why invest in argentina?
DESCRIPTION
This presentation gives the investor a view of Argentina´s key competitive advantages as well as strategic economic sectors. A must see presentation for investors that are looking to invest in Argentina produced by ProsperAr, Argentina's Investment Promotion Agency. This document was produced by ProsperAr, Argentina´s Investment Development Agency. If you would like to see more publications or sector specific information please go to www.prosperar.gov.ar or contact us at [email protected]TRANSCRIPT
Why invest in Argentina?
Naturally Talented to Meet Global Market Needs
October 2009
2
Solid foundations for sustainable growth and profitability
Highly skilled, innovative and entrepreneurial labor force
Abundance of natural resources, biodiversity and environmental sustainability
Access to a large regional market and a springboard to the world
Diversified economy to meet global market needs
Rich cultural heritage and remarkable quality of life
Modern infrastructure and quality connectivity
Public sector supportive of investment
Argentina’s Investment Development Agency
Why invest in Argentina?Argentina offers investors:
2
A winning formula to succeed in your business
3Argentina’s Investment Development Agency
Argentina at a glance(2008)
3
Area: 2,780 km²Population: 40.6 millionGDP: US$326.8 billionGDP per capita PPP:
US$14,413FDI: US$8.9 billionExports: US$82.1 billionImports: US$67.5 billion
Area: 2,780 km²Population: 40.6 millionGDP: US$326.8 billionGDP per capita PPP:
US$14,413FDI: US$8.9 billionExports: US$82.1 billionImports: US$67.5 billion
4
Solid foundations for sustainable growth and profitability
5Argentina’s Investment Development Agency 5
Source: ProsperAr based on INDEC
10.7
8.9 8.9
4.2
5.35.7
4.0
13.0
9.38.7
5.7
4.7
7.5
3.3
9.0
7.36.8
5.0
3.22.5
1.3
China India Argentina Brazil Chile ColombiaMexico
Average 2003-2006 2007 2008
Fastest growing economy in
Latin America
Selected Economies: GDP growth 2003-2008
Vigorous ExpansionSix consecutive years of rapid economic growth at an accumulated rate of 8.5% per year
6Argentina’s Investment Development Agency
Chile
Colombia
Ecuador
Peru
Mexico
Bolivia
BrazilSouth America
Uruguay
Paraguay
-5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0
C h ile
2010
2009
6
Balanced Accounts
Argentina maintained twin surpluses for six consecutive years and is the only country in the region expected to maintain them in 2009 and 2010
Source: ProsperAr based on INDEC and “Regional Economic Outlook 2009”, IMF
Current and Fiscal Account Surpluses(as a percentage of GDP)
Argentina
IMF's Current Account Projections 2009-2010(as a percentage of GDP)
0
1
2
3
4
5
6
7
2003
2004
2005
2006
2007
2008
IQ 2
009
Current account balance
Primary fiscal balance
7
A Resilient EconomyLower debt levels and record-high international reserve accumulation contribute to a more stable and predictable economy, even in the current global context
7
Source: ProsperAr based on the Ministry of Economy and the Argentine Central Bank
18 1819
2427 28 26
19
10
14
20
28
32
46 46 46
Dec
-94
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Aug
-09
Public Sector External Debt (% of GDP)
International Reserves(in billions of US$)
Argentina’s Investment Development Agency
147140
126
7164
5645
9083
76
3629 27
20
2002 2003 2004 2005 2006 2007 2008
Public Sector Total Debt
Public Sector External Debt
8
Dynamic Investment ProcessIn 2008, the highest investment rate in constant prices in the last 30 years was achieved
8
0
5
10
15
20
25
30
19931994
19951996
19971998
19992000
20012002
20032004
20052006
20072008
GFCF/GDP current prices GFCF/GDP constant prices
Source: ProsperAr based on INDEC
✓ Sustained growth in the investment rate (2003-2008)
✓ Fundamental pillar for a sustainable economy and an increasing production capacity
Gross Fixed Capital Formation as % of GDP(in current and constant prices)
Argentina’s Investment Development Agency
9Argentina’s Investment Development Agency 9
Global Crisis, Global ImpactThe financial and economic crisis has impacted developing economies through two main channels: financial and commercial
Financial channel:• Global credit crunch: Lack of liquidity and expensive financing• Risk aversion and “flight to quality” behavior • Growing uncertainty leading to lower investment levels and postponement of investment projects
Commercial channel:• Lower global trade flows negatively affecting exports• Reductions in prices, particularly commodities
• Global FDI fell 14.2% in 2008 and 44% during the IQ2009
• Cross-border M&A sales in developing countries fell 34.7% during the IQ2009
• Global trade volumes are expected to contract by 12.2% in 2009
• Emerging economies are expected to suffer a 6.5% fall in their exports
Source: ProsperAr based on UNCTAD and World Bank
10
% Change 2008 vs.
2007
% Change IT2009 vs.
IT2008
World -14.2 -44.0
Argentina 50.7 -47.6
10
Impact of the Global Crisis on Foreign Direct Investment In line with the rest of the world, FDI in Argentina contracted for the first time in the IVT 2008 and again in the IT 2009 and the IIT 2009
Source: ProsperAr based on UNCTAD and CEPAL.
Foreign Direct Investment(% Change, IQ 2009)
Argentina’s Investment Development Agency
-21%-21%
-39%-42%-46%
-51%-52%-56%-56%
-61%
-77%
-91%
Mal
aysi
a
Th
aila
nd
Bra
zil
U.S
.
Ch
ile
Ru
ssia
Arg
enti
na
Mex
ico
Ind
ia
Sin
gap
ore
Jap
an
Ko
rea
✓During the IIT2009, FDI experienced a 88.1% reduction from the same period in 2008.
✓Hence, FDI fell by 63.6% during the IS2009.
11
11
Impact of the Global Crisis on Gross Fixed Capital FormationInvestment in Argentina also contracted for the first time in the IVT 2008 and again in the IT 2009 and the IIT 2009
Source: ProsperAr based on UNCTAD and CEPAL.
Gross Fixed Capital Formation(% Change, IQ 2009)
% Change IT2009 vs.
IT2008
% Change IIT2009 vs.
IIT2008
Argentina -14.2 -10.7
India 6.4
S. Korea -6.2
Chile -9.3
Malaysia -10.8
Mexico -11.8
Brazil -14
Argentina -14.2
US -14.5
Singapore -14.8
Japan -14.9
Thailand -15.8
Russia -16.3
Turkey -29.7
China 28.6
-30 -20 -10 0 10 20 30
Argentina’s Investment Development Agency
During the IIT2009, GFCF fell by 10.7% from the same period in 2008.
Hence, investment suffered a 12.3% year-on-hear reduction in the IS2009.
12
Argentina’s Investment Development Agency
Chile-38.2%
Canada (*)-37.6%
EU (27)-31.7%
U.S.(*)-24.9%
Brazil-22.8%
China-21.7%
Argentina-21.3%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
12
Impact of the Global Crisis on Foreign Trade Argentina recorded a smaller decline in exports compared with the major economies of the region and the world
Sources: ProsperAr based on INDEC, SECEX , Central Bank of Chile, National Bureau of Statistics of China, Ministry of Development, Brazil’s Secretariat of Foreign Trade, Australian Bureau of Statistics, Centre of International Economy and IMF
✓The decline in exports of manufactured goods is also lower in Argentina than in the major economies
Exports (% Change, I Semester 2009)
*Figures from EU (27) and Canada correspond to the first five months.
13
Argentina’s Investment Development Agency
High Levels of ProfitabilityFirms reached high levels of profitability in historic terms during the 2004-2008 period
13
6.1
1.2
6.0
10.9
9.9 9.78.9
Source: ProsperAr based on Balance of Payments data and Survey of Big Companies INDEC
9.5
11.9 11.5
14.613.8
Net margin of the top 500 companies in Argentina(as a % of sales)
FDI return on assets(profits as a % of FDI Stock)
14
14
Rapid Increase in FDIFDI recorded great dynamism over the past six years and showcased in 2008, for the third consecutive year, a higher average than the 90s (net of privatizations)
Source: ProsperAr based on INDEC
Foreign Direct Investment (FDI) (in millions of US$)
2,087 1,8583,499
4,496
8,268 8,899
5,372
2,141 2,149 1,652
4,1255,265 5,537
6,473
9,753
6,8596,369
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
FDI net of privatizations Total FDI
23,988
US$5,300
Argentina’s Investment Development Agency
15
15
Greenfield Investment DestinationIn 2008, Argentina was the 3rd greenfield investment destination in Latin America and 2nd in South America, identified as one of the most attractive markets with highest international potential
Source: FDI Intelligence and British Ministry of Commerce and Investment
*Ranking excludes the BRIC countries. The world report is elaborated by the British Ministry of Commerce and Investment based on the opinion and perspective of more than 560 management executives of international companies.
Main FDI Greenfield Investment Destinations(2008)
Country # of projectsMexico 346Brazil 245Argentina 115Colombia 73Chile 64Other 263
Argentina’s Investment Development Agency
Markets with high potential growth for investors identified by the British Ministry of Commerce and
Investment*
Country
1 Vietnam
2 Mexico
3 United Arab Emirates
4 Ukraine
5 Indonesia
6 Singapore
7 Poland
8 South Africa
9 Argentina
10 Saudi Arabia
16
Argentina’s Investment Development Agency
Recent Investments
High profitability reassures big players to increase their commitment and attracts more leading companies to invest in Argentina
16
17
Highly skilled, innovative and entrepreneurial labor force
18
Argentina’s Investment Development Agency
Human CapitalHighly skilled and talented labor force
18
✓Ranked 1st in Guggenheim research fellowships, receiving the largest number of scholarships in Latin America (2009)
✓Over 85,000 graduates from higher education programs and 6,100 postgraduates per year
✓106 universities throughout the country
✓Ranked 4th in the Global Entrepreneurship Monitor (2008)
✓Ranked 5th worldwide in terms of quantity of ‘Think Tanks’ and nominated as a Regional Think Tank Hub by the University of Pennsylvania (2008)
82
66
65
65
51
43
42
30
24
24
24
21
9
5
0 10 20 30 40 50 60 70 80 90
United States
Spain
Italy
Argentina
Europe & Central Asia
Chile
Uruguay
Latin America & Caribbean
World
Middle East
Brazil
East Asia & P
South of Asia
Sub-Saharan Africa
Source: ProsperAr based on World Bank, GEM 2008 and University Yearbook 2009, Ministry of Education
Gross Entry Ratio to Tertiary Education(% of new entrants)
19
Argentina’s Investment Development Agency
Science, Talent and CreativityA leader in the region
19
Country 1990-2005
United States 4,605
Spain 2,195
Argentina 720
Chile 444
Mexico 268
Brazil 344
Colombia 109
✓Advertising Industry:One of the three best places in the world to look for ideas according to the Gunn Report 2008
✓Research & Development: Highest number of patents per million inhabitants in Latin America registered with the U.S. Patent and Trademark Office over the past whole 45 years
Source: Human Development Report 2007/08, United Nations, United States Patent and Trademark Office
Researchers (per million inhabitants)
20
Bernardo HoussayNobel Prize in Physiology or Medicine 1947
For his discovery of the course of the catalytic conversion of glycogen.
Luis F. LeloirNobel Prize in Chemistry 1970
For his discovery of sugar nucleotides and their role in the biosynthesis of carbohydrates. César Milstein
Nobel Prize in Physiology or Medicine 1984For his theories concerning the specificity in development and control of the immune system and the discovery of the principle for production of monoclonal antibodies.
Argentina’s Investment Development Agency
A Tradition of Research Excellence Number one in Latin America and forth in the developing world in terms of science related Nobel Prizes
Recent awards received by Argentine scientistsand researchers
✓An Argentine scholar was the only Latin American to receive one of the 18 foreign associate positions granted by the National Academy of Sciences of the United States in 2008.
✓The Maxime Becher medal, granted every 3 years by the US Mathematics Society, was awarded to an Argentine mathematician in 2008.
✓Argentines received the highest number of Guggenheim Foundation awards in Latin America; 13 out of the 36 awarded in 2008.
✓Argentina received the L´Oréal-Unesco for Women in Science Award for the Latin American region for two consecutive years (2007-2008).
✓Two Argentine physicists were honored by the Nobel Physics Laureate George Smoot in 2006.
20
Source: ProsperAr based on CONICET, The Nobel Prize Organization and Argentine press releases.
21
Argentina’s Investment Development Agency
High Returns on Knowledge ProducedArgentine scientists are the most prolific in terms of knowledge production in the region (as measured by science publications)
21
22.3
18.516.5 16.3
Argentina Brazil Mexico Chile
4.84.6
1.6
0.2
Argentina Chile Brazil Mexico
Science Publications per 100 Full Time Researchers (Full-time or equivalent - 2007 or last available year)
Science Publications per Million Dollar Spent in R&D (2007 or last available year)
Source: ProsperAr based on the Argentine Center of Information on Science and Technology (CAICYT).
22
Argentina’s Investment Development Agency
Outstanding Performance, Today and TomorrowThe most innovative country in South America
22
1
2
20
39
42
46
47
48
49
52
62
67
69
0 14 28 42 56 70 84
Japan
Switzerland
Ireland
Russia
Argentina
China
Chile
Mexico
Brazil
India
Colombia
Peru
Ecuador
Innovation Prospects Ranking 2009-2013 (Position: highest=1, lowest=82)
2004/2008Ranked as the most
innovative country in South America and one of the best in the
developing world
Source: ProsperAr based on Innovation Index, Economist Intelligence
23
Argentina’s Investment Development Agency
Rising Capacities and Greater CapabilitiesRemarkable labor productivity gains
23
100
110
120
130
140
2003 2004 2005 2006 2007 2008
Source: ProsperAr based on INDEC
+30%
Labor Productivity (Index 2003=100)
24
EntrepreneurshipArgentina ranks fourth on the Global Entrepreneurship Monitor (2008)
24
Global Entrepreneurship Monitor Ranking(2008)
Source: ProsperAr based on GEM 2008
05
1015
202530
3540
4550
Bo
livia
Co
lom
bia
Pe
ru
Arg
en
tin
a
Ec
ua
do
r
Do
min
ica
nR
ep
ub
lic
Ind
ia
Bra
zil
An
go
la
Ch
ile
Eg
yp
t
Uru
gu
ay
Me
xic
o
Se
rbia
Large group of talented and motivated entrepreneurs
Business schools have international prestige in the field
Argentina’s Investment Development Agency
25
Abundance of natural resources, biodiversity and environmental sustainability
26
Argentina’s Investment Development Agency
Size, Abundance and VarietyTo enjoy and develop
26
✓8th largest country in the world, 2nd in Latin America
✓9th largest agricultural area in the world
✓32 million Ha of forests ✓4,500 km of exploitable mining
resources✓4,700 km along the Atlantic Coast
with rich fisheries✓3rd largest fresh water reservoir in
the world, the Guaraní Aquifer (shared with Brazil, Paraguay and Uruguay)
Source: ProsperAr based on United Nations Food and Agriculture Organization (FAO), CIA World Factbook, and other sources
27
Argentina’s Investment Development Agency
Diverse Energy SourcesOutstanding natural resources to fuel growth
27
✓Vast oil and gas resources with exploration opportunities
✓Hydraulic energy generates 38% of the total electricity
✓Growing wind and solar energy production
✓Three nuclear power generation plants
✓One of the top five biofuel producers worldwide
✓Incentives for renewable energy production under Law 26,190 (2006)
Source: ProsperAr based on United Nations Food and Agriculture Organization (FAO), CIA World Factbook, and other sources
28
Argentina’s Investment Development Agency
From High Peaks to Blue LakesVaried terrenes
28
✓Exuberant beauty and extraordinary flora and fauna can be found throughout Argentina.
✓Visitors are captivated by the deep blue lakes, high mountain peaks, large salt pans, paleontological sites, fertile valleys, snow-covered volcanoes, subtropical rain forests, crystal-like glaciers, white deserts, long rivers, boundless flat lands and vibrant cities.
29
Argentina’s Investment Development Agency
From the Warm North to the Cold SouthMultiple climates
29
✓The North: warm; from subtropical with a wet season to tropical without a wet season; including tropical highland.
✓The Center: moderate temperatures; influenced by the ocean, moderately arid; the Pampas grassy plains.
✓The West and South Center: Patagonian cold temperatures; arid mountains and plains.
✓The South: cold, arid and windy; humid in the far South; high mountain snow.
30
Argentina’s Investment Development Agency
Eco-Intelligent GrowthCommitted to environmental sustainability
30
174,000 km² of protected areas
(6.4% of national territory)
1
2
35
38
39
46
47
97
105
120
0 14 28 42 56 70 84 98 112 126
Switzerland
Sweden
Brazil
Argentina
United States
Australia
Mexico
South Africa
China
India
Source: ProsperAr based on Yale Environmental Sustainability Index and World Development Indicators, WB
Yale Environmental Performance Index (Position: highest=1, lowest=149)
Access to a large regional market and a springboard to the world
32
Argentina’s Investment Development Agency
An Internationally Recognized ChoiceOne of the fastest growing FDI destinations in the world
32
1.7
4.1
5.3 5.5
6.5
9.7
2003 2004 2005 2006 2007 2008
Growing FDI (in billions of US$)
Source: ProsperAr based on International Accounts, INDEC and UNCTAD
2nd South American FDI destination for greenfield projects
(2008)
2008
World -14.2 %
Developed economies -29.2 %
Developing economies 17.3 %
Latin America & Caribbean 13.2%
Argentina 50.7 %
FDI Inflows Growth
33
Argentina’s Investment Development Agency
An Economy Integrated to the Region and the WorldLeading multinational companies operate in Argentina, many of them with a long-term vision and commitment
33
Top 50 Transnational Corporations with a presence in Argentina
Nearly 2,000 TNCs(half of the Fortune 100).
Many TNCs operating with along-standing tradition and
long-term vision
34
Argentina’s Investment Development Agency 34
CLISA
Top 50 Local Multinationals
Going GlobalLeading Argentine companies operating internationally
35
Argentina’s Investment Development Agency
Open EconomyRising trade flows
35
3440
47
55
66
82
20
29
3643
56
70
2003 2004 2005 2006 2007 2008
Exports Imports
Exports ↑ 19%
(average annual growth rate
2003-2008)
Imports ↑29%
(average annual growth rate
2003-2008)
Source: ProsperAr based on INDEC
Rising Exports and Imports of Goods and Services(in billions of US$)
36
Argentina’s Investment Development Agency
A Global OpportunityA gateway to Latin America’s largest markets and a springboard to the world
36
Main trade agreements:
Trade negotiations underway include an agreement with the South African Customs Union (SACU), countries of the Gulf Cooperation Council and Morocco; a more comprehensive agreement with the European Union (EU); a trade preference agreement with India; and a free trade agreement with Israel (in process).
14,41413,295
10,326
4,778
Argentina Uruguay Brazil Paraguay
Source: ProsperAr based on IMF
MERCOSUR: Customs Union
Members: Argentina, Brazil, Uruguay, ParaguayAssociates: Bolivia, Chile, Colombia, Ecuador, Peru, Venezuela
Mercosur member countries GDP per capita (PPP dollars 2008)
GDP: US$1.9 trillionPopulation: 241 million inhabitants
37
Argentina’s Investment Development Agency
Linked UpInternational synergies for global integration
37
WORLD TRADE ORGANIZATION: Founding member
G-20: Argentina and Brazil are the only two members representing South America
Investment Protection and Promotion Treaties: 59 bilateral investment treaties
ALADI ( Latin American Integration Association) provides the institutional framework for regional integration, promoting the creation of an area of economic preferences in the region, with the ultimate goal of establishing a common Latin American market.
Members: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela and Cuba.
38
Argentina’s Investment Development Agency
Open SocietyAuspicious environment for business to thrive
38
✓ Open Society
✓ Commitment to democracy and freedom
✓ Free of religious, ethnic and armed conflicts
Map of Freedom 2008
Argentina is a free country with a high degree of political and civil freedom, according to the findings of the Freedom House 2008 survey. The survey concluded that more than half of the world does not enjoy full freedom.
FREE
PARTLY FREE
NOT FREE
Source: Freedom House
39
Diversified economy to meet global market needs
40
Argentina’s Investment Development Agency
Producing VarietyWidely diversified economy
40
GDP by Sector (% of GDP, 2008)
Source: ProsperAr based on INDEC
Real estate & business services
11%
Wholesale & retail trade
12%
Education, health & community services
13%
Manufacturing industry21%
Agriculture, livestock, forestry & fishing
10%Transport, storage & communications
8%
Government6%
Construction 6%
Financial intermediation 5%
Mining 4%
Hotels & restaurants3%
Electricity, gas & water1%
41
Argentina’s Investment Development Agency
Investment Opportunities Across Sectors in Argentina
41
Agro-Industry, Wine &
Biofuels
Manufactured Goods with Added Value
or DesignBiotechnology
Pharmaceuticals & Health
Professional Value-Added
Services
Creative Industries
Software & Information Technology
Mining & Forestry
Tourism
42
Argentina’s Investment Development Agency
Agro IndustryLeading global producer & exporter of food commodities and products
42
24.5
18.2
73.3
32.0
50.2
20.5
23.3
14.7
11.6
12.0
9.9
1.3
Natural honey
Pears
Lemon juice, concentrated
Safflower seeds
Soybean oil
Grape juice
Sunflower oil
Lemons and limes
Soybeans
Safflower oil
Powdered whole milk
Sunflower seeds
Argentine Share in Global Exports and Global Position(export % and position)
Source: ProsperAr based on FAO data
43
Argentina’s Investment Development Agency
Agro IndustryHigh agricultural efficiency and productivity
43
Soybean Production Yield(Hectograms/Hectare, 2007)
Wheat Production Yield(Hectograms/Hectare, 2007)
Source: ProsperAr based on FAO
29,711 28,133 28,06624,369 23,010
ArgentinaBra
zil U.S.
Australia
Canada
28,270 27,046
23,220 22,199
10,562
ArgentinaU.S.
CanadaBra
zil
Australia
44
Argentina’s Investment Development Agency
Agro IndustryBooming exports & innovation
44
✓16% of the total expenditure on innovative activities is for agro industry
✓8% of the manufacturing’s R&D investments are agro-industry related
✓55 biotech firms are working to further develop the country’s Food & Beverage industry
Source: ProsperAr based on INDEC
R&D Applied to the Value Chain
Rising Manufactured Exports of Agricultural Origin(in billions of US$)
1112
1415
21
28
20032004
20052006
20072008
45
Argentina’s Investment Development Agency
Wine IndustryUnique terroir, tradition and freedom to innovate
45
Source: National Vitiviniculture Institute (INV)
0
100
200
300
400
500
600
700
2001
2002
2003
2004
2005
2006
2007
2008
mill
ions
of U
S$
0
50
100
150
200
250
300
350
400
450
mill
ions
of l
iter
sMillions of liters US$ millions
Wine Exports (in millions of US$ and in million of liters) 5th largest
producer in the world
7th largest domestic market
7th largest exporter in the world
Fastest growing exporter in the world (22.3% per year, 2002-2008)
46
Argentina’s Investment Development Agency
Wine IndustryQuality-Value advantage positions Argentine wines globally
46
Traditional and High Potential Markets Growing Sophistication and Value Added
237%
44%
35%
24%
25%
Icon
UltraPremium
SuperPremium
Premium
PopularPremium
Export Growth by Price Segment compound annual growth rate (2002-2008)
Glass-Bottled Wine Exports by Country Destination (2008)
Source: Wine of Argentina and Wine Area
United States29.0%
Others15.4%
Canada10.4%
U.K.9.3%
Netherlands7.1%
Brazil 7.7%
Latin America5.2%
Other Europe4.6%
Asiatic Countries3.8%
Nordic Countries3.7%Mexico
2.5%Russia1.2%Russia
1.2%
47
Argentina’s Investment Development Agency
BiofuelsA green powerhouse: competitive production of renewable & clean energy
47
14.3%
12.0%
11.6%
11.1%
7.2%
U.S.
Germany
France
Brazil
Argentina
Projection of Top Five Biodiesel Producers in 2010(share in total production %)
Source: World Ethanol and Biofuels Report by the Consulting Company F.O. Lichts
Investment Incentives Biofuels: accelerated
depreciation of income tax and early return of VAT for
capital goods and equipment.
✓ Competitive advantage based on abundant and high-quality natural resources, qualified human resources and existing industrial capacity.
48
Projected Rise in International Demand
Argentina’s Investment Development Agency
BiofuelsStrong international and domestic demand
48
0
4,750
9,500
14,250
19,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: ProsperAr based on the Energy Secretariat
✓Diesel, easily replaceable by biofuel (biodiesel), leads domestic fuel consumption accounting for 66% of total consumption.
✓Argentine Biofuel Law 26,093 (2006) establishes mandatory biofuel mixes (5%) by 2010.
Countries with mandatory biofuel (biodiesel) mixes✓European Union✓Brazil✓United States✓Japan✓Canada
Projected Diesel Consumption(in thousands of m3)
Estimated growth rate: 3,5%
49
Manufactured Goods with Added Value or DesignAttractive selection of investment opportunities
49
Agencia Nacional de Desarrollo de Inversiones
Auto Parts IndustryDeveloped and innovative industry with a long tradition in the country.International leading companies with presence in Argentina: Fiat, Ford, General Motors, Mercedes Benz, Peugeot-Citroën, Renault, Toyota, Volkswagen, Iveco and Scania.Great opportunity for growth in auto parts to complement regional and global demand in the automotive industry which is increasing in sophistication and innovation. Success case: Rafaela, Santa Fe (Basso) is a leading world producer and exporter of valves.
Agro Industrial Machinery and Precision InstrumentsMajor agro machinery cluster with more than 100 years of expertise, 40,000 employees (80% skilled labor) and 650 factories.Know-how to produce innovative equipment for new agronomic practices like “Direct Sowing”.A growing production of high-tech precision agro components.
50
Manufactured Goods with Added Value or DesignAttractive selection of investment opportunities
50
Agencia Nacional de Desarrollo de Inversiones
Manufactured goods with design: sailboats, cruisers and vesselsHigh quality and international recognition.Over 25 years exporting to developed countries mainly the European and Asian markets.Integrated value chain: 120 builders of sailboats, cruisers, vessels, inflatable boats, equipment and all necessary services for the production and maintenance of a wide range of boats.Installed capacity of 700,000 m2 and occupying 700,000 people.
Nuclear, Spatial and Industrial EngineeringINVAP: technology-based company dedicated to developing advanced technology in nuclear, aerospace, medical and industrial sectors.In 2000 won an international tender, beating specialized companies from countries like Canada, Germany and France for a 20 MW reactor power, which was sold for approximately US$200 million.The reactor is used for scientific research in the fields of health, environment and industry and the production of radioisotopes for medicinal purposes, catering to Australia, New Zealand and Southeast Asian market. IMPSA: global company dedicated to producing solutions for power generation from renewable resources.
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Argentina’s Investment Development Agency
Pharmaceutical IndustryLong standing tradition, innovation and rising potential
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Source: Argentina Industrial Chamber of Pharmaceutical Laboratories (CILFA)
Growing Sales & Exports(in millions of US$)
✓Highest local market share of domestic labs in comparison with other Latin American countries.
✓Local labs in Argentina account for 56% of local sales while domestic firms in Brazil account for 25%, 24% in Uruguay, and 12% in Mexico.
✓Two companies included in the Ranking of the 19 Argentine Multinationals (ProsperAr-Columbia).
National Labs56%
InternationalLabs44%
Market Share of International & National Labs in Argentina
0
500
1,000
1,500
2,000
2,500
3,000
2003 2004 2005 2006 2007 2008
Sales Exports
+69%
+134%
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Argentina’s Investment Development Agency
Health IndustryApplied knowledge
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✓The rate of clinical trials per 100,000 inhabitants is 1.45, nearly double the average (0.79) in Latin America.
✓Competitive advantages due to solid hospital infrastructure and hi-tech equipment.
✓Creation of the clinical trial registry in 2009: critical tool for researchers, experts, patients and donors.
✓Focus on the more advanced phases of clinical trials.
Source: ProsperAr based on CEPAL (2008) and CAEME
34.0 37.244.9
49.6
65.8
91.8
2002 2003 2004 2005 2006 2007
+170%
Share of Clinical Trials by Phase (in %)
Clinical Research Investments in thePharmaceutical Industry (in millions of US$)
Phase I 1%
Phase II 18%
Phase IV 68%
Phase III 13%
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BiotechnologyApplied research and first-class scientists
✓More than 35 bioscience research institutes operating in private companies and universities
✓Highest number of biotechnology companies per capita in Latin America
✓Leader in GMO applications accounting for 17% of world GM crop area
✓ Integrated with industrial production (agricultural and pharmaceutical industries)
✓High-calibre scientists and researchers
✓Two biotechnology companies included in the Ranking of the 19 Argentine Multinationals (ProsperAr-Columbia)
Source: Biotec Sur, International Service for the Acquisition of Agri-biotech Applications (ISAAA) and Bisang, Gutman, Lavarello, Sztulwark and Diaz (2006)
Biotechnology Investment Incentives: accelerated depreciation of income tax and early
reimbursement of VAT intended to reduce payments in the first years in purchase of capital
goods and related equipment
Human Health11%
Food Ingredients
15%
Animal Health25%
Seeds & Plants41%
Inoculants8%
Biotechnology Sales(by type)
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Argentina’s Investment Development Agency
Professional Value Added Services High quality at competitive costs
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Source: ProsperAr based on Balance of Payments data, INDEC, Deloitte Global Shared Services Survey 2009 and Global Services Magazine
Cultural & Entertainment(US$419 mn) IT
(US$770 mn)
Business, Professional & Technical (US$3,7oo mn)
✓ According to Deloitte’s latest Global Shared Services Survey, 265 leading global firms from all sectors, rank Argentina as the fifth best location for outsourcing services for it’s labor quality and availability, just below the US, India, UK and China (2009)
✓ Buenos Aires as the 14th most attractive city in the emerging world for outsourcing activities (“Global Services” index)
✓ A location with the presence of leading companies: Globant, Atento, Teletech, Teleperformance, Motorola, Microsft, HP, IBM, Citibank, Repsol, CapGemini, Tata Consulting and Nextel
Record Levels of Exports of Value Added Professional Services = US$4.9 billion(2008)
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Argentina’s Investment Development Agency
Professional Value Added Services Strong advantages make Argentina a global center for skilled outsourcing
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Source: ProsperAr based on Balance of Payments data, INDEC, ATKearney Consulting and Global Services Magazine
Minimal time difference with the US and main European cities✓ High penetration and best English levels in
the region (Cambridge ESOL exams)✓ Other languages spoken: Italian, German,
Portuguese and French ✓ Cultural similarities with European markets✓ Competitive costs✓ World renowned creativity
(advertising and design)✓ Native Spanish speakers reaching out to a
population of 500 million people that speak the language worldwide
Argentina Time Zone = GMT -3 hours
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Argentina’s Investment Development Agency 56
Growing Software Production & Exports (in millions of US$)
Source: ProsperAr based on Cessi and INDEC
0
500
1,000
1,500
2,000
2,500
2003 2004 2005 2006 2007 2008
SALES EXPORTS
+364%
+152%
✓ 1,600 software companies (60% SMEs)
✓ Young and dynamic sector: 40% of the SMEs started operations after 2002 and 85% after 1991
✓ In 2008 exports accounted for 28.6% of total sales and 55% of all software companies export
✓ Leading international presence: IBM, NEC, Siemens, Google, Oracle, SAP, Intel, Motorola and Sabre Holdings
✓ According to The Economist's technological ranking, Argentina surpasses Mexico, Colombia and Peru and ranks 3rd in Latin America after Brazil and Chile (2009)
Software and IT Industry Thriving growth driven by innovative local firms and leading global companies
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Argentina’s Investment Development Agency
Software and IT IndustryTalented labor force and public support
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Source: ProsperAr based on Cessi and other sources
Córdoba
Santa Fe
Mendoza
Tandil
Mar Del Plata
Buenos Aires
Gualeguaychú
Rosario
✓ Available and affordable high skilled labor force
✓ 243 IT degrees offered locally
✓ Some 70,000 students enrolled in university-level informatics programs
✓ Public-Private cooperation networks
✓ Software Promotion Law (2004)
✓ Diverse attractive locations
IT Industry Investment Incentives: 10-year tax stability; tax credit up to 70% of employers’
contributions; 60% reduction in income taxes.
IT Hot Spots
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Argentina’s Investment Development Agency
Creative IndustryDiverse and attractive segments
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HOTSECTORS
AdvertisingAdvertising
PublishingPublishing
AudiovisualAudiovisual
DesignDesignFashionFashion
VideogamesVideogames
MusicMusic
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Argentina’s Investment Development Agency
Creative IndustryA flourishing cluster
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The Gunn Report 2008
The most awarded countries in the world in 2008
TV & Cinema Print Interactive Gunns
Blazing(*) Total
U.S. (1) 149 52 91 39 331
Great Britain (2) 124 39 45 4 212
Argentina (3) 99 21 2 7 129
Germany (4) 47 35 31 6 119
Japan (5) 42 1 60 14 117
Advertising
2005 2006 2007
Annual growth rate 19.6% 18.6% 15.0%
As a % of total GDP 2.6% 2.8% 3.0%
Export boom: US$500 million in 2007, double 2002 values
Cultural GDP
Source: ProsperAr based on The Gunn Report 2008. (*) Note: Gunns Blazing tallies allawards given under the various labels of Integrated, Mixed Media, Innovative, Content and Contact, Titanium, and other advertising award categories; Frapa (The Format Recognition and Protection Association)
Source: ProsperAr based on SINCA.
Argentina, leading television content exporter: 4th exporter in TV contents wordlwide
Argentina in Top 3 : One of the three best places in the world to look for ideas. And one of the three best to produce them, according to The Gunn Report.
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Argentina’s Investment Development Agency
TourismMagnificent cultural experiences and a striking geography attract global tourism
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1,0521,476
1,883
2,472
3,0603,295
2001 2004 2005 2006 2007 2008
Rising Tourism Expenditures(in millions of US$)
Source: Tourism Secretariat
0.93
1.511.79
2.062.30 2.33
2001 2004 2005 2006 2007 2008
Tourist arrivals(in millions of people)
✓ One of the most exciting and diverse tourist destinations in Latin America offering from wine tourism to eco-friendly adventures
✓ Buenos Aires ranked in the top 5 cities to visit in the world for 3 consecutive years (Travel & Leisure, 2009)
✓ Buenos Aires ranked #1 gay friendly city by Out Traveller Magazine
✓ Excellent hotel infrastructure throughout the country
✓ Exquisite gourmet dining & restaurants
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Argentina’s Investment Development Agency
Mining IndustryNatural advantage and strong incentives
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Source: Mining in Numbers 2008, Mining Secretariat
In figures…
Mining Investment Incentives: 30-year tax stability, exemption from
tariffs on imports of capital goods among other tax benefits
2003 2008Accumulated growth rate
2015 projected
Investments (millions of US$) 224 1,771 748% 10,079
Exports (millions of US$) 1,119 3,558 241% 7,330
Exploration (meters drilled) 170,000 500,000 201% NA
Direct employment (inhabitants) 19,000 40,000 110% 87,250
Production (GPV in millions of US$) 1,383 4,554 253% 9,476
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Argentina’s Investment Development Agency
ForestryGrowing opportunities
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648
821 842
9891,0481,032
2003 2004 2005 2006 2007 2008
Source: ProsperAr based on INDEC Trade database..
Timber exports (in millions of US$)
✓ Endowed with large and varied extensions of primary forests, ranging from subtropical forests in the North to coniferous forests in the South.
Forestry Investment Incentives: 30-year tax
stability, extendable to up to 50; early VAT return; special depreciation for income tax
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Rich cultural heritage and remarkable quality of life
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Argentina’s Investment Development Agency
Create, Experience, Enjoy!Exciting and dynamic culture
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✓Rich urban life with an endless arrayof cultural activities: 928 museums, 2,813 theaters and 448 cinemas.
✓Buenos Aires chosen World Book Capital 2011 by UNESCO with 2,191 public libraries.
✓Argentina is the World Capital for enjoying Soccer and Polo, and has talents such as Ginobili in the NBA, Del Potro in Tennis and Los Pumas in rugby.
✓For golf lovers, the country offers golf courses amidst mountains, on sea coasts, in jungle regions, in the forest or even in the city.
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Argentina’s Investment Development Agency
Live ArgentinaRemarkable living standards
✓Argentina has the highest quality of life index in the region, right after Canada and the UK, taking the 21st position from a total of 194 countries surveyed (International Living 2009)
✓Argentina is ranked in the High Development category of the Human Development Report and is ranked 2nd in Latin America (UNDP 2009)
✓Buenos Aires was nominated as the best city to live in Latin America (The Economist 2009)
✓Buenos Aires, together with Berlin and Montreal, was appointed as City of Design under the UNESCO Global Alliance's Creative Cities Network
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Argentina’s Investment Development Agency
Share ArgentinaCelebrating cultural richness and diversity
✓Ranked first in the region in UNDP Gender-related development Index (2008)
✓Buenos Aires ranked as the number one worldwide gay friendly city in Out Traveler Magazine (2008)
✓The country offers world-class health services at the most competitive costs and caters for international education with bilingual schools and universities responding to numerous cultures.
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Argentina’s Investment Development Agency
Explore ArgentinaBreathtaking views, magnificent natural scenes
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Source: ProsperAr based on UNESCO
UNESCO World Heritage Sites
✓Iguazu Falls & National Park, recently chosen as world best attraction (The Guardian, 2009)
✓The Perito Moreno Glaciers ✓Jesuit Missions of the Guaranis✓Archaeological site Cueva de las Manos,
and the Pinturas River Canyon✓Valdes Peninsula✓Ischigualasto and Talampaya
Natural Parks✓Jesuit Block and Estancias of Cordoba✓Quebrada de Humahuaca
Modern infrastructure and quality connectivity
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Argentina’s Investment Development Agency
A Road to SuccessModern infrastructure connecting Argentina within and beyond its borders
Source: ProsperAr based on CIA world fact book and Ministry of Federal Planning, Public Investment and Services
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✓31,909 km of railways, 9th in the world
✓231,374 km of roadways, 23rd in the world
✓25 sea ports and 38 river ports
✓11,000 km of waterways, 12th in the world
✓58 airports, 23 of them international
✓Pipelines: • Gas: 28,138 km• Oil: 5,939 km• Refined products: 3,629 km
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Source: ProsperAr based on CIA world fact book and National Communications Commission
✓Showcases the highest broadband penetration in the region with 8.8% according to Cisco's Barometer (2008)
✓Modern and competitive network, in a highly deregulated market
✓Highest mobile and fixed-line density in South America
✓Ranked 18th worldwide in terms of Internet usage, with 3.8 million hosts and more than nine million users
Broadband Penetration in Latin America(in %)
Modern ConnectivityAdvanced and competitive telecommunications
Venezuela: 3.6%
Brazil: 5.2%
Uruguay: 7.6%
Argentina: 8.8%
Colombia: 4.1%
Peru: 2.7%
Chile: 8.8%
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Argentina’s Investment Development Agency
Committed to ImprovementNational Plan to boost infrastructure capacity
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Source: ProsperAr based on Ministry of Federal Planning, Public Investment and Services
The National Strategic Plan for Infrastructure 2003-2011 aims to increase:
Gas transport-distribution by 30% Electric energy generation by 72% Transport network by 69%
The Key Investment areas are:✓Energy
‣ Gas transport‣ Electricity generation & transport
✓Transport infrastructure‣ Roads‣ Railways‣ Waterways‣ Ports‣ Airports
✓Living conditions‣ Water works, sewage and irrigation‣ Homes‣ Health and Education
Increasing Infrastructure Budget(in billions of US$)
0.31.1
1.7
3.24.7
5.8
8.0
16.0
2002
2003
2004
2005
2006
2007
2008
2009
p
Public sectorsupportive of investment
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Argentina’s Investment Development Agency
Welcoming InvestorsProtection and equal rights for foreign investors
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Equal treatment and rights extended to foreigners, guaranteed by the Argentine Constitution
✓Equal treatment for local and foreign investors
✓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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Argentina’s Investment Development Agency
Horizontal Incentives: Apply to all economic sectors or activities
✓Investment Promotion Law (No. 26,360): early VAT return and/or accelerated depreciation for capital goods and infrastructure projects
✓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, plans to foster employment, and export promotion plans (for further details please see “Investment Incentives” published by ProsperAr)
Attractive IncentivesSupport for your investments
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Argentina’s Investment Development Agency
Attractive IncentivesSupport for your investments
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Sectoral Incentives:
Automotive industry: cash reimbursement based on local content; tariff free access to Brazil and Mexico.
Software: 10-year tax stability; tax credit up to 70% of employers’ contributions; 60% reduction on income taxes.
Biofuels and biotechnology: accelerated depreciation of income tax and early return of VAT for capital goods and equipment intended for the project.
Mining: 30-year tax stability; exemption from tariffs on imports of capital goods among other tax benefits.
Forestry: 30-year tax stability, extendable to up to 50; early VAT return; special depreciation regime for income tax.
Infrastructure: incentives for public-private partnerships (PPP´s).
Oil and gas exploration and exploitation: early VAT refund, income tax reductions.
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Argentina’s Investment Development Agency
Regional Incentives:Local stimulus programs and support for infrastructure investments
✓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
✓Subsidized rates for public utilities
Attractive IncentivesSupport for your investments
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✓Providing timely and relevant information on business sectors and geographical locations in Argentina
✓Help identify investment and innovation opportunities in strategic sectors
✓Troubleshoot red tape and obstacles; facilitate the whole investment process
✓Assist in building partnerships between foreign investors and local companies
Our group of professionals will gladly assist you by:
Argentina’s Investment Development Agency
ProsperArProfessional assistance for your business to succeed in Argentina
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To learn more about how investing in Argentina can benefit you, please contact us:
www.prosperar.gov.ar
+ 5411-4328-9510
Argentina’s Investment Development Agency
ArgentinaNaturally Talented to Meet Global Market Needs
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