Wednesday, May 15, 2013 Foreign direct investment in Argentina - TopicsExpress



          

Wednesday, May 15, 2013 Foreign direct investment in Argentina increases Foreign Direct Investment (FDI) in Argentina grew 27 percent in 2012 to US$ 12.5 billion, equivalent to 7.23 percent of the total investment in Latin America and the Caribbean, making it the fifth destination in the region. This information was presented yesterday in Chile by the United Nations Economic Commission for Latin America and the Caribbean (CEPAL). Although it highlighted the arrival of investments for the region, the CEPAL report expressed concern over “the not so clear evidence of an important contribution by the FDI toward the generation of new sectors or to the creation of activities with high technological content.” Argentina US$ 12.5 billion, when compared to the US$ 9.8 billion registered in 2011, represents an annual increase of 27 percent. The global FDI for the region in 2012 was US$ 173.361 billion, of which 37.65 percent (US$ 65.272 billion) went to Brazil. Of Argentina’s FDI, only US$ 3.354 billion represented capital contributions while more than twice as much, US$ 7.984 billion, corresponded to reinvestment of profits. “A priori, it’s hard to determine if the foreign investment in Argentina is of high quality or a job generator,” said Giovanni Stumpo, head of the Investment and Business Strategy Unit of CEPAL. CEPAL said that in Argentina, the main FDI has been linked to the agricultural sector, especially to soybean, which is characteristically labour-intensive or high quality. In the region, Argentina ranks fifth behind Brazil, Chile (US$ 30.323 billion), Colombia (US$ 15.823 billion) and Mexico (US$ 15.659 billion) and ahead of Peru (US$ 12.24 billion). 2012 was the year in which the foreign currency control and the restrictions on companies which wire dividends to their main offices abroad, were intensified. “The sectoral composition of the FDI accumulated in the country at the end of 2011 indicates that the sector with the largest presence of transnational companies (in Argentina) was the oil industry, with 20 percent, six per cent corresponds to the mining sector, 44 percent to the industry and agricultural sector and 30 percent to the services sector,” read the CEPAL report. The Committee recalled that “Spain used to be the main country of origin for the investments, followed by United States, the Netherlands, Brazil and Chile. This distribution was modified in 2012 after the nationalization of YPF’s 51 percent from Spain’s oil company Repsol.” In this way, Spain dropped in 2012 to eighth place in FDI in Argentina, behind the United States, Brazil, Switzerland, Chile, Denmark, Holland and Mexico. From last year, CEPAL highlighted as the main investment projects the purchase by Industrial & Commercial Bank of China (ICBC) of 80 percent of Standard Bank Argentina, and the acquisition of the British insurance company HSBC by Australian company QBE Insurance Group. Furthermore, CEPAL mentioned “the rise in the participation of Brazilian capital in oil and food companies,” and that “the projects of new investments with broader dimension were aimed at agricultural production; in particular, the Chinese group Chongqing Grain Group has purchased land destined to soybean production and its bid to associate with the local group Molinos Cañuelas.” UN on the region’s FDI Foreign direct investment in Latin America and the Caribbean this year could fall as much as three percent or jump by up to seven percent after leaping to a record in 2012, the United Nations body for the region said yesterday. The wide range is due to uncertainty over Anheuser-Busch InBev’s planned US$20.1 billion expansion of its stake in Mexico’s Grupo Modelo, the UN said. The region’s FDI expanded 6.7 percent last year from 2011 levels to a record US$173.361 billion, CEPAL said in its report. Beyond the potential massive Modelo purchase, investment rates in the region should be broadly similar to past years although recent declines in commodity prices pose a risk, the Santiago-based body added. Robust economic growth, high commodity prices and explosive domestic demand have lured high levels of capital to much of Latin America in the past decade. The region’s economy is now seen speeding up to expand 3.5 percent this year, boosted by stronger expected growth in Brazil and Argentina, surging domestic demand, as well as agriculture and investment. “The FDI results attest to the good current performance of the Latin American economy,” CEPAL Executive Secretary Alicia Barcena said. “However, we see no clear signs of FDI making a relevant contribution to generating new sectors or creating activities with a high technological content.” FDI is increasingly destined to natural resources, especially in South America, the UN body noted. The region exports a wide range of commodities such as oil, soy and copper, which have been buoyed by China’s voracious appetite. Brazil attracts most investment Powerhouse Brazil received the most FDI in the region last year, clocking 41 percent of flows to Latin America. The US and EU countries continue to be the top investors in the region although the UN underlined investment from countries within the region grew significantly in 2012. The region accounted for roughly 12 percent of global FDI last year. Herald with DyN, Reuters Increase font size Decrease font size Size Email article email Print Print Share Share on facebookShare on twitterShare on google_plusone_shareShare on linkedinShare on favoritesShare on google Vote Not interesting Little interesting Interesting Very interesting Indispensable
Posted on: Sun, 11 Jan 2015 21:34:03 +0000

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