Foreign direct-investment-in-uruguay 052012

May
2012

Foreign Direct Investment in Uruguay

URUGUAY XXI Instituto de Promoción de Inversiones y Exportaciones

I. EXECUTIVE SUMMARY ............................................................................................... 3
II. FDI IN LATIN AMERICA.............................................................................................. 4
III. FDI IN MERCOSUR ................................................................................................ 7
IV. FDI IN URUGUAY ..................................................................................................... 9
V. URUGUAYAN FDI PER COUNTRY OF ORIGIN ...................................................................12
VI. URUGUAYAN FDI PER ACTIVITY SECTOR .......................................................................15
VII. ENQUIRIES RECEIVED BY THE INVESTMENT PROMOTION DEPARTMENT ................................17
VIII. PERSPECTIVES FOR FDI IN URUGUAY ...........................................................................18

2


I. Executive Summary
Latin America is consolidating as an important region for Foreign Direct Investment (FDI)
attraction. In the last years, this region has increased its participation as global FDI attraction
region. Several countries are acquiring more importance as foreign investment attraction
destination. Uruguay is not an exception. Taking into account FDI data in terms of GDP, it can
be observed that in Uruguay FDI accounts for over 5% the GDP (as of 2011), which reports one
of the highest investment percentages of the region, in relative terms.
Uruguayan FDI has experienced a strong growth over the last years, reaching in 2011 US$
2,528 millions, a record figure. This means that Uruguayan FDI multiplied by eight in the last
decade.
Considering the origins of Uruguayan FDI (2001-2009 period), the main countries of origin of
our FDI have been Argentina, Spain, United States, Brazil and England, altogether accounting
for less than half the FDI attracted by Uruguay in the period.
As regards the different sectors, the largest foreign capital raising sectors in Uruguay have
been: agriculture, cattle raising, and forestry (afforestation), construction and manufacturing
industry, which altogether account for more than 60% the total FDI of 2001-2009 period.
Uruguay XXI’s Investment Promotion Department receives a large number of enquiries from
foreign investors interested in settling in Uruguay. In 2011, more than 260 companies from
over 40 countries have contacted said department. Enquiries received were mainly from
Argentina, Spain and the United States. Furthermore, enquiries from Japan stand out.
Enquiries received were oriented to investments mainly in automotive and autopart industries,
services (in particular, tourism), agribusiness, energy and construction.
Finally, FDI perspectives are introduced. FDI flows towards the region are expected to keep
their growth in the next years. Moreover, Uruguay is expected to follow this trend and
consolidate as one of the main FDI attracting countries of the region, in relative terms.
Therefore, it is necessary to continue the progress towards the improvement of the regulatory
framework in order to promote investments and continue enhancing investment conditions in
Uruguay. An important milestone is that Uruguay has recovered the Investment Grade Rating
(GR) it had lost a decade ago. This shows the trust generated by the country’s institutional
framework as well as by the economic policy management, thus creating an even more
attractive framework to do business in Uruguay.

3


II. FDI in Latin America
Over the last decade, Latin America has been consolidating as an important Foreign Direct
Investment (FDI) attractive region. According to the last report submitted by the Economic
Commission for Latin America and the Caribbean (ECLAC)1, the FDI flows towards the region in
2011 registered an increase of 31% compared to 2010, reaching US$ 153,448 million. Latin
America and the Caribbean (LA&C) was the region with the highest FDI attraction growth rate
with a 10% participation in total global investments. According to the ECLAC forecast for 2012,
the region will continue to be an attractive localization, maintaining FDI inflows of around US$
150,000 million.
The underlying reason for such dynamism is to have taken advantage of the domestic markets
as a consequence of the economic growth in the South region - the high price for raw
materials that spurred investments in natural resource extraction and processing and an
increase in outsourcing of manufacturing activities and business services by developed
countries). On the other hand, the growth of emerging economies has revealed an increase in
investments in the South.
South America has shown an outstanding performance as the sub-region’s major recipient,
with a participation of 80% of the total FDI, with Brazil accounting for over half of the FDI
inflow. Furthermore, other Latin American countries achieved historical records; such is the
case of Chile (US$ 17,199 million), Colombia (US$ 13,234 million) and Uruguay (US$ 2,528
million).
The FDI sector destination varies according to countries of destination. In South America
companies invest mainly in natural resources, with the exception of Brazil which has the
manufacturing industry as main destination with a focus on the metallurgical industry and
food and beverages. Alternatively, Mexico, Central America and the Caribbean’s major FDI is in
the services and manufacturing sector.
In the following chart Latin America’s main FDI origins can be observed for the accumulated
period 2006-2010 and the year 2011. Netherlands is the main investor (accounting for 21% of
the total FDI)2, followed by the United States (18%), Spain (14%) and Japan (8%). An interesting
fact worth mentioning is the increase of investments from Asia in 2011. In effect, 9 of the 10
major cross-border merges and acquisitions carried out by foreign companies were Japanese
and Chinese.

1
Foreign Direct Investment in Latin America and the Caribbean,2011.
2
Due to its status as a hub for investments carried out from foreign countries.

4


Chart II. 1 – FDI in Latin America per country of origin (% share)

Others 38% 20%
The Netherlands 7% 21%
USA 23% 18%
Spain 9% 14%
Latin America 9% 9%
Japan 3% 8%
United Kingdom 4% 4%
Canada 5% 4%
China 2% 1%

50% 30% 10% 10% 30% 50%

2006-2010 2011

Source: URUGUAY XXI based on ECLAC

Uruguay appears in the list among the major FDI attracting countries in the region over the
past few years. Brazil is the main FDI recipient in Latin America, followed by Mexico and Chile.
Colombia and Venezuela have also attracted greater FDI flows by 92% and 339% respectively
compared to 2010. The rise in FDI received by Colombia is driven by the investments carried
out in the natural resources sector, particularly mining and oil as well as investments in the
trade and transport and telecommunications sector3. Moreover, the surge recorded in
Venezuela corresponds to reinvested earnings and inter-affiliate loans in the oil sector and
financial activities.
Chart II. 2 – Main FDI recipients in the region (In billions of US$)

50
45
40
35
30
25
20
15
10
5
0

2010 2011


3
Some of the main investments carried out in Colombia: Itochu, acquisition of assets of mining company Drummond (US$ 1,524
million); BHP Billiton y Xstrata, expansion of coal mines (US$1,300 million); DHL, logistic center (US$ 1,300 million).

5


Comparing the FDI in terms of GDP of different countries of Latin America and the Caribbean,
it can be observed that in 2011 the Uruguayan FDI accounts for almost 6% of the GDP. Such
figure not only shows the significance of FDI in our country but also positions us as one of the
major investment flow recipients in the region, in relative terms, with a significantly larger
percentage than other Mercosur member states.

Chart II. 3 – FDI in South America (GDP %) – 2011

Chile 7.1%

Uruguay 5.4%

Peru 4.3%

Brazil 4.1%

Colombia 4.1%

Paraguay 2.4%

Argentina 1.2%

0% 2% 4% 6% 8%

Source: URUGUAY XXI based on Central Banks of each country

6


III. FDI in MERCOSUR

In the last decade, the flows of FDI into MERCOSUR had followed an upward trend, registering
in the period 2001-2011 an average growth rate of 21%. This dynamism has determined an
important increase of the MERCOSUR’s share in global FDI flows. In 2010, the share of FDI
attracted by MERCOSUR reached the maximum value in the last 10 years - 5% of total global
FDI flows, meanwhile in 2001 was 3%-.

In 2011, FDI in MERCOSUR exceed the value recorded in 2010 by 31%, reaching a record high
of US$ 76,580 million, after the decrease in 2009 experienced as a result of the fall of global
FDI. The volume of FDI relative to GDP increased, reached 2.7% in 2011. This value was slightly
below the maximum value reached in 2008.

Chart III.1- FDI in MERCOSUR (US$ Millions and % of GDP)

US$ millions
4%
90000
76,580 3%
80000
70000 3%
57,209 57,548
60000
2%
50000 42,573
40000 31,767 2%
25,004 26,026
30000 22,641
21,232
18,943 1%
20000 12,239
10000 1%
0
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Over the past years there have been changes regarding the recipient countries of FDI in
MERCOSUR. Brazil continues to stand as the largest recipient of FDI, with a share of over 80%.
Argentina was the second recipient but Uruguay begun acquiring greater significance since
2005. In particular, in 2011 Uruguay’s share was 3% of the total FDI received by MERCOSUR.

While Paraguay has also increased its participation over the last three years, its share is still
around 1%. Regarding sectors, investment flows were mainly directed to natural resource,
manufacturing and services.

7


Chart III.2- Distribution of FDI in MERCOSUR (%)

100%

80% 100% 1%
3%
80%
60%
60%
40% 11%
40% 9%
20% 20%

0% 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2011

Argentina Uruguay Paraguay Brazil Argentina Paraguay Uruguay


8


4
IV. FDI in Uruguay

FDI in Uruguay has grown strongly, tripling in the last 7 years. In 2011, FDI reached US$ 2,528
millions. Therefore, 2011 is a record year regarding FDI attraction, even surpassing the levels
reported in 2008.

Chart IV.1 - Uruguayan FDI (Millions of US$ and GDP %)
US$ millions GDP %

3000 10%
2,528
2500 2,358
8%
2,106
2000
1,593 6%
1,493
1500 1,329
4%
1000 847

416 2%
500 297 332
194

0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Uruguay XXI based on Central Bank of Uruguay

Chart IV.1 shows the significant leap of level experienced as from 2005, when Uruguay started
reporting large investments, basically related to pulp mill setting5. Likewise, the chart shows
the growing trend of FDI flows attracted by Uruguay, which remained at high levels despite
2009 international crisis. Furthermore, in 2010 another important investment related to a new
pulp mill was materialized6. This important investment will have strong effects in FDI figures of
this year and the next ones.
In fact, in 2006-2011 period, FDI reported an average growth rate of 26%, reaching in 2011
unprecedented levels.
FDI in terms of GDP has grown considerably over the last years, reaching its highest level in
2006 (8% of GDP). In 2011, the FDI reached 5.4% of the GDP.

4
Methodological Note: Uruguayan FDI information is gathered from Balance of Payments quarterly publications issued by BCU
Financial Scheduling Department. Contributions of capital, profit reinvestment and net financing between headquarters and their
branches or subsidiaries, as well as real estate investment in the seaside city Punta del Este are included. As from 2003, direct
investment estimations in the primary sector (land) are included. Such data allows identifying reverse investments, i.e.
investments of subsidiaries in their own headquarters.

5
Investment made by Botnia (currently UPM) was approximately US$ 1,200 millions, which were ascribed to FDI between 2005
and 2006.

6
Investment made by Montes del Plata is estimated in US$ 1,900 millions in the plant and US$ 700 millions in land approximately.
The plant will begin operations in the first quarter of 2013. This investment will be allotted to FDI in 2011, 2012 and 2013.

9


It is worth mentioning that this growing trend has deepened as from 2007 with the approval of
Decree 4557 which regulates chapter III of the Law on Investment Promotion and Protection
No. 16,906 (Ley de Promoción y Protección de Inversiones) yielding an even more favorable and
attractive investment environment in the country. In this issue, it is worth mentioning that
Uruguay has an attractive statutory framework to attract investments.
Law 16,906 promotes productive investment by means of tax benefits granted to IRAE-
generating companies, no matter the amount to be invested, sector or legal nature of the
company. Benefitted investments are those which create jobs, increase exports, use cleaner
technologies, invest in research, development and innovation, favor decentralization or rate in
several sector indices.
The Decree in force, No. 2/0128, incentives projects which create quality jobs (according to the
salary level), hire groups with more problems finding jobs, promote undertakings outside
Montevideo (basically in departments with less resources) or in less developed neighborhoods
in Montevideo, among other amendments.
Apart from the Investment Promotion Law, Uruguay has several systems which make
investment in the country even more attractive, such as Free Zones, Free Ports and Airports,
Industrial Parks, Temporary Admission, Customs Deposits, among others.
In addition, Uruguay presents an excellent business environment, as shown by the outstanding
position of the country in several international rankings. Among them, we can highlight the
first position in the Economic Environment in Latin America ranking made together with the
Brazilian Economy Institute, the Getulio Vargas Foundation and the Economic Research
Institute of Munich University (January 2012). Furthermore, according to the last report Doing
Business 2012 drawn up by the World Bank, Uruguay moved up 17 positions regarding its
favorable environment to do business, it being ranked in the 90th position among the 183
analyzed countries.
Last but not least, at the beginning of April 2012, Standard & Poor´s granted Investment Grade
(IG) status to Uruguayan sovereign debt, a rating that our country had lost ten years ago. This
shows the trust generated by the country’s institutional framework as well as by the economic
policy management, in particular, it reflects a very orderly conduction of macroeconomic
policy. The recovery of the IG creates an even more attractive framework to do business in
Uruguay (see section below).

7
November 2007.
8
February 2012.

10


What is the significance of the Investment Grade in Uruguay?
It has several effects with different degrees of importance:

The Investment Grade widens the range of prospective investors who can invest in Uruguay.
This applies both for financial investments (purchase of Uruguayan Government Bonds and
securities from Uruguayan private companies) and for productive investments.
The IG enhances our position in the current international uncertain scenario, thus assuring that
Uruguay will find no difficulty in accessing funding on a risk-averse environment.
Finally, IG provides Uruguay with better funding conditions regarding terms and rates. Note
that Uruguay already had similar sovereign risk levels to those present in countries of the
region with IG. Therefore, no effects on short and medium term rates will be expected;
however, there will be long term effects.

More Incentives...

In the Investment Promotion System framework and with the purpose of energizing some sectors, the
government has established tax incentives to companies carrying out activities related to certain specific
sectors. Some of these sectors are:

Renewable Energies9: activities such as power generation from non-traditional renewable sources, electrical
power generation through co-generation, transformation of solar power in thermal power, national
manufacturing of machines and equipment destined to the activities mentioned above, among others.

Shipping Industry and Electronics Industry10: ship and water vehicle building, maintenance and repair
activities fall within the shipping industry. With respect to the electronics industry, activities such as
production of electronic and electric equipments, logic controls, computers, telecommunication equipment,
measurement instruments, medical equipment and domestic appliances are promoted.

Remote customer service centers11: activities such as services rendered by telemarketers receiving or making
phone calls, Internet messages and other kind of communication channels.

Condominium Hotels12: destined to offer lodging services in order to attract the tourism demand.
Tourism13: investments related to civil works corresponding to Tourism Projects, including activities destined
to offer lodging, cultural, commercial, congress, sports, recreational, amusement or health services or
investments related to the acquisition of goods destined to fitting out Tourism and Hotel Projects, Apart
Hotels, Motels and Tourism Farms.

Machinery and Agricultural Equipment Manufacturing14:

9
Decree No. 354/009 http://archivo.presidencia.gub.uy/_web/decretos/2009/08/245%20.pdf
10
Decree No. 532/009 http://archivo.presidencia.gub.uy/_web/decretos/2009/11/ASUNTO413%20.pdf
11
Decree No. 207/008 http://archivo.presidencia.gub.uy/_web/decretos/2008/04/951_19%2010%202007_00001.PDF
12
Decree No. 04/010 http://archivo.presidencia.gub.uy/sci/decretos/2010/12/mef_889.pdf
13
Decree No. 175/003 http://www.mef.gub.uy/inversor/decreto_175_03.pdf
14
Decree No. 6/010 http://archivo.presidencia.gub.uy/_web/decretos/2009/08/ASUNTO3682%20.pdf

11


V. Uruguayan FDI per country of origin15

The countries of the region, Europe and NAFTA are the main countries of origin of Uruguayan
FDI, reporting an irregular behavior regarding their relative participation each year. With
respect to investments from MERCOSUR member countries, a capital reduction in 2002 and
subsequent recovery as from 2003, reaching 38% of total FDI in 2009 can be observed. It is
important to point out that more than one third of overall Uruguayan FDI in the 2001-2009
period corresponds to investments made by countries of the region.
On the other hand, investments from Europe have remained relatively stable over the last
three years, after an important drop reported in 2006. On average, they account for 18% the
total Uruguayan FDI.
Regarding investments from NAFTA countries, they reported a recovery as from 2005,
accounting for 10.5% of overall FDI in 2009 and the amount invested in such period only
reached to US$ 575 millions out of US$ 8,608 millions.

Chart V. 1 – Uruguayan FDI per country of origin 2001-2009 (% share)
100%
90% 26%
80% 34%
70%
60% 26% 11%
50%
17%
40% 13%
30%
20% 36% 38%
10%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009

MERCOSUR EUROPA NAFTA OTROS


At country level, it is worth mentioning that there are more than 30 countries which choose
Uruguay as destination for their investments. In such sense, the main five countries of each
year accounted, on average, for 60% of overall Uruguayan FDI in the 2001-2009 period.
Argentina stands out in the first place. This has been one of the main countries of origin with
an average share of 20% in the 2001-2009 period. Although between 2002 and 2005 it was no
longer ranked first as country of origin (resuming its position as of 2006), it is always among

15
FDI data per country and per sector available only until 2009 by the BCU.
Note: “Other origins” include those companies which resulted to be exclusive for a country for the purpose of respecting the state
secret.

12


the first 3 countries of origin of Uruguayan FDI. The major investment sectors of Argentina are:
agribusiness, manufacturing industries and services.
In the second place, it is worth mentioning the importance of Spain, with an average share of
9.5% in overall Uruguayan FDI in the 2001-2009 period. However, its share decreased last year
(2009), only accounting for 3% of the total FDI. Spanish investments are basically directed
towards financial and call center services and industries, in particular due to investments in the
timber industry.
In the third place, there appear investments from United States and Brazil. As for United
States, while in 2001 its share was of 25% (ranking second) in 2004 it reports a lower share of
only 0.4%, recovering its dynamism in 2009. Investments from United States are directed
towards a wide range of sectors, the most relevant ones being audiovisual, hotel and
recreation services and industry. As for Brazil, there has been a significant increase since 2007
with an average incidence of 7.4% in overall FDI. Brazil’s main investment sectors are
agribusinesses, agro-industries, financial and hotel and recreation services.
Lastly, investment flows from England, which in the 2002-2008 period was one of the 5 main
countries of origin of Uruguayan FDI, stand out. In 2009 this situation was reverted and it was
ranked 13th.

Chart V. 2 – Major countries of origin of Uruguayan FDI 2001-2009 (% share)

100%

80% 34% 43%
54%
60% 7%
7%
26% 7%
40%
24% 11%
20%
35% 29%
12%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009
-20%
Argentina Estados Unidos Brasil Holanda España Otros


13


In short, in the period under study (2001-2009), the main countries of origin of Uruguayan FDI
have been Argentina, Spain, United States, Brazil and England, altogether accounting for less
than half the FDI attracted by Uruguay in the period. It is also worth mentioning the
importance of Netherlands in 2009, with an investment of US$ 110 millions, basically related
to the purchase of a company by a Dutch group.

Chart V. 3 – Major countries of origin of Uruguayan FDI
2001-2009 period (% share)

Holland France Belgium
2% 2% 1%
Bermudas
3%
Bahamas
3%
England Argentina
3% 23%

Brazil
5%

United States
Spain
6%
9%


14


VI. Uruguayan FDI per activity sector16
The largest foreign capital attraction sectors in Uruguay have varied over time, although
agriculture, cattle raising, and forestry (afforestation), construction and manufacturing
industry altogether account for more than 60% the overall FDI of the 2001-2009 period.
In the 2003-2006 period, the sector with the largest investment attraction was Agriculture,
cattle raising and forestry, with an average share of 34%. Within this sector, agriculture and
cattle raising subsector has been the most significant one in 2003 and 2004, while in 2005 and
2006, the most significant one was the forestry and timber extraction subsector as a result of
the strong development of the timber sector in Uruguay. As of 2007 this sector was no longer
the main FDI recipient, leaving this place to the Construction sector.
The construction sector increased its share significantly as of 2006, from 11% the overall FDI in
the 2001-2005 period to 28% in the 2006-2009 period. This situation is both explained by the
building and setting up of pulp mills and by the real estate investment dynamism in Punta del
Este.
On the other hand, two events which took place in the last years are worth mentioning. Firstly,
the sustained growth of FDI in manufacturing industries as from 2006, upon the slowing-down
reported as from 2003, accounting for 16% the total investment in 2009. Within this sector,
the main subsectors are: Food and Beverage Product Manufacturing due to the strong
investments received by the cold storage industry and agro industries and, on the other hand,
Manufacturing of Chemical Substances and Products. At the same time, investments in the
wholesale and retail trade sector have increased - the wholesale trade being responsible for
this important growth. In 2009, this sector attracted investments for a total of US$ 269
millions, the second most important sector in the investment attraction.

16
FDI data per country and per sector available only until 2009 by the BCU.

15


Chart VI.1- FDI in Uruguay per activity sector 2001-2009 (%share)
100%

25% 8%
80% 39%
16%
60%
6% 16%
61%
40% 17%
31%

20%
4% 32%
12% 14%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009
-20%
Construction Wholesale and retail commerce
Manufacturing Industries Agriculture, cattle-raising and forestry
Transport, storage and communications Financial brokerage
Other

Source: URUGUAY XXI based on Central Bank of Uruguay

Lastly, it is worth mentioning the decrease in the relative share of the financial brokerage
sector. While in the 2001-2006 period its average share was 24.4%, in the last three years
under study, it was only 3.6%.

16


VII. Enquiries received by the Investment Promotion Department
In 2011, Uruguay XXI’s Investment Promotion Department has received a large number of
enquiries by foreign investors interested in settling in Uruguay. Specifically, more than 260
companies have contacted said department in the year.
Enquiries received during 2011 came from
several countries, in its great majority from Chart VII.1- Enquiries per country of origin
(2011, %)
Argentina (16%), Spain (14%) and USA
(14%). At the same time, Japan had an
outstanding participation (5% of the
enquiries), highly above the participation
reported previously. Finally, the enquiries
received from other countries of the region
were important, fundamentally Brazil (9%).
India, China, Canada and several European
countries also contacted said department.
Overall, more than 40 countries worldwide
made investment-related enquiries.
Source: Uruguay XXI
The chart shows that, like FDI flows in the
country, enquiries come mainly from
Argentina, USA, Spain and Brazil.
Enquiries received were to make investments in several sectors: industrial sector (39%) and
within this sector, the automobile and auto parts sector stand out (10%). Other sectors
enquired were services (31%) – within this, tourism stand out (6%) -, agro-business (8%),
construction and engineering (5%) and energy (4%).

Chart VII. 2- Enquiries per region of origin Chart VII. 3 – Enquiries per sector
(2011, %) (2011, % share)

Not Oceania
specified and
2% Africa Industrial
Asia 2%
9% Services
15% South 4%
America 5% Agribussines
34% 5% 39%
North
Construction and
America
8% Engineering
17% Real-estate

Europe Energy
30% 31%
Other

Source: Uruguay XXI

17


VIII. Perspectives for FDI in Uruguay
In the current context, characterized by worldwide uncertainty, it is difficult to forecast future
FDI flows. However, in spite of the doubts regarding economic recovery of developed
countries (in particular, United States and the European Union), emerging countries appear to
contribute most to world growth. In such sense, global FDI flows for the next years are
expected to be driven by economic growth and improvements in the emerging countries’
business environment.
Latin America is a booming region with growth perspectives over 3% in 2012. Adding the
growing trend of investment flows to this, ECLAC estimates that FDI income to Latin America
and the Caribbean could increases 8% compared with 2011 flows. Therefore FDI flows will
remain high in the region in 201217.
FDI flows in Uruguay have had a strong growth in the last years and according to perspectives,
this trend will be consolidated. For the next years, Uruguay is expected to keep its conditions
to continue attracting FDIs. In 2011, Uruguayan economy grew 5.7%, thus consolidating the
ninth consecutive growth year and perspectives for 2012 indicate that the Uruguayan
economy will grow 4%, consolidating a steadily growing decade. Furthermore, according to
indexes recently disclosed by the World Bank, Uruguay has substantially improved its business
environment.
However, it is worth pointing out that Uruguay’s ability to continue attracting FDIs and
promoting a sustained economic growth is translated into investments in infrastructure (in
particular, land and rail transportation, maritime and fluvial ports), energy and education,
among others. Therefore, it is enhancing its regulatory framework in order to foster
investments. In such sense, in July 2011 “Law of public/private participation agreement for the
performance of infrastructure works and provision of related services (PPP)" was enacted.
These agreements shall be executed by and between any state authority and person subject to
private law. This regulation provides for road, rail, port, airport, energetic infrastructure, waste
treatment and social infrastructure (prisons, health centers, educational centers, social
interest houses, sport centers, etc.) works. In the framework of this new Law, approximately
US$ 750 millions are expected to be executed in the 2011-2014 period. Moreover, in
September 2011 the "Law on Accommodation for Social Interest Purposes” (Ley de Vivienda de
Interés Social) was enacted, which is also a beneficial statutory framework to attract foreign
investments since it promotes private investment in houses with social interest through the
granting of tax exemptions.
In short, despite the uncertain international context, it is expected that FDI flows towards the
region keep on growing in the next years. Moreover, Uruguay is expected to follow this trend
and consolidate as one of the main FDI attracting countries of the region, in relative terms.
Therefore, it is necessary to keep on making progress towards the improvement of the
regulatory framework in order to promote investments and continue improving investment
conditions in our country.

17
“Foreign direct investment in Latin America and the Caribbean”, ECLAC (2011).

18

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