Macri should make it easier for Brazilian SMB’s to do business in Argentina

This article was written and published by Renato Ghelfi (in Portuguese) for the Diário Comércio Indústria & Serviços. Click here for the original publication.

São Paulo – Businessman Mauricio Macri, recently elected President of Argentina, promises to open up the local market to foreign businesses. With the improvements in logistics and regulations proposed by the new president, there should be more scope for smaller Brazilian companies.

The opposition’s win in Argentina, in last Sunday’s elections, has been well received by executives across the border. André Favero, business director of the Brazilian Export and Investment Promotion Agency (Apex-Brazil), has no doubts: "small companies from our country can gain handsomely [from the change in government] and can be expected to get more business".

Favero says that "the logistical and regulatory terms of the laws in Argentina should improve". And with these changes "the already steady flow of business” may grow. He also stressed that we are going to see "a very favourable climate for increasing trade and investment between the two countries".

Currently Brazil and Argentina are two of the most backward nations in terms of trading with other countries, with exports accounting for 11.5% and 14.9% of gross domestic product (GDP), respectively. In most emerging economies, such as India (23.6%) and South Africa (31.3%), and Latin American countries such as Chile (33.8%) and Peru (22.3%), the percentages are higher. The figures are from the World Bank.

On the changes in Argentina, Sérgio Frota, Vice President of the World Trade Center (WTC) in Brazil, says that “real investment opportunities” are already being discussed and that “companies are showing interest in doing business in the country". He says that representatives of the WTC in Buenos Aires "can now feel more sanguine about trading relationships with foreigners".

Fredson Justo, managing partner at TMF Group, a firm that helps companies wanting to internationalize, agrees: "Macri’s arrival should make it easier for international companies to invest in Argentina, which is the second choice for Brazilian companies looking to invest abroad".

Justo also commented that “with improved foreign exchange and economic policies, it will be easier to invest in Argentina". In his view, "clearer rules and more stability will give businessmen who are interested in the country more security".

According to a ranking prepared by TMF Group, Argentina is the most difficult country for foreign companies to operate in, followed by Brazil and Bolivia. The list compares 81 jurisdictions according to the difficulty of doing business, from regulatory and compliance aspects. At the other end of the scale, the countries where it is easiest to invest are Hong Kong, Ireland and Puerto Rico.

Another comment on the result of the elections in Argentina is made by Horácio Borja, Ecuador's ambassador to Brazil. He says: "the more open the economies of Latin American countries, and the more contact there is between them, the easier it will be to combat the economic crisis in the region".

He also said that "for some years countries in this continent have been looking only to the United States and Europe for foreign trade" and he stressed that "Latin America has realized that its countries can help each other and progress together".

Mercosur

Shortly after he was elected, Mauricio Macri announced that he is going to invoke the democracy clause against Venezuela "for abuses in persecuting opponents and restricting freedom of expression". This measure could lead to Venezuela’s suspension from the Mercosur, a continental trading block with Brazil, Argentina, Paraguay and Uruguay as the other members.

Borja commented on this news and defended the government of Nicolas Maduro: "there have been more than ten democratic elections in this period [since Hugo Chavez came to power], with high turnouts. There will be another election soon, and the president has said he will respect the outcome.”

However Daniel Rivera, M&A consultant with Elit Capital, has other views. After recalling the arrest of the opposition leader Leopoldo Lopez, he says that Venezuela "must work very hard to reverse the current situation, and they need more democracy in the country".

Rivera thinks that Macri will have an important part to play "in the recovery and development of Latin America” and that his government will not tolerate “authoritarian attitudes on the part of trading partners".

All the specialists interviewed for this article took part yesterday in the "Latam for Business" conference, arranged by the WTC São Paulo Business Club.

 
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