What Would Dollarization Mean for Expats?

[Agribotics]

Taiwan has half the population and nearly twice the GDP of Argentina on an island with no natural resources. Its finances are in the black and it produces 90% of the world's most advanced semiconductors and has a 1.9% annual inflation rate.

It succeeds because Taiwanese people know the only way to prosperity is by producing goods and services that the market wants. No gimmicks like dollarization, living on debt, free stuff, and money printing.

Until Argentina learns that the only way to prosperity is by producing goods and services that the market wants it will be doomed to penury.

 

[SinPulgas]

Here, if you produce goods and services that the market wants, you're threatened, extorted, and taxed to the point that you have to move to Uruguay.

 

[Ries]

Here, if you produce goods and services that the market wants, you're threatened, extorted, and taxed to the point that you have to move to Uruguay.

I gotta wonder how many business people in BA you know- because I know a lot, and none have been threatened or extorted, and they all deal with the taxes.

I also know a few business people in Uruguay, and its MUCH harder to do business there- taxes wages and all costs are higher.

I know several furniture manufacturers here, a bunch of clothing makers, including one friend who has a 100 people in his factory, some shoe companies, as well as a couple firms that make eyeglasses frames, some kitchen products, restauranters, including one friend who has 4 restaurants, designers, builders, architects, flooring guys, and more. We have visited a bunch of factories here, and they get by. Not rich, but not out of business, either, many are 3rd generation or more.

None will tell you its easy to do business here, but all of them keep plugging along.

I have been in business myself since 1980 or so in the USA, and can tell you that there are plenty of places in the US as bad or worse than BA. I had a friend who did a lot of contracting in NYC, and the shit she went thru there, with permits and bribes and under the table payments, with mob owned suppliers- well, its day and night compared to here.
I had a guy redo a floor for me in Argentina in march- he ordered a dumpster, it was there that day, and hauled away full the next- no issues, price as stated in advance. In NYC, you pay ten times as much, pay off people to even get it, and everything is harder and more expensive.
I have friends in Chicago who routinely pay off cops to not get tickets.
Pittsburgh, dont get me started.
I pay far more different taxes in the US than businesses here do, and the rates are higher. They dont have "prevailing wage" here, for govt jobs, for example, and many things are subsidized (fuel, transportation, utilities, basic foods) that you pay thru the nose for in the US.

I was in Uruguay at the beginning of the year, talking to a chef there who owns a well regarded restaurant. He goes to BA and guest cooks to make money. Because he barely gets by in Montevideo.
I love Uruguay, but they dont make anything there, whereas there is a LOT of manufacturing in Argentina.

 

[Agribotics]

Argentina's government makes creating goods and services painful:

Simply put, the bureaucracy, barriers and burdens that have made doing business in Argentina so painful in the past will continue into next year and well beyond. Some of the key challenges for companies and investors include:

• Difficulties starting a business
• Importation, currency barriers
• Persistently high inflation
• Convoluted property registry process
• High cost of obtaining credit
• A complicated tax regime
• Complex regulations for cross-border trade
• The ongoing national debt crisis

Key challenges to doing business in Argentina in 2023​

If you’re wondering if 2023 will be a better year for doing business in Argentina, it could be – if you hire the right local legal and accountancy team that will work tireless to obtain all the licenses, certificates, notarization and documentation you will need. What follows are some of the biggest hurdles that companies and investors that plan to do business in Argentina will face next year:

1. When starting a business, be prepared for red tape​

Starting a business in Argentina requires that businesspeople navigate a maze of bureaucracy and comply with seemingly needless requirements like notarizing employee records. “Argentina made starting a business more difficult by introducing an additional procedure for legalizing the employee books for companies hiring more than 10 employees,” the 2020 Ease of Doing Business study stated. Not something you want to hear if you are hoping 2023 will be a better year for doing business in Argentina.

2. Import barriers, difficulty accessing foreign currency​

Businesses that rely on imports to Argentina could experience delays or denials of licenses to import goods and services, and face strict limitations on a company’s ability to access foreign currency to pay for those imported goods or services.

3. High inflation​

The annual rate of inflation in Argentina accelerated to 71 percent in July of 2022, the highest since 1992, from 64 percent in June and above market expectations of 70.8 percent. Unlike other issues, much of this isn’t Argentina’s fault. The global rise in energy and food prices due to the war in Ukraine and fluctuation in oil prices have had a particularly adverse impact on Latin America. It is extremely likely these factors will have a negative impact on whether 2023 will be a better year for doing business in Argentina.

4. Registering property​

Registering property requires the completion of seven procedures taking an average of 51.5 days. Before the process can begin, three different hard-to-get certificates are required, and the act of obtaining them can be costly and time consuming.

5. Costly access to credit​

Bucking the inefficiency trend, getting access to Argentine credit in may be one of the most streamlined processes in the country. This may be the one glimmer of hope that 2023 will be a better year for doing business in Argentina. Still, there are four complex procedures to navigate and the cost of obtaining credit can be quite high.

6. Complex tax system​

Paying taxes is a highly complicated process, with around nine payments needed per year, which can take roughly 312 hours of work to prepare. Argentina has very high levels of taxation and a complex system with overlapping taxes, making paying taxes a headache for businesses. The corporate tax rate in Argentina ranges between 25 to 35 percent.

7. Cross-border trade barriers​

If you are thinking of doing business in Argentina, get to know its main cities
“Barriers” to Argentine trade might not be the most precise term to use, since those barriers are self-inflicted. But needless to say, cross-border trade remains challenging.

The government recently signed a series of new trade agreements with its neighbors, which sought to optimize the flow of international trade. Among the measures taken was the removal of tariffs on technological products.

Despite these efforts, Argentina remains one of the most complex countries from which to do cross-border trade. On the trade side of things, 2023 is unlikely to be a better year for doing business in Argentina.

​

 

[SinPulgas]

I gotta wonder how many business people in BA you know- because I know a lot, and none have been threatened or extorted, and they all deal with the taxes.

I also know a few business people in Uruguay, and its MUCH harder to do business there- taxes wages and all costs are higher.

I know several furniture manufacturers here, a bunch of clothing makers, including one friend who has a 100 people in his factory, some shoe companies, as well as a couple firms that make eyeglasses frames, some kitchen products, restauranters, including one friend who has 4 restaurants, designers, builders, architects, flooring guys, and more. We have visited a bunch of factories here, and they get by. Not rich, but not out of business, either, many are 3rd generation or more.

None will tell you its easy to do business here, but all of them keep plugging along.

I have been in business myself since 1980 or so in the USA, and can tell you that there are plenty of places in the US as bad or worse than BA. I had a friend who did a lot of contracting in NYC, and the shit she went thru there, with permits and bribes and under the table payments, with mob owned suppliers- well, its day and night compared to here.
I had a guy redo a floor for me in Argentina in march- he ordered a dumpster, it was there that day, and hauled away full the next- no issues, price as stated in advance. In NYC, you pay ten times as much, pay off people to even get it, and everything is harder and more expensive.
I have friends in Chicago who routinely pay off cops to not get tickets.
Pittsburgh, dont get me started.
I pay far more different taxes in the US than businesses here do, and the rates are higher. They dont have "prevailing wage" here, for govt jobs, for example, and many things are subsidized (fuel, transportation, utilities, basic foods) that you pay thru the nose for in the US.

I was in Uruguay at the beginning of the year, talking to a chef there who owns a well regarded restaurant. He goes to BA and guest cooks to make money. Because he barely gets by in Montevideo.
I love Uruguay, but they dont make anything there, whereas there is a LOT of manufacturing in Argentina.

Don't hold back. Tell us what you really think.

 

[SinPulgas]

Here are some businesses that didn't find the climate so rosy:

Una por una: las empresas que dejaron el país en los últimos años (from La Nación, archived version)

 

[Ries]

Its easy to post a link to an abstraction. As I said, I know dozens of Argentines who have businesses. I know a fair amount of relatively young people who have started businesses here in the last ten years. Some just make a living for one person, others have employees.
Nothing is easy in Argentina, but the idea that its somehow impossible to have a buisiness, given that its a country with more manufacturing than probably any other South American country except Brazil, that its a city with 10,000 restaurants, that there are small family owned businesses on almost every corner?
Its true, its an unfriendly environment for large multinationals.
Walmart left.
But how many Argentine factories have you visited?
How many actual Artentine business owners do you know?
I keep seeing anonymous right wing expats spout recieved wisdom from the Austrian school, but little actual on the ground experience.

 

[SinPulgas]

Its easy to post a link to an abstraction.

So the article is untrue? The reasons given for leaving Argentina are untrue?

I know several furniture manufacturers here, a bunch of clothing makers, including one friend who has a 100 people in his factory, some shoe companies, as well as a couple firms that make eyeglasses frames, some kitchen products, restauranters, including one friend who has 4 restaurants, designers, builders, architects, flooring guys, and more. We have visited a bunch of factories here, and they get by. Not rich, but not out of business, either, many are 3rd generation or more.

This is a country of 45 million people. 40% of them are below the poverty line. Almost 30% of full-time workers are below the poverty line (how many of those 100 factory workers fall into that category?). And this is your proof that things are ok? That the business climate is satisfactory?

I'll give you an anecdote of my own. I know an owner of a very successful bar/restaurant in San Telmo. Ten years ago, he was the owner of five very successful restaurants in CABA. If you'd like to meet him, let me know, and he'll explain to you why he's back down to one restaurant.

But I hate to get bogged down in this anecdotal back and forth when the macro economic climate of Argentina is so obviously, statistically and palpably, one of the worst in the world. Certainly among the larger countries of the world. And for many and varied, difficult-to-fix reasons. To suggest otherwise is simply absurd.

You live in a nice area in Recoleta (not that there's anything wrong with that). You're more of a raclette type of guy, you drink carrot juice or eat chicken wraps. You go to the tandil sandwich place on San Martin and Marcelo T all the time, you get helados at Esmeralda, and get the lunch special at Mr. Ho. And you eat bondipans from La Sonada a couple times a week. You've been known to hit Fa Song Song often, and you like those sliders at Tanta, too. Again, nothing wrong with that. But it's easy to have a rosy view of things when you live like that.

You know nothing about me, yet you label me an "anonymous right wing expat [receiving] wisdom from the Austrian school, but [having] little actual on the ground experience," absolutely none of which is true. Why? Because I try to take a realistic, unbiased view of the country I've been living in for 20 years. For more than half of those years the country has been in recession, again, one of the worst economic performances in the world during that time. I find it very sad.

So keep spouting your oft-repeated, well-worn anecdotes. But I'm going to stick with reality, thanks.

 

[ArgentinaVet]

I’ve owned various businesses in Argentina over the last twenty years and I can tell you from first hand experience that the taxes are so onerous and never ending that to compare them to anything in the USA (specifically Florida, where I also own businesses) is preposterous.
The rumor is true: Argentina IS among the most difficult places to do business in the world and if you followed the law it would be mathematically impossible to earn a profit.
That being said, such a treacherous environment keeps out most of the “smart money” and thus more nimble and less restrained individuals such as myself can do their thing here. If you catch Argentina at the right point in the cycle and you are in the right business you can make alot of money here.

 

[earlyretirement]

I’ve owned various businesses in Argentina over the last twenty years and I can tell you from first hand experience that the taxes are so onerous and never ending that to compare them to anything in the USA (specifically Florida, where I also own businesses) is preposterous.
The rumor is true: Argentina IS among the most difficult places to do business in the world and if you followed the law it would be mathematically impossible to earn a profit.
That being said, such a treacherous environment keeps out most of the “smart money” and thus more nimble and less restrained individuals such as myself can do their thing here. If you catch Argentina at the right point in the cycle and you are in the right business you can make alot of money here.

EXACTLY. ArgentinaVet you get it. I've found very few people on this forum have actually done business or set up companies here in Argentina. People can speculate or try to compare it to the USA or anywhere else. But for anyone that has truly done it. You are exactly right. Argentina is horrible. Do the math and if you actually paid every single tax you're legally obligated to pay, there is virtually no way possible to make a profit. It's just impossible. And that needs to get fixed ASAP with a new presidential regime.

The labor laws as well are all broken. As you mentioned, you can still time things if it happens to be in a right cycle, you can do ok but the profit might come from things you do outside of Argentina and not an actual good or service that you're providing IN Argentina.

You can't compare Argentina with any other countries to do business except for maybe the seediest places on Earth maybe in Africa.

Argentina is and probably always will be an amazing place for a retired ex-pat to live. But a horrible place to try to operate any type of business. A paradise for a digital nomad.