Argentina: Investing

FDI in Figures

FDI influx into Argentina halved in 2009 as an effect of the global economic recession. In 2010 they rose again by 58% and should continue their recovery. Argentina ranks 4th amongst the South American countries that attract the most FDI flow (after Colombia, Brazil and Chile). The three main investors in Argentina are the United States, Spain and France. Argentina's poor ranking in this classification is due the disastrous image conveyed by the country during the economic crisis which affected its economy between the end of 90s and the beginning of 2000. Nevertheless, Argentina has clear strenghts: its natural resources are considerable (copper, gas and oil) and its workforce is highly-skilled and competitive.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	9,726	4,017	6,337
FDI Stock (million USD)	77,066	79,871	86,685
Performance Index*, Ranking on 141 Economies	87	91	-
Potential Index**, Ranking on 141 Economies	60	-	-
Number of Greenfield Investments***	120	111	-
FDI Inwards (in % of GFCF****)	12.7	1.2	-
FDI Stock (in % of GDP)	23.3	26.2	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2010, in %
Spain	26.3
USA	16.8
Netherlands	8.3
Chili	6.2
Brazil	6.1
Germany	3.3
Switzerland	3.3

Main Invested Sectors	2010, in %
Oil sector	20.6
Chemical and plastic industry	9.6
Car industry	6.4
Communication	6.4
Mining sector	5.6
Metallurgy	5.5
Food industry	5.5
Finance	4.8
Trade	4.6

Source: Central Bank of Argentina - Last Available Data.

Form of Company Preferred By Foreign Investors: Public limited company - SA
Form of Establishment Preferred By Foreign Investors: Subsidiary
Main Foreign Companies: Many foreign companies, mostly european and american, have invested in Argentina. We can quote Peugeot, General Motors, Telefonica, Wal-Mart, Sony. . .
Sources of Statistics: INDEC, national statistics center

Why You Should Choose to Invest in Argentina

Strong Points: A wealth of raw materials, good level of education, a human development indicator noticeably above the Latin American average, and strong growth for several years now.
Weak Points: The banking sector is fragile and under-capitalized; investments in energy are insufficient and inflation is high.
Government Measures to Motivate or Restrict FDI: The government has established various measures to encourage foreign investment in the form of incentives to invest in capital goods and infrastructures, financing programs, capacity promotion (employment and quality amongst others), encouraging innovation and technological development, geographic incentives and sectorial investments.
For further information, consult the ProsperAr website.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Argentina: Argentina has signed bilateral agreements on investments with 60 countries.
To see the list of countries, click here.
To see the conventions, click here.
International Controversies Registered By UNCTAD: Dispute between Argentina and Uruguay over the installation of two pulp mills on the bank of the Uruguay River.
Dispute between Suez company and the city of Buenos Aires over the distribution and the treatment of drinking water.
Organizations Offering Their Assistance in Case of Disagreement: ICCWBO , International Chamber of Commerce
CAC , Argentine Chamber of Commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Yes, since 1992.

Country Comparison For the Protection of Investors

	Argentina	Latin America & Caribbean	United States	Germany
Index of Transaction Transparency*	6.0	4.1	7.0	5.0
Index of Manager’s Responsibility**	2.0	5.3	9.0	5.0
Index of Shareholders’ Power***	6.0	6.0	9.0	5.0
Index of Investor Protection****	4.7	5.1	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes
Acquisition of Holdings: All sectors of the economy are open to foreign investors, on an equal footing with national investors.
The investment regime is a liberal regime. Foreign investment is not subject to any authorization or declaration, whatever the amount or the activity envisaged, and even if this means taking a majority share in the capital of a local company.
Obligation to Declare: In principle, no declaration.
Requests For Specific Authorizations: There is no declaration, in principle, except for large projects which require the agreement of the competent ministry. For example: the TGV (high speed train) with the Ministry of Infrastructure.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are several possible temporary solutions: domiciliation of the company at the private address of the director, and domiciliation in a business center.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes
It is possible to buy freehold, to build industrial and commercial premises or to buy through a real estate company.
Risk of Expropriation: Foreign investors are entitled to compensation if they are victims of expropriation.

Investment Aid

Forms of Aid: The industrial promotion program is determined by Decree n° 2054/92, in force since 1 February 1992. It is the Under-Secretary for Investment's office, a division of the Secretariat for Commerce and Investment, which is in charge of deciding which sectors and regions to promote and the advantages foreign investors may lay claim to. The mechanism of aid to investment has been revised.
In principle, aid no longer takes the form of tax exemptions or reductions, but tax credits, covering the theoretical fiscal cost of the project, which is calculated according to the level of development of the area of activity being encouraged.
Other forms of aid to investment have been developed: tax exemptions, special import regimes, accelerated depreciation for machines, equipment and infrastructure work.
Privileged Domains: Public infrastructures, biofuels, hydrocarbons, software industry, mining sector, export of IT services, etc.
Privileged Geographical Zones: Province of San Luis, Ushuaïa, Catamarca, La Rioja, San Juan, Tierra del Fuego, the Antarctic and the islands of the South Atlantic.
Free Zones: Map of all the free zones
Organizations Which Finance: Bank of investment and foreign trade (BICE)
Federal Investment Council (CFI)
Integral Regional Development Fund (FONDER)
Argentine Technological Fund (FONTAR)

Investment Opportunities

The Key Sectors of the National Economy: Automobile, agrifood, raw materials.
High Potential Sectors: Automobile, agrifood, raw materials, call centers.
Privatization Programs: The water sector in some towns.
Tenders, Projects and Public Procurement: Globaltenders, Tenders & Projects from Argentina
Tenders Info, Tenders in Argentina
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: Steel, concrete (hidden monopolies). For example, for concrete, two families have divided the country in two. There is no direct monopoly but it is impossible to break into the market. For steel, there is one producer who provides a living for his competitors. When a customer is no longer of interest to him, he leaves him to the others.
There are no longer any public monopolies.
Sectors in Decline: Textile

Finding Assistance For Further Information

Investment Aid Agency: Prosperar Foundation
Fundacion Invertir Argentina
Other Useful Resources: Centro de Economia Internacional
Doing Business Guides: http://www.lexmundi.com/lexmundi/Guides_To_Doing_Business.asp
">The Lexmundi guide «Doing Business» on Argentina
Argentina Commercial Guide 2010 - Buy USA
http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/taxation-and-investment-guides/index.htm
">The Deloitte "International Tax and Business Guide" on Argentina

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