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Argentina has enjoyed strong economic growth over the past decade while receiving little foreign direct investment or exposure to the international financial markets. For overseas companies looking to capitalise on its strong fundamentals, local help and prior knowledge of the market is essential.
The Argentine Government plays a very proactive role in the country’s business relations, and new measures to stabilise the domestic business environment are imposed at a continuously. Government controls on trade and access to foreign exchange are one of many ways in which the public sector interferes with the economy; Central Bank measures are also commonplace as the country battles a diminishing trade surplus.
But there is an air of optimism around the country’s economic prospects after government figures predicted growth of 4.4% in 2013 after growing 3.4% in 2012. Economy Minister Hernan Lorenzino praised the country’s strong domestic consumption and investment, which continues to fuel growth despite a lull in the international economy.
Expanding businesses moving into Argentina are advised to have local help on board in order to seamlessly navigate the diverse and complicated landscape.
Starting a Business
It takes 14 procedures and 26 days to start a business in Argentina, which is well above the OECD average but on par with other countries in Latin America and the Caribbean. Figures from the World Bank and International Finance Corporation revealed that it costs 12.3% of income per capita, far more than the 4.5% OECD average.
Dealing with Construction Permits
Dealing with construction permits is by far the most arduous and time consuming aspect of doing business in Argentina, taking 24 procedures and a year to complete. Obtaining a new construction project permit and an Environmental Impact Assessment Certificate takes 150 days in total.
Obtaining approval of electrical plans from the relevant Municipality can be a daunting task in Argentina, coupled with drawn out procedures with Edesur, an Argentine distributor of electricity, which can take 30 calendar days.
Registering property requires seven procedures and an average of 55 days compared to the OECD average of 26. The seller must obtain a certificate of ownership ("dominio") and a certificate of good standing ("inhibiciones") from the Real Property Registry before the procedure can even begin, which can add costs and time to the overall procedure.
Argentina ranks 67th in the world for ease of getting credit, according to the World Bank, making it one of the most streamlined processes in the country. Still, there are four complex procedures to navigate and the cost of obtaining credit can be quite steep.
Investor protection certainly isn’t Argentina’s strong suit, although its results are in line with most countries in South America.
Paying taxes is a complicated procedure, with around nine payments per year and 405 hours required. The taxes are also extremely high and navigating the system, with multiple overlapping taxes, can create a significant business chore.
Trading Across Borders
Overseas trade can be challenging, and an increased focus on maintaining Central Bank reserves in the face of a diminishing trade surplus together with an import substitution model have led Argentina to increase its use of non-tariff trade barriers. A tax on foreign purchases made by credit or debit cards has also been introduced and broadened to include international flight tickets and payment of foreign services. It costs $2,260 to import each container and an average of 30 days.
Enforcing contracts can take up to 590 days and 36 procedures. Filing and service and trial and judgement are the two areas that take the most time; 470 days collectively.
It can take up to 2.8 years from filing for insolvency in court until the resolution of distressed assets, and cost 12% of the estate.
We have the local knowledge to help you navigate these minefields. Whether you want to set up in Argentina or just want to streamline your Argentinian operations, talk to us.