Problems relating to Trade and Investment on Argentina

11. Restriction on profits remittance abroad
Issue	Issue details	Requests	Reference

(1) Restricted External Payment/ Remittance in Foreign Currency

- Due to foreign currency shortage, external remittance of dividends has been continually suspended effectively from the invested business enterprises (while not prohibited by law, request for remittance filed gets rejected without explanatory reasons.) consequently, on a principle of equality of shareholders, distribution of dividend is not possible also to domestic firms in Argentina (MFS).
- Foreign exchange for the purposes of external remittance of dividend to home country overseas or royalty payment by related companies/subsidiaries is only possible by CBA's individual examination. This requirement serves as a great barrier in evaluating investment into Argentina.
- Restriction on external remittance entails the following problems:
-- Request to importers is necessary for deferring payment in U.S. dollars.
-- While for external remittance of consideration for service (such as brand fees), advance service application system (DJAS) is available. However, even with an issued DJAS in hand, CBA refuses to grant external remittance.
-- External Remittance requires vexatiously complex bureaucratic procedures.
- While CBA prior approval scheme has been in force since January 2012 on external remittance to home countries by subsidiaries and related companies, due to the de facto control, it is in effect disallowed.

- It is requested that GOA takes steps to:
-- resume as soon as possible its approval of external remittance of dividends.
- It is requested that CBA repeals foreign exchange control as soon as possible.
- GOM exercises its control by way of administrative guidance over the telephone, etc. on many issues, disrupting the stability of traders' business activities, regardless of how it impacts their activities.
- It is requested that GOA deregulates restrictions on external remittance.
- It is requested that GOA repeals the restrictions in all, inclusive of de fact control.

- Measures commensurate with the Central Bank of Argentina's (CBA's) Foreign Fund Reserve Status, in lieu of outright prohibition or restriction.

(2) Mandatory Conversion of Foreign Currency Revenue into Local Currency	- Foreign Exchange Risk and Foreign Exchange Commission occur due to having to convert proceeds from exported products manufactured in Argentina into local currency and to convert again into foreign currency preserve the value of foreign currency. - Compulsion upon exporters for early collection of USD accounts receivables and conversion into Peso.	- It is requested that GOA repeals the restrictions stated in the left column.
	(Action) - Since February 2012, GOA has tightened its control on the outflow of foreign currency, taking measures such as the following: (1) Submission of DJAI number obtained under DJAI System is a mandatory requirement for purchase of foreign currency in payment for import transactions, moreover, requiring minimum 6-days prior approval of the Central Bank before such purchase, (Comunicacion "A" 5274). (2) Central Bank has prohibited from 3rd April 2012 withdrawal by use of ATM of foreign currency overseas from the domestic peso bank account (Comunicacion "A" 5294). (3) Central Bank's Advance Approval is required for payment of imported service in the amount exceeding USD 100,000 per annum (Comunicacion "A" 5295). - The Argentine trade deficit against Brazil during January through August 2012 was USD1.71 billion, down by 54% against the same period in the preceding year, as the import was restricted following the GOA's introduction of DJAI. - Central Bank requires conversion into peso in principle all foreign currency that flows domestically into Argentina.

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