Argentina: From Red Tape to Red Carpet
Argentina’s new administration has held its first Business and Investment Forum in an effort to entice foreign direct investment (FDI) into the country. The event was leveraged to showcase the new direction of the government, voice commitment to prolonged fiscal and structural transition, and address a key concern of many of the industry leaders in attendance: government consistency.
“We have embarked upon a new political phase, and are ushering in the new Argentina”
Mauricio Macri, President of Argentina
A key milestone in President Mauricio Macri’s crusade to attract tranches of fresh FDI into Argentina occurred in Buenos Aires from the 13th to the 15th of September with the launch of the much anticipated Argentina Business and Investment Forum. The event itself was attended by over 2000 top executives from around the world each eager to witness first hand a demonstration of the new administration’s political and economic resolve following years of economic turmoil and insular protectionist policy.
“We have embarked upon a new political phase, and are ushering in the new Argentina,” confidently declared President Mauricio Macri, eager to reassure the international investor community that the country has learned from past eccentricities and is finally ready to complement its “profound talents and bountiful natural resources” with “consistency in rule of law, regulatory predictability an a thorough clean-up of the national economy.” Such pronouncements were naturally warmly received by private industry. “To trigger prolonged growth and inward investment flows, it’s absolutely crucial to have regulatory certainty and to be convinced of the state’s commitment to and persistence in carrying through proper structural reform,” explains Andrew Liveris, CEO of Dow Chemical.
The ongoing fiscal and structural reforms of the Argentinian government have not passed unnoticed with Liveris keen to point out that “many governments around the globe are nowadays bereft of ideas, struggling for answers to their economic woes and unwilling to countenance necessary structural and fiscal reform given its associated unpopularity!” Macri’s regime, by contrast is pressing ahead with real reform unabashed. “This has been a red tape country for so long that it is almost unimaginable to now witness the emergence of a red carpet [country]!” he gushes. Liveris is convinced that Argentina is on the cusp of becoming one of the most promising countries in the region just so long as its leaders prove successful in “changing the rules of the game.” Other industry leaders concur. “We’ve entered a period of incredible adjustment, but just have to hope that the new spirit prevails and there is no back sliding or weakening of resolve,” mutters one.
Juan Procaccini, president of Argentina’s Investment and Trade Promotion Agency, recognises that there will be doubters and that it will take time to win back the trust of the international investment community. “We’ve been pretty much out of the market for 10 years; we were totally isolated… and now everything has radically changed,” he muses, reflecting on the sheer scale of the task at hand.
For Bob Dudley, CEO of BP in Argentina, the country requires two more ingredients in addition to a continuation of the reforms underway. ”To turn this situation around it’s going to be massively important to secure both labour flexibility and great scale, by which I men more rigs, more roads, more hard infrastructure that can buttress and support the industry,” he asserts. “In my discussions with government officials, I do detect though that there is genuine desire to make this happen, so there’s much reason to be optimistic,” he elaborates.
Not only private actors, but even governments appear charmed by declarations of a “new Argentina, open for business again.” Sigmar Gabriel, Vice-Chancellor and Minister for Economic Affairs and Energy of Germany says he is convinced the country “is on the right track again,” emphasising that Germany stands as “a ready trade partner” with “all manner of German businesses ready to engage in technology and know–how transfer and assist in Argentina’s economic development.”
Testament to that readiness, Siemens even used the event to unveil a commitment to the tune of some EUR five billion (USD 5.6 billion) in direct in-country investment in infrastructure, mobility and energy management. ”The size of our contribution is reflective of what we perceive as the utter seriousness displayed by the authorities towards enacting game-changing reform,” expounds Siemens CEO, Joe Kaeser. Our calculation is that, if Argentinians get their economy and business ecosystem in order this time round, they could soon find themselves leading the Latin American region once more.”