Argentina Advantages of Investing Today

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ArgentinaAdvantages of Investing Today

• Dr. Beatriz Nofal
• President
• National Investment Development Agency
• Argentina

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Inclusive economic development entails
investment promotion and a steady increase in
productivity
President Néstor KirchnerAddress to the
Legislature3/1/2006
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(No Transcript)
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Argentina faces a unique opportunity given its
healthy macroeconomic situation and sustainable
growth coupled with a favorable international
scenario.
Substantial accumulation of reserves with
reasonable goals
Steady growth of global economy and international
trade
Four years steady growth at an average rate
around 9
Favorable trade terms based on high price of
commodities and natural resources.
Twin Surpluses fiscal and external
Extraordinary international liquidity
Growth of exports and imports with positive trade
balance
SUSTAINABLE GROWTH IN ARGENTINA
FAVORABLE INTERNATIONAL SCENARIO
Low global interest rates
Tight monetary policy
Global splitting of value chains
New global consumption patterns (product
differentiation)
Competitive and stable exchange rate
Record profitability in prime companies
Increasing demand for alternative energy sources
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Argentina grew at an average annual rate of
around 9 over the past four years, ranking among
the fastest growing economies worldwide
Developing Asia
G7 Most developed economies
Source ProsperAr based on IMF, WEO
databases. Developing Asia includes 23 countries
such as China, India, Indonesia, Philippines,
Vietnam, Bangladesh, Fiji and Pakistan, among
others.
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Growth is based on solid macroeconomic
foundations that strengthen the countrys economy
and rule out the possibility of a crisis in the
mid term.
Fiscal and Current Account Surplus (in millions
of pesos)
International Reserves (in billions of dollars)
Primary Fiscal Balance
Current Account Balance
Source ProsperAr based on Ministry of Economy
and Production.
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Argentinas income per capita measured in terms
of purchasing power parity (ppp) is the highest
in the region.
Estimated Source ProsperAr based on IMF
World Economic Outlook.
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In addition, Argentina has a solid base of
competitive structural factors and capabilities
to offer the world a differential value
proposition.
Knowledge
Culture
Nature
Skills
Diverse cultural capital and outstanding
productions in various fields Important
international figures and works of art Rich Urban
life with a wealth of cultural possibilities Inter
national destination chosen for its quality of
life and tourism
Qualified Human Resources High level of education
and training Prestigious Universities Highly
competent Research Centers Highly competitive
health indicators
Abundance of land and natural resources A wide
variety of mineral and energy resources Diversity
of regions, topography and climate Public and
private commitment to preserve nature and
sustainable development
Ability to learn, undertake endeavors and
innovations Strong industrial tradition Modern
infrastructure and technological
availability World-class agricultural and
industrial commodities ET with permanent and
strategic outlook Competitive SME center
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As a member of MERCOSUR, Argentina enjoys
preferential access (0 of import duties) to a
highly attractive market 261 millions of
consumers and joint GDP of US 1.400 billions in
2006.
MERCOSUR (1) GDP US 1.214 Billions Population
234 Millions of inhabitants
MERCOSUR partners in FTAs (3) GDP US 1.789
Billions Population 376 Millions of inhabitants
MERCOSUR Venezuela (2) GDP US 1.378
Billions Population 261 Millions of inhabitants

• MERCOSUR is a common market conformed in the
  beginning (1991) by Argentina, Brazil, Paraguay y
  Uruguay.
• Venezuela was incorporated recently as a full
  member of the integration process in MERCOSUR,
  becoming the Mercosur 5
• Bolivia, Chile, Peru, Colombia y Ecuador are
  associated members.
• Estimated 2006
• Source ProsperAr based on IMF World Economic
  Outlook.

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Intra and Extra Mercosur Exports shows a
significant dynamism. The internal exports
started recovering, surpassing in 2005 the
maximum level of 1998.
Internal and External Mercosurs Exports
increases ( )
Intra Mercosur Exports Extra Mercosur Exports
1990 2006 521,6 173,3
1990 1998 393,6 42,1
1998 2006 25,9 173,3
Source ProsperAr based on INDEC
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To accomplish the differential value proposition
and continue with the steady growth trend at high
rates, the flow of domestic and foreign
investment is a key success factor
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Investments over the past years reacted
positively to the prevailing favorable conditions
of the country and at the same time played a role
in strengthening the economy.
GDFI/GDP Ratio At current prices. Expressed as
Percentages
Source ProsperAr based on DNCN, INDEC.
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High investment/GDP ratios position Argentina
among the main economies of the region
GDFI/GDP ratio by country 1st Quarter 2006, at
current prices
Relación IBIF/PBI por país 1º Semestre 2006, a
precios corrientes
Figure corresponds to total for 2005. Source
ProsperAr based on CEP.
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Likewise, Foreign Direct Investment exhibits a
dynamic performance over the past three years.
2006 Improvement in the composition of FDIIn
2006 Argentina's FDI levels was similar to those
of 2005 (-3,9), highlighting - The share of
investment in the productive sector increased by
US 276M (6)- The main components of FDI are
the investment in production capacity expansion
of foreign companies with operations in
Argentina and the entrance of new TN companies
-The MA activity represents a very small share
of total FDI - Historical record in
reinvestment of earnings. Reinvestment in 2006 (
us 2238 M) was 4 times that of 2005 ( us 655
M).The investment of Argentina abroad increased
74 (from us 1151M to us 2008M).
Source ProsperAr based on INDEC
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However Argentina faces big challenges in terms
of investment
Challenges
Results
To increase and sustain high investment/PBI
ratios, aligned with the requirements of
sustainable growth. To improve the quality of
investments To increase our participation in
foreign and regional flows of Foreign Direct
Investment To promote further value chain
integration international companies in Argentina
To support internationalization of local
companies
The highest Gross Domestic Fixed Investment
(GDFI) as a percentage of the GDP Public
investment accompanying investment of the private
sector Investments more directed to tradeable
sectors of the economy. Recovery of Foreign
Direct Investment after 2004
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This process occurs within a favorable
political/institutional framework for investments.

• Full enforcement of civil and democratic rights.
• Argentina is a country where freedom prevails in
  every area, as confirmed by the Freedom in the
  World 2007 report.
• Democracy
• Within a framework of freedom and full
  enforcement of the rule of law, our country has
  moved consistently towards strengthening the
  democratic system following the institutional
  crisis in 2000. The new composition and structure
  of the Supreme Court of Justice of the Nation is
  a milestone in this sense that reinforces the
  independence of the Judiciary.
• Respect for Human Rights
• There is full respect for human rights. The
  Courts have reviewed cases related to crimes of
  lese humanity committed in the past convicted
  those involved and reopened new investigations
  to avoid impunity.
• Strategically Safe Country
• Old-time conflict hypotheses with neighboring
  countries have been defused following the
  regional economic integration. There are neither
  terrorist groups, drug trafficking, gangs or
  organized crime activities. There are no
  differences between religious or ethnic groups
  that could affect the security, or the
  institutional and economic activity of the
  country.
• Country of choice among multinational companies
• Argentina ranks 18th out of 25 countries of
  choice among the largest 100 multinational
  corporations, according to the UNCTAD report.
• Good quality of life
• Argentina ranks 10th on the quality of life index
  prepared by the specialized publication
  International Living.
• Preferred international tourism destination
• Argentina ranks 5th as preferred international
  tourism destination, according to the FutureBrand
  report . Buenos Aires was rated the 7th best city
  to visit (Travel Leisure 2006).

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Under this scenario, the National Investment
Development Agency (Prosperar) was created,
representing an institutional innovation key to
boost the private sector investments foreign
direct investment, domestic investment and
internationalization of local companies.
Autonomy
Stability
Transparency
Public-private coordination and collaboration
Economic-Financial Autarchy Legal
status Involvement in the field of public and
private law Ability to send correspondents to the
interior of the country and abroad
Board members hold a 4-year term of office The
presidents rank is equivalent to that of a
Secretary of State and the Directors rank to
that of Undersecretary of State
Yearly rendering of accounts Internal Audit
Department in coordination with the National
Audit Commission

• Government Model
• National Investment Council
• Chief of Cabinet
• Minister of Economy and Production
• Minister of Foreign Relations, International
  Trade and Worship
• Advisory Councils
• Private and academic sector
• International

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The institutional design of the Agency aims to
facilitate public-private coordination and
collaboration
Board of Directors President (1) Dr. Beatriz
Nofal Members (2) Mr. Daniel Falcón Ms. Luciana
Pagani

• National Council on Development Investments
• - Chief of Cabinet
• Minister of Economy and Production
• Minister of Foreign Relations, International
  Trade and Worship

Advisory Council private sector
Superior International Advisory Council
Internal Audit Department
Legal Department
Operations and Investment Services Manager Ms.
Marcela Reganzani
Investment Strategy and Environment Manager Mr.
Ricardo Rozemberg
Public Relations, Marketing and Communications
Manager Ms. Mariana Blanco
Office of the Assistant Manager of Human
Resources and Administration
A Presidents rank is equivalent to that of a
State Secretary and Members to that of
Undersecretary
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The main mission of the Agency is to contribute
to the sustainable economic growth by attracting
FDI and encouraging the growth of the domestic
business ecosystem. There are four major areas of
activity to accomplish this mission
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Basically, the agency aims to contribute so that
investment in Argentina and prosperity become
sinonymous.

• To Prosper, and that we all become more
  prosperous, is our ambition.
• To Prosper means to leverage in our achievements
  to propel a more competitive and innovative
  Argentina with a higher level of income per
  capita and social equity.
• In order to Prosper the public and private
  sectors must submit a differential value
  proposition to attract domestic and foreign
  investment, a key factor for growth.
• To Prosper, we will work for a vigorous
  investment environment, communicating Argentinas
  value proposition to the world, and contributing
  towards an active integration to investment flows
  and international trade.
• In order to Prosper, our aim is to ensure
  Prosperity both to those companies that invest in
  our and to their employees.
• In order to prosper, the National Investment
  Development Agency of Argentina, ProsperAr, was
  created.

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Your partner to invest and prosper in Argentina
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Annex
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Natural ResourcesArgentina has leveraged on the
richness and diversity of its natural resources
to develop highly competitive agribusiness
activities
Wheat Productivity Year 2005. Argentina 100
Corn Productivity Year 2005. Argentina 100
Soy Productivity Year 2005. Argentina 100
Source ProsperAr based on FAO
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Natural Resources and Agro-industry being a
leading producer and/or exporter in various
agroindustrial segments.

• The Argentine territory has almost 250,000 km2 of
  farmland.
• This large quantity of fertile land together with
  a competitive industry places Argentina as
• The N 1 world producer and exporter of Sunflower
  Oil.
• The N 1 world exporter and 3rd leading world
  producer of Soy Oil.
• The N 1 world exporter and 3rd leading world
  producer of Honey.
• The N 1 world exporter of Horse Meat.
• The N 1 world exporter of Pears.
• The 2nd leading world exporter of Peanut Oil.
• The 3rd leading world producer of Beef.
• The 3rd leading world producer of Soy Beans.
• The 3rd leading world producer and the N 1
  exporter of Lemons.
• The 5th leading world producer of Wine.

Source ProsperAr based on FAO.
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IndustryA long industrial tradition has enabled
us to reach an expansive and diverse
manufacturing ecosystem
A significant number of transnational companies
have been present in the country for decades and
progressively participated in the generation of
value added activities. A group of prime national
companies strongly internationalized and
world-class. A segment of flexible, innovative
and dynamic SMEs

• As an example, the annual production capacity of
  local industry includes
• 7 million tons of vegetable oils and over 20
  million in by-products,
• Over15 million hectoliters of wine,
• 400 thousand tons of tanned leather,
• 1.2 million tons of paper,
• 200 thousand tons of PVC and over 1.5 million
  tons of derivatives such as propylene and
  polyethylene.
• 275 thousand tons of raw aluminum,
• 5 million tons of steel and
• 4.15 million tons of seamless and non-seamless
  pipes,
• 550 thousand automobiles.

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Socioeconomic IndicatorsArgentina socioeconomic
indicators are higher than the average for the
region
Socioeconomic Indicators Argentina Brazil Chile Mexico Region Average
Human Development Index (HDI) 0.863 0.792 0.859 0.821 0.795
Life Expectancy at Birth (years) 74.6 70.8 78.1 75.3 71.7
Infant Mortality Rate (0/000) 16 32 8 23 26
Health Care Expenses (PPA in US per capita) 1067 597 707 582
Undernourished Population lt2.5 8 4 5 10
Population with sustainable access to improved water source 96 90 95 97 91
Deliveries performed by specialized staff () 99 97 100 95 87
Physicians/1000 inhabitants 301 115 109 198
Illiteracy ( over 15 years old) 2.8 11.4 4.3 9 10.8
Gross schooling rate 89 86 81 75 81
Researches in RD (for every million inhabitants 1990-2003) 720 344 444 268 306
Source UNDP. 2006 Report on Human Development.
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EducationArgentina is also characterized by its
high educational and cultural level based on the
high education standards, similar to developed
countries
Adult Literacy Rate (15 years)
School Attendance Expectations In years
Source ProsperAr based on GED 2006, UNESCO.
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Environmentwithin the context of a sustainable
environment.
Argentina ranks 9th among 146 countries in
environmental sustainability
Environmental Sustainability Index elaborated by
environmental experts from Yale and Columbia.