President Javier Milei’s flagship RIGI incentive scheme for large investors has only imported US$26 million in three projects in one year. Seven actions were approved, 11 pending, and China rejected. One year after receiving Congressional approval and being introduced to much acclaim, one of President Javier Milei’s signature initiatives, the Régimen de Incentivos para Grandes Inversiones incentive scheme for major investments – commonly referred to as RIGI – has yet to gain traction.
In the last year, a total of seven initiatives have received approval, amounting to an investment of US$13.167 billion. There are an additional 11 projects currently under consideration. Thus far, there has been a solitary rejection, specifically concerning a proposal submitted by the Chinese company Ganfeng. “RIGI is progressing at a somewhat measured pace,” economist Federico Bernini informs us. “The projects experienced delays in their presentation and approval processes.”
RIGI projects have demonstrated limited investment activity. For instance, regarding imports – “The imports are progressing at a sluggish pace, with several approved projects still awaiting the registration of purchases.” However, many of these initiatives are oriented towards the long term – copper, for instance – indicating that the imports do not occur instantaneously but rather require time,” stated Bernini, a member of Instituto Interdisciplinario de Economía Política (IIEP) at the University of Buenos Aires. The October midterms are currently hindering investment activity. “They could be awaiting the results of the elections to know whether there exists a possibility of non-compliance with the conditions,” as occurred with the mining investment legislation of the 1990s, stated the economist.
In specific terms, three projects have recorded imports. For Luz de Campo, a solar energy park that became the first project to be approved by the RIGI, the latest data available from July indicate zero imports, although accumulated imports amounted to US$22 million up to that point, representing the highest total to date. The acquired products included complete solar trackers, liquid dielectric transformers, static converters, and photovoltaic cells that were assembled into modules or panels. Next is VMOS SA, the Vaca Muerta Southern Oil Pipeline Project, which recorded imports of US$24,000 in July, contributing to a cumulative total of US$4.6 million for the year to date. The primary offering consisted of steel containers with a capacity exceeding 300 litres. Finally, the Proyecto Rincón mining project in Salta commenced imports last month with a modest budget of US$5,500 allocated for the acquisition of alternative volumetric pumps.
Matías Cena Trebucq, an economist with the Fundación Ambiente y Recursos Naturales (FARN) working at the environmental foundation’s RIGI Observatory, stated : “This kind of régime finds it difficult at the start to grease the institutional and bureaucratic processes for the review and approval of all the paperwork the companies have to hand in to join the régime.” This may have added a layer of complexity to the situation, particularly given the political context in which we currently operate. Trebucq emphasized the significance of various elements, beyond merely the incentives employed to attract investors. “Various studies indicate that it is not solely the fiscal incentives, such as those provided by RIGI, that significantly influence foreign direct investment (FDI) in the country.” Other variables tend to carry more significance, such as the educational attainment of the population, specifically the skill level of the workforce, alongside the quality of infrastructure necessary for service provision, connectivity, and the maintenance of roads in optimal condition.
Argentina’s foreign direct investment (FDI) landscape reveals a negative balance of US$1.527 billion, as indicated by recent data from the Central Bank, highlighting the disparity between inflows and outflows. If it concludes the year in that manner, it would represent the most unfavorable figure recorded since its inception. In the previous year, a favorable balance of US$89 million was recorded.
FARN’s RIGI Observatory conducted a study to commemorate the anniversary of the scheme’s approval. The collaboration extended to various organizations, such as the CELS (Centro de Estudios Legales y Sociales) human rights group, CEPPAS (Centro de Políticas Públicas para el Socialismo), EPyG/NUSAM (Escuela de Política y Gobierno de la Universidad Nacional de San Martín), ETFE (Espacio de Trabajo Fiscal para la Equidad), and the Transnational Institute (TNI). The report emphasized that “19 investment projects were identified, 10 in the mining sector (five lithium, three copper and two gold), three in renewable energy (two wind farms and one photovoltaic), three for oil and gas infrastructure with one each for steel, biofuels and port infrastructure.” The total investment committed by these projects would exceed US$30.76 billion.
Analyzing the distribution of investments, the mining sector accounts for 63 percent of the total pledged investment, while the oil sector comprises 32 percent. Renewable energy constitutes two percent, with biofuels, steel, and port infrastructure each representing one percent. To put it differently, the mining and oil sectors account for 95 percent of the committed investments. “Mining represents the most appealing sector for the leading international players. The report indicates that this area hosts the greatest concentration of initiatives, totaling 10, alongside the largest volume of pledged investments, amounting to US$19.312 billion from private international capital overall.
Lithium stands as the primary target for investments, with five projects located in Salta and Catamarca, collectively attracting commitments nearing US$4.485 billion. “To these should be added three ventures in copper and a further two in gold,” the report states. The fiscal advantages of the scheme result in revenue that the state no longer collects. “To provide context, regarding the mining régime, which shares several characteristics with Law 24,196, including the provision of 30 years of fiscal stability, accelerated amortisation, and tariff exemptions for companies engaged in mineral exploration or exploitation, the Undersecretariat of Public Revenues has estimated a revenue loss of 0.07 percent of Gross Domestic Product for this year,” stated ETFE economist María Julia Eliosoff.