Latin America battles for investment

Latin America battles for investment

By Chris Aspin

MEXICO CITY (Reuters) - Latin America faces an uphill battle to win investment from the world's economic powerhouses ahead of emerging giants China and India unless the region undergoes deep political and social change.

For years, investors in the United States and Europe have chosen to build more factories and sink more money into Asian nations rather than into Latin America, which has meant lost opportunities and less growth for the resource-rich region.

Latin America desperately needs billions of dollars of investments to pull out of poverty, build the roads, bridges and dams it lacks and improve inadequate education systems.

Bertrand Delgado, economist with IDEAglobal research group, said Asia's labor force is more productive than Latin America's and that investors are still wary of the region's past debt defaults and economic instability.

"There is also a lack of investment (by people and governments of the region), a lack of infrastructure and a lack of coherent policies that promote export-orientated businesses, except commodities," Delgado said.

Latin America has huge natural resources from oil and gas to bananas, coffee and sugar to iron ore, copper and silver mines. But apart from a few major cities, especially in Brazil and Mexico, its manufacturing base is small.

Drawing investment to the region will be one of the top topics at the Reuters Latin American Investment Summit, which will take place in Reuters' offices this week.

Around 60 government ministers and top executives of telecoms, mining, banking and retail companies will participate in the summit.

One topic of interest may be the political risks of investing in the region. Venezuelan President Hugo Chavez is buying out private investors in power companies and telecoms companies and aims to take control by May 1 of four oil projects in the Orinoco basin worth $30 billion.

Bolivian President Evo Morales, the landlocked nation's first indigenous president, has vowed to boost state control of natural resources. He nationalized the energy industry last year and has said he will reform mining.

SLIM BETS ON REGION

Mexican tycoon Carlos Slim, the world's third-richest person with an estimated fortune of $49 billion who took part in last year's Reuters Latin America summit, is betting on the future of the region.

His flagship companies -- mobile phone giant America Movil (AMXL.MX: Quote, Profile, Research) (AMX.N: Quote, Profile, Research) and fixed-line phone company Telmex (TMX.N: Quote, Profile, Research) (TELMEXL.MX: Quote, Profile, Research) -- have both expanded rapidly across Latin America since 2000.

America Movil has around 125 million clients from the deserts of the U.S.-Mexico border to the glaciers of Argentina and Chile, beating Spain's Telefonica for the No. 1 spot in mobile phones in the region.
"We are going to continue investing, looking for more penetration," Slim, 67, said at a news conference this week.

Slim has long said he wants to help fight poverty, illiteracy and shabby health care in Latin America and lead a multibillion-dollar effort to improve infrastructure.

His construction companies plan in the next few years to build roads, hydroelectric dams, oil refineries, schools and hospitals.

Alongside his profit-making infrastructure development plans, Slim also aims to use his foundations to hand out $4 billion in donations and scholarships to boost health and education.