Post on 03-Jul-2020
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Agri-Business in Argentina: A Strategic Investment Destination
to Meet the Demand of Global Markets
Agri-Business in Argentina: A Strategic Investment Destination
to Meet the Demand of Global Markets
Argentine EmbassyInvestmentsMinistry of Foreign Affairs and International Trade
London, December 14th 2011
Abundant and diverse natural resourcesSize, abundance and variety to enjoy and develop
8th largest country in the world, 2nd in Latin
America
9th largest agricultural area in the world
32 million Ha of forests
4,500 km of mining resources
4,700 km along the Atlantic Coast with rich
fisheries
3rd largest fresh water reservoir in the world, the
Guaraní Aquifer (shared with Brazil, Paraguay and
Uruguay)
Source: ProsperAr based on United Nations Food and Agriculture Organization (FAO), CIA World Factbook, and other sources
✓Vast oil and gas resources with exploration opportunities
✓Hydraulic energy generates 38% of the total electricity
✓Growing wind and solar energy production
✓Three nuclear power generation plants
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Modern infrastructure and quality connectivityModern infrastructure connecting Argentina within and beyond its borders
Source: ProsperAr based on CIA world fact book and Ministry of Federal Planning, Public Investment and Services
Well‐developed transport and infrastructure system: more than 38,700 kilometers of national roads; one of the longest rail road networks in the world (35,753 kilometers); 43 authorized ports; and 53 airports.
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Ranked second in the Logistics Performance Index in the region (World Bank, 2010).
Fixed‐line and mobile density among the highest in Latin America (World Bank).
Ranked 16th worldwide in terms of internet hosts with 6 million hosts in 2010 (CIA Factbook).
Buenos Aires: WiFi capital with the highest wireless density per inhabitant in Latin America, surpassing Sao Paulo, Mexico City and Santiago (2009)
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Highly skilled, innovative and talented human resourcesA labor force with outstanding capabilities
Source: ProsperAr based on World Bank, MINCYT and other sources
Internationally renowned for the quality, creativity and versatility of its human resources.
Highest ratio of researchers to the economically active population in Latin America.
English level among the highest in the developing world.
Ranked 7th worldwide in quantity of Think Tanks.
Highest level of patents registered at the U.S. Patent Trademark Office in the region (measured as total number per million inhabitants for a 40‐year period).
Almost 95,000 graduates from higher education programs and more than 7,600 postgraduate students from 107 universities across the country enter the labor market each year.
Country 1990‐2005
United States 4,605
Spain 2,195
Argentina 720
Chile 444
Brazil 344
Mexico 268
Colombia 109
Researchers (per million inhabitants)
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Remarkable quality of lifeExcellent living standards
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Buenos Aires, together with Berlin and Montreal, was appointed as City of Design under the UNESCO Global Alliance's Creative Cities Network
The country offers world‐class health services at the most competitive costs and caters for international education with bilingual schools and universities responding to numerous cultures.
Ranked forth among developing countries in the Quality of life Index (International Living, 2010)
Argentina is ranked in the High Development category o the Human Development Report and is ranked 2nd in Latin America (UNDP 2009)
Buenos Aires was nominated as the best city to live in Latin America (The Economist 2009)
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The opportunityGlobal trends are well aligned with Argentina's comparative and competitive advantages, making the country a strategic investment location in the new global scenario
Global trends‐Population growth
‐Food & energy demand expansion
‐Climate change
‐Manufacturing and services outsourcing
‐R&D in emerging markets
Argentina's comparative & competitive advantages
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Diversified economy to meet global market needsArgentina presents profitable investment opportunities in a variety of strategic sectors for the world economy
AgroIndustry
Value added and design manufactures
Renewable Energies
Professional services, software and IT
Automotive and Auto parts
Agricultural machinery
Forest Industry Tourism
Biotechnology
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Food and BeveragesLeading producer and exporter of commodities and value added foods
Source: SUINV based on FAO and INDEC
Argentina’s share in global exports and global position (2008)
64.7%
44.9%
27.7%
24.0%
22.9%
19.4%
17.8%
17.3%14.9%
Lemon juice concentrate
Soybean oil
Safflower oil
Sunflower oil
Grape juice
Pears
Lemons and limes
Honey
Soy seeds
1st
1st
3rd
2nd
2nd
2nd
2nd
1st
3rd
Rising manufactured exports of agricultural origin (in billions of US$)
10 12 13 1519
24 21 23
2003 2004 2005 2006 2007 2008 2009 2010
Resources and leadership Industrial and innovation capacity
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Agro-Industry:Diversity of investment opportunities
Consolidated segments:
Vegetable oils (sunflower, soybean, olive, etc.)
Cereals and milled cereal products
Meat: cattle, pork, goat and poultry
Fish and shellfish
Fruits (+ berries) and vegetables
Dairy products (with added value)
Spices
Wines
High potential segments:
Gourmet Foodstuffs
Healthy Foodstuffs
Organic Foodstuffs
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Paper, Carboard, boxes33%
Charcoal6%
Others13% Cel lulose Pulp
27%
Paper and Printing15%
Medium Dens i ty Fibreboard (MDF)
6%
Agroindustry: Forest IndustryNatural conditions and availability of genetics
Source: SUINV based on FAO and Ministry of Agriculture
Temperate climates and good water availability
1.2 million hectares of mature planted forests
Potential to increase the cultivated area and to process natural resources
2020 Industrial Plan: an annual rise of the 9% in the forest industry and a trade surplus of more than US$ 540 million is predicted by 2020
Law 25,080 (Investments in Forestry)Tax Benefits (Tax exemptions, Tax
stability for 30 years, Early refund of VAT, Accelerated depreciation in income Tax, among others)
Non-refundable contribution
Top Argentina’s forestry exportsTotal exports US$ 514 million (2009)
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Agroindustry: Forest industryA wide range of investment opportunities
Design and technology opportunities
Furniture industry: this sector generates high value added and jobs
Construction with industrialized solid wood
Increasing interest in Europe and Scandinavia for this type of building system.
Possible linkage with the machinery and the equipment industry
Investment in roundwood crushing industry
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Agroindustry: Wine IndustryUnique Terroir, exceptional cost-quality ratio and attractive investment opportunities
0
100
200
300
400
500
600
700
800
2002 2003 2004 2005 2006 2007 2008 2009 2010
Millione
s de
US$
Wine Exports (In millions of US$)
5th Global Producer
8th Domestic Market
9th Global Exporter
Source: National Institute of Grape Industry (INV) and International vine and wine (OIV)
Annual average growth: 24%
Argentina is one of the fastest growing exporters in the world
Mill
ions
of U
$S
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Agroindustry: Wine ProductionDiversity of investment opportunities
Potential Segments:Sophisticated varietals (with high
consistence and quality)Supplies for production (agricultural
machinery, traceability techniques, bottles, corks and capsules)
Grape juice concentrateWine tourism
Source: SUINV based on the Strategic Content of the Argentine Wine Indus
Opportunities:Great ability to adapt to the
demand requirements in developed countries
Emergence of new markets with increasing purchasing power (China, Brazil)
increasing tastes tastes of the domestic demand
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Renewable EnergyDiversity of investment opportunities
Biofuels:Biodiesel: global leaderBioethanol: growing productionSecond generation Biofuels
Wind EnergySix new wind farm are being built
Hydroelectric:Specially in small hydroelectric
developments (up to 30 MW)
Geothermal:There are four areas in Argentina with
great potential for productionBiomass y biogas:
Obtained from agriculture and forestry, animal droppings and urban solid wasteSolar Energy
High Potential for the installation of photo-voltaic panels in 11 provinces
Source: SUINV based on OCDE-FAO Agricultural Outlook
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9.920
2.405
2.178
953
886
640
258
315
European Union
Brazil
Argentina
United States
Malaysia
Australia
Canada
India
Renewable EnergiesOutstanding performance and expansion opportunities
Public Support Biofuel Law (2006) and Biothanol
Law(2008)
Mandatory blends: E5 (5% of ethanol) and B7 (7% of biodiesel)
The Secretary of Energy establishes biofuel prices based on international prices
Under Law 26,190 renewable sources are to account for 8% of the electric energy consumed in 2016(GENREN)
Biodiesel production during 2010(In millions of liters)
Source: SUINV based on OCDE-FAO Agricultural Outlook
3rd
9,920
2,178
2,405
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BiotechnologyWorld-class scientists, diversity and specialization
Regional Leader
120 firms, including successful
multinational firms and leading local firms.
More than 3,000 jobs
Annual exports: over US$ 260 million per
year
3rd largest world producer of
biotechnological crops (GMOs)
Long tradition in biomedicine
The largest biotechnological Pole in Latin
America is located in Rosario (Santa Fe)
Multi-species cloning
Competitive advantages in various segments such as agricultural, food as well as human and animal health.
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BiotechnologyDiversity of investment opportunities
Applications in Agricultural Production
Micropropagation of crops, biotechnological seeds and inoculants
Applications in Food ProductionBioengineering (production and improvement of enzymes)
Applications to Animal ReproductionTransgenic and multi-species cloning
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Agricultural MachineryInvestment opportunities
Innovative Agricultural machinery industry
Argentina is leader in NO TILL FARMING
A growing production of high-tech precision agro- Know-how to produce innovative components equipment
Over 600 plants
Innovative cluster with a long-standing tradition Agro Machinery 40,000 employees (80% skilled labor)
US$850 million production in 2007
.
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Foundations for success:
This opportunity is supported by different factors and outstanding
capabilities
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10.7%
8.1%
3.8%
0.9%1.6%
7.4%
3.5%
1.8% 1.8%
3.0%
10.3% 10.1%9.2%
5.2%
7.5%
5.4%
3.8%
7.8%
9.5%
1.5% 1.6%
8.0%
3.8%
6.5%
4.6%
9.0%
7.5%
4.7%
3.6% 3.6%
1.8%
1.1%
China India Argentina Chile Brasil México Estados Unidos UE
Prom. (2003‐2009) 2010 2011 (p) 2012 (p)
Selected economies: GDP growth rates (2003-2012)
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Argentina: sustainable growthThe country has been showing a strong economic performance. The IMF projections for 2011 and 2012 and confirm this trend
Source: SUINV based on IMF
World GDP Growth
4.0% (2011P)
4.0% (2012P)
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An economy integrated with the region and the worldLeading multinational companies operate in Argentina, most of them with a long‐term vision and commitment
Examples of multinationals with a presence in Argentina
Nearly 2,000 multinationals Total FDI stock of US$ 80 billionRanked 15th among emerging
countries in FDI stock (2009)Foreign affiliates account for:
- + than 405,000 jobs (2007)- + than US$ 121 billion in sales (2007)- 330 of the 500 largest non-financial companies in Argentina
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CLISA
Examples of local multinationals
A growing global playerLeading Argentine companies operate internationally
Stock of Argentine FDI abroad: US$ 28 billion
Top 19 Argentine multinationals have: - USD 19 billion in foreign assets- 42,400 in employees abroad- U$S 21 billion in foreign sales- 315 foreign affiliates in 42 countries- Presence in a diversity of sectors
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UK companies investing in ArgentinaSeveral companies have reaffirmed there investment commitment in Argentina as reflected by some of the recent announcements in the country
Top investors by number of Greenfield projects announced
(2003-2010)
Source: FDI Markets, Financial Times
Other recent investment announcements (2007-2010)
NB Developer
International Port Holdings (IPH)
Source: ProsperAr, Investment Observatory
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Strong regional linksThere are increasing business opportunities with Brazil, Argentina's main trading partner, to complement each other and to specialize in specific manufactured goods
•As a member of MERCOSUR, Argentina has tariff free market access of more than 240 million consumers and a combined GDP of US$ 2,9 trillion (PPP 2010)
•Remarkable industrial complementarities with Brazil and further opportunities for specialization
Source: SUINV based on IMF and World Bank
MERCOSUR: Common market
Members: Argentina, Brazil, Uruguay, ParaguayAssociates: Bolivia, Chile, Colombia, Ecuador, Peru, Venezuela
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Horizontal incentives
Investment Promotion Law (No. 26,360): early VAT return and/or accelerated depreciation allowances for investment on capital goods and infrastructure.
0% tariff on imports of capital goods.
0% tariff on imports of goods which are part of a large investment project.
For every new job created, 50% reduction on employers’ contributions during the first year of employment and a 25% reduction in the second year.
Others: FONTAR, FONSOFT, SEPyME programs, incentives to foster employment and exports (for further details please see “Investment Incentives”published by ProsperAr).
Public sector incentivesIncentives across sectors to boost investment
Sector incentives
Specific benefits and incentives for diverse sectors: automotive and autoparts, software, biofuels, biotechnology, mining, forestry, public infrastructure and hydrocarbons.
Exemptions from provincial taxes for a determined period of time.
Gross income
Stamp taxes
Property tax
Financial support for infrastructure investments and purchase of relevant equipment.
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Public sector supportive of investorsWelcoming investors: protection and equal rights for foreign investors
The Argentine Constitution guarantees equal treatment and rights for local and foreign investors.
The Foreign Investments Act (No. 21382) defines the legal framework for foreign investments.
Foreign investors may:
Remit abroad liquid profits arising as a return on their investment as well as repatriate their investment.
Make use of the legal forms of incorporation foreseen by Argentine legislation.
Access all sectors of economic activity as there are no activities reserved exclusively for local enterprises.
Make use of domestic credits and loans with the same rights and under the same conditions as domestic companies of domestic capital.
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Open to FDI According to the OECD, Argentina is the least restrictive country in the region when it comes to FDI
FDI Restrictiveness Index by country 2010
Source: ProsperAr based on OECD
Four types of measures are covered by the FDI Restrictiveness Index: (i) foreign equity restrictions (ii) screening and prior approval requirements (iii) rules for key personnel(iv) other restrictions on the operation of foreign enterprises.
The highest score for any measure is 1 (the measure fully restricts foreign investment ) and the lowest is 0 (there are no regulatory impediments to FDI).
Closed = 1 Open = 0
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To learn more about how investing in Argentina can benefit you, please contact :
Cristián H. Miguens
investments@argentine-embassy-uk.org
www.argentine-embassy-uk.org
www.prosperar.gov.ar+ 44 020 7318 1300
Thank You
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