Newsletter Argentina
June 2014, Edition 9
On the 14th of May, 2014 the Ambassador of the Kingdom of the Netherlands, Henry J. de Vries, signed a Treaty and a
Memorandum of Understanding with AFIP (Agencia Federal de Ingresos Públicos)
Newsletter Argentina is a publication composed by the agricultural and economic departments of the Embassy of the Kingdom of
the Netherlands in Buenos Aires. The main focus of this newsletter is on Argentina, but also relevant developments in Uruguay and
Paraguay will be introduced. The newsletter provides an update of economic developments, new policies and regulations, tenders,
fairs and trade missions. This newsletter is put together on the basis of various public sources such as newspaper articles, press
releases, and third party information.




Economic Outlook- Argentina-Paraguay-Uruguay
Regulations
Trade Opportunities – Fairs
Main Figures- Statistics
Trade Opportunities
Trade Mision to Argentina, Uruguay y Paraguay
On the month of November this year, a trade mission to Argentina, Uruguay and Paraguay will take
place. The mission will be headed by the General Director for International Economic Relations of
Ministry of Foreign Affairs of the Kingdom of the Netherlands, Simon Smits, accompanied by Dutch
companies.
Those interested in having meetings with these companies can contact the Economic Department of
the Embassy of the Kingdom of the Netherlands in Buenos Aires to [email protected].
International Logistics Day at Expo Logistics 2014
During the 11th International Exhibition of Equipment, Technology and Logistics Solutions,
Information Flow and Supply Chain, to be held between August 12th and 15th in the City of Buenos
Aires, an International Logistics Day will take place, which will bring together local and foreign
specialists.
This event is aimed at professionals and entrepreneurs and for the occasion a Consultive Committee
was set up comprising representatives of port and maritime activities, international trade, logistics
operators and customs brokers, among others.
During the conference, which will be held in parallel to the most important logistics meeting in Latin
America, the main issues related to trade logistics will be discussed, from the point of view of the
various links of the chain of services involved.
For more information on this event, visit the Expo Logistics website: www.expologisti-k.com.ar
New Linkedin Profile
As of June, the Embassy of the Kingdom of the Netherlands in Buenos Aires has a Linkedin profile,
where you can find the most relevant information on bilateral trade, current news, events and more.
Argentina
Tax agreements signed with Argentina
On May 14th, in
Curacao and the
signed, as well
Netherlands and
(MoU).
Buenos Aires an Agreement between the Kingdom of the Netherlands, in respect of
Argentine Republic for the exchange of information with respect to taxes (TIEA) was
as a Memorandum of Understanding between the competent authorities of the
the Argentine Republic on the automatic exchange of information for tax purposes
The agreement and the memorandum were signed by Ambassador H. de Vries, representing Curacao
for the TIEA and the Netherlands for the MoU, and by the Administrator of AFIP (Federal
Administration of Public Revenue) Ricardo Echegaray.
The TIEA establishes a formal framework for an effective exchange of tax information between the tax
authorities of the parties, which is key in meeting the objective of preventing fraud and tax evasion.
The MoU was signed in order to carry out the provisions of the Convention between the Kingdom of
the Netherlands and the Argentine Republic for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and on capital signed in Buenos Aires on December
27th, 1996. It is the first one signed by Argentina, and the second signed by the Netherlands in the
western hemisphere (after Canada).
http://www.dialogofiscal.gob.ar/internacionales/audioPaisesBajos.aspx
Argentina and its external debt
On June 16th, against market expectations, the U.S. Supreme Court refused to hear an Argentine
appeal on defaulted bonds. Two days later the U.S. courts lifted a hold on the order requiring
Argentina to pay $1.33 billion to NML Capital and lifted the stay of enforcement of injunctions.
Judge T. Griesa required Argentina to pay over USD 1.3 billion with interest, to NML Capital ensuring
the holdouts are treated in the same way as other creditors (the pari passu clause). The problem is
that the RUFO clause (Rights Upon Future Offers) given to bondholders who took Argentina’s debt
restructuring terms in 2005 and 2010, entitles them to get the same treatment if Argentina
“voluntarily” makes a better offer to the creditors who stayed out before 31 December 2014. It may
be eventually argued that fulfilling a Judge’s ruling is not a “voluntary” payment.
The Argentinian government announced that “it will not default on its restructured bonds”. And
despite the court order on June 26th, the Economy Minister, Axel Kicillof, announced that Argentina
paid more than USD 1 billion for capitals and interests corresponding to the bondholders that joined
the debt swap. The payment was made because on June 30th Argentina had to pay the already
restructured debt (although it has a 30 days period of grace). Judge Griesa nullified the payment
which he called an “explosive action” that has disrupted settlement talks. Griesa also denied the
request of Argentina for a stay.
It should be noted that even in the worst case scenario, the technical default if Argentina does not
reach an agreement in July with the holdouts, it can’t be compared to the 2001 crisis. First off all it
will be a technical default: Argentina has the money, transferred the money, but can’t technically fulfill
the payment. Secondly, in 2001 the debt was 166% of GDP while now it amounts to 40% of GDP. As
of today (June 30th) the markets are expecting that an agreement will be achieved as the stock
exchange, and even the thermometer of the economy - the exchange rate - are stable (with ups and
downs, but no drastic changes).
The Paris Club and the Argentine Republic agree to a resumption of payments and to
clearance of all arrears
“The representatives of Paris Club creditors and of the Government of the Argentine Republic met on
28 and 29 May 2014 and agreed on an arrangement to clear debt in arrears due to Paris Club
creditors over a five year period. The scheme offers a framework for a sustainable and definitive
solution to the question of arrears due by the Argentine Republic to Paris Club creditors, covering a
total stock of arrears of USD 9.7 billion, as of 30 April 2014. It provides a flexible structure for
clearance of arrears within five years including a minimum of USD 1150 million to be paid by May
2015, the following payment being due in May 2016”.
The agreement was well received by the opposition and the private sector (including Dutch companies
in Argentina) as it will allow Argentina to access the international finance markets, also foreign direct
investments are expected to arrive. However it was criticized that in order to avoid the IMF
intervention, the government accepted terms that could have been improved: a period of 10 years
instead of 5 and a smaller amount to be paid. It is also worth mentioning, that most of the debt has to
be paid by the next government as the presidential elections will be held in October 2015.
http://www.clubdeparis.org/sections/actualites/argentine/downloadFile/PDF/PR20140529_Argentine.p
df?nocache=1401336431.64
Argentina: knowledge and technology in the potato
chain
The 2g@there-program GITAHpapa, supported by RVO.nl,
consists of a thriving multiannual partnership with the
Argentine-Dutch group for technology exchange in the potato
industry. Within this framework 3 activities have been
organized during the first months of 2014 in the province of
Buenos Aires: (i) a workshop and field demonstration in Tres
Arroyos about the use of uncut and calibrated seed potatoes,
(ii) a seminar and machine demonstration during the annual
“Fiesta de la papa” in Otamendi, (iii) a workshop about the
storage and packaging in Otamendi. The events brought together the most important Argentine potato
producers with the representatives of the Dutch machine manufacturers and research institutes. For
more information please click on the following link:
www.gitah.com.ar
Increasing influence of China
After the Dutch grain-multinational Nidera announced last February that they sold a majority stake to
the Chinese Cofco, Cofco continued their expansion. In April the state-runned Chinese food-company
announced that they will also take over the agricultural branch of Noble (originally from Hongkong).
Nidera and Noble together represent more than 10% of the Argentine soy exports (annual total
exports of soy are about 50 million tons). It illustrates the great importance that China attributes to
the (future) food supply.
Strong increase of exports of poultry meat
In 2013 Argentine poultry exports amounted to 653 million dollars, 18% more than in 2012. The most
important export destination is Venezuela, followed by China and Chile. In recent years, the
production of poultry meat in Argentina has been increasing significantly because the main cost, corn,
is available in abundance and at good prices. This is partly due to the export tax of 23% that
exporters of corn and other cereals must pay.
Paraguay
Private Sector Forum Paraguay
In connection with the annual meeting of the OAS which took place in the first week of June this year,
a Private Sector Forum was organized. During the Forum a lot of emphasis was placed on Public
Private Partnerships, an area in which Paraguay has recently adopted new legislation. Also, the
ambition of Paraguay to launch PPP’s for investment plans particularly in the area of infrastructure was
underlined by President Cartes. Cartes, having a business background himself, emphasized the role of
the private sector in sustainable and inclusive economic growth and job creation.
The Minister of Economic and Social Development and Planning of Paraguay, Jose Molinos Vega, stated
that three months of after the passage of the PPP-legislation already 14 projects are being prepared,
mostly in the area of infrastructure. In this way Paraguay hopes to generate interest of foreign
investors. The Minister of Industry and Trade, Gustavo Leite, added that PPP’s can also be used in
sectors like education, science and technology. In addition he stressed the favorable tax climate in
Paraguay and the necessity to offer investors legal security.
Standard & Poors upgraded Paraguay’s debt rating
The rating agency raised their qualification from BB- to BB, expecting sustainable economic growth
driven by the investment impulses given by the government in infrastructure and by cautious
macroeconomic management. The agency expects stable growth for the coming years with an average
between 4 and 5%. As part of the financing of its investments plans Paraguay plans to issue new debt
in international markets in the second half of the year. This will amount to 750 million US dollar
according local authorities.
http://www.infobae.com/2014/06/12/1572239-paraguay-sigue-alza-sp-subio-la-nota-su-deuda
Potable water investments in Paraguay
As part of the many investment projects of the Cartes government, the ministry of public works and
communications published the 5-year goal of an investment of 2.4 billion US dollars in potable water
and sanitation improvements. Five mega-projects were listed including sewer and wastewater
treatment for Asunción and potable water services and sewage sanitation upgrades in various cities.
The Paraguayan sewerage system currently reaches 11% of the population, and wastewater treatment
only 3%. Apart from the improvement on the access and quality of water, the projects will also create
over 28.000 jobs.
http://web6.bnamericas.com/news/waterandwaste/paraguay-to-spend-us24bn-on-waterwaste/424519662/?utm_source=free&utm_medium=newsletter&utm_campaign=recursos
Paraguay: an agricultural country in development
As announced in this Newsletter there will be a trade mission to Argentina,
Paraguay and Uruguay. Interested? Here you can read more on the
development and challenges in Paraguay – the best kept secret of LatinAmerica.
You never really hear anything about Paraguay. To many it is unknown that the
economy grew by an impressive 13,6% last year. The agricultural sector is fast
growing, export-oriented and increasingly diversifying its industry next to soy
and beef. Although the price is steadily increasing, land is still low-priced. This
offers opportunities for investment or export of Dutch agricultural knowledge
and technology. However, Paraguay also has its challenges. For the full article (
in Dutch) please click on the following link:
http://argentinie.nlambassade.org/binaries/content/assets/postenweb/a/argentinie/nederla
ndse-ambassade-in-buenos-aires/import/producten_en_diensten/landbouw/artikel-bbparaguay-mei-2014.pdf
Uruguay
Moody's upgrades Uruguay's debt rating
The risk rating agency Moody's upgraded Uruguay's debt rating from "Baa3" to "Baa2", and
mantanined a "stable perspective". This is the highest historical debt rating for Uruguay and puts the
country on the same rating levels of Perú and Brasil.
Economic Outlook
Foreign Direct Investment in Latin America
According to the annual report on Foreign Direct Investment published by CEPAL, FDI inflows in Latin
America remained stable in 2013. Total inflows showed an increase of 5% with the previous year,
however, total outflows declined by 33%. The services sector received the highest proportion, 38%, of
FDI inflow in 2013, followed by manufacturing and natural resources. However, the composition varies
strongly per country.
Despite Paraguay’s strong economic growth last year. FDI inflows in Paraguay were 20% less than in
2012 and amounted to 382 million US dollar. Both services and the manufacturing sectors have been
important for FDI, in addition, several companies continue to explore for oil and gas in different parts
of the country. A large acquisition was made by the Chilean brewer Compañía Cervecerías Unidas S.A.
(partly controlled by Heineken), which purchased a 50% stake in Bebidas de Paraguay and a
distributor.
FDI inflows in Argentina, amounting to 9.081 billion US dollars, also showed a decline compared to
last year. A rise in reinvestment of earnings was triggered by restrictions to access foreign capital
imposed at the 2011 and accounted for 77% of the total inflows in 2013. Capital inflows, mergers and
acquisitions were limited in 2013. After the governmental agreement to pay Repsol 5 billion US dollars
in compensation for the nationalization of 51% of the oil company YPF, YPF is now trying to attract
other international companies as partners.
The FDI inflows in Chile amounted to 20.258 billion, which is 29% less than the previous year. The
most important industry for FDI is the mining industry which has seen some large investments, but
also the electricity generating sector has seen a lot of activity with various projects in wind and solar
energy. In addition, announcements have been made for investments in hydroelectric power. In
manufacturing, Chile saw one of the larges takeovers in Latin America in 2013, when Colombia’s
Grupo Nutresa acquired the food company Tresmontes Lucchetti for 758 million US dollars.
Considering outward FDI, Chile is one of the largest providers of Latin American Foreign Direct
Investments, together with Mexico, although countries outflows showed a declined after very high
outflows in 2011 and 2012.
In contrast to the previous countries, Uruguay received more inflows of FDI in 2013 than the
previous year, with a total amount of 2.796 billion US dollars. The inflows in Uruguay represented 5%
of GDP, a fairly high proportion in comparison with the region. The sectorial distribution has not yet
been issued, however in 2012 there was a strong growth in investment in utilities, consistent with the
governmental push for wind energy and the strong inflows of investment in that sector. In addition, in
2014, tenders for solar energy projects amounting to 300 million US dollars have been issues. What
could limit FDI in the future is a draft law that is currently being discussed, limiting land ownership by
foreigners.
http://www.eclac.cl/cgibin/getProd.asp?xml=/publicaciones/xml/8/52978/P52978.xml&xsl=/publicaciones/ficha.xsl&base=/p
ublicaciones/top_publicaciones.xsl
IMF - World Economic Outlook (WEO) - “Recovery Strengthens, Remains Uneven”
“Global activity has broadly strengthened and is expected to improve further in 2014–15, according to
the April 2014 WEO, with much of the impetus for growth coming from advanced economies”. In Latin
America “only a modest acceleration in activity is expected with growth rising from 2,5% in 2014 to 3
percent in 2015”.
In Argentina the economy continues to struggle “with difficult external funding conditions and the
negative impact on output from pervasive exchange and administrative controls. The activity is
expected to slow markedly during 2014, though the outlook is subject to high uncertainty. Persistently
loose macroeconomic policies have generated high inflation and a drain on official foreign exchange
reserves. The gap between official and market exchange rates remains large”. After the strong
devaluation in January Argentina raised the interest rates, but more significant policy changes are
needed. The projected GDP growth for 2014 is 0.5%, and the unemployment 7.6%.
In the case of Paraguay growth rebounded in 2013 (13%) as the agricultural sector recovered from a
severe drought. This year’s growth is expected to reach 4.8% (in line with the Central Bank’s figures)
and will be the third highest one in the region (after Peru with 5.5% and Bolivia with 5.1%). The
inflation and unemployment will be steady at 4.7% and 5.5%.
Projections for Uruguay are that the GDP growth will reach 2.8% with an inflation of: 8.3%.
In Chile activity “is projected to moderate somewhat because private investment growth is
decelerating markedly, including the mining sector”. The country “is also financially highly integrated
but not that vulnerable to capital flow volatility”. The projections for 2014 are: GDP growth 3.6%,
inflation 3.5%,
http://www.imf.org/external/pubs/ft/weo/2014/01/pdf/text.pdf
Fairs
2014
July
The 128th edition of the
Agricultural and Livestock
Exhibition
XXXIII International
Livestock, Industry,
Agriculture, Commerce and
Services Expo Fair
V Latin-American Congress
of Teaching in Design
12-21 July
Agricultural and
Livestock
Exhibition
Expo 2014
28 Julio – 1
August
Diseño Palermo
2014
7 – 9 August
AAPRESID
The annual AAPRESID
congress
13 – 15
August
Expo Logisti-K
26 – 29
August
Expo Portuaria
27-29 August
Expo Agua
September
Congreso
Tecnológico CREA
3–5
September
Espacio Food
Service 2014
11th International Exhibition
of Equipment, Technology
and Solutions for Logistics,
Flow of Information and
Supply Chain
Latin American Congress of
harbors organized by the
Asocación Americana de
Autoridades Portuarías
Meeting of companies and
technology in the water
sector
Technological Congress
CREA (Asociación Argentina
de Consorcios Regionales de
Experimentación Agrícola)
International congress of the
food industry
3 -14
september
Expoprado 2014
16 – 19
September
TECNO-FIDTA:
International Fair
of Food Technology
The 109th edition of the
International Exposition and
Livestock Exhibition of
Agroindustry and
Agribusiness
The 12th edition of the
International Fair of Food
Technology
http://www.
sra.org.ar/
Buenos
Aires
http://www.e
xpo.org.py/
Asunción
Paraguay
http://fido.p
alermo.edu/s
ervicios_dyc/
encuentro20
10/
http://www.
aapresid.org.
ar/
www.expolo
gistik.com.ar
Buenos
Aires
http://www.aa
pa2014argenti
na.com/index.
php/es/
Puerto
Iguazu
Rosario
Buenos
Aires
Buenos
Aires
http://www.
aacrea.org.a
r/i
Córdoba
http://espaci
ofoodservice.
cl/2013/
www.expopr
ado.com
Santiago
Chile
http://www.t
ecnofidta.co
m/
Buenos
Aires
Montevid
eo
Uruguay
Main Figures
Statistics
GDP
growth (%)
Argentina
Exports
(million
USD)
Imports
(million USD)
9,2
9.162
7,7*
8,4
81.576,40
67.630,00
8,9
10.959
10,9*
7,3
83.950,00
73.935,00
2012
1,9
11.576
10,8*
6,9
81.205,00
68.504,00
2013
3,0
-
9,4*
6,4
83.026,00
74.002,00
0,5
-
11,4*
7,4
-
-
2010
8,5
11.742
6,8
7,0
10.666,10
9.875,40
2011
5,7
13.866
8,6
6,0
7.920,00
10.726,00
14.614
2013
2014 projections
3,7
2,8
7,5
6,1
8.751,00
8.536,00
-
8,5
6,6
9.155,00
9.533,00
-
8,6
6,8
-
-
2010
15,0
3.105
7,2
6,1
10.474,37
9.592,68
2011
3,8
3.833
4,9
5,6
7.776,43
11.548,96
2012
-1,2
3.700
4,0
6,9
7.283,88
10.756,39
2013
13,6
4.368
3,7
5,4
9.432,34
11.302,07
4,6
5,5
2014 projections
Sources:
Unemployment
(%)
2011
2012
Paraguay
Inflation
(%)
2010
2014 projections
Uruguay
GDP per capita
(current USD)
4,8
-
-
-
IMF, WB, ECLAC, BCRA, BCU, BCP, EIU
* Data produced by private analysts have shown considerably higher inflation that official data mentioned above.
The Embassy of the Kingdom of the Netherlands in Buenos Aires cannot be held responsible for the accuracy of the
information published. Newsletter Argentina will be published on the website of the Embassy. If you wish to receive
Newsletter Argentina, or would like to add a person to the distribution list, or if you would like to send your
comments, please feel free to send a message to [email protected].