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Siemens to invest in Argentina

September 15, 2016

The German engineering giant will be engaging in funding and building infrastructure projects worth billions of euros, saying the new government of Mauricio Macri is serious about reforming Argentina's economy.

Argentinen Mauricio Macri, Sigmar Gabriel und Joe Kaeser
Image: picture-alliance/dpa/Presidency of Argentina

Following a visit by Siemens chief executive (CEO) Joe Kaeser to Buenos Aires this week, the engineering group said it would work with Argentina on 5 billion euros ($5.6 billion) worth of projects to improve infrastructure, mobility and energy management there and creating some 3,000 jobs.

Speaking on the sidelines of the Argentina Business & Investment Forum hosted by the country's new market-friendly president Mauricio Macri, Kaeser said Siemens would provide 3.1 billion euros in financing backed by Germany's export credit agency.

The investment drive includes energy projects to supply about 5 gigawatts of energy to Argentina - 4 gigawatts from modern gas-fired power plants and 600 megawatts from renewable energy. Other investments will focus on trains and suburban connections, streetcars and rail automation.

The jobs would be created over a period of four or five years, Kaeser said, adding that Siemens could create more than 6,000 jobs indirectly.

"If Argentina gets it right now they can take the lead in Latin America," Kaeser told attendees at Macri's event. "Think about it twice before you wait because now is the time to make a difference, and tomorrow it could be too late."

Argentinians grapple with rising prices

Macri under pressure

Macri won the presidency last year by promising to open Argentina's economy to foreign investment. While companies generally speak enthusiastically about his policies, many are hesitant to invest because of Argentina's notoriously volatile politics and economic crises.

Siemens was the main investment commitment made public so far during the government's investment forum that attracted nearly 2,000 executives from around the world.

Lack of infrastructure is a key bottleneck holding back economic growth in Argentina, which is now in recession after three consecutive quarters of negative growth. But Kaeser said the country's future could be bright.

"Those people [government] are all really reform-oriented, they're very serious about what they want to do," he said. "It's a decisive moment in the history of the country to come back to what it used to be and to come back to what it deserves to be."

Kaeser, who was accompanied by German Economy Minister Sigmar Gabriel, noted that Siemens investment drive was backed by the German government.

"That should ring a bell about the seriousness of the commitment. It's about two countries coming together," he added.

The Argentine president urgently needs such projects to show his voters that recent reforms, including a devaluation of the peso and a controversial debt deal with the country's creditors, are translating into much-needed investment. As of last week, a ticker on the Finance Ministry website had tallied $32.5 billion in investment pledges since December, but central bank data show only $1.3 billion has actually arrived in the first six months of 2016.

uhe/jd (Reuters, dpa, AFP)