Dispatches from our Ambassadors in Latin America

1 December 2016

Argentina is open for business

Mr Noel Campbell
Ambassador to Argentina

After more than a decade of populist rule Argentina is under new management. The new centre-right government has made significant progress over the past ten months to open the economy, enhance productivity, encourage investment and re-engage internationally. It is also working rapidly to adopt international norms in transparency and business regulation.

Mr Noel Campbell, Ambassador to Argentina

The government's objective is to restore growth by maximizing the country's undoubted economic potential. Argentina is a leading exporter of agricultural products. But has the potential to double its current capacity. It also has significant untapped reserves of copper, gold, silver, lead and lithium – as well as the world's second and fourth largest reserves of shale gas and shale oil. The government's growth agenda also includes ambitious new infrastructure projects in transport, energy, tourism, and regional inter-connectivity. And it has promised major social reforms in health, education and welfare.

These developments present important opportunities for Australia. We are viewed positively as a country with a similar economic profile and a record of economic reform it wishes to emulate. It is keen to draw on the experience of the Productivity Commission, for instance.

We are also regarded as a source of international best-practice in sustainable mining, technical education, productive agriculture and delivery of social services. The message to Australian investors and service providers is clear. Argentina is open for business.

The legal framework for closer engagement by Australian companies is already in place through investment protection and double taxation agreements. Indeed, Australian mining and energy firms have already begun to expand their activities. Orocobre, Energi Resources and First Quantum are cases in point. New opportunities are also emerging in agriculture, infrastructure and services, building on the presence of established players such as NuFarm, Amcor and QBE. Argentine firms are also keen to consider joint ventures with Australian partners to create new market opportunities in the Asia Pacific and Mercosur respectively.

Increased interest in Argentina will also have positive spin-offs for Australia's relations with Uruguay and Paraguay. Although small in size, both countries have open economies and offer excellent potential in such sectors as agriculture, renewable energy and education.

Brazil: bouncing back

Mr John Richardson
Ambassador to Brazil

Where else in the world would you queue for an hour and half to buy a beer and enjoy the experience? If there was a negative to the Olympics Opening Ceremony, this was the only one and the sheer friendliness, exuberance and sense of fun of those in the crowd with us washed it away.

Mr John Richardson, Ambassador to Brazil

Brazil presents a complex and, at times, contradictory face to the world. Despite a deep economic recession, paralysing corruption scandals and the impeachment of a President in 2016, Brazil also successfully staged world-class Olympic and Paralympic Games, defying the expectations of doomsday naysayers.

Australian interests in Brazil witnessed solid growth. Our student numbers continue to grow strongly at 20 per cent, and the largest ever public diplomacy event in Latin America Australia now received a warm welcome from Brazilian audiences. Cooperation between Australian and Brazilian scientific and research institutions is expanding rapidly, drawing on the common challenges we face.

Brazil remains a difficult and puzzling place in which to operate but given its exceptional natural resource base, sophisticated agribusiness and mining sectors, large population of 205 million, economic weight and a growing middle class who increasingly seek education overseas, opportunities exist in all sectors.

Austrade is building on already strong education links (with the Embassy's Education Counsellor), promoting two way investment, particularly in agribusiness, and promoting trade in the mining technology, health and medical, aviation component and transport infrastructure technology industries.

The new Temer administration is committed to reform with its market-friendly agenda receiving support from Congress and a tick from investors. A Constitutional amendment limiting public spending increases to previous year's CPI will be a key step toward fiscal sustainability, as will proposed reforms to the social security system. Also critical are decisions to divest various State concessions including regional airports and to terminate Petrobras' exclusive control of Brazil's pre-salt oil extraction reserves. Business investment confidence is returning to Brazilian markets and the IMF expects Brazil to return to growth next year.

Australian products and services benefit from Australia's reputation for delivering quality and a fair-go. These are key assets that we can leverage further.

Gateway to South America

Mr Tim Kane
Ambassador to Chile

Chile remains Australia's gateway to South America with either non-stop Qantas or one-stop LATAM flights from Sydney every day of the week. Over 100 Australian companies and the Trade and Investment Offices of Queensland and Victoria are based in Santiago.

Mr Tim Kane, Ambassador to Chile

Australia's business presence is led by BHP Billiton, with its majority share in the world's largest copper mine, Escondida, in northern Chile. Australia is well positioned to take advantage of the broad relationship with Chile – our bilateral Free Trade, Double Taxation and Air Services Agreements, are just a few of the advantages for business people in Chile.

Responding to calls from Australian businesses, the embassy helped shape Chile's Productivity Commission, based on the Australian model. The Australia-Chile Economic Leadership Forum in December will highlight new opportunities in infrastructure, education, mining and the scope for Australia and Chile to be the best platforms into their respective regions.

Colombia is the rising star of the continent with a lasting peace within grasp and opportunities for Australian business ranging from mining and hydrocarbons, to infrastructure, animal genetics, tourism development and franchise opportunities.

Geographically located close to almost everything and a market of 50 million people in a country twice the size of France, Colombia presents itself in a new light. Australian companies such as Orica, WorleyParsons and Noble Metals Ltd are leading the way in seeking new opportunities and helping to advance the economic prospects of all Colombians.

Investment groups in Bogota and Medellin are also looking for opportunities in Australia and the Asia Pacific and we're connecting them to the best prospects.

Ecuador is something of the South American quiet achiever. After considerable expenditure on infrastructure in the last few years, the country is well served by quality roads, airports, transport services and ports which are conveniently located within easy reach of cities and business hubs. SolGold has shown the way with its impressive Cascabel gold development project which has attracted the attention of mining giants, and QBE is the country's biggest insurer. LatAm Autos, the ASX-listed company and one of the largest online auto classifieds businesses in Latin America, calls Quito, Ecuador home and continues to grow.

Peru's reforms pay dividends

Mr Nicholas McCaffrey
Ambassador to Peru

Good economic opportunities exist for Australian business in Peru and the growth in our commercial presence in this Andean nation demonstrates that. In 2003, there were ten Australian companies in Peru, now there are over 80 with around A$5 billion invested. 

Mr Nicholas McCaffrey, Ambassador to Peru

The expansion in our trade and investment relationship with Peru matches the country's impressive economic growth over the past 10-15 years. This growth is the result of structural reforms undertaken in the 1990s which opened up the country to the world. 

In addition, the consistent application of regulations governing Peru's economy has delivered it a reputation as a "business-friendly" destination for foreign investment.

Mining remains the most important part of our bilateral economic relationship with Peru.  There is much potential to do more in this sector with the development of mining in Peru still in its early stages, coupled with local authorities' desire for greater Australian involvement.

Peru's recently-elected President, Pedro Pablo Kuczynski, is determined to tackle a yawning infrastructure deficit; this presents Australia with opportunities as much of the work required centres on supporting the country's natural resource development. Education is another area which is undergoing thorough reform, and Peru is keen to learn from our experience in order to address a major skills shortage, including in mining and energy-related training.

There are, of course, challenges to doing business in Peru. However, a strong record of attracting FDI in the last decade, allied to Peruvian Government attempts to tackle these impediments, make it a destination worth careful investigation by Australian business.

Australia's relationship with Bolivia is more modest, with currently little trade or investment exchange. Like its Peruvian neighbour, Bolivia is prospective from a mining geology point of view, however in recent years there has been less interest shown by international mining and energy companies.

Mexico: becoming an economic powerhouse

Mr David Engel
Ambassador to Mexico

Mexico is set to be one of the world's top 10 economies by 2030, boosted by an extensive economic reform program that has seen it transform into an economic powerhouse. Its membership of The North American Free Trade Agreement, globally competitive cost structures and openness to foreign trade and investment make it a key emerging market. 

Mr David Engel, Ambassador to Mexico

Mexico has its challenges. But look beyond the media focus on drug cartels and you start to comprehend the skills and technology intensity of its manufacturing sector, which is among the highest in the world. The result is that the value of Mexico's exports in this sector exceeds the rest of Latin America combined. It is the world's largest producer of TVs and the fourth largest exporter of autos, where Australian companies are already active. It is emerging as a significant player in aeronautical production. It is intent on pursuing innovation, including through technology parks that bring together some of Latin America's best research with a sophisticated business community.

Australian companies are starting to appreciate this. Mexico is Australia's largest trading partner in Latin America. Australian investment in Mexico has increased from around $4 billion in 2010 to $5 billion today. More than 150 companies are now in the market in such diverse sectors as infrastructure, advanced manufacturing, agriculture and resources. Our energy and METS companies are already taking advantage of the opening up of Mexico's mining and energy sector.

Others are set to follow. There are significant opportunities to inject Australian expertise into Mexico's food and agribusiness sector. And Australia's world class educational institutions, including in vocational and technical fields, can serve Mexico's skills demand, particularly through innovative 'borderless' delivery models.

Nearby countries' reputations also mask economic potential. Panama, Cuba and the Dominican Republic are places where Australian interests can expand in such sectors as resources, agriculture, education and services. Earlier this year, former Special Envoy for Trade Andrew Robb led Australia's first trade mission to Cuba, noting that Cuba's newly opening market could become a niche for our premium food products, among other things. Australian businesses stand to benefit from first mover advantage in these markets if they play their cards right.

Caribbean: opportunities in resources

Mr John Pilbeam
High Commissioner to Trinidad and Tobago

Since the 1950's the Caribbean countries have been useful markets for Australia as small but steady importers of lamb, beef and cheese. The Caribbean has also developed a taste for Australian wines as North Americans have brought their taste for Yellowtail with them on holiday. 

Mr John Pilbeam, High Commissioner to Trinidad and Tobago

Where an Australian product is a world-leader, Caribbean buyers have sought it out – fast ferries have been sold by Australian firms Incat and Austal in Trinidad and Tobago and in the French island of Guadeloupe while Thales is supplying 12 Bushmaster troop transports to the Jamaica Defence Force. 

But the big Caribbean opportunity for Australian investors and exporters now is in resources. An Exxon-led consortium discovered a major oilfield in Guyana's offshore waters in May 2015 and BHP Billiton is drilling for oil in the deep Atlantic 200km east of Trinidad, as part of a major, eight-hole exploration program, its largest anywhere at present. So global oil and gas equipment, technology and service firms are beefing-up their presence in the region. 

Improved gold prices over last year have also seen mineral exploration pick-up in Guyana and Suriname in 2016 and in late October Perth-based Troy Resources celebrated a year of operations at its Karouni gold mine, Guyana's second-biggest.

Last Updated: 1 December 2016

Case study One

Monash University and the Fiocruz Institute are cooperating on a global health research program that aims to stop the spread of mosquito-borne viruses, including dengue fever, chikungunya and Zika, with an USD18 million funding increase recently announced to scale up the project in Latin America, including across Rio de Janiero.

Case Study Two

Aesop, Melbourne-based high end skincare products company has established two stores in São Paulo with very successful results in its first two years, but time and considerable effort were needed with regulatory permissions.

Case Study Three

Karoon Gas is set to be the first foreign interest to buy a producing oil field from Petrobras with current production of 45,000 barrels per day and interest in another field with expected oil production in the first quarter of 2018, complementing its own discoveries currently in a pre FEED stage.

Zapotitlan Salinas Botanical Garden, Mexico Photo by: Andrés Sanz
Honduras Photo by: Miguel Gomez