Interview : Dante Sica
In a context of macroeconomic and currency volatility, what can be done to boost industrial activity?
DANTE SICA: We need to overcome the systemic lack of competitiveness in the economy. Roundtable discussions – involving the state, companies and workers – are helping us to find productivity-enhancing solutions for each industry. At the macro level we are implementing the Federal Development Plan, which consists of eight pillars: reducing the cost of capital, improving human capital and labour productivity, developing infrastructure and energy systems, promoting innovation and technology, pursuing an efficient fiscal policy, supporting fair competition, achieving intelligent integration into the global economy and simplifying production processes.
Important reforms have been carried out to support each of these policy directives and more are under way to improve regional productivity. The agreement with the IMF and multilateral organisations provides solidity to this ongoing plan. Nevertheless, it is time to accelerate the changes we are promoting, to facilitate faster economic improvements.
How can the impact of technological change on labour-intensive sectors be minimised?
SICA: President Mauricio Macri’s objective is to reduce poverty and there is only one way to achieve this, namely creating more and better jobs. The world is undergoing a fourth industrial revolution and countries have to be part of this process; we must promote innovation and prepare people for these changes. New technologies are not a threat, countries like Germany, South Korea and Sweden – which have the highest levels of robotisation – also have some the highest rates of industrial employment, along with the best wages. Public policies, including fair rules for commercial multilateralism, will be fundamental for the fast generation of quality employment opportunities with the lowest transition costs. We are focusing on the modernisation of all sectors and the building of a knowledge-based economy. As such, we are optimistic about integrating into the global economy. Exports of knowledge-based systems already represent a third of total exports in Argentina. Furthermore, they grew 19% in 2017, while exports of computer services grew 38%. We have an extraordinary opportunity to develop economically, both in terms of the domestic transformation of our industries and in terms of international expansion.
How does the Bank of Investment and Foreign Trade aim to achieve better financing mechanisms for small and medium-sized enterprises (SMEs)?
SICA: We are transforming it into a true development bank, removing one of the main barriers faced by Argentina, namely the lack of credit for manufacturing companies. In 2017 the bank disbursed over AR1.5bn ($77.7m) to the manufacturing sector, with 86% of these loans provided to SMEs. Over 2018 we expect to double that figure. The importance of the bank lies in generating supportive conditions and financial instruments for the productive sector. Furthermore, the bank not only finances companies directly, but also indirectly, through the provision of commercial banking services to SMEs. Financing through this second-tier channel grew by 2757% between December 2015 and December 2017, from AR211m ($10.9m) to AR6bn ($310.7m).
What impact can the EU-Mercosur trade agreement have on domestic businesses, especially SMEs?
SICA: The EU does a very important job in the creation of value chains where SMEs are central, building on their high adaptability and ability to generate employment. Argentine SMEs will benefit from this integration, which will provide access to markets and technology, and attract foreign investment. Therefore, this is much more than a commercial agreement; it is a strategic agreement that represents a fundamental step towards the economic transformation that Argentina requires.
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