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Interview

Andr‎és Ondarra – Vice President, Invest Argentina

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The Vice President responsible for the oil and gas sector of Invest Argentina highlights the signs of government consistency in its current reform efforts and how the agency can support potential investors in maximizing the utilization of existing investment opportunities in Argentina.

Could you please introduce us to the scope of Invest Argentina?

“We ensure that the government’s direction and message as well as existing investment opportunities in Argentina are presented in a professional manner and that the world understands the full scope of unmatched opportunities in the country.”

The agency is dedicated to promoting and facilitating investments in Argentina, as well as promoting exports from Argentinian SME’s into foreign markets. We are a private & public organization; our funding is 100 percent public, reporting to the Ministries of Production and Foreign Affairs. We ensure that the government’s direction and message as well as existing investment opportunities in Argentina are presented in a professional manner and that the world understands the full scope of unmatched opportunities in the country. In this effort, we provide full support to companies investing in Argentina during the entire investment process, as well as local SMEs willing to internationalize their business

How would you define your mandate as Vice President?

The Agency is organized under a President – Juan Procaccini — and five vice presidents each of which has specific sector responsibility. In order to help companies in their investments plans, we have to thoroughly understand their sectors’ needs and demands, hence why we organized ourselves in a way where we have dedicated teams focusing on each sector. This allows us to maintain a high level of expertise in each sector, while establishing a tailored networking circle and close contact with the main stakeholders. My sectors include oil and gas, power, financial services and real estate. A very important fact is that the entire leadership of the agency has a private sector background, which means we understand the general perspective of the private side and are able to converse on eye level. The way we are organized reflects the way the new government is willing to interact with the private sector, as it certainly will maximize investments which in turn will materialize in employment opportunities for our citizens.

The president of the Agency, Juan Procaccini, said “We’ve been pretty much out of the market for 10 years, we were totally isolated. And now that has totally changed”. In this context, what is your action plan to generate investments into Argentina?

Our first priority was to get the Agency up and running with the right team in place. The Agency was created by the new administration in February 2016. I joined the agency in May, at the time we were only two vice presidents –now we are five—, thus we have already significantly increased our senior team. Right now we are operating at full speed, working head to head with our clients, ensuring that we understand their investment plans and help these to materialize. At this stage, we are focusing on companies that have already decided to invest in Argentina, companies that at some point had decided to postpone their investments due to different facts and that now, under the new government, are willing to implement their investments plans. The speed of our progress can be seen by the numbers we have already achieved in less than a year of existence; right now we are managing more than 100 companies with an investment pipeline of more than USD 25 billion.

As pointed out by Dow Chemical’s CEO Andrew Liveris at the Investment Forum, Argentina is beginning to turn from a red tape country to a red carpet country. However, the country needs to show persistency of the current political direction. What do you say to business community leaders and international investors who are cautious and waiting to see whether this new policy direction is enduring?

We fully understand this concern. Having the private background, all of us understand the need of as much certainty as possible before making an investment decision. On the other hand, I am convinced that the right signs of stability and continuity have already been sent in the context of political direction, building consensus and engaging in dialogue with the private sector. In the recent Argentina Business & Investment Forum, for instance, we had a significant participation of the opposition with a clear message: while some disagree with certain policy implementations, most players agree with the general direction the government is taking, which is to stabilize as a country, express a sense of continuation and stop swinging in between the extremes of the political spectrum.

What’s more, the current administration does not have congress majority and in October 2017 there are mid-term elections. Nevertheless, we believe this will not change the country’s direction. The sheer pace of our government’s ability to pass all the heavy measures already implemented through congress shows that the majority of the political spectrum of Argentina agrees on the general direction One of the most recent laws that got half sanction, for instance, is the public private participation law (PPP) which will bring a more stable regulatory framework for companies interested in investing in long term oil and gas or infrastructure projects with public sector participation. Other regulatory changes already implemented include the law for first employment, SMEs, changes to the land law; all efforts to ‘normalize’ the country and provide stability in the longer term.

President Mauricio Macri recently said that energy is at the heart of Argentina’s future. However, investments are needed across all sectors in Argentina including agriculture, infrastructure, capital goods and more. To what extend is attracting investments into the oil & gas and energy industry a priority within your overall ambitions to attract investments?

Investments in energy and infrastructure are a top priority; these are the key pillars to develop the whole country. For instance, the agroindustrial sector of Argentina is significant, yet if the transportation infrastructure is not good enough we will not be able to use the resources of this sector to full extend. The government has a crystal clear vision to put the country back to work, and the imminent challenges to are energy and infrastructure development.

What are some of the existing incentives for investors to invest into Argentina?

There are numerous incentives for the full scope of industries in need of investments. In the oil and gas industry, for instance, the different price structure compared to the international price structure is an obvious incentive, among others.

What can the Agency offer to companies willing to invest into Argentina?

We engage in an active dialogue with the individual companies in order to understand their specific needs while ensuring the companies fully understand the scope of opportunities within the country., We help them in conducting their investment process, acting as their strategic partner throughout the entire process with the idea to work in collaboration on challenges in this process thus ensuring the investments are materialized to their full extend. The core idea here is to solve problems; that means we provide assistance in government interaction, provide market overview and an understanding of the stakeholders within the public and private sphere. We also provide expertise on the financing side: we do not offer loans, but we can provide assistance in understanding the financial solutions available. Another area is legal advice, we have a team dedicated to analyzing the regulatory framework and other legal aspects affecting investment decisions in the country, with the main goal of advocating for policies that facilitate and encourage investments. Overall, we can provide assistance, expertise and know-how in the entire process of investing.

Many of the multinational companies already operating in Argentina have told us that one cannot operate here without a local partner. How would you asses the indigenous industry’s sentiment in regards to supporting multinationals coming into Argentina?

There are excellent success stories of both, investors collaborating with a local partner and multinationals who did not. In the oil and gas industry, for instance, there are companies with a successful track record of international partnerships while other companies have decades of success without a partner. Of course, there are advantages of having local partners for multinationals investing in Argentina –domestic market knowledge among others—however, in the past these partnerships were often rather required to gain specific contacts—especially with the government. This, however, is the old Argentina; companies do not need these contacts anymore to be successful because the new administration emphasizes transparency and endorses the principle of equal opportunity.

Argentina is not alone in offering opportunities to the oil and gas industry but it is competing with countries such as Bolivia, Colombia and Brazil. Of course, none of these has a “Vaca Muerta”, however, these also have their specific opportunities. Why should the global oil and gas companies place their investments into Argentina instead of these regional neighbors?

The momentum of Argentina is entirely different to other Latin American countries. Argentina is coming out of decades of little or no foreign investment, which creates significant opportunities across multiple sectors. Specifically, in the energy sector there has been practically no investments for many years. Moreover, as a country we understand that opportunities are not everything but that these have to be matched by the right framework, the way business is conducted and simply being a stable country of the 21st century. What’s more, we have strong fundamentals compared to some of our regional neighbors such as the size and development of the local market. We have the second highest GDP per capita in the region. Additionally, we have tremendous natural resources; not only oil and gas but also renewable energy, water, agriculture. We also have a highly trained and educated workforce. The Argentinean value proposition globally—and especially in the regional context—is highly attractive! And this value proposition is already recognized by some of the leading private stakeholders globally; given the scope of available natural resources and the positive business and investment environment this government is establishing, some analysts believe that Argentina will be one of the main determinants of the global oil and gas price in the next 30 to 40 years.

“Argentina will be one of the main determinants of the global oil and gas price in the next 30 to 40 years.”

Overall, what are the accomplishments you want to look back onto when it comes to the next presidential election in Argentina?

Many materialized investments which resulted in more and better job for our citizens, and improved the overall living standards in our country! We will work as close as possible with companies to ensure that investment opportunities are clearly defined and conveyed in the right manner thus establishing Argentina on the global map as a highly attractive investment destination.

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