Imports: Tierra del Fuego, under fire?

Juan Guaita was surprised by the Central Bank’s measures at his Rio Grande plant. I have planned the other match that will be played in this World Cup, between sales of high tech TVs and broadcasts, to enjoy a tournament that is the first in history that takes place in our summer. And he found an unexpected scenario.

In Tierra del Fuego they called the brake on access to foreign currency by the Central Bank “turnstile”. In an Argentina with no trade credit, importers of the kit to be assembled must now open an account with a bank that requires collateral to advance dollars to the supplier.

This cost stands at a minimum level of 30%. Another alternative is to use your own dollars which, with the 100% gap between the official and the blue, brings the price of products to levels that are beyond competition.

The validity of the regime

In that southern region, which many consider the last Argentine bastion, Alberto Fernández extended until 2038 the industrial promotion regime which provides great tax advantages. Naturally, a fund was created to finance projects that help diversify the island’s production matrix. After 2038, another extension is planned for 15 years.

The justification for electronics in Tierra del Fuego has always been the existence of the Manaus free zone in northern Brazil.

In Argentina, the cost of the system is 0.37% of GDP according to the 2021 Budget data. It is 25% of everything that goes to Science and Technology. But only a small part, given the demand in foreign currency for imports that the regime requires. They reach $ 4,000 million this year.

Guaita assures us that in his case it is not an armor of aircraft systems. It employs 240 people, reaching 400 in high season. He says he imports copper coils and empty electronic boards from China.

The electronic assembly train, in which he has invested $ 5 million, is state-of-the-art and has been refurbished with 14 machines in the process of cutting and bending the tubes. The case and remote control are made in Argentina.

A lawyer by profession, Guaita, 55, considers himself a business management expert. He walked through the Buenos Aires Zoo, among many others, until he landed with a handful of shares in Electra in 2009, when the company was owned by Israeli capital.

Because of the economic cyclones and that fateful combination of high rate pesos debt and dollar debt to Chinese suppliers, in 2018 with the devaluation and a summer with low temperatures, they came down to call creditors.

Guaita reached an agreement recognizing 100% of the debt in pesos and 50% of the debt in dollars. He got the majority and left the competition. Last year bought 43% the Israelis still held in Electra and manages the brand in Argentina, Chile and Uruguay.

“The pandemic has helped us. In 2020 we sold 90,000 devices and 128,000 in 2021. We produce for third parties and we have consolidated ourselves behind Newsan and BGH ”. With the World Cup in Qatar, they identified the opportunity and they planned to produce 140,000 arias.

Comparison with Manaus

Of course, access to foreign exchange does not seem to be the only obstacle. Chinese kits increased by 30% and freight rates, from $ 3,000 per container before the pandemic, stabilized at $ 12,000. The sector parity was adjusted by 55%. Guaita admits that aires, about $ 400 in Argentina, are cheaper abroad.

This reality has led to notice it The Tierra del Fuego regime cannot be compared or justified in terms of Manaus.

The researchers Marta Bekerman and Federico Dulcich, underlined: “The main differences lie in the greater local integration and with its national territory which presents the Manaus Free Trade Zone, as well as in a less irregular investment path, and a more diversified “.