According to UNCTAD's 2022 World Investment Report, inflows of FDI to Uruguay increased by 151% to USD 1.6 billion in 2021, compared to USD 635 million in 2020. Uruguay has a dynamic technology industry which, together with the increase in various tax breaks granted to eligible projects under the investment promotion scheme, has led to a significant increase in inflows. The total stock of FDI was estimated at USD 31.4 billion in 2021, increasing from USD 29.7 billion in 2020. The number of Greenfield Investments in the country also increased, going from 16 in 2020 to 22 in 2021. The Uruguayan government extended its economic plan by pursuing a cautious budget and monetary policy, accompanied by a structural reform programme aiming to attract foreign investment, which eventually reassured businesses. Foreign investors enjoy the same rights and fiscal incentives as local investors. FDI are free from any restrictions and are not subject to any declaration. Moreover, there is no limit regarding the transfer of profits or the repatriation of capital. Uruguay is a member of MIGA, the Multilateral Investment Guarantee Agency of World Bank. FDI influx comes mainly from Argentina, Brazil, Spain, the Netherlands, and the United States, and investment is directed towards manufacturing, construction, agriculture and the tertiary sector. Looking ahead, the doubling of the number of greenfield projects in information and communication in 2020 to over 37% of all announced projects indicates a thriving industry.
Uruguay is keen on attracting FDI and has an investment promotion agency, Uruguay XXI. There is also an investment promotion law in the country that guarantees equal treatment for local and foreign investors. Individuals and corporations can set up businesses without having to comply with prerequisites, obtain special permits from the state, or have a local counterpart. Additionally, there is no distinction between national and foreign capital, and investment promotion incentives are available to both. Foreign investors are attracted to the country's political stability, business climate, and skilled workforce. Uruguay is a regional hub with a strategic location to access the rest of the region. Also, as a member of Mercosur, and having free trade agreements with other Latin American countries, Uruguay provides access to a market of more than 400 million people and represents a flow of foreign trade of almost 74% of Latin America's total. Other strengths of Uruguay include the highest literacy rate in Latin America (98% of the population), and modern infrastructure. However, there are also some challenges, such as limited flexibility in setting wages, strict hiring and firing practises, a small population, and vulnerability to the economic situation of its neighbours - mainly Brazil and Argentina. Some of the most important foreign investment projects and M&A transactions that took place in the last few years in Uruguay involved banks, such as the acquisition of the Crédit Uruguay Banco by BBVA, the acquisition of the ABN AMRO Bank by Santander, and the buyout of Uruguayan Pension Fund Afinidad AFAP by Grupo Sura. According to an Uruguay XXI report, financial and insurance is the sector that most attracts investment (35% of flows), followed by manufacturing (27%), and commerce (18%). Other significant investments made in the country recently include the construction of a pulp mill by the Finnish group UPM - which is the largest private investment ever made in the country, worth nearly USD 3 billion - and the acquisition of Petrobras Uruguay (a subsidiary of the Brazilian National Oil Company) by the Spanish Disa Corporación Petrolífera, for USD 68.17 million.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||753||2,241||3,839|
|FDI Stock (million USD)||30,439||31,084||36,183|
|Number of Greenfield Investments*||16||22||25|
|Value of Greenfield Investments (million USD)||156||1,131||934|
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
The main assets of Uruguay are:
The main weak points of the country are:
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: September 2023