Uruguay flag Uruguay: Investing in Uruguay

Foreign direct investment (FDI) in Uruguay

FDI in Figures

According to UNCTAD's World Investment Report 2023, inflows of FDI to Uruguay reached USD 3.8 billion in 2022, compared with USD 2.2 billion one year earlier, the second-highest level after 2013. At the end of the same period, the total stock of FDI was estimated at USD 36.1 billion, around 50.3% of the country’s GDP. According to data from the Central Bank, the main investing countries are Spain (20% of the total stock), Argentina (14.2%), Switzerland (11.8%), Singapore (6.7%), Chile (5.4%), and Brazil (4.8%). In terms of sectors, the ones receiving the majority of the stock are financial and insurance activities (27.8%), manufacturing (25.8%), wholesale and retail trade (13.6%), real estate (13.2%), and agriculture (12.2%). Official governmental figures show that in the period January-September 2023, FDI to Uruguay increased to USD 4.1 billion, compared to USD 2.2 billion in the same period one year earlier.

Uruguay appeals to foreign investors because of its favorable investment environment, primarily driven by its adherence to the rule of law, minimal political risk, stable macroeconomic conditions, advantageous geographical positioning, and enticing investment incentives. Foreign investors enjoy the same rights and fiscal incentives as local investors. FDI is free from any restrictions and is 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 the World Bank.

Uruguay is keen on attracting FDI and has an investment promotion agency, Uruguay XXI. 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. 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 practices, a small population, and vulnerability to the economic situation of its neighbors - mainly Brazil and Argentina. Uruguay ranks 63rd among the 132 economies on the Global Innovation Index 2023 and 27th out of 184 countries on the latest Index of Economic Freedom.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 7532,2413,839
FDI Stock (million USD) 30,43931,08436,183
Number of Greenfield Investments* 162225
Value of Greenfield Investments (million USD) 1561,131934

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.

Country Comparison For the Protection of Investors Uruguay Latin America & Caribbean United States Germany
Index of Transaction Transparency* 3.0 4.1 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 8.0 6.7 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Uruguay

Strong Points

The main assets of Uruguay are:

  • A democratic and stable political system.
  • Effective education and health systems.
  • Abundant agricultural resources.
  • A highly skilled workforce.
  • Economic stability. Uruguay was among the first nations in Latin America to achieve a certain level of stability and economic well-being, maintained through relatively high taxes on the industrial sector.
  • In recent years, the Uruguayan economy has benefited from a favourable international scenario for the exports of its agricultural production.
  • The country has comfortable foreign exchange reserves.
  • Favourable growth prospects. Uruguay benefits from increases in domestic consumption, the development of its exports, the high level and the diversification of its investments.
  • Privileged trade relations with members of Mercosur, the EU and the United States generate a level of FDI.
  • Wide range of tax exemptions for investments, free zones, attractive ports and airports.
Weak Points

The main weak points of the country are:

  • A high level of external debt that is subject to trade fluctuations and external shocks
  • A high level of inflation that is difficult to curb (8.3% in 2021 - IMF)
  • Public debt above the regional average (68% of GDP in 2021 - IMF)
  • Vulnerability to the economic situation of its neighbours and fellow Mercosur members, Argentina and Brazil, in particular, vis-à-vis its exports and links between their financial sectors.
  • Commodity price sensitive economy.
Government Measures to Motivate or Restrict FDI
In Uruguay, foreign investors can develop any type of business and are treated the same as local investors. The government is encouraging foreign investment by offering tax exemptions for investment and the country has also established an investment promotion agency, Uruguay XXI.

Also, at the end of 2017, President Vazquez announced significant investments (of €12 billion) in infrastructure (transportation, renewable energy, housing and telecommunications) to boost economic growth and job creation.

Eleven free zones are located throughout Uruguay. Companies can import goods, services, products and raw materials of foreign or Uruguayan origin. Companies operating in free zones are exempt from national taxes.

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Latest Update: May 2024