Amazon Wins OK for Data Center in Argentina Trade Zone

(Bloomberg) -- Inc.’s cloud division has won government approval to open a data center in an Argentine free trade zone.

The Seattle-based company, through a local subsidiary Amazon Data Services Argentina SRL, has permission to open the facility in the Bahia Blanca-Coronel Rosales districts of Buenos Aires, according to an item published in the province’s official gazette. The areas are called “Tango Sur,” “Tango Centro,” and “Tango Norte,” referring to the country’s popular dance. The location confers on Amazon income and energy consumption tax breaks.

The project will cost an estimated $800 million, according to the document. The province also estimates the data center will generate $400 million in economic activity, without citing a time period. The company has until Oct. 31 to present the land deed and then has 360 days to start construction.

The planned data center was previously reported by Bloomberg.

Amazon’s decision to put part of its cloud infrastructure in South America’s second-largest economy is a big win for the Argentine government, which is keen to diversify the economy into digital services, nanotechnology, aerospace and more. Earlier this year, the national congress unanimously passed a law creating incentives for tech companies to set up shop there -- a major achievement in an election year that has polarized society.

“ADS Argentina and AWS consider that Argentina and the region in general have opportunities that justify such a significant capital investment,” according to the document. The document also approves a fourth subzone, called “IT Park.”

Amazon Web Services, the company’s most profitable business, has been expanding its infrastructure around the globe to maintain an edge on rivals like Microsoft Corp. and Alphabet Inc.’s Google. Sales of cloud-computing services and software are expected to total $214.3 billion in 2019, up 17.5% from a year earlier, according to Gartner.

Proximity to an Amazon data center helps companies reduce costs and improve data speeds compared with having to rely on sites outside the country. Argentina is home to several online outfits, including its largest company, e-commerce retailer MercadoLibre Inc., which uses AWS to host its platforms.

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.