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Argentina: The Time for Business Opportunities is Here

Once again, Argentina has become an appealing arena for foreign investors, and Marval, O’Farrell & Mairal is ready to help its clients turn opportunities into real business.

Some facts

Argentina is a federal republic subdivided into twenty-three provinces and the Autonomous City of Buenos Aires. It is the world’s eighth largest country, second in South America only to Brazil, and one of the most important economies in the region. The country is a representative democracy where the term of office for the president is four years, and re-election is allowed for one more consecutive term.

Founded in 1923, Marval, O’Farrell & Mairal is the largest law firm in Argentina, and leader in the country as well as in Latin America. It has been providing quality and sophisticated advice to domestic and foreign clients for 90 years now.

In the past ten years, private initiatives were seriously affected by numerous government measures (freezing of utility rates, tax burden and restrictions on exports, export taxes on agriculture, lack of government investment in infrastructure, artificially fixed exchange rate, YPF expropriation, prohibition of rural land acquisition by foreigners, and import restraints, to name a few).

In December 2015, Mauricio Macri, former Mayor of the City of Buenos Aires and head of the “Cambiemos” party won the presidential elections, reversing a trend of over 12 years of Peronist government led by. Mrs. Cristina Fernández de Kirchner, who was  originally elected president in 2007 after her husband, Nestor Kirchner, fulfilled his term of office. She was reelected in 2011.

Nearly a year into Mauricio Macri’s presidential term, the signs of change in direction are auspicious.

A new horizon

An ambitious plan to strengthen the domestic sources of growth was launched in 2016, and a series of measures have been implemented to create an appropriate environment for future investments.

In particular, the conflict with the holdout creditors was solved, the “exchange clamp” was lifted and the bank reserve requirement of 30% for foreign currency entry into the country was removed, import controls were modified, export duties of agricultural products were either eliminated or reduced, as appropriate, subsidies to utility rates were also eliminated or reduced, and anti-money laundering measures were implemented, seeking to increase the flow of dollars into the country’s economy

Macri’s administration also aims to reduce fiscal deficit and combat inflation making efforts to bring it down to a single-digit figure in the next four years.

The objectives above, together with the fact that Argentina has an open investment regime, have enhanced the perception of potential investors and encouraged investment.

While there remain issues on the government’s agenda that demand attention (such as the creation of official rates of actual inflation, and changes to the capital market and competition law), this new climate is particularly suitable for the development of new businesses.

As an assessment of the first year of Macri’s administration, it can be affirmed that the government’s underlying aim is to establish the country as a potential domestic and foreign investment target.

What kind of investments can you carry out in Argentina?

Opportunities in fields such as renewable energy, telecommunications, transport, infrastructure, and agribusiness, among others, should be highlighted.

Given the high education level of the young population, and the prestige of Argentine universities, many cities have also become an attractive destination for mobile, software and game development. The four most successful examples are: Mercado Libre, Despegar, OLX and Globant.

While everything predicts an auspicious future for Argentina, we still have a long way to go, and it is of the utmost importance for a potential investor to obtain proper legal advice.

Marval, O’Farrell & Mairal is ready to meet this demand and provide comprehensive advice, especially in the following fields:

  • Corporations
  • Foreign exchange
  • Tax / Customs
  • Regulations
  • Dispute resolution

The change is real.

Argentina is open for business, and Marval, O’Farrell & Mairal is ready to advise you.

Alfredo M. O'Farrell

Partner

C.V.

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