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.