Advantages of Investing Today
ARGENTINA
Advantages of Investing
Today
Secretariat of Industry, Commerce, and
SMEs
Ministry of Economy and Production
Advantages of Investing Today
The Argentine Economy
1
Advantages of Investing Today
Argentina at a Glance
Surface Area
2.8 million km²
Argentina is the 2nd largest country in Latin America
and the 8th largest worldwide in terms of surface area
Population
36,223,947
GDP (2004 est.)
US$ 145 billion
Growth (2003)
8.7%
Per Capita GDP
(2004 est.)
US$ 4,003
Form of Government
Republican, Representative, and Federal
Political Subdivisions
24 autonomous States with political, administrative and
economic powers
(23 provinces and the City of Buenos Aires)
Currency
Argentine Peso (Arg$)
Language
Spanish
Advantages of Investing Today
In terms of purchasing power, Argentina boasts the highest per
capita income in Latin America.
Per capita GDP 2003
(Purchasing Power Parity)
11,013
9,993
9,070
8,015
6,773
4,363
Venezuela
Colombia
Brazil
Mexico
Chile
Argentina
Source: World Economic Outlook 2004 (IMF)
2
Advantages of Investing Today
The Argentine economy is highly diversified …
GDP by Economic Sector, 2003
Services, 54%
Goods, 46%
Wholesale, Retail,
and Repairs; 21%
Real Estate, Rental,
and Other Business
Activities, 22%
Transport,
Warehousing,
and
Communications;
16%
Manufacturing
Industry; 52%
Fisheries; 1%
Hotels and
Restaurants; 4%
Other Services; 7%
Education, Social,
and Health
Services; 13%
Financial
Intermediation:
Public Administration,
7%
Defense, and
Extraterritorial Activities;
10%
Electricity, Gas,
and Water
Supply; 4%
Agriculture,
Fishing,
Hunting, and
Silviculture;
23%
Construction;
7%
Mining and
Quarrying; 13%
Source: ADI based on National Accounts
Advantages of Investing Today
with an ample supply of skilled labor …
Illiteracy Rate 2002
Illiterate population over age 15 (%)
12.3%
Latin America and the Caribbean: 10.5%
8.3%
4.0%
1.5%
Italy
2.2%
Spain
3.0%
Argentina
Chile
Mexico
Brazil
Source: World Bank
• The illiteracy rate is the lowest in Latin America and compares with developed countries.
3
Advantages of Investing Today
… high availability of natural resources …
•
Argentina has just under 250,000 km² of arable land.
•
This wealth of fertile land and a competitive industry makes Argentina:
Ö The world’s leading producer and exporter of sunflower oil
Ö The world’s leading exporter and third largest producer of soybean oil
Ö The world’s leading exporter and second largest producer of honey
Ö The world’s leading exporter of horse meat
Ö The world’s second largest exporter of corn
Ö The world’s third largest producer of soybeans
Ö The world’s third largest producer and second largest exporter of
lemons
Ö The world’s third largest producer of beef
Ö The world’s sixth largest producer of wine
Source: FAO (2003)
Advantages of Investing Today
… and considerable energy resource reserves.
CONFIRMED RESERVES AS AT 12/31/2002
Oil (Mm3)
Basin
Confirmed
Gas (Mill m3)
Probable
Confirmed
Probable
North West
25,326
7,880
129,481
44,524
Cuyo
31,097
6,713
179,546
188,040
67,145
75,519
545
344,567
97,180
40,289
25,833
24,416
22,430
148,641
138,398
179,687
663,523
306,118
Neuquen
San Jorge Gulf
Southern
NATIONAL TOTAL 448,425
183
Source: Energy Secretariat
4
Advantages of Investing Today
Domestic industry is modern and competitive …
• Annual domestic industrial production
includes:
• Argentine industrial structure is broad
and diversified.
• Highly competitive industrial sectors
boast world class enterprises.
• Companies including Shell, Exxon, Ford,
Coca-Cola, Fiat, Bayer, Renault,
Siemens, Nestlé, Firestone, BASF, Pirelli
and Abbot have been operating in
Argentina for over 50 years.
– 6 million tons of oilseed oils
– 12.3 million hectoliters of wine
– 2 million tons of sugar
– 300,000 tons of tanned leather
– 1.2 million tons of paper
– 170,000 tons of PVC and 545,000 tons
of polyetyhlene
– 48,000 tons of synthetic yarns
– 275,000 tons of aluminium
– 5 million tons of steel and 732,000
tons of seamless pipes
– 5,000 harvesters
– 260,000 automobiles
Advantages of Investing Today
… with a highly developed infrastructure.
• A 38,744 km national road
network
• This extends to 500,000 kms if
the provincial and municipal
networks are included
• A 35,753 km railway network
• 38 maritime ports and 25 river
ports
TELECOMMUNICATIONS
per 1000 inhabitants Argentina Brazil
Latin Am. &
Telephone Lines
220.2
182.1
124.7
the Caribbean
145.9
Cellular Phones
168.8
136.6
142.4
70.5
91.1
62.9
68.7
59.3
PCs
Source: World Bank (2002)
• 52 airports, 21 of which are
international
• Over 25 airlines operate flights
from Argentina to 40
international destinations in
five continents
Mexico
•
Installed electrical energy generating capacity
totals 21,300 MW, while annual production stands
at 75,554 GWh (2,084 KWh/ inhabitant)
5
Advantages of Investing Today
Social conditions in Argentina are above the regional average.
Socioeconomic Indicators 2002
Argentina
Brazil Mexico
Lat. Am. &
Carib.
Average
Life Expectancy at Birth (years)
74.3
68.6
73.6
70.7
Fertility Rate (births per female)
2.4
2.1
2.5
2.5
Infant Mortality Rate (0/00)
16
31
24
27.5
Hospital Beds per 1,000 Inhabitants
3.3
3.1
1.1
2.2
Doctors per 1,000 Inhabitants
2.7
1.3
1.6
1.6
Source: World Bank
Life Expectancy at Birth (years): Number of years a newborn infant will live if the mortality patterns at the time of birth
remain constant throughout the entire lifespan .
Fertility Rate (births per female): Number of births per female, assuming a full fertile lifespan and
births in line with age group-specific fertility rates.
Infant Mortality Rate (0/00): Number of infant deaths in the first year of life per1,000 live births.
Advantages of Investing Today
As a MERCOSUR Member State, Argentina enjoys preferential
access to a market totalling 272 million consumers.
MERCOSUR +
ASSOCIATES
GDP: US$ 687
billion
Population: 272
million
MERCOSUR
GDP: US$ 558
billion
Population:
221 million
Source: IMF (2003)
•
The MERCOSUR (Southern Cone Common Market) is a common market
comprising Argentina, Brazil, Paraguay and Uruguay.
•
Bolivia, Chile and Peru are MERCOSUR Associate States.
6
Advantages of Investing Today
Since the creation of MERCOSUR, there has been strong growth in
trade between Argentina and the other MERCOSUR Member
States ...
• Argentine exports to the
bloc increased by 181%
between 1991 and 2003
( 30% more than sales
to the rest of the world).
10,000
Argentina-MERCOSUR Trade
(in millions of US$)
Exports
Imports
Trade Balance
8,000
6,000
• Imports from
MERCOSUR practically
4,000
tripled over the same
2,000
period.
0
-2,000
1991
1993
1995
1997
1999
2001
2003
Source: INDEC.
In 2003, 6,500 companies registered exports to the value
of US$ 5,555 million to MERCOSUR.
Advantages of Investing Today
… resulting in a higher value added export profile.
Exports
to MERCOSUR
2003
IM
47%
PP
21%
F&E
20%
AM
12%
•
•
US$/ ton (2003)
Exports
to other markets
2003
IM
21%
AM
39%
PP
23%
F&E
17%
MERCOSUR
375
Other Markets
300
PP: Primary Products
AM: Agricultural Manufactures
IM: Industrial Manufactures
F&E: Fuel and Energy
Source: ADI based on INDEC
33% of total industrial manufacture exports go to MERCOSUR.
The export value per-ton to MERCOSUR is 25% higher than to other markets.
7
Advantages of Investing Today
Argentina ranks as an integrated economy.
•
Since the late 80s and as a result of a significant reduction in tariff and non-tariff
barriers, foreign trade has been particularly dynamic, a phenomenon that does not
exclude trade with the region.
Non-MERCOSUR Trade
(in millions of US$)
Exports
25,000
Imports
Trade Balance
20,000
15,000
10,000
5,000
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
-5,000
Source: ADI based on INDEC data
-10,000
Advantages of Investing Today
An integrated economy with its doors open to the world.
FOREIGN DIRECT INVESTMENT FLOWS (FDI)
TO ARGENTINA –IN MILLIONS OF US$FDI
GDP
FDI/GDP
1993
2,793
236,505
1999
23,988
278,369
2000
11,657
276,173
2001
3,206
263,997
2002
785
235,236
2003
478
255,751
1.2%
8.6%
4.2%
1.2%
0.3%
0.2%
Source: Ministry of Economy
•
The opening of the capital
market and solid economic
performance attracted
numerous foreign direct
investment projects in various
sectors of the economy.
Foreign Direct Investment
By Economic Sector (1992-2002)
Oil
20%
Electricity, Gas,
and Water
14%
Banks
10%
Transport and
Communications
9%
Manufacturing
Industry
34%
Mining
1%
Trade
4%
Others
8%
Source: ADI based on Ministry of Economy data
8
Advantages of Investing Today
Argentina in the
new economic context
Advantages of Investing Today
The economy staged a gradual recovery following the crisis that
began in mid-1998 and ended with the abandonment of the
Convertibility Regime in January 2002.
• 8 consecutive quarters of
growth were recorded as
from 2Q 2002, a sequence
that had not been
witnessed since 1997.
• The surge in growth is also
noteworthy: Variation rates
reached 3% in the last
months of the series.
9
Advantages of Investing Today
The manufacturing industry led the recovery, reaching the 1998
level in March 2004, only 4% below the historical record (June
1998).
Advantages of Investing Today
There was renewed growth in the construction industry,
surpassing 2000 and 2001 levels.
Source: ADI based on Ministry of Economy data
10
Advantages of Investing Today
There has been a gradual recovery in investment as from 4Q
2002.
45,000
Gross Domestic Fixed Investment and
Investment Rate (GDFI/GDP)
Investment Rate (%)
GDFI (in millions of pesos)
15.6%
16%
15%
40,000
14%
35,000
13%
30,000
12%
11.3%
25,000
11%
10%
20,000
1Q-02
2Q-02
3Q-02
4Q-02
1Q-03
2Q-03
3Q-03
4Q-03
Source: ADI based on National Accounts data
• Following eight consecutive negative quarters, renewed growth in investment
represented a significant contribution to GDP.
Advantages of Investing Today
Following devaluation, consistent monetary and fiscal policy led
to price stability.
• 2002 inflation marked a break
with the price stability of the
previous decade and was the
result of abandoning the
Convertibility Regime,
introduced in April 1991,
establishing exchange rate
parity at $ 1= US$ 1.
• Nevertheless, following the
adjustment involving a minimal
pass-through of devaluation to
prices, a single-digit inflation
rate was once again achieved
in 2003.
Source: ADI based on Ministry of Economy data
11
Advantages of Investing Today
The recovery in economic activity led to a significant increase in
jobs.
• 1,096,000 new jobs were created between 4Q 2002 and 4Q 2003.
• The albeit still high unemployment levels began to drop following the recovery in
economic activity.
è
Employment Rate: Employed/ Total Population
è
Unemployment Rate: Unemployed/ Economically Active Population
Advantages of Investing Today
A robust trade surplus was maintained in 2003 despite the
recovery of economic activity and a slight appreciation of the
peso in real terms.
• Export performance is highly favorable and
the upward trend is expected to continue.
• Imports have recovered strongly following
the drop in 2002.
12
Advantages of Investing Today
The Current Account Balance has turned positive following ten
years of deficits.
• The 2003 balance is slightly down on 2002 due to a 40% rise in imports following the
economic recovery.
Advantages of Investing Today
The trade surplus and the reduction in the financial account deficit
have significantly boosted reserves
13
Advantages of Investing Today
Fiscal accounts have improved substantially since May 2002, as a
result of stabilized public spending and higher tax revenues.
Advantages of Investing Today
A favorable monetary trend was established throughout 2003.
Source: ADI based
on Ministry of
Economy data
• The expansion of the broad monetary base and the issue of Central Bank Bills (LEBACs)
exemplified the continuity of a prudent and flexible monetary policy that accompanied economic
growth at no cost in terms of inflation.
14
Advantages of Investing Today
The drain on deposits was halted as from 2Q 2002 , with a
positive trend from that point onwards, together with banks
recovering liquidity.
Source: ADI based on Ministry of Economy data
Advantages of Investing Today
Why invest in Argentina?
15
Advantages of Investing Today
Why invest in Argentina?
ê Highly qualified population
ê Availability of natural resources
ê Modern diversified industry
ê Competitive costs and services
ê Developed infrastructure
ê Investment incentives
ê A legal framework that does not discriminate against foreign
investments
Advantages of Investing Today
A country with a highly skilled workforce
A comparison of the main education indicators reveals Argentina’s high
ranking at both regional and international level.
Illiteracy in Argentina
(% of population over 15 years)
Illiteracy (2001)
(% of population over 15 years)
Italy
1.5
Spain
2.3
Uruguay
2.4
Argentina
Chile
Costa Rica
Colombia
Mexico
2.6
4.1
Illiteracy in the City of Buenos
Aires, with a population similar
to Uruguay, is 0.5% and 1.3%
in the metropolitan region, with
a population similar to that of
Chile.
5.8
3.8
2.6
4.3
8.1
8.6
Latin Am.
Brazil
10.8
12.7
1980
1991
2001
Source: ADI based on UNESCO data
16
Advantages of Investing Today
Education is compulsory and free for the 5-14 year age group, thus ensuring high
school enrolment rates. In addition, attendance expectancy at educational
establishments is the highest in Latin America and only one year less than that
observed for developed countries such as Spain, Italy, and the United States.
School attendance expectancy
Net secondary education enrolment rate
(years)
(2001)
Italy
15
Argentina
13
Uruguay
13
Mexico
12
Brazil
12
Colombia
Costa Rica
91
Italy
79
Argentina
14
Chile
94
Spain
15
Spain
75
Chile
Brazil
71
Uruguay
70
60
Mexico
57
Colombia
11
49
Costa Rica
10
Number of students enrolled in the correct age group level as a
percentage of the total population eligible for this age group level.
Source: ADI based on UNESCO
data
Advantages of Investing Today
The Argentine education system is also well developed at the
higher education level.
University Students
(per 100,000 inhabitants)
3,582
Spain
Argentina
3,123
Italy
3,022
Uruguay
2,400
Chile
2,100
Colombia
1,540
1,490
Mexico
Brazil
1,068
• Argentina boasts a broad
network of public and
private universities attended
by over one million students.
• The university student/
total population ratio is the
highest in Latin America
and compares with the ratio
for several developed
countries.
Source: ADI based on UNESCO data
17
Advantages of Investing Today
The strength of the education system is exemplified by the
number of scientists and engineers working in research and
development.
Scientists and Engineers working in R&D
1,921
(per 1,000,000 inhabitants)
1,128
713
533
370
Spain
Italy
Argentina Costa Rica
Chile
323
Brazil
225
Mexico
219
101
Uruguay Colombia
Source: ADI based on UNESCO data
Advantages of Investing Today
Availability of Natural Resources
• Argentina is characterized by the abundance and quality of its natural
resources that provide competitive advantages in developing activities
linked to these resources.
• Argentina is the eighth largest country in the world in terms of surface
area and its relevance is even greater if factors relating to the
potential its surface area offers are considered (i.e. the proportion of
surface area suitable for agriculture, mining resources, etc.).
18
Advantages of Investing Today
Agriculture: Argentina has some of the most suitable
agricultural land worldwide.
The relevance of
Argentina’s
agricultural surface
area is not only due
to its size but also to
the excellent
agroecological
conditions, resulting
in high yields.
Source: ADI based on FAO data
Advantages of Investing Today
In Latin America, only Brazil has a greater surface area suitable for
agricultural use. However, if the domestic market pressure on
production in these areas is considered, Argentina has a higher
level of agricultural land available in relative terms.
Source: ADI based on FAO data
19
Advantages of Investing Today
• In comparison with the major grain-producing
countries, Argentine yields are highly
competitive at international level.
Soybean Productivity
(Argentina =100)
Argentina
• Similar conclusions are obtained when
comparing yields for other crops such as apples,
pears, lemons, beans, and garlic in which
Argentina also has a considerable global market
share.
Brazil
USA
Australia
China
Russia
India
0
50
100
Wheat Productivity
(Argentina =100)
Corn Productivity
(Argentina =100)
China
USA.
USA
Argentina
India
Australia
Argentina
China
Brazil
Brazil
Australia
Russia
Russia
India
0
0
30
60
90
120
50
100
150
200
150
Source: ADI based on FAO data
Advantages of Investing Today
Agricultural production increased 105% in the period 1990-2003.
Principal crops include soybean, wheat, sunflower, and corn.
Cultivated surface area increased approximately 52% over the same
period, representing significant progress in terms of yields.
Source: ADI based on SAGPyA data
20
Advantages of Investing Today
Silviculture: The availability of extensive areas promotes the
development of other activities including silviculture.
•
The main factors determining competitive advantages in this activity (soil types,
climate, costs, human resources, etc.) are present in vast regions of Argentina.
•
Of the 20 million hectares suitable for forestry, only 5% are currently used for this
purpose. Land suitable for forestry does not compete with other agricultural
activities.
•
The diversity of climates and soil types makes it possible to cultivate a wide variety
of species.
•
In addition to tree growth rates, the relatively low land value compared to countries
such as Brazil and Chile yields high rates of return and exceptional payback periods.
•
High growth rates: 41 m 3 / hectare/ year (Chile 35 m3) for eucalyptus and up to
32 m3 / hectare/ year for pine (three times the growth rate in Canada and twice that
of the United States).
Advantages of Investing Today
High growth rates for conifers and eucalyptus
Conifers
Eucalyptus
Source: Simpson Timber Co., Aracruz Cellulose, Jaako Powry Investments. CIEF.
21
Advantages of Investing Today
Fishery Resources: The length of its Atlantic coastline (4,725 km)
and the variety of species found in the fishing zone make
Argentina one of the best fishing areas worldwide.
Shellfish
Fish
Source: ADI based on SAGPyA
data
Advantages of Investing Today
Mining in Argentina
Ö The estimated surface area with mining potential totals approximately
750,000 km2 , 75% of which has still to be exploited.
Ö Argentina has considerable gold, copper, lead, zinc, natural borate,
bentonite, clay, and ornamental stone deposits.
Ö The effective tax rate is 41%, 6 points below the average for the principal
Latin American mining nations and almost 20 points lower than that of the major
Canadian and Australian mining regions.
Ö The regulatory framework and current mining incentive regime play a key role in
attracting investment to this sector.
22
Advantages of Investing Today
The Mining Investment Law provides the following incentives:
• Double deduction of prospecting, exploration, and technical/ economic feasibility
study expenses.
• Financing and reimbursement regime for VAT on capital goods and investments in
physical infrastructure projects.
• Accelerated depreciation of capital investments.
• Exemption from import duties on capital goods and equipment, spare parts, and
accessories.
• Exemption from assets tax.
• Provincial royalties are limited to 3% of the pit-head value of mineral extracted.
• An income tax deduction of up to 5% of extraction operating costs and a tax
deduction for environmental conservation allowances.
Advantages of Investing Today
Notable growth in mineral exports
8 The transformation and integration of the Argentine mining industry into
international markets is reflected in the tripling of exports over the last seven
years.
Source: ADI based on INDEC data
23
Advantages of Investing Today
Investment growth in the sector
Ö The positive impact of the new legal framework on the sector can be observed
in recent investments that rose from practically zero to over US$ 1
billion in 2002.
Ö Investment has remained robust despite the economic crisis.
Ö Leading global mining
companies including
Barrick, Homestake, BHP,
and Billiton have decided to
invest in Argentina.
Source: ADI based on CEP data
Advantages of Investing Today
Argentina ranks high internationally in terms of available mining
resources.
and Cerro Vanguardia and important
1.China
2. Peru
3. Philippines
4. Brazil
5. Chile
projects involving significant
6. Argentina
metalliferous mineral reserves in
7. Mexico
8. Bolivia
9. Venezuela
10. Burma
• The principal mining areas currently
in production include Bajo La
Alumbrera, El Salar del Hombre
Muerto, Farallón Negro, Mina Aguilar
various stages of exploration are
underway at locations including
Pirquitas, Agua Rica, Pascua Lama
and Pachón.
Source: ADI based on Mining
Journal
24
Advantages of Investing Today
Substantial oil and gas reserves
•
Argentina boasts substantial oil and gas reserves. Despite increased
production in recent years, investment in exploration has made it possible
to maintain significant levels of reserves.
•
CONFIRMED RESERVES (2002)
– Oil: 448.4 million m3
– Gas: 663.5 billion m3
•
PROBABLE RESERVES (2002)
– Oil: 179.5 million m3
– Gas: 306.1 billion m3
Advantages of Investing Today
Oil and Gas
• The oil reserves/ production ratio increased despite a 13% rise in production
during the period under review.
• Although the gas ratio decreased between 1994 and 2002, it should be pointed
out that production rose by 65.2% during this period.
Gas: Reserves/ Production ratio
(years)
Oil: Reserves/ Production ratio
(years)
10.6
10.2
19.3
19.8
17.8
9.2
1994
9.1
1996
8.9
1998
2000
2002
1994
1996
1998
14.8
14.5
2000
2002
Source: ADI based on Energy Secretariat data
25
Advantages of Investing Today
Increased oil and gas production
• Gas production has increased constantly since the early 90s, doubling early 90s
levels in 2003.
Oil and gas production
• Although oil
(in million/ billion m³ respectively)
production has
50
fallen in recent
40
years, levels are
still 50% above the
30
20
levels recorded 12
years ago.
10
0
'91
'92
'93
'94
'95
'96
'97
'98
Oil
'99
'00
'01
'02
'03
Gas
Source: ADI based on Energy Secretariat data
Advantages of Investing Today
A Sustainable Environment
• The availability of vast areas with
Environmental Sustainability Index 2002
optimal environmental conditions is
73.9
1 Finland
2 Norway
73.0
3 Sweden
72.6
70.6
4 Canada
5 Switzerland
66.5
66.0
6 Uruguay
7 Austria
64.2
8 Iceland
63.9
9 Costa Rica
63.2
10 Latvia
63.0
…
15 Argentina
62.2
61.5
16 Australia
60.3
17 Panama
60.0
18 Estonia
19 New Zealand
20 Brazil
60.0
59.9
59.6
clearly a significant factor in attracting
investment .
• Argentina ranks 15 among 142
countries in the University of
Colombia environmental
sustainability rankings.
• Only Costa Rica and Uruguay rank
higher in Latin America. In terms of
surface area worldwide, Argentina
ranks second behind Canada.
26
Advantages of Investing Today
Modern diversified industry
•
Capital Formation (2004)
Argentina boasts a relatively modern and
diversified industrial structure. There has been
substantial investment in machinery and
Financial
Services
1%
equipment in recent years and a nucleus of
state of the art companies has emerged.
•
Extractive
Activities
27%
Industry
42%
In addition, Argentina’s industrial profile is
characterized by:
Trade and
Services
11%
– Pronounced alignment with Argentine
factor endowment
Infrastructure
19%
– High labor productivity indices
– High capital intensity
Source: ADI based on CEP data
– Export-oriented production
The recovery is currently being boosted by
new investment, with flows aimed at
industry and other tradable goods sectors
playing a dominant role.
– Increases of scale
– Transnational enterprises
Advantages of Investing Today
Relatively higher prices for domestic products favor the production
of tradable goods, resulting in a higher industrial sector share in
GDP.
•
The industrial sector is one of the pillars of the current economic recovery and growth in
production is the result of higher exports as well as import substitution.
•
Sectors that were internationally competitive in the 90s (petrochemicals, iron and steel,
foodstuffs) reacted favorably, while other previously relegated industries (textiles,
metalworking) led the recovery in the industrial sector.
Sector Share in GDP at current prices
Manufacturing Industry
Services
22.3%
18.2%
65.1%
60.8%
61.1%
18.2%
63.5%
62.3%
17.0%
17.2%
50.9%
16.1%
1993
1995
1997
1999
2001
2003
1993
1995
1997
1999
2001
2003
27
Advantages of Investing Today
A modern diversified industrial sector integrated into the global
market
Economic opening has transformed the industrial sector, resulting in:
• A greater emphasis on exporting: Manufactured goods exports have increased their share
of industrial GDP.
• Increased international integration: Intermediate goods imports have increased their
share of industrial GDP.
Intermediate Goods Imports/
Industrial GDP
Exports / Industrial GDP
80%
22%
60%
26.5%
50%
18%
40%
30%
1995
1997
17.4%
17.0%
1999
2001
14%
12%
AM
11.4%
0%
1993
34.2%
IM
20%
10%
16.2%
16%
8.5%
21.6%
18.9%
20%
70%
1999
2001
11.8%
10%
1993
1995
2003
1997
Source: ADI based on INDEC and National Accounts data
2003
Advantages of Investing Today
The industrial sector displays continuous improvement in human
resource productivity.
• Argentina has recorded significant progress in human resource productivity with a
26% increase in labor producivity between 1995 and 2000.
Industrial sector hourly productivity
(1997 =100)
The relative labor productivity
120
115
110
105
100
95
90
I-03
IV-02
III-02
I-02
II-02
IV-01
III-01
I-01
II-01
IV-00
III-00
I-00
II-00
1998
1997
1996
1995
80
1999
85
gap with the United States is the
lowest in Latin America.
According to ECLAC statistics,
average Argentine industrial
sector labor productivity is 67%
of US levels, with Brazil at 37%,
and no other Latin American
country higher than 40%.
Source: ADI based on INDEC data
28
Advantages of Investing Today
A modern, diversified, and growing industrial sector
• Industrial production has developed favorably in recent months. The recovery in
domestic demand, the integration of Argentine world class producers of industrial
inputs and primary commodities into external markets is intensifying, accompanied by a
new process of import substitution in specific branches.
Non-seasonally adjusted Monthly Industrial Estimator (MIE)
(Base Year 1997=100)
105
100
The MIE is currently at its
95
highest level for the last
three years.
The cumulative increase
from January 2002 to
February 2004 is 35%.
90
85
80
75
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
Mar-02
May-02
Jan-02
70
Source: ADI based on INDEC data
Advantages of Investing Today
There has been growth in all industrial sectors in recent months.
2003 average vs. 2002 average
% variation
• Of the industrial sectors currently
75
Textiles
56
Metalworking
53
Cotton yarn
displaying increased growth, special attention
should be drawn to the metalworking
industry, textiles, editing and printing
Cement
31
products, agrochemicals, construction
Other construction materials
30
materials, and other foodstuff and drinks
Editing and printing
Glass
23
20
sub-sectors.
• Only one of the 30 categories comprising
Pharmaceuticals
19
the MIE recorded a lower performance vis-à-
Industrial gases
18
vis the previous year.
18
• Industrial growth in recent months has
Tires
17
been generalized, irrespective of the various
Basic chemical prods
17
branches’ specific orientation (domestic
Sugar
16
market, import substitution, or exports).
Agrochemicals
Source: CEP based on INDEC data
29
Advantages of Investing Today
Argentina is among the most competitive economies in the
international market in terms of labor costs.
•
Some of the basic costs investors must take into consideration if they wish to
set up their business in Argentina are listed below.
Gross annual wages/ salaries by sector
(2003, in US$)
Financial
Intermediation
9,628
Manufacturing
Industries
5,509
Logistics and
Communications
5,515
Trade
3,648
Construction
3,276
Hotels and
Restaurants
2,589
Source: ADI based on Ministry of Economy and Production data
Advantages of Investing Today
Skilled labor costs for Buenos Aires are competitive vis-à-vis
other cities worldwide.
• Comparing City of Buenos Aires local labor costs with costs in other major urban
centers reveals that Argentine costs are highly competitive.
Annual gross salary for industrial skilled
workers (2003, in US$)
Annual gross salary for engineers
US$)
Annual gross(2003,
salaryinfor
engineers
(2003, in U$S)
Mexico City
MexicoRep)
City
Prague (Czech
Buenos Prague
Aires (Argentina)
(Czech Rep)
Buenos
Aires (Argentina)
Shanghai
(China)
Shanghai (China)
Sao Paolo (Brazil)
9.000
9,000
10.200
14,400
Caracas (Venezuela)
14,900
Santiago (Chile)
15,500
Lima (Peru)
Singapore
Singapore
Mexico City
3,600
Bogota
4,100
Shanghai
4,600
Buenos Aires
13,400
Lima (Peru)
4.100
10,500
12.100
Bogota (Colombia)
Santiago (Chile)
3.600
Bogota
Shanghai
12,100
13.400
14.400
4.600
5.100
Sao Paolo
Buenos
Aires
6.500
5,100
SaoPrague
Paolo
6.800
6,500
Prague
Lima
14.900
6,800
6.800
15.500
Lima
Santiago
6,800
8.300
16.800
Caracas
Santiago
8,300
16,800
Caracas
Milan
26.700
26,700
Milan
Milan
Milan(Italy)
(Italy)
32.200
32,200
Singapore
Sidney
Sidney(Australia)
(Australia)
32.400
32,400
Barcelona
Barcelona
Barcelona
Barcelona(Spain)
(Spain)
32,400
32.400
Miami (U.S.A.)
(USA.)
Miami
(2003, in U$S)
Mexico City
10,200
10.500
Sao Paolo (Brazil)
Bogota (Colombia)
Caracas (Venezuela)
Annual gross salary for industrial skilled workers
Singapore
Sidney
Sidney
54,000
54.000
Miami
Miami
10.700
10,700
16.100
16,100
17.000
17,000
17.700
17,700
18.400
18,400
40,90040.900
Source: UBS
30
Advantages of Investing Today
Buenos Aires also offers clear advantages over the rest of the
world in terms of cost of living.
Food basket
(2003, in U$S)
Services basket
(2003, in U$S)
153
Buenos Aires
207
Santiago
Lima
228
Sao Paolo
230
276
Caracas
Prague
164
Bogota
165
Mexico City
202
Shangai
206
Santiago
207
208
Sidney
349
Lima
Barcelona
351
Singapore
Shangai
183
Caracas
246
Mexico City
162
Sao Paolo
186
Bogota
136
Buenos Aires
164
Prague
Singapore
Milan
270
327
Sidney
377
Miami
248
Barcelona
359
417
Miami
348
422
Milan
355
A basket of 39 products with due consideration
of the preferences of Western European
consumers was taken as a reference.
Source: UBS
A basket of 19 services including telephone, post
office, hairdressing, cinema, restaurant dining, dry
cleaning, etc. was taken as a reference.
Advantages of Investing Today
Competitive costs for agricultural land combine with excellent
agroecological conditions that ensure high yields in the widest
variety of crops.
10
8
6
4
Australia
USA
Canada
Argentina
U.K.
Spain
New Zealand
Source: ADI
Holland
0
Germany
2
Belgium
Argentina = 1
12
31
Advantages of Investing Today
Availability of office space at low rates
Monthly rental rates (Class A offices)
Class A buildings:
Buildings generally used for
rental purposes.
(2003, in US$ per m²)
Bogota
(Colombia)
Buenos Aires
(Argentina)
Santiago (Chile)
7.5
Located in easy access areas.
Modern layouts with good
natural light and view. Well
finished and maintained.
Tenants are generally
multinational companies and/
or tenants with a high
economic capacity.
8.0
11.5
Rio de Janeiro
(Brazil)
14.5
Montevideo
(Uruguay)
14.9
21.0
Mexico City
Source: ADI based on Colliers, Castro, Cranwell & Weiss data
Advantages of Investing Today
Low-cost electric power for industry
Electricity rates for industrial users
(2002, in US$ per MWh)
Argentina
Spain
19.3
31.2
Chile
36.8
Brazil
36.9
Colombia
55.0
International average
57.6
U.K.
59.1
Italy
98.7
Source: Electricity Association
32
Advantages of Investing Today
Low-cost gas for industry
Rates for major industrial users
(2003, in US$ per m³)
Argentina
0.02
Uruguay
0.11
0.22
Mexico
0.25
International average
0.28
USA
0.29
Italy
0.31
Canada
0.45
Chile
Source: ADIGAS
Advantages of Investing Today
Competitive telecommunications costs
Local call rates
(2002, in US$/ 3 minutes)
Argentina
0.03
Brazil
0.03
Spain
0.09
Italy
0.12
Chile
0.12
Mexico
Uruguay
0.14
0.17
International average
0.21
Source: International Telecommunication Union
33
Advantages of Investing Today
Developed infrastructure
• Argentina boasts considerable development in terms of road, rail, port,
aeronautical, and telecommunications infrastructure.
• In addition, modern regulatory frameworks ensure a high level of
competition.
• Appropriate infrastructure provides a platform to boost production sector
competitiveness and ensure territorial and social integration .
Advantages of Investing Today
Commercial Aviation infrastructure
• The National Airports System comprises 52 airports, 35
of which are managed by the private sector in
conjunction with recognized international operators.
• Argentina has 21 airports equipped for international
traffic (see map).
34
Advantages of Investing Today
Port infrastructure
• Argentina has 38 maritime ports along the Atlantic
coastline and 25 river ports.
• Recognized international maritime cargo operators
operate out of Argentina.
• The Port of Buenos Aires is the main container port in
Latin America and the Caribbean.
• Argentina’s principal maritime and river ports are featured
on the map.
Advantages of Investing Today
Port Infrastructure
• Argentina’s main port has achieved considerable progress in recent years in
terms of operability.
CATEGORY
General cargo (thousands of tons)
Containers (thousands of TEUs)
Operating area (hectares)
1991
2001
4,000
6,957
300
650
65
92
Average lay days
6.2
1.0
Productivity tons/ personnel/ year
800
5,984
Source: Port of Buenos Aires
35
Advantages of Investing Today
Paraguay - Paraná Waterway
• The Paraguay-Paraná Waterway is the main river transport lane along the ParaguayParaná water system and measures 3,302 km in length.
• The importance of this project lies in the lower river navigation costs (the approximate
freight cost is US$ 0.010 per ton/ km) and the lower environmental impact.
• Hidrovía S.A. is responsible for dredging to a draft depth of 32 feet, seamarking, and
maintaining the main access channel to the River Plate and the River Paraná for the 779
km stretch to the port of Santa Fe.
• The waterway is navigated by tug-propelled barge convoys, each barge with a loading
capacity of 1,500 tons. Currently, the maximum convoy is generally 20 barges (30,000
tons) measuring approximately 300 meters between perpendiculars with a 48 meter beam.
Advantages of Investing Today
Road Infrastructure
• The National Road Network spans 38,632 km,
81% of which are paved (see map).
• A further 180,000 km of roads are under
provincial and 280,000 km under municipal
jurisdiction.
36
Advantages of Investing Today
Railway Infrastructure
• The Argentine railway network is one of the most
extensive worldwide, covering a distance of 35,753 km.
• The federal government has decided to promote regional
integration though the railway system and consequently
decreed the reopening of branch lines such as the
Central Trans-Andean Railway via tender and the
rehabilitation and transformation of the Belgrano Cargas
freight line.
Advantages of Investing Today
Telecommunications
Argentina began developing telecommunications 123 ago, only 4 years following the
launch of the Bell Telephone Company.
Over the last 10 years, investments totalling more than 20 billion dollars have
increased the number of telephone lines in service by 74%, total digitalization of the
network has been achieved, and the mobile telephone service has grown from less
than half a million to 8 million phones in service.
PER 100
INHABITANTS
Telephone lines
Cellular phones
PCs
Internet users
Argentina
Latin Am.
& Carib.
Brazil
Mexico
22.0
16.9
9.1
18.2
13.7
6.3
12.5
14.2
6.9
14.8
12.2
5.9
8.8
4.6
3.7
5.0
Source: World Bank (2001)
37
Advantages of Investing Today
Telecommunications
• Various indicators give an overview of improvements in the telecommunications
sector in recent years.
CATEGORY
1990
Lines installed (thousands)
2000
3,097
7,894
Cellular phones (thousands)
15
6,380
Digitalization of network
13%
100%
Lines in service per 100 inhabitants
11.9
20.6
Public telephones (thousands)
22.5
150.7
76.1
406.9
Lines in service per employee
Investment in the sector 1991-2000
US$ 21,150 million
Source: National Communications Commission
Advantages of Investing Today
Telecommunications
Telephone lines in service
(in millions)
7.9
5.7
6.3
6.8
7.1
7.2
'97
'98
'99
8.5
8.6
8.7
'01
'02
'03
5.0
'94
'95
'96
'00
Source: National Communications Commission
38
Advantages of Investing Today
Telecommunications
Cellular telephone lines
(in millions)
7.8
6.4
6.7
6.6
'01
'02
3.9
2.7
2.0
0.2
0.3
'94
'95
0.7
'96
'97
'98
'99
'00
'03
Source: National Communications Commission
Advantages of Investing Today
Investment Incentives
•
Argentina has a number of regimes designed to promote investments by both
domestic and foreign investors alike:
– General incentives: Instruments and measures aimed at promoting
investment in any region or economic activity
– Sectoral incentives: Promotion regimes aimed at a particular economic
sector
– Regional incentives: Provincial investment promotion regimes and
investment support infrastructure
39
Advantages of Investing Today
General Incentives
• Export promotion incentives including drawback, temporary admission, turnkey
plant exports, and customs-at-factory regimes.
• Instruments and regulations aimed at reducing initial investment costs: investment
VAT financing; reduced VAT tax rate on capital goods, IT, and telecommunications;
zero import tariff on capital goods; zero tariff on all goods destined for use in
major investment projects.
• Measures that boost competitiveness by reducing operating costs, such as
deregulation of the electricity market, air freight transport, etc.
Advantages of Investing Today
General Incentives
• The Executive Branch has proposed new mechanisms designed to promote
investment and these mechanisms are currenly being analyzed by Congress:
– Accelerated depreciation for machinery, equipment, and infrastructure works
destined for investment projects. Capital goods purchases may be depreciated in
the balance sheets for the three years subsequent to purchase and infrastructure
project depreciation will be reduced by 50% vis-à-vis the usual depreciation period.
– Refund of VAT paid on the purchase of goods destined for use in investment
projects. All VAT not offset will be refunded in cash three months after purchase.
– The regime will remain in effect for 36 months.
40
Advantages of Investing Today
Sectoral Incentives
• Certain sectors including mining, forestry, tourism, and the automotive industry have
specific investment promotion regimes.
• Some of these regimes include the following incentives inter alia:
– Fiscal stability for 30 years (forestry, mining)
– Special depreciation regime for income tax purposes (forestry, mining)
– Tax exemptions (forestry, mining, tourism, automotive industry)
– Compensated trade regime (automotive industry)
Advantages of Investing Today
Regional Incentives
•
Various provinces in Argentina have investment promotion regimes that generally
include the following incentives:
– Exemption from provincial taxes such as turnover tax, stamp duty, real estate
tax, etc.
– Reduced public utility rates
– Support for infrastructure and equipment projects
– Facilities for the purchase, rental, or lease without charge of public property
•
Most provinces have business support infrastructure such as industrial parks and
free zones.
41
Advantages of Investing Today
Legal Framework
•
Removal of barriers to foreign investor acess to specific economic sectors
•
The main aspects of the current legal framework with regard to FDI are based on:
– National treatment for foreign investors
– No prior approval or registration requirement for investments
– Access to all economic sectors
– Access to domestic incentive programs
– Unimpeded transfer of profits and repatriation of capital
•
Protection and arbitration of disputes between Argentina and foreign investors
•
Argentina maintains bilateral agreements for the promotion and protection of
investments (BITs) and is a member of MIGA, OPIC and ICSID.
Advantages of Investing Today
Attractive Sectors for
Investment
42
Advantages of Investing Today
Attractive sectors for investment
• The following include some of the most attractive sectors for investment:
n Mining
n Forest industry
n Leather and leather products
n Petrochemical industry
n Agricultural machinery
n Vegetable oils
n Grape growing and wine
making
n Cultural industries
n Software
n Outsourcing
n Tourism
Advantages of Investing Today
Mining
4Strong increase in production
4Exports tripled in the last 7 years (US$ 996
millon in 2003)
Rates of return after taxes
(gold mine)
S. Africa
Chile
Argentina
Australia
USA
4Strong foreign investment in the last 6 years
(US$ 3 billion)
Peru
Bolivia
Canada
4Favorable legal framework
Mexico
China
4Geological potential: rich in mining resources
(ranked sixth worldwide)
475% territory with potential still unexplored
4Mining Integration Treaty with Chile
4High profitability in copper and gold mines
4Availability of production resources:
infrastructure, skilled labor and a growing
supply of local suppliers
0
5
10
15
20
15
20
Rates of return after taxes
(copper mine)
Chile
Argentina
S. Africa
USA
Australia
Peru
China
Bolivia
Mexico
Source: Colorado School of Mines è
Canada
0
5
10
43
Advantages of Investing Today
Forest Industry
• The Forestry Law provides an attractive legal
framework for investments
• Fiscal and economic incentives for the
PAPER INDUSTRY
• Unmet domestic demand
• Growing per capita consumption
WOOD INDUSTRY
development of the sector
• High growth rates and lower harvesting
maturities
• New project potential
• Abundant supply of suitable low-cost land
and extensive tracts available
• High expansion potential due to relatively low
consumption
• Cost of wood lower than in Nordic countries
• 20 million hectares of suitable virgin land,
only 5% of which is currently being
cultivated
Productivity per worker in paper and paper
product production
(1993=100)
• High potential for industrial development
200
• PULP INDUSTRY
150
• Abundant supply of forest raw material
100
• Extensive use of recycled fibers with definite
growth potential
50
0
93
94
95
96
97
98
99
00
01
02
Source: CEP
Advantages of Investing Today
Leather and leather
products
The sector produces tanned leather, semifinished and finished leather, and upholstery
covers with an annual turnover of US$ 1
billion.
The largest firms produce up to 5,000/6,000
pelts per day (in Italy average-sized companies
produce approximately 200/300 pelts per day).
Argentina is the world’s fourth largest producer
and exporter of leather goods and claims 9%
of the global leather market.
The industry is moving forward in terms of
upstream integration, basically by producing
upholstery covers for the automotive industry
(US$ 200 million in exports).
80% of total production is exported and 50%
of these exports go to the USA, China, and
Brazil.
Production has increased notably in recent
years.
Productivity per worker
(1993=100)
Productivity per man hour
(1993=100)
180
130
180
80
130
01
01
02
00
99
98
97
96
02
00
99
98
97
96
95
94
94
Source: CEP
30
93
95
93
30
80
44
Advantages of Investing Today
Petrochemical Industry
The petrochemical industry has been operating for more than fifty years in Argentina and
petrochemical plants process and add value to raw materials in the form of locally extracted
hydrocarbons (oil derivatives and natural gas compounds).
43 plants with installed capacity on an international scale
produce primary, intermediate, and final products, and in
the five-year period 1996-2000, the petrochemical industry
invested approximately US$ 3 billion and doubled its
installed capacity to 6.2 million tons per annum.
Urea production
(in thousands of tons)
1,200
1,000
800
600
400
Demanding domestic market: one of the most notable
examples is the increase in apparent consumption in the
agricultural sector.
200
0
92
The industry has the potential to become a production
platform to supply MERCOSUR markets.
93
94
95
96
97
98
99
00
01
02
Productivity per worker
(1993=100)
300
250
200
Human resource productivity in the manufacture of
chemical products for agricultural use has practically tripled
in 10 years.
150
100
50
0
93
94
95
96
97
98
99
00
01
02
Advantages of Investing Today
Agricultural Machinery
This sector has been industrially active for over 100 years and has the capacity to adapt
to changes in agricultural practices (e.g. the adaptation of seeders to the direct seeding
system).
Argentine seeder production statistics
3,278
1990
n An ever-expanding and important domestic
market: Agricultural production is displaying marked
1991
1992
1993
growth, while current profitability allows producers
1994
to procure suitable equipment.
1995
n The industry is able to support domestic
1996
purchasers in the post-sales phase.
2,562
2,080
3,100
3,600
3,400
5,880
4,740
1997
4,640
1998
n National equipment can be adapted perfectly to
1999
Argentine soil characteristics.
2000
n Applied knowledge export potential.
2001
2002
2003
4,178
3,894
3,420
5,100
5,350
45
Advantages of Investing Today
Vegetable Oils
• SOYBEANS:
• Argentina’s prominence in the global market:
èAverage production unit capacity: 5,000 tons
è 12% of global soybean production
Principal global producers: USA (1,500 tons),
è 30% of vegetable oil exports and 10% of
Brazil (2,500 tons)
èCrush cost US$ 4/ ton (USA –US$ 10-, Brazil
seed exports
-US$ 14-)
è 22% of global sunflower production
• A high incidence of leading-edge technology in use
è Leading exporter of sunflower oil
in the industrial sector
• GPV: US$ 4.2 billion
• Capacity to produce bio-fuels from vegetable oils
• Low cost of arable land
• High geographic concentration of primary and
Soybean oil exports
industrial production
(in millions of US$)
• Availability of futures markets for agricultural
producers
2000
1500
• Growing global demand for vegetable oils and
1000
500
vegetable oil by-products
0
92 93 94 95 96 97 98 99 00 01 02 03
Source: INDEC
Grape Growing and Wine
Making
• Argentina is the world’s fifth largest producer of
Advantages of Investing Today
• High availability of raw materials: eighth
largest global producer of fresh grapes
wine
• High domestic consumption (world’s sixth largest
consumer of wine)
• High competitiveness of Argentine wine
producers: excellent price/quality ratio
• Argentine wine exports have risen by more than
400% in the last ten years
• High quality wines account for over 80% of
exports in this sector
• Low cost of land in the context of a global
reduction in planted area
• Available technology similar to that used by
the major producing countries
Argentine wine exports
(in millions of US$)
180
150
• Capacity to export high-value wines amid
growing foreign demand
• Capacity to produce organic products
120
• Ongoing improvement in the quality of grape
90
60
and wine products
30
0
92 93 94 95 96 97 98 99 00 01 02 03
Source: INDEC
46
Advantages of Investing Today
Cultural Industries
• The book industry was one of the first to develop in Latin America, while there is also a long history
of film production.
• Cultural industry professionals and technicians are high-quality, and human resources working in
these industries display a high degree of flexibility in adapting to work-related developments and
adverse scenarios.
• A large number of training centers are available for professionals in the various specialist fields
covered by these industries.
• Argentina boasts talented writers, musicians, actors, authors, scriptwriters, directors, and advertisers
of world renown.
• High-level equipment in graphic design, film studios, television and music production ensures highquality productions.
• Argentine cinema is always represented and performs well at international film festivals, and
Argentina was among the top five creative leaders worldwide in advertising in the 90s.
• Argentina has a wide variety of landscapes and locations suitable for filmmaking, and a good tourist
infrastructure and transport system makes it easy for television, cinema, and advertising production
teams to stay in and move around the country.
Advantages of Investing Today
Software
• Human Capital: highly trained, specialized
in technology and IT solutions at competitive
costs, with socioeconomic and cultural
characteristics similar to those in the most
highly developed countries
è
3,500 computer and IT graduates/ year
è
20,000 AMBA professionals
• Potentially significant domestic markets
for specific applications:
è
• Low production costs: the cost structure for
this sector is highly competitive internationally
• Argentina: A highly competitive base for
producing and exporting software and IT
services to Latin America and the Spanishspeaking world
• Legal framework: Software Development Bill:
è
Fiscal stability
è
Extrazone import duty exemption for
Agribusiness, industrial automation,
educational and entertainment software
(edutainment)
• Exportable software development
capability
hardware imports
è
Income tax reduction in the amount of
a percentage to be investe in R&D
è
VAT credit
47
Advantages of Investing Today
Outsourcing
• Argentina is in a position to become one of the main beneficiaries of this growing corporate
trend. Various multinational companies (HP, IBM, Teleperfomance, SAP, Motorola, Accenture)
have selected Argentina as their base for operations ranging from basic services (such as
telemarketing or call-centers) to software development, engineering, financial analysis, design,
and R&D.
• The main reasons for Argentina’s attractiveness are the level of qualification of the population,
the critical mass of professionals and university students, labor cost levels, and
telecommunications infrastructure availability.
“Proficiency in English” examination
"
(% of successful candidates)
• Potential to provide the US market with
call center services. A growing number of
70
60
50
Argentines are training and qualifying in
40
English. Qualifications obtained abroad
30
by Argentine students are among the
20
highest.
10
global average:
46%
No data
available: less
than 40
candidates
0
Chile
Brazil
Uruguay
Argentina
Italy
Spain
Source: University of Cambridge, EFL
Advantages of Investing Today
Tourism
• The number of foreign tourists visiting Argentina rose
Hotel supply:
Number of establishments
by 27% in 2003 compared to a 15% increase in
2002.
7,800
• Foreign tourism displays a high degree of diversity in
7,500
terms of countries of origin and average spending,
7,200
accompanied by longer average stays.
6,900
• There has been strong investment in hotel
infrastructure in recent years, although there are still
6,600
6,300
1998
1999
2000
2001
2002
a considerable number of locations available for
developing tourist services.
Tourist countries of origin
2003
• Skilled labor is low-cost and tourist tariffs are
Others
13%
attractive.
• The diversity of Argentine landscapes makes it
possible to tailor products to international demand
(ecotourism, rural tourism, cultural tourism, sport
tourism, etc.).
Brazil
17%
Uruguay
26%
Chile
17%
USA &
Canada
10%
Europe
17%
Source: INDEC
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Advantages of Investing Today
Perspectives and Challenges
Advantages of Investing Today
Market expectations consensus: improved Argentine economic
performance
Market Expectations Survey
GDP
2004
7.2% Industrial Activity
2004 11.0%
(Interannual variation)
2005
4.8% (Interannual variation)
2005 7.5%
Nominal Exchange Rate
End 2004
2.97 Investment
2004 23.0%
($/US$)
End 2005
3.00 (Interannual variation)
2005 11.5%
Consumer Prices
Dec 04
6.9% Trade Balance
2004
13.0
(Interannual variation)
Dec 05
6.0% (US$ billion)
2005
12.3
5.1
Average Salary
2004 10.5% Current Account Balance
2004
(Interannual variation)
2005
2005
4.1
Unemployment Rate
2004 13.5% International Reserves
2004
17.1
(% of Workforce)
2005 12.4% (US$ billion)
2005
18.8
8.0% (US$ billion)
Source: BCRA
This survey is conducted by the Central Bank of Argentina to obtain a systematic follow-up of the
principal short- and medium-term macroeconomic projections made by Argentine and foreign analysts
and academics on Argentine economic performance.
49
Advantages of Investing Today
Argentina will be among the leading countries in Latin America
in 2004/ 2005 in terms of growth.
Source: World Economic Outlook (IMF)
• Argentina recorded the highest growth in Latin America in 2003 and is expected to continue to
be among the leaders in the years to come.
Advantages of Investing Today
On the domestic front, Argentina aims to intensify the current
economic growth process
• To achieve this goal, Argentina must ensure continuity in the
processes already underway:
– Lowering unemployment
– Boosting investment flows
– Strengthening the financial system
– Fiscal consolidation
– Restructuring the social security system
– Stabilizing prices
50
Advantages of Investing Today
While on the international front, the main objective is to intensify
Argentina’s quantitative and qualitative international integration
by ...
• Deepening regional integration schemes and moving
forward in the foreign trade negotiations agenda (WTO,
FTAA, MERCOSUR, etc.)
• Ensuring the ordered and sustainable restructuring of
public and private debt with a view to achieving a
solution in accordance with Argentina’s payment
capacity.
Advantages of Investing Today
Secretariat of Industry, Commerce, and SMEs
Ministry of Economy and Production
Av. Julio A. Roca 651 – 5th Floor, Office 22
(C1067AAB) Buenos Aires
Republic of Argentina
Tel. (+54 11) 4349-3442 / 3313 / 3315
Fax (+54 11) 4349-3453
E-mail: [email protected]
http://www.inversiones.gov.ar
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