Hola Business News - December 2010

Latin American GDP growth in 2010 exceeeds expectations
The GDP growth in 2010 is estimated to be six percent, according to the Annual Report on the region released by ECLAC (Economic Commission for Latin America and Caribbean of UN) last week. In its December 2009 report, ECLAC had projected 4.3% growth for 2010, revised this in July 2010 to 5.2% and now finally to six percent.

Welcome to the New Latin America which has started surprising experts positively.
Such a high growth coming after a GDP contraction of 1.9% in 2009 caused by the global economic and financial crisis of 2008-9 and in the backdrop of the crisis in Europe and uncertain outlook in USA is commendable. This shows the new resilience and strengthening internal fundamentals of Latin American markets. The main driver for the growth is domestic demand although South America has benefitted from high commodity prices and increase in exports to Asia.

Another surprise. The country which has the highest growth in 2010 is Paraguay with 9.7%. This is followed by Uruguay with 9%, Peru-8.6%, Argentina-8.4% and Brazil-7.7%. The four Mercosur countries are among the top five in the whole region. This reminds us of the World Cup 2010 when the four Mercosur countries reached the quarter finals.

South America has shown a growth of 6.6% despite the 1.6% GDP contraction of Venezuela ( which is an exception to the new paradigm of the region) this year. The only other country which sufffered negative growth this year is Haiti with 7%.

Mexico, the second largest market of the region has grown by 5.3% bouncing back from a 6.1% contraction in 2009. Central America has grown by 3.5% in 2010.

Unemployment rate in the region has come down to 7.6% from 8.2% in 2009. This is expected to decline further to 7.3% in 2011.

Inflation has gone up from 4.7% in 2009 to 6.2% in 2010. It should be noted that inflation is in single digit in all but two countries. Venezuela has not only the highest inflation ( 29%) in the region…but also in the world. Argentina also has a double digit inflation.

ECLAC has predicted 4.2% GDP growth for the region in 2011. Some country-wise projections for 2011 are: Haiti-9%, Panama-7.5%, Peru and Chile -6%,Argentina-4.8%, Brazil-4.6% and Mexico-3.5%.

One should not be surprised if the Latin American markets exceed these expectations again…

The growth in 2010 is not a one-off wonder. Except for 2009, the region has shown a new trend of consistent growth since 2003. The average growth in the last eight years is 4.2%. The highest growth was 6.1% in 2004.

According to another report, Latin America’s growth rate could outstrip the global average for the next seven years. This means the second decade of this century is going to be the growth decade even when there is talk of a ¨lost decade¨ in Europe. Some experts suggest that Europe should learn from Latin America which has bounced back from its own Lost Decade of the eighties and the debt crisis. There are no more IMF cases in Latin America. Brazil has become a net creditor to IMF now.

More cheerful news from some markets
Brazil has overtaken Germany as the fourth-biggest car market in the world with a 2010 sale of 3.45 million vehicles, 10 percent more than last year. There are now 30 million vehicles in Brazil which means there is one for every seven inhabitant of the 191 million population.

Brazil has discovered huge oil reserves with a potential to produce 5 million barrels per day. Argentina has discovered a large gas field in 2010. They are just starting the off-shore exploration. Colombia, Peru, Ecuador and Cuba have intensified exploration. With these, Latin America is going to be an important source of oil and gas for the world.

In the case of renewable energy sector, Brazil is the leading exporter of fuel ethanol and Argentina is the largest exporter of biodiesel. Some other countries in the region are following their examples.
Latin American pharma market, which is worth 50 billion dollars and its imports of 10 bn $ are expected to increase in 2011 and coming years, especially in the generic sector.

Colombia is a hot destination for energy investment and Peru for mining.

Panama has got investment grade in 2010. The others who have already got are: Brazil, Chile, Mexico and Peru. Future candidates are Uruguay and Colombia.

Higher commodity prices and increase in demand have stimulated investment in mining and agribusiness. For example Vale, world’s largest iron-ore producer of Brazil is expected to invest $68 billion in 27 projects over the next five years. Peru is expecting 40 bn$ investment in the mining sector in the coming years.

Trade in 2010

Last year our trade with Latin America was 17.2 billion dollars. In 2010, it should cross 20 billion dollars. My next newsletter will have the trade figures for the whole year. Meanwhile here are some trade figures which will give an idea of the boom in our trade.
-India- Brazil bilateral trade in the period January- October 2010 reached a record 6.2 billion dollars. India´s exports- 3.4 bn and imports 2.8 bn
-India´s exports to Mexico in Jan-Sept 2010 jumped to 1227 million dollars from 850 million in the same period last year.
-India- Argentina trade reached a record 2.1 bn $ in jan-oct 2010 doubling from the 2009 figures. India´s exports increased from 374 m$ in the period Jan- Nov 2009 to 511 m $ in the same period in 2010.
- India´s exports to Colombia increased to 491 m$ in the period Jan- sept 2010 from 365m $ in the same period last year.
- India´s exports to peru in the period Jan- Oct 2010 were 410 m$ as against 263 m$ in the same period last year
- India´s exports to Chile were 301 m$ in Jan- oct 2010 as against 233 m$ in the same period last year.

Petroleum crude, soy oil and copper are the principal items of our imports. Latin America is becoming a significant source of crude oil for India. India imported around 300,000 barrels per day in the period jan- oct 2010.

Chemicals, pharmaceuticals,engineering products, textiles and diesel oil are our major exports.

Suggested Focus of exports in 2011

Indian companies need to target the small and medium countries for trade besides the large ones. Small countries does not mean small trade. Example ..China´s exports to Costa Rica were 767.1 million dollars and imports 711.6 million dollars in 2010. Chinese export to Costa Rica is double the export of India to Argentina.

Autoparts to Brazil is emerging as a growth area for India´s exports.

Exports of equipments and machinery for mining,oil and gas exploration and production and infrastructure projects in the region.

Because of the strong Real ( 1US$= 1.7 Reais) Brazilian exports have become less competitive and imports cheaper. Indian exporters should take advantage of this and intensify their exports to Brazil.

Major investment by Indian companies in Latin America in 2010

- Renuka sugars acquisition of two sugar groups in Brazil for 350 million$
-Godrej acquisition of 2 Argentine cosmetic cos for about 40 m$
- Aegis group (part of Essar) acquisition of Argentine BPO company Actionline which has 5000 staff. This is the largest Indian BPO in Latin America. With this, the number of Latin Americans working in Indian IT, BPO and KPO companies in the region has gone upto 17,000.

Suggestions for focus of Indian Companies in 2011

Investment in the mining sector in Peru, Bolivia, Colombia, Brazil, Argentina and Chile.

Investment in agribusiness in Argentina, Brazil and Uruguay. The Mercosur region has the potential to bring 100 million hectares of additional land for cultivation, increase agriproduction and become an agircultural super power. Indian companies can source soy and sunflower oil, sugar, ethanol and pulses through investment in the region

Investment in commercial forestry and paper pulp in Argentina, Brazil, Uruguay and Chile and take back timber and paper pulp.

Establishment of IT, BPO and KPO operations in Argentina, Brazil, Mexico and follow the new trend of Indian IT companies getting contracts from Latin American clients.

Acquisition of pharma companies in Argentina, Brazil and Mexico

Contracts, subcontracts and supply of equipments and materials to Brazil which is embarking on massive infrastructure development for the 2014 World Cup and 2016 Olympics

Contracts and supplies to the 224 billion dollar five year investment plan of Petrobras for exploration and production of off-shore oil. This is the largest corporate investment plan in the world at this moment.

Investment in the petroleum exploration and production sectors of Brazil,Colombia,Argentina. Colombia expects investment of 28 billion dollars in oil exploration and production in the next four years and increase the oil production to 1.4 million bpd by 2014 from 963,000 bpd in June 2010. Colombia is emerging as South America's third-largest oil producer behind Brazil and Venezuela.
Look at the Chinese companies who have spent $20 billion this year in the following deals:
CNOOC paid $3.1 billion for a 50% stake in Argentina’s Bridas Energy in March.
Sinochem Group, paid $3 billion to Statoil for 40% of its Brazilian offshore field, Peregrino, in May.
Sinopec, made a $7.1 billion investment into the Brazilian subsidiary of Repsol YPF in October.
CNOOC agreed to pay $7.06 billion for a 60% stake in Argentina’s Pan American Energy in November.
In addition, China has invested in Venezuela, which include
· 40% stake in Junin 4 block of Orinoco belt expected to produce 400,000 bpd
· Another 40% in Junin 1 with capacity to produce 200,000 bpd
· A refinery with capacity to process 200,000 bpd

Opening of more embassies

India has opened embassy in Guatemala-2010.

Costa Rica has opened embassy in New Delhi-2010

More embassies likely to be opened from both sides..

Presidential Elections in 2011

Peru – April
Nicaragua – June
Guatemala- September
Argentina – October

Forthcoming events in 2011

Rio Carnival 4-8 March
Made in India Exhibition of CII in Sao Paulo 8-11 March
What a coincidence ! Exihibitors can dance samba at the carnival in Rio and move on to Sao Paulo for the business…

Indo-LAC business conclave of CII in New Delhi, 24-25 February 2011. Mr Danilo Astori, Vice President of Uruguay expected to be the guest of honour.

Ongoing negotiations to expand and widen the India-Mercosur PTA . Indian companies, export promotion councils and trade and industry bodies should approach Commerce Ministry with their wish lists and contact Anil Mukhim JS a.mukim@nic.in

Business Plus

My favourite Latin American author Mario Vargas Llosa from Peru won the Nobel prize for literature in 2010. My blog on this..
http://latinamericanaffairs.blogspot.com/2010/10/mario-vargas-llosa-peruvian-nobel-prize.html#links

For those who want to understand the new Latin America I recommend the following two books:
- Brazil on the rise by Larry Rohter
- What if Latin America ruled the world by Oscar Guardiola Rivera

The Argentine film ¨The secret of your eyes¨ won the Oscar in 2010.

An Argentine musician Martin Felix Folatelli, living in Benares for the last several years is producing fusion music …Benares Milonga and Mate- Chai…

Latin America is the latest flavour in Bollywood.
Mexican actress Barbara Mori was the heroine with Hrithikesh Roshan in the film Kites released in 2010.
Dhoom II film and TV reality show ¨Fear factor¨ were shot in Rio de Janeiro.
Rajnikanth danced with Aishwar Rai in Machu Pichu (in Peru) for the film Robot.
A 28- member team of Indian TV stars are in Buenos Aires right now (staying here for 40 days) to shoot a reality show ¨Zor Ka Jhatka¨ (Wipe Out). This will be hosted by Shahrukh Khan in Imagine channel in January 2011.
The music director of Dhobi Ghat , the film directed by Kiran Rao and produced by Aamir Khan ( being released on 21 January) is an Argentine, Gustavo Santaolalla.
Giselle Monteiro, the Brazilian Bollywood actress of Love Aajkal fame is acting in another film ¨Always kabhi kabhi¨ being produced by Shah Rukh Khan
An Argentine- India coproduction film on Tagore and Victoria Ocampo is on the works and is likely to materialise in 2011.

Loca loca loca….

The most anticipated event in 2011…. Shakira´s tour of Latin America starting in March 2011 covering Argentina (Shakira´s boyfriend is Argentine..), Brasil, Colombia, Costa Rica, Chile, Ecuador, Guatemala, México, Paraguay, Perú, Puerto Rico, República Dominicana and Venezuela (with even more countries to be announced). The tour will be part of The Pop Festival, a brand new festival that will bring international music stars to Latin America, and which will also showcase the latest in contemporary art and technology. Here is her latest song to celebrate the new year..
Loca loca loca…. Loca means crazy
http://www.youtube.com/watch?v=XAhTt60W7qo

cheers….for more business and businessplus with Latin America in 2011…

Increasing reliance of Reliance Petroleum on Latin American crude oil

Reliance imported about 300,000 barrels a day of crude on average from Latin America during the first ten months of 2010. This accounted for about a quarter of the company’s total imports during the period, compared with 13 percent in the same period of 2009.

Reliance refinery complex in Jamnagar in Gujrat, India has refining capacity of 1.24 million barrels a day, the largest at a single location.

About two-thirds of Reliance’s imports from Latin America during the first 10 months of 2010 came from Venezuela which accounted for 59 percent, Mexico 21 percent and Brazil 14 percent.

Reliance is expected to increase crude imports from Latin America as it seeks better refining margins by processing heavier and cheaper grades of oil.

In 2009 Reliance bought 155,000 bpd from Latin America. This went up to 380,000 barrels a day in the first four months of 2010.

In dollar terms Reliance imports of crude oil from Latin America in 2010 ( Jan-Oct) are about 7.5 billion dollars and in 2009 imports were 4.2 billion dollars.

The crude oil imports of Reliance accounts for over forty percent of India´s imports from Latin America. Crude oil is the leading item of India´s imports from latin America.

Reliance´s export of diesel oil to Brazil in the period Jan-Oct 2010 was 1.4 billion dollars. This topped India´s exports to Brazil and constituted 41 percent of India´s exports to Brazil. In the same period Reliance imported 900 million dollars of crude oil from Brazil which accounted for 32 percent of India´s total imports from Brazil. Overlall, Reliance accounted for 30 percent of India´s trade with Brazil in the period Jan-Oct 2010.

Reliance is also investing in oil exploration in Colombia and Peru.

Brazilian Surya.. Argentine Satya .. and Latin American Karma

Exporting Henna to India from Brazil ?... It sounds as incredible as exporting Caipirinha ( the strong Brazilian alcoholic drink which makes you dance Samba after two glasses) to Brazil from India. Clélia Cecilia Angelon, the founder President of Surya Brasil dared to think outside the box and has exported Henna powder to India. She started off with a shop in Sao Paulo selling Henna powder formulated with raw materials imported from India. To make it look authentic she named her company Surya Henna. This gave a touch of Indian magic and appealed to the Brazilians who are fascinated by Indian yoga, meditation and spiritual gurus. During my stay in Sao Paulo I had the opportunity to interact with Clelia. Once I saw her stall in a Cosmetics Fair which drew large crowds with Brasilian beauties tattooed all over their bodies with henna. I realised then that India was not only touching the Brazilian soul but also gave a touch to their skin. The combination convinced me that it was going to be a winner in business and win-win for India and Brazil.

As the sales picked up, Clelia expanded the business into other haircolouring and cosmetic products and dreamed of going global. She changed the name of her company into Surya Brasil. The company started the Amazônia Preciosa Line, enriched with ingredients from the Amazon forest biodiversity. The turnover of the company has now reached twenty million dollars. Surya Brasil has established its niche in the market as a cosmetic producer with natural and organic ingredients and eco-friendly. The company is exporting to twenty countries including USA, Australia, UK and France.

In an audacious move, Surya Brasil decided to export its Henna products to India . The marketing team of Clelia thought this was like a Brazilian trying to teach an Indian Guru. How would the Indian consumers living with a long tradition of Henna accept a Brazilian Henna product? How could a Brazilian company find a place in the space crowded by so many Indian companies in their home market? Clelia would not take no for an answer. She opened an office in India in 2005 and sent a marketing executive Fernanda Drumond who spent four years understanding the Indian market. Fernanda who has now become the head of India operations has achieved sales of 1.5 million dollars and plans to double it this year. She has placed the products in beauty parlours and stores in shopping malls in the major cities. Now she is reaching out to the smaller towns and cities. Surya Brasil plans to start a factory in India from which it will export to Japan, Korea, Taiwan, Australia and other Asian countries. They also plan to open an organic SPA in India like the one they have in Brazil.

Surya goes beyond Henna in its India connection. The company´s website says ¨Surya is guided by Ayurvedic principles: know and respect individuality; pursue well being and both emotional and physical balance. ¨ Surya also uses Amla as an ingredient in some of its products. The website of Surya has a section ¨moment of meditation ¨.

They say, behind every successful man there is a woman. The secret behind the success of Clelia is a man…..an Indian man. Raj Malhotra had employed Clelia as a salesperson in his shop in London. Raj could not resist the Brazilian charm. He left his wife and married Clelia. She became Clelia Malhotra. They had a daughter Vandana. Raj lived for some time in Sao Paulo. After a few years, Raj and Clelia got separated. Clelia had other men in her life thereafter including another Indian Kanwaljit Singh.

Clelia´s story reminds me of the other story of the Argentine woman Monica Socolowsky who was inspired by Saibaba and went into the Fashion business using Indian fabrics and designs. Monica is a staunch devotee of Saibaba and her company is called as Satya Fashion. Here is my blog on Monica http://latinamericanaffairs.blogspot.com/2009/03/from-faith-to-fashion-story-of-monica.html#links

So we have Surya in Brasil and Satya in Argentina. The other day I was asked in a TV interview,¨what is your Karma? ¨. I replied, ¨Latin America¨.

Aegis group of India acquires BPO firm in Argentina

Aegis of India has acquired Argentine BPO company Actionline from Young and Rubicam Inversiones Publicitárias, S.A. and its business partner.

Founded in 1994, Actionline is one of the largest BPOs in Argentina with about 5,000 associates, spread across seven centres in five cities and has a turnover of around $50 Million dollars per year. It is domestic market focussed, serving leading telecom, banking, insurance, and energy clients in the region. It has operations in Brazil and Chile also. Actionline has expanded at a healthy pace, registering a compounded annual growth rate of 65 per cent from 2003-2009. Actionline Argentina's senior management, lead by CEO Fernando Pedron will continue to spearhead the business.

Actionline has become the largest Indian BPO in Latin America

With this entry Aegis joins the other Indian companies which have BPOs in Argentina. These are TCS, Cognizant, Irevna, HCL, Global Sourcing Solutions, Cellent and other BPOs owned by Indians from USA. Aegis stands out , of course, as the largest among them.

Aegis is part of the 15 billion dollar Essar group of India. This is the 16th acquisition for Aegis over the last five years. It is one of the fastest growing BPO companies in the world. With workforce of 5,000 that Actionline has, Aegis' total headcount goes up to 47,000. The company has a target of 50,000 workforce and is looking to expand its footprint in various markets including America, Latin America, Africa and Middle East. Aegis serves more than 135 clients from 42 delivery centers with more than 39,000 employees across India, Philippines,United States, Costa Rica, New Zealand, SriLanka, Australia, Kenya and South Africa. In United States Aegis employs 4000 Americans.

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction and Minerals. With operations in more than 20 countries across five continents, the group employs 60,000 people, with revenues of about USD 15 billion. They have acquired a Canadian steel mill, a iron ore mine in Minnesota and a coal mine in USA for over two billion dollars. They have a project to build a Steel plant in Trinidad and Tobago with an investment of 1.5 billion dollars.

Mercosur ...GDP champion in 2010

Readers of my blogs will recall my euphoria and celebration when the four member countries of Mercosur reached the quarter finals of the 2010 World Cup.

Don’t ask me what happened afterwards. I had to drown my sorrow with lots of Brazilian Caipirinha and Brahma and Argentine Malbec.

Ask me now about the economy. Mercosur has emerged as the GDP growth champion in 2010. Brazil and Argentina will have 7.5% growth each, Paraguay will grow by 9% and Uruguay by 8.5%. These figures put the four Mercosur members among the top five in the whole region of Latin America and Caribbean.

The country which is projected to have the highest growth in Latin America and Caribbean in 2010 is… hold on… a surprise… even for me. It is Paraguay ...with 9%. Viva Paraguay !!!.

These are the figures mentioned in the World Economic Outlook report released by the International Monetary Fund on 6 October. According to this report, the economies of Latin America and the Caribbean will grow by 5.7% in 2010. This is higher than earlier predictions. The IMF has said, ¨ the LAC region is exiting the global crisis at a faster pace than anticipated. This reflects solid macroeconomic policy fundamentals, sizeable policy support, favourable external financial conditions and strong commodity revenues¨.
The July 2010 report of the UN Economic Commission for Latin America and Caribbean( ECLAC) had predicted GDP growth of 5.2 % for the region while its December 2009 report had predicted 4.3%. Here is what ECLAC says in its September2010 report ¨Output and trade in Latin America and the Caribbean have recovered more quickly than expected. This solid revival is largely based on the dynamism of domestic demand, a pick-up in investment and robust exports driven by demand from China and the rest of Asia, and by the normalization of demand in the United States¨.
As part of the current fashion to group countries into G-20, G-8 etc, the IMF has labelled Brazil, Chile, Colombia and Peru as " LA-4 " This foursome's policy framework is described as more market-friendly than the others in the region.
"Impressive improvements in macroeconomic policy frameworks over the past two decades, combined with accommodative policies, easy external financing conditions, and strong commodity prices, are driving a robust recovery in the LA-4," the report said.

The IMF forecast of GDP growth for other countries and sub-regions are: Chile - 5 %, Peru- 8.3% Colombia - 4.7%, Mexico - 5%, Central America -3.1% and Caribbean 2.4%. South America is projected to grow by 6.3%. Of course, South America, which is rich in natural resources has benefitted from its commodity exports.
The only country in the region which has gone against the growth trend is Venezuela which faces an ecoonomic contraction of 1.3%. The consolation is that this is better than the contraction of 3.3% in 2009.

The IMF has projected that the average inflation of the region in 2010 would be 6.1% which is up slightly from 6% last year. The inflation in 2011 is projected to decline to 5.8%. The average inflation of the region has remained in single digit in the last ten years.

But again Venezuela is an exception. It has the highest inflation of 29.2% this year. This is said to be the highest in the world this year. Venezuela is projected to carry on this distinction in 2011 too with 32%. The only other country in the region with a double digit inflation is Argentina with 10.6%. But the good news is that these are just small double digits. The region will not go back to hyper inflation in four digits as it happened in some countries till 1990.

Brazil adds one more superlative....

Brazil,the largest market of Latin America is on a roll these days adding one superlative after another. Here is the latest one. Petrobras raised $70 billion in the world’s largest share sale last week. With this, Petrobras has become the fourth-biggest company in the world, behind Exxon Mobil , Apple and PetroChina . Petrobras now has a market value of $214 billion, which is more than that of Microsoft and Wal-Mart.

Sao Paulo which has been the financial capital of Latin America, has now become a super capital with this deal. It was with justifiable pride that President Lula said ¨It wasn’t in Frankfurt, it wasn’t in New York, it was in our Sao Paulo exchange that we carried out the biggest capitalization in the history of capitalism,”

Petrobras has budgetted $224 billion of spending over the next five years in exploration and production. This is the largest corporate investment plan in the world at this moment.

With this investment, Brazil aims to increase its production to 5.38 million barrels a day and overtake Venezuela and Mexico. Brazil will add the most oil production of any country outside of the Organization of Petroleum Exporting Countries ( OPEC) over the next 25 years

Petroleum is only one part of the story. Brazil is all set to become an agricultural superpower too. It has the largest surplus land that can be brought under cultivation to feed the growing population of the world. It can add atleast 130 million hectares of land which is equal to the total area cultivated by India to feed its one billion population.

Here is the leadership position of Brazil in the global food sector:
Chickens: 1st in the world, 41% of export market share

Coffee: 1st in the world, 27% of export market

Orange juice: 1st in the world, 82% of export market

Soybeans: 1st in the world, 38% of export market

Beef: 1st in the world, 26% of export market

Sugar: 1st in the world, 39% of export market

Ethanol: 1st in the world, 52% of export market

Tobacco: 2nd in the world, 17% of export market

Bananas: 2nd in the world, behind India

Pork: 3rd in the world, 15% of export market

Corn: 3rd in the world (behind USA and Argentina)

Black pepper: 3rd in the world (behind Vietnam and Indonesia)

Cotton: 5th in the world (USA is the leader)

Brazil is a pioneer and global leader in fuel ethanol. Most of the cars produced in Brazil have flexifuel engines which can use etahnol or/and petrol. Brazil is thus straddling the two worlds of conventional fuels and biofuels. Brazil has a secure and enviable position in the world which is increasingly concerned with food and energy security.

Brazil has plenty of water resources and the largest forest cover in the world. It is not prone to natural disasters. It has a agreeable climate and does not suffer from extreme heat or cold.

Brazil is embarking on massive investment to prepare for the World Cup football in 2014 and Olympics in 2016.

Brazil which used to be an IMF case is now a net creditor to IMF. Brazilian market now has Investment Grade rating.

Here are the other factors which distinguishes it from the other members of BRIC.

- Democracy has been instituitionalised irreversibly and strongly

- free from terrorism .. no ethnic , linguistic or religious conflicts. One language, religion and one skin colour of cafe con leite ( coffee with milk- some have more milk ...others have less..)

- free from unstable and evil neighbours who can pull it down and hurt.

Skeptics used to say Brazil was always a country with a future and will remain as a country with future. It was also called as a sleeping giant. But now Brazil has become a country of the ¨present¨and a giant who has woken up. What makes the Brazil story different this time is the paradigm shift in the politics and mindset of the Brazilians. Brazil follows a new pragmatic policy which pleases the Wall Street and at the same time has brought hope and smiles in the Favelas ( slums) with its Inclusive Agenda and market- friendly policies. This is what makes Brazil as the moral leader and role model for Latin America. Brazilians now have a strong conviction that their time has come…..

pharmaceutical market of Central America

The pharma sales of the seven countries of central america are expected to reach US$2.53bn in 2010, a 7.9% increase from US$2.35bn in 2009. The sales are expected to maintain a compound annual growth rate (CAGR) of 8.6% over a five-year period, and 8.4% over a ten-year period. The pharmaceutical sales are expected to reach US$5.27bn by 2019. This is according to a report of CompaniesandMarkets.com
For more info on the Central America Pharmaceuticals and Healthcare Report Q4 2010: http://www.companiesandmarkets.com/r.ashx?id=852G62254342128&prk=dc9464d426ba854d3af301ceab8fa0e4

World cup and Olympics - Game Changers for Brazil

Brazil is going to host the World Cup football in 2014 and Olympics in 2016. These are not just games... but are game changers for the New Brazil. The Brazilians are using these two events to build the foundations for a New Brazil and showcase their arrival as a global economic and political power.

Brazil is the eighth largest economy in the world with a GDP of 1.5 trillion dollars and is expected to climb up to the fifth rank by 2016. In the first quarter of 2010, the Brazilian GDP grew by a record 9% and the estimated growth in 2010 is 7.6%, the highest in Latin America. Brazil is a superpower in agriculture with its growing output, exports and increase in the area of production. With the recent discoveries of large new off-shore oil fields, Brazil is emerging as an important global supplier of petroleum. Brazil is already a pioneer and leader in fuel ethanol programme with 90% of cars running with flexi fuels of petrol and ethanol.

The preparation for the games opens up projects worth $220 billion from 2011 to 2014.
Here are some samples:
-US$ 5.5 billion to improve transportation in Rio in preparation for the Olympic games
-A high speed bullet train at a cost of 18.7 billion $ is being developed and is expected to be completed in time for the World Cup
-plans for 11,700 miles of railroads facilitating improved access to the 12 cities hosting the World Cup
- US$ 43 billion will be spent on commercial and tourism construction in preparation for the 2014 World Cup
-US$ 3 billion in airport expansion and improvement.
-restoration of historic buildings and renovation of Rio de Janeiro city
- budget for the Games alone will be about $15 billion

A Conference is being organised in Sheraton Hotel, Rio de Janeiro on 31 August- 1 September on the infrastructure projects for the two events. Federal and provincial authorities, bankers and local and foreign companies will participate in the conference.

President Luiz Inacio Lula da Silva launched on 29 March 2010, a $878 billion program to upgrade Brazil's infrastructure in the period 2011-2014. The plan will improve access to clean water, medical posts and energy as well as modernize the country's air, road and rail system.

The energy part of the plan envisages investment of 257 billion dollars. This includes the five year plan of Petrobras, the Brazilian energy giant to invest 220 billion dollars, the largest corporate investment in the whole world at this time. In 2010, Petrobras will invest 20 billion dollars in exploration and production and 17 billion dollars in refining and petrochemicals, with the remainder going toward areas such as distribution and biofuels.

Some of the other infrastructure projects are:
-construction of Angra III nuclear power plant
- construction of The Belo Monte 11.2GW, US$ 4.1 billion hydropower plant
- Jirau hydropower plant costing US$ 3.1 billion
- US$ 152 billion for the construction of low income housing over the next 15 years

The Indian exporters and business houses should focus on Brazil for exports and projects for the games projects. India´s exports were 2.19 billion dollars in 2009. The target should be atleast 7 billion dollars by 2014.

Colombia bullish on foreign investment

Colombia has become a favorite destination for foreign investment in Latin America. The foreign investors are getting into petroleum, mining, services and manufacturing. Colombia's foreign trade ministry expects $10 billion in foreign investment this year, approaching the record $10.6 billion of 2008. In 2009 FDI was 7.2 billion dollars.

The Colombian Minister of Energy and Mining announced on 15 August 2010 that he expected investment of 28 billion dollars in oil exploration and production in the next four years and increse the oil production to 1.4 million bpd by 2014 from 963,000 bpd in June 2010. Colombia is emerging as South America's third-largest oil producer behind Brazil and Venezuela. About 5.6 billion dollars of direct foreign investment went into petroleum and mining in 2009. Colombia's known oil reserves rose 22 percent in the last eight years to 1.9 billion barrels with production jumping 45 percent.

The foreign investors who were deterred by the internal problems of Colombia in the past are now encouraged by the improving siuation of the country. Farc is irreversibly fading out. There is steady reduction in kidnapping, crime and narcotraffic. In any case, the Colombian economy has been stable and growing even despite those challenges. Politics has also been mature and there is a general political and economic consensus on the future of the country. The election of Manuel Santos, the new president , who had earlier served in the cabinet of Uribe means continuation of the policies of crackdown on crime and market-friendly approach.

Colombia is the only Latin American country to have an Investment Promotion Officer (Alejandro Pelaez) in their embassy in Delhi. Mr Juan Alfredo Pinto Saavedra, the Colombian Ambassador is one of the most active Latin American diplomats, reaching out to Indian business and media.

OVL and Reliance have already invested in the petroleum sector of Colombia. TCS, Infosys, United Phosporous, NIIT, Bajaj, TVS, Hero Honda, Havells, Essel Propack and Praj have operations in Colombia. In 2009 India´s exports to Colombia reached 504 million dollars. Colombia is the third largest destination of India´s exports to latin America. More Indian companies should enter this market which offers lot of potential for India´s investment and trade.

Agriculture Process Outsourcing by an Argentine Patel

This article was published by Financial Express of 1 August 2010
http://www.financialexpress.com/news/agri-process-outsourcing-by-an-argentine-patel/654277/

During my meeting with Gustavo Grobocopatel, the founder President of the Argentine farming company Los Grobo which cultivates 270,000 hectares, I told him that I came from a small farming family which owned just an acre of land. Gustavo responded, ¨Lucky you…. I am a landless farmer ¨. He is right. He does not own a single hectare. It is all leased land.

Los Grobo does not own any tractor or harvester either. They outsource all the operations such as planting, fertiliser spraying, weeding, harvesting, storage and transportation to contractors who own the machineries. The firm has a system of technical leaders each of whom manage 7000 hectares. They are not employees but are partners who share the profit and risk. Even the agronomists who work with the company are contractors, who get a share of the crops they raise.

The 270, 000 hectares of land spread over Argentina, Brazil, Paraguay and Uruguay are managed by the headquarters staff of about 100 people who are connected in a network with the land owners, agronomists, the international traders and the 4000 service providers. Grobocopatel who believes in social capital says, ¨We are not big… but many¨

Here is Mr Patel working on the fields with his laptop...

Grobocopatel´s Agriculture Process Outsourcing (APO) is similar to the BPO (Business Process Outsourcing) and Knowledge Process Outsourcing (KPO) operations of the Indian IT companies. Los Grobo office looks like a BPO of Infosys with young people in casual dress glued to their computer screens and working with their blackberries. The only difference with the Infosys office is that Los Grobo is located in a remote rural area in the middle of soya and wheat fields near Carlos Casares, a small village 300 km from Buenos Aires city....seen in the foto below...
Los Grobo office ...like a BPO of Infosys...

Grobocopatel says he was inspired by ¨Information Age¨, the book of the Spanish sociologist Manuel Castells which helped him to understand how networks could be used to generate wealth with the least investment. Grobocopatel describes his new model of farming as ¨Agribusiness in the new era of Knowledge Society¨. He points out at the young people behind the computers and says proudly that the human resources are the main asset of his company. Training and empowerment of the employees, the service providers and partners is an integral part of the value creation of the company. Los Grobo has arrangements with universities to give courses in agribusiness and management of small and medium family-owned companies at their headquarters in Carlos Casares. Los Grobo encourages its employees to become enterpreuners and even provides seed funding. Through its Rural Entrepreneurship Foundation, the company participates in projects to improve the standard of living in villages and small towns. Los Grobo, together with other partners, has created Bioceres, a biotechnology research and development organization.

Los Grobo farms scientifically by satellite mapping of every hectare of the land using a vast database of agricultural metrics. They do ¨Precision Farming¨ in which monitors are used to control input distribution of seeds and different fertilisers for each parcel of land on the basis of information generated by software calculating the dosage needed, depending on satellite location of the seeding and sprayer machines. The best practices of Los Grobo include ¨No-Till Farming ¨ (direct seeding) in which the crop residues are left to decompose and enrich the organic matter and maintain soil moisture. The land is always covered by straw and residues. There is no ploughing of the land and exposing it to sun and wind and erosion and degradation. This method improves physical and chemical soil structure, reduces carbon emission, cost of production and labour and increases productivity and helps in the conservation of soil.

The innovative business model of Los Grobo has been studied and commended by Harvard University, among others. Los Grobo has been sought out for consultancies by other countries. It is the first company worldwide to obtain ISO 9001 certification on grain production processes. It is establishing its APO business model in Brazil, Paraguay and Uruguay. Other Argentine farming companies are following the example of Los Grobo. This includes the company El Tejar which has emerged as the largest farming company in the world with cultivation of one million hectares this year. Such scale does not exist even in Brazil or USA. El Tejar´s goal is to reach two million hectares in the next five years. Out of the one million, 800,000 hectares are leased and 200,000 owned. El Tejar operates in Uruguay, Paraguay, Bolivia and Brazil where they cultivate 600,000 hectares. With such emerging global pioneering leaders in farming, best practices, advanced technologies and abundance of water and fertile land, Argentina is set to become a significant global player in the future when the world is going to be more concerned about food security.

I call Grobocopatel as ¨Senor Patel¨. He has no connection to Gujrat. He is of East European origin and his grandfather had emigrated to Argentina in 1912. Grobocopatel founded the company in 1984 and has achieved a turnover of 700 million dollars in 2009-10. His target is 1.5 billion dollars in the next five years. Grobocopatel is an agronomist and had taught the subject in the Buenos Aires University before becoming an enterpreneur. His agronomist wife is also a director in the company. For them, farming is not just business. It is passion. Grobocopatel has admiration for Indian culture and practises meditation and yoga. He is planning to visit India for a month in December. He has agreed to give talks in India on his new business model and also meet Indian companies interested in strategic partnership with his company.

South America offers opportunities for Indian companies to invest in farmland and source edible oil, pulses, sugar and biofuels needed in India for the growing population and consumption. The Indian investors do not need farming expertise or invest in machinery since they can outsource all the farming operations to local service providers. A Non-Resident Indian company Olam is at present cultivating 30,000 hectares in Argentina growing peanuts, soya and beans and are planning to double the acreage in the next three years. All of their land is leased and their operations outsourced. Simmarpal Singh is the young country manager behind this success of Olam. I told Grobocopatel that we have an Indian Singh following in the footsteps of the Argentine Patel.

TCS plans for increase in Latin America business

Tata Consultancy Services (TCS) plans to increase its turnover in Latin America to one billion dollars in the medium term , according to a statement by Chandrashekar, CEO of the company in July2010. At present their annual revenue is over 300 million dollars. They have close to 8000 Latin American employees in eight Latin American countries: Argentina, Brazil, Uruguay, Chile, Mexico, Ecuador, Peru and Colombia.
TCS will recruit 40,000 more staff this year around the world to increase its global staff strength to 200,000.

Mid-year review of Latin American markets

The July 2010 report of the UN Economic Commission for Latin America and Caribbean( ECLAC) has revised its estimate of the 2010 GDP growth of the region upwards to 5.2 % from its earlier projection of 4.3% in its December 2009 report. The highlights of the report are:

• Brazil will be the top performer in the region with GDP growth of 7.6%. Parabens Brasil !!
• Uruguay and Paraguay will grow by 7% and Argentina by 6.8%. The Mercosur countries are the top four performers of the region as a whole. Oops.. it is like the 2010 World Cup quarter finals in which all the four were in.
• Mexico will grow by 4.1%, Colombia- 3.7%, Peru-6.7%, Chile-4.3%
• Venezuela will be the only country which will go against the trend. No surprise...Its GDP is expected to suffer contraction of 3%.

The credit for the quick and robust recovery from the economic contraction of 1.9% in 2009 goes to the resilience and strong macroeconomic fundamentals of the markets and the pragmatic policies and prudent fiscal and monetary management by the governments. Following are some of the examples:

- Gross public debt of the region as a percentage of GDP has been brought down to 30.2% in 2009 from 58.2% in 2002. The highest is Argentina with 48.5% which is very low in comparison to the situation in USA and Europe. Credit should be given to Argentina which had brought down the percentage from 145.9% in 2002.

-The governments rely less on external resources and have been raising more funds from domestic sources. They have been reducing external debt burden consciously.

-The current account deficit of the region was brought down to 0.4% in 2009 from 0.6% in 2008.

-Flexible exchange rates, inflation targetting and sound financial regulations of the banking sector helped the region to withstand the global crisis of 2008-9 better than during the previous global downturns.

-Gross international reserves of the region has been steadily increasing from 163 billion dollars in 2001 to 563 billion in the second quarter of 2010. The reserves of Brazil are 253 billion dollars, Mexico- 104 billion and Argentina -49 billion.

-Inflation was brought down to 4.7% in 2009 from 8.2% in 2009. The average inflation rate of the region has stayed in single digit every year since 2003. Venezuela stands out as the only country with double digit inflation. It was 26.9% in 2009.

-Five countries namely Chile, Mexico, Brazil, Peru and Panama have been upgraded in recent years to investment grade by the Sovereign Rating Agencies.

Of course, the growth of China, India and Asia and the high commodity prices also contributed to the growth of Latin America.

-

Lupin looking for acquisitions in Latin America

According to newspaper reports Lupin Ltd., the Indian generic-drug maker, is looking for acquisitions in Brazil and Mexico to expand its revenue from the Latin American region.
The company plans to spend $50 million to $75 million on each purchase, according to S. Ramesh, president of finance and planning. Lupin is looking for companies that have a strong marketing relationship with physicians and will make the acquisitions soon, he said, without providing a more specific timeframe.
Lupin generates 10 percent of revenue from a sales region that includes Latin America and Europe. Ramesh was quoted as saying “Latin America is the next stop for us, in so far as of acquisitions...Recognition with the doctor is the most important consideration for the purchases¨.

panama gets investment grade rating

Panama’s credit rating has just been raised to investment grade by Moody’s Investors Service, which cited “significant improvement” in the country’s fiscal policies and strong economic growth.
Moody’s upgraded the country’s debt ratings to Baa3 from Ba1, matching moves that Fitch Ratings made in March and Standard & Poor’s made in May. The outlook on Panama’s rating is stable, Moody’s said.
With this Panama joins the club of investment grade Latin American countries Brazil, Chile, Mexico and Peru.
GDP of Panama is expected to grow by 6% this year. The Panama Canal expansion project and investment in infrastructure add to long term prosperity.

Enlightening interview of Kapil Gulati

The conventional wisdom is that Brazil, Mexico or Argentina are the platforms to launch pan-latin american business. Kapil Gulati loves defying conventions. He is the new breed of Indian executives with a new mindset. He operates from the small country of Costa Rica and manages a business of 160 million dollars in 13 Latin American countries as well as in USA. And he wants to expand the business with new acquisitions.

During our lunch in Buenos Aires last month, I found him sharing my optimism and confidence about the prospects of Latin America for Indian business. He has adapted well to the Costa Rican ¨Pura Vida ¨. http://latinamericanaffairs.blogspot.com/2009/05/costa-rica-pura-vida-country.html#links

Here is Gulati´s enlightening ( ... his company Havells is in the lighting business..) interview in Financial Express of today.

INTERVIEW: KAPIL GULATI
We are scouting for acquisitions & tie-ups in Latin America.

Costa Rica is the America headquarters of Indian company, Havells Sylvania. Kapil Gulati, the company’s director of America, manages the $160-million operations in the region, including the US. Havells had bought the lighting and fixtures business of American firm Sylvania worldwide and Gulati is in the process of consolidating and streamlining the business. He discusses the company’s inorganic growth strategy for the region with FE’s Huma Siddiqui. Excerpts:
How do you plan to expand in the region?
Havells Sylvania is among the top-four lighting companies in the world owned by Havells India since 2007. In Latin America, we now have two manufacturing plants, in Colombia and in Costa Rica. We have local operations in 13 Latin American countries, from Mexico to Chile. We employ more than 750 locals and generate about $200mn revenue, 16% of the business of Havells India.
After India, Latin America has highest growth for the corporation. Chile is a developed and stable country with highest per capita GDP ($15,000). Peru is among the highest growth rate countries of the region. The countries touched 9.8% real GDP growth in 2008. These were a perfect fit in our phase-1 regional geographical expansion. In phase-II, besides improving our reach within the existing countries, we are improving our export business in Uruguay, Paraguay, The Caribbean & other Central American countries (Nicaragua & Honduras).
Last year, we formed local companies in Chile & Peru, but due to the global economic situation decided to put the process on slow track. This year in Q1, we started team building activity and local product validation process. In May, our local business in Chile was started.We are scouting for strategic tie ups, joint ventures and acquisitions to strengthen our position, especially in the biggest Latin American economies — Brazil, Mexico and Argentina.
What are the opportunities available to Indian companies in the region?
Over the last seven-10 years, the Indian business community has increased its participation in Latin America. The region has stabilised economically. With success stories like Havells, other Indian business houses can keep Latin America on their high-priority expansion list.
What is your company’s participation in energysaving programmes?
Some of the Latin American countries (Ecuador, Colombia, Argentina, Brazil) have announced banning and phase-out schedule for high-energy consumption products like incandescent lamps. Most Latin American countries are now giving subsidy or even distributing free compact fluorescent lamps.
Have you identified partners for joint ventures in the region?
We are looking at local companies, with the objective of expanding our manufacturing base for energy-efficient products. Since we are a public-listed company, we have to follow certain guidelines, therefore cannot give more details.

Hola Business News - May 2010

This is the time of …¨ sonrisa de esperanza y sollozo de pasion¨…. Means ….¨smile of hope and cry of passion¨.
…for the football teams and the soccer-crazy people of latin america
Between 11 june and 11 july , watching football will take precedence over business meetings and office work. .. especially in Argentina and Brazil, the super powers of football.
While the Latinos are watching the football scores… the Indian exporters can plan and formulate strategies for market entry and expansion in Latin America..
Here is the Hola Business News…to help in the preparations of plans and strategies..

Expansion of India- Mercosur PTA
In the next India- Mercosur meeting to be held in New Delhi on 15-16 June 2010, the deepening and widening of the India- Mercosur PTA will be discussed.
The current India - Mercosur PTA which has become operational since June 2009, covers 450 itmes of our exports and 450 items of Mercosur exports. These lists are in the businesswithlatinamerica website. It has now been decided to expand the lists. Mercosur has already drawn up their list of 1600 items. Our commerce ministry is starting the list collection.Indian exporters, export promotion councils and trade and industry bodies can present their cases to the Indian commerce ministry..mentioning the items with the HS codes and percentage of preference you desire. Also you might like to check how much preferrence is being sought by Mercosur for the items which are of interest to your company.
Contacts in commerce MinistryAnil Mukhim, JS a.mukim@nic.inShubha Sarma DS shubha.s@nic.in
CII is planning to hold an interactive meeting with the visiting Mercosur delegation, which will have officials from all the four member countries of Mercosur.

Prospects of Latinamerican markets in 2010
According to ECLAC, the region is set for a GDP growth of 4.1% in 2010. IMF and Word Bank also predict 4% growth. Brazil, the largest market of the region is geared up for an admirable 7% growth, the highest since 1986. In the first four months of 2010, Brazil has generated almost a million jobs. The next football World Cup and Olympics in Brazil mean more investment, infrastructure and business in the coming years…

Peru, Chile, Panama and Mexico are expected to post growth in the 4 percent range. Other countries, such as Argentina, Bolivia, Colombia, Costa Rica, Dominican Republic, Paraguay, and Uruguay ,will grow closely below the regional projected average of 4 percent. Venezuela is the only country which will suffer an economic contraction. Hmmm… Instead of feeling bad and guilty …someone … you know.. who ..is celebrating this as the ¨death of capitalism ¨ !

In the past, Latin America was known as the region of crisis and debtand they were given bitter medicine and condenscending sermons. Oops .. now the doctors have got the disease and the priests have become the sinners. Latin American economies have learnt from their past mistakes and have become wiser. They have withstood the crisis of US and Europe with their resilience and strong macroeconomic fundamentals. The Latino markets are stable and growing …while Europe is in crisis and USA had undergone worse in 2008-9. Since these developed markets do not bring smile to our exporters , it is time they should focus on new markets such as Latin America.

FDI in Latin America in 2009
Foreign Direct Investment ( FDI) in 2009 in Latin America was 77 billion dollars. Brazil, as usual, was the top recepient of FDI with 26 biilion dollars. What was unusual was.. Chile emerged as the second most preferred FDI destination with 12.7 billion dollars, taking over the usual number two slot of Mexico, which attracted 11.4 billion. Peru seems to be the most attractive destination for mining investment in Latin America. Venezuela is the least attractive destination for FDI...no surpise...Here are the figures of FDI in billion dollars...
USA continued to be the largest investor in Latin America ( 37%) followed by Spain ( 9%) and Canada ( 7%).
Outward Foreign Direct Investment by Latin America in 2009 stood at 11.4 billion dollars. Chile replaced Brazil as the largest investor with 7.9 billion dollars. Mexico was the second largest with 7.6 billion ( dont forget.. the world´s richest man is a Mexican ! ) and Colombia invested 3 billion. The surprise in 2009 was that Brazil which was the traditional number one missed out the top spots. The Brazilian companies received more from their subsidiaries abroad in 2009 than their fresh investment.

Since American and European companies are less active in Latin America at this time, the Indian companies should focus on this region to get access to edible oil, pulses, wheat, sugar, minerals and crude oil which are going to be needed more and more by the growing Indian market. Agribusiness, mining and petroleum should be the priority areas for Indian companies.

More Indian companies invest in Latin America
Renuka Sugar bought another Brazilian company for US$ 329 million in February 2010. In November 2009, Earlier, Renuka had acquired sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $240 million. With these Brazilian acquisitions, Renuka has become the third biggest sugar company in the world, the number one sugar firm in India and among the top five in Brazil.
Godrej has acquired the Issue Group of Argentina which is a national leader in the cosmetics business. The turnover of the company is 35 million dollars which includes exports of 12 million dollars. Besides Argentina, the Issue Group cosmetics have a presence in a number of Latin american countries. The Group has a manufacturing plant in Buenos Aires.
Patni Computer Systems opened a new IT Delivery Center in Queretaro, Mexico to Serve North and Latin American Markets. Jose E. Calzada Rovirosa, Governor of the Queretaro State cut the ribbon on 12 march.
IFFCO ( Indian Farmers Fertilisers Cooperative ) has invested 25 million dollars in Americas Petrogas, a Canadian company, which has oil and gas projects in Argentina and a potash mine in Peru. IFFCO is keen on the potash project in Peru, as part of their global fertiliser production strategy. They are considering the construction of a potassium chloride plant in Bayóvar (Piura) which will involve an investment of 200 milion dollars. They are also considering a Urea production plant in Argentina based on the gas produced by Americas Petrogas in La Pampa province of Argentina.Kirloskar is exploring the possibility of manufacture of pumps in one of the countries to be selected in Latin America.

Latin American investment in India
Cinepolis, a Mexico-based multiplex operator, is rolling out its investment of 350 million dollars. The company started operations in India last year and is planning to operate 500 screens in 40 cities in the next five years in cities like Jaipur, Pune, Thane, Amritsar, Bangalore, Thane, Patna, Bhopal, Surat and Ahmedabad. It is the world’s fifth largest movie theatre circuit, operating 2,257 screens across 240 cinemas in six countries.
During my leave in India in April, I bought some chocolate candies in a super market in Trichy for the kids in my village. I was in for a surprise..the candies were made in Argentina by Arcor, the Argentine company !

India opens an embassy in Guatemala
This has enhanced the presence of India in Central America. Guatemala is the largest market of central america with 10 million population and is the entry point for the region. Panama is the other central american country where India has embassy.The embassy became functional from April 2010 with the following address.
Embassy of India
16 Street 4-88
Zone-14, Guatemala city
Telephone: 00502-23682988, 23683230,23633295,23633305,23682974
Mr Achal Sharma, Second Secretary - mobile number 00502 4891 4477Mr Mishra, Attache - mobile 00502 4965 0857

Third Festival of India 4-14 November 2010
The Embassy will organise the third edition of the festival in collaboration with EPCH ( export promotion council for handicrafts) of India as done in 2008 and 2009. The festival will include a handicraft exihibition with 60 Indian companies, classical and folk dance and music, films, food festival, exihibitions, seminars, literary events etc. Centro Cultural Borges is the main venue of the festival. Food festival will be at the Sheraton Hotel. The second Festival of India attracted 50,000 visitors and the Argentines are anxiously waiting for the next edition.

Participation in AutoMechanica Fair Buenos Aires 17-19 November
CII will bring 40 Indian autoparts companies and this is the first-ever Indian participation in this Fair

Made in India exihibition in Sao paulo, March 2011
CII is organising this first-ever exihibition in Brazil. Hmm.. we tried to get it for Buenos Aires but lost to my dear Brazil…no hard feelings..

India Business Seminar in Buenos Aires - 16 November
CII and the embassy will organise this mega event to promote Brand India in Hotel Sheraton. There will be speakers and presentations on Indian industry and on Argentine market. Over 200 Argentine CEOs, chambers of commerce and industry, government authorities and media will attend this event. Minister of State for Commerce from India will be the key note speaker at the seminar.

Golf and Polo tournaments
As part of the Festival, the third India Cup golf tournament will be organised in Jockey Club with about 100 golfers on 8 November.
The first India- Argentina Polo tournament will be held on 16 November in Buenos Aires. Players from India will come specially for the tournament.

Game for more…
Yes, we are game… to organise more trade promotion events, receive delegations and visits of individual exporters….

FDI in Latin America in 2009

Foreign Direct Investment ( FDI) in 2009 in Latin America was 77 billion dollars ( down from 132 billion in 2008 ) . Brazil, as usual, was the top recepient of FDI with 26 biilion dollars. What was unusual was.. Chile emerged as the second most preferred FDI destination with 12.7 billion dollars, taking over the usual number two slot of Mexico, which attracted 11.4 billion. It is interesting that Colombia had attracted more FDI than Argentina, the third largest market of the region. Peru is the largest attractive destination for mining exploration investment in Latin America and the third largest in the world. Venezuela is the least attractive destination for FDI...no surpise...
Here are the figures of FDI in billion dollars...

USA continued to be the largest investor in Latin America ( 37%) followed by Spain ( 9%) and Canada ( 7%).

Outward Foreign Direct Investment by Latin America in 2009 stood at 11.4 billion dollars. Chile replaced Brazil as the largest investor with 7.9 billion dollars. Mexico was the second largest with 7.6 billion ( dont forget.. the world´s richest man is a Mexican ! ) and Colombia invested 3 billion. The surprise in 2009 was that Brazil which was the traditional number one missed out the top spots. The Brazilian companies received more from their subsidiaries abroad in 2009 than their fresh investment.

Indian companies have also been showing enthuisasm for investment in the region. Notable case was Renuka Sugars which made a half billion dollar investment in Brazil recently. But still there is inadequate realisation among Indian corporates about the advantages and need for investment in the region. Agribusiness, mining and petroleum should be the priority areas for Indian companies. Investment in these sectors will get us access to edible oil, pulses, wheat, sugar, minerals and crude oil which are going to be needed more and more by the growing Indian market.

More Indian companies invest in Latin America

IFFCO has invested 25 million dollars in Americas Petrogas, a Canadian company, which has oil and gas projects in Argentina and a potash mine in Peru. IFFCO is keen on the potash project in Peru, as part of their global fertiliser production strategy. They are also considering a Urea production plant in Argentina based on the gas produced by Americas Petrogas in La Pampa province of Argentina.

Godrej is in talks with the Issue Group of Argentina to acquire their cosmetics production business.

Kirloskar is exploring the possibility of manufacture of pumps in one of the countries to be selected in Latin America.

Expansion of India- Mercosur PTA

The India - Mercosur PTA which has become operational since June 2009, covers 450 itmes of our exports and 450 items of Mercosur exports. It has now been decided to expand the lists. The next India- Mercosur meeting to be held in New Delhi in June 2010 will discuss these lists. Mercosur has already drawn up their list of 1600 items. Our commerce ministry is starting the list collection. Indian exporters, export promotion councils and trade and industry bodies can present their cases to the Indian commerce ministry..mentioning the item with the HS code and percentage of preference you desire.Contacts in commerce MinistryAnil Mukhim, JS a.mukim@nic.inShubha Sarma DS shubha.s@nic.in

Simmarpal Singh- target of pursuit of models and journalists

Exactly a year back, I wrote a blog on the peanut prince Simmarpal Singh saying that he is a role model for success in agribusiness in Argentina. http://businesswithlatinamerica.blogspot.com/search?q=peanut+prince

Since then, the role model has become the target of pursuit of hot Argentine models....when they see his flashy red turban...they chase him..follow his car...and stalk him everywhere.

He is also being chased by Indian journalists ...for interview. He has been interviewed and written about in many newspapers and magazines in India. Here is his latest interview in the Financial Express of today written by Huma Siddiqui, .... the Latina of Indian media...

Quote...

He started with leasing of 700-ha of land in Argentina and grew peanuts. It was a success. His company Olam International let him lease additional acreage. He has plans to continue the increase in acreage and grow other crops such as wheat, soya and pulses. Simmarpal Singh, Gerente General, Olam Argentina, today employs 140 people in Argentina, most of them in the processing plants. What Pal is doing in Argentina has a lesson for India which is going to face, in the long term, a shortage of agricultural land and water for irrigation to feed its population which is increasing by 15 million per year. Following are excerpts from an interview of Simmarpal Singh by Huma Siddiqui.
Realistically speaking, is contractual farming a concept for India?
Contractual farming applied in India may not work the same way as it does in Argentina because it is not about just getting an access to assured supply by giving some new seeds and a price cover to small farmers. All the while, you have to stay away from the operational part of the farm management. I think this is the way some companies are engaged in India. The higher plane of contractual farming is also about employing newer technology in planting, spraying and harvesting for which one needs large tracts of land to make the initial investment viable. We all know the kind of fragmentation that exists in India.
However, contractual farming in countries where large tracts of land are available can surely be an opening for Indian-based companies if they look at it from a long-term perspective and are ready to make some initial investments.
Agriculture ministry is planning to set up a task force which has members from MEA, Ficci and APEDA to help Indian farmers wanting to go to Latin America for contractual farming. What are your views on this?
A very good initiative looking at the entities engaged in the task force. Ficci along with MEA has organised quite a few conferences in LatAm in the recent past and they are in a position to access the right information in the region. However, everything will depend on how fast the task force is able to come up with a viable format for engagement and support.
The modalities of participation will be quiet different in each of these countries within the LatAm cluster and the country-specific social and cultural issues should equally be a focus area for the task force. It is also important to evaluate the segment this task force will be looking at within the ‘Indian Farmers’ category because that will go a long way in creating the initial acceptance locally which will be instrumental in the success of the venture—finally enhancing or destroying the brand India.
What has been the success mantra for your Argentinean venture?
Success, I believe, is all about the environment one happens to be in. Also, the level of effort one is willing to put in to achieve the objectives is also a crucial factor. I consider myself fortunate to be in Olam. It encourages risk taking under a properly-measured and evaluated framework. That gave me a ground to try something new.
Then, it was all about taking the plunge into it—ownership of the project, adaptability and readiness to take on new things.
When and how did you start in that country? How long did it take for you to establish yourself?
I came to Argentina in May 2005 to start the peanut operations in the country. I started from zero in a new place in my own way all the while aligning with and ensuring compliance with the core processes of Olam.
Starting up the operation had all its challenges related to understanding the business environment, the statutory, the labour and the tax-related laws, getting the governmental and institutional approvals and licenses.
Which are the commodities that can be grown in Argentina?
Argentina has fertile soil and good rainfall distribution which can allow one to grow all types of crops—soybeans, corn, wheat, beans, rice etc. One can go into citrus plantations or into vineyards too. It is all there.
What are the typical problems an Indian farmer can run into?
For me it is difficult to give a ready answer on this without getting a feel of what kind of a typical farmer it will be. The profile of a farmer in Punjab (95% farms with Irrigation) and some other state could be quite different. Again, within Punjab the profile of a farmers can differ. However, without generalising on the Indian farmer, I do think that there will be lot of starting problems but any educated person with a bit of meticulous planning can rough it out. The bigger challenge, however, will be the language and the ability to quickly adapt to the local culture.
What kind of food processing/exporting facilities are provided?
You can find everything there. However, most of the businesses are vertically integrated and depending upon which crop one may go into, there could be some specific infrastructure needed for stocking after a certain volume level. Generally speaking, it would not be so much of a challenge.
What are the laws of the land for the farmers/contractual farming?
Like any other place, the procedure is tedious on this aspect. But there is always a path available. I would say that one who has gone through the process with the Patwaris and Tehsildars in India is well trained for the situation here. Rather, he may find it slightly easier.

India- Latin America trade in 2009

The trade between India and Latin America was 15 billion dollars in 2009. India´s exports were 5.8 billion dollars and imports 9.2 billion.
Brazil remained as the top trading partner of India with 5.6 billion dollars, followed by Venezuela with 2.4 billion and Mexico 2.2 billion.

Below are the trade figures of 2009


Chemicals, pharmaceuticals, engineering equipments, vehicles and autoparts, textiles and software were the main exports.
Crude oil, edible oil, sugar, copper and other minerals were the major imports of India in 2009. Major sources of imports of
crude oil -Venezuela
sugar- Brazil
edible oil- Argentina
copper- Chile
India´s trade with Latin America has decreased from 17 billion dollars in 2008. This was not unexpected in the light of the global crisis last year.
India´s exports have already resumed growth in the beginning of 2010 and the trade is expected to increase in 2010 and in the coming years.

Brasil plans massive investment

President Luiz Inacio Lula da Silva launched on 29 March a $878 billion program to upgrade Brazil's infrastructure in the period 2011-2014. The plan will improve access to clean water, medical posts and energy as well as modernize the country's air, road and rail system. The energy part of the plan envisages investment of 257 billion dollars. This includes the five year plan of Petrobras, the Brazilian energy giant to invest 220 billion dollars, the largest corporate investment in the whole world at this time.
This is besides the investment being made for Olympic games 2016 and World Cup Football 2014.
Indian companies should rush in to get projects, contracts, subcontracts and orders for supply of equipments, machinery and materials.

Bajaj three wheelers in Colombia

Bajaj three wheelers were launched in Colombia on 24 March by the Colombian company Auteco. The vehicle which is being assembled in Medellin, Colombia, will be marketed at a little over US$4,000/- for the basic model. Apart from this model, there will be other versions including fully enclosed vehicles and others for carrying cargo. Auteco expects to import 3000 SKD kits of the vehicle this year and increase the numbers in the years to come. The vehicle has been homologated and has received the approvals from the Government of Colombia. It will, however, only serve as a taxi for the present in towns with less than 50,000 population, but will be allowed for private use in other cities.
Auteco also markets eight different brands of Bajaj motor cycles in Colombia. Their imports exceed US$50 million per year.
Bajaj three wheelers are also exported to Peru and Central America.

Wipro opens a new global delivery centre at Curitiba

The Indian IT major Wipro opened a new global delivery centre at Curitiba in Brazil, last week.
It was inaugurated by the mayor of Curitiba, Beto Richa, and the Consul General of India in Sao Paulo, Jitendra K Tripathi.
Though the company has been operating in Brazil for past three to four years, it is for the first time the company has established a delivery centre in the region. The Curitiba Centre would be a hub of the firm in the region and would serve as the regional headquarters for other Wipro offices located at So Paulo in Brazil and Buenos in Aires Argentina. Serving global and domestic clients, the centre would cater to 20 clients in IT and BPO sectors. The centre which started with 60 people currently employs around 350 people.

Indian petroleum companies to invest 2.18 billion dollars in Venezuela

The Government of India approved on 19 March an investment of $2.18 billion by three state-run companies - ONGC Videsh Ltd (OVL), Indian Oil Corporation and Oil India - in Venezuela's Carabobo oil block.
The three companies, which together have an 18 percent equity interest in the project were awarded the block in consortium with Spain's Repsol YPF SA (REP) and Malaysia's Petroliam Nasional Bhd. Venezuala's state-run Petroleos de Venezuela SA holds the remaining stake in the block.
OVL has already invested over a billion dollars in oil fields in Brazil and Colombia

Panama gets investment grade rating

Panama won the coveted investment-grade rating on its debt on 23 March. Fitch Ratings raised its credit rating for Panama by one notch to BBB-minus, putting it in a club of creditworthy countries. This is a reward to the Central American country for years of rapid economic growth, trim budgets and recent tax system overhauls. The other credit rating agencies are also expected to upgrade panama.

Brazil, Mexico and Chile are the other three Latin American countries with investment grade ratings.

The upgrade of Panama, coming at a time some Southern European countries are risking downgrades, is likely to attract more investment.

Panama uses the U.S. dollar as its currency and has emerged as a big winner from the growth in global trade , domestic construction boom and the vibrant banking sector. The average annual growth between 2000-09 was 8 percent, the fastest pace in Latin America.

About 4 percent of international commerce flows through the Panama Canal, which is now being widened to accomodate bigger ships with an investment of 5.25 billion dollars.

After running a deficit equivalent to 4.9 percent of GDP in 2004, Panama ran surpluses between 2006-08.

The country's debt as a percentage of gross domestic product has fallen to 45 percent in 2009 from 71 percent in 2004.

Congrats Panama... Keep going...

India starts importing coal from Colombia

This first ever import of thermal coal from Colombia is being done by Adani Enterprises Ltd, India’s biggest coal importer. The first cargo of fuel will be imported in a capesize, a vessel that has a carrying capacity of at least 110,000 deadweight tons. The company is said to be negotiating a long-term contract.

Colombia’s Cerrejon, the world’s largest open-pit mine producing coal for export, may make its first sales to India this year. Colombian coal may land in Mundra and Dahej ports on India’s west coast because they can handle capesizes.

Colombian coal supplies, which account for about 10 percent of global trade, may rise by 7.7 million tons in 2010 to 71 million after falling by about 8.7 percent last year.

Indian thermal coal imports surged last year to a little less than 60 million tons from about 30 million in 2008. India plans to almost double electricity generation capacity by 2012, when the shortage of coal will exceed 200 million tons.

India imports around 5 million tons a month from Australia, Indonesia and South Africa.

agricultural production up in Argentina and Brazil in 2010

Brazilian agroproduction is estimated to reach 145.1 million tons in 2010, 8.5% larger than that obtained in 2009 (133.8 million tons), according to Brazilian official statistical agency report of 9 March 2010. The area to be harvested, 47.9 million hectares, presents a 1.5% increase in relation to 2009, which was 47.2 million hectares.

The three main crops (rice, corn and soybeans), which account for 81.5% of the planted area, present variations of -3.8%, -4.1% and +5.9%, respectively, when compared to the 2009 harvest. As regards production, corn and soybeans recorded increases of +2.6% and +17.4%, whereas rice presents a decrease of -5.0%.

soy production in 2010 is expected to reach 66.9 million tons. The estimate for the coffee harvest is 2.8 million tons (14.4% larger than that of 2009).

Argentine soy production is estimated to reach 53 million tons in 2010 from 32 million tons in 2009.

This is good news for India since increased production especially soy will keep prices from going up. India imports soy oil and sunflower oil from Argentina, Brazil and Paraguay in large quantities.

Patni Computer Systems Opens New IT Delivery Center in Queretaro, Mexico on 12 March

Patni Computer Systems is opening a new IT Delivery Center in Queretaro, Mexico to Serve North and Latin American Markets. Jose E. Calzada Rovirosa, Governor of the Queretaro State is cutting the ribbon on 12 march.

Patni is moving from its temporary facility into a permanent location in a high-rise building at ITESM Technological Park of Tech de Monterrey. The new center occupies 11,000 square feet on two floors in ITESM Technological .Patni currently employs 40 in Queretaro. The company has plans to increase employment in the local facility to 200 by the end of 2010, with the bulk of the new hires coming from the local area.
Queretaro is Patni's 22nd development center, expanding a global presence which already features near-shore centers in the United States and Europe. Patni has an employee strength of around 14,000; multiple global delivery centers spread across 13 cities worldwide; 28 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues of US $656 million for the year 2009.
For more information on Patni, visit www.patni.com.

Petrobras plans investment of 44 billion dollars in 2010

Brazil's Petrobras is investing $44 billion in 2010 as part of its 2009-13 Five-year investment plan of 174 billion dollars. This is the world´s largest corporate investment plan at this moment. Petrobras had invested 28 billion dollars in the first nine months of 2009.

In 2010, Petrobras will invest 20 billion dollars in exploration and production and 17 billion dollars in refining and petrochemicals, with the remainder going toward areas such as distribution and biofuels.

This is a great opportunity for Indian companies to get project and supply contracts.

The investment in the petroleum sector will make Brazil as a significant exporter in the coming years.

Strides Arcolab acquires pharma assets of Aspen in Brazil for $ 75 million - March 2010

Strides Arcolab has bought Aspen's ( south african company ) facility in Campos, Brazil, with related products and intellectual properties for about $75 million. It is an all-cash acquisition.
The facility makes Penems and Penicillins and has annual turnover of $40 million.
Strides Arcolabs is already operating in Brazil as Cellofarm with a manufacturing unit in the port city of Vitoria near Rio de Janeiro.
Strides has a manufacturing facility in Mexico City in the name of Solara and has a marketing & trading operation in Venezuela as Sumifarma.

Renuka Sugar buys another Brazilian company for US$ 329 million

India's biggest sugar refiner Shree Renuka Sugars Ltd has signed a definitive agreement for a 51 percent stake in Brazil's Equipav SA Acucar e Alcool for $329 million. The Brazilian firm, which holds the sugar and alcohol assets of Equipav Group, owns two large sugar mills with integrated co-generation facilities, in southeastern Brazil. The sugar mills have a combined annual cane-crushing capacity of 10.5 million tonnes, co-generation capacity of 203 MW and 115000 hectares of cane growing land..The Indian firm will expand the co-generation capacity to 295 MW and cane-crushing capacity to 12 million tonnes annually with additional capital expenditure.

In November 2009, Renuka had acquired sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $240 million.

With these Brazilian acquisitions, Renuka has become the third biggest sugar company in the world, the number one sugar firm in India and among the top five in Brazil.

Hydrocarbon investments in Peru to total US$ 2 billion in 2010

Investments in the hydrocarbon sector projects in Peru would amount to 2 billion dollars taking into account the implementation of various ongoing projects and those in the planning stage, reported Peru's National Mining, Petroleum & Energy Society (SNMPE).

According to the president of the SNMPE Hydrocarbon Committee Guillermo Ferreyros, the biggest investment in the hydrocarbon sector this year is the execution of a liquefied natural gas project of Peru LNG in the country.Export operations are scheduled to commence in the second quarter of 2010. In 2009, Peru's hydrocarbon sector received $1.6 billion and if the works are carried out according to schedule, the accumulated investment in 2010 would be higher.

The Peru LNG project is set to be one of the most important resources of the Peruvian government's future energy strategy. The project, which was launched in January 2007, will also be one of the largest industrial projects ever to be undertaken in Peru.

The international project consortium for the project consists of Hunt Oil Company of the United States, SK Corporation of Korea and Repsol YPF of Spain. The operator for the Peru LNG gas export project will be Hunt Oil Company as the subsidiary Hunt Oil Peru.

The hydrocarbon project offers opportunities for supply of inputs for the project.

Reliance from India has entered Peru for exploration of oil and gas.

Falabella expands with 1.74 billion dollar investment

Chile's Falabella Department store chain announced on 14 January that it would invest $1.74 bn 2010 to 2012 to expand its operations. Falabella is one of South America's top retailer. It has 65 department stores, 95 Home Depts and 33 supermarkets located in Chile, Argentina, Colombia and Peru. It has eight stores in Buenos Aires itself.

It plans to invest around $492 million this year, $620 million in 2011 and $632 million in 2012. Falabella invested $280 million in 2009. The company has expanded its businesses in the region over the years.

Falabella sells clothes, hometextiles, electronics, furniture, healthcare products and other such consumer goods. India is an important source of their purchases. Indian companies can expect more business from Falabella in the coming years.

Devaluation of Venezuelan currency Bolivar – 8 January 2010

This was announced by the President of Venezuela on 8 January. Besdies devaluation, the President also introduced a two tier exchange rate system. The bolivar will now have two government-set rates: 2.6 to the dollar for transactions deemed priorities by the government, and 4.3 to the dollar for other transactions.

The priority exchange rate of 2.6 Bolivar for a dollar will apply to imports of priority items such as food, machinery and equipment for economic development, health care items and books and supplies for schools, family and pensioner remittances as well as public sector imports. For all other imports and non essential items the exchange rate of 4.3 will apply.

Before this devaluation, the official exchange rate had been held by the government at 2.15 bolivars to the dollar after the last devaluation in March 2005. President Chavez imposed exchange controls in 2003 after the coup attempt against him. At that time the exchange rate was 1600 Bolivars to a dollar. In February 2004 the rate was changed to 1920 Bs for a dollar and later in 2005 it was further devalued to 2150 Bs to a dollar. In January 2008, the government changed the currency to a a strong Bolivar ( Bolivar Fuerte) and fixed the new rate at 2.15 to a dollar, eliminating three zeros from the old currency.

The black market rate in January 2010 is 6.25 Bs to a dollar. Because of the foreign exchange restrictions and complicated procedures to get foreign exchange, there has been a thriving black market in foreign exchange transactions since 2003.

According to observers, the new exchange regime is a reminder of a similar situation in 1983, when President Luis Herrera Campins devalued the bolivar and established a multi-tiered exchange system, known as Recadi, after oil prices plunged. Inflation soared to 40 percent in 1987 from 7 percent in 1983 as capital flight led Herrera Campins’s successor, Jaime Lusinchi, to devalue the currency further. By the time Carlos Andres Perez replaced Lusinchi in early 1989, the system had collapsed. The country was running out of foreign reserves and food shortages were mounting. Perez eliminated the multi-tiered system, unifying the currency at the free-market rate, and lifted price controls. Consumer prices soared 21 percent in one month alone, leading to the “Caracazo” riots that killed hundreds and spurred a military coup attempt.

Venezuela has the highest inflation in Latin America and one of the the highest in the world. The inflation was 29.5 % in 2009 and is expected to worsen and reach 30% in 2010. It may be noted that the average inflation of Latin America was 6.1% in 2009 and is projected to decline to 5.2% in 2010

The government of President Chavez sets retail prices on hundreds of products and threatens strong action against violations. The President announced this week that the military would monitor prices of essential items in shops.

There is an energy and water crisis in the country. President Chavez has advised the Venezuelans to shorten the shower time and not sing in the bathroom. The crime rate has reached unprecedented proportions.

Poor Venezuela... so rich in oil, minerals and natural resources...and yet so poor...

Scores of 2009 and Promises of 2010 for Business in Latin America

2009 Scores
Messi won the best football player award of the year
Del Potro won US Open tennis
Luciana Aymar was selected as world´s best woman hockey player for the fifth time this year
Loreena Ochoa retained number one ranking in women´s golf
Cambiasso, the world´s best polo player won the Polo Open
Cabrera won the Masters Golf
And… Brazil won the Olympics venue, beating the heavyweights. ¨Sim Podemos¨ overtook ¨Yes we Can ¨.

The Latin American market could not score that well in 2009, since it got hit by the global crisis. GDP of the region fell by 1.8% in 2009, after having had an annual average growth of 4.8% in the previous six years. In 2009, ten countries managed to grow between 0.2% and 3.5%( Bolivia) while ten countries suffered GDP contraction ranging from -0.4% to -6.7%( Mexico). Exports and imports decreased by about thiry percent.

The good news is that the region did not go under due to the external shock as badly as it would have done in the past. Here is what Pamela Cox, vice president of the World Bank Vice President Latin America & The Caribbean wrote on 28 December 2009 under the title ¨Latin America enters new decade with more clout ¨,
“What a difference a decade can make. Ten years ago, Latin America and the Caribbean received the new century in the midst of tremendous uncertainty. …Today, the picture looks very different. News of default jolts other regions - not Latin America. Thanks to sound fundamentals, such as improved financial regulation and supervision, budget surpluses, and high international reserves, the region has weathered the current crisis without massive currency devaluations, bank collapses, debt defaults, inflationary spikes or capital flights. In other words, the region has learned from its past and is on track toward a better future¨

The OECD Latin American Economic Outlook 2010 says,
“ Latin America has not escaped the global economic crisis, but it has stood up to it with a new resilience. However, it is already apparent that Latin America is rebounding from the shock more rapidly than the majority of developed economies. Most importantly, it is doing so without compromising its significant progress towards its long-term development goals.”

Growth in domestic demand helped many countries to tide over the global crisis. For example, auto sales in Brazil increased to an impressive record of 3.01 million units in 2009 from 2.66 million in 2008. The sales are expected to increase by 10% in 2010. What is more… General Motors Volkswagen and Ford plan to invest a combined 14.2 billion reais ($8.3 billion) in the coming years to increase production capacity. More .. in my article ¨ "Brazil: Short skirts and Big B arouse Global Interest" published in Miami- based Latin Business Chronicle - 17 December.

Average inflation of the region is estimated to have declined to 4.5% in 2009 from 8.3% in 2008. The currencies and exchange rates remained stable. Some currencies such as Brazilian Real strengthened while Mexican peso maintained its rate and Argentine peso depreciated.
External debt was within manageable limits. The Brazilians rewrote the history of Latin America by becoming Creditors from Debtors. They lent US$ 10 billion to IMF in 2009 !

Politics
The region continued its consolidation and strengthening of democracies with regular elections and peaceful transfer of power with the exception of Honduras. In the 2009 elections held in Ecuador, Bolivia Uruguay, and El Salvador Leftist presidents were reelected / elected. In Panamá a centre right candidate became the President and in Chile´s first round a centre right candidate got more votes.
In 2010 Brazil, Costa Rica, Chile (second round) and Colombia will go for elections.
It does not matter whether the presidents are left or right. The general trend and consensus in the region is towards pragmatism with agenda for the poor and pro business policies. There are of course a few exceptions…
2010 is the year of bicentennary of independence from Spain for Venezuela (16 April), Argentina (25 May),Colombia (20 July),Chile (18 September) and Mexico (16 September)

The coup in Honduras in June 2009 was an unpleasant reminder of the past. President Zelaya was put in a plane at gun point and sent out of the country. But the Golpistas did not go all the way to install a classical dictatorship by military or by a Caudillo. They held elections in which a new President has been elected.

India´s score in Latin America in 2009
India´s exports to the region went down by about 30 percent in 2009 in comparison to 2008. This was expected, after the global crisis and local import restrictions by the governments which wanted to protect domestic industries and minimise outflow of foreign exchange.
Chemicals, engineering products and textiles were the major exports from India. Crude oil, edible oil and minerals were the main imports.
The India- Mercosur PTA, became effective from June 2009. This should give a boost to our trade with the four Mercosur countries.

Indian IT companies expanded operations in Latin America including in Brazil, Mexico, Argentina and Chile
These companies which set up operations in the region initially to service their North American and European clients, have now started focussing on local cients and have been getting local contracts

Renuka sugar mill made an investment of 240 million in the acquisition of two sugar factories and sugar cane estates in Brazil. This is the first agribusiness investment by an Indian company in the region.

Panama liberalised its business visa system for Indians. Indian business visitors holding US or Schengen visas do not need visa to visit Panama under a Presidential decree issued in July 2009. The decree is for all foreigners including Indians. The visitors can stay for 30 days during each visit. Earlier Panama embassy in Delhi had to send every visa application to their immigration authorities which would take months for clearance. Ecuador, Costa Rica and Honduras are the other countries which have waived visa requirement for Indian business visitors.

During the visit of Argentine President to India in October 2009, we signed a visa agreement under which Argentina has agreed to give five year multientry visas free of cost with validity of 90 days during each visit.
Visa is no longer an obstacle for Indian business visitors to Latin America……

Promises of 2010
Market
Latin America will grow by 4.3 % in 2010, according to ECLAC estimate in their report of 10 December. The growth of Latin America in 2010 is higher than the growth projected for developing countries ( 4%) except China and India.
Brazil will be the 2010 champion of the region with the highest growth of 6%. Ooops... I do not recall Brazil topping the growth chart of the region in recent times. Uruguay and Peru will be runners-up with 5% each. Mexico will grow by 3.5%. Argentina, the third largest market will grow by 4%.It is no surprise that the least growth in 2010 in the region will be in Honduras, which is in a political crisis.While South America is expected to grow by 4.7% in 2010, the Caribbean and Central America are projected to grow by around 2%.

Opportunities for Indian companies
Projects
Petrobras, the state oil company of Brazil is investing 174 billion dollars in the period 2009-13 in exploration and production of the recently discovered offshore oil fields. This is the world’s largest corporate investment plan at this moment.
The ongoing Panama Canal expansion project is over 5 billion dollars.
Venezuela , Argentina, Mexico, Colombia, Ecuador and Bolivia also have investment plans in their oil and gas sectors.
Projects related to Olympics and World Cup in Brazil
Exports
The manufacturing sector in the big and medium countries of the region are modernising to survive in this time of globalisation and against the competition from Chinese goods.This opens up opportunities for supply of equipments, machinery and spare parts.
Agricultural production in South America is steadily increasing thanks to the growing world demand and high prices. This means more scope for exports of inputs for agribusiness such as agrochemicals.
The new area opening up for Indian exports is Defence equipments and items. India has sold helicopters to Ecuador air force. Other countries have shown interest.
Imports
India will be importing more edible oil, crude oil and minerals from the region in 2010 and in the coming years.
Investment
Indian companies should consider buying/ leasing farmland in south america to grow oilseeds, grains, sugarcane and pulses, which are needed in India. Thousands of hectares of productive land are available in the private sector at prices less than in Punjab. There is no local government restriction.
Indian companies can also consider investment in commercial forestry in order to have direct access to wood and paper pulp whose imports are also growing in India
Mining sector is another area for Indian entry.
Investment in petroleum sector can be increased
Operations of Indian IT companies can be expanded
Entertainment Industry
Indian films were shot in Rio and Machu Pichu. There are other attractive shooting locations in the region. Latin Americans are keen to collaborate with Indians for coproduction of films and exchanges of soap operas and TV productions.