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Argentina Advantages of Investing Today

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Presentation on theme: "Argentina Advantages of Investing Today"— Presentation transcript:

1 Argentina Advantages of Investing Today
Dr. Beatriz Nofal President National Investment Development Agency Argentina

2 “Inclusive economic development entails investment promotion and a steady increase in productivity”
President Néstor Kirchner Address to the Legislature 3/1/2006


Argentina faces a unique opportunity given its healthy macroeconomic situation and sustainable growth coupled with a favorable international scenario. Four years steady growth at an average rate around 9% Substantial accumulation of reserves with reasonable goals Steady growth of global economy and international trade Favorable trade terms based on high price of “commodities” and natural resources. Twin Surpluses: fiscal and external Extraordinary international liquidity Growth of exports and imports with positive trade balance SUSTAINABLE GROWTH IN ARGENTINA FAVORABLE INTERNATIONAL SCENARIO Low global interest rates “Tight” monetary policy Global splitting of value chains Competitive and stable exchange rate New global consumption patterns (product differentiation) Record profitability in prime companies Increasing demand for alternative energy sources

5 Argentina grew at an average annual rate of around 9% over the past four years, ranking among the fastest growing economies worldwide Average: 8.9% Average: 8.7% Average:5.4% Average:2.8% Average:1.7% Developing Asia G7: Most developed economies 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.

6 Fiscal and Current Account Surplus International Reserves
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. Fiscal and Current Account Surplus (in millions of pesos) International Reserves (in billions of dollars) Primary Fiscal Balance Current Account Balance Source: ProsperAr based on Ministry of Economy and Production.

7 Argentina’s income per capita measured in terms of purchasing power parity (ppp) is the highest in the region. * Estimated Source: ProsperAr based on IMF World Economic Outlook.

8 In addition, Argentina has a solid base of competitive structural factors and capabilities to offer the world a differential value proposition. Knowledge Nature Culture Skills 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 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

9 MERCOSUR + partners in FTA’s (3) MERCOSUR + Venezuela (2)
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$S billions in 2006. MERCOSUR (1) GDP*: US$ Billions Population: 234 Millions of inhabitants MERCOSUR + partners in FTA’s (3) GDP*: US$ Billions Population: 376 Millions of inhabitants MERCOSUR + Venezuela (2) GDP*: US$ Billions Population: 261 Millions of inhabitants MERCOSUR is a common market conformed in the beginning (1991) by Argentina, Brazil, Paraguay y Uruguay. Venezuela was incorporated recently as a full member of the integration process in MERCOSUR, becoming the “Mercosur 5” Bolivia, Chile, Peru, Colombia y Ecuador are associated members. *Estimated 2006 Source: ProsperAr based on IMF World Economic Outlook.

10 Intra and Extra Mercosur Exports shows a significant dynamism
Intra and Extra Mercosur Exports shows a significant dynamism. The internal exports started recovering, surpassing in 2005 the maximum level of 1998. Internal and External Mercosur’s Exports increases ( %) Intra Mercosur Exports Extra Mercosur Exports 1990 – 2006 521,6% 173,3% 1990 – 1998 393,6% 42,1% 1998 – 2006 25,9% Source: ProsperAr based on INDEC

11 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

12 At current prices. Expressed as Percentages
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 Ratio At current prices. Expressed as Percentages Source: ProsperAr based on DNCN, INDEC.

13 Relación IBIF/PBI por país GDFI/GDP ratio by country
High investment/GDP ratios position Argentina among the main economies of the region Relación IBIF/PBI por país 1º Semestre 2006, a precios corrientes GDFI/GDP ratio by country 1st Quarter 2006, at current prices * Figure corresponds to total for Source: ProsperAr based on CEP.

14 Likewise, Foreign Direct Investment exhibits a dynamic performance over the past three years.
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). Source: ProsperAr based on INDEC

15 However Argentina faces big challenges in terms of investment
Results 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 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

16 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 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).

17 Public-private coordination and collaboration
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. Autonomy Stability Public-private coordination and collaboration Transparency Economic-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 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 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 Yearly rendering of accounts Internal Audit Department in coordination with the National Audit Commission

18 The institutional design of the Agency aims to facilitate public-private coordination and collaboration Board of Directors* President (1) Dr. Beatriz Nofal Members (2) Mr. Daniel Falcón Ms. Luciana Pagani National Council on Development Investments - Chief of Cabinet Minister of Economy and Production Minister of Foreign Relations, International Trade and Worship Advisory Council: private sector Superior International Advisory Council Internal Audit Department Investment Strategy and Environment Manager Mr. Ricardo Rozemberg Operations and Investment Services Manager Ms. Marcela Reganzani Public Relations, Marketing and Communications Manager Ms. Mariana Blanco Legal Department Office of the Assistant Manager of Human Resources and Administration *A President’s rank is equivalent to that of a State Secretary and Members to that of Undersecretary

19 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

20 Basically, the agency aims to contribute so that investment in Argentina and prosperity become sinonymous. 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.

21 Your partner to invest and prosper in Argentina

22 Annex

23 Natural Resources Argentina has leveraged on the richness and diversity of its natural resources to develop highly competitive agribusiness activities Corn Productivity Year Argentina = 100 Wheat Productivity Year Argentina = 100 Soy Productivity Year Argentina = 100 Source: ProsperAr based on FAO

24 Natural Resources and Agro-industry …being a leading producer and/or exporter in various agroindustrial segments. 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. Source: ProsperAr based on FAO.

25 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.

26 Socioeconomic Indicators
Socioeconomic Indicators Argentina socioeconomic indicators are higher than the average for the region Socioeconomic Indicators Argentina Brazil Chile Mexico Region 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 4 5 10 Population with sustainable access to improved water source 96 90 95 97 91 Deliveries performed by specialized staff (%) 99 100 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 Researches in R&D (for every million inhabitants ) 720 344 444 268 306 Source: UNDP Report on Human Development.

27 Adult Literacy Rate (+15 years) School Attendance Expectations
Education Argentina is also characterized by its high educational and cultural level based on the high education standards, similar to developed countries Adult Literacy Rate (+15 years) % School Attendance Expectations In years Source: ProsperAr based on GED 2006, UNESCO.

28 Environment …within the context of a sustainable environment.
Argentina ranks 9th among 146 countries in environmental sustainability Environmental Sustainability Index elaborated by environmental experts from Yale and Columbia.

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