1

Why Argentina?April 2017

2

Argentina has strong fundamentals and solid prospects for sustainable growth

VAST AVAILABILITY OF

NATURAL RESOURCES

• 8th largest country in the world (2.8 Mn km2), with 53% of agricultural land

• 1st exporter of soybean oil, 2nd producer of lemons, 3rd exporter of corn

• Large oil & gas (2nd largest shale gas reservoir), renewable energy (solar and wind), abundant water and mineral resources

NATIONAL INFRASTRUCTURE

IMPROVEMENT

• Nationwide road & railroad systems (+35,000 km), 43 ports & 54 airports

• Most ambitious infrastructure plan in Argentina’s history being deployed

• Over USD 100 Bn investment plan in transport, telco, water and sanitation

LARGE AND DIVERSIFIED ECONOMY

• 3rd largest economy in LatAm, GDP 2016 of USD 545 Bn

• 2nd highest GDP per capita in PPP terms in the region, USD 22,500

• ~43 Mn pop (~60% under 35); access to 300 Mn pop in Mercosur

HIGH QUALITY HUMAN CAPITAL

• Educated middle class and qualified labor force

• #1 in Latin America’s Human Development and Education indexes

• 98% literacy rate, ~110,000 higher education graduates per year

3

Brazil

3.4%

Peru Colombia

3.9%

5.0%

Chile

2.4%1.9%

Mexico Argentina

8.4%74.9

9.412.5

27.4

Brazil

12.4

1.9

Argentina

9.7

Chile

19.7

3.4

Mexico Peru

8.27.11.5

Colombia

Argentina has potential to capture USD 25 Bn/year+ in Foreign Direct Investment

Argentina has lagged behind its peers in capturing the strong FDI inflow growth in Latin America

Now we have the opportunity to reach the level of FDI correspondent to the size of our economy

Foreign Direct Investment (Avg. USD Bn/Year)

Source: World Bank, IMF

6.0x

2.9x5.8x 6.6x 5.4x

’08 - ’15 FDI/GDP(%, average)

’08-’15’90-’00

Average4.5%

Argentina’s share of regional FDI flows fell from 16% to 4% between the 90s and the last 7 years

To reach the regional average, Argentina needs to capture USD 25 Bn a year in FDI flows

1.4x

4

President Macri’s new administration has a clear plan to unveil Argentina’s full potential

2016 Key reforms and initiatives

Removed capital controls and repatriation restrictions Floated exchange rate and recovered monetary reserves Resolved defaulted debt and regained access to financial markets Removed export taxes and import restrictions Introduced Central Bank independence Instituted inflation targeting policy to reach single–digit CPI by 2018 Established 4–year plan to eliminate the primary fiscal deficit New Public–Private Partnerships (PPP) regulatory framework Re–launched the National Statistics Bureau (INDEC) Created the Argentina Investment & Trade Promotion Agency Implemented an unprecedented tax amnesty scheme Government e-platform for tenders and public accounts

Source: World Economic Forum (2015), press releases* JPMorgan, Embi+ 0/30/15 = 591, Embi+ 09/30/16 = 439. **Includes the Federal Government, Buenos Aires Province and corporations

• Country risk declined more than 100bp in 12 months*• Recent public and corporate debt issuances have been oversubscribed by 4-7x**

2017 -2019 National Productivity Plan

COST OF CAPITAL LABOR COSTS

ENERGY & INFRASTRUCTURE

INNOVATION & TECHNOLOGY

EASE OF DOING BUSINESS

INSERTION TO THE WORLD

OPEN COMPETITIONTAX & FISCAL EFFICIENCY

5

The time to invest is now as macro indicators are showing improvement with the reforms

Argentine GDP growth is projected to rebound

-2,0%

3,0%

2,5%

3,5%

2013

2015

2021

2018

2017

2016

-2,5%

-3,0%20

19

2020

2014

0,0%

2,4

2,7 2,8

3,3

2,92,8

-1,8

2,3

-2,6

Projected

YoY GDP Growth (constant 2004 prices)

Inflation decreasing to its one-digit target

YoY Consumer Price Change

2016.00000000

023

2017.00000000

023

2018.00000000

023

2019.00000000

023

2020.00000000

023

2021.00000000

023

4.8%4.1%

3.1%2.2%

1.5%0.9%

Strong plan in place to reduce the primary fiscal deficit

USD 51.495

Reserves back to level to pre FX restrictions policiesUSD bn

0

10,000

20,000

30,000

40,000

50,000

60,000

2013 2015 2016

20192017 20202016 20212018

5%7%

39%

17%

5%

2018

17%21%

8%

2017

12%12%

2016 2020 20212019

12%

IMF forecast

Central Bank LowCentral Bank High

6

The government is implementing agreements to increase productivity in key sectors

Government Private companies Unions

Vaca Muerta• National government guarantees

minimum price for gas• Neuquen province not to increase

taxes and will build infrastructure required for gas exploitation

• Invest minimum of USD 5 Bn in 1st year and USD 15 Bn in following ones

• Productivity improvements (adjustemnts in workers per well, working hours, night shifts, etc.)

Automotive Industry

• Implement new Autoparts Law• Search new markets abroad• Follow-up agreements with Brazil

• Invest USD 5 Bn in next 2 years and increase 40% use of local autoparts

• Reduce absenteism by 3% • Propose improvements in

employee training

Textile & Leather Industries

• Special treatment for industry workers through Repro Express program

• Promote new law to increase formal employment

• Banks: new installment paymet plan for consumers - 3 & 6 month zero interest payments for national products (financing ~400 Mn worth of monthly sales)

• Participation in round tables to work toward approval of new law

Construction• New developer loans at 17% fixed

rate for up to 60 months• State sponsored mortgage credits

and subsidies for first time buyers doubled to USD ~4 Bn

• Municipal and sales tax reduction• Revision of lease law

• New 100k residential units for households with income inferior to 8 times minimum wage with price reduction of ~10% (investment of USD ~10 Bn)

• Improve presenteeism ratios and labor productivity

• Create new training programs

7

• Oil & Gas: $25 Bn+ ($20 Bn+ per year)

• Mining: $30 Bn+• Renewable energy: $15 Bn• Hydro power: $10 Bn• Power grid: $5 Bn• Thermal power: $5 Bn • Nuclear power: $3 Bn

$90 Bn+

ENERGY & MINING

• Roads & highways: $55 Bn• Water & sanitation: $22 Bn• Education & health: $20 Bn• Urban mobility: $21 Bn• Freight rail: $16 Bn• Real estate: $5 Bn• Telco networks: $5 Bn• Airports & ports: $3 Bn

$145 Bn+

INFRASTRUCTURE

• Animal protein (beef, pork, poultry): $10 Bn• Irrigation: $8 Bn• Forestry/Pulp: $2.5 Bn• Aquaculture: $1 Bn• Food industrialization:

$0.5 Bn

$20 Bn+

AGRIBUSINESS

• Automotive industry

• Food & Beverage

• Consumer products

• Machinery & Equipment

• Basic materials

$5 Bn+

MANUFACTURE/ INDUSTRIAL

GOODS

• Tourism

• Professional services

• Biotechnology

• Pharma

• Software development

$5 Bn+

VALUE ADDED SERVICES

Argentina offers diverse attractive investment opportunities of more than USD 260 Bn

Note: All values are in USD

8

The Agency was created to accelerate the process of reinserting Argentina into the world

Contribute to the creation of quality jobs and sustainable economic development by reinserting Argentina into the world, through investment and tradeM

issio

nAm

bitio

n Investments• Promote investment opportunities of USD 260 Bn• Achieve USD ~25 Bn of FDI per year (4,5%/GDP)

International Trade• Transform SMEs into exporting SMEs• Recover export capacity (from current ~9k to ~15k

companies)

• Become a strategic partner and single point of contact for companies with an interest in investing in Argentina• Unlock SMEs and regional economies potential to enter strategic international markets• Facilitate investment and trade processes and improve business climate• Promote the highest ethical and professional standards, making Argentina a better and more transparent place to

conduct business

Stra

tegi

c go

als

Area

s of

invo

lvem

ent Investments

Provide services to investors along the investment process

International Trade Business Climate Strategic Planning

Support SMEs to transform them into

exporters

Generate favorable business conditions

Define the “North” to insert Argentina into the

world

9

8.1

1.34.2

6.6

7.2

7.4

9.5

58.6

Investments announced*

0.32.33.13.4

Investments assisted by the Agency**

41.3

1.34.8

9.0

3.5

Transport & InfrastructureHealth & Profesional Services

AgroindustryRenewable Energy

Consumer Goods & Retail

Power Generation

Telcos, Media & Tech

Financial Services & Real Estate

Industrial Goods

Mining

Oil & Gas

2.64.0

2.31.7

6.3

5.4

5.5

29

40

21

42

54

56

39

11

30

10

18

1734

49

423

271

5319

393

53

13

2

57

Under the current administration, there have been private investment announcements in the media for USD 59 Bn, and the Agency is assisting projects for USD 41 Bn

* From 12/11/15 to 03/31/2017. Includes only projects with a declared monetary amount.** Includes projects already announced and yet not announced but managed by the Agency.

USD billion# Projects

# Projects

10

welcome@invest.org.arPhone: +54 11 5239 4490

www.investandtrade.org.arInvestTradeARG

11

APPENDIX

12

Low private and public leverage increase potential for investment and growth

Chile

40%

Japa

n UK67

%65

%

121%

Fran

ce

54%

Chin

a12

5%In

dia

86%

USA

45%

Russ

ia

Germ

any

30%

Colo

mbi

a Pe

ru19

%Ar

genti

na29

%

38%

Braz

il86

%

24%

Chile

18%

UK89

%

Indi

a

Russ

ia43

%

71%

249%

105%

69%

USA

Chin

a

Fran

ce96

%

Japa

n

Colo

mbi

a 51

%

Braz

il

Peru

16%

Arge

ntina

52%

70

%M

exic

o54

%

Germ

any

USA

9%

74% 81

%

Chile

Japa

n10

1%

36%

Braz

il

53%

21%

Colo

mbi

a

Germ

any

Fran

ce UK

55%

Indi

a

7%Ar

genti

na

7%M

exic

o

15%

Source: McKinsey Global Institute, BCRA, IMF

Household Debt - 2014(% of GDP)

Corporate Debt - 2014(% of GDP)

Sovereign Debt - 2015(% of GDP)

Argentine households have significant room to borrow and increase spending

Argentine corporations have the lowest debt to GDP ratio in the world,

increasing opportunity for leverage

The government has ample room to borrow from capital markets to fund

infrastructure projects

Latin America

Emerging Markets

Developed World

13

There are a number of public tenders planned in the short term across sectors

Transportation

H1

2017

Nationwide road concessions

Stage 2 Regional Express Railway

San Martín Cargas railway

Passenger rail rolling stock

Buenos Aires Subway construction & renovation

Port of Buenos Aires concessionH2 2

017

and

2018

Federal Infrastructure Energy Real Estate & Tourism

Three waste-to-energy electricity plants in greater

Buenos Aires area

Note: All tender dates are tentative and approximate; includes only selection of opportunities.

Nationwide irrigation systems

Health related public works

Education related public works

“Portezuelo del Viento” multipurpose dam

“Potrero del Clavillo” multipurpose dam

Various real estate projects in Provinces (e.g. North Port Rosario, Mendoza Station)

Housing public works

Cafayate tourism project

Renewable energy (solar, wind, hydro, biomass)

Seismic evaluation for offshore O&G

First HV Transmission Grid Tender

Thermal Tender 3GW (high efficiency facilities)

6-8 Vaca Muerta play tenders

Paraná- Santa Fe bridge

Chaco- Corrientes bridge

Agua Negra tunnel

Stage 3 Belgrano Cargas

Urquiza Cargas railway

Construction of aqueducts for the provision of drinking

water

Thermal Tender 2GW (open cycles closure & co-

generation)

Waste-to-energy electricity plants in Buenos Aires city

Various real estate projects in Buenos Aires City (e.g.

Catalinas II multipurpose development, Tiro Federal

innovation park, Youth Olympic Village, Colegiales

Station)

Various real estate projects in Buenos Aires City (e.g.

Huergo and Puerto Madero multipurpose building

spaces, Houssay Square)