Uruguay

URUGUAY

General Information

Geography,climate and population

Uruguay is one of the smallest countries in South America; it is located between 30 and 35 degrees latitude south covering almost 1 70.000 square km, bordering on Brazil by the North and Northeast, on Argentina by the West and on the River Plate and the Atlantic Ocean by the South and Southeast. The country has over 200 km of Atlantic coastline and more coast on the River Plate.

The land has no remarkable topographical features, it is a mixture of plains crossed by long rivers and soft hills, the highest of which barely reaches 500 m.

Main cities are:Montevideo,capital of thecountry and most important port built around a deep bay in the Southwestern coast, on the River Plate; Paysandú and Salto on the Uruguay River, Las Piedras near montevideo and Puntadel Este, the principal oceanside resort.

The weather is mild the year round, with temperatures ranging from 22 to 32 centigrades in summer (December/February) and 10 to 15 centigrades in winter time (June/August). Rain fall occurs in all seasons but is generally heavier in the winter months.

The population of almost 3 million people is integrated mostly by Caucasians origin, with a high degree of literacy (95%). Concentrated in urban areas (89%) ar 50% living in Montevideo, its growth rate (0.7%) is one of the lowest in South-America.

Spanish is the official language. A generalized knowledge of English is found in commercial and government circles. Other languages like French,Portuguese and German are handled in a lesser degree.


Political system

Uruguay is politically organizad as a unitary republic, geographically divided into 19 departments (districts), in accordance with a Constitution last reformed in 1967, under which the members of the govemment are elected every five years under a system of universal suffrage. The executive power is in the hands of the President and a Cabinet of 11 ministers.

The legislative power is representad by the general Assembly, or parliament, composed of two chambers: the Senate with 31 members elected on a nation wide basis, and the Chamber of deputies (Commons), of 99 members with their seats being all located on the basis of proportional representation of each department.

Justice is exercised by the Supreme Court, whose members are elected by the General Assembly, courts of justice and judges on a nation wide basis.

Each department elects its own authorities, also under a system of universal voting. The municipal executive branch is represented by a mayor and the legislative power is represented by a municipal chamber. The governments of the departments are essentially responsable for managing their own intemal affairs, excluding justice, education, health, security, foreign policy, defense, and primary responsibilities for economy and finance, which are administered on a national basis.


Currency

T'he monetary unit is the Peso Uruguayo. $U is the official symbol used within uruguay Exchange.
Economic Policy

Uruguay's development strategy is based on an active participation of the private enterprise within the framework of an increasingly competitive market economy that continues to open both to the South American region and to the world.

The Uruguayan economic policy growth strategy is based on the leadership of the exporting sector -among other aspects- and committed to world trade liberation and Latin American integration. Non-discrimination and total freedom from quantitative restrictions characterize the import policy.
Demographic and standard of living indicators

Surface area: total 318.413 KmS2
land 176.215 KMS2
Capital Montevideo
Language Spanish
Total population 3.130.500 Inhab.
Montevideo 1.383.660 Inhab.
Urban 89,4%
Rural 10,6 %
Population growth 6,79%/1000 Inhab, (1990-1995 period)
Life expectancy at birth 72,41 years (1990-1995 period)
Literacy rate 95,8%
Students per teacher 21
Economically active population45%
Inhabitants/Telephone4,68
Inhabitants/Car 10,2

Economic Data

G.D.P. U$S 15.543 millon - 1994
G.D.P per capita U$S 3.840 - 1993
G.D.P. real growth 7,9 % - 1992
2,5 % - 1993
5,1% - 1994
Unemployment Jan-Mar 1994 - 8.1 %
Exports (FOB) U$S 1.925,0 millon - 1995
Imports(CIF) U$S 2611,8 millon - 1995
Investment as a % of G.D.P. 10,60 % - 1991
11,50 % - 1992
15,60 % - 1993
Inflation rate 52,9% 1993
44,1% 1994
35,4 % 1995
Net External Debt U$S 2.241,7 - 1993

Main Economic Sectors

The contribution of various sectors to the overall economy is summarized below:
Economic sector % of G.D.P.
Agriculture,forestry,fishing11
Manufacturing23
Trade, restaurants and hotels13
Financial entities, assurance,
real estate and services 		22
Community,social and personal services17
Construction3
Other Sectors11

Agriculture, Livestock and Fishing

The inherent productivity of Uruguay's soil initiated and has maintained the export-oriented production of meat, wool and leather. Derived industries, based on these primary raw materials, include textiles and the leather goods.

The economy has also made significant gains in the areas of rice, citrus, and dairy production for export.

In recent years, producers have focused on the development and exploitation of renewable natural resources, namely pine and eucalyptus forest products. This sector has received strong support and interest from policy makers and foreign investors, and today represents the fastest growing economic sector.

In the sector of counter-seasonal agricultural exports fresh and frozen, fruits,vegetables,and seeds are the main items.

The fishing industry is of lesser importance since its output represents onIy 4% of the sector's total, however, exports reach up to 8O million dollars per year.
Manufacturing Industry

This is another key sector of the Uruguayan economy,which accounted for 23% of the GDP in 1993 and for 18% of total workforce employed, while most of the raw materials used come from the agricultural sector.

Food stuffs (24.3%) and textiles (1 0.5%) are the most significant industrial sectors, both export oriented. Within the food sector, exports representad 36% of the total while accounted for 4l % of the textile production.

Oil refining, a State monopoly, represents 9.5% of the total manufacturing sector. Its production, however, is exclusively for local consumption.
Services

Thanks to its geography, tradition, level of education and the opening and liberalization of its economy, Uruguay has become an important regional service center. Quality of life, environment conditions and personal security play an important role in the decisions made by intemational business circles conceming operations abroad.

Traditional financial freedom and a strict observance to banking secrecy law have been die basis for Uruguay to become the region's leading off-shore financial center. Although the banking sector employs only 4.7 % of the total urban workforce, its services account for almost 20% of the GDP. Over 80% of total private sector credits and almost 9O% of the deposits are denominated in foreign currency.

New regional developments and integration, with programs such as the "Hidrovía" ("Waterway") assure a future increasing relevance of the sector of services within the Uruguayan economy.

Within the service sector,the construction sector is especially important.
Tourism

Incoming tourism is also an important source of foreign exchange earnings for the country. The sector's yield accounted for 13.5% of theGDP in 1992.Over 1 million tourists visit the country every year, 50% of them in the high season, between November and March. the favorite destination is Punta del Este. Most visitors (over 9O%) are from Argentine and Brazil.

Since the Ministry of Tourism was created in 1986, a great deal has been done to promote the sector,including investment,trough important promotional programs,such as developing Punta del Este and Montevideo into internacional convention centers.

Many tourists are regular visitors to Uruguay because of its attractions and its proximity to their place of residence (particularly Buenos Aires), allowing a great deal of them to own their summer houses. Preliminary 1992 figures indicate 381 million US dollars of earnings for the sector hence becoming the main export item of the country.
Regional Financial Center

The maintenance of the tradicional financial and commercial openness of the country strengths the attractions and characteristics of Uruguay as a security framework for financial placements in the country and in the region.

As the main financial center in the region, Montevideo receives the world's major banks.

The principies valid in the country are:


Holding companies (or foreign investment corporations) are defined as uruguayan corporations whose main activities are to invest abroad in securities, bonds, shares, commercial papers, debentures, commodities, and property, on their account or on behalf of others (activities of holdings include trading outside Uruguay on their account or on behalf of third parties). They are exempt from all taxes except social security taxes and are only subject to an annual tax of 0,3 % on their net worth. The exemption is granted only if the total value of the corporation's assets located in the country does not exceed 1 0 % of its total asssets; f unds and investments administered on behalf of third parties are considered as assets for this purpose. Companies engaged exclusively in offshore banking operations are exempt frorn all taxes except social security contributions. Institutions of the Financial System Banks establishment and operation is strictly regulated by the Financial Intermediacy Law.


Seventeen banking houses (financial intermediary entities)are involved in off-shore activities,being authorized to conduct any type of financial dealing operations,except those reserved exclusively to banks,i.e.receiving deposits from Uruguayan residents.
Numerous representativas of foreign banks are operating in the local market.
Investment banks may receive deposits from non-residents only for periods over one year, grant medium and long term loans. In addition they may perform the following operations. issuing debentures and similar securities, rendering advice on investment matters, managing investment portfolios, and executing mandates for the management and investment of funds received from non residents.
Government authorization is required for establishing new financial institutions
Free Zones

Established in a country with an excepcional geographic situation, Uruguayan Free Zones are a highly attractive option for any type of industrial or foreign trade activity.

There are two government-managed free zones in the country, located in Colonia and Nueva Palmira. They are easily accessible by river, road and rail, allowing a good connection with any part of the region or points overseas.The Colonia free zone is l5O kms. From Montevideo and 47kms. From BuenosAires, while the free zone at Nueva Palmira, with an excellent port at the mouth of theWaterway Paraná-Paraguay,is 221 kms.from Montevideo and 85 kms. from Buenos Aires.

There are other operational free zones, one near Montevideo's airport and the others at Florida (middle of the country) and Rivera, are managed by private companies. Establishment of other private free zones is under process in various points of the country - Río Negro, Nueva Helvecia and San José.

In addition to the general economic activity freedom existing in Uruguay, there are various advantages to operate through a free zone, such as:
Communications and ports

Uruguay benefits from a fluent communication network inside the country and for its connection with neighbors and the world.

Roads have a length of 11.3OO km starting at the capital, Montevideo. Three bridges link Uruguay to Argentina, a new bridge is being studied between Colonia and Buenos Aires, the quickest way to reach the Argentinean capital. Four roads lead to Brazil. Buenos Aires is 65O km far and PortoAlegre 8OO km.

Rail system offers only cargo transportation (few lines for passengers leaving from Montevideo to near cities) and disposes of 3.000 km and 154 stations.

The country has a very long coast line on the Atlantic Ocean, the Rio de la Plata and the Rio Uruguay. The principal ports are Montevideo, Colonia, Nueva Palmira, Fray Bentos and Paysandu, Montevideo is the best natural port of the region with an operative capacity adapted to international trade.

This port of Montevideo is the main way of entrance of products not only for the country but to other Mediterranean regions like Paraguay. A new port law allows even processing activities inside the port zone, this area is going to be transformad in a services center for internacional trade and a free port.

The new port law allows the Port National Administration (ANP) to:


The waterway

The fluvial network formed by Paraná and Paraguay rivers connects at a low cost many regions in five countries: Argentina, Bolivia, Brazil, Paraguay and Uruguay.

Uruguay is included in the Waterway Project shared with Argentine, Brazil Bolivia and Paraguay, which implies an important navigation and transportation system for the Latin America Southern Cone region. Paraguay-Parana-Caceres-Nueva Palmira is a waterway offering equal advantages to the fíve above-mentioned countries, supplying fluvial transportation as well as the most important coastal fleet of South America.

Consequently ,the waterway,its ports and the multimodal system summon up attractive advantages in capacity ,nimbleness reliability and security , as well as special treatments and the other facilities to reach the core of South America and the maritime exit ot the Atlantic Ocean and the whole word.

The creation of the Regional Authority will allow the coordination of the navigation policies of the five countries all the way along this immense river network and will help create the infrastructures needed to use fully its potencial.

This ambitious program puts Uruguay in the best possible situation for developing large enterprises of transport, services, cargo handling and ports, among other things. The port of Nueva Palmira, for example, in the department of Colonia, opposite the mouth of Paraná, is one of the largest infrastructures for shipping out the goods produced in the Mediterranean type regions and countries such as Bolivia and Paraguay.
The Southern Cone axial Way

The integration process involving Uruguay has already developed transportation by water with land transportation by highway .A binational mixed commission is specifically working with all the matters concerning the construction of a bridge between Colonia (Uruguay)and Buenos Aires (Argentine).

This bridge will be part of the"Southern Cone Axial Way" which directly links Argentine , Brazil and Uruguay, starting from the Brazilian city of Porto Alegre and ending at Buenos Aires,Argentine.

The 'Southern Cone Axial Way' has been declared of high priority by the Government of Uruguay .The project development tasks have already started nacional territory.


Why investing in Uruguay

Uruguay offers certain conditions that make it particularly attractive to receive foreign investment.Its privileged geographic position; its institutional stability; its high degree of economic and financial openness, its process of regional integration. the level of performance of its human resources and the non discriminatory treatment that receives the foreign investor, guarantee the climate of security, necessary to realize new initiatives in its territory.

Why then, investing in Uruguay.


HIGH LIVING STANDARS SHOWN IN:



ECONOMIC AND DEMOCRATIC STABILITY SHOWN IN:

OUTLINE OF INVESTMENT OPPORTUNITIES

Based on the experience and interest of local and foreign entrepreneurs, specialized goveRMment services have identified the following production sectors particularly active during the last few years:



Furthermore, as a result of the reform of the Uruguayan economy and its deregulation process, other investment and development areas, such as the following, have appeared:

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