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Business opportunities

Since the new Administration took office in Argentina in December 2015, several business opportunities have arisen across multiple sectors. In this website, Marval, O’Farrell & Mairal wants to offer you an analysis of the main investment possibilities within some of its areas of practice: energy and natural resources, agribusiness, infrastructure, and information and communication technologies. We hope this information will help you to make a decision if you are thinking about investing in Argentina.

Currently, power generation in Argentina is expensive and insufficient, for that reason energy is one of the fields where there are more room for improvement and, therefore, for investments. Showing its commitment with renewable energy and being its main goals to lower the cost of electricity and to get cleaner energy sources, the Ministry of Energy and Mining has launched during 2016 the RenovAr Program, a public auction to buy eolic and solar energy. Some of the opportunities for investors in this sector are to leverage Argentina’s excellent wind and solar conditions, to build multipurpose dams to generate hydroelectric power, and to introduce the latest technology developed for power generation.

Regarding oil and gas exploitation, Argentina is the second largest natural gas producer and the fourth largest producer of crude oil in Central and South America. Besides, the country has the second largest amount of shale gas resources and the fourth large shale oil resources worldwide. Lately there have been implemented several incentive programs to promote investments in hydrocarbon exploration and production, such as Gas Plus, Gas Plan I and II, and a promotional regime for new projects. Under this regime, producers that increase their natural gas production are entitled to a compensation, whose amount varies according to the additional volumes they supplied to the domestic market.

Agribusiness is an area where important business opportunities may be found. Argentina has a strong and developed grain futures and option markets, has adopted the most advanced innovations in sustainable production, and has been a leading country in introducing the direct seeding system. All these characteristics make the country suitable for an important development in this sector. Due to its important installed capacity, there are investment opportunities in the vegetal oil complex, and in the highly developed biotechnological sector, with more than 200 firms dedicated to this activity and a strong link with agribusiness. Investors may also find interesting opportunities to develop large industrial projects related to the lumber processing, and the use of wood biomass to generate renewable energy.

The lack of investment in infrastructure in Argentina is very deep, and the need for capital, technology, management and resources to overcome this deficit can’t be satisfied by the public or the private sector alone. The new Public-Private Partnership (PPP) Law provides an important tool to generate greater involvement of banks and multilateral lending agencies in financing public works. It will allow a balanced and predictable cooperation between the private and the public sector, something that the current government has been promoting since the beginning of its administration.  Private investors will have great opportunities to provide services directly to the public sector through contracts for the design, construction, operation and maintenance of, for example, water treatment plants, hospitals, schools, or freight hubs.

The ICT sector in Argentina is another example of how the new Administration is promoting relevant changes in order to attract new investments. One of the main changes is the reduction of administrative bureaucracy: the National Government intends to create a new and unified control authority for the sector and to speed up the administrative proceedings to obtain licenses. It is also promoting the development of new telecommunications infrastructure regarding video and audio streaming, cell phones, and radio frequency. The Government is also planning to take different measures to reduce the digital divide, eliminating import tariffs on computers and implementing a Digital Country Plan to provide public and free Wi-Fi to 1000 localities all over the country. Another important change, that may originate new business opportunities, is that, as from 2018, mobile carriers will be able to offer pay TV services.

New business opportunities are arising in Argentina. In this website, Marval, O’Farrell & Mairal gives you relevant information so that you can take advantage of them.

Alfredo M. O'Farrell

Partner

C.V.

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