The announcement did not make noise more because of the magnitude of the company involved than because of the surprise of the decision to leave the country of the Italian giant that controls EDESUR, El Chocón and two thermal generation plants. Enel is an Italian electricity company that operates in the traditional and renewable energy segment, with a presence in more than 30 countries worldwide, 74 million end users and a distribution network of 22 million kilometers and with total assets of US$266,000 million and a net worth as of September of this year of US$42,000 million, owned almost 27% by the Italian State.
return ticket. In principle, the decision to leave the country is multi-causal and its CEO Francesco Starace He confirmed it after the last shareholders’ meeting and it involves not only operations in the country but also in Peru and Romania. The announced idea is to disinvest in markets with little return and high risks to fully face the new Mecca of the industry: renewable energy. For connoisseurs, the verdict on the Andean country is a mystery, but in the case of the Bucharest-based service it was sung: the problems there are only comparable to those in Argentina.
A year earlier, the same executive stated that they were expectant about their investment horizon in the country. Probably the twists and turns with the update of the rates, but, above all, due to the little political support that the disclosure of the price scheme had in the entire sector, hurried them to close the door.
The theme is not only EDESUR, whose supply is always in the gaze of Kirchnerism for the simple reason that it supplies its electoral heart and therefore the amount that the national government allocates to subsidize its consumption, but the rest of the value chain of the sector in which it also participates . The common thread is very clear: the global management of the emporium is not willing to channel energy and money to survive in a market with high volatility and a lot of political risk. The only question is how it will dispose of its most important assets, which, in the case of EDESUR, will surely be another group “experts in regulated markets”like the one who stayed last year with EDENOR.
The exodus. The first sector that precisely took flight was the aeronautical sector. Before the pandemic, the low-cost Norwegian had already expressed his will, after his stressful three-year experience in the country. It sold its local operation to Chile’s Jetsmart. Then, already in the middle of the pandemic and with the sector turned upside down, it was the turn of the one that had made the most noise so far: Latam Argentina. It laid off almost all of its employees and only remained operating international routes. air new zealand Y Qatar Airways they also took advantage of the pandemic stoppage to stop their operations in Buenos Aires. Alitalia was another that did it, but there the crisis that dragged on was of a global order.
falabella It was another Chilean who erased Argentina from her investment portfolio, with order and taking care of the contingencies that are usually a nightmare in these cases; She found in Francisco de Narváez a buyer who had started out as a supermarket and a skilled sherpa on the paths of power, and thus crossed out the name of the country, the first global private employer (2.1 million employees), from her map. Alicorp (food from Peru), brightsar (electrical components with plant in Tierra del Fuego); those related to auto parts: Basf and Axalta (paints) and Saint Gobain (glasses) and Glovo are some of the most emblematic cases. Raizen Gas (linked to Shell) and Petrobras (Brazil) head the list of multinationals that changed their regional bets that involved the sale of their Argentine subsidiaries. Many names and one question: why did the Argentine market stop being attractive?
Causes. The consultant Marcelo Elizondo, specialized in international economics, warns that the trend in Argentina is going against the world current. Since the beginning of the century, the stock of foreign direct investment (FDI), according to OECD figures, has multiplied by 6, while in our country it has increased by less than 50% in these 21 years (an annual rate of 1.9%). . And if it weren’t for capital controls that forced subsidiaries of multinational companies to reinvest far more than the global standard in fixed assets, growth would have been close to zero. “The problem is not so much what left but what stopped coming. Excessive controls stop bleeding, but scare away other capital that chooses other more attractive markets”, he explains. Two decades ago, Argentina accounted for 0.9% of total world FDI and today it accounts for only 0.2%. This percentage would also be linked to the lack of vocation of national companies to internationalize and compete regionally: it only represents 0.1% of global FDI. Brazil, for example, has 7 times more “sunk” investments in its territory, but very little of Argentine origin.
Elizondo lists the reasons why, in general, companies choose to leave the:
1.institutional weakness. Contracts in which the authority intervenes a lot, slow Justice, few individual guarantees, resolution of conflicts in an inadequate time and manner.
two. macroeconomic instability. For the unstable, there is no adequate management to manage such a degree of uncertainty and risk.
3. regulatory environment. The commercial stocks and the excessive capital control are complicated and incomprehensible for foreigners. Above all, intra-firm trade is made difficult (and it is a third of the total international trade of US$28 trillion).
Four.Weakness in international architecture. There are not many free trade agreements signed by Argentina and 70% of world trade is between countries that reduced their tariffs to 0.
In short, there is a favorable environment for FDI when there is open trade with international agreements and fluid access to different markets, access to international financing, data and information exchange with the world, and good reception of foreign capital flows. The continuous drainage of signatures is only the tip of the iceberg of a phenomenon exposed, also, by the very low rate of companies per inhabitant: 12 per thousand inhabitants of Argentina while in Uruguay it is 48 and in Chile, 36. Everything has to do with everything.
