May 05
09:42
2024
Print news
The Large Investment Incentive Regime (RIGI) is the part of the Base Law that is of most interest to the mining sector. What is it about? Why does it generate so much expectation and controversy at the same time? The position of La Rioja and national industrialists. The short blanket problem.
The first thing the reader should know is the meaning of the acronym RIGI.
The Large Investment Incentive Regime (RIGI) is a part of the “Bases Law” project that has had half a sanction from the Chamber of Deputies of the Nation since last week and that in a couple of days will concentrate the entire media agenda when it begins. its debate in senators to see if the project becomes law.
The second thing the reader should know is why RIGI is so important.
As determined in Deputies: the RIGI establishes that investments of more than USD 200 million will have extensive tax, customs and exchange benefits for 30 years, extendable for up to 40 more years after the launch of the project. Not only that, as marked by the ideological winds prevailing in the “Casa Rosada”, companies will also have absolute freedom for the entry and exit of capital.
There are two sectors that look forward to seeing the senators approve this article without modifying a single comma: the miners and the oil workers.
With this information, it is clearer why the Governments of Catamarca and Salta are pressuring their legislators to endorse the law or at least that chapter of the project, which involves them directly and could enhance their chances of mining production.
The equation made by the provinces that make up the Lithium triangle (which includes La Rioja) is that the greater the foreign mining investments, the more royalties and therefore more autonomy from national funds. Without forgetting that each project of this size and infrastructure needs local suppliers and direct resources would be encouraged there by injecting money into the area market.
The measure of market liberalization and regulations raised hackles in the national industry, because as a businessman in the sector explained this week: “It is playing with the playing field tilted.”
The main claim is that the tax cuts and conditions offered to foreign investors are “exaggerated” and “will generate deep asymmetries.”
The Association of Metallurgical Industrialists (Adimra) sent a note to the Minister of Economy Luis Caputo and in that text he expressed: “The regime is designed so that the products necessary for investment enter without paying taxes such as import duties, VAT and Profits. They even exempt them from municipal taxes. But if we bring stainless steel, which is not manufactured here, we pay for all that. At the same price of raw materials and labor, the regime will generate asymmetries of between 15% and 35% of the total value of the goods.” Put more simply: in some cases it would be cheaper to produce for foreign companies than for national ones.
When consulted for this text, someone from the Rioja ruling party with direct influence on the issue expressed at the end of the week: “There are two more problems. The first is that the companies that have already invested before are at a disadvantage compared to those that have already invested in previous years and the new investments are not directed towards the North of the country, so obviously you are going to continue developing the provinces that already have million-dollar investments and better infrastructure. ”.
While the national Congress gave half-sanction to the bill that the “Casa Rosada” hopes to have sanctioned before the signing of the “May Pact”, in La Rioja a report from the Ministry of Industry was released on the reality of the industry based in the province.
In the first quarter of this year there were a total of 198 layoffs and more than 350 suspensions in the Industrial Park, with the main problem for Riojan industrialists being the drop of more than 50% in sales in the textile sector. Added to this is that two companies directly closed their doors and many are experiencing delays of more than a month in paying salaries to their employees.
As always in this country, football has the answer to everything.
There is an old axiom of the sport that we Argentines play best that raises the problem of the short blanket. If you attack with many players you neglect the defense, if you leave many defenders you lose offensive weight in the rival goal. Football is like a short blanket and the need to cover different parts of the body when it is cold.
The provincial government faces several dilemmas.
The Bases law is against everything that Rioja Peronism thinks in economic matters and they are convinced that it especially harms the worker, the wage earner. “We did what we had to do, this law harms the worker,” said national deputy Ricardo Herrera on “Riojavirtual Radio” minutes after voting against it in the Deputies.
And the national senator Fernando Rejal also anticipated in the same media his negative vote in the Upper House by stating: “I cannot support a law that is going to cause harm.”
However, one of the main future economic projects of the provincial government is to strengthen the mining sector with lithium and copper. And for that sector of the economy, approving the RIGI is a great incentive for the arrival of more investments.
On the other hand, the national Executive’s proposal encourages the arrival of foreign funds to the detriment of an Argentine industry that is suffering the double impact of the fierce recession and the increase in internal costs. This context generated a problem that the Argentine economy did not have before December 10: the growth of unemployment.
Politics is a short blanket.
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