National Investment Promotion Agency Argentina Advantages of Investing Today Dr. Beatriz Nofal President National Investment Development Agency Argentina
Mar 26, 2015
National Investment Promotion Agency
Argentina
Advantages of Investing Today
Dr. Beatriz Nofal
President
National Investment Development Agency
Argentina
National Investment Promotion Agency 2
“Inclusive economic development entails investment promotion and a steady increase in productivity”
President Néstor Kirchner
Address to the Legislature
3/1/2006
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National Investment Promotion Agency 4
Argentina faces a unique opportunity given its healthy macroeconomic situation and sustainable growth coupled with a favorable international scenario.
SUSTAINABLE GROWTH IN ARGENTINA
Four years steady growth at an average rate around 9%
Twin Surpluses: fiscal and external
Growth of exports and imports with
positive trade balance
Competitive and stable exchange rate
“Tight” monetary policy
Record profitability in prime companies
FAVORABLE INTERNATIONAL
SCENARIO
Steady growth of global economy and international trade
Favorable trade terms based on high price of “commodities” and natural resources.
Extraordinary international liquidity
Low global interest rates
Global splitting of value chains
New global consumption patterns (product differentiation)
Substantial accumulation of reserves with reasonable goals
Increasing demand for alternative energy sources
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Argentina grew at an average annual rate of around 9% over the past four years, ranking among the fastest growing economies worldwide
8,4
3,9
0,5 0,8
8,8
6,2
4,9
2,1
9
6,3
2,3
1,3
8,7
5,2
3,6
2,4
8,8 9 9,28,5
Argentina Asia endesarrollo
Chile Brazil G7: Economíasmás
desarrolladas
2003 2004 2005 2006
Average: 8.9%Average: 8.7%
Average:5.4%
Average:2.8%
Average:1.7%
Source: ProsperAr based on IMF, WEO databases.
Developing Asia: includes 23 countries such as China, India, Indonesia, Philippines, Vietnam, Bangladesh, Fiji and Pakistan, among others.
Developing Asia
G7: Most developed economies
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Growth is based on solid macroeconomic foundations that strengthen the country’s economy and rule out the possibility of a crisis in the mid term.
17,9 17,619,3
24,326,5
27,826,5
19,4
10,5
32
28,1
19,6
14,1
-15.000
-10.000
-5.000
0
5.000
10.000
15.000
20.000
25.000
30.000
Balance Fiscal Primario Saldo Cuenta Corriente
Fiscal and Current Account Surplus(in millions of pesos)
International Reserves(in billions of dollars)
Source: ProsperAr based on Ministry of Economy and Production.
Primary Fiscal Balance Current Account Balance
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Argentina’s income per capita measured in terms of purchasing power parity (ppp) is the highest in the region.
GDP per capita in the main Latina American economies Year 2006*, in US$ PPP
6467
78988964
10580
12737
14838
Venezuela Colombia Brasil Uruguay Chile Argentina
* Estimated Source: ProsperAr based on IMF World Economic Outlook.
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In addition, Argentina has a solid base of competitive structural factors and capabilities to offer the world a differential value proposition.
Diverse cultural capital and outstanding productions in various fields
Important international figures and works of art
Rich Urban life with a wealth of cultural possibilities
International destination chosen for its quality of life and tourism
Ability to learn, undertake endeavors and innovations
Strong industrial tradition
Modern infrastructure and technological availability
World-class agricultural and industrial commodities
ET with permanent and strategic outlook
Competitive SME center
Qualified Human Resources
High level of education and training
Prestigious Universities
Highly competent Research Centers
Highly competitive health indicators
Abundance of land and natural resources
A wide variety of mineral and energy resources
Diversity of regions, topography and climate
Public and private commitment to preserve nature and sustainable development
Knowledge CultureNature Skills
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MERCOSUR + Venezuela (2)
GDP*: US$ 1.378 Billions
Population: 261 Millions of inhabitants
MERCOSUR (1)
GDP*: US$ 1.214 Billions
Population: 234 Millions of inhabitants
MERCOSUR +
partners in FTA’s (3)
GDP*: US$ 1.789 Billions
Population: 376 Millions of inhabitants
(1) MERCOSUR is a common market conformed in the beginning (1991) by Argentina, Brazil, Paraguay y Uruguay.(2) Venezuela was incorporated recently as a full member of the integration process in MERCOSUR, becoming the
“Mercosur 5”(3) Bolivia, Chile, Peru, Colombia y Ecuador are associated members.*Estimated 2006Source: ProsperAr based on IMF World Economic Outlook.
As a member of MERCOSUR, Argentina enjoys preferential access (0% of import duties) to a highly attractive market: 261 millions of consumers and joint GDP of U$S 1.400 billions in 2006.
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Intra and Extra Mercosur Exports shows a significant dynamism. The internal exports started recovering, surpassing in 2005 the maximum level of 1998.
Extra Mercosur Exports Billions u$s
56 5871,277,4
93,4
118,2
142,4
665850
44434142,3
6061
164,3
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: ProsperAr based on INDEC
Intra Mercosur Exports
Extra Mercosur Exports
1990 – 2006
521,6% 173,3%
1990 – 1998
393,6% 42,1%
1998 – 2006
25,9% 173,3%
Internal and External Mercosur’s Exports increases ( %)
IntraMERCOSUR Exports. In billions u$s
4,1 5,17,2
1012
14,4
1715,2
17,715,2
10,212,8
17,3
21,120,420,1
25,6
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
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To accomplish the differential value proposition and continue with the steady growth trend at high rates, the flow of domestic and foreign investment is a key success factor
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18,1%19,4% 19,9%
16,2%
14,2%
12,0%
15,1%
19,2%
21,5% 21,5%22,2%
23,5%24,8% 25%
18,0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 I-2006 II-2006 III-2006 IV-2006
Investments over the past years reacted positively to the prevailing favorable conditions of the country and at the same time played a role in strengthening the economy.
GDFI/GDP RatioAt current prices. Expressed as Percentages
Source: ProsperAr based on DNCN, INDEC.
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High investment/GDP ratios position Argentina among the main economies of the region
22,2% 21,9% 21,6%
19,3% 19,0% 18,5%
12,9%
20,1%
0%
5%
10%
15%
20%
25%
Brasil Argentina Colombia Chile México Venezuela Perú* Uruguay*
* Figure corresponds to total for 2005.Source: ProsperAr based on CEP.
Relación IBIF/PBI por país1º Semestre 2006, a precios corrientes
GDFI/GDP ratio by country
1st Quarter 2006, at current prices
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Likewise, Foreign Direct Investment exhibits a dynamic performance over the past three years.
Source: ProsperAr based on INDEC
2.166 2.149
1.652
4.274
5.0084.809
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
2001 2002 2003 2004 2005 2006
Foreign Direct Investment in ArgentinaIn millions of US$
2006: Improvement in the composition of FDI
In 2006 Argentina's FDI levels was similar to those of 2005 (-3,9%), highlighting:
- The share of investment in the productive sector increased by US$ 276M (+6%)
- The main components of FDI are the investment in production capacity expansion of foreign companies with operations in Argentina; and the entrance of new TN companies;
-The M&A activity represents a very small share of total FDI
- Historical record in reinvestment of earnings. Reinvestment in 2006 ( u$s 2238 M) was 4 times that of 2005 ( u$s 655 M).
The investment of Argentina abroad increased 74% (from u$s 1151M to u$s 2008M).
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However Argentina faces big challenges in terms of investment
To increase and sustain high investment/PBI ratios, aligned with the requirements of sustainable growth.
To improve the quality of investments
To increase our participation in foreign and regional flows of Foreign Direct Investment
To promote further value chain integration international companies in Argentina
To support internationalization of local companies
Challenges
The highest Gross Domestic Fixed Investment (GDFI) as a percentage of the GDP
Public investment accompanying investment of the private sector
Investments more directed to tradeable sectors of the economy.
Recovery of Foreign Direct Investment after 2004
Results
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This process occurs within a favorable political/institutional framework for investments.
• Full enforcement of civil and democratic rights.
Argentina is a country where freedom prevails in every area, as confirmed by the Freedom in the World 2007 report.
• Democracy
Within a framework of freedom and full enforcement of the rule of law, our country has moved consistently towards strengthening the democratic system following the institutional crisis in 2000. The new composition and structure of the Supreme Court of Justice of the Nation is a milestone in this sense that reinforces the independence of the Judiciary.
• Respect for Human Rights
There is full respect for human rights. The Courts have reviewed cases related to crimes of lese humanity committed in the past; convicted those involved; and reopened new investigations to avoid impunity.
•Strategically Safe Country
Old-time conflict hypotheses with neighboring countries have been defused following the regional economic integration. There are neither terrorist groups, drug trafficking, gangs or organized crime activities. There are no differences between religious or ethnic groups that could affect the security, or the institutional and economic activity of the country.
• Country of choice among multinational companies
Argentina ranks 18th out of 25 countries of choice among the largest 100 multinational corporations, according to the UNCTAD report.
• Good quality of life
Argentina ranks 10th on the quality of life index prepared by the specialized publication International Living.
• Preferred international tourism destination
Argentina ranks 5th as preferred international tourism destination, according to the FutureBrand report . Buenos Aires was rated the 7th best city to visit (Travel & Leisure 2006).
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Under this scenario, the National Investment Development Agency (Prosperar) was created, representing an institutional innovation key to boost the private sector investments: foreign direct investment, domestic investment and internationalization of local companies.
Government Model:
National Investment Council:- Chief of Cabinet- Minister of Economy and Production- Minister of Foreign Relations, International Trade and Worship
Advisory Councils:- Private and academic sector- International
Public-private coordination and
collaborationEconomic-Financial Autarchy
Legal status
Involvement in the field of public and private law
Ability to send correspondents to the interior of the country and abroad
Autonomy
Board members hold a 4-year term of office
The president’s rank is equivalent to that of a Secretary of State and the Directors rank to that of Undersecretary of State
Stability
Yearly rendering of accounts
Internal Audit Department in coordination with the National Audit Commission
Transparency
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Legal Department
National Council on Development Investments
- Chief of Cabinet
- Minister of Economy and Production
- Minister of Foreign Relations, International Trade and Worship
Operations and Investment
Services Manager
Ms. Marcela Reganzani
Investment Strategy and Environment
Manager
Mr. Ricardo Rozemberg
Internal Audit Department
Public Relations, Marketing and
Communications Manager
Ms. Mariana Blanco
Superior International Advisory Council
Advisory Council: private sector
Office of the Assistant Manager of
Human Resources and Administration
Board of Directors*
President (1)
Dr. Beatriz Nofal
Members (2)
Mr. Daniel Falcón
Ms. Luciana Pagani
The institutional design of the Agency aims to facilitate public-private coordination and collaboration
*A President’s rank is equivalent to that of a State Secretary and Members to that of Undersecretary
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The main mission of the Agency is to contribute to the sustainable economic growth by attracting FDI and encouraging the growth of the domestic business ecosystem. There are four major areas of activity to accomplish this mission:
Attract and generate
investment
General Investment Missions
Investment and innovation proposals based on current opportunities in competitive entities and sectors
Missions and actions focused on investment
Boost investment
environment
Program to established closed relationships with investors
Create a federal network to better serve the Investors
Offer Services to Investors:Foreign Direct
Investment/Local
Companies/Enterprising Development
Personalized reply to investors inquires
Large, Medium and Small businesses working together for a more prosperous ecosystem
Develop financial instruments to facilitate investment and innovation
Disclose to the world the new favorable situation in Argentina - sustainable growth and investment opportunities.
Create a country image aligned to its differential identity knowledge+nature+culture
Creating a differential image
for Argentina
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• To Prosper, and that we all become more prosperous, is our ambition.
• To Prosper means to leverage in our achievements to propel a more competitive and innovative
Argentina with a higher level of income per capita and social equity.
• In order to Prosper the public and private sectors must submit a differential value proposition to
attract domestic and foreign investment, a key factor for growth.
• To Prosper, we will work for a vigorous investment environment, communicating Argentina’s value
proposition to the world, and contributing towards an active integration to investment flows and
international trade.
• In order to Prosper, our aim is to ensure Prosperity both to those companies that invest in our and
to their employees.
• In order to prosper, the National Investment Development Agency of Argentina,
ProsperAr, was created.
Basically, the agency aims to contribute so that investment in Argentina and prosperity become sinonymous.
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Your partner to invest and prosper in Argentina
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Annex
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Natural Resources
Argentina has leveraged on the richness and diversity of its natural resources to develop highly competitive agribusiness activities
Soy ProductivityYear 2005. Argentina = 100
Corn Productivity Year 2005. Argentina = 100
Wheat ProductivityYear 2005. Argentina = 100
75
77
85
100
106
106
106
167
Rusia
Australia
Brasil
Argentina
India
EE.UU
Canada
China
27
41
53
72
79
100
117
126
India
Brazil
Rusia
China
Australia
Argentina
Canada
EE.UU
30
38
62
64
85
99
100
106
India
Rusia
Australia
China
Brazil
Canadá
Argentina
EE.UU
Source: ProsperAr based on FAO
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Natural Resources and Agro-industry
…being a leading producer and/or exporter in various agroindustrial segments.
Source: ProsperAr based on FAO.
The Argentine territory has almost 250,000 km2 of farmland.
This large quantity of fertile land together with a competitive industry places Argentina as:
• The N° 1 world producer and exporter of Sunflower Oil.
• The N° 1 world exporter and 3rd leading world producer of Soy Oil.
• The N° 1 world exporter and 3rd leading world producer of Honey.
• The N° 1 world exporter of Horse Meat.
• The N° 1 world exporter of Pears.
• The 2nd leading world exporter of Peanut Oil.
• The 3rd leading world producer of Beef.
• The 3rd leading world producer of Soy Beans.
• The 3rd leading world producer and the N° 1 exporter of Lemons.
• The 5th leading world producer of Wine.
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Industry
A long industrial tradition has enabled us to reach an expansive and diverse manufacturing ecosystem
A significant number of transnational
companies have been present in the
country for decades and progressively
participated in the generation of value
added activities.
A group of prime national companies
strongly internationalized and world-class.
A segment of flexible, innovative and
dynamic SMEs
As an example, the annual production capacity of local industry includes:
• 7 million tons of vegetable oils and over 20
million in by-products,
• Over15 million hectoliters of wine,
• 400 thousand tons of tanned leather,
• 1.2 million tons of paper,
• 200 thousand tons of PVC and over 1.5 million
tons of derivatives such as propylene and
polyethylene.
• 275 thousand tons of raw aluminum,
• 5 million tons of steel and
• 4.15 million tons of seamless and non-
seamless pipes,
• 550 thousand automobiles.
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Socioeconomic Indicators
Argentina socioeconomic indicators are higher than the average for the region
Source: UNDP. 2006 Report on Human Development.
Socioeconomic Indicators Argentina Brazil Chile MexicoRegion
Average
Human Development Index (HDI) 0.863 0.792 0.859 0.821 0.795
Life Expectancy at Birth (years) 74.6 70.8 78.1 75.3 71.7
Infant Mortality Rate (0/000) 16 32 8 23 26
Health Care Expenses (PPA in US$ per capita) 1067 597 707 582 …
Undernourished Population <2.5 8 4 5 10
Population with sustainable access to improved water source
96 90 95 97 91
Deliveries performed by specialized staff (%) 99 97 100 95 87
Physicians/1000 inhabitants 301 115 109 198 …
Illiteracy (% over 15 years old) 2.8 11.4 4.3 9 10.8
Gross schooling rate 89 86 81 75 81
Researches in R&D (for every million inhabitants 1990-2003)
720 344 444 268 306
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Education
Argentina is also characterized by its high educational and cultural level based on the high education standards, similar to developed countries
Source: ProsperAr based on GED 2006, UNESCO.
Adult Literacy Rate (+15 years)%
School Attendance ExpectationsIn years
88,6
89,7
90,4
90,9
91
92,8
93
95,7
97,1
97,2
98,4
Brazil
Am. Lat. y Caribe
Indonesia
China
Mexico
Colombia
Venezuela
Chile
Israel
Argentina
Italy
11,2
11,5
11,5
11,7
12,5
13,1
13,4
14,6
15,6
15,7
16,4
China
Indonesia
Colombia
Venezuela
México
Am. Lat. y Caribe
Chile
Brazil
Israel
Italy
Argentina
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Environment
…within the context of a sustainable environment.
Environmental Sustainability Index elaborated by environmental experts from Yale and Columbia.
Argentina ranks 9th
among 146 countries in
environmental
sustainability
Environmental Sustainability Index Year 2005
75,1
73,4
71,8
71,7
70,8
64,4
63,7
62,9
62,7
62,7
62,2
61,7
61
60,9
Finland
Norway
Uruguay
Sweden
Iceland
Canada
Switzerland
Guyana
Argentina
Austria
Brazil
Gabon
Australia
N. Zeland