Foreign direct investment and business climate in Uruguay


More than 200 executives of foreign companies operating in the country, authorities, consultants, business associations and diplomats participated in the conference "Foreign Direct Investment and Business Climate in Uruguay".

On November 12 the Institute Uruguay XXI, the Ministry of Finance and the National Economic Development Agency (ANDE) organized the conference "Foreign Direct Investment and Business Climate in Uruguay". Presentations were made by the Minister of Finance, Danilo Astori and the Executive Director for emerging markets at JP Morgan, Franco Uccelli.

The meeting was opened by the Executive Director of Uruguay XXI, Antonio Carámbula, who stated that one of the strategic objectives of the institute is to attract productive investment that generates quality jobs and economic development and to meet current and potential foreign investors. "For us it is essential that foreign companies that are set up in Uruguay continue investing in the country," said Carámbula.

The Executive Director of Uruguay XXI reported that the Institute is conducting a survey of foreign investors to know the reasons that led them to settle in Uruguay, to know their experiences in this process, their views on the business climate in our country and the setbacks they encountered, among other things. In this regard he invited the participants to complete the survey, which was considered as "a key to improving the service we provide." For his part, the President of ANDE Alvaro Ons, stressed that investments benefit the development of the country.

During his presentation, the Minister of Economy, Danilo Astori, thanked those investors present for trusting in Uruguay. Astori said that one of the hallmarks of growth in the last 10 years has been the dynamism of investment. "FDI increased significantly in recent decades, both in absolute and relative terms. In the past years, Uruguay has received an average of USD 3 billion a year".

The Minister of finance mentioned that the inflow of FDI has positioned the country as one of the main recipients of FDI in Latin America, after Chile, and he highlighted that Uruguay is not only a FDI recipient country, but the main "reinvestor" country of Latin American profits. "65% of total FDI profits are reinvested in Uruguay, which reflects several strengths of our country: the confidence of investors, the returns they get, the absence of restrictions on the remittance of profits, the political stability and reliability of our country and our compliance with the rules of the game", he said.
Astori stated that FDI has had an impact on different dimensions and moments of the Uruguayan economy and said that foreign companies account for a majority share of the country’s exports and have a positive effect on the technical efficiency of local companies. In turn, he said that FDI in the country is associated with increased productivity and demand for skilled labor.

He also highlighted the domestic and foreign regulatory scheme aimed at promoting investment, both national and foreign, among which he pointed out the importance of the Investment Act. Astori also referred to the sustained improvement in the credit quality of Uruguay and highlighted the recovery of the Investment Grade in 2012. "We keep improving our rating and credit rating agencies today currently position us above the Investment Grade, which shields us against potential future adversities and facilitates access to financing in the country at reduced costs. "In this sense, Astori highlighted the successful issuance of Global Bonds 2017 , which had an over demand in international financial markets.

The executive director for emerging markets at JP Morgan reaffirmed in his presentation the important role of Uruguay as a recipient of FDI flows and its good economic performance compared to the region, which has enabled Uruguay to stand against foreign investors. "Uruguay is no longer perceived as a simple extension of Brazil and Argentina," Uccelli said.

Uccelli said that in view of the political and economic uncertainties existing in Brazil and Argentina, Uruguay is much better positioned than in the past. In turn, he said that today's markets are much more sophisticated and can distinguish good credit subjects much easier, which favors Uruguay against external shocks.

The economist said that between 2004 and 2015 so far, Uruguayan bonds had one of the highest return rates of the region with very low variability, i.e. with much less risk.

Uccelli also mentioned that the prospect of the rating of the Uruguayan sovereign debt remains stable and that the international market is not concerned about a downward revision of that rating.

Source: Uruguay XXI