argentinaargentinatradenet.gov.ar/sitio/datos/material/adi2.pdf · argentina advantages of...
TRANSCRIPT
1
Advantages of Investing Today
ARGENTINAAdvantages of Investing
Today
Secretariat of Industry, Commerce, andSMEsMinistry of Economy and Production
Advantages of Investing Today
The Argentine Economy
2
Advantages of Investing Today
Argentina at a Glance
8.7%Growth (2003)
US$ 4,003Per Capita GDP(2004 est.)
US$ 145 billionGDP (2004 est.)
SpanishLanguage
Argentine Peso (Arg$)Currency
24 autonomous States with political, administrative andeconomic powers(23 provinces and the City of Buenos Aires)
Political Subdivisions
Republican, Representative, and FederalForm of Government
36,223,947Population
2.8 million km²Argentina is the 2nd largest country in Latin Americaand the 8th largest worldwide in terms of surface area
Surface Area
Advantages of Investing Today
In terms of purchasing power, Argentina boasts the highest percapita income in Latin America.
Per capita GDP 2003(Purchasing Power Parity)
4,363
6,773
8,015
9,070
9,993
11,013
Venezuela Colombia Brazil Mexico Chile Argentina
Source: World Economic Outlook 2004 (IMF)
3
Advantages of Investing Today
The Argentine economy is highly diversified …
Source: ADI based on National Accounts
GDP by Economic Sector, 2003
Construction; 7%
ManufacturingIndustry; 52%
Fisheries; 1%
Goods, 46%Services, 54%
Wholesale, Retail,and Repairs; 21%
Transport,Warehousing,andCommunications;16%
Education, Social,and HealthServices; 13%
Real Estate, Rental,and Other BusinessActivities, 22%
Other Services; 7%
FinancialIntermediation:7%
Hotels andRestaurants; 4%
Public Administration,Defense, andExtraterritorial Activities;10%
Mining andQuarrying; 13%
Agriculture,Fishing,Hunting, andSilviculture;23%
Electricity, Gas,and WaterSupply; 4%
Advantages of Investing Today
with an ample supply of skilled labor …
• The illiteracy rate is the lowest in Latin America and compares with developed countries.
Illiteracy Rate 2002 Illiterate population over age 15 (%)
1.5%2.2%
3.0%4.0%
8.3%
12.3%
Italy Spain Argentina Chile Mexico BrazilSource: World Bank
Latin America and the Caribbean: 10.5%
4
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:
⌦ The world’s leading producer and exporter of sunflower oil
⌦ The world’s leading exporter and third largest producer of soybean oil
⌦ The world’s leading exporter and second largest producer of honey
⌦ The world’s leading exporter of horse meat
⌦ The world’s second largest exporter of corn
⌦ The world’s third largest producer of soybeans
⌦ The world’s third largest producer and second largest exporter oflemons
⌦ The world’s third largest producer of beef
⌦ The world’s sixth largest producer of wine Source: FAO (2003)
Advantages of Investing Today
… and considerable energy resource reserves.
Confirmed Probable Confirmed Probable
North West 25,326 7,880 129,481 44,524
Cuyo 31,097 6,713 545 183
Neuquen 179,546 67,145 344,567 97,180
San Jorge Gulf 188,040 75,519 40,289 25,833
Southern 24,416 22,430 148,641 138,398
NATIONAL TOTAL 448,425 179,687 663,523 306,118
Source: Energy Secretariat
Basin
Oil (Mm3) Gas (Mill m3)
CONFIRMED RESERVES AS AT 12/31/2002
5
Advantages of Investing Today
Domestic industry is modern and competitive …
• 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.
• Annual domestic industrial productionincludes:
– 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 roadnetwork
• This extends to 500,000 kms ifthe provincial and municipalnetworks are included
• A 35,753 km railway network
• 38 maritime ports and 25 riverports
• 52 airports, 21 of which areinternational
• Over 25 airlines operate flightsfrom Argentina to 40international destinations infive continents
• Installed electrical energy generating capacitytotals 21,300 MW, while annual production standsat 75,554 GWh (2,084 KWh/ inhabitant)
per 1000 inhabitants Argentina Brazil MexicoLatin Am. &
the CaribbeanTelephone Lines 220.2 182.1 124.7 145.9
Cellular Phones 168.8 136.6 142.4 70.5
PCs 91.1 62.9 68.7 59.3
TELECOMMUNICATIONS
Source: World Bank (2002)
6
Advantages of Investing Today
Social conditions in Argentina are above the regional average.
Socioeconomic Indicators 2002 Argentina Brazil MexicoLat. 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 preferentialaccess to a market totalling 272 million consumers.
• The MERCOSUR (Southern Cone Common Market) is a common marketcomprising Argentina, Brazil, Paraguay and Uruguay.
• Bolivia, Chile and Peru are MERCOSUR Associate States.
MERCOSUR
GDP: US$ 558billion
Population:221 million
MERCOSUR +ASSOCIATES
GDP: US$ 687billion
Population: 272million
Source: IMF (2003)
7
Advantages of Investing Today
Since the creation of MERCOSUR, there has been strong growth intrade between Argentina and the other MERCOSUR MemberStates ...
• Argentine exports to the
bloc increased by 181%
between 1991 and 2003
( 30% more than sales
to the rest of the world).
• Imports from
MERCOSUR practically
tripled over the same
period.
In 2003, 6,500 companies registered exports to the valueof US$ 5,555 million to MERCOSUR.
Argentina-MERCOSUR Trade (in millions of US$)
-2,000
0
2,000
4,000
6,000
8,000
10,000
1991 1993 1995 1997 1999 2001 2003
Exports Imports Trade Balance
Source: INDEC.
Advantages of Investing Today
… resulting in a higher value added export profile.
• 33% of total industrial manufacture exports go to MERCOSUR.• The export value per-ton to MERCOSUR is 25% higher than to other markets.
MERCOSUR 375
Other Markets 300
US$/ ton (2003)
PP: Primary ProductsAM: Agricultural ManufacturesIM: Industrial ManufacturesF&E: Fuel and Energy
Source: ADI based on INDEC
Exports to other markets
2003
F&E17%
PP23%
AM39%
IM21%
Exports to MERCOSUR
2003PP
21%
F&E20%
AM12%
IM 47%
8
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 notexclude trade with the region.
Non-MERCOSUR Trade (in millions of US$)
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Exports Imports Trade Balance
Source: ADI based on INDEC data
Advantages of Investing Today
An integrated economy with its doors open to the world.
• The opening of the capital
market and solid economic
performance attracted
numerous foreign direct
investment projects in various
sectors of the economy.
1993 1999 2000 2001 2002 2003FDI 2,793 23,988 11,657 3,206 785 478GDP 236,505 278,369 276,173 263,997 235,236 255,751
FDI/GDP 1.2% 8.6% 4.2% 1.2% 0.3% 0.2%
Source: Ministry of Economy
FOREIGN DIRECT INVESTMENT FLOWS (FDI) TO ARGENTINA –IN MILLIONS OF US$-
Foreign Direct InvestmentBy Economic Sector (1992-2002)
Mining1%
Trade4%
Others8%
Transport and Communications
9%
Banks10%
Electricity, Gas, and Water14%
Manufacturing Industry34%
Oil20%
Source: ADI based on Ministry of Economy data
9
Advantages of Investing Today
Argentina in the
new economic context
Advantages of Investing Today
The economy staged a gradual recovery following the crisis thatbegan in mid-1998 and ended with the abandonment of theConvertibility Regime in January 2002.
• 8 consecutive quarters ofgrowth were recorded asfrom 2Q 2002, a sequencethat had not beenwitnessed since 1997.
• The surge in growth is alsonoteworthy: Variation ratesreached 3% in the lastmonths of the series.
10
Advantages of Investing Today
The manufacturing industry led the recovery, reaching the 1998level in March 2004, only 4% below the historical record (June1998).
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
11
Advantages of Investing Today
There has been a gradual recovery in investment as from 4Q2002.
• Following eight consecutive negative quarters, renewed growth in investmentrepresented a significant contribution to GDP.
Source: ADI based on National Accounts data
Gross Domestic Fixed Investment and Investment Rate (GDFI/GDP)
11.3%
15.6%
20,000
25,000
30,000
35,000
40,000
45,000
1Q-02 2Q-02 3Q-02 4Q-02 1Q-03 2Q-03 3Q-03 4Q-0310%
11%
12%
13%
14%
15%
16%GDFI (in millions of pesos) Investment Rate (%)
Advantages of Investing Today
Following devaluation, consistent monetary and fiscal policy ledto price stability.
• 2002 inflation marked a breakwith the price stability of theprevious decade and was theresult of abandoning theConvertibility Regime,introduced in April 1991,establishing exchange rateparity at $ 1= US$ 1.
• Nevertheless, following theadjustment involving a minimalpass-through of devaluation toprices, a single-digit inflationrate was once again achievedin 2003.
Source: ADI based on Ministry of Economy data
12
Advantages of Investing Today
The recovery in economic activity led to a significant increase injobs.
• 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 ineconomic 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 therecovery of economic activity and a slight appreciation of thepeso 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.
13
Advantages of Investing Today
The Current Account Balance has turned positive following tenyears of deficits.
• The 2003 balance is slightly down on 2002 due to a 40% rise in imports following theeconomic recovery.
Advantages of Investing Today
The trade surplus and the reduction in the financial account deficithave significantly boosted reserves
14
Advantages of Investing Today
Fiscal accounts have improved substantially since May 2002, as aresult of stabilized public spending and higher tax revenues.
Advantages of Investing Today
A favorable monetary trend was established throughout 2003.
• 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 economicgrowth at no cost in terms of inflation.
Source: ADI basedon Ministry ofEconomy data
15
Advantages of Investing Today
The drain on deposits was halted as from 2Q 2002 , with apositive trend from that point onwards, together with banksrecovering liquidity.
Source: ADI based on Ministry of Economy data
Advantages of Investing Today
Why invest in Argentina?
16
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
Illiteracy in the City of BuenosAires, with a population similarto Uruguay, is 0.5% and 1.3%in the metropolitan region, witha population similar to that ofChile.
Source: ADI based on UNESCO data
A comparison of the main education indicators reveals Argentina’s highranking at both regional and international level.
A country with a highly skilled workforce
Illiteracy in Argentina (% of population over 15 years)
5.8
3.8
2.6
1980 1991 2001
Illiteracy (2001) (% of population over 15 years)
1.5
2.3
2.4
2.6
4.1
4.3
8.1
8.6
10.8
12.7
Italy
Spain
Uruguay
Argentina
Chile
Costa Rica
Colombia
Mexico
Latin Am.
Brazil
17
Advantages of Investing Today
Education is compulsory and free for the 5-14 year age group, thus ensuring highschool enrolment rates. In addition, attendance expectancy at educationalestablishments is the highest in Latin America and only one year less than thatobserved for developed countries such as Spain, Italy, and the United States.
Number of students enrolled in the correct age group level as apercentage of the total population eligible for this age group level.Source: ADI based on UNESCO
data
School attendance expectancy (years)
15
15
14
13
13
12
12
11
10
Italy
Spain
Argentina
Chile
Uruguay
Mexico
Brazil
Colombia
Costa Rica
Net secondary education enrolment rate(2001)
94
91
79
75
71
70
60
57
49
Spain
Italy
Argentina
Chile
Brazil
Uruguay
Mexico
Colombia
Costa Rica
Advantages of Investing Today
• Argentina boasts a broadnetwork of public andprivate universities attendedby over one million students.
• The university student/
total population ratio is thehighest in Latin Americaand compares with the ratiofor several developedcountries.
Source: ADI based on UNESCO data
The Argentine education system is also well developed at thehigher education level.
University Students (per 100,000 inhabitants)
3,582
3,123
3,022
2,400
2,100
1,540
1,490
1,068
Spain
Argentina
Italy
Uruguay
Chile
Colombia
Mexico
Brazil
18
Advantages of Investing Today
Source: ADI based on UNESCO data
The strength of the education system is exemplified by thenumber of scientists and engineers working in research anddevelopment.
Scientists and Engineers working in R&D (per 1,000,000 inhabitants)
1,921
1,128
713533
370 323225 219
101
Spain Italy Argentina Costa Rica Chile Brazil Mexico Uruguay Colombia
Advantages of Investing Today
Availability of Natural Resources
• Argentina is characterized by the abundance and quality of its naturalresources that provide competitive advantages in developing activitieslinked to these resources.
• Argentina is the eighth largest country in the world in terms of surfacearea and its relevance is even greater if factors relating to thepotential its surface area offers are considered (i.e. the proportion ofsurface area suitable for agriculture, mining resources, etc.).
19
Advantages of Investing Today
Agriculture: Argentina has some of the most suitableagricultural land worldwide.
Source: ADI based on FAO data
The relevance ofArgentina’sagricultural surfacearea is not only dueto its size but also tothe excellentagroecologicalconditions, resultingin high yields.
Advantages of Investing Today
In Latin America, only Brazil has a greater surface area suitable foragricultural use. However, if the domestic market pressure on
production in these areas is considered, Argentina has a higherlevel of agricultural land available in relative terms.
Source: ADI based on FAO data
20
Advantages of Investing Today
• In comparison with the major grain-producingcountries, Argentine yields are highlycompetitive at international level.
• Similar conclusions are obtained whencomparing yields for other crops such as apples,pears, lemons, beans, and garlic in whichArgentina also has a considerable global marketshare.
Source: ADI based on FAO data
Soybean Productivity(Argentina =100)
0 50 100
India
Russia
China
Australia
USA
Brazil
Argentina
Corn Productivity(Argentina =100)
0 30 60 90 120 150
India
Russia
Brazil
China
Australia
Argentina
USA.
Wheat Productivity(Argentina =100)
0 50 100 150 200
Russia
Australia
Brazil
Argentina
India
USA
China
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 sameperiod, representing significant progress in terms of yields.
Source: ADI based on SAGPyA data
21
Advantages of Investing Today
Silviculture: The availability of extensive areas promotes thedevelopment 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 thispurpose. Land suitable for forestry does not compete with other agriculturalactivities.
• The diversity of climates and soil types makes it possible to cultivate a wide varietyof species.
• In addition to tree growth rates, the relatively low land value compared to countriessuch as Brazil and Chile yields high rates of return and exceptional payback periods.
• High growth rates: 41 m3 / 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 thatof the United States).
Advantages of Investing Today
High growth rates for conifers and eucalyptus
Source: Simpson Timber Co., Aracruz Cellulose, Jaako Powry Investments. CIEF.
Conifers
Eucalyptus
22
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 SAGPyAdata
Advantages of Investing Today
Mining in Argentina
⌦ The estimated surface area with mining potential totals approximately
750,000 km2, 75% of which has still to be exploited.
⌦ Argentina has considerable gold, copper, lead, zinc, natural borate,
bentonite, clay, and ornamental stone deposits.
⌦ 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.
⌦ The regulatory framework and current mining incentive regime play a key role in
attracting investment to this sector.
23
Advantages of Investing Today
The Mining Investment Law provides the following incentives:
• Double deduction of prospecting, exploration, and technical/ economic feasibilitystudy expenses.
• Financing and reimbursement regime for VAT on capital goods and investments inphysical infrastructure projects.
• Accelerated depreciation of capital investments.
• Exemption from import duties on capital goods and equipment, spare parts, andaccessories.
• 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 taxdeduction for environmental conservation allowances.
Advantages of Investing Today
Notable growth in mineral exports
8 The transformation and integration of the Argentine mining industry intointernational markets is reflected in the tripling of exports over the last sevenyears.
Source: ADI based on INDEC data
24
Advantages of Investing Today
Investment growth in the sector
⌦ 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.
⌦ Investment has remained robust despite the economic crisis.
Source: ADI based on CEP data
⌦ Leading global mining
companies including
Barrick, Homestake, BHP,
and Billiton have decided to
invest in Argentina.
Advantages of Investing Today
Argentina ranks high internationally in terms of available miningresources.
• The principal mining areas currently
in production include Bajo La
Alumbrera, El Salar del Hombre
Muerto, Farallón Negro, Mina Aguilar
and Cerro Vanguardia and important
projects involving significant
metalliferous mineral reserves in
various stages of exploration are
underway at locations including
Pirquitas, Agua Rica, Pascua Lama
and Pachón.
1.China2. Peru3. Philippines4. Brazil5. Chile
6. Argentina7. Mexico8. Bolivia9. Venezuela10. Burma
Source: ADI based on MiningJournal
25
Advantages of Investing Today
Substantial oil and gas reserves
• Argentina boasts substantial oil and gas reserves. Despite increasedproduction in recent years, investment in exploration has made it possibleto 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
• 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 pointedout that production rose by 65.2% during this period.
Source: ADI based on Energy Secretariat data
Oil and Gas
Gas: Reserves/ Production ratio(years)
19.319.8
17.8
14.8 14.5
1994 1996 1998 2000 2002
Oil: Reserves/ Production ratio(years)
9.2 9.1 8.9
10.610.2
1994 1996 1998 2000 2002
26
Advantages of Investing Today
• Gas production has increased constantly since the early 90s, doubling early 90s
levels in 2003.
Source: ADI based on Energy Secretariat data
Increased oil and gas production
Oil and gas production
(in million/ billion m³ respectively)
0
10
20
30
40
50
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Oil Gas
• Although oil
production has
fallen in recent
years, levels are
still 50% above the
levels recorded 12
years ago.
Advantages of Investing Today
• The availability of vast areas with
optimal environmental conditions is
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.
A Sustainable Environment
Environmental Sustainability Index 2002
73.9
73.0
72.6
70.6
66.5
66.0
64.2
63.9
63.2
63.0
62.2
61.5
60.3
60.0
60.0
59.9
59.6
1 Finland
2 Norway
3 Sweden
4 Canada 5 Switzerland
6 Uruguay
7 Austria
8 Iceland
9 Costa Rica
10 Latvia
…
15 Argentina
16 Australia
17 Panama
18 Estonia
19 New Zealand
20 Brazil
27
Advantages of Investing Today
Modern diversified industry
• Argentina boasts a relatively modern anddiversified industrial structure. There has beensubstantial investment in machinery and
equipment in recent years and a nucleus ofstate of the art companies has emerged.
• In addition, Argentina’s industrial profile ischaracterized by:
– Pronounced alignment with Argentinefactor endowment
– High labor productivity indices
– High capital intensity
– Export-oriented production
– Increases of scale
– Transnational enterprises
Source: ADI based on CEP data
The recovery is currently being boosted bynew investment, with flows aimed atindustry and other tradable goods sectorsplaying a dominant role.
Capital Formation (2004)
Trade and Services
11%
Industry 42%
Financial Services
1%
Infrastructure 19%
Extractive Activities
27%
Advantages of Investing Today
Relatively higher prices for domestic products favor the productionof tradable goods, resulting in a higher industrial sector share inGDP.
• 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
50.9%
63.5%
60.8%
62.3%
61.1%
65.1%
1993 1995 1997 1999 2001 2003
18.2%
17.0%
18.2%
17.2%
22.3%
16.1%
1993 1995 1997 1999 2001 2003
Manufacturing Industry Services
28
Advantages of Investing Today
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
Source: ADI based on INDEC and National Accounts data
A modern diversified industrial sector integrated into the globalmarket
21.6%
17.0%17.4%
18.9%
16.2%
11.8%10%
12%
14%
16%
18%
20%
22%
1993 1995 1997 1999 2001 2003
26.5%
34.2%8.5%
11.4%0%
10%
20%
30%
40%
50%
60%
70%
80%
1993 1995 1997 1999 2001 2003
AM
IM
Advantages of Investing Today
• Argentina has recorded significant progress in human resource productivity with a
26% increase in labor producivity between 1995 and 2000.
The industrial sector displays continuous improvement in humanresource productivity.
The relative labor productivity
gap with the United States is thelowest in Latin America.According to ECLAC statistics,average Argentine industrialsector 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
Industrial sector hourly productivity (1997 =100)
80
85
90
95
100
105
110
115
120
1995
1996
1997
1998
1999
I-00
II-0
0
III-
00
IV-0
0
I-01
II-0
1
III-
01
IV-0
1
I-02
II-0
2
III-
02
IV-0
2
I-03
29
Advantages of Investing Today
• Industrial production has developed favorably in recent months. The recovery in
domestic demand, the integration of Argentine world class producers of industrialinputs and primary commodities into external markets is intensifying, accompanied by a
new process of import substitution in specific branches.
The MIE is currently at its
highest level for the lastthree years.The cumulative increasefrom January 2002 toFebruary 2004 is 35%.
Source: ADI based on INDEC data
A modern, diversified, and growing industrial sector
Non-seasonally adjusted Monthly Industrial Estimator (MIE) (Base Year 1997=100)
70
75
80
85
90
95
100
105
Jan-
02
Mar
-02
May
-02
Jul-02
Sep-
02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-03
Sep-
03
Nov
-03
Jan-
04
Mar
-04
Advantages of Investing Today
2003 average vs. 2002 average % variation
75
56
53
31
30
23
20
19
18
18
17
17
16
Textiles
Metalworking
Cotton yarn
Cement
Other construction materials
Editing and printing
Glass
Pharmaceuticals
Industrial gases
Agrochemicals
Tires
Basic chemical prods
Sugar
Source: CEP based on INDEC data
There has been growth in all industrial sectors in recent months.
• Of the industrial sectors currently
displaying increased growth, special attention
should be drawn to the metalworking
industry, textiles, editing and printing
products, agrochemicals, construction
materials, and other foodstuff and drinks
sub-sectors.
• Only one of the 30 categories comprising
the MIE recorded a lower performance vis-à-
vis the previous year.
• Industrial growth in recent months has
been generalized, irrespective of the various
branches’ specific orientation (domestic
market, import substitution, or exports).
30
Advantages of Investing Today
Argentina is among the most competitive economies in theinternational market in terms of labor costs.
• Some of the basic costs investors must take into consideration if they wish toset up their business in Argentina are listed below.
Source: ADI based on Ministry of Economy and Production data
Gross annual wages/ salaries by sector (2003, in US$)
2,589
3,276
3,648
5,515
5,509
9,628
Hotels andRestaurants
Construction
Trade
Logistics andCommunications
ManufacturingIndustries
Financial Intermediation
Advantages of Investing Today
Annual gross salary for engineers (2003, in U$S)
54,000
32,400
32,400
26,700
16,800
15,500
14,900
14,400
13,400
12,100
10,500
10,200
9,000
32,200
Miami (USA.)
Barcelona (Spain)
Sidney (Australia)
Milan (Italy)
Singapore
Lima (Peru)
Santiago (Chile)
Caracas (Venezuela)
Bogota (Colombia)
Sao Paolo (Brazil)
Shanghai (China)
Buenos Aires (Argentina)
Prague (Czech Rep)
Mexico City
Annual gross salary for industrial skilled workers (2003, in U$S)
40,900
18,400
17,700
17,000
16,100
10,700
8,300
6,800
6,800
6,500
5,100
4,600
4,100
3,600
Miami
Sidney
Barcelona
Singapore
Milan
Caracas
Santiago
Lima
Prague
Sao Paolo
Buenos Aires
Shanghai
Bogota
Mexico City
• Comparing City of Buenos Aires local labor costs with costs in other major urbancenters reveals that Argentine costs are highly competitive.
Skilled labor costs for Buenos Aires are competitive vis-à-visother cities worldwide.
Source: UBS
Annual gross salary for industrial skilled workers (2003, in US$)
40.900
18.400
17.700
17.000
16.100
10.700
8.300
6.800
6.800
6.500
5.100
4.600
4.100
3.600
Miami
Sidney
Barcelona
Singapore
Milan
Caracas
Santiago
Lima
Prague
Sao Paolo
Buenos Aires
Shanghai
Bogota
Mexico City
Annual gross salary for engineers (2003, in US$)
54.000
32.400
32.400
26.700
16.800
15.500
14.900
14.400
13.400
12.100
10.500
10.200
9.000
32.200
Miami (U.S.A.)
Barcelona (Spain)
Sidney (Australia)
Milan (Italy)
Singapore
Lima (Peru)
Santiago (Chile)
Caracas (Venezuela)
Bogota (Colombia)
Sao Paolo (Brazil)
Shanghai (China)
Buenos Aires (Argentina)
Prague (Czech Rep)
Mexico City
31
Advantages of Investing Today
Source: UBS
A basket of 39 products with due considerationof the preferences of Western Europeanconsumers was taken as a reference.
A basket of 19 services including telephone, postoffice, hairdressing, cinema, restaurant dining, drycleaning, etc. was taken as a reference.
Buenos Aires also offers clear advantages over the rest of theworld in terms of cost of living.
Food basket(2003, in U$S)
422
417
377
351
349
276
246
230
228
207
186
164
153
359
Milan
Singapore
Miami
Shangai
Barcelona
Sidney
Caracas
Mexico City
Sao Paolo
Lima
Santiago
Bogota
Prague
Buenos Aires
Services basket(2003, in U$S)
355
348
327
248
208
207
206
202
183
165
164
162
136
270
Milan
Miami
Sidney
Barcelona
Singapore
Lima
Santiago
Shangai
Mexico City
Caracas
Bogota
Prague
Sao Paolo
Buenos Aires
Advantages of Investing Today
Competitive costs for agricultural land combine with excellentagroecological conditions that ensure high yields in the widestvariety of crops.
0
2
4
6
8
10
12
Belg
ium
Ger
man
y
Hol
land
Spai
n
U.K
.
Arge
ntin
a
Cana
da
USA
Aust
ralia
New
Zea
land
Arg
en
tin
a =
1
Source: ADI
32
Advantages of Investing Today
Source: ADI based on Colliers, Castro, Cranwell & Weiss data
Class A buildings:Buildings generally used for
rental purposes.
Located in easy access areas.Modern layouts with good
natural light and view. Wellfinished and maintained.Tenants are generally
multinational companies and/or tenants with a high
economic capacity.
Availability of office space at low rates
Monthly rental rates (Class A offices)(2003, in US$ per m²)
21.0
14.9
14.5
11.5
8.0
7.5
Mexico City
Montevideo(Uruguay)
Rio de Janeiro(Brazil)
Santiago (Chile)
Buenos Aires(Argentina)
Bogota(Colombia)
Advantages of Investing Today
Source: Electricity Association
Low-cost electric power for industry
Electricity rates for industrial users (2002, in US$ per MWh)
98.7
59.1
57.6
55.0
36.9
31.2
19.3
36.8
Italy
U.K.
International average
Colombia
Brazil
Chile
Spain
Argentina
33
Advantages of Investing Today
Source: ADIGAS
Low-cost gas for industry
Rates for major industrial users (2003, in US$ per m³)
0.45
0.31
0.29
0.28
0.25
0.11
0.02
0.22
Chile
Canada
Italy
USA
International average
Mexico
Uruguay
Argentina
Advantages of Investing Today
Source: International Telecommunication Union
Competitive telecommunications costs
Local call rates (2002, in US$/ 3 minutes)
0.21
0.17
0.14
0.12
0.12
0.03
0.03
0.09
International average
Uruguay
Mexico
Chile
Italy
Spain
Brazil
Argentina
34
Advantages of Investing Today
• Argentina boasts considerable development in terms of road, rail, port,
aeronautical, and telecommunications infrastructure.
• In addition, modern regulatory frameworks ensure a high level of
competition.
• Appropriate infrastructure provides a platform to boost production sector
competitiveness and ensure territorial and social integration.
Developed infrastructure
Advantages of Investing Today
• The National Airports System comprises 52 airports, 35
of which are managed by the private sector in
conjunction with recognized international operators.
• Argentina has 21 airports equipped for international
traffic (see map).
Commercial Aviation infrastructure
35
Advantages of Investing Today
• Argentina has 38 maritime ports along the Atlantic
coastline and 25 river ports.
• Recognized international maritime cargo operators
operate out of Argentina.
• The Port of Buenos Aires is the main container port in
Latin America and the Caribbean.
• Argentina’s principal maritime and river ports are featured
on the map.
Port infrastructure
Advantages of Investing Today
• Argentina’s main port has achieved considerable progress in recent years in
terms of operability.
Port Infrastructure
General cargo (thousands of tons) 4,000 6,957
Containers (thousands of TEUs) 300 650
Operating area (hectares) 65 92
Average lay days 6.2 1.0
Productivity tons/ personnel/ year 800 5,984
CATEGORY 1991 2001
Source: Port of Buenos Aires
36
Advantages of Investing Today
• The Paraguay-Paraná Waterway is the main river transport lane along the Paraguay-
Paraná water system and measures 3,302 km in length.
• The importance of this project lies in the lower river navigation costs (the approximate
freight cost is US$ 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.
Paraguay - Paraná Waterway
Advantages of Investing Today
• 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.
Road Infrastructure
37
Advantages of Investing Today
• 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.
Railway Infrastructure
Advantages of Investing Today
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.
Telecommunications
PER 100 INHABITANTS Argentina Brazil Mexico
Latin Am. & Carib.
Telephone lines 22.0 18.2 12.5 14.8 Cellular phones 16.9 13.7 14.2 12.2 PCs 9.1 6.3 6.9 5.9
Internet users 8.8 4.6 3.7 5.0
Source: World Bank (2001)
38
Advantages of Investing Today
• Various indicators give an overview of improvements in the telecommunications
sector in recent years.
Telecommunications
Lines installed (thousands) 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
Lines in service per employee 76.1 406.9
Investment in the sector 1991-2000
Source: National Communications Commission
CATEGORY 1990 2000
US$ 21,150 million
Advantages of Investing Today
Source: National Communications Commission
Telecommunications
Telephone lines in service (in millions)
5.05.7
6.36.8 7.1 7.2
7.98.5 8.6 8.7
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03
39
Advantages of Investing Today
Source: National Communications Commission
Telecommunications
Cellular telephone lines (in millions)
0.2 0.30.7
2.02.7
3.9
6.46.7 6.6
7.8
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Advantages of Investing Today
Investment Incentives
• Argentina has a number of regimes designed to promote investments by bothdomestic 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
40
Advantages of Investing Today
General Incentives
• Export promotion incentives including drawback, temporary admission, turnkeyplant exports, and customs-at-factory regimes.
• Instruments and regulations aimed at reducing initial investment costs: investmentVAT 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 inmajor investment projects.
• Measures that boost competitiveness by reducing operating costs, such asderegulation 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 worksdestined for investment projects. Capital goods purchases may be depreciated inthe balance sheets for the three years subsequent to purchase and infrastructureproject 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 investmentprojects. All VAT not offset will be refunded in cash three months after purchase.
– The regime will remain in effect for 36 months.
41
Advantages of Investing Today
Sectoral Incentives
• Certain sectors including mining, forestry, tourism, and the automotive industry havespecific 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 generallyinclude the following incentives:
– Exemption from provincial taxes such as turnover tax, stamp duty, real estatetax, 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 andfree zones.
42
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 forInvestment
43
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)
4Strong foreign investment in the last 6 years
(US$ 3 billion)
4Favorable legal framework
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
Rates of return after taxes (gold mine)
0 5 10 15 20
China
Mexico
Canada
Bolivia
Peru
USA
Australia
Argentina
Chile
S. Africa
Rates of return after taxes(copper mine)
0 5 10 15 20
Canada
Mexico
Bolivia
China
Peru
Australia
USA
S. Africa
Argentina
Chile
Source: Colorado School of Mines è
44
Advantages of Investing Today
Forest Industry
• The Forestry Law provides an attractive legalframework for investments
• Fiscal and economic incentives for the
development of the sector
• High growth rates and lower harvestingmaturities
• Abundant supply of suitable low-cost landand extensive tracts available
• 20 million hectares of suitable virgin land,
only 5% of which is currently beingcultivated
• High potential for industrial development
• PULP INDUSTRY
• Abundant supply of forest raw material
• Extensive use of recycled fibers with definitegrowth potential
PAPER INDUSTRY
• Unmet domestic demand
• Growing per capita consumption
WOOD INDUSTRY
• New project potential
• Cost of wood lower than in Nordic countries
• High expansion potential due to relatively lowconsumption
Productivity per worker in paper and paper product production
(1993=100)
0
50
100
150
200
93 94 95 96 97 98 99 00 01 02
Source: CEP
Advantages of Investing Today
The sector produces tanned leather, semi-finished and finished leather, and upholsterycovers with an annual turnover of US$ 1billion.
Argentina is the world’s fourth largest producerand exporter of leather goods and claims 9%of the global leather market.
80% of total production is exported and 50%of these exports go to the USA, China, andBrazil.
Production has increased notably in recentyears.
The largest firms produce up to 5,000/6,000pelts per day (in Italy average-sized companiesproduce approximately 200/300 pelts per day).
The industry is moving forward in terms ofupstream integration, basically by producingupholstery covers for the automotive industry(US$ 200 million in exports).
Leather and leatherproducts
Productivity per worker (1993=100)
30
80
130
180
93 94 95 96 97 98 99 00 01 02
Productivity per man hour (1993=100)
30
80
130
180
93 94 95 96 97 98 99 00 01 02
Source: CEP
45
Advantages of Investing Today
Petrochemical IndustryThe petrochemical industry has been operating for more than fifty years in Argentina andpetrochemical 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 scaleproduce primary, intermediate, and final products, and inthe five-year period 1996-2000, the petrochemical industry
invested approximately US$ 3 billion and doubled itsinstalled capacity to 6.2 million tons per annum.
Demanding domestic market: one of the most notableexamples is the increase in apparent consumption in theagricultural sector.
The industry has the potential to become a productionplatform to supply MERCOSUR markets.
Human resource productivity in the manufacture of
chemical products for agricultural use has practically tripledin 10 years.
Urea production (in thousands of tons)
0
200
400
600
800
1,000
1,200
92 93 94 95 96 97 98 99 00 01 02
Productivity per worker (1993=100)
0
50
100
150
200
250
300
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
2,562
2,080
3,100
3,600
3,400
5,880
4,740
4,640
4,178
3,894
3,420
5,100
5,350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
n An ever-expanding and important domestic
market: Agricultural production is displaying marked
growth, while current profitability allows producers
to procure suitable equipment.
n The industry is able to support domestic
purchasers in the post-sales phase.
n National equipment can be adapted perfectly to
Argentine soil characteristics.
n Applied knowledge export potential.
46
Advantages of Investing Today
Vegetable Oils
• Argentina’s prominence in the global market:
è 12% of global soybean production
è 30% of vegetable oil exports and 10% of
seed exports
è 22% of global sunflower production
è Leading exporter of sunflower oil
• GPV: US$ 4.2 billion
• Low cost of arable land
• High geographic concentration of primary and
industrial production
• Availability of futures markets for agricultural
producers
• Growing global demand for vegetable oils and
vegetable oil by-products
• SOYBEANS:
èAverage production unit capacity: 5,000 tons
Principal global producers: USA (1,500 tons),
Brazil (2,500 tons)
èCrush cost US$ 4/ ton (USA –US$ 10-, Brazil
-US$ 14-)
• A high incidence of leading-edge technology in use
in the industrial sector
• Capacity to produce bio-fuels from vegetable oils
Soybean oil exports(in millions of US$)
0
500
1000
1500
2000
92 93 94 95 96 97 98 99 00 01 02 03Source: INDEC
Advantages of Investing Today
Grape Growing and WineMaking
• Argentina is the world’s fifth largest producer of
wine
• High domestic consumption (world’s sixth largest
consumer of wine)
• Argentine wine exports have risen by more than
400% in the last ten years
• High quality wines account for over 80% of
exports in this sector
• High availability of raw materials: eighth
largest global producer of fresh grapes
• High competitiveness of Argentine wine
producers: excellent price/quality ratio
• Low cost of land in the context of a global
reduction in planted area
• Available technology similar to that used by
the major producing countries
• Capacity to export high-value wines amid
growing foreign demand
• Capacity to produce organic products
• Ongoing improvement in the quality of grape
and wine products
Argentine wine exports(in millions of US$)
0
30
60
90
120
150
180
92 93 94 95 96 97 98 99 00 01 02 03Source: INDEC
47
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 high-
quality 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 competitivecosts, with socioeconomic and culturalcharacteristics 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 marketsfor specific applications:
è Agribusiness, industrial automation,
educational and entertainment software(edutainment)
• Exportable software developmentcapability
• Low production costs: the cost structure forthis sector is highly competitive internationally
• Argentina: A highly competitive base for
producing and exporting software and ITservices to Latin America and the Spanish-speaking world
• Legal framework: Software Development Bill:
è Fiscal stability
è Extrazone import duty exemption for
hardware imports
è Income tax reduction in the amount of
a percentage to be investe in R&D
è VAT credit
48
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)
0
10
20
30
40
50
60
70
Chile Brazil Uruguay Argentina Italy Spain
global average: 46%
No dataavailable: lessthan 40candidates
• Potential to provide the US market with
call center services. A growing number of
Argentines are training and qualifying in
English. Qualifications obtained abroad
by Argentine students are among the
highest.
Source: University of Cambridge, EFL
Advantages of Investing Today
Tourism
• The number of foreign tourists visiting Argentina rose
by 27% in 2003 compared to a 15% increase in
2002.
• Foreign tourism displays a high degree of diversity in
terms of countries of origin and average spending,
accompanied by longer average stays.
• There has been strong investment in hotel
infrastructure in recent years, although there are still
a considerable number of locations available for
developing tourist services.
• Skilled labor is low-cost and tourist tariffs are
attractive.
• The diversity of Argentine landscapes makes it
possible to tailor products to international demand
(ecotourism, rural tourism, cultural tourism, sport
tourism, etc.).
Hotel supply: Number of establishments
6,300
6,600
6,900
7,200
7,500
7,800
1998 1999 2000 2001 2002
Tourist countries of origin2003
Brazil17%
Chile17%
Europe17%
Uruguay26%
Others13%
USA & Canada
10%
Source: INDEC
49
Advantages of Investing Today
Perspectives and Challenges
Advantages of Investing Today
Market expectations consensus: improved Argentine economicperformance
Market Expectations Survey
This survey is conducted by the Central Bank of Argentina to obtain a systematic follow-up of theprincipal short- and medium-term macroeconomic projections made by Argentine and foreign analystsand academics on Argentine economic performance.
Source: BCRA
GDP 2004 7.2%
(Interannual variation) 2005 4.8%
Nominal Exchange Rate End 2004 2.97
($/US$) End 2005 3.00
Consumer Prices Dec 04 6.9%
(Interannual variation) Dec 05 6.0%
Average Salary 2004 10.5%
(Interannual variation) 2005 8.0%
Unemployment Rate 2004 13.5%
(% of Workforce) 2005 12.4%
Industrial Activity 2004 11.0%
(Interannual variation) 2005 7.5%
Investment 2004 23.0%
(Interannual variation) 2005 11.5%
Trade Balance 2004 13.0
(US$ billion) 2005 12.3
Current Account Balance 2004 5.1
(US$ billion) 2005 4.1
International Reserves 2004 17.1
(US$ billion) 2005 18.8
50
Advantages of Investing Today
Argentina will be among the leading countries in Latin Americain 2004/ 2005 in terms of growth.
• Argentina recorded the highest growth in Latin America in 2003 and is expected to continue tobe among the leaders in the years to come.
Source: World Economic Outlook (IMF)
Advantages of Investing Today
On the domestic front, Argentina aims to intensify the currenteconomic 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
51
Advantages of Investing Today
While on the international front, the main objective is to intensifyArgentina’s quantitative and qualitative international integrationby ...
• 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