Latin American region.

Likely to command significant investment and government attention: telecom and internet industries. Brazil, Mexico and Argentina, for instance, either already have or are developing programs to expand broadband access. Multinationals want a role in shaping rules for those programs and in providing hardware, software and services, said Marco Malfavon, communications director in Miami for telecom company Alcatel-Lucent’s Latin American division.

Alcatel-Lucent as a French-U.S. company calls on its two home-country embassies to reach out to Latin American officials. It may work with either French embassy staff – or U.S. embassy staff – to secure meetings, depending which has better contacts in a specific Latin nation. It also has teamed with the Chinese, given its strong presence in China, to build ties with Venezuelan officials in China-friendly Venezuela, Malfavon said.

For Internet companies, key issues for 2011 include regulations on “net neutrality” and data privacy issues. In its meetings with Latin American officials, Yahoo! sometimes brings in company specialists from the United States or Europe to share insights on policy and regulation, said lawyer Laura Juanes, who helps run legal compliance in the Americas for internet company Yahoo!

Financial services companies, meanwhile, are watching how regulators in Latin America handle such sticky issues as “interchange fees,” or the fees that banks charge on credit, debit and other payment systems, said Salvador Perez-Galindo, vice president for government affairs at Visa Latin America.

“Regulators are showing more interest in these issues, because card use in Lain America is skyrocketing,” Perez-Galindo said.

In the United States, the government is considering a cap on interchange fees charged on debit cards. Governments in Latin America often take regulatory cues from Washington, participants said.

Other concerns for multinationals in 2011: Tighter enforcement by U.S authorities of the Foreign Corrupt Practices Act. That crackdown has multinationals more cautious, even about how they work with charities or pursue corporate social responsibility programs, the group said.

Government Affairs Connections is one of seven event series organized by WorldCity to bring together executives on international business topics. The Government Affairs series is sponsored by energy company Chevron. The next meeting is scheduled for Feb. 18.

Multinational companies represented at previous events in the Government Affairs series include Avaya, Baxter, Burger King, Caterpillar, Clorox, Crowley, Diageo, Discovery Networks Latin America, FedEx, MasterCard, Nokia, Novartis and Seaboard Marine.

 

 

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