MercoPress. South Atlantic News Agency

Peugeot and GM Argentina promise not to remit dividends for two years

Cristina Fernandez at the launching of a new Peugeot model 308

The French auto consortium Peugeot-Citröen agreed with the Argentine government not to remit earnings during two years (2011/2012), approximately 50 million dollars announced Argentine government sources.

The agreement was made public Thursday in the midst of the administration of President Cristina Fernandez battle to impede capital flight and bring some calm to the sensitive money exchange market which became volatile once the government announced strict limitations for the trading of US dollars, Argentines refuge currency.

The announcement came precisely on the day President Cristina Fernandez visited the Peugeot-Citröen plant in the province of Buenos Aires for the launching of a new model, 308 Hatchback, where she underlined the contribution of the French group and called for a similar attitude from other corporations to ensure the re-industrialization process in Argentina.

“The corporation does not remit earnings, on the contrary it reinvests them in Argentina; those are the business attitudes we need for a strong prosperous Argentina to ensure jobs” said the Argentine president.

Peugeto-Citröen had also agreed a few months ago to switch from a 290 million dollars deficit in 2010 to a surplus of 85 million dollars in 2012.

Earlier this week General Motors adopted a similar policy and announced it would not send dividends overseas in 2011/2012, a sum estimated in 207 million dollar. GM also committed an additional 150 million dollars investment in 2012.

Earlier this year the Argentine government signed agreements with several auto manufacturers and importers which operate in the country to match their trade balance and substitute imports.

Last March the CFK administration said that auto plants in Argentina will only be allowed to import vehicles for the same value they export Argentine manufactured cars and auto-parts, the so called dollar for dollar compensation.

In her speech to the French corporation officials and workers CFK recalled how the auto industry has played a huge part in Argentina’s reindustrialization process.

“The increase of jobs (in the industry) since 2003 moved up from 700 to 5700 jobs” and stated that this had come to pass due to “there being a project in place that puts an emphasis on industrializing the country.”

Cristina Fernandez then highlighted how Argentine industry has grown across the board, stating “within the growth that industry is experiencing overall, Peugeot is setting a great example, because this car is the seventh model to be launched since 2003 to date, showing the strength of the industry and the trust in global companies in the development of our country.”

The President also commented on the global economic crisis and remarked how Argentina and countries of the region (particularly South America) have now the “opportunity to make a historic leap within industrial, technological and social development.”

Last year Argentina exported 447.953 vehicles but the same terminals imported a total of 435.767 while private distributors and individuals imported directly another 47.075 cars.