Inversiones En Argentina

Why invest in Argentina?

Naturally Talented To Meet
Global Market Needs

Daniel Falcón, Director
ProsperAr, Argentina's Investment Development Agency
September 2009
Frankfurt , Germany

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
8.5% annual GDP growth over the
six year period of 2003-2008
Six years of twin fiscal and
current account surpluses Average 2003-2006 2007 2008
Sustained increase in foreign 13.0

reserves 10.7
9.0 8.9 9.3 8.9 8.7
Steady rise in savings (26.7% in
7.7
7.3 6.8
2008)
5.7 5.8 5.3 5.7
5.1
Exports of goods and services 4.2 4.5 4.0 4.0
3.2
doubled over a six year period to hit 1.8
a historical high of US$82.1 billion in
2008 China India Argentina Brazil Chile Colombia Mexico

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

Public sector total and external debt International Reserves
(as a % of GDP) (in billions of US$)

160
50 46.2 46.4 46.1
140 Public Sector Total Debt
45
120 40
Public Sector External Debt
100 35 32.0
30 26.5 27.826.5 28.1
80 24.3
25
19.3 19.4 19.6
60 20 17.9 17.6
14.1
40 15
10.5
10
20
5
0 0
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
2002 2003 2004 2005 2006 2007 2008

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


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 Foreign Direct Investment
(in constant and current prices) (in millions of US$ dollars)

25 23.4 24.2 23.3 23.1
22.6
21.5 21.6
19.2 19.8 12,000
20
17.7
9,753
15.1 10,000
15 14.3
8,000
6,473
6,000 5,265 5,537
10
4,125
4,000
5
1,652
2,000

0 0
2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008
GFCI/GDP current prices GFCI/GDP constant prices

Source: ProsperAr based on INDEC


Source: ProsperAr based on INDEC

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
• Risk aversion and “flight to quality” 44% during the IQ2009
behavior • Cross-border M&A sales in
• Growing uncertainty leading to lower developing countries fell 35.7% during
investment levels and postponement of the IQ2009
investment projects

Commercial channel: • Global trade volumes are expected
• Lower global trade flows negatively to contract by12.2% 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


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

Gross Fixed Capital Formation
(% Change, IQ 2009) Economic activity began to slowdown
during the 4th quarter of 2008 and the first
Turkey -29.7 quarter of 2009, but remains positive.
Russia -16.3
Thailand -15.8 Investment has fallen in line with other
Japan -14.9 economies worldwide as a result of the global
Singapore -14.8 downturn and the postponement of
US -14.5
investment projects in the light of growing
Argentina -14.2
uncertainty.
Brazil -14
Mexico -11.8
Malaysia -10.8
Chile -9.3
S. Korea -6.2
India 6.4
China 28.6

-30 -20 -10 0 10 20 30
Source: ProsperAr based on UNCTAD


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

Total Exports
(% Change, I Sem. 2009/08)

0%
-5% ✓ The decline in exports of
-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


Balanced external accounts
Argentina is the only country in the region expected to maintain current account
surpluses in 2009 and 2010

Current Account Surplus IMF's Current Account Projections 2009-2010
(as a percentage of GDP) (as a percentage of GDP)

7
Argentina
6 Paraguay
Uruguay
5
South America
4 Brazil 2010
Bolivia
2009
3 Mexico
Peru
2 Ecuador
Colombia
1
Chile
C h ile

0 -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0
2003

2004

2005

2006

2007

2008

IQ 2009

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


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

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

300 220
Copper Soybean
200
250 Wheat Petroleum
180 Aluminum Coal
200 160
140
150 120
100 100
80
50 60
Agriculture Metals Fuels
40
0
20
2008O
2008J

2009J
2008A

2008A

2008D

2009A
2008F

2009F

2008O
2008A

2008A

2008D

2009A
2008F

2009F
2008J

2009J
Source: ProsperAr based on IMF


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

Three-Way Process in Asia
GDP Growth Projections
Urbanization Change in
Industrialization
Eating Habits
2009 2010
China 6.5% 8.5%
India 4.5% 5.6%
growing demand for
Argentina's production
Source: ProsperAr based on IMF

rapid recovery + sustained growth


Great Business
Investing companies in Argentina achieve record profitability levels

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

14.6
13.8

11.9
11.5

9.5

2003 2004 2005 2006 2007

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


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

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


Outstanding Performance, Today and Tomorrow
Argentina is the most innovative country in South America and ranks high in the
developing world

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

Japan 1
Switzerland 2
Ireland 20
Russia 39
Argentina 42
Chile 47
China 46
Mexico 48
Brazil 49
India 52
Colombia 62
Peru 67
Ecuador 69

Source: ProsperAr based on Innovation Index, Economist Intelligence


High Returns on Knowledge Produced
Scientists are the most prolific in terms of knowledge production
in the region (as measured by science publications)

Science Publications per 100 Full Time Reserachers Science Publications per Million Dollar Spent in
(Full-time or equivalent - 2007 or last available year) R&D
(2007 or last available year)

25 6

21 5

17 4

13 3

8 2

4 1
0 0
Argentina Brazil Mexico Chile Argentina Chile Brazil Mexico

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


Investment Opportunities Across Sectors in Argentina:
An Overview

Machinery
Sector
Agro-Industry Wine Industry

Health Industry Biotechnology

Professional Creative
and Value IT Industry
Industry
Added Services


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

0 10 20 30 40 50 60 70 80
Source: ProsperAr based on FAO data


Agro Industry
High agricultural efficiency and productivity

Soybean Production Yield 2007 Wheat Production Yield 2007
(Hectograms/Hectare) (Hectograms/Hectare)

29,711 28,270
28,066 27,046
24,369
23,010 23,220

10,562

hectograms hectograms
S.

da
lia
a
in

U.

na
ra
nt

st

Ca

S.

a

lia
ge

a
Au

ad
in

U.

ra
Ar

nt

n

st
Ca
ge

Au
Ar

Source: ProsperAr based on FAO


Machinery Sector
An innovative cluster with a long-standing tradition

Agro Machinery Cluster

40,000 employees
(80% skilled labor) More than 100
years of expertise

Cluster
US$850 million
production in 2007
650 factories

A growing production of
high-tech precision agro- Know-how to produce innovative
components equipment for new agronomic
practices like “Direct Sowing”

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


Wine Industry
Unique terroir, tradition and freedom to innovate

Wine Exports
(in millions of dollars and in million of liters) 5th largest
producer in
the world
700 Fastest growing exporter 450
in the world (22.3% per 400
600 year, 2002-2008)
350
500 7th largest

millions of liters
millions of US$

300 domestic
400 250 market
300 200
150
200
100
100 50 7th largest
0 0 exporter in
the world
01

02

03

05

06

07

08
04
20

20

20

20

20

20

20
20

Millions of liters US$ millions
Source: National Vitiviniculture Institute (INV)


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 Export Growth by Price Segment compound
(2008) 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%
1.2%
Russia
United States
29.0% 1.2% Popular
25%
Premium

Source: Wine of Argentina and Wine Area


Health Industry
Applied knowledge

Clinical Research Investments in the ✓ The rate of clinical trials per 100,000
Pharmaceutical Industry (millions of US$) inhabitants is 1.45, nearly double the
average (0.79) in Latin America.
✓ Competitive advantages due to solid hospital
infrastructure and hi-tech equipment.
91.8
+170% ✓ Creation of the clinical trial registry in 2009:
critical tool for researchers, experts, patients
65.8 and donors.
49.6
44.9 ✓ Focus on the more advanced phases of
34.0 37.2 clinical trials.

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


Biotechnology
Applied research and first-class scientists

Biotechnology Sales ✓ More than 35 bioscience research institutes
(by sector)
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%
15%
of world GMO crop area
Human Health
11%
✓ Integrated with industrial production (agricultural
Animal Health
25%
and pharmaceutical industries)

Inoculants
✓ High-calibre scientists and researchers
8%

Biotechnology Investment
Incentives: accelerated depreciation
of income tax and early return of VAT
Seeds & Plants
for capital goods and equipment
41%

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


Professional and Value Added Services
High quality at competitive costs

✓ Buenos Aires as the 14th most attractive city Record Levels of Exports of Value
in the emerging world for outsourcing Added Professional Services =
activities (“Global Services” index) US$4.9 billion (2008)
✓ Argentina ranks among the top 20 most
attractive locations for outsourcing Cultural & Entertainment
(ATKearney’s Offshore Location (US$419 mn) IT
Attractiveness Index) (US$770 mn)

✓ 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, ATKearney Consulting and Global Services Magazine


Professional and 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


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

Growing Software Production & Exports ✓ 1,600 software companies
(in millions of US$) (60% SMEs)
✓ Young and dynamic sector:
2,500 40% of the SMEs started operations
SALES EXPORTS
+152% after 2002 and
85% after 1991
2,000
✓ In 2008 exports accounted for
1,500 28.6% of total sales
✓ 55% of all software companies
+364%
1,000 export
✓ Leading international presence:
500
IBM, NEC, Siemens, Google, Oracle,
SAP, Intel, Motorola and Sabre
0 Holdings
2003 2004 2005 2006 2007 2008

Source: ProsperAr based on Cessi and INDEC


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 Cordoba
Gualeguaychu
✓ 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


Creative Industry
Diverse and attractive segments

Advertising

Music Publishing

HOT
SECTORS
Videogames Audiovisual

Fashion Design


Creative Industry
A flourishing cluster

Cultural GDP
2005 2006 2007 Export boom:
Annual growth rate 19.6% 18.6% 15.0% US$500 million in 2007,
double 2002 values
As a % of total GDP 2.6% 2.8% 3.0%
Source: ProsperAr based on SINCA.

Advertising
The Gunn Report 2008
The most awarded countries in the world in 2008 Argentina in Top 3 :
TV & Gunns
One of the three best places in
Print Interactive Total
Cinema Blazing(*) the world to look for ideas. And
U.S. (1) 149 52 91 39 331
one of the three best to produce
Great Britain (2) 124 39 45 4 212
them, according to
Argentina (3) 99 21 2 7 129
The Gunn Report.
Germany (4) 47 35 31 6 119
Japan (5) 42 1 60 14 117
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.


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 Argentina
Remarkable 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 Argentina
Breathtaking views, magnificent natural scenes

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

Source: ProsperAr based on UNESCO


ProsperAr
Professional assistance for your business to succeed in Argentina

Our group of professionals can assist you by:

✓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


Argentina: Naturally Talented to Meet Global Market Needs

Thank you!
Danke schön!

To learn more about how investing
in Argentina can benefit you,
please contact us:
www.prosperar.gov.ar
info@prosperar.gov.ar
+ 5411-4328-9510


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