Argentina: Argentina Overview – Sector Opportunities

Last Updated: 28 June 2016
Article by Cody Mcfarlane

Argentina at one time was the poster child for foreign direct investment in Latin America. This came to an end after periods of political, economic and social upheaval left Argentina troubled, however, for example with a populist regime in the past decade that intervened in all sectors of the economy, especially imposing huge protectionist taxes on imports and exports. Following the election of President Mauricio Macri's new government in November 2015, much of that has begun to shift, and Argentina is once again opening for business.

President Macri started his term with important changes, including the devaluation and managed float of the peso, the removal of many of the restrictions on the acquisition and movement of foreign currency, efforts to make it possible for a greater number of imports to enter the country without the need for import licences and the removal or reduction of taxes on agricultural exports.

Looking ahead, Argentina has plenty of opportunities for companies and investors. Sectors of importance include mining, oil and gas, renewable and nuclear energy, infrastructure and agricultural technology.

Below we have provided an overview of some the opportunities that exist:

Energy

Regardless of low international prices, development of hydrocarbons is still considered a great opportunity for the economy since Argentina has one of the mail shale oil and shale gas reservoirs in the world. The discovery of Vaca Muerta and the partnerships between YPF and foreign companies further improve the ground for the development of the sector.

On March 11th, 2016, the energy minister said the exporters of heavy crude form Argentina will receive USD$7.50 per barrel subsidy from the government as long as the international prices remain under $47.50 per barrel.

Exxon Mobil recently announced it could put upwards of $10 billion behind efforts over the next few decades to extract shale gas from Argentina's Vaca Muerta region.

Exxon's plans, as described by Chief Executive Rex Tillerson and reported by Bloomberg, have included a $200 million investment in the region and will include $250 million more "in coming months" for a pilot project. The remaining billions would come if the pilot program works out.

Agribusiness

Agribusiness is considered a critical engine for the country and to ensure the rebound of this sector, the Government eliminated the export taxes on all agricultural, cattle, fishery and industrial products, with the exception of soybeans, whose tax was reduced by 5 p.p. Therefore, export taxes for soybeans are now set at 30%, and taxes for soybeans derivatives at 27%. In this context, wheat will be one of producers' larger bets. Historically, wheat was seen as the crop to turn into cash at the end of the year.

In addition, Argentina is currently not producing enough food to cover its future demand. It is projected by Argentina's Ministry of Agriculture that Food production shall increase by 70% in 2050 to attend demand. 80% percent of the necessary production increases would come from productivity increases and only 20% from expansion of arable land.

To take advantage of the need for higher productivity, input companies, distributors, and logistics enterprises can expand into new geographies as well as provide a wider range of products and services (for example, high-yield seeds, fertiliser, and resource-optimization techniques) to help farmers increase crop yields. Offering innovative technologies (for example, seeds requiring less water for similar yields) is important, but so is their distribution in emerging markets.

Renewable Energy

Argentine President Mauricio Macri recently unveiled RenovAr, a national program to help the country reach its mandated goal of a 20% renewable-powered grid by 2025.

System operator Cammesa will oversee the tender, which aims to award 600MW of wind, 300MW solar, 65MW biomass, 20MW small hydropower and 15MW biogas capacity, and attract US$2bn in investment.

Power purchase agreements (PPAs) will have a term of no more than 20 years. Cammesa, representing electric utilities and large consumers, will be the official off taker.

Infrastructure

Reviving infrastructure projects is a key part of Argentina's efforts to boost its economy. Several major projects have already been re-launched, and news of more projects are expected in the coming months.

The infrastructure sector also opens up suitable opportunities. This industry presents two lanes: on the one hand, long-term projects, on the other, projects to solve bottle necks such as rural roads, bridges or high lanes connecting regional countries, that is, short-term projects that offer fast and high return rates.

Freight in Argentina will grow 40% over the next 10 years, from 430 million tons currently to about 600 million tons, according to estimates outlined by the national government's transport secretary, Guillermo Krantzer, in a meeting with transport operators earlier this year.

To address this growth, the government plans to build 2,800km of divided highways in the next four years, under a 12-year plan in which another 4,000km of roads will be added and all national routes will be widened to 7.3 meters and modified to increase turning space. The road expansion program will require investment of around US$13 billion, half of which will go to construction of divided highways.

Conclusion

Foreign investment is undoubtedly a very important factor in the government's economic strategy. And the role of private capital is key to that strategy.

With proposals focusing on rebuilding a good business climate in Argentina, the government has managed to attract the interest and sympathy of investors and business people in Argentina and abroad. But it faces a delicate task ahead to rebuild a climate of long-term confidence, which is critical to attract investment. As Roberto Chama says, Argentina is a secure country to do business, but it is not secure from a legal perspective.

Macri and his team now have the opportunity to change this. It won't be done overnight, but infrastructure investments will certainly play a key role.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions