Argentina: A strategic destination for productive investment

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1 Argentina: A strategic destination for productive investment Undersecretariat for Investment Development and Trade Promotion Secretariat of International Economic Relations Ministry of Foreign Affairs and Worship June

2 Why invest in Argentina? Natural resources and productive development working together to satisfy national, regional and global demand Solid foundation for a sustainable growth A domestic market in expansion Attractive profitability Profitable business in a wide variety of productive sectors A global and regionally integrated economy Global strategic link Diversified productive economy Attractive investment opportunities in a variety of strategic productive sectors Modern infrastructure National and international connectivity Natural resources and a highly skilled workforce Abundance and diversity Public support for investment Incentives and equal treatment for foreign investors 2 2

3 Argentina s Forest Industry 3

4 Forest Industry A dynamic growing sector with great potential Variety of climates, lands and species: extensive areas for forestry. Profitability: high rates of forest growth and shorter cutting periods guarantee the sector s profitability. A favorable legal framework: two laws for Investments in Planted Forests (No and No ) promote and support the industry s development. Technologic innovation: genetic developments and latest generation forestry service in place. Industrial Plan 2020: forestry industry on track to grow 9% per year to reach a trade surplus of US$ 540 million in

5 Forest Industry Responsible and sustainable exploitation 33.2 million hectares of native forest and 1.2 million hectares of planted forest. Planted forests are expected to reach 1.8 million hectares by Conifers and eucalyptus predominate in planted forests, while high-quality woods such as quebracho, carob and lengapredominate in native forests. 20 million hectares suitable for forestry Only 5% of the land suitable for forestry development is being exploited 5

6 Solid foundation for success Extensive areas for forestry Mesopotamia (the provinces of Misiones, Corrientes and Entre Ríos) has the highest number of planted forests to exploit Forest extraction of planted forests Total amount 9.3 million tons (In % ) Other 1.71% Poplar 4.02% Eucalyptus 32.01% Forestry lands do not compete with other farming activities Pine 59.24% Willow 3.02% Source: SUINV based on MAGyP 6

7 Solid foundation for success Strong legal framework ensures sustainable development and growth Two laws (25080 and 26432) provide the legal framework to foster investment in planted forests, including: Economic support: reimbursement of planting costs and support for new ventures up to 700 hectares and non-reimbursable funds for new investments. Tax benefits: tax exemptions, fiscal stability for 30 years (extendable up to 50 years), early VAT refund, accelerated depreciation (e.g., income taxes). Forest certification system has been in place in the country for over a decade. More and more Argentine companies are obtaining these certifications: Forest management certification Chain of custody certification Controlled wood certification 7

8 Solid foundation for success Attractive profitability outlook and high growth rates Growth rate (%) Meters 3 /Hectares/year (2003) Argentina`s forest industry The profitability annual average reached growth 11,5% in 2010 The annual average growth of conifers in Argentina is twice as high as that of the traditional forestry countries Eastern Canada Russia Sweden Spain Northern USA Southern USA Australia Chile New Zealand Argentina Chile Argentina Brazil Average growth of eucalyptus per year 43m 3 /ha Conifers Eucalyptus Average growth of conifers per year 33m 3 /ha Source: Simpson Timber Co., Aracruz Cellulose, Jaako Poyry Investments. CIEF. 8

9 Solid foundation for success Tremendous growth potential with local, regional and global scope Destination of Argentine forest exports (% Year 2010) NAFTA 9% Chile 13% Africa 6% China 8% Others 4% Rest of América 9% European Union 14% Mercosur 37% Argentine forest product exports reached US$1.1 million in 2010 Argentine exports increased 20% in 2010, slightly above global exports, which increased 19% in the same period. Argentine participation in global forest product exports is negligible (0.2%) representing huge growth potential. The main export markets for Argentine forest products are Mercosur (37%), European Union (14%) and Chile (13%). Source: SUINV based onmagyp 9

10 Solid foundation for success Innovation for forest industry Genetic development: companies, labs and public entities, such as The National Institute for Agricultural Technology (INTA) and the National Institute for Industrial Technology (INTI), are working together to improve the sector s technologic development. Biomass: electric energy generation through total use of wood using sawdust, splinters and other forest waste. BIOMASS Sawmill and wood waste (production: 600,000 tons) Skilled workers: undergraduate an graduate degrees in forestry studies. Top-level technicians, agronomists and industrial engineers provide the expertise to ensure sustainable growth. 10

11 Forest Industry Opportunities in a booming domestic market Foreign trade evolution of forest-based products In thousand of dollars, Argentine exports increased 20% in Exports Imports Balance of trade Source: SUINV based on MAGyP 11

12 Boundless opportunities Diversity of investment opportunities within an industry with a longstanding tradition Opportunities related to design and technology in an industry with an outstanding track record Furniture industry Construction with industrialized solid timber Development of a forest-product productive value chain Energy generation from biomass Continued certification of a sustainable productive forest value chain 12

13 Argentina welcomes productive investment The Undersecretariat for Investment Development and Trade Promotion is your strategic partner for investing in Argentina The Undersecretariat for Investment Development and Trade Promotion fosters productive investments in Argentina and supports the international expansion of domestic companies. Investment development activities are supported by a network of 130 permanent representations throughout the world. Major working areas: Investment missions Productive Investment Opportunities Database (BaPIP) Investor Services Permanent promotion actions Promotion agents 13

14 BaPIP: Productive Investment Opportunities Database A link between investment projects and investors 14

15 Productive Investment Opportunities Database (BaPIP) A link between projects and investments at the disposal of forest industry High-technology sawmills with: - drying place and tongue-and-groove wood factory. - drying place - drying place and molding factory - drying place & wood flooring factory Medium-density fiberboard manufacturing plant Development of industrial plants to manufacture furniture and wooden houses 15

16 Thank you! To learn more about how investing in Argentina can benefit you, please contact us: (5411)