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The fight between Marcos Galperin and the banking union grows: can he "move" Mercado Libre to Uruguay?

The fight between Marcos Galperin and the banking union grows: can he "move" Mercado Libre to Uruguay?
The technological giant is fighting union pressure in Argentina and its CEO does not hide his annoyance. What benefits does the neighboring country offer?
15.07.2019 10.11hs Innovación

Leading Mercado Libre, one of the Argentine unicorns, could be the dream of any CEO.

With a market valuation of more than US $ 31,000 million, presence in more than a dozen countries and a staff of more than 7,000 employees, the chair of Marcos Galperin, its founder, would be coveted by any executive who aspires to have great challenges.

But just as the operation is great, so are the conflicts that the company must face, including one of its business units: Mercado Pago.

Is that, for a long time, the company has been resisting a hard onslaught guild, a wrestling that worsened in recent weeks and that even added to references of Kirchner as new protagonists of the race. This is how today Mercado Libre and Galperin are in the eye of the storm.

The firm has opened, on the one hand, a conflict front with Sergio Palazzo, head of the banking union, who anticipated that they would go "for all workers in the financial sector", alluding to the Fintech sector and to Mercado Pago in particular. And that if he did not succeed by the good, he would go "through the bad".

This, in a context in which La Bancaria is negotiating with Alberto Fernández the inclusion of leaders in the list of deputies of the Frente de Todos.

In parallel, Galperin maintains a confrontation with Pablo Moyano, secretary of Truckers, who also wants to affiliate to some 80 employees who are under the agreement of Workers of Loading and Unloading.

To complete the picture, the "kirchnerist" referent Juan Grabois launched strong accusations against the company for an alleged "abuse of dominant position", "inadequate legal framework" and even a lower payment of taxes than it would correspond.

Even the banks grouped in ADEBA went out to complain to the government about the "asymmetries" that, they argue, put companies such as Mercado Libre in an advantageous position.

Faced with this onslaught, in recent days rumors have grown about the possibility of the firm moving forward with new investments but across the border, more precisely in Uruguay, to centralize more operations in a less conflictive market.

These rumors, did nothing but enhance the war with the union. Palazzo affirmed that the threat of changing part of the processes and of management to another country is an "extortive attitude" and that "it does not help that in Argentina the law is respected".

Uruguay is nominated
The emergence of Uruguay, in full fight with the unions, as a "candidate" to host the regional hub of the company, in the event that the firm makes a decision of this nature, is not accidental.

Galperin lived fourteen years in his capital, Montevideo. In addition, he constantly ponders the positive environment for doing business that this territory offers. And the executive not only comes preaching with words: he does it with concrete examples.

Mercado Libre already has a very solid base in the bordering nation, where it was installed in 2012 with a relatively modest operation, until now becoming one of the leading companies that drives direct foreign investment of Argentine companies on Uruguayan soil.

Not only that: for ML, Uruguay is the second most important place in its entire operation -behind Argentina- in terms of providing Spanish-speaking services for the company.

The firm has a non-negligible structure there, with more than 900 employees, which is equivalent to about 13% of all the jobs it generates in the region.

One of the keys that explained its landing is the attractive "menu" of tax benefits offered by the Uruguayan government under the free zones regime, which is not only designed to attract industrial companies, but also those of services.

Just landed in that country, ML opened its offices in Aguada Park, which is promoted as a global business platform that operates under the protection of law 15,921, which establishes a series of customs and tax exemptions.

Initially, the company occupied 1,700 square meters of offices and from there it began to offer services related to customer service. He also formed a team to develop software for the platform and security support.

"We are very excited about the opening of this office in Uruguay, we believe that this country has a huge potential to export services for the development of electronic commerce in the region, we trust in the capacity of its human resources to continue expanding our business in the region. ", affirmed at that time an enthusiastic Galperin.

However, with the expansion of the operation, the offices quickly fell short. Therefore, in September 2016, ML inaugurated a new space in the World Trade Center complex, which also operates under the free zones regime.

The development team moved to these new offices, while the commercial area was operational in Aguada Park.

Soledad Delfante, Human Resources Manager of Mercado Libre Uruguay, highlighted that in that country the company has the second largest Spanish-speaking service center.

The reasons for the choice of that market "are their level of education, the security of the institutional framework, economic policy, the legal framework," the executive listed last June during a meeting with foreign companies organized by Uruguay XXI, the agency of investment promotion of that country.

Delfante also emphasized other factors that the company evaluated to expand its operations there, instead of doing so in other nations, such as infrastructure, access to technology and good human resources.

A "magnet" for Argentine companies
That is to say that Mercado Libre has a very well-oiled operation in the neighboring country, in a context that offers less labor conflict and great tax benefits. So an "operational" expansion would be relatively simple with the base you already have.

That is why the local unions get scared when they hear about any rumor that part of the local operations are transferred to the other side of the Río de la Plata.

In dialogue with iProUP, Antonio Carámbula, executive director of the official agency Uruguay XXI, was not surprised when the rumor was mentioned: "That our country is seen as a possible destination for new investments responds to the work we have been doing on several fronts."

"At a general level, we have good social, political and economic stability, there is also a framework of legal security, very well trained human resources and the fact that our country has an investment grade, and we also have a very strong policy. to promote investments, starting with special regimes, such as those in free zones, "he said.

Many of these advantages had already been listed, point by point, by Galperin himself, in a thread he opened on Twitter a few years ago and in which he highlighted the 10 things he liked most about Uruguay.

However, fiscal incentives are one of the great magnets when it comes to attracting companies and are some of the benefits that, in fact, Free Market receives in the neighboring country because they started their activity under the free zones regime. Among them are:

-Exoneration of the so-called Income Tax on Economic Activities (IRAE), of the order of 25%.

- Exemption from the payment of the Wealth Tax (IP), which has a rate of 1.5%.

-Exclusion of taxes for dividends paid to shareholders domiciled abroad.

-Sales and purchases abroad of goods and services not taxed by VAT.

According to Carámbula, "Argentina is the main source of direct foreign investment in Uruguay", with a stock that, according to the latest available data, exceeds US $ 5,300 million.

That agency has been deploying an aggressive strategy to spread the benefits of settling in that country. And the results are clear: according to Carámbula, there are currently some 300 Argentine companies that have a subsidiary on the other side of the Río de la Plata.

"They are firms of the most diverse scales and of different areas, such as agribusiness, services, real estate and tourism," added Carámbula.

An interesting fact? Of that total, some 120 companies are installed in one of the eleven free zones that Uruguay has.

Among the companies that have operations in Charrúas land, in addition to Mercado Libre, the case of the computer giant Globant stands out. The services also include Corporación América, which operates the Carrasco airport concession.

In the field of laboratories are Biogenesis Bagó, Roemmers and Adium Pharma.

Among industrial companies is Techint and, as regards businesses related to the food and beverages sector, cases such as Grupo Cepas and Agroland are mentioned, by businessman Alejandro Bulgheroni, who has about 4,300 hectares in the neighboring country where he develops various units of business, such as dried fruits, olive oil and wines.

"The investment attraction regime that we have is important to generate a friendly business environment with entrepreneurs who come from abroad, much has been done to achieve improvements in labor relations, regulations and the tax burden," Ana explains to iProUP Laura Fernández, head of the Economic Studies Department of the National Chamber of Commerce and Services of Uruguay.

While the tension between the company of ecommerce and financial services with the guilds is increasing in Argentina, Uruguay, with just 3.5 million inhabitants, is postulated to occupy a more important space in the global strategy of the firm.

Galperin, in addition, feels a lot of affinity for that nation. And he left it very well captured a few years ago when he listed the ten reasons why he liked Uruguay so much and decided to close the list stating that if there was something important was that they feel "pride for their country."

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