Caracas Chronicles

The world is mourning the death of Lee Kuan Yew, the visionary yet controversial father of modern Singapore.

We at home should also get ready to mourn the imminent passing of the Industrial Bank of Venezuela. Those two deaths have more in common than you think.

The term “padre de la patria” is thrown around a lot, but few could lay claim to the title more than Lee. Steering Singapore through independence, he led it to become the modern world’s most succesful development story. He did so thanks to a combination of sophisticated, counter-intuitive policy moves, as well as the repression of his political opponents.

At the same time, our Industrial Bank (BIV), the long-in-the-tooth State-owned financial institution, is practically bankrupt. The tale is the usual one: no accountability, cushy loans to cronies, no strategic vision whatsoever, and years (decades even) of mounting losses.

The funny thing is that it didn’t have to be this way.

Lee would have been the first to argue that in order to enact a succesful development policy, the State needs to have a bank, or at least some leverage with which to guide loans into “strategic” sectors. Singapore’s state-owned DBS Bank is the largest bank in Southeast Asia, enjoying enviable credit ratings and a rock-solid reputation. Thanks to a combination of honesty, clear-headed strategic planning, and a commitment to benchmarks for success, Lee’s Singapore is the poster child for industrial policy gone right.

Our BIV? Not so much.

When was the last time you heard the BIV run a profit? When was the last time you learned that a BIV loan ended up benefitting a local industry? Year after year, taxpayers have bailed out the BIV and most of the state’s financial institutions with little to show for it.

It’s a shame the BIV will have to die this way. But after its demise, we can probably sit back and think about what a sensible development bank should look like. Maybe we can star again from scratch, and learn a lesson or two from Lee Kuan Yew.