Argentina: Business environment at a glance. Check it out:
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW
FROM THE ECONOMIST INTELLIGENCE UNIT
Policy towards private enterprise and competition
2006-07: Contract renegotiations with privatised utilities make slow progress. Further state interventionism through price controls and wage renegotiations. Incentives for investment and subsidised credit lines for local investors.
2008-10: Distortions from interventionist policies impair efforts to restore confidence in institutions and propertyrights.
Policy towards foreign investment
2006-07: Welcoming of foreign investment, tempered by encouragement of increased domestic ownership.
2008-10: As foreign direct investment (FDI) will be critical to long-term growth, policy will focus on broadening inflows.
Foreign trade and exchange controls
2006-07: Targeting of an unofficial exchange rate weaker than Ps3:US$1. Trade policy will be occasionally used as an anti-inflationary tool. Occasional resort to protectionism against Brazil. Control on short-term capital inflows.
2008-10: Emphasis on improving export finance and infrastructure; deepening of subregional integration within the Mercado Comun del Sur (Mercosur, the Southern Cone customs union).
Taxes
2006-07: The system to remain complex. Financial transactions tax and export levies will persist, but rates may be reduced.
2008-10: An increased likelihood that the rates of temporary taxes could be reduced. Although a comprehensive tax reform is unlikely, the government will attempt to change the tax structure towards a major share of direct taxes in tax revenue.
Financing
2006-07: Although lending will recover, the availability of investment finance will be limited.
2008-10: Availability of long-term credit will continue to increase gradually from a low base, but lingering distortions in financial markets will restrain expansion. Slow progress in improving the lending practices of state-owned banks.
The labour market
2006-07: Union influence will inhibit government attempts to curb wage rises, but informal-sector wages to remain low.
2008-10: Dollar cost of labour rises. Possible re-examination of severance costs and payroll taxes. Some skills shortages.
Infrastructure
2006-07: Demand management and state intervention to avert energy shortages. Interim tariff deals struck with utilities.
2008-10: New investments set to improve energy supply and to upgrade export infrastructure.
Copyright 2006 Economist Intelligence Unit
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