Inversiones En Argentina

Why invest in Argentina?

Naturally Talented To Meet

Global Market Needs

Why invest in Argentina?

Naturally Talented To Meet

Global Market Needs

Daniel Falcón, Director ProsperAr, Argentina's Investment Development Agenc ySeptember 2009Frankfurt , Germany

Argentina’s Investment Development Agency

� 8.5% annual GDP growth over the

six year period of 2003-2008

� Six years of twin fiscal and

current account surpluses

�Sustained increase in foreign

reserves

� Steady rise in savings (26.7% in

2008)

� Exports of goods and services

doubled over a six year period to hit

a historical high of US$82.1 billion in

2008

Vigorous expansion

During 2003-2008, Argentina has taken advantage of a favorable global environment to

consolidate growth and expand its production and export capacity

Selected Economies: GDP growth 2003-2008

4.2

5.7

4.0

13.0

9.3

5.75.1

7.7

3.2

8.9

5.3

8.9

10.7

8.7

5.8

4.0

1.8

6.8

4.5

7.3

9.0

China India Argentina Brazil Chile Colombia Mexico

Average 2003-2006 2007 2008

Source: ProsperAr based on IMF and INDEC


Solid foundations for sustainable growth

Declining debt levels and record-high international reserve accumulation contribute to a

more stable and predictable economy, even in the current global context

0

20

40

60

80

100

120

140

160

2002 2003 2004 2005 2006 2007 2008

Public Sector Total Debt

Public Sector External Debt

Public sector total and external debt

(as a % of GDP)

46.1

17.917.619.324.3

26.527.826.5

19.4

10.514.1

19.6

28.132.0

46.2 46.4

0

5

10

15

20

25

30

35

40

45

50

dec-

94

dec-

95

dec-

96

dec-

97

dec-

98

dec-

99

dec-

00

dec-

01

dec-

02

dec-

03

dec-

04

dec-

05

dec-

06

dec-

07

dec-

08

Aug

-09

International Reserves(in billions of US$)

Source: ProsperAr based on Argentine Central BankSource: ProsperAr based on Ministry of Economy and Finance


Rapid investment growth

Domestic and foreign investment grew rapidly over the past six years and gross fixed

capital investment reached record rates as a percentage of GDP

Gross Fixed Capital Investment as a % of GDP

(in constant and current prices)

Source: ProsperAr based on INDEC

15.1

19.2

21.523.4 24.2 23.3

14.3

17.719.8

21.622.6 23.1

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008

GFCI/GDP current prices GFCI/GDP constant prices

Source: ProsperAr based on INDEC

1,652

4,1255,265 5,537

6,473

9,753

0

2,000

4,000

6,000

8,000

10,000

12,000

2003 2004 2005 2006 2007 2008

Foreign Direct Investment

(in millions of US$ dollars)


Global crisis, global impact

The financial and economic crisis has impacted developing economies through two main

channels: financial and commercial

Financial channel:

• Global credit crunch: Lack of liquidity

and expensive financing

• Risk aversion and “flight to quality”

behavior

• Growing uncertainty leading to lower

investment levels and postponement of

investment projects

Commercial channel:

• Lower global trade flows negatively

affecting exports

• Reductions in prices, particularly

commodities

• Global FDI fell 14.2% in 2008 and

44% during the IQ2009

• Cross-border M&A sales in

developing countries fell 35.7% during

the IQ2009

• Global trade volumes are expected

to contract by12.2% in 2009

• Emerging economies are expected to

suffer a 6.5% fall in their exports

Source: ProsperAr based on UNCTAD and World Bank


Impact of the global crisis on investment

While it has not been immune, Argentina stands strong to face the current global crisis

� Economic activity began to slowdown

during the 4th quarter of 2008 and the first

quarter of 2009, but remains positive.

Source: ProsperAr based on UNCTAD

� Investment has fallen in line with other

economies worldwide as a result of the global

downturn and the postponement of

investment projects in the light of growing

uncertainty.

Gross Fixed Capital Formation

(% Change, IQ 2009)

India 6.4

S. Korea -6.2

Chile -9.3

Malaysia -10.8

Mexico -11.8

Brazil -14

Argentina -14.2

US -14.5

Singapore -14.8

Japan -14.9

Thailand -15.8

Russia -16.3

Turkey -29.7

China 28.6

-30 -20 -10 0 10 20 30


Chile-38.2%

Canada (*)-37.6%

EU (27)-31.7%

U.S.(*)-24.9%

Brazil-22.8%

China-21.7%

Argentina-21.3%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Impact of the global crisis on foreign trade

Argentina recorded a smaller decline in exports compared with the major economies of

the region and the world

*Figures from EU (27) and Canada correspond to the first five months.

Sources: ProsperAr based on INDEC, SECEX , Central Bank of Chile, National Bureau of Statistics of China, Ministry of Development, Brazil’s Secretariat of Foreign Trade,

Australian Bureau of Statistics, Centre of International Economy, and IMF

✓ The decline in exports of manufactured goods is also lower in Argentina than in the major economies

Total Exports

(% Change, I Sem. 2009/08)


Balanced external accounts

Argentina is the only country in the region expected to maintain current account

surpluses in 2009 and 2010

Source: ProsperAr based on INDEC and “Regional Economic Outlook 2009”, IMF

0

1

2

3

4

5

6

7

2003

2004

2005

2006

2007

2008

IQ 2

009

Current Account Surplus

(as a percentage of GDP)

Chile

Colombia

Ecuador

Peru

Mexico

Bolivia

BrazilSouth America

Uruguay

Paraguay

-5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0

C h ile

2010

2009

Argentina

IMF's Current Account Projections 2009-2010

(as a percentage of GDP)


0

50

100

150

200

250

300

2008

F

2008

A

2008

J

2008

A

2008

O

2008

D

2009

F

2009

A

2009

JAgriculture Metals Fuels

Sustained Global Demand

Commodity prices of Argentine exports (particularly food) have experienced a lower volatility

during the last year, as a result of the current and future structural global demand

Source: ProsperAr based on IMF

20406080

100120140160180200220

2008

F

2008

A

2008

J

2008

A

2008

O

2008

D

2009

F

2009

A

2009

J

Copper SoybeanWheat PetroleumAluminum Coal

Commodity Price Indexes (2005=100) Commodity Price Indexes (2008F=100)


Structural Changes in Global Demand

High growth and structural changes in the main markets for Argentine products facilitate

Argentina's rapid recovery and future sustainable growth

Urbanization IndustrializationChange in Eating Habits

growing demand for Argentina's production

Three-Way Process in Asia

rapid recovery + sustained growth

5.6%4.5%India

8.5%6.5%China

20102009

GDP Growth Projections

Source: ProsperAr based on IMF


Great BusinessInvesting companies in Argentina achieve record profitability levels

Source: ProsperAr based on Balance of Payments data, and Survey of Big Companies, INDEC

9.5

11.911.5

14.613.8

2003 2004 2005 2006 2007

Profits of the Top 500 companies in Argentina(as a % of sales)


Leading Companies Invest in Argentina

More than a thousand TNCs, half of the Fortune 100, operate with a long-standing tradition and long-term vision


Recent Investments

High profitability reassures big players to increase their commitment and attracts more leading companies to invest in Argentina


Human Capital

Highly talented and skilled labor force is a structural competitive advantage

✓Ranked 1st in Guggenheim research fellowships, receiving the largest number of scholarships in Latin America (2009)

✓Over 85,000 graduates from higher education programs and 6,100 postgraduates per year

✓ 106 universities throughout the country

✓Ranked 4th in the Global Entrepreneurship Monitor (2008)

✓Ranked 5th worldwide in terms of quantity of ‘Think Tanks’ and nominated as a Regional Think Tank Hub by the University of Pennsylvania (2008)

82

66

65

65

51

43

42

30

24

24

24

21

9

5

0 10 20 30 40 50 60 70 80 90

United States

Spain

Italy

Argentina

Europe & Central Asia

Chile

Uruguay

Latin America & Caribbean

World

Middle East

Brazil

East Asia & P

South of Asia

Sub-Saharan Africa

Source: ProsperAr based on World Bank, GEM 2008 and University Yearbook 2009, Ministry of Education

Gross Entry Ratio to Tertiary Education(% of new entrants)


Outstanding Performance, Today and TomorrowArgentina is the most innovative country in South America and ranks high in the

developing world

1

2

20

39

42

47

46

48

49

52

62

67

69

Japan

Switzerland

Ireland

Russia

Argentina

Chile

China

Mexico

Brazil

India

Colombia

Peru

Ecuador

Innovation Prospects Ranking 2009-2013(Innovation Performance Index: highest=1, lowest=82)

Source: ProsperAr based on Innovation Index, Economist Intelligence


High Returns on Knowledge ProducedScientists are the most prolific in terms of knowledge production

in the region (as measured by science publications)

0

4

8

13

17

21

25

Argentina Brazil Mexico Chile

0

1

2

3

4

5

6

Argentina Chile Brazil Mexico

Science Publications per 100 Full Time Reserachers (Full-time or equivalent - 2007 or last available year)

Science Publications per Million Dollar Spent in

R&D (2007 or last available year)

Source: ProsperAr based on the Argentine Center of Information on Science and Technology (CAICYT)


Investment Opportunities Across Sectors in Argentina:

An Overview

Agro-Industry

Machinery

Sector

Wine Industry

BiotechnologyHealth Industry

IT Industry Professional

and Value

Added Services

Creative

Industry


Agro IndustryLeading global producer & exporter of food commodities and products

24.5

18.2

73.3

32.0

50.2

20.5

23.3

14.7

11.6

12.0

9.9

1.3

0 10 20 30 40 50 60 70 80

Natural honey

Pears

Lemon juice, concentrated

Safflower seeds

Soybean oil

Grape juice

Sunflower oil

Lemons and limes

Soybeans

Safflower oil

Powdered whole milk

Sunflower seeds

Argentine Share in Global Exports and Global Position(export % and position)

Source: ProsperAr based on FAO data


Agro IndustryHigh agricultural efficiency and productivity

Soybean Production Yield 2007(Hectograms/Hectare)

Wheat Production Yield 2007(Hectograms/Hectare)

Source: ProsperAr based on FAO

29,71128,066

24,36923,010

Argentin

a

U.S.

Austra

lia

Canada

28,27027,046

23,220

10,562Arg

entina

U.S.

Canada

Austra

lia

hectograms hectograms


Machinery SectorAn innovative cluster with a long-standing tradition

Agro Machinery Cluster

Source: ProsperAr based on Argentine Chamber of Agricultural Machinery and Strat Consulting

More than 100

years of expertise

650 factories

40,000 employees

(80% skilled labor)

US$850 million

production in 2007

Know-how to produce innovative

equipment for new agronomic

practices like “Direct Sowing”

A growing production of

high-tech precision agro-

components

ClusterCluster


Wine IndustryUnique terroir, tradition and freedom to innovate

Source: National Vitiviniculture Institute (INV)

0

100

200

300

400

500

600

700

2001

2002

2003

2004

2005

2006

2007

2008

mil

lio

ns

of

US

$

0

50

100

150

200

250

300

350

400

450

mil

lio

ns

of

lite

rs

Millions of liters US$ millions

Wine Exports(in millions of dollars and in million of liters) 5th largest

producer in the world

7th largest domestic market

7th largest exporter in the world

Fastest growing exporter in the world (22.3% per year, 2002-2008)


Wine IndustryQuality-Value advantage positions Argentine wines globally

Traditional and High Potential Markets Growing Sophistication and Value Added

237%

44%

35%

24%

25%

Icon

Ultra

Premium

Super

Premium

Premium

Popular

Premium

Export Growth by Price Segment compound

annual growth rate (2002-2008)

Glass-Bottled Wine Exports by Country Destination

(2008)

Source: Wine of Argentina and Wine Area

United States

29.0%

Others

15.4%

Canada

10.4%

U.K.

9.3%Netherlands

7.1%

Brazil

7.7%

Latin America

5.2%

Other Europe

4.6%

Asiatic Countries

3.8%Nordic Countries

3.7%Mexico

2.5%Russia

1.2%Russia

1.2%


Health IndustryApplied knowledge

✓ The rate of clinical trials per 100,000 inhabitants is 1.45, nearly double the average (0.79) in Latin America.

✓ Competitive advantages due to solid hospital infrastructure and hi-tech equipment.

✓ Creation of the clinical trial registry in 2009: critical tool for researchers, experts, patients and donors.

✓ Focus on the more advanced phases of clinical trials.

Source: ProsperAr based on CEPAL (2008) and CAEME

34.037.2

44.949.6

65.8

91.8

2002 2003 2004 2005 2006 2007

+170%

Share of Clinical Trials by Phase (in %)

Clinical Research Investments in the

Pharmaceutical Industry (millions of US$)

Phase I

1%Phase II

18%

Phase IV

68%

Phase III

13%


BiotechnologyApplied research and first-class scientists

✓More than 35 bioscience research institutes operating in private companies and universities

✓ Highest number of biotechnology companies per capita in Latin America

✓ Leader in GMO applications accounting for 17% of world GMO crop area

✓ Integrated with industrial production (agricultural and pharmaceutical industries)

✓High-calibre scientists and researchers

Source: Biotec Sur, International Service for the Acquisition of Agri-biotech Applications (ISAAA) and Bisang, Gutman, Lavarello, Sztulwark and Diaz (2006)

Biotechnology Investment

Incentives: accelerated depreciation

of income tax and early return of VAT

for capital goods and equipment

Inoculants

8%

Seeds & Plants

41%

Animal Health

25%

Food Ingredients

15%

Human Health

11%

Biotechnology Sales(by sector)


Professional and Value Added Services High quality at competitive costs

Source: ProsperAr based on Balance of Payments data, INDEC, ATKearney Consulting and Global Services Magazine

Cultural & Entertainment(US$419 mn) IT

(US$770 mn)

Business, Professional & Technical (US$3,7oo mn)

✓ Buenos Aires as the 14th most attractive city

in the emerging world for outsourcing

activities (“Global Services” index)

✓ Argentina ranks among the top 20 most

attractive locations for outsourcing

(ATKearney’s Offshore Location

Attractiveness Index)

✓ A location with the presence of leading

companies: Globant, Atento, Teletech,

Teleperformance, Motorola, Microsft, HP,

IBM, Citibank, Repsol, CapGemini, Tata

Consulting and Nextel

Record Levels of Exports of Value

Added Professional Services =

US$4.9 billion (2008)


Professional and Value Added Services Strong advantages make Argentina a global center for skilled outsourcing

Source: ProsperAr based on Balance of Payments data, INDEC, ATKearney Consulting and Global Services Magazine

Minimal time difference with the

US and main European cities✓ High penetration and best English levels in

the region (Cambridge ESOL exams)

✓ Other languages spoken: Italian, German,

Portuguese and French

✓ Cultural similarities with European markets

✓ Competitive costs

✓World renowned creativity

(advertising and design)

✓ Native Spanish speakers reaching out to a

population of 500 million people that speak

the language worldwide

Argentina Time Zone = GMT -3 hours


Growing Software Production & Exports

(in millions of US$)

Source: ProsperAr based on Cessi and INDEC

0

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007 2008

SALES EXPORTS

+364%

+152%

✓ 1,600 software companies

(60% SMEs)

✓ Young and dynamic sector:

40% of the SMEs started operations

after 2002 and

85% after 1991

✓ In 2008 exports accounted for

28.6% of total sales

✓ 55% of all software companies

export

✓ Leading international presence:

IBM, NEC, Siemens, Google, Oracle,

SAP, Intel, Motorola and Sabre

Holdings

IT Industry Thriving growth driven by innovative local firms and leading global companies


IT IndustryTalented labor force and public support

Source: ProsperAr based on Cessi and other sources

Cordoba

Santa Fe

Mendoza

Tandil

Mar Del Plata

Buenos Aires

Gualeguaychu

Rosario

✓ Available and affordable high skilled

labor force

✓ 243 IT degrees offered locally

✓ Some 70,000 students enrolled in

university-level informatics programs

✓ Public-Private cooperation networks

✓ Software Promotion Law (2004)

✓ Diverse attractive locations

IT Industry Investment Incentives:

10-year tax stability; tax credit up to

70% of employers’ contributions;

60% reduction in income taxes.

IT Hot Spots


Creative IndustryDiverse and attractive segments

HOTSECTORS

AdvertisingAdvertising

PublishingPublishing

AudiovisualAudiovisual

DesignDesignFashionFashion

VideogamesVideogames

MusicMusic


Creative IndustryA flourishing cluster

The Gunn Report 2008

The most awarded countries in the world in 2008

TV &

CinemaPrint Interactive

Gunns

Blazing(*)Total

U.S. (1) 149 52 91 39 331

Great Britain (2) 124 39 45 4 212

Argentina (3) 99 21 2 7 129

Germany (4) 47 35 31 6 119

Japan (5) 42 1 60 14 117

Advertising

Argentina in Top 3 :

One of the three best places in

the world to look for ideas. And

one of the three best to produce

them, according to

The Gunn Report.

2005 2006 2007

Annual growth rate 19.6% 18.6% 15.0%

As a % of total GDP 2.6% 2.8% 3.0%

Export boom:

US$500 million in 2007,

double 2002 values

Cultural GDP

Source: ProsperAr based on The Gunn Report 2008. (*) Note: Gunns Blazing tallies all awards given under the various labels of Integrated, Mixed Media, Innovative,

Content and Contact, Titanium, and other advertising award catagories.

Source: ProsperAr based on SINCA.

Not only good businesses, also a place to enjoy, visit and live


See, Experience, Enjoy!Exciting and dynamic culture

✓Rich urban life with an endless array

of cultural activities

✓928 museums, 2,813 theaters and

448 cinemas

✓Buenos Aires chosen World Book

Capital 2011 by UNESCO

✓2,191 public libraries

✓A myriad of restaurants, coffee

stores and pubs

✓ The World Capital for enjoying

Soccer and Polo


Live ArgentinaRemarkable living standards

✓Buenos Aires, together with Berlin

and Montreal, appointed as City of

Design under the UNESCO Global

Alliance's Creative Cities Network

✓Buenos Aires nominated as the best

city to live in Latin America in The

Economist’s Liveability Survey (2009)

✓11th in Quality of Life Index

elaborated by the trade publication

International Living (2008)


Explore ArgentinaBreathtaking views, magnificent natural scenes

Source: ProsperAr based on UNESCO

UNESCO World Heritage Sites

✓The Glaciers

✓Jesuit Missions of the Guaraní's

✓Iguazu Falls & National Park

✓Cave Cueva de las Manos, Pinturas River

✓Peninsula Valdes

✓Ischigualasto and Talampaya

Natural Parks

✓Jesuit Block and Estancias of Cordoba

✓Quebrada de Humahuaca

✓Providing timely and relevant information on

business sectors and geographical locations in

Argentina

✓Help identify investment and innovation

opportunities in strategic sectors

✓Troubleshoot red tape and obstacles; facilitate the

whole investment process

✓Assist in building partnerships between foreign

investors and local companies

Our group of professionals can assist you by:


ProsperArProfessional assistance for your business to succeed in Argentina

Thank you!

Danke schön!

To learn more about how investing

in Argentina can benefit you,

please contact us:

www.prosperar.gov.ar

[email protected]

+ 5411-4328-9510


Argentina: Naturally Talented to Meet Global Market Needs

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