The Argentine Industrial Union (in Spanish, UIA) has introduced a bill to Congress designed to solidify collaborations between domestic firms and foreign capital investing in the nation through the Large Investment Incentives Regime, which is President Javier Milei’s primary investment initiative. While the RIGI includes a clause mandating that 20% of the purchases and contracts associated with the initial investment be allocated to local companies, the regulations do not differentiate between goods and services. The gap diminishes the potential uplift that RIGI projects could provide to local manufacturing, as the 20% threshold can be satisfied through contracts that must be executed domestically, such as construction work or services.
Specifically, the UIA’s proposal aims to clarify that the RIGI’s 20% minimum allocated to local companies should be applicable solely to goods that possess local added value. “If Argentina requires special regimes to draw in investment, the fundamental challenge remains enhancing the overall conditions for industrial operations,” UIA president Martín Rappallini stated during a meeting on Tuesday. The business chamber also recommended implementing progressive integration schemes aimed at enhancing the involvement of local suppliers as projects advance through their investment and operational phases. The group further recommended establishing mechanisms to verify the existence of local suppliers capable of meeting the demand from companies investing through the RIGI. The proposal arises in the context of increasing apprehension within the sector that a significant chance to rejuvenate the industry — which has been adversely affected by declining consumption and competition from imported products — may be forfeited.
The industry’s frustration is heightened by the postponement of the detailed provisions of the Medium Investment Incentives Regime — akin to the RIGI, but tailored for small and medium-sized local enterprises investing in projects valued between US$150,000 and US$9 million. The government released RIMI’s regulations on April 13. More than two months later, the system remains non-operational at the Customs Collection and Control Agency. An ARCA spokesperson informed that they are currently in the process of finalising the details and that a timeline for the system’s operational status has yet to be established. The industry is exhibiting a lack of recovery indicators. According to the right-wing think tank Fundación FIEL, industrial activity experienced a decline of 2% year-on-year in May and has decreased by 0.6% over the first five months of the year. It also recorded a 0.6% decrease on a monthly basis. The UIA released its own estimate for May a few days ago, indicating a 5% year-on-year decline and a 0.8% month-on-month decrease.
Industry’s request arises as the lower house of Congress deliberates on one of Milei’s most ambitious proposals: the Incentive Regime for Large Investments in New Industries, commonly referred to as the “Super RIGI.” The bill proposes an expansion of the original RIGI to incorporate an unprecedented framework of tax, customs, and foreign-exchange incentives aimed at investments exceeding US$1 billion in industries that are not yet present in Argentina, such as artificial intelligence data centers. The UIA meeting also addressed the “Super RIGI” debate, highlighting that it presents an opportunity to enhance local suppliers, generate employment, facilitate technology transfer, and bolster productive capacity nationwide.