Supreme Decree No. 5503 creates an Extraordinary Regime for the Promotion and Protection of Strategic Investments (REPPI), aimed at reactivating the Bolivian economy through the attraction of investments. Its premise states that it is “essential to streamline, flexibilize and modernize the legal framework for investment, creating favorable and competitive conditions for attracting domestic and foreign capital in strategic sectors of the economy.” The Decree seeks to ensure legal certainty, regulatory predictability and non-discriminatory treatment for investors.
Key features of the regime include:
• Definition of Priority Strategic Investments (IEP): investments aimed at developing natural resource production circuits and economic activities aligned with national development planning. The Decree identifies, among other activities, formal mining and metallurgy; hydrocarbons and energy; power generation and renewables; agribusiness and food; logistics and transport infrastructure; export-oriented manufacturing.
• Guiding principles: fair and equitable treatment, non-discrimination, legal certainty and legitimate expectations, regulatory and contractual stability, proportionality and regulatory reasonableness, and administrative good faith.
• Investment contracts approved by Supreme Decree: IEP projects may be formalized through investment contracts approved by supreme decrees, which may include incentives and legal stability clauses.
• Enhanced stability for up to 15 years: IEP investments benefit from legal and tax stability regarding (i) tax rates and structure; (ii) applicable tariff regimes; (iii) foreign trade rules; (iv) rules on access, use and repatriation of foreign currency; and (v) expressly recognized sector incentives.
Subsequent regulatory changes do not apply without investor consent.
• One-stop shop (VUIE): a single investment window is created under the Ministry of Foreign Affairs, with participation of the Ministry of Economy and Public Finance and the Ministry of Development Planning and Environment.
• Fast-track procedure: technical approvals are subject to a maximum term of 30 business days, with positive administrative silence and potential authority liability for missed deadlines.
• Conciliation and arbitration: the inclusion of arbitration and conciliation clauses is permitted under Law No. 708, with national or international arbitrators.
• Extraordinary and preferential application: while the declaration of economic emergency is in force, the Decree has extraordinary standing and prevails over incompatible general or sector regulations.
Implementation milestones
• Initial regulation of the VUIE: the relevant ministries must issue implementing regulations within 30 calendar days.
• Institutional adjustments: entities and ministries involved must adapt to the Decree within ten (10) administrative business days from publication.
Consistency with Law No. 516 (Investment Promotion)
The Decree appears to contradict certain provisions of Law No. 516. In particular: (i) Law No. 516 requires legislative approval for strategic contracts that include specific incentives, whereas DS 5503 provides for approval by Supreme Decree; and (ii) Law No. 516 contemplates incentives with a time frame of 1 to 20 years, while DS 5503 sets a 15-year stability period and details a fast-track procedure.