By Eduardo Fort
Located east of Argentina and south of Brazil, unknown to the vast majority of European citizens, Uruguay is undoubtedly a pearl to discover for foreign investors. With a fascinating history, the former Spanish colony, which became independent in 1828 from its two huge neighbors, is considered, since the end of the 19th century, the “Switzerland of Latin America”: it was one of the first countries in the world to establish a public, free educational system, compulsory and lay (1877) and pioneer in passing a divorce law (1917). The State guarantees free access to education, from preschool to university and 4.5% of GDP is invested in education. To this must be added the political stability that has been its trademark for decades. With the pragmatism and tenacity of the children, the Oriental Republic of Uruguay became, in its own right, a very attractive horizon for the most diverse companies.
This is a country with a broad trajectory of political, democratic and social stability and a strong macroeconomic solidity, which creates the right environment to develop successful investments. It is also a stable and predictable country, qualities that are taken as a differential by investors. Several international organizations place Uruguay among the top positions for transparency, respect for democratic values and human development.
Its strategic location – as a gateway to the region – offers the perfect springboard to Latin America.
The advantages of settling in Uruguay
As previously stated, the small South American has a strong sociopolitical stability. Uruguay’s trade and investment regime is one of the most open in the world. Uruguay’s main trade strategy is to continue liberalizing trade and investment, both multilaterally and regionally. Being an economy of small dimensions, it requires markets free of restrictions and distortions to trade, especially in the agricultural sector, which generates most of Uruguay’s exports. As a financial and monetary tactic, Uruguay actively seeks to improve its business environment to continue bringing direct foreign investment and thus support economic growth, employment and promote technology transfer, with very successful results.
On the other hand, Uruguay had an average annual growth of 6% between 2004 and 2011, which has allowed it to consolidate the structural improvements achieved after the economic crisis of 2002. These improvements helped the country to be more resistant to external shocks, like the international crisis of 2008-2009. At the tax level, Uruguay presents extensive tax exemptions (20-100%) on investment, as well as attractive regimes of free zones, ports, and airports of free circulation (exports of services are exempt from VAT payment).
Investment in Uruguay, both national and foreign, is declared of national interest. The foreign investor and the locals are treated equally, having a wide range of incentives that are adapted to the different types of activities, both industrial, commercial or services that want to be carried out in the country.
It is important to remember that Uruguay is a founding member of MERCOSUR, the booming free trade area between Argentina, Brazil, Paraguay, and the currently suspended Venezuela. Uruguay has signed free trade agreements with Israel and Mexico, as well as a macro trade and investment agreement with the United States.
Through Uruguay, you can access a market of 400 million people, which accounts for 68% of Latin America’s GDP and represents a flow of foreign trade of almost 74% of Latin America’s total.
Unlike other Latin American countries, Uruguay has a first level infrastructure in Montevideo (its capital and most important city), being already a regional hub par excellence for the Southern Cone of Latin America. 50% of the merchandise entering the port of Montevideo is in transit. In addition, Uruguay has the densest road network in Latin America. It is ranked number 1 in the region with respect to Internet penetration, PC and telephone lines. It benefits from a very reliable electrical supply, mostly from renewable sources.
In short, Uruguay has become the destination par excellence for international companies seeking quality, efficiency, experience and new opportunities in the most stable and reliable business environment in Latin America.