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BHP Billiton forges alliance with Mexico’s Pemex (This article was written by Angela Macdonald-Smith and was published on September 26, 2014 in the AFR)

BHP Billiton has linked up with Mexican state oil giant Pemex to exchange expertise in deepwater operations in an alliance it hopes will give it a headstart over its rivals into the Central American country’s liberalising oil and gas sector. “We obviously wouldn’t be here if we didn’t think the relationship would extend beyond the exchange of technical data,” BHP’s petroleum and potash president, Tim Cutt, said on a teleconference from Cancun, after signing the deal with Pemex chief executive Emilio Lozoya. “Once we get the data once we understand the fiscal regime, we’ll be able to actually move quite quickly... We see this as a long-term opportunity for us and we want to give it a real good shot.” Mexico passed ambitious energy reform laws this year opening up the oil and gas sector and removing the monopoly that Petroleos Mexicanos, known as Pemex, had in the industry. The first round of oil and gas exploration licences is due in 2015 and international players have been lining up for a wealth of opportunities expected to arise in the resource-rich nation. Mr Cutt pointed to an upcoming series of bid rounds for exploration and production leases in onshore, shallow and deep waters in Mexico starting early next year that will provide opportunities for new entrants into Mexico. The first opportunity looks set to emerge in February with a planned offer of leases over discovered resources. BHP is in particular targeting the prolific Perdido play in the north-west deepwater Gulf, which has yielded large discoveries on the US side of the border. However, the fiscal terms for the leases in Mexico have yet to be announced, and Mr Cutt said the final settings for these would be critical to the industry’s appetite to invest. “All of industry is in the same situation where we are where we are waiting to see the final terms [and] how that will work,” he said. “I think everybody has been open and honest about the fact that the terms will need to be competitive for industry to bring large capital dollars to bear.”

Article continued on page 3/

This issue (Click on each heading to open article)

BHP Billiton signs alliance with Mexico’s Pemex 1

Brisbane 25th

Anniversary Dinner - Last Tickets Selling Now! 3

WorleyParsons looks to Mexico for growth opportunities 4

Historic Sydney Dinner – RESERVE THE DATE 4

Chairman’s message 5

University of Queensland Latin America Colloquium 6

Annual Canberra Networking Day 7

Australia-Chile Economic Leadership Forum 7

High quality Brazilian interns available to Australian business 8

Latam Autos seeks $40m for pre-IPO listing on ASX 9

Uruguay targets oil majors 9

Ecuador to grow 4-4.5% in 2015 10

Pacific Alliance communiqué 10

Chile’s economy grows more than expected 11

Opinion: Latam – the ‘Valley Girl’ of global markets 12

Mexican mining alive and kicking 13

Analysis: Chile’s aquaculture industry 14

Paraguay emerges as growing beef exporter 16

Argentina’s new hydrocarbons regime 17

Latin American brands gain ground 18

Young Professionals Group hosts first event in Brisbane 19

Colombia to speed up environmental permits 20

Latin American insurance market growing strongly 20

Producing in Mexico is cheaper than in China 21

Peru growth forecast at 5.5% 22

For the diary 22

Edition: September, 2014

Newsletter of the Australia-Latin America Business Council

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www.alabc.com.au Tel: 02 9431 8651

Our Patron Members

http://www.alabc.com.au/


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2014 Brisbane Anniversary Dinner – 7 October Last days to book! The Australia-Latin America Business Council’s 2014 Brisbane 25

th Anniversary Dinner promises to be something special, with Neil

O’Sullivan (pictured), Managing Director of Noja Power as guest of honour and keynote speaker. Neil is one of the four founding partners of NOJA Power and has overseen the company’s expansion and has been a champion of the company’s expansion in Latin America. Under his leadership, Noja Power has won numerous awards, including 2009 Australian Exporter of the Year, 2008 and 2012 Queensland Premier’s Exporter of the Year Award. Neil is a true export hero and an outstanding example of the Business leaders driving the charge of Australian business into Latin America.

Date: Tuesday, 7 October 2014 Gold Sponsor

Time: 7.00pm – 11.00pm

Location: Customs House, 399 Queen Street, Brisbane

Silver Sponsors

Bronze Sponsors

Call NOW to avoid missing out: Tickets to this important dinner are now on sale. For further information about the Dinner, please contact, Ms Steph Patrick, on [email protected] or telephone 02 9431 8651 ↑Return to Index

Continued . . . . BHP Billiton forges alliance with Mexico’s Pemex BHP’s ambitions to expand into Mexican oil and gas fit alongside its expansion of its offshore exploration acreage in the US Gulf of Mexico, recently winning a further 16 offshore leases, two of which lie right on the US side of the Mexico-US border. It has also been pointing to its expanding exploration position in Trinidad, where it has been carrying out a large seismic survey. Under the deal signed with Pemex, the two companies will exchange technical knowledge, information and practices in the oil and gas industry. “What we can offer is absolute focus as Mexico seeks partners to help develop its enormous petroleum resources,” Mr Cutt said. “Right now, our global offshore organisation is capable of moving with considerable speed, safety, agility and flexibility.” Mr Cutt pointed to the example of BHP’s Shenzi field in the US Gulf of Mexico as an example of BHP’s capacity in offshore exploration and production. He said Shenzi was “one of the great success stories” in the deepwater Gulf of Mexico, in terms of the time from discovery to production, drilling costs, safety and production. He said Pemex liked BHP’s “track record of delivering big projects” and highlighted the Mexican company’s “exceptional capability and experience”. He said that although Pemex had previously signed similar alliances with oil services companies, this was the first one signed with an overseas exploration and production company. One of its key shale plays in the US, the Eagle Ford shale in southern Texas, extends into onshore Mexico. But Mr Cutt said BHP was not looking in the near term to take up shale acreage in Mexico, because of the plentiful opportunities it still had to tap in the US onshore. ↑Return to Index


mailto:[email protected]


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Worley Parsons looks to Mexico as Australian projects dry up (This article was written by John Kehoe and was published on September 24, 2014 in the AFR)

Worley Parsons is expanding into Mexico to capitalise on the government opening up the oil and gas sector, the latest sign that a lack of new Australian projects is pushing the engineering services company overseas.

Mexico is allowing the private sector to invest in its lucrative resources sector for the first time. Worley Parsons chief financial officer Simon Holt said the company was setting up in anticipation of existing clients winning the right to drill for oil and gas. “It’s the opportunities in the Gulf,” Mr Holt said in an interview at the Bank of America Merrill Lynch investor conference in New York. “We’ve got great technical skills very close to Mexico that can provide services not only to Pemex, but to our current customers who seek to invest there.”

A senior Worley Parsons regional director in Latin America, Mark Trueman, is moving to set up an office in Mexico. Mexico’s reformist President Enrique Peña Nieto has pushed through constitutional change to allow foreign oil and gas companies into Mexican waters to challenge the state-controlled Pemex. The policy is designed to encourage more sophisticated energy giants, such as Shell, BP, Exxon Mobil and BHP Billiton to undertake expensive and complex deep-water drilling to increase oil production and boost investment and jobs. In Australia, the pipeline of big gas projects, typically serviced by Worley, has dried up. Despite seven huge liquefied natural gas projects being developed in Western Australia and Queensland, there are no new projects approved due to the high cost of doing business in Australia. “Australia has come off some really big projects and there is still some huge construction going on there,” Mr Holt said. “But our earnings are greatest through the detailed design process and there are no new large projects that we can see in the future there.” ↑Return to Index

TThhee hhiissttoorriicc 2255tthh AAnnnniivveerrssaarryy DDiinnnneerr –– 1188 NNoovveemmbbeerr RESERVE THE DATE! 2014 is a historic year in the life of the Australia-Latin America Business Council, as it celebrates the 25

th Anniversary of its

founding with a special celebratory Dinner in Sydney on November 18. Guest of honour and keynote speaker will be Mr Andrew Robb, Australia’s Minister for Trade and Investment.

If you are in any way connected with Australia’s burgeoning relationship with Latin America, this is one event that you will not want to miss. The event promises to bring together a veritable who’s who of Australia-Latin America business, culture, sport and more. Details of the dinner will be released and tickets will be available as from October 1. You are strongly encouraged to set this date aside in your calendar and to join us for this historic event.

Date: Tuesday, 18 November 2014

Time: 7.00pm – 11.00pm

Location: Sheraton on the Park Hotel, Elizabeth Street, Sydney

For information about sponsorship of the Dinner, please contact, Ms Steph Patrick, on [email protected] or telephone 02 9431 8651 ↑Return to Index

Andrew Robb Minister for Trade & Investment




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Chairman’s Message Regular readers of ‘Latam News’ will be aware that, over the past year or so, we have featured a growing number of articles concerning the historic and profound reforms being introduced in Mexico by the government of Enrique Peña Nieto. It is therefore very pleasing to see two major Australian companies, BHP Billiton and Worley Parsons, announce their intention to set up operations in Mexico in order to pursue opportunities in the nation’s energy sector. It is to be hoped that these announcements will encourage other Australian companies to take a closer look at what modern Mexico has to offer across many sectors, not just the energy one. Over the past three decades, Mexico has made the transition from a commodity- and agricultural-based economy to one dominated by manufacturing and services. Its global competitiveness is enhanced by its integration in the North American supply chains thanks to its NAFTA membership and can only grow as a consequence of Mexico’s involvement in both the Trans-Pacific Partnership (TPP) and the Pacific Alliance, two of the most dynamic free-trade initiatives of this century. If Mexico is able to follow through successfully with its legislative changes and to harness its geostrategic potential, the country has the potential to excel in coming years. Unlike some of the other major resource-based economies in Latin America, Mexico competes with, rather than complements, China’s rise. It provides few natural resources to the Asian behemoth and its own factories have faced the threat of low-cost Chinese production and won out. With its streamlined operating environment and growing trade links to the United States, Mexico now looks increasingly attractive. Mexico has a stable economy, a solid banking system, a democratic government, favourable demographics, globally competitive manufacturing capabilities, and preferential access not just to the world’s largest market (the United States) but also to many others through its growing network of trade alliances. If Mexico is able to get beyond its current challenges, it has the potential to be a much larger economy and it is important that Australian business pays it the attention that it deserves. Closer to home, November 18 will see the ALABC host in Sydney its Gala Dinner to celebrate the 25

th anniversary of its founding, a

truly historic milestone and an event that should be seen by all those engaged in doing business with Latin America as a unique opportunity to acknowledge the importance of the region to Australia and to their operations. At a time when the developed markets of Europe are showing ongoing economic weakness, the US market is still a long way from performing at its best and the Asian markets are experiencing an unfamiliar degree of volatility, there are compelling reasons why Australian business should not rely solely on its more traditional markets. Latin America is not immune to the challenging economic scenario unfolding on the global stage, but it has features that suggest that it can offer many Australian companies a very useful and profitable alternative to our traditional markets. The growing economic uncertainty makes is more imperative than ever that Australian business hedges its bets and does not place all of its hopes on any single region, even one as popular as that of Asia. We need to tap into Latin America’s growth story and to engage with its 500 million plus consumers. This was the clear message that the ALABC gave to the government officials and other guests that gathered in Canberra at the beginning of September for the annual Australia-Latin America networking day. Bringing together representatives of government, the Latin American diplomatic corps, the ALABC board of directors and patron members, and strategic allies, the event provided an opportunity to exchange ideas about the relationship and what can be done to take it to the next level. The participation of Foreign Affairs Minister, Julie Bishop, was much appreciated by all involved and served to highlight that the government does regard Latin America highly and does want to contribute to deepening what is a growing relationship that spans business, education, culture and sport. The challenge is for all concerned, with business at the forefront, to raise the bar even higher so as to ensure that we seize all of the opportunities that are available from the ongoing development of the Latin American nations. The November 18 Sydney Dinner provides an ideal opportunity for business to show its support for Latin America and to send a clear message to government that it wants more to be done to connect Australia with the region. Jose Blanco, Chairman ↑Return to Index



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In keeping with the G20 focus of striving for higher world growth, the theme of the eighth University of Queensland Latin American Colloquium (UQ-LA8) will be ‘21st Century Economic Partnerships: Latin America, Australia & Asia’. The Colloquium will showcase effective case studies and models for expansion for high impact three way partnerships, including Latin American natural resources, Australian research, education and know-how, and Asian finance. It will be a pivotal and interactive forum on Australia–Latin America relations, featuring the participation of Latin America's Ambassadors, government, business leaders and researchers. Event details Last Days to Book!

The focus of this year’s colloquium is on building trilateral relationships between Latin America, Australia & Asia. Distinguished speakers include:

Latin American Heads of Mission

Mr Brett Hackett, Assistant Secretary Canada and Latin America Branch, Department of Foreign Affairs and Trade

Mr Crispin Conroy, Senior Trade and Investment Commissioner for Latin America and Consul-General to Colombia, Austrade

Ms Sofia Pereira, Education Commissioner - Latin America, Austrade

Mr Alex Pessagno, Trade & Investment Commissioner for Latin America, Trade & Investment Queensland

Mr Jose Blanco, Chairman, Australia Latin America Business Council

Mr Troy Hey, General Manager, Executive General Manager - Stakeholder Relations, MMG

Mr Mauro Mezzano, Chief Executive Officer, Vantaz Group Please join Global Engagement in UQ International for this important event in showcasing and extending our links with stakeholders engaged in Latin America.

Please click HERE to register by October 1.

↑Return to Index

Date: Tuesday 7 October 2014

Time: 2:00pm for 2:30pm to 5:30pm

Venue: Auditorium, Level 2

Sir Llew Edwards Building (#14)

Cnr University Drive & Campbell Road

UQ St Lucia

Brett Hackett

Crispin Conroy

Mauro Mezzano


http://www.vision6.com.au/em/forms/subscribe.php?db=465300&s=164433&a=30320&k=85cd99e

http://www.vision6.com.au/ch/30320/1x180/1446324/fec0ax7y9.html


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Annual Australia-Latin America Networking Day in Canberra

On September 3, the ALABC hosted in Canberra its annual Australia-Latin America Networking Day, an event that brings together representatives of the federal and state government, as well as of ALABC patron members and board of directors, the Latin American diplomatic corps, the Council on Australia Latin America Relations (COALAR) and strategic allies of the ALABC. The event is aimed at allowing the primary stakeholders in the Australia-Latin America relationship to exchange information about their respective activities and to identify areas capable of improvement. This year’s event featured the participation of the Minister for Foreign Affairs, Ms Julie Bishop. The Minister for Trade and Investment, Mr Andrew Robb, was a last minute withdrawal due to the bringing forward of his flight to India, accompanying the Prime Minister. In addition to the address given by Minister Bishop, presentations were made by: - HE Mr Pedro Villagra Delgado, Argentine Ambassador and Head of the Group of Latin American and Caribbean Countries - Dr Brendon Hammer, First Assistant Secretary Americas Division, Department of Foreign Affairs and Trade - Mr George Di Scala, Director Trade Engagement – Americas, Victorian Department of State Development, Business and Innovation - Ms Michelle Wade, General Manager International Operations, Trade and Investment Queensland - Mr Sam Gerovich, Australian Ambassador for Asia-Pacific Economic Cooperation: Economic Diplomacy and G20 - Mr Jim Williams, First Assistant Secretary Visa and Offshore Services Division, Department of Immigration and Border Protection - Mr Chris Gale, Chairman of the Council on Australia Latin America Relations - Ms Robyn Archer AO, Council on Australia Latin America Relations - Mr Brett Hackett, Assistant Secretary Canada and Latin America Branch, Department of Foreign Affairs and Trade Patron members of the ALABC that were represented at the event included, Arrium, MMG, Orica, the University of Queensland, the University of Melbourne, Macquarie Graduate School of Management, Innovia Security and Petrel Energy. ↑Return to Index

Australia-Chile Economic Leadership Forum scheduled for Santiago in December If Chile is a market of interest, please note that the inaugural bilateral Economic Leadership Forum" Australia-Chile: Asia Pacific Platforms" will be held in Santiago, from 11 to 12 December, 2014. An initiative of the Australian Embassy in Santiago and the Chile-Australia Chamber of Commerce (Auscham), the forum is expected to attract around 200 high-level business and government representatives to chart future directions in the Australia-Chile relationship.

ALABC chairman, Jose Blanco, welcoming Minister Julie Bishop

HE Mrs Clemencia Forero (Ambassador of Colombia); John Barbagallo (CEO of Arrium Mining Consumables); Harold

Lucero (Director, ALABC); HE Mr Pedro Monzón (Ambassador of Cuba); Bede Fennell (General Manager, Government &

Industry Relations, Orica); HE Mr Luis Quesada (Ambassador of Peru)



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Official supporters of the Forum include the trade promotion entity of the Chilean Government, Pro-Chile; Chile’s pre-eminent industry association, SOFOFA; and the Latin American think-tank, The Chilean Foundation for the Pacific. The Forum has received endorsement from Australian and Chilean government ministries, including those responsible for trade and investment, mining, energy, defence, agriculture and economy, among others. It also counts on the support of the ALABC, which will be represented at the Forum by its chairman, Jose Blanco.

The focus will be on services and investment, innovation, mining, energy, transport and logistics, water and environmental services, food security and funds management. The program will include extensive commercial networking opportunities. The forum will also mark the fifth anniversary of the entry into force of the Australia-Chile Free Trade

Agreement and highlight the 20th anniversary of Chile's APEC participation. Further details regarding the forum will be available from http://asiapacificplatforms.com and will also be published in future editions of Latam News. Expressions of Interest for Business Delegation to Chile Given the importance and high-level attendees expected at this event, the ALABC is evaulating the possibility of arranging a delegation to travel for Santiago for this event and for a 2-day visit earlier in the same week to another of the fast-growing countries in South America, either Lima or Bogota. Such an initiative would provide delegates with the opportunity of establishing valuable contacts and gaining important market information from two key markets whilst only spending a week away from their office. Anyone interested in registering their interest in such a delegation is asked to do so by writing to the ALABC chairman, Jose Blanco, at [email protected]. ↑Return to Index

‘Science Without Borders’ offers access to highly talented interns

Members are reminded that Australian Internships currently has some 300 elite students that require non-paid internship within the Science, Technology and Engineering industries in Brisbane, Sydney, Perth & Melbourne.

These internships are available under the ‘Science Without Borders’ (SWB) scholarship program of the Brazilian Government, which is designed to strengthen the expansion of science, technology and innovation in Brazil. The program offers 100,000 students with scholarships around the globe in the areas of STEM (Science, Technology, Engineering and Maths), in addition to a full time internship program over the summer. Students have been selected based on academic excellence. Students are required to complete internships over the 2 – 3 months summer period. Many students are available to commence immediately on a part time basis and progress into a full time capacity for 2-3 months over the Australian summer (November – February). All students have a valid visa and AUD$2 Million Personal Liability insurance. Each candidate has been carefully vetted to ensure that they have high level English skills, strong academic credentials and unwavering commitment. Anyone interested in learning more about the program is invited to contact: Jesse Karnaitis, Internship Program Manager, Australian Internships. Call Toll Free: 1800 GO INTERN or Tel: +61 (0)7 3305 8408 [email protected]

↑Return to Index


http://asiapacificplatforms.com/




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Latam Autos seeks $40 million in pre-IPO raising (This article was written by Sarah Thompson, Anthony Macdonald and jake Mitchell and was published on September 22, 2014 in the AFR)

South American-focused, automotive classifieds business LatAm Autos is seeking $40 million in a pre-IPO raising, run by Canaccord Genuity. LatAm operates in Argentina, Mexico, Ecuador, Peru, Panama and Bolivia, which gives it a $US685 million ($767 million) target market. The company was founded earlier this year by Australians Tim Handley and Gareth Bannan, who set out to create a regional platform by aggregating online auto classifieds companies. LatAm Autos raised seed capital of $3 million in April, which was used primarily for acquisitions.

Handley has worked in investment banking at UBS and Gresham Partners, while Bannan was previously with KPMG’s corporate finance practice. Both had previous experience in Latin American markets. The company’s current investors include the White family of Ray White Group, Hastings Funds Management founder Mike Fitzpatrick and founding investor of Freelancer.com, Simon Clausen.

LatAm is being compared to Patrick Grove’s iCarAsia, which has a market value of $245 million. Mr Grove’s Catcha Group is also looking to float a tech company in 2014, following the initial public offerings of iCar, iProperty and iBuy. ↑Return to Index

Uruguay aims to attract oil majors to offshore prospects

Uruguay will seek to reach seismic-surveying and crude-prospecting deals with the world's leading global energy companies in hopes oil can be found in offshore areas up to 3,500 meters (11,475 feet) deep, according to state-owned company Ancap. Uruguay's third offshore round is to begin in early 2015 and aims to attract interest from companies with the deep pockets and technology to undertake the work, said Ancap executive Santiago Cerro.

Uruguay plans to sell these multinational firms on that offshore region's potential in a road show that will include presentations in Houston, London, Rio de Janeiro and an Asian city to be determined. Ancap is targeting the oil industry's leading multinational companies because the drilling work will be conducted in ultra-deep waters and require the use of the latest exploration technology, Cerro said. Companies must first demonstrate that they have the technical, financial and legal capacity to undertake the work and must present an exploratory plan before they

can become eligible to participate in the bidding process, known as Ronda Uruguay III. The companies will be rated on a point system based on the profits the government expects it would obtain from an eventual contract.



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Should an exploratory drilling program lead to oil reserves being discovered and developed, the Uruguayan government would receive a percentage of the company's declared profits on those deposits and tax revenues, as well as income based on Ancap's stake in oil-producing blocks. Editor’s Note: The Uruguay Oil & Gas Summit 2014 will take place on 17th-18th November 2014 in Montevideo. Held under the auspices of the Ministry of Industry, Energy and Mines of Uruguay, this conference will bring together existing and future operators in the oil and gas industry in Uruguay and Latin America. Speakers will address a range of issues including the upcoming Ronda Uruguay bidding terms; the geological and geophysical potential of the country’s basins; an update on the regulatory framework; seismic data acquired so far; downstream opportunities and incentives and analysis of the onshore potential, amongst other topics. It will offer a unique networking platform where delegates will come to discuss changes in the legislation and exclusive details on the upcoming bidding round. For more information visit: www.uruguaysummit.com ↑Return to Index

Ecuador to grow 4%-4.5% in 2015 Ecuador's economy will grow between 4.0 percent and 4.5 percent next year, while inflation should be less than 3 percent, according to Finance Minister Fausto Herrera. The oil-dependent nation, OPEC's smallest member, is also facing a budget deficit of 4.0 to 5.0 percent of gross domestic product in 2015, Herrera said in an interview. "That's the objective of the monetary policy we have next year and the budget will be adjusted based on that," Herrera told Reuters on a visit to Colombia to sign a $617.6 million loan deal with the Latin American Reserve Fund. The central bank forecasts 4.0 percent growth this year, compared with 4.5 percent in 2013. Inflation is expected to be 3.2 percent in 2014, compared with 2.7 percent last year. Ecuador posted a $34.3 billion budget this year and has not yet detailed its 2015 plan, which must be approved by Congress. The country expects to raise oil output to 580,000 barrels per day (bpd) by the end of this year from 560,000 bpd, the minister said, and it expected income from its top export of around $4 billion next year. Ecuador will need to raise between $8 billion and $9 billion through credit lines to finance the budget for 2015. "We are working on new credit lines with China. We have a line open with India, some with Russia," he said. He added that Ecuador was also looking for financing from multilateral organizations such as the World Bank and the Inter-American Development Bank. Ecuador has enjoyed steady economic growth over the last few years, but the government has warned that 2014 and 2015 could be "difficult" for public finances, as Quito directs large sums toward its hydro-electric infrastructure. Although Ecuador has strict rules about the development of resources such as oil, the government is weighing allowing foreign investment in the sector. Several companies are interested in extraction operations in the ITT oilfield, which has reserves of one billion barrels, Herrera said. The field, located in the country's Amazon region, would require investments of $5 billion, he added. ↑Return to Index

Chile, Colombia, Mexico and Peru: Better Together The following is a communiqué issued on September 21 by the Presidents of Chile, Michelle Bachelet; Colombia, Juan Manuel Santos; Mexico, Enrique Pena Nieto & Peru, Ollanta Humala . The Pacific Alliance is achieving significant results. Three years ago, Chile, Colombia, Mexico and Peru decided to move toward deeper economic and commercial integration. The effort was based on our common belief that the free movement of people, goods, services and capital can help us achieve greater welfare and social inclusion for our citizens.



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Our four countries represent 214 million people, and our economies have a combined gross domestic product of $2.1 trillion, which accounts for 37 percent of Latin America’s total GDP, averaging a 5.1 percent annual growth rate over the past four years. Our foreign trade adds more than $1.13 trillion, and we receive 45 percent of total foreign investment flows in Latin America. To fulfil our goal of free movement of people, we lifted tourist and business visa requirements for our citizens. Because cultural exchange and education are so important, we put in place special programs to make it easier for our students to study and travel. We also found ways to expand the free movement of goods and

services. A new trade agreement will immediately eliminate tariffs for 92 percent of our common products, and the remaining 8 percent will be phased out, giving extra help to small and medium enterprises. On the free movement of capital, our stock exchanges are now unified in the Latin American Integrated Market. With the recent addition of Mexico, we are certain that this action will broaden the diversity of financial products that we can offer. More than 750 companies with a market value of $1.1 trillion are represented in our integrated market. We believe we have come a long way in a short time. However, we want to do more and do it together. We are establishing embassies and trade offices in shared facilities overseas as well as organizing trade and economic missions. We created a fund to promote projects among ourselves and with third parties. We are particularly committed to working with other countries. With 32 nations now observing the Pacific Alliance, we know there is broad global interest in our shared enterprise and the prospect for wider integration. We are therefore strengthening our relationship with observer countries by defining projects of cooperation in our core areas. Specifically, we are working on education, trade, small and medium businesses, innovation, science and technology, and infrastructure. More generally, we are open to exploring engagement with other regional integration efforts. The Pacific Alliance Business Council, which includes representatives of the main private economic institutions of our four countries, is another important partner in our project. As we gather this week in New York City to attend the United Nations General Assembly, we plan to discuss our achievements, challenges and prospects, as well as to deepen a fruitful exchange with the U.S. and the international business community. If we had to highlight one characteristic of our integration process, it would be this: We firmly believe that the main purpose of the Pacific Alliance is to improve the welfare of all our citizens through the promotion of growth and economic development, and the improvement of the competitiveness of our economies. Three years ago, we faced the challenge of fostering a process that would strengthen our countries and, especially, help us build a bridge to the Asia Pacific region. This aspiration has now become a reality. We will continue to work together, as partners, to fulfill our common goals and to deepen and extend our vision, for the benefit of our nations. ↑Return to Index

Chile’s economy grows more than expected on services and mining Chile's economy grew more than analysts expected in July, led by services and mining, while still expanding at the slowest pace in four years. The Imacec index, a proxy for gross domestic product, rose 0.9 percent from a year earlier, the central bank said. The median forecast of 14 economists surveyed by Bloomberg was for growth of 0.4 percent. Economic activity expanded 0.5 percent from the previous month. Central bank President Rodrigo Vergara called for calm over the slowdown in Chile's economy, saying that gross domestic product is still expanding and that growth will accelerate next year.



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Changes in monetary policy, which have pushed the key interest rate down 1.5 percentage points to 3.5 percent in the past year, have been a suitable response to the slowdown, he said. Interest rates will probably fall in line with market expectations, Vergara said, adding that the economy was unlikely to contract. GDP rose 1.9 in the second quarter from a year earlier, down from 2.4 percent in the first quarter and 4.1 percent last year. Manufacturing has contracted in nine of the past 12 months, while retail sales rose at the slowest pace in almost five years in July. The central bank this week cut its growth forecast for 2014 for the fourth consecutive quarter. Policy makers said GDP will expand 1.75 percent to 2.25 percent, compared with the previous estimate of 2.5 percent to 3.5 percent. Finance Minister Alberto Arenas, who has called for a public, private alliance to boost growth, said that economic growth would accelerate by about 1.5 percentage points next year. The government has cut its 2014 growth forecast twice this year to 3.2 percent, citing a steep slowdown in domestic demand. The government of former President Sebastian Pinera, which left office in March, had forecast growth of 4.9 percent. ↑Return to Index

Opinion: Latin America – the ‘Valley Girl’ of global markets (This article was written by John Price, the managing director of Americas Market Intelligence)

If the Latin American market could be symbolized by one single character, the California Valley Girl might fit the bill. It’s a simplistic, even insulting stereotype, but one that stands up to statistical scrutiny, specifically an analysis of Latin America’s share of the globe in different product usage, asset classes, and investment flows. After a decade of impressive growth and strengthened currencies, Latin America is today a middle income region with roughly 8% of the world’s population and 8% of its GDP. Where Latin America performs above or below the 8% share of the globe is indicative of its relative strengths and weaknesses.

Well Endowed Latin America is home to a quarter of the world’s arable land but only produces 11% of its food value. Similarly, the region has more than 20% of the globe’s proven oil reserves but extracts less than 14% of total petroleum volumes. A long legacy of resource colonialism, stretching from Pizarro to Rockefeller continues to poison the region’s political discourse, denying investors stability and consistency. The exception is Chile, whose laudable mining laws and copper financed rainy day fund have proven pivotal in creating Latin America’s only first world nation. Ambitious nations like Colombia and Peru try to emulate Chile’s approach but with higher corruption levels, the windfalls of mining

are less likely to reach local communities, let alone support a sovereign fund. Commodities are the obvious source of Latin America’s competitiveness but until Latin America’s political class embraces the sector and builds an attractive long term investment climate, the region will never realize its wealth potential. Glamorous Latin American women are fascinated by beauty. They are three times more likely than the rest of the world to go under the knife to enhance their looks. They spend well beyond their means on beauty products, helping to develop several world class home-grown cosmetics companies, such as Natura, which grossed over $3 billion USD in 2013. Colombia has developed a thriving cosmetic surgery tourism industry, generating close to $100 million in export revenue per year.



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In spite of security concerns, Latin Americans like to parade their status. Luxury goods outperform in the region if the calculation includes luxury goods purchased by affluent Latin Americans when they travel abroad, in some categories and brands garnering 15+% of global sales. According to the Financial Times, the number of retail luxury stores in Latin America grew 24% from 2011-13, more than any region in the world. Latin American credit card spending, which grew at CAGR levels north of 20% over the last decade has done wonders for the mass luxury segment.

Sociable Latin Americans love to chat. Brazil is now the 3

rd largest mobile phone market after China and the US.

Brazil and Mexico are Facebook’s 3rd

and 5th

largest markets respectfully. More than any other emerging market region, Latin Americans are heavy long distance diallers. Many of their international calls are with relatives abroad (mostly the US) that send over $60 billion per year to the region. Latin America is the most developed remittance market in the world. Technologically challenged While Latin Americans love their mobile phone, they are less enamoured with computers and tablets. The sale of both items underperforms in the region. Similarly, software sales, both to consumer and business do poorly in Latin America. One obstacle to both hardware and software sales is the lack of credit cards and other forms of financing available to 70% of the population. Purchasing a $2,000 computer with cash is a daunting challenge for someone earning only $10,000 per year. Software

companies are also afraid of piracy. Anywhere from 50-80% of computer software used on personal computers in Latin America is pirated. Some global software firms stay out of the region altogether. Only a handful make the necessary investment to translate into local language, much less support sales with a robust distribution model and technical support. A recent McKinsey study showed how productivity gains in large Mexican firms outpaced those of smaller firms. The differentiator is technology, which larger firms adopt at a faster pace. Not very studious Latin Americans are known for their creativity in the arts and even in business where complexities must be ingeniously navigated. But all that creative energy produces little in the way of marketable ideas. Latin America is responsible for a paltry 3% of R&D spending and yield a similar level of patents. There are universities in the USA that singlehandedly produce more patents each year than all Latin American academia, government and private sector efforts combined. Too many Latin American inventors and designers migrate abroad (usually to California) to develop their ideas because they have little faith in the legal defense of their patents and trademarks at home. Less understandable is Latin America’s underperformance in all things written. The region’s publishing industry continues to fall behind the rest of the world, publishing only 5.2% of the world’s titles, many of which are translated versions of original works written elsewhere. In Mexico, there is only one bookstore for every 70,000 people. Latins read fewer newspapers than the rest of the world, printed or online. E-publishing and reading is even less prevalent, whereby Latin America contributes less than 1% of the global market. What is most galling about these statistics is that Latin American governments spend heavily on public education. Argentina, Brazil and Mexico governments all spend a higher percentage of GDP on schooling than Canada, Germany, China, Russia or Japan. Dating the Geek International trade is a bit like love in that opposites often attract. Not surprisingly, the Valley Girl (LatAm) has taken to dating its opposite: a less resource endowed, unglamorous, penny pinching, tech savvy, highly studious older fellow known to the world as China. ↑Return to Index

Mexico’s mining sector alive and kicking (This article was written by Samuel Williams and was published on September 9, 2014 in BNamericas)

Mexico's mining sector is showing resilience despite concerns over lower metal prices and taxes. Gold, silver and copper have lost significant value since the start of 2013 and the issue has been compounded by the introduction of Mexico's mining taxes - comprising a 7.5% charge on mining income minus certain deductions and a 0.5% gross revenue royalty on precious metals mines - but official figures show that production, exports and foreign investment in the industry are on the rise.



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Production in the mining-metallurgy sector was 1.8% higher in June than in the same month of 2013, according to statistics agency Inegi. Copper showed the steepest production growth over the period, up 6.8% to 40,895t, with lead, silver and gold all up slightly. The June increase comes despite a 4.2% year-on-year slowdown in H1 mining production. Mexico's mining exports are also showing healthy signs, with metallic mining exports worth US$2.36bn in H1, up from US$1.9bn in 1H13, despite lower metals prices, according to a recent government report citing preliminary figures. Non-metallic mining exports declined to US$348mn from US$368mn. Foreign direct investment (FDI) in the sector also appears to be strengthening. According to economy ministry figures at end-August, mining FDI was US$854mn in H1, a 109% increase from US$408mn in 1H13. While both figures are preliminary, they suggest foreign investment is rising despite attempts by mining companies to cut exploration and capital spending in the face of lower metals prices. While it is unclear what H2 holds in store for the sector, there are signs production will remain strong, with Mexico's top five gold and silver miners generally predicting stable or higher output. The value of exports will depend on both production and how metal prices perform. But it seems likely that higher FDI may be a temporary blip in a downward trend, with mining chamber Camimex predicting a decline in overall Mexican mining investment to US$6.18bn in 2014, 6% lower than the US$6.58bn last year. ↑Return to Index

Analysis: Chile’s aquaculture industry

(This article was written by Claudia Marin and was published in the August edition of bUSiness Chile magazine, the journal of Amcham Chile)

While output from traditional fishing in Chile currently finds itself in a difficult situation, aquaculture is booming. This has even led to the Food and Agriculture Organization (FAO) of the United Nations to predict that the focus of long term global demand will be on cultivated products.

When, by 1990, the emerging Chilean salmon farming industry began reproducing Coho salmon and generating the first locally-produced eggs, it was difficult to imagine the trajectory the sector would soon take. With annual production of around 800,000 tons of salmon, the country is the second biggest actor on the global market, and among national exports it represents second place, behind copper. This is a meteoric rise which is now projected to grow even farther, thanks largely to a stalling commercial fishing sector and growing demand. Aquaculture in Chile dates back to the mid-19thcentury with the introduction of foreign species to the country. In 1921, the first Coho salmon arrived for cultivation, while both foreign technology and knowledge began to be adopted to boost cultivation, via the

Fisheries Development Institute. However, although the aquaculture sector began to take shape in the 1970s, becoming a definitive industry in the 1980s, the real drive came with the arrival of the first eggs at the beginning of the 1990s. This latter step is considered by the sector itself to mark the true starting point of the industry. Currently, the country has 3,300 aquaculture concessions and 18 hydro-biological species in commercial cultivation. According to the most recent Fisheries and Aquaculture Sector Report compiled by the Undersecretary of Fisheries, to June of this year, aquaculture accounted for exports of nearly 321,000 tons, worth US$2.172 billion. This is a 35.4% increase on the figure from last year. This favorable situation means the aquaculture sub-sector represents 80.5% of the total value of exports from the wider industry. In cultivation terms, the main resources relate to Atlantic salmon, mussels and Rainbow trout, representing 51%, 26.8% and 11.9% of the harvest, respectively, during June. The Undersecretary of Fisheries, Raúl Súnico, recognizes that Chile is a country with a vocation for aquaculture, benefiting from its biodiversity and the Humboldt Current, as well as a large coastline some 6,435 kilometers in length. This has helped Chile become a world leader in the export of salmon, in less than three decades. It now exports its produce, mainly salmon and trout, to over 100 markets around the world.



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But this boom is no accident. It coincides with a period of more than a decade in which traditional fishing practices have experienced stagnation. According to Héctor Bacigalupo, General Manager of the National Fisheries Society, over the last ten to 15 years, global catch figures have remained stable at around 90 million tons. In Chile, however, figures have been falling: while in

1999 products caught amounted to 5.35 million tons, the figure for 2013 was just 2.9 million tons. As such, while the international demand for marine products has risen, Chilean fishing catches have been falling. This situation has opened the door to aquaculture, which is experiencing a rise in the price of the products being cultivated. This is in addition to much of the capture production in Chile being earmarked for fishmeal rather than human consumption. As a result, the sector is unable to respond to a worldwide demand in rising consumption, largely stimulated by a trend in favor of healthy foods. This rising demand could reach 20.9 kilograms per capita by 2023, according to the Agricultural Outlook 2014 report compiled by the Organization for Economic Cooperation and Development (OECD) and the FAO. The key for Ricardo García, General Manager of Camanchaca is the following: demand for seafood products grows at twice the rate of the global population, i.e., it doubles every 22 years. García notes that the FAO has predicted that in five years’ time, cultivated species will

account for 70% of global seafood consumption, and that aquaculture has tremendous potential. Traditional fishing, on the other hand, is structurally limited by quotas seeking to ensure marine biomass sustainability. A stable and less volatile supply of the capture of natural products is another one of the big advantages of the aquaculture industry. Salmon: the star It is therefore of no great surprise that aquaculture is becoming a key part of this program. And Chile has unquestionably favorable conditions on which to draw, like clean and cold waters, with high levels of oxygen, in which the Atlantic salmon has thrived in terms of satisfying this new demand. With 792,000 tons of cultivated produce in Chile in 2013, the United States and Japan are the main destinations of Chilean salmon. The markets of Brazil and Russia are also playing an increasing role and the sector is looking to open up new markets or entrench its position within Latin America and also Asia, in countries like China and South Korea. Projections for this year are positive, and are helped by the healthy international price of fish over the long term. But not everything is such plain sailing. According to the latest report of “The State of World Fisheries and Aquaculture” by the FAO, “in Chile, the second major producer and exporter, the industry is undergoing an important transformation process in response to the current financial crisis and in order to address higher production costs resulting from stricter production regulations. Chilean farms continue to suffer from disease problems and high feed costs that compound an overall production efficiency disadvantage”. This analysis is directly related to the last crisis in the sector. In 2007, a cultivation center on the island of Chiloe recorded the presence of Infectious Salmon Anemia, more commonly known as ISA virus, a disease that causes fish to die and which spreads rapidly between different fish farms. The impact was such that it put the entire development of the Chilean salmon farming industry at risk. It resulted in a public-private initiative that devised sanitary regulations for controlling and combating the virus in the case of its re-emergence. This crisis became an inflection point for the sector, with an increased regulatory role played by the State and the realization of the industry of the need to ensure the presence of a model that allows cultivation levels to be expanded. With these issued having been clarified, the subsequent growth was based on improvements to technology and the wider production model, as well as far more careful procedures, given how close to one another Chile’s salmon farms are located. As such, one of the key points to continued growth in the industry, according to Felipe Sandoval, President of SalmonChile, is relocating the areas in which concessions are made to more environmentally friendly locations. This task should be undertaken in conjunction with the authorities, and would bring about a positive health and environmental effect, not only for the sector but for the entire local community.



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The road to diversification While the traditional fishing industry is working to replenish recently affected species, like common hake or mackerel, aquaculture is looking to diversify its production beyond that of just salmon. Andrés Barros, Head of Food and Biotechnology at Fundación Chile, understands that cultivating another species will be difficult, given the size of the current salmon industry. However, he believes that niche aquaculture and medium scale cultivation present Chile with a viable business opportunity. In 2009, the public sector established the Program for the Diversification of Chilean Aquaculture, which sets out complementary long term actions between CORFO’s InnovaChile and the Scientific and Technological Development Support Fund (FONDEF), managed by the National Commission for Scientific and Technological Research Commission (CONICYT). In the private level sector, businesses are also hard at work. Camanchaca, for example, has expanded into the cultivation of additional shellfish, including Chilean mussel (mejillon), oyster and abalone, although it realizes that Chile’s advantages and strengths lie with the first two. Fundación Chile, conversely, is developing research into species like amberjack, palometa, corvina, razor clams and the golden conger, among others. Similarly, algae has emerged as a potential area of exploitation. The extraction of this resource has led to certain levels of depredation and its cultivation is a potentially significant alternative, especially for its use in the food, pharmaceutical and cosmetic industries. Although Chile has been one of the major countries in global fish production for many years, this is largely because of its volume of catch rather than its value. The huge capture of sardine, anchovy and mackerel has been used for the production of fishmeal, which has a low sales price. The growth in the production of salmon and other highly priced aquaculture species, which feed on this fishmeal, has finally given value to this product. Today, rather than exporting its sub-products at low prices, Chile exports fish for human consumption, at a more profitable rate. This represents a classic exercise of added value, using Chilean labor and technology. The future of national aquaculture production is looking optimistic, especially given that this change to fish production is bringing, and will continue to bring, important benefits to the country. ↑Return to Index

Paraguay becomes world’s 8th-largest exporter of beef, ahead of Argentina

Paraguay now ranks as the eighth-largest exporter of beef in the world and is planning to double the number of cattle slaughtered by 2020, according to the country's Rural Association, ARP. Last year 2.2million head of cattle were slaughtered in Paraguay, and 73% of the beef was exported while the rest was domestic consumption. Argentina on the other hand, only managed to export 200.000 tons last year This year Paraguayan abattoirs are expected to slaughter 4.2 million head of cattle, of which 3.1 million will be shipped overseas as beef exports, while 1.1 million will supply the home market. At this rate the cattle farmers expect Paraguay to be exporting the equivalent of 4 billion dollars in beef by 2020. Paraguay's export markets are mainly Chile, Russia and Brazil. US Department of Agriculture stats show that Brazil remains the leading beef exporter with over 2million tons, followed closely by India with 1.9m; Australia, 1.56m; New Zealand 535.000 tons; Uruguay, 385.000 tons; Canada, 355.000 and Paraguay, 350.000 tons. Argentina not so many years ago a reference of the world's beef market only figures with 200.000 tons of exports in position 11, only just ahead of Mexico with 180.000 tons. India on the other hand has emerged as a world power having trebled exports in five years, and thus taking control of approximately 20% of the global market. ↑Return to Index



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Argentine government and provinces agree new hydrocarbons regime Argentina’s central government has reached an agreement with the Organización Federal de los Estados Productores de Hidrocarburos (Ofephi, a body composed of the governors of Argentina's ten oil-producing provinces) on updates to the country's 1967 energy law, aimed at incentivising investment in the country's promising hydrocarbons sector, especially in unconventional sources such as shale gas and shale oil. The proposed draft, which will now move to the Chamber of Deputies (the lower house) for approval, comes after almost three weeks of debate between the central government and provincial governors. The government's original draft proposal—dubbed the "Galuccio Law" after the CEO of the national oil company, Yacimientos Petrolíferos Fiscales (YPF), Miguel Galuccio—was met with fierce opposition by Ofephi governors, especially Jorge Sapag of Neuquén, Martín Buzzi of Chubut, Francisco Pérez of Mendoza, and Alberto Weretilneck of Río Negro. All of these objected in particular to the proposed decrease in royalties revenue going to the provinces, and to the elimination of the "carry", which is the province's share in the ownership of projects without making an investment. Given their objections, the Galuccio law lacked sufficient votes to pass through the lower house.

The draft legislation agreed to this week aims to standardise investment rules at the federal level, and bring the country's energy laws up to date. The proposed legislation will update the 1967 energy law, which puts most energy policy in the hands of the provinces, and replace Decree 929, issued by the government in 2013, which has guided investment by international oil companies in Argentina's vast shale reserves such as Vaca Muerta. Coming together The new law maintains certain aspects of the Galuccio Law, which also mirrors many of the investment incentives present in Decree 929. It continues to allow international oil companies exemption from foreign currency controls, and restrictions on importing equipment and repatriating profits, but lowers the

minimum investment for such incentives from US$1bn to US$250m over a five-year period. The law introduces a national auction system for exploration licences or concessions, replacing the current different provincial systems. The bill shortens the period for exploration licences, but lengthens the period for concessions, which are now 35 years for unconventional sources and 30 years for offshore drilling, with the opportunity for extensions of ten years. In a concession to Ofephi, the law allows 3% increases in royalty payments for concession extensions to a maximum of 18%, (up from an originally proposed cap of 12%). Notably, the proposed legislation eliminates the "carry"—a key point of objection for the Ofephi governors, especially Mr Sapag of Neuquén, home to the Vaca Muerta deposit—and forbids the provinces from levying special taxes against operators. The legislation also calls for the creation of a national environmental law to replace different regulations currently existing between the provinces. A bright spot Although Argentina's economic outlook in the short term appears bleak, the development of the country's shale oil and shale gas reserves still presents a tremendous opportunity. The country is estimated to hold the world's second-largest reserves of shale gas, and fourth-largest reserves of shale oil. The country hopes to exploit these resources to close a costly energy trade deficit (US$6.1bn in 2013) and spur economic growth. However, estimates suggest that it will cost between US$140bn to US$200bn to develop the reserves, more than can be provided by the state alone. Private investment will therefore be essential to properly exploit these reserves. The passage of the new hydrocarbons law has been a priority of the administration of the president, Cristina Fernández de Kirchner, which is eager to attract investors scared off by moves such as the renationalisation of YPF from Spain's Repsol in 2012. The passage of a passable bill became especially urgent for the administration after the country's default in July. The Argentinian cabinet chief, Jorge Capitanich, has said that he would like to see the legislation pass before the end of the year, preferably by October or November, for enforcement in early 2015, when several YPF contracts expire. This could help to put the country on track for a moderate recovery in activity in the medium term, and, eventually, for the reversal of Argentina's growing energy deficit. ↑Return to Index



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Latin American brands gain ground on global names

(This article was written by John Paul Rathbone and was published on September 23, 2014 in The Financial Times.)

Who won this year’s World Cup in Brazil? A simple question, surely? Not necessarily; it depends on your point of view. For footballers, the answer is a matter of record: Germany beat Argentina in the final. For the host country, the answer is less clear-cut. Although Brazil was dogged by worries about social unrest and late building works, many pundits and even some Brazilians described it as the best world cup ever as the tournament progressed – despite the humiliation of the national team’s 7-1 defeat by Germany in the semi-finals. But for companies involved in the World Cup, the winning brand is still being thrashed out. Ostensibly, the winner was Adidas, the German sportswear company that has been a long-time official sponsor. In a stroke of good fortune, the brand sponsored both finalists, who duly appeared in its kit. Yet Nike, its rival for the spot of being the world’s leading football brand, came a close second. The US-based sportswear company sponsored 10 of the tournament’s 32 teams, versus Adidas’s nine, but was not an official sponsor of the World Cup itself. Instead, though Nike disputes the term, it used “ambush marketing” strategies to piggyback the World Cup, such as sponsoring individual athletes and promoting that sponsorship on social media. According to one study, Nike was the company that most Brazilians associated with the tournament.

This is the Financial Times’ third annual survey of Latin American brands, and the sophistication of Nike’s approach in Brazil, combined with that of regional companies beefing up their branding strategies, shows how the concept continues to gain traction. There are four main reasons for this. The first is the region’s $5.7tn economy and 600m people, 80 per cent of whom live in cities, which makes Latin America an attractive destination for multinationals. Nestlé, for example, derives some 15 per cent of global sales from Latin America. Against that, however, local brands are fighting back against multinationals, building substantial “branding barriers to entry”.

One example is Peru’s Inca Kola, which has a 30 per cent domestic market share compared with Coca-Cola’s 20 per cent, and has been the subject of a Wharton business school case study on successful branding. Another is Banorte, the Mexican bank, one of what Boston Consulting Group calls “emerging market dynamos” – and increasingly they are eating the multinationals’ lunch. A second reason is that more local companies are going international and investing heavily in their brands to do this. According to HSBC, these so-called “multilatinas” may also be better-performing investments than companies focused on the domestic market. Falabella, the Chilean retailer that is expanding across the continent, is one such case. Other multilatinas include banks, such as Brazil’s Itau and Colombia’s Bancolombia, and, more unusually, a clutch of food lines that have capitalised on their brand recognition among expatriates to enter foreign markets – especially among Hispanics in the US. One of the most striking examples is Nescafé, an instant coffee made by Nestlé. Although in coffee-proud Colombia it is sometimes jokingly referred to as “No-es-café”, the company won a bridgehead for the brand in the US thanks to sales there of its Mexican brand, Nescafé Clásico. “Nescafé was not a big brand in the US until Clásico, which has now become one,” says Chris Johnson, Nestlé’s head of the Americas. A third reason for branding’s uptake in Latin America is the rise of the equity culture – either to fund growth or because a stock market listing can smooth succession at the family-owned companies that remain a feature of the region’s corporate landscape. The last reason for the importance of branding is more of the moment. As the region’s economies slow with the ebbing of the commodity price boom, companies have had to work their brands harder in order to keep old customers and capture new ones.



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“Branding is something that has to be won every day,” says Mr Johnson. “It represents trust, and in difficult times people don’t want to risk money on a product that does not work. At the same time, if people trust a brand, that allows you to innovate, which is important for value creation.” “De-premiumisation” is the buzz word here. According to a June survey by LatAm Confidential, an FT research service, more Latin American consumers are now trading down when it comes to buying foods and cosmetics brands than are trading up. One company that spotted and then capitalised on this trend, notes Eduardo Tomiya of São Paulo-based BrandAnalytics, is Brahma with its budget-priced beer, Brahma Fresh. Another is Peru’s Kola Real, which has exported its cheap fizzy drink range to Asia, where it has tapped into a similar emerging consumer class. Still, despite its rising importance, brand value requires a dose of scepticism, especially when comparing Latin American rankings to those ranked globally. Although brand value is theoretically measurable, it is only possible in a rough-and-ready way. Furthermore, by deriving brand value from market information, the rankings cannot include the many unquoted family-owned Latin American companies. And Latin American brands remain far smaller than their global counterparts. Corona, the Mexican beer that has Latin America’s largest brand value, worth an estimated $8bn, does not make the top 100 global list. (Aldi, the budget retailer, comes last, with a brand value of $9.6bn, while Google comes first with $159bn of brand value.)

Nonetheless, the changes in this year’s brand rankings tell interesting stories – and suggest some plausible winners for the coming year. The biggest corporate fallers were again commodity producers as the China-fuelled commodity price boom continues to come off the boil. Banks also declined, as Latin America’s consumer credit boom matures. Against that, the brand value of retailers and consumer goods companies has continued to rise, which speaks to the region’s still-strong consumer demand. Perhaps the biggest rebranding exercise of the year was Mexico’s, following President Enrique Peña Nieto’s reform drive. One sign it is gaining traction is how the brand value of Mexican companies has overtaken those of Brazil. What of the winners and losers in the coming year? Mr Tomiya of BrandAnalytics

ventures some informed guesses. Sectors likely to fare less well include telecoms companies, such as Claro, which are struggling to penetrate more deeply into the region’s increasingly value-conscious middle classes. By contrast, companies likely to do well are those that can consolidate their brand across the region, such as Avianca, the Colombian airline. “Next year, I think we will see a lot more local icons in the top 50,” Mr Tomiya says. If so, that would spell good news for local brand enthusiasts but tougher times for the multinationals, which may have to buy their way into the region. M&A anyone? ↑Return to Index

Young professionals group hosts first ‘ice breaker’ in Brisbane

With over eighty attendees, including representation from more than ten nationalities and a wide range of professional industries, the Australia Latin America Young Professionals group (ALAYP) hosted a successful first networking event at Elixir’s rooftop bar in Fortitude Valley, Brisbane ALAYP is an initiative aimed at fostering and developing the Latin American and Australian business community. ALAYP’s organization team believes that there is plenty of opportunity for young Latin American and Australian professionals to help each other through business contacts, job tips and sharing of stories. Their next ‘mix and mingle’ sessions will take place in November this year. The ALAYP group can be contacted at [email protected] ↑Return to Index




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Colombia to speed up environmental permits

Colombia has announced plans to expedite environmental permit approvals, a move that would speed up infrastructure, mining and oil projects across the country. President Juan Manuel Santos said oral presentations will replace all requests submitted in writing. In addition, environmental authorities will only be given a single opportunity to request information during the permit approval process.

Colombia will also tighten regulations to establish a project's area of influence in order to improve mitigation of environmental and social risks. "These changes will reduce to five months the time it takes to reach a decision concerning projects," Santos said in a statement. Companies have complained it can take years to get environmental permits in Colombia. The government said similar measures have been taken in other countries, allowing for speedier hydrocarbon transport through the Arctic and mining activities in British Columbia, for example. In mid-September, Colombia changed compensation rules when the state purchases or

expropriates properties, in a move to speed up and ease the financial cost of infrastructure projects. ↑Return to Index

Latin American insurance market seen remaining among fastest growing

Latin America is expected to remain one of the fastest growing insurance markets worldwide, despite potential headwinds facing the industry, Moody's senior VP Alan Murray told BNamericas on September 25. The region has been the world's fastest growing insurance market during the last decade, outpacing other emerging markets, such as Asia, as well as developed markets. Average annual growth for the region's insurance sector reached almost 15% in the last ten years, with particularly strong growth in markets including Brazil, Argentina and Colombia.

Much of this growth has been driven by a rapid expansion of Latin America's middle class, as earnings, savings and consumption grew rapidly, Moody's said in a report. Slowing economic growth in Latin America is giving rise to the possibility of stagnating income growth among the region's middle class, and this could have a dampening effect on the insurance sector, the report added. With a slower pace of growth, the positive gap in insurance growth relative to other markets is unlikely to be sustained at current levels, according to Murray. The strong middle class expansion in the region, however, has been accompanied by capital market development, improved corporate

governance and insurance market regulation. As a developing market, Latin America is expected to grow at higher rates than mature economies, but whether it continues to exceed Asia "remains to be seen," according to the analyst. The Brazilian insurance sector, which accounts for around half of overall premiums in the region, has continued to grow faster than GDP despite the "ups and downs" of the local economy, Moody's VP and senior analyst Diego Kashiwakura said. The still relatively low level of insurance penetration in Latin America also means that there is still potential to grow, he added. ↑Return to Index



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Producing in Mexico is cheaper than in China

According to an index published by the Boston Consulting Group on August 19, "Mexico is experiencing strong growth in a range of industries" due to its competitiveness would be more driven by structural reforms. The index was reported in an article published by “El Financiero” newspaper on the same day. Mexico emerges as "star" because global manufacturing competitiveness in the country improved in comparison with the rest of exporting economies, according to Boston Consulting Group (BCG).

In an index released Tuesday August 19

th, the consultancy business strategy

indicated that the strength of Mexico is further explained because their production costs are far lower than those of China. Also, foreign investment is resuming its dynamism in the Latin American country, even in industries like electronics, which have been traditionally dominated by China. The index, which measures the costs and competitiveness of global manufacturing, said that electronics exports from Mexico have tripled from 2006 to 2013 to reach

78 billion dollars annually. Companies like Sharp, Sony and Samsung now account for one third of the investment in the field of electronics manufacturing, while a decade ago meant only 8.0 percent. Meanwhile, the Taiwanese manufacturing giant Foxconn Technology Group, which is the largest investor in China, is now the second largest exporter from Mexico, just below General Motors. In addition to the rise in the production of electronic, BCG said that "Mexico is experiencing strong growth in a range of industries," such as transportation equipment, appliances and computer equipment. Furthermore, 89 of the world's leading producers of auto parts, as well as 70 companies that assembly appliances or build related components, manufacture in Mexico. The BCG report stated that the transformation in the global structure of Mexican manufacturing costs, which has improved more than any of the 25 exporting economies considered in the BCG index, explains the revitalization of manufacturing in the country. While in 2004 China had cost six percentage points lower than the Mexicans, the Latin American country is now four percentage points cheaper relative of the Asian economy, according to BCG. One reason is that while production costs China raised in the last decade, productivity in the country grew at a lower rate. In Mexico, however, increased 67 percent in average wages in the manufacturing sector in the last decade was offset almost entirely by productivity gains in the country and the depreciation of 11 percent of the peso against the dollar. The index said Mexico also benefits from the "shale gas revolution" in the United States, as the costs of this industrial input for Mexican factories have fallen 37 percent since 2004. BCG also stressed that Mexico has free trade partnerships with 44 nations as well as the "strong work ethic" of the Mexicans, who work an average of nine hours a day, more than any other worker in the countries of the Organization for Economic Cooperation and Development (OECD). The report further stated that the "ambitious reform agenda" of the current government would boost Mexico's competitiveness, which "could strengthen the position of Mexico as a global manufacturing raising star". BCG settled another rising star that is the United States, while Brazil, China and Russia are losing ground by decreased levels of competitiveness, and India, meanwhile, maintains the same relative attractiveness had a decade to produce goods. The original study published by BCG on 19 August, 2014 is available from: https://www.bcgperspectives.com/content/articles/lean_manufacturing_globalization_shifting_economics_global_manufacturing/ ↑Return to Index


https://www.bcgperspectives.com/content/articles/lean_manufacturing_globalization_shifting_economics_global_manufacturing/

https://www.bcgperspectives.com/content/articles/lean_manufacturing_globalization_shifting_economics_global_manufacturing/


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JP Morgan sees Peru’s 2015 economic growth at above 5.5%

Peru's economy is set to go back to growth levels above 5.5 percent by 2015 fuelled by the ramping up of the largest mining projects, accelerating investment and strong consumption, Investment financial bank JPMorgan Chase (JPM) has reported. "There are high expectations regarding the positive impact of the ramp-up of Toromocho's production, which coupled with an acceleration in investment (both public and private)," JPM’s Latin America Equity Research said in a report which was put out Monday. The United States-based New York-headquartered bank continued, "This is consistent with improving levels of business confidence, and a still strong consumption should boost the Peruvian Gross Domestic Product's (GDP) growth next year". The research firm stressed the above forecast have led to leading investors from around the region to have an overall positive view regarding the performance of Peru's economy by the end of the current fiscal year. In this regard, JPM noted its senior economist analysts have found a high level of confidence from the Peruvian companies, authorities and private economists, regarding the significant pick-up in activity that should be seen next year. From 10th through 11th September, Peru was on the spotlight of more than sixty-five top investors from countries across Latin American and the Caribbean during the third edition of the Southern Cone & Andean Conference which took place in the nation’s capital Lima. At the two-day conference, Peruvian policy makers, economists and portfolio managers from the region delivered keynote speeches on the current trend of a broad range of sectors including capital goods, retail, financial services, TMT and transportation. Over 300 one-on-one meetings between firms from Chile, Colombia and Peru were carried out at this year’s meeting which as usual is organized by JPM with the aim of raising awareness of the region’s growing equity market. ↑Return to Index

For the diary In 2014, the ALABC celebrates the 25

th anniversary of its founding, a significant milestone that the Council plans to mark through

with an increased number of events and a Gala Dinner in Sydney in November. If you would like to know more about how your company can take advantage of the events that the ALABC will be hosting in 2014, please contact our Marketing and Events Manager, Steph Patrick at [email protected] or Tel: 02 9431 8651 Date: October 7, 2014 Event: ALABC Brisbane Annual Dinner Venue: Customs House, Brisbane Organiser: ALABC

Contact: Steph Patrick, [email protected] Date: November 18, 2014 Event: ALABC 25

th Anniversary Gala Dinner

Venue: Sheraton on the Park Hotel, Sydney Organiser: ALABC Contact: Steph Patrick, [email protected] Date: December 11-12, 2014 Event: Economic Leadership Forum "Australia-Chile: Asia Pacific Platforms" Venue: Santiago, Chile Organiser: Australian Embassy in Santiago and AUSCHAM

Contact: www.asiapacificplatforms.com Please visit our website www.alabc.com.au for regular updates. ↑Return to Index





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