Argentina: A strategic destination for productive investment

Undersecretariat for Investment Development and Trade Promotion Secretariat of International Economic Relations Ministry of Foreign Affairs and Worship June 2012

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Why invest in Argentina? Natural resources and productive development working together to satisfy national, regional and global demand • Solid foundation for a sustainable growth A domestic market in expansion • Attractive profitability Profitable business in a wide variety of productive sectors • A global and regionally integrated economy

Global strategic link • Diversified productive economy Attractive investment opportunities in a variety of strategic productive sectors • Modern infrastructure National and international connectivity • Natural resources and a highly skilled workforce Abundance and diversity • Public support for investment Incentives and equal treatment for foreign investors 2

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Argentina’s Forest Industry

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Forest Industry A dynamic growing sector with great potential

Variety of climates, lands and species: extensive areas for forestry.

Profitability: high rates of forest growth and shorter cutting periods guarantee the sector’s profitability.

A favorable legal framework: two laws for Investments in Planted Forests (No. 25080 and No. 26432) promote and support the industry’s development.

Technologic innovation: genetic developments and latest generation forestry service in place.

Industrial Plan 2020: forestry industry on track to grow 9% per year to reach a trade surplus of US$ 540 million in 2020.

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Forest Industry Responsible and sustainable exploitation

• 33.2 million hectares of native forest and 1.2 million hectares of planted forest.

20 million hectares • Planted forests are expected to reach 1.8 million hectares by 2020. • Conifers and eucalyptus predominate in planted forests, while high-quality woods such as quebracho, carob and lenga predominate in native forests.

suitable for forestry

Only 5% of the land suitable for forestry development is being exploited

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Solid foundation for success Extensive areas for forestry

Mesopotamia (the provinces of

Forest extraction of planted forests Total amount 9.3 million tons (In % - 2010)

Misiones, Corrientes and Entre Ríos) has the highest number of planted Other 1.71%

forests to exploit

Poplar 4.02% Eucalyptus 32.01%

Forestry lands do not compete with other farming activities

Pine 59.24%

Source: SUINV based on MAGyP

Willow 3.02%

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Solid foundation for success Strong legal framework ensures sustainable development and growth Two laws (25080 and 26432) provide the legal framework to foster investment in planted forests , including: Economic support: reimbursement of planting costs and support for new ventures up to 700 hectares and non-reimbursable funds for new investments.

Tax benefits: tax exemptions, fiscal stability for 30 years (extendable up to 50 years), early VAT refund, accelerated depreciation (e.g., income taxes).

Forest certification system has been in place in the country for over a decade. More and more Argentine companies are obtaining these certifications: Forest management certification Chain of custody certification Controlled wood certification

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Solid foundation for success Attractive profitability outlook and high growth rates

Growth rate (%) Meters3/Hectares/year (2003)

Argentina`s forest industry reached Theprofitability annual average growth 11,5% in 2010

45 40 35 30

The annual average growth of conifers in Argentina is twice as high as that of the traditional forestry countries

25 20 15 10 5

Conifers

Brazil

Argentina

Chile

Argentina

New Zealand

Chile

Australia

Southern USA

Northern USA

Spain

Sweden

Russia

Eastern Canada

0

Average growth of eucalyptus per year 43m3/ha

Eucalyptus

Average growth of conifers per year 33m3/ha

Source: Simpson Timber Co., Aracruz Cellulose, Jaako Poyry Investments. CIEF.

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Solid foundation for success Tremendous growth potential with local, regional and global scope

Destination of Argentine forest exports (% – Year 2010)

NAFTA 9%

China 8%

• Argentine exports increased 20% in 2010, slightly above global exports, which increased 19% in the same period.

Others 4% Mercosur 37%

Chile 13% Africa 6%

Rest of América 9%

• Argentine forest product exports reached US$1.1 million in 2010

European Union 14%

• Argentine participation in global forest product exports is negligible (0.2%) representing huge growth potential. • The main export markets for Argentine forest products are Mercosur (37%), European Union (14%) and Chile (13%).

Source: SUINV based onMAGyP

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Solid foundation for success Innovation for forest industry

• Genetic development: companies, labs and public entities, such as The National Institute for Agricultural Technology (INTA) and the National Institute for Industrial Technology (INTI), are working together to improve the sector’s technologic development.

• Biomass: electric energy generation through total use of wood using sawdust, splinters and other forest waste.

BIOMASS Sawmill and wood waste (production: 600,000 tons)

• Skilled workers: undergraduate an graduate degrees in forestry studies. Top-level technicians, agronomists and industrial engineers provide the expertise to ensure sustainable growth.

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Forest Industry Opportunities in a booming domestic market

Foreign trade evolution of forest-based products In thousand of dollars, 1990-2010

2.000.000

1.500.000

Argentine exports increased 20% in 2010

1.000.000

500.000

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

-500.000

-1.000.000

Exports

Imports

Balance of trade

Source: SUINV based on MAGyP

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Boundless opportunities Diversity of investment opportunities within an industry with a longstanding tradition

Opportunities related to design and technology in an industry with an outstanding track record Furniture industry Construction with industrialized solid timber Development of a forest-product productive value chain Energy generation from biomass Continued certification of a sustainable productive forest value chain

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Argentina welcomes productive investment The Undersecretariat for Investment Development and Trade Promotion is your strategic partner for investing in Argentina • The Undersecretariat for Investment Development and Trade Promotion fosters productive

investments in Argentina and supports the international expansion of domestic companies. • Investment development activities are supported by a network of 130 permanent representations

throughout the world.

Major working areas: ✓Investment missions ✓Productive Investment Opportunities Database (BaPIP) ✓Investor Services ✓Permanent promotion actions ✓Promotion agents

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BaPIP: Productive Investment Opportunities Database A link between investment projects and investors

www.inversiones.gov.ar 14

Productive Investment Opportunities Database (BaPIP) A link between projects and investments at the disposal of forest industry

• High-technology sawmills with: - drying place and tongue-and-groove wood factory. - drying place - drying place and molding factory - drying place & wood flooring factory

• Medium-density fiberboard manufacturing plant • Development of industrial plants to manufacture furniture and wooden houses

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Thank you!

To learn more about how investing in Argentina can benefit you, please contact us: www.inversiones.gov.ar [email protected] (5411) 4328-9510

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