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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$82.1 billion in
2008
Vigorous expansion
During 2003-2008, Argentina has taken advantage of a favorable global environment to
consolidate growth and expand its production and export capacity
Selected Economies: GDP growth 2003-2008
4.2
5.7
4.0
13.0
9.3
5.75.1
7.7
3.2
8.9
5.3
8.9
10.7
8.7
5.8
4.0
1.8
6.8
4.5
7.3
9.0
China India Argentina Brazil Chile Colombia Mexico
Average 2003-2006 2007 2008
Source: ProsperAr based on IMF and INDEC
Argentina’s Investment Development Agency
Solid foundations for sustainable growth
Declining debt levels and record-high international reserve accumulation contribute to a
more stable and predictable economy, even in the current global context
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005 2006 2007 2008
Public Sector Total Debt
Public Sector External Debt
Public sector total and external debt
(as a % of GDP)
46.1
17.917.619.324.3
26.527.826.5
19.4
10.514.1
19.6
28.132.0
46.2 46.4
0
5
10
15
20
25
30
35
40
45
50
dec-
94
dec-
95
dec-
96
dec-
97
dec-
98
dec-
99
dec-
00
dec-
01
dec-
02
dec-
03
dec-
04
dec-
05
dec-
06
dec-
07
dec-
08
Aug
-09
International Reserves(in billions of US$)
Source: ProsperAr based on Argentine Central BankSource: ProsperAr based on Ministry of Economy and Finance
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
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)
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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%
Argentina’s Investment Development Agency
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%
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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$4.9 billion (2008)
Argentina’s Investment Development Agency
Professional and Value Added Services Strong advantages make Argentina a global center for skilled outsourcing
Source: ProsperAr based on Balance of Payments data, INDEC, ATKearney Consulting and Global Services Magazine
Minimal time difference with the
US and main European cities✓ High penetration and best English levels in
the region (Cambridge ESOL exams)
✓ Other languages spoken: Italian, German,
Portuguese and French
✓ Cultural similarities with European markets
✓ Competitive costs
✓World renowned creativity
(advertising and design)
✓ Native Spanish speakers reaching out to a
population of 500 million people that speak
the language worldwide
Argentina Time Zone = GMT -3 hours
Argentina’s Investment Development Agency
Growing Software Production & Exports
(in millions of US$)
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
Creative IndustryDiverse and attractive segments
HOTSECTORS
AdvertisingAdvertising
PublishingPublishing
AudiovisualAudiovisual
DesignDesignFashionFashion
VideogamesVideogames
MusicMusic
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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
Argentina’s Investment Development Agency
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)
Argentina’s Investment Development Agency
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:
Argentina’s Investment Development Agency
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
+ 5411-4328-9510
Argentina’s Investment Development Agency
Argentina: Naturally Talented to Meet Global Market Needs