Latin America’s ever escalating violent crime rates are driving foreign investors to the less blood-thirsty investment centers of Asia.
Crime such as murder and kidnapping in Latin America is forcing up the costs of doing business in the region and, not surprisingly, making executives gun-shy to the through of accepting work assignments in the region. Investment is growing more speculative and Latin America is fast losing ground to Asia in attracting foreign money, a report issued by the Council of the Americas said.
Big cities that have long been business centers are the worst hit by crime, with executives rating Bogota, Caracas, Sao Paulo, Mexico City and Buenos Aires as the most dangerous. In Brazil, Latin America’s largest economy, 40% of homicides occur in Rio de Janeiro and Sao Paulo. In Argentina, 35% of people polled had been a crime victim in 2003.
“Unless Latin America and the Caribbean turn the tide on the violence and corruption that plague their societies, they will continue to underperform economically.”
Of particular concerns to executives is the potential for abduction, as terrorist organizations see this as a way to fast cash. “Hence the business community has become a more likely target and the impact on investors is significant,” the report said. As the private sector has to hire and equip security guards and investigators due to weak national policing, costs soar. For example, in Brazil, the cost of security for an executive for a year can top $80,000, including kidnap and ransom insurance. In Colombia, total private investment in security was $766 million, or 1.5% of GDP.