After nearly three years of discussions, the five members of South America's Andean Pact have collectively decided to lay out the welcome mat to foreign investors. On May 13 in Quito, Ecuador, the trade ministers of the five countries - Venezuela, Colombia, Ecuador, Peru, and Bolivia - signed an agreement gutting Decision 24, the legal instrument that has stringently controlled foreign investment during the organization's 18 years.
Despite the gesture, however, businessmen say the countries should expect little new foreign investment, indicating they prefer to invest their money in nations with fewer economic and political problems.
They point out that none of the countries have been successful in their efforts to woo investors over the past several years.
``With investors facing severe economic and political instability, the Andean countries can't expect the changes to bring a flood of foreign investment,'' says a Western diplomat.
``Besides, Mexico and the Far East offer far better investment opportunities.''
The Andean countries must also compete against China, India, Canada, and others that have recently offered incentives to foreign investors.
Symbolically, at least, the new agreement represents a big change. Since the Andean Pact's founding in 1970, the five countries had espoused a ``Yankee Go Home'' sentiment that has helped slow foreign investment to a trickle. But they have changed their tune in the hopes that foreign capital will help reactivate their slumping economies.
``We need the jobs and technology foreign investment brings,'' said Pedro Luis Echeverria, one of the three members of the Andean Pact's governing board.
``Foreign investment is better than foreign debt,'' said Manuel Azp'urua, Venezuela's finance minister, in a comment echoed by officials of other Andean countries.
The accord will allow each country to establish its own regulations for foreign investors, instead of having one set of rules as Decision 24 required.
The only remaining Decision 24 decree that foreign companies will have to observe requires those businesses that export products to other Andean countries to sell majority ownership to local investors within 30 years in Peru, Venezuela, and Colombia, and 37 years in Ecuador and Bolivia.
Previously, the countries through Decision 24 put limits on such activities as the amount of profits companies could send abroad, how much money they could reinvest, and what sectors of the economy they could invest in.
It took the countries so long to agree to the changes largely because of opposition from various domestic business groups. The opposition in Venezuela was so strong that the government delayed the signing of the agreement by three months.
The economic and political problems the five countries in the pact face, which have been the main barriers to foreign investment, seem unlikely to end any time soon.
Low oil prices have forced Venezuela to seek a renegotiation of its foreign debt agreement and to scale back ambitious domestic spending plans.
Ecuador, like Venezuela, an oil-dependent country and a member of the Organization of Petroleum Exporting Countries, has announced it will not make foreign debt payments this year to commercial banks after earthquakes in March ruptured the country's only pipeline.
Colombia, although enjoying sharply higher dollar inflows from increased exports of coffee, oil, and coal, is beseiged by cocaine traffickers and communist guerrillas.
Peru notched an impressive 8 percent growth rate in 1986, but is quickly depleting foreign exchange and continues to face attacks by the Shining Path, a Maoist rebel group.
Bolivia, the poorest nation in the Andean Pact, has stopped cold a 22,000 percent inflation rate, but faces mounting unemployment from the recessionary policies the government adopted to end the hyperinflation.
Despite the bleak picture for the Andean Pact nations, two sectors are attracting foreign investment: petroleum and tourism.
Foreign oil companies have signed oil drilling contracts in each of the countries, while investment in tourism is increasing with the number of tourists having risen since last year's attacks on United States travelers in Europe.