One law abolished, and houses poured onto the market

The Argentine government sequentially cut public utility subsidies by 50-70%. During this process, the subsidy system was reformed to simplify the previously complex payment methods and transition to a selective support system, focusing subsidies solely on low-income groups.

Subsidies for the middle and upper-middle classes were gradually abolished. This reduction in subsidies encouraged changes in energy consumption patterns among citizens and contributed to the spread of a savings culture.

To adjust the previous government's overemployment structure, the Milei government significantly reduced the number of civil servants. Instead of directly dismissing permanent civil servants, they chose to not renew the contracts of temporary civil servants.

Gradual reductions were made by maintaining the status of permanent civil servants while halting contract renewals for temporary staff. This aimed to reduce the government's labor costs and increase efficiency in the public sector.

By abolishing the rental law, Argentina returned price-setting power to free contracts between landlords and tenants. Previously, restrictions on the timing and extent of rent increases led to a shortage of supply.

This deregulation resolved the supply shortage, and rental properties previously traded on the black market began to be formalized within the legal system. Although there were initial concerns about a sharp rise in rents, market principles dictated that excessively high prices would deter tenants, leading to gradual price adjustments.

Under the previous rental law regulations, the practice of secretly paying additional amounts beyond the rent stated in the contract was widespread. The repeal of the rental law formalized these black market rents into legitimate prices.

This served as a key driver for increased rental supply. As landlords could now reflect market prices without legal restrictions, hidden rental properties began to emerge on the market.

It was common practice to continuously adjust rents, primarily linked to the inflation index or construction index.

Furthermore, contracts often explicitly stated amounts in US dollars or included clauses for price adjustments every 3 to 6 months. Even after currency stabilization, index-based price adjustment methods remain widely used.

This, coupled with tax evasion motives, leads to discrepancies between official records in contracts and actual transaction prices.

For example, if a 200 million won property is traded for 300 million won in cash, taxes can be reduced. This practice is also linked to the lack of mortgage products in the market, hindering the activation of transactions through the official financial system.

Due to distrust in banks caused by the 'corralito' crisis in 2001, many Argentines have kept their dollars at home instead of depositing them in banks. President Milei referenced this situation, urging citizens to 'take out the dollars from under the mattress.'

This demonstrates the government's intention to formalize dormant dollar assets in the underground economy to contribute to economic revitalization. Simultaneously, it is expected to help resolve social issues such as the risk of theft associated with storing large amounts of cash.

The Argentine Central Bank amended the law, making it possible to open accounts that can receive dollars. As a result, citizens can now directly receive their salaries in dollars.

This served as an opportunity for dollar payments to spread not only to export companies but also to general businesses. The government manages the exchange rate by operating a band system and having the central bank intervene in the market to stabilize it.

The Argentine government is pursuing pension reform, but it requires consultation with stakeholders. Currently, Argentina's pension levels are relatively low, and with severe inflation continuing, pension increases have not kept pace with rising prices.

As a result, the real income of the elderly continues to decline regardless of nominal amounts. Pension reform needs to proceed in a direction that guarantees the real purchasing power of the elderly, premised on price stability.

Argentina has introduced a large-scale investment incentive system called 'RIGI,' which stands for 'Regime for Large Investment Incentives' in Spanish. This system aims to attract large-scale investments of over 200 million dollars.

The RIGI system offers investors key benefits, ensuring a stable environment across administration, including taxes, foreign exchange, and customs, for 30 years. This encourages foreign investors to confidently invest in the Argentine market.

Foreign investors are most concerned about the uncertainty of whether existing policies will be maintained if the government changes. To compensate for such political risks, the RIGI system was legalized through parliamentary legislation rather than a presidential decree.

Because the system was established through parliamentary legislation, its stability is expected to remain relatively high even if the government changes. Indeed, several foreign companies, including POSCO, are showing interest in participating in this system.

Argentina possesses abundant natural resources such as lithium, oil, and gas, but its technological capability to develop them is low. In response, some segments of Argentine society criticize the government's resource development-centric economic structure.

Critics point out that foreign companies come in, develop resources, and share profits, but this does not lead to domestic industrialization (development of processing industries). This is contrasted with China's strategy of pursuing resource development and technology transfer simultaneously through joint ventures, highlighting Argentina's industrialization challenges.

The ability to repatriate invested assets in dollars to the home country is a critical priority.

This is because instability in the freedom and stability of capital inflow and outflow poses a greater concern than exchange rate issues. Argentina's past unstable economic situation fueled these anxieties, but evaluations suggest that the investment environment is gradually improving with the Milei government's reforms.

Initially, there were reactions that his extreme character and unconventional pledges seemed like a joke, but he ultimately garnered strong support from young people yearning for change.

In past governments, economic instability led to a significant outflow of skilled professionals abroad. However, since the inauguration of the Milei government, as the country gradually stabilizes, there is a trend of professionals who had left returning to Argentina.