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Why invest in
Argentina?


Naturally Talented
to Meet Global
Market Needs


October 2009
Why invest in Argentina?
Argentina offers investors:

      Solid foundations for sustainable growth and profitability
   ...
Argentina at a glance
(2008)




                 Area: 2,780 km²
                 Population: 40.6 million
              ...
Solid foundations
for sustainable
growth and
profitability




                    4
Vigorous Expansion
Six consecutive years of rapid economic growth at an accumulated rate of 8.5% per year


Selected Econo...
Balanced Accounts
    Argentina maintained twin surpluses for six consecutive years and is the only
    country in the reg...
A Resilient Economy
 Lower debt levels and record-high international reserve accumulation contribute to a
 more stable and...
Dynamic Investment Process
 In 2008, the highest investment rate in constant prices in the last 30 years was achieved


Gr...
Global Crisis, Global Impact
The financial and economic crisis has impacted developing economies through two main
channels...
Impact of the Global Crisis on Foreign Direct Investment
In line with the rest of the world, FDI in Argentina contracted f...
Impact of the Global Crisis on Gross Fixed Capital Formation
Investment in Argentina also contracted for the first time in...
Impact of the Global Crisis on Foreign Trade
  Argentina recorded a smaller decline in exports compared with the major eco...
High Levels of Profitability
  Firms reached high levels of profitability in historic terms during the 2004-2008 period

 ...
Rapid Increase in FDI
FDI recorded great dynamism over the past six years and showcased in 2008, for the third
consecutive...
Greenfield Investment Destination
In 2008, Argentina was the 3rd greenfield investment destination in Latin America and 2n...
Recent Investments
High profitability reassures big players to increase their commitment and attracts more
leading compani...
Highly skilled,
innovative and
entrepreneurial
labor force




                  17
Human Capital
Highly skilled and talented labor force


Gross Entry Ratio to Tertiary Education
(% of new entrants)
      ...
Science, Talent and Creativity
A leader in the region


   Researchers
   (per million inhabitants)


                    ...
A Tradition of Research Excellence
Number one in Latin America and forth in the developing world in terms of science
relat...
High Returns on Knowledge Produced
Argentine scientists are the most prolific in terms of knowledge
production in the regi...
Outstanding Performance, Today and Tomorrow
 The most innovative country in South America


                              ...
Rising Capacities and Greater Capabilities
Remarkable labor productivity gains


Labor Productivity (Index 2003=100)


   ...
Entrepreneurship
Argentina ranks fourth on the Global Entrepreneurship Monitor (2008)



  Global Entrepreneurship Monitor...
Abundance of
natural resources,
biodiversity and
environmental
sustainability




                     25
Size, Abundance and Variety
To enjoy and develop




                                                                     ...
Diverse Energy Sources
Outstanding natural resources to fuel growth




                                                  ...
From High Peaks to Blue Lakes
Varied terrenes




                                ✓ Exuberant beauty and extraordinary
   ...
From the Warm North to the Cold South
Multiple climates



                                 ✓ The North: warm; from subtro...
Eco-Intelligent Growth
Committed to environmental sustainability


Yale Environmental Performance Index
(Position: highest...
Access to a large
regional market
and a springboard
to the world
An Internationally Recognized Choice
One of the fastest growing FDI destinations in the world



Growing FDI (in billions ...
An Economy Integrated to the Region and the World
Leading multinational companies operate in Argentina, many of them with ...
Going Global
Leading Argentine companies operating internationally

                               Top 50 Local Multinatio...
Open Economy
Rising trade flows


Rising Exports and Imports of Goods and Services
(in billions of US$)
                  ...
A Global Opportunity
A gateway to Latin America’s largest markets and a springboard to the world


MERCOSUR: Customs Union...
Linked Up
International synergies for global integration



                   WORLD TRADE ORGANIZATION: Founding member

...
Open Society
Auspicious environment for business to thrive


✓ Open Society                                    Argentina i...
Diversified
economy to meet
global market
needs




                  39
Producing Variety
 Widely diversified economy


GDP by Sector                                                          Agr...
Investment Opportunities Across Sectors in Argentina


                                Manufactured
                      ...
Agro Industry
 Leading global producer & exporter of food commodities and products


Argentine Share in Global Exports and...
Agro Industry
High agricultural efficiency and productivity



Soybean Production Yield                                   ...
Agro Industry
Booming exports & innovation


Rising Manufactured Exports of
Agricultural Origin                           ...
Wine Industry
 Unique terroir, tradition and freedom to innovate



   Wine Exports
   (in millions of US$ and in million ...
Wine Industry
 Quality-Value advantage positions Argentine wines globally


Traditional and High Potential Markets        ...
Biofuels
 A green powerhouse: competitive production of renewable & clean energy


 Projection of Top Five Biodiesel Produ...
Biofuels
Strong international and domestic demand


Projected Rise in International Demand              Projected Diesel C...
Manufactured Goods with Added Value or Design
Attractive selection of investment opportunities

                       Aut...
Manufactured Goods with Added Value or Design
Attractive selection of investment opportunities
                      Manuf...
Pharmaceutical Industry
 Long standing tradition, innovation and rising potential

                                       ...
Health Industry
Applied knowledge

                                                                  ✓ The rate of clinica...
Biotechnology
    Applied research and first-class scientists


   Biotechnology Sales                                    ...
Professional Value Added Services
High quality at competitive costs


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


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


                 ...
Software and IT Industry
Talented labor force and public support


✓ Available and affordable high skilled                ...
Creative Industry
Diverse and attractive segments




                                      Advertising

                 ...
Creative Industry
A flourishing cluster

Cultural GDP
                                               2005              200...
Tourism
 Magnificent cultural experiences and a striking geography attract global tourism


✓ One of the most exciting and...
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  1. 1. Why invest in Argentina? Naturally Talented to Meet Global Market Needs October 2009
  2. 2. Why invest in Argentina? Argentina offers investors: Solid foundations for sustainable growth and profitability Highly skilled, innovative and entrepreneurial labor force Abundance of natural resources, biodiversity and environmental sustainability Access to a large regional market and a springboard to the world Diversified economy to meet global market needs Rich cultural heritage and remarkable quality of life Modern infrastructure and quality connectivity Public sector supportive of investment A winning formula to succeed in your business Argentina’s Investment Development Agency 2
  3. 3. Argentina at a glance (2008) Area: 2,780 km² Population: 40.6 million GDP: US$326.8 billion GDP per capita PPP: US$14,413 FDI: US$8.9 billion Exports: US$82.1 billion Imports: US$67.5 billion Argentina’s Investment Development Agency 3
  4. 4. Solid foundations for sustainable growth and profitability 4
  5. 5. Vigorous Expansion Six consecutive years of rapid economic growth at an accumulated rate of 8.5% per year Selected Economies: GDP growth 2003-2008 13.0 Fastest growing 10.7 economy in 9.3 Latin America 9.0 8.9 8.9 8.7 7.3 7.5 6.8 5.7 5.7 5.3 5.0 4.7 4.2 4.0 3.2 3.3 2.5 1.3 China India Argentina Brazil Chile Colombia Mexico Average 2003-2006 2007 2008 Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 5
  6. 6. Balanced Accounts Argentina maintained twin surpluses for six consecutive years and is the only country in the region expected to maintain them in 2009 and 2010 Current and Fiscal Account Surpluses IMF's Current Account Projections 2009-2010 (as a percentage of GDP) (as a percentage of GDP) 7 6 Current account balance Argentina Primary fiscal balance Paraguay 5 Uruguay 4 South America Brazil 2010 3 Bolivia 2009 Mexico 2 Peru Ecuador 1 Colombia 0 Chile C h ile 2003 2004 2005 2006 2007 2008 IQ 2009 -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 Source: ProsperAr based on INDEC and “Regional Economic Outlook 2009”, IMF Argentina’s Investment Development Agency 6 6
  7. 7. A Resilient Economy Lower debt levels and record-high international reserve accumulation contribute to a more stable and predictable economy, even in the current global context Public Sector External Debt International Reserves (% of GDP) (in billions of US$) 46 46 46 147 140 126 Public Sector Total Debt 32 Public Sector External Debt 28 28 90 27 26 83 24 76 71 20 64 19 19 18 18 56 45 14 36 10 29 27 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Aug-09 Dec-94 2002 2003 2004 2005 2006 2007 2008 Source: ProsperAr based on the Ministry of Economy and the Argentine Central Bank Argentina’s Investment Development Agency 7 7
  8. 8. Dynamic Investment Process In 2008, the highest investment rate in constant prices in the last 30 years was achieved Gross Fixed Capital Formation as % of GDP (in current and constant prices) 30 GFCF/GDP current prices GFCF/GDP constant prices ✓ Sustained growth in the 25 investment rate (2003-2008) 20 ✓ Fundamental pillar for a sustainable economy and an 15 increasing production capacity 10 5 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 8
  9. 9. 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 • Global FDI fell 14.2% in 2008 and 44% during the IQ2009 • Risk aversion and “flight to quality” behavior • Cross-border M&A sales in • Growing uncertainty leading to lower developing countries fell 34.7% during investment levels and postponement of the IQ2009 investment projects Commercial channel: • Global trade volumes are expected • Lower global trade flows negatively to contract by 12.2% in 2009 affecting exports • Emerging economies are expected to • Reductions in prices, particularly suffer a 6.5% fall in their exports commodities Source: ProsperAr based on UNCTAD and World Bank Argentina’s Investment Development Agency 9
  10. 10. Impact of the Global Crisis on Foreign Direct Investment In line with the rest of the world, FDI in Argentina contracted for the first time in the IVT 2008 and again in the IT 2009 and the IIT 2009 Foreign Direct Investment (% Change, IQ 2009) Malaysia Chile Argentina India Thailand Mexico Brazil Russia Singapore Korea Japan U.S. ✓ During the IIT2009, FDI experienced a 88.1% reduction from the same -21% -21% period in 2008. ✓ Hence, FDI fell by 63.6% during the -39% IS2009. -42% -46% -51% -52% -56% -56% -61% -77% % Change % Change -91% 2008 vs. IT2009 vs. 2007 IT2008 World -14.2 -44.0 Argentina 50.7 -47.6 Source: ProsperAr based on UNCTAD and CEPAL. Argentina’s Investment Development Agency 10 10
  11. 11. Impact of the Global Crisis on Gross Fixed Capital Formation Investment in Argentina also contracted for the first time in the IVT 2008 and again in the IT 2009 and the IIT 2009 Gross Fixed Capital Formation (% Change, IQ 2009) During the IIT2009, GFCF fell by Turkey -29.7 10.7% from the same period in 2008. Russia -16.3 Hence, investment suffered a Thailand -15.8 12.3% year-on-hear reduction in the Japan -14.9 IS2009. Singapore -14.8 US -14.5 Argentina -14.2 Brazil -14 % Change % Change Mexico -11.8 IT2009 vs. IIT2009 vs. Malaysia -10.8 IT2008 IIT2008 Chile -9.3 Argentina -14.2 -10.7 S. Korea -6.2 India 6.4 China 28.6 -30 -20 -10 0 10 20 30 Source: ProsperAr based on UNCTAD and CEPAL. Argentina’s Investment Development Agency 11 11
  12. 12. 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 Exports (% Change, I Semester 2009) ✓ The decline in exports of 0% -5% -10% manufactured goods is also lower in -15% Argentina than in the major -20% economies -25% Brazil China Argentina -30% U.S.(*) -21.7% -21.3% -22.8% -35% -24.9% EU (27) Canada (*) -31.7% -40% Chile -45% -38.2% -37.6% *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 Argentina’s Investment Development Agency 12 12
  13. 13. High Levels of Profitability Firms reached high levels of profitability in historic terms during the 2004-2008 period Net margin of the top 500 companies in FDI return on assets Argentina (profits as a % of FDI Stock) (as a % of sales) 14.6 10.9 13.8 9.9 9.7 8.9 11.9 11.5 9.5 6.1 6.0 1.2 03 04 05 06 07 04 05 06 07 08 0 3 00 00 20 20 20 20 20 20 20 20 20 20 -2 -2 92 01 19 20 Source: ProsperAr based on Balance of Payments data and Survey of Big Companies INDEC Argentina’s Investment Development Agency 13
  14. 14. Rapid Increase in FDI FDI recorded great dynamism over the past six years and showcased in 2008, for the third consecutive year, a higher average than the 90s (net of privatizations) Foreign Direct Investment (FDI) (in millions of US$) 23,988 11,000 10,000 9,000 8,000 7,000 6,000 US$5,300 5,000 9,753 8,268 8,899 4,000 6,369 6,859 6,473 3,000 5,372 5,265 5,537 2,000 4,496 4,125 3,499 1,000 2,087 1,858 2,141 2,149 1,652 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 FDI net of privatizations Total FDI Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 14 14
  15. 15. Greenfield Investment Destination In 2008, Argentina was the 3rd greenfield investment destination in Latin America and 2nd in South America, identified as one of the most attractive markets with highest international potential Markets with high potential growth for investors identified by the British Ministry of Commerce and Investment* Main FDI Greenfield Investment Destinations Country (2008) 1 Vietnam 2 Mexico 3 United Arab Emirates 4 Ukraine Country # of projects 5 Indonesia Mexico 346 6 Singapore Brazil 245 7 Poland Argentina 115 Colombia 73 8 South Africa Chile 64 9 Argentina Other 263 10 Saudi Arabia *Ranking excludes the BRIC countries. The world report is elaborated by the British Ministry of Commerce and Investment based on the opinion and perspective of more than 560 management executives of international companies. Source: FDI Intelligence and British Ministry of Commerce and Investment Argentina’s Investment Development Agency 15 15
  16. 16. Recent Investments High profitability reassures big players to increase their commitment and attracts more leading companies to invest in Argentina Argentina’s Investment Development Agency 16
  17. 17. Highly skilled, innovative and entrepreneurial labor force 17
  18. 18. Human Capital Highly skilled and talented labor force Gross Entry Ratio to Tertiary Education (% of new entrants) ✓ Ranked 1st in Guggenheim research fellowships, receiving the largest 0 10 20 30 40 50 60 70 80 90 number of scholarships in Latin United States 82 America (2009) Spain 66 ✓ Over 85,000 graduates from higher Italy 65 education programs and 6,100 Argentina 65 postgraduates per year ✓ 106 universities throughout the Europe & Central Asia 51 Chile 43 country Uruguay 42 Latin America & Caribbean 30 ✓ Ranked 4th in the Global World 24 Entrepreneurship Monitor (2008) ✓ Ranked 5th worldwide in terms of Middle East 24 Brazil 24 quantity of ‘Think Tanks’ and East Asia & P 21 nominated as a Regional Think Tank South of Asia 9 Hub by the University of Sub-Saharan Africa 5 Pennsylvania (2008) Source: ProsperAr based on World Bank, GEM 2008 and University Yearbook 2009, Ministry of Education Argentina’s Investment Development Agency 18
  19. 19. Science, Talent and Creativity A leader in the region Researchers (per million inhabitants) ✓ Advertising Industry: Country 1990-2005 One of the three best places in the world to look for ideas according to United States 4,605 the Gunn Report 2008 Spain 2,195 ✓ Research & Development: Argentina 720 Highest number of patents per million inhabitants in Latin America Chile 444 registered with the U.S. Patent and Mexico 268 Trademark Office over the past whole 45 years Brazil 344 Colombia 109 Source: Human Development Report 2007/08, United Nations, United States Patent and Trademark Office Argentina’s Investment Development Agency 19
  20. 20. A Tradition of Research Excellence Number one in Latin America and forth in the developing world in terms of science related Nobel Prizes Recent awards received by Argentine scientists Bernardo Houssay and researchers Nobel Prize in Physiology or Medicine 1947 For his discovery of the course of the catalytic conversion of glycogen. ✓An Argentine scholar was the only Latin American to receive one of the 18 foreign associate positions granted by the National Academy of Sciences of the United States in 2008. Luis F. Leloir ✓The Maxime Becher medal, granted every 3 years by the Nobel Prize in Chemistry 1970 US Mathematics Society, was awarded to an Argentine mathematician in 2008. For his discovery of sugar nucleotides and their role in the ✓Argentines received the highest number of Guggenheim biosynthesis of carbohydrates. Foundation awards in Latin America; 13 out of the 36 awarded in 2008. César Milstein ✓Argentina received the L´Oréal-Unesco for Women in Science Award for the Latin American region for two Nobel Prize in Physiology or Medicine 1984 consecutive years (2007-2008). For his theories concerning the specificity in development and control of the immune ✓Two Argentine physicists were honored by the Nobel system and the discovery of the principle for Physics Laureate George Smoot in 2006. production of monoclonal antibodies. Source: ProsperAr based on CONICET, The Nobel Prize Organization and Argentine press releases. Argentina’s Investment Development Agency 20
  21. 21. High Returns on Knowledge Produced Argentine scientists are the most prolific in terms of knowledge production in the region (as measured by science publications) Science Publications per 100 Full Time Science Publications per Million Dollar Researchers Spent in R&D (Full-time or equivalent - 2007 or last available year) (2007 or last available year) 22.3 4.8 4.6 18.5 16.5 16.3 1.6 0.2 Argentina Brazil Mexico Chile Argentina Chile Brazil Mexico Source: ProsperAr based on the Argentine Center of Information on Science and Technology (CAICYT). Argentina’s Investment Development Agency 21
  22. 22. Outstanding Performance, Today and Tomorrow The most innovative country in South America Innovation Prospects Ranking 2009-2013 (Position: highest=1, lowest=82) Japan 1 Switzerland 2 2004/2008 Ireland 20 Ranked as the most Russia 39 innovative country in 42 Argentina South America and one China 46 of the best in the Chile 47 developing world Mexico 48 Brazil 49 India 52 Colombia 62 Peru 67 Ecuador 69 Source: ProsperAr based on Innovation Index, Economist Intelligence Argentina’s Investment Development Agency 22
  23. 23. Rising Capacities and Greater Capabilities Remarkable labor productivity gains Labor Productivity (Index 2003=100) 140 130 +30% 120 110 100 2003 2004 2005 2006 2007 2008 Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 23
  24. 24. Entrepreneurship Argentina ranks fourth on the Global Entrepreneurship Monitor (2008) Global Entrepreneurship Monitor Ranking (2008) Large group of talented and 50 motivated entrepreneurs 45 40 Business schools have 35 international prestige in the field 30 25 20 15 10 5 0 Angola Egypt Dominican Bolivia Colombia Argentina Ecuador India Chile Uruguay Peru Mexico Serbia Brazil Republic Source: ProsperAr based on GEM 2008 Argentina’s Investment Development Agency 24 24
  25. 25. Abundance of natural resources, biodiversity and environmental sustainability 25
  26. 26. Size, 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 exploitable 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 Argentina’s Investment Development Agency 26
  27. 27. Diverse Energy Sources Outstanding natural resources to fuel growth ✓ 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 ✓ One of the top five biofuel producers worldwide ✓ Incentives for renewable energy production under Law 26,190 (2006) Source: ProsperAr based on United Nations Food and Agriculture Organization (FAO), CIA World Factbook, and other sources Argentina’s Investment Development Agency 27
  28. 28. From High Peaks to Blue Lakes Varied terrenes ✓ Exuberant beauty and extraordinary flora and fauna can be found throughout Argentina. ✓ Visitors are captivated by the deep blue lakes, high mountain peaks, large salt pans, paleontological sites, fertile valleys, snow-covered volcanoes, subtropical rain forests, crystal-like glaciers, white deserts, long rivers, boundless flat lands and vibrant cities. Argentina’s Investment Development Agency 28
  29. 29. From the Warm North to the Cold South Multiple climates ✓ The North: warm; from subtropical with a wet season to tropical without a wet season; including tropical highland. ✓ The Center: moderate temperatures; influenced by the ocean, moderately arid; the Pampas grassy plains. ✓ The West and South Center: Patagonian cold temperatures; arid mountains and plains. ✓ The South: cold, arid and windy; humid in the far South; high mountain snow. Argentina’s Investment Development Agency 29
  30. 30. Eco-Intelligent Growth Committed to environmental sustainability Yale Environmental Performance Index (Position: highest=1, lowest=149) Switzerland 1 Sweden 2 Brazil 35 174,000 km² of protected areas Argentina 38 United States 39 (6.4% of national territory) Australia 46 Mexico 47 South Africa 97 China 105 India 120 Source: ProsperAr based on Yale Environmental Sustainability Index and World Development Indicators, WB Argentina’s Investment Development Agency 30
  31. 31. Access to a large regional market and a springboard to the world
  32. 32. An Internationally Recognized Choice One of the fastest growing FDI destinations in the world Growing FDI (in billions of US$) FDI Inflows Growth 2008 9.7 World -14.2 % Developed economies -29.2 % Developing economies 17.3 % 6.5 Latin America & 5.3 5.5 Caribbean 13.2% 4.1 Argentina 50.7 % 1.7 2nd South American FDI destination for greenfield 2003 2004 2005 2006 2007 2008 projects (2008) Source: ProsperAr based on International Accounts, INDEC and UNCTAD Argentina’s Investment Development Agency 32
  33. 33. An Economy Integrated to the Region and the World Leading multinational companies operate in Argentina, many of them with a long-term vision and commitment Top 50 Transnational Corporations with a presence in Argentina Nearly 2,000 TNCs (half of the Fortune 100). Many TNCs operating with a long-standing tradition and long-term vision Argentina’s Investment Development Agency 33
  34. 34. Going Global Leading Argentine companies operating internationally Top 50 Local Multinationals CLISA Argentina’s Investment Development Agency 34
  35. 35. Open Economy Rising trade flows Rising Exports and Imports of Goods and Services (in billions of US$) Exports ↑ 19% Exports Imports 82 (average annual growth rate 70 2003-2008) 66 55 56 47 43 40 34 36 Imports ↑ 29 29% 20 (average annual growth rate 2003-2008) 2003 2004 2005 2006 2007 2008 Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 35
  36. 36. A Global Opportunity A gateway to Latin America’s largest markets and a springboard to the world MERCOSUR: Customs Union Mercosur member countries GDP per capita (PPP dollars 2008) 14,414 13,295 10,326 4,778 GDP: US$1.9 trillion Population: 241 million Argentina Uruguay Brazil Paraguay inhabitants Main trade agreements: Members: Argentina, Brazil, Trade negotiations underway include an agreement with Uruguay, Paraguay the South African Customs Union (SACU), countries of the Associates: Bolivia, Chile, Colombia, Ecuador, Peru, Venezuela Gulf Cooperation Council and Morocco; a more comprehensive agreement with the European Union (EU); a trade preference agreement with India; and a free trade Source: ProsperAr based on IMF agreement with Israel (in process). Argentina’s Investment Development Agency 36
  37. 37. Linked Up International synergies for global integration WORLD TRADE ORGANIZATION: Founding member G-20: Argentina and Brazil are the only two members representing South America Investment Protection and Promotion Treaties: 59 bilateral investment treaties ALADI ( Latin American Integration Association) provides the institutional framework for regional integration, promoting the creation of an area of economic preferences in the region, with the ultimate goal of establishing a common Latin American market. Members: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela and Cuba. Argentina’s Investment Development Agency 37
  38. 38. Open Society Auspicious environment for business to thrive ✓ Open Society Argentina is a free country with a high degree of political and civil freedom, according to the ✓ Commitment to democracy and freedom findings of the Freedom House 2008 survey. The survey concluded that more than half of ✓ Free of religious, ethnic and armed conflicts the world does not enjoy full freedom. Map of Freedom 2008 FREE PARTLY FREE NOT FREE Source: Freedom House Argentina’s Investment Development Agency 38
  39. 39. Diversified economy to meet global market needs 39
  40. 40. Producing Variety Widely diversified economy GDP by Sector Agriculture, livestock, (% of GDP, 2008) forestry & fishing Transport, storage & 10% Real estate & communications business services 8% 11% Government 6% Wholesale & retail trade Construction 12% 6% Financial intermediation 5% Mining Education, health & 4% community services Hotels & restaurants 13% 3% Electricity, gas & water 1% Manufacturing industry 21% Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 40
  41. 41. Investment Opportunities Across Sectors in Argentina Manufactured Goods with Added Value or Design Agro-Industry, Biotechnology Wine & Biofuels Professional Value-Added Pharmaceuticals Services & Health Software & Information Technology Creative Mining & Industries Forestry Tourism Argentina’s Investment Development Agency 41
  42. 42. Agro Industry Leading global producer & exporter of food commodities and products Argentine Share in Global Exports and Global Position (export % and position) Natural honey 24.5 Pears 18.2 Lemon juice, concentrated 73.3 Safflower seeds 32.0 Soybean oil 50.2 Grape juice 20.5 Sunflower oil 23.3 Lemons and limes 14.7 Soybeans 11.6 Safflower oil 12.0 Powdered whole milk 9.9 Sunflower seeds 1.3 Source: ProsperAr based on FAO data Argentina’s Investment Development Agency 42
  43. 43. Agro Industry High agricultural efficiency and productivity Soybean Production Yield Wheat Production Yield (Hectograms/Hectare, 2007) (Hectograms/Hectare, 2007) 28,270 29,711 27,046 28,133 28,066 23,220 22,199 24,369 23,010 10,562 S. il da lia a S. il a lia az a in U. az ad in na U. ra Br ra nt Br nt st n Ca st ge Ca Au ge Au Ar Ar Source: ProsperAr based on FAO Argentina’s Investment Development Agency 43
  44. 44. Agro Industry Booming exports & innovation Rising Manufactured Exports of Agricultural Origin R&D Applied to the Value Chain (in billions of US$) ✓ 16% of the total expenditure on innovative 28 activities is for agro industry 21 ✓ 8% of the manufacturing’s R&D investments are agro-industry related 15 14 11 12 ✓ 55 biotech firms are working to further develop the country’s Food & Beverage industry 03 04 05 06 07 08 20 20 20 20 20 20 Source: ProsperAr based on INDEC Argentina’s Investment Development Agency 44
  45. 45. Wine Industry Unique terroir, tradition and freedom to innovate Wine Exports (in millions of US$ and in million of liters) 5th largest producer in the world 700 450 Fastest growing exporter in the world (22.3% per 400 600 year, 2002-2008) 350 500 7th largest millions of liters millions of US$ 300 400 250 domestic market 300 200 150 200 100 100 50 7th largest 0 0 exporter in the world 01 02 03 04 05 06 07 08 20 20 20 20 20 20 20 20 Millions of liters US$ millions Source: National Vitiviniculture Institute (INV) Argentina’s Investment Development Agency 45
  46. 46. Wine Industry Quality-Value advantage positions Argentine wines globally Traditional and High Potential Markets Growing Sophistication and Value Added Glass-Bottled Wine Exports by Country Destination (2008) Export Growth by Price Segment compound annual growth rate (2002-2008) U.K. Netherlands Icon 237% 9.3% Canada 7.1% 10.4% Brazil 7.7% Ultra 44% Latin America Premium 5.2% Others 15.4% Super Other Europe 35% 4.6% Premium Asiatic Countries 3.8% Nordic Countries Premium 24% Mexico 3.7% Russia 2.5% Russia1.2% United States 1.2% 29.0% Popular 25% Premium Source: Wine of Argentina and Wine Area Argentina’s Investment Development Agency 46
  47. 47. Biofuels A green powerhouse: competitive production of renewable & clean energy Projection of Top Five Biodiesel Producers in 2010 (share in total production %) ✓ Competitive advantage based on abundant and high-quality natural resources, qualified human resources and existing U.S. 14.3% industrial capacity. Germany 12.0% France 11.6% Investment Incentives Biofuels: accelerated Brazil 11.1% depreciation of income tax and early return of VAT for capital goods and equipment. Argentina 7.2% Source: World Ethanol and Biofuels Report by the Consulting Company F.O. Lichts Argentina’s Investment Development Agency 47
  48. 48. Biofuels Strong international and domestic demand Projected Rise in International Demand Projected Diesel Consumption (in thousands of m3) Countries with mandatory biofuel 19,000 (biodiesel) mixes ✓European Union 14,250 ✓Brazil 9,500 ✓United States ✓Japan 4,750 ✓Canada 0 11 12 13 15 10 14 04 05 06 07 08 09 20 20 20 20 20 20 20 20 20 20 20 20 Estimated growth rate: 3,5% ✓ Diesel, easily replaceable by biofuel (biodiesel), leads domestic fuel consumption accounting for 66% of total consumption. ✓ Argentine Biofuel Law 26,093 (2006) establishes Source: ProsperAr based on the Energy Secretariat mandatory biofuel mixes (5%) by 2010. Argentina’s Investment Development Agency 48
  49. 49. Manufactured Goods with Added Value or Design Attractive selection of investment opportunities Auto Parts Industry Developed and innovative industry with a long tradition in the country. International leading companies with presence in Argentina: Fiat, Ford, General Motors, Mercedes Benz, Peugeot-Citroën, Renault, Toyota, Volkswagen, Iveco and Scania. Great opportunity for growth in auto parts to complement regional and global demand in the automotive industry which is increasing in sophistication and innovation. Success case: Rafaela, Santa Fe (Basso) is a leading world producer and exporter of valves. Agro Industrial Machinery and Precision Instruments Major agro machinery cluster with more than 100 years of expertise, 40,000 employees (80% skilled labor) and 650 factories. Know-how to produce innovative equipment for new agronomic practices like “Direct Sowing”. A growing production of high-tech precision agro components. Agencia Nacional de Desarrollo de Inversiones 49
  50. 50. Manufactured Goods with Added Value or Design Attractive selection of investment opportunities Manufactured goods with design: sailboats, cruisers and vessels High quality and international recognition. Over 25 years exporting to developed countries mainly the European and Asian markets. Integrated value chain: 120 builders of sailboats, cruisers, vessels, inflatable boats, equipment and all necessary services for the production and maintenance of a wide range of boats. Installed capacity of 700,000 m2 and occupying 700,000 people. Nuclear, Spatial and Industrial Engineering INVAP: technology-based company dedicated to developing advanced technology in nuclear, aerospace, medical and industrial sectors. In 2000 won an international tender, beating specialized companies from countries like Canada, Germany and France for a 20 MW reactor power, which was sold for approximately US$200 million. The reactor is used for scientific research in the fields of health, environment and industry and the production of radioisotopes for medicinal purposes, catering to Australia, New Zealand and Southeast Asian market. IMPSA: global company dedicated to producing solutions for power generation from renewable resources. Agencia Nacional de Desarrollo de Inversiones 50
  51. 51. Pharmaceutical Industry Long standing tradition, innovation and rising potential ✓ Highest local market share of domestic Growing Sales & Exports labs in comparison with other Latin (in millions of US$) American countries. ✓ Local labs in Argentina account for 56% +69% of local sales while domestic firms in 3,000 Brazil account for 25%, 24% in Uruguay, and 12% in Mexico. 2,500 ✓ Two companies included in the Ranking 2,000 of the 19 Argentine Multinationals (ProsperAr-Columbia). 1,500 +134% Market Share of International & National Labs 1,000 in Argentina 500 International Labs 0 44% 2003 2004 2005 2006 2007 2008 National Labs 56% Sales Exports Source: Argentina Industrial Chamber of Pharmaceutical Laboratories (CILFA) Argentina’s Investment Development Agency 51 51
  52. 52. Health Industry Applied knowledge ✓ The rate of clinical trials per 100,000 Clinical Research Investments in the inhabitants is 1.45, nearly double the Pharmaceutical Industry average (0.79) in Latin America. (in millions of US$) ✓ Competitive advantages due to solid hospital infrastructure and hi-tech equipment. 91.8 ✓ Creation of the clinical trial registry in 2009: +170% critical tool for researchers, experts, patients 65.8 and donors. 49.6 ✓ Focus on the more advanced phases of 44.9 37.2 clinical trials. 34.0 Share of Clinical Trials by Phase (in %) Phase I Phase II 1% 18% 2002 2003 2004 2005 2006 2007 Phase IV Phase III 68% 13% Source: ProsperAr based on CEPAL (2008) and CAEME Argentina’s Investment Development Agency 52
  53. 53. Biotechnology Applied research and first-class scientists Biotechnology Sales ✓ More than 35 bioscience research institutes (by type) operating in private companies and universities ✓ Highest number of biotechnology companies per capita in Latin America Food Ingredients ✓ Leader in GMO applications accounting for 17% of 15% world GM crop area Human Health ✓ Integrated with industrial production (agricultural 11% and pharmaceutical industries) Animal Health 25% ✓ High-calibre scientists and researchers Inoculants 8% ✓ Two biotechnology companies included in the Ranking of the 19 Argentine Multinationals (ProsperAr-Columbia) Biotechnology Investment Incentives: accelerated depreciation of income tax and early Seeds & reimbursement of VAT intended to reduce Plants payments in the first years in purchase of capital 41% goods and related equipment Source: Biotec Sur, International Service for the Acquisition of Agri-biotech Applications (ISAAA) and Bisang, Gutman, Lavarello, Sztulwark and Diaz (2006) Argentina’s Investment Development Agency 53
  54. 54. Professional Value Added Services High quality at competitive costs Record Levels of Exports of Value Added Professional Services = US$4.9 billion ✓ According to Deloitte’s latest Global Shared (2008) Services Survey, 265 leading global firms from all sectors, rank Argentina as the fifth best location for outsourcing services for it’s labor Cultural & Entertainment quality and availability, just below the US, (US$419 mn) IT (US$770 mn) India, UK and China (2009) ✓ Buenos Aires as the 14th most attractive city in the emerging world for outsourcing activities (“Global Services” index) ✓ A location with the presence of leading companies: Globant, Atento, Teletech, Teleperformance, Motorola, Microsft, HP, IBM, Citibank, Repsol, CapGemini, Tata Consulting and Nextel Business, Professional & Technical (US$3,7oo mn) Source: ProsperAr based on Balance of Payments data, INDEC, Deloitte Global Shared Services Survey 2009 and Global Services Magazine Argentina’s Investment Development Agency 54
  55. 55. Professional Value Added Services Strong advantages make Argentina a global center for skilled outsourcing Minimal time difference with the ✓ High penetration and best English levels in US and main European cities the region (Cambridge ESOL exams) ✓ Other languages spoken: Italian, German, Portuguese and French ✓ Cultural similarities with European markets ✓ Competitive costs ✓ World renowned creativity (advertising and design) ✓ Native Spanish speakers reaching out to a population of 500 million people that speak the language worldwide Argentina Time Zone = GMT -3 hours Source: ProsperAr based on Balance of Payments data, INDEC, ATKearney Consulting and Global Services Magazine Argentina’s Investment Development Agency 55
  56. 56. Software and IT Industry Thriving growth driven by innovative local firms and leading global companies ✓ 1,600 software companies Growing Software Production & Exports (60% SMEs) (in millions of US$) ✓ Young and dynamic sector: 40% of the SMEs started operations 2,500 after 2002 and 85% after 1991 SALES EXPORTS +152% ✓ In 2008 exports accounted for 2,000 28.6% of total sales and 55% of all software companies export 1,500 ✓ Leading international presence: +364% IBM, NEC, Siemens, Google, Oracle, 1,000 SAP, Intel, Motorola and Sabre Holdings 500 ✓ According to The Economist's technological ranking, Argentina 0 surpasses Mexico, Colombia and 2003 2004 2005 2006 2007 2008 Peru and ranks 3rd in Latin America Source: ProsperAr based on Cessi and INDEC after Brazil and Chile (2009) Argentina’s Investment Development Agency 56
  57. 57. Software and IT Industry Talented labor force and public support ✓ Available and affordable high skilled IT Hot Spots labor force ✓ 243 IT degrees offered locally Santa Fe ✓ Some 70,000 students enrolled in university-level informatics programs Córdoba Gualeguaychú ✓ Public-Private cooperation networks Mendoza Rosario ✓ Software Promotion Law (2004) Buenos Aires ✓ Diverse attractive locations Mar Del Plata Tandil IT Industry Investment Incentives: 10-year tax stability; tax credit up to 70% of employers’ contributions; 60% reduction in income taxes. Source: ProsperAr based on Cessi and other sources Argentina’s Investment Development Agency 57
  58. 58. Creative Industry Diverse and attractive segments Advertising Music Publishing HOT SECTORS Videogames Audiovisual Fashion Design Argentina’s Investment Development Agency 58
  59. 59. Creative Industry A flourishing cluster Cultural GDP 2005 2006 2007 Export boom: US$500 million in 2007, Annual growth rate 19.6% 18.6% 15.0% double 2002 values As a % of total GDP 2.6% 2.8% 3.0% Source: ProsperAr based on SINCA. Advertising The Gunn Report 2008 Argentina, leading television The most awarded countries in the world in 2008 content exporter: 4th exporter in TV contents wordlwide TV & Gunns Print Interactive Total Cinema Blazing(*) U.S. (1) 149 52 91 39 331 Great Britain (2) 124 39 45 4 212 Argentina in Top 3 : Argentina (3) 99 21 2 7 129 One of the three best places in Germany (4) 47 35 31 6 119 the world to look for ideas. And Japan (5) 42 1 60 14 117 one of the three best to produce Source: ProsperAr based on The Gunn Report 2008. (*) Note: Gunns Blazing tallies all them, according to awards given under the various labels of Integrated, Mixed Media, Innovative, Content and Contact, Titanium, and other advertising award categories; Frapa The Gunn Report. (The Format Recognition and Protection Association) Argentina’s Investment Development Agency 59
  60. 60. Tourism Magnificent cultural experiences and a striking geography attract global tourism ✓ One of the most exciting and diverse tourist ✓ Buenos Aires ranked #1 gay friendly city by destinations in Latin America offering from Out Traveller Magazine wine tourism to eco-friendly adventures ✓ Excellent hotel infrastructure throughout the ✓ Buenos Aires ranked in the top 5 cities to country visit in the world for 3 consecutive years ✓ Exquisite gourmet dining & restaurants (Travel & Leisure, 2009) Tourist arrivals Rising Tourism Expenditures (in millions of people) (in millions of US$) 2.30 2.33 3,295 2.06 3,060 1.79 2,472 1.51 1,883 0.93 1,476 1,052 2001 2004 2005 2006 2007 2008 2001 2004 2005 2006 2007 2008 Source: Tourism Secretariat Argentina’s Investment Development Agency 60
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