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Argentina: A Strategic Investment Destination to
Meet the Demand of Global Markets
Argentina: A Strategic Investment Destination to
Meet the Demand of Global Markets
Cecilia NahónUndersecretariat of Investment Development Ministry of Foreign Affairs, International Trade and WorshipMay 2011
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•Annual GDP growth of 7.4% over the seven year period of 2002-2009
•2010 GDP growth 9.2%
•Twin fiscal and current account surpluses (1.7% and 1.0% of GDP, respectively in 2010) provide strong foundations for continued economic growth
•Unprecedented accumulation of international reserves (US$ 52 billion in May 2011)
•Significant public debt reductions
•Earnings as a percent of FDI stock averaged 10.0% in 2006-2010
Sound fundamentals for sustainable growthThe Argentine economy has grown steadily since 2003. Argentina is among the fastest growing economies in the region.
GDP 2002-2010(billion AR$, constant prices)
Source: SUINV based on World Bank, BCRA and INDEC
-50
50
150
250
350
450
2002 2003 2004 2005 2006 2007 2008 2009 2010
+ 7.4%:
+ 9.2%:
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Growth fueled by investment growthInvestment grew steadily since 2003 and reached record-high levels in 2008. Fast recovery in 2010 with FDI flows growing 54%.
Source: SUINV en based on INDEC
15,1
19,2
21,5
23,4 24,2 23,322,0
20,9
22,8
20,6
14,3
17,7
19,8
21,622,6 23,1
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010
GFCF/GDP current prices GFCF/GDP constant prices
Gross Fixed Capital Formation (GFCF) as % of GDP(in current and constant prices)
1.652
4.1255.265 5.537
6.473
9.726
4.017
6.193
2003 2004 2005 2006 2007 2008 2009 2010
Foreign Direct Investment (FDI) (million of US$)
•High-saving, high-investment model, with a positive saving-investment gap
+ 21%
•FDI grew at an annual average rate of 43% between 2003-2008. In 2009 FDI contracted in line with FDI flows to the region and the rest of the world as a consequence of the global crisis. FDI were up 54% in 2010.
+ 54%
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Nearly 2,000 multinationals Total FDI stock of US$ 86 billionRanked 15th among emerging countries in FDI stock (2009)Foreign affiliates account for:
• + than 442,000 jobs (2009)• + than US$ 123 billion in sales
(2009)• 324 of the 500 largest non-financial
companies in Argentina
An economy integrated with the region and the worldLeading multinational companies operate in Argentina, most of them with a long-term vision and commitment.
Examples of multinationals with a presence in Argentina
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Italy is a prolific investor worldwideItaly is the 11th foreign direct investor in the world
•Italy is the 11th foreign direct investor
in the world with a total FDI stock of
US$ 578 billion and outflows of US$ 44
billion in 2009
•Italian FDI abroad grew in recent
decades
•Italian FDI in the world is concentrated
in the European Union (79% of total FDI
stock in 2007), while looking for new
emerging markets destinations
Evolution of Italian FDI abroad (In millions of US$)
Source: SUINV based on UNCTAD
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Italy is a significant investor in ArgentinaItalian FDI stock in Argentina grew at an annual average rate of 4.2% between 2004 and 2009
Evolution of Italian FDI stock in Argentina (In millions of US$)
Source: SUINV based on BCRA
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Italian FDI stock in Argentina is diversified Argentina captures 22% of Italian investments in the region
Italian FDI Stock by sectors(In %)
Source: SUINV based on BCRA
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Leading Italian companies operate in Argentina
Examples of Italian companies with projects or presence in ArgentinaExamples of Italian companies with projects or presence in Argentina
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Most encouraging country in the region to FDIAccording to the OECD, Argentina is the least restrictive country in the region when it comes to FDI.
• FDI Restrictiveness Index by country 2010
Source: SUINV based on OECD
Four types of measures are covered
by the FDI Restrictiveness Index:
(i) foreign equity restrictions
(ii) screening and prior approval requirements
(iii) rules for key personnel
(iv) other restrictions on the operation of foreign enterprises.
The highest score for any measure is 1 (the measure fully restricts foreign investment ) and the lowest is 0
(there are no regulatory
impediments to FDI).
Closed = 1 Open = 0
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Attractive business profitabilityFirms reached high levels of profitability in historic terms.
Source: SUINV based on Balance of Payments data and Survey of Big Companies INDEC
Net margin of the top 500 companies in Argentina(as a % of sales)
FDI return on assets(profits as a % of FDI Stock)
6.1
1.2
6.0
10.9
10.09.5 9.8 10.0
8.9
9,5
11,9 11,5
14,613,8
11,4
12,5
20032004
20052006
20072008
2009
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The opportunityGlobal trends are well aligned with Argentina's comparative and competitive advantages, making the country a strategic investment location in the new global scenario
Global trendsPopulation growth
Food & energy
demand expansion
Climate change
Manufacturing and
services outsourcing
R&D in emerging
markets
Argentina's advantages to meet global demand: key sectors
Why Argentina ?
Food & Beverages
Renewable Energies
Value added manufacturing
and services outsourcing
New technologies and R&D
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Diversified economy to meet global market needsArgentina presents profitable investment opportunities in a variety of strategic sectors for the world economy
Agro Industry
Value added and design manufacture
s
Renewable Energies
IT and Software Creative
Industries
Professional Services
Pharmaceutical
Industry and
Biotechnology
Tourism
Automotive and Auto
parts
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Sound fundamentals for sustainable growth
Attractive business profitability
Globally and regionally integrated economy Diversified economy to meet global market needs
Highly skilled, innovative and talented human resources
Abundant and diverse natural resources
Modern infrastructure and quality connectivity
Vibrant culture
Remarkable quality of life
Public sector supportive of investment
Foundations for successArgentina offers investors:
A winning formula to succeed in your business
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Public sector supportive of investorsWelcoming investors: protection and equal rights for foreign investors
The Argentine Constitution guarantees equal treatment and rights for local and foreign investors
The Foreign Investments Act (No. 21,382) defines the legal framework for foreign investments
Foreign investors may:
Remit abroad liquid profits arising as a return on their investment as well as repatriate their investment
Avail themselves of any of the legal forms of incorporation foreseen by Argentine legislation
Make use of domestic credits and loans with the same rights and under the same conditions as domestic
companies of domestic capital
Access all sectors of economic activity as there are no activities reserved exclusively for local enterprises
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Horizontal incentives
✓Investment Promotion Law (No. 26,360): early VAT
return and/or accelerated depreciation allowances for
investment on capital goods and infrastructure
✓0% tariff on imports of capital goods
✓0% tariff on imports of goods which are part of a large
investment project
✓For every new job created, 50% reduction on employers’
contributions during the first year of employment and a
25% reduction in the second year
✓Others: FONTAR, FONSOFT, SEPyME programs, incentives
to foster employment and exports (for further details
please see “Investment Incentives” published by SUINV)
Sector incentives
Specific benefits and incentives for diverse
sectors: automotive and auto parts, software,
biofuels, biotechnology, mining, forestry, public
infrastructure and hydrocarbons
Exemptions from provincial taxes for a
determined period of time
•Gross income
•Stamp taxes
•Property tax
Financial support for infrastructure investments and
purchase of relevant equipment
Public sector incentivesIncentives across sectors to boost investment
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The Undersecretariat of Investment Development is your strategic partner Providing professional assistance for your business to succeed in Argentina
✓Timely information and relevant advise on business sectors and geographical locations in Argentina
✓Identification of investment and innovation opportunities in strategic sectors
✓Facilitation of the whole investment process (generation, growth and after-care)
✓Building partnerships between foreign investors and local companies
Our group of professionals will gladly assist you with:
We are Argentina’s Undersecretariat of Investment Development within the Ministry of Foreign Affairs, International Trade and Worship.
Investment development activities are supported by a network of 130 permanent representations throughout the world.
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To learn more about how investing in Argentina can benefit you, please contact us:
(5411) 4328-9510
Thank You!