Doing Business in Argentina | World Law Group – JDSupra – JD Supra

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Doing Business in Argentina | World Law Group – JDSupra – JD Supra

[co-authors: Carlos Alfaro, Liliana Arauz, Javier Medin, Agustín Negre, Ignacio Celorrio, Pedro Mazer, Sebastian Rodrigo]* 1.

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[co-authors: Carlos Alfaro, Liliana Arauz, Javier Medin, Agustín Negre, Ignacio Celorrio, Pedro Mazer, Sebastian Rodrigo]*

1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in your country that could have a big impact on businesses?

Argentina is still recovering from massive debt accumulated during the last government. The present government is trying to renegotiate debt to sustainable levels. Unfortunately, the COVID-19 pandemic has added an enormous financial burden. Social programs and debt relief packages have been successfully implemented to reduce the social impact. However at a cost. Likewise, the typical restrictions imposed by COVID-19 health measures have not been well received by a sector of society. The middle and upper classes are heavily discontent. Midterm elections are going to be held in November 2021. The outcome will have an impact on investments and business.

2. From what countries do you see the most inbound investment? What about outbound?

Uncertainty over external debt restructuring had already negatively affected inbound flows in 2020, before the COVID-19 crisis. The United States, Spain, and the Netherlands accounted for more than half of inbound FDI. Other major investor countries include Brazil, Chile, Switzerland, Uruguay, France, Germany, and Canada. These investments were mainly focused on manufacturing, mining and oil extraction, trade, banking, and other financial institutions, information and communications, and agriculture.

Outbound: Chile, Uruguay and Paraguay are the countries that for its geographical location and socio/economic characteristics may receive Argentine investments. Uruguay and Paraguay in agriculture and cattle. Uruguay in real estate and tourism. Chile in winery and mining. 

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

  • Mining
  • Cryptocurrencies, Fintech, and the technology sector altogether
  • Knowledge economy
  • Energy – Oil & Gas
  • Renewable energy
  • Construction

4. What advantages and pitfalls should others know about doing business in your country?

Understanding political and economic scenarios in the region allows us to anticipate changes in the legal framework and determine the impact of these changes on the business cycle. This is why our firm offers Political and Legal Risk Analysis services. We are, to the best of our knowledge, the only law firm in Argentina that offers this kind of service. Legal Risk Analysis is deemed to be a key element for decision making in direct and financial investment. It is part of our firm’s culture to provide our clients with insightful forecasts of the region’s environment. We believe that this tool is key to any investment or transaction in any country.

There are no restrictions for foreign investors to participate in companies incorporated in Argentina. Foreign investments do not require prior approval, and they enjoy the same conditions as those applied to local investors, being subject to the same rights and obligations of domestic investors. Nevertheless, foreign investments are subject to the laws governing the specific sectors and activities in which such investments are made. In this respect, a few activities require foreign investors to obtain prior approval from Argentine regulatory agencies (e.g., defense, banking & finance, insurance, and broadcasting industries).

5. What is one cultural fact or custom about your country that others should know when doing business there?

Social empathy is crucial. Argentinians do not like a “tough negotiator’s attitude.” Therefore, spending fifteen minutes chatting when starting a meeting and lunch or dinner is an advisable recommendation.

*Alfaro-Abogados

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