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The Incentive Scheme for Large Investments (RIGI) is a national government initiative in Argentina aimed at attracting significant investments in strategic sectors of the country. This article explores the details, benefits, controversies, and the impact of RIGI on maritime trade.

What is RIGI?

RIGI is a special regulatory regime designed to attract investments exceeding 200 million dollars in sectors such as agribusiness, infrastructure, mining, energy, technology, and forestry. This regime offers a series of fiscal and customs incentives with the goal of promoting economic development and competitiveness in these sectors.

Benefits of RIGI

  1. Reduction of Income Tax: Companies adhering to RIGI will see a reduction in the Income Tax rate, decreasing from 35% to 25%.
  2. Accelerated VAT Refund: Investments covered by the regime can benefit from a faster VAT refund.
  3. Zero Export Duties: Exports resulting from these investments will not be subject to duties.
  4. Duty Exemption: Companies will be able to import necessary machinery and supplies without paying duties.
  5. Legal Security and Rights Protection: The regime offers legal guarantees and protection of acquired rights for a period of 30 years.

Approval Process and Modifications

RIGI was approved in the Senate with 38 votes in favor and 32 against. In addition to the official party’s votes, support came from the PRO, most Radicals, and three Peronist senators. To ensure its approval, the national government introduced some modifications, including:

  • Local Suppliers Contracting Requirement: Investments must allocate at least 20% of the total to contracting local suppliers.
  • Sector Restrictions: The regime is limited to the agroforestry, infrastructure, mining, energy, and technology sectors.

Criticisms and Concerns

RIGI has sparked controversy and criticism from various sectors. The main concern is that the regime excessively favors large, especially foreign, companies at the expense of local small and medium-sized enterprises (SMEs).

Román Guajardo, president of the Industrial SME Union, expressed disagreement with the regime’s implementation, arguing that too many benefits are granted to foreign companies without sufficient reciprocation. Guajardo compared RIGI to promotion regimes in less industrialized countries and warned that Argentina, being an industrial country, does not need to offer such generous incentives.

Objectives of RIGI

Despite the criticisms, RIGI’s main objective is to attract large investments that boost economic development, strengthen sectoral competitiveness, and increase exports of goods and services. Companies interested in adhering to the regime have a two-year window from the enactment of the Base Law, with the possibility of extending this period by one more year.

Impact on Maritime Trade

The implementation of RIGI can have a significant impact on Argentine maritime trade for several reasons:

  1. Increase in Exports: By reducing duties and facilitating export conditions, an increase in the volume of exported goods is expected. This will benefit ports and maritime logistics companies, increasing cargo traffic and port activity.
  2. Investment in Port Infrastructure: With RIGI’s focus on sectors like infrastructure, investments to improve and expand port capacity are likely. This will not only modernize existing facilities but could also lead to the construction of new port infrastructures.
  3. Importation of Machinery and Supplies: The duty exemption for the importation of machinery and supplies necessary for large investments will also increase import volumes. This will require greater handling and storage capacity in ports.
  4. Strengthening the Logistics Chain: An increase in import and export activities can lead to a strengthening of the entire logistics chain, from land transport to loading and unloading operations, generating more jobs and opportunities in the sector.

Conclusion

The Incentive Scheme for Large Investments represents an ambitious effort by the national government to attract capital and promote economic development in key sectors. However, it is crucial to balance the benefits granted to large investments with the needs of local SMEs to ensure inclusive and sustainable growth. The introduced modifications are a step in this direction, but the debate on how to implement RIGI fairly and effectively continues. Additionally, its positive impact on maritime trade could be an opportunity to modernize and expand the country’s logistical capacities, benefiting the entire economy.