“Chinese companies have become an increasingly important source of inward productive capital into Uruguay”

AMBASSADOR: 2021 marks the 33rd year since Uruguay and China established bilateral diplomatic relations. In this period, our exchanges have developed in a sustained and harmonious manner. We are now working to upgrade our ties to the Comprehensive Strategic Partnership level. We hope that, in the framework of our joint construction of the Belt and Road Initiative, our cooperation will reach new heights for the mutual benefit of both our peoples.

Since 1988 (the year Uruguay-China diplomatic relations were established), our bilateral trade in goods has multiplied by 40. Since 2013, China has been Uruguay’s main trading partner. Roughly 30 percent of our goods’ exports come to China. In particular, my country is an important supplier of agricultural goods to the Chinese market; we are among China’s largest providers of beef, mutton, soybeans, wood pulp, wool tops, and milk powder.

As for investment, Chinese companies have become an increasingly important source of inward productive capital into Uruguay. Chinese firms have invested in a wide array of economic sectors, ranging from agriculture to telecommunications services. In the last 10 years, direct investment from China into Uruguay has multiplied by more than 100. However, we believe this is just the beginning and that many more Chinese enterprises will find interesting opportunities to invest in Uruguay.

AMBASSADOR: Uruguay’s political, social and economic stability is unrivalled in Latin America. These attributes create an enabling environment for long-term investment projects, which are protected by a strong rule of law and one of the lowest prevalence rates of corruption in the world. 

We have a long-standing Investment Promotion Law that encourages both domestic and foreign investment alike. According to this bill, foreign investors enjoy the same level of rights as domestic ones; are free to enter the market without need to obtain government pre-authorizations; may own up to a 100% of the capital of a local company; are exempt from finding a local counterpart to set up business; and are guaranteed the right to freely repatriate their profits in any currency.

The Investment Promotion Law has been followed by several Executive Decrees. The latter outline the tax incentives afforded to investors. These incentives include long-term tax breaks for projects which create new jobs as well as boost research and development expenditures or increase our total exports, among other relevant criteria.

Furthermore, Uruguay has a series of specific investment promotion regimes, such as its free trade zones. By law, companies that locate themselves in Uruguayan free trade zones are wholly exempted from any existing taxes or future ones.

Complementary to our free trade zones, our free port and free airport regimes allow foreign enterprises to take advantage of our strategic location in South America, and set up logistics operations (such as warehouses) to cater to the regional market. Companies operating under these two regimes are also exempted from taxes and from applying for any permit to move goods in these areas.

Uruguay also offers sector-based promotional regimes, in areas such as the automotive industry life sciences or information technologies, to name but a few of them.

It is no surprise, then, that Uruguay is the only MERCOSUR country which has been granted the Investment Grade by the major credit rating agencies. In Latin America, Uruguay comes at the top of global rankings which assess aspects such as economic freedom and competitiveness, among others.

Most foreign companies which invest in Uruguay look beyond our domestic market. They thus make full use of our preferential trade agreements with South American countries and Mexico. They also take advantage of our abundant natural resources and talented population to provide goods and services to the rest of the world.

My country is a reliable partner of China. All political parties which have been in office since 1988 have committed themselves to boosting our bilateral relations. That is why we have a Bilateral Investment Treaty that has been in force since the early 1990s. More recently, we signed both a Framework Agreement on Cooperation in Productive Capacity and Investment and a Memorandum of Understanding on the Joint Construction of the Belt and Road Initiative, both of which are welcoming signals for Chinese investors seeking to expand into Latin America.

AMBASSADOR: Chinese investment in Uruguay has followed an upward trend. Chinese companies have increasingly taken advantage of the country’s favorable investment climate and opportunities.

I would like to point out that Chinese companies which have already invested in the country have chosen a wide array of sector. This fact implies that the country provides profitable opportunities not only in a specific area, but in the economy as a whole. Leading firms from China such as COFCO, Huawei, ZTE or Minsheng Group have already invested in Uruguay’s food and logistics, telecommunications, and offshore finances’ sectors, to name only a handful of them.

The meat-packing business is one of the industries in which Chinese companies have had a larger impact. Around 10% of Uruguay’s overall productive capacity in the meat-processing field has received injections of Chinese capitals. In this area, we have witnessed an overlap between investment and trade, since China is also the main destination for our meat (beef and mutton) exports.

More recently and in the framework of the Belt and Road Initiative, state-owned Chinese firms have taken an interest in developing infrastructure projects in Uruguay. As a transportation and logistics hub in the South Atlantic, my country has a constant need to improve its physical infrastructure. That is why Chinese contractors have established their representative offices in Uruguay; this will certainly allow them to gain a deeper understanding of the projects that my government will pursue in order to upgrade the roads, ports, railways, electricity, and digital networks that connect it to the rest of South America and the globe.

AMBASSADOR: In line with its tradition, Uruguay will remain fully open to receiving foreign investors in all sectors of its economy.

Agriculture and husbandry will still be some of the main areas to watch out for. My country is already able to produce food for 10 times its population, but could almost double this figure if we managed to channel the appropriate investment projects. Uruguay is home to fertile soils, temperate climate and vast sources of natural water, which allow for a quick expansion of its grain, meat (not only beef and mutton, as I have mentioned before, but also pork and poultry), dairy, aquatic products, and fruit production.

In addition, Uruguay is well-known as a supplier of other agricultural goods, such as forestry products (wood pulp and timber) and also wool and leather. The same goes for our mineral resources, plenty of which (including gold, iron ore and semiprecious stones) remain untapped. These are all subsectors in which Chinese investors could reap large profits.

Uruguay has over the years prioritized its technological development. That is why the country now ranks very favorably in world indices for digital readiness and the strength of its ICT infrastructure. It is no surprise that Uruguay is home to a thriving IT industry, and is among the top three world exporters of software (on a per-capita-basis). The competitive US market accounts for more than 60% of Uruguayan IT exports.

We encourage Chinese IT firms to explore opportunities for collaboration with their Uruguayan peers. Our companies could be the right partners for Chinese digital champions looking into the possibility of localizing their solutions to market requirements in the Western hemisphere.

Lastly, Uruguay is a leading player in the field of new energies. We have already completed the first phase of the so-called “energy transition”. Nowadays, more than 60% of our energy needs come from renewable sources; this figure rises to more than 95% in the case of electricity demand. The country has abundant hydro, wind, solar, and biomass resources to build upon new investment projects, including in the new energy transportation domain. At present, the Uruguayan government is actively inviting foreign firms to development a pilot project in the production and distribution of green hydrogen, a new component that will be critical to the future of transportation and other industries.

AMBASSADOR: In spite of the COVID-19 pandemic, the current government of Uruguay has eagerly sought to streamline and improve the business environment of the country. This has been done so for structural reasons but also to help accelerate our economic recovery. That is why, since taking office in March 2020, President Luis Lacalle Pou has been keen to extend a warm welcome to foreign investors, not only to do business in Uruguay, but also to relocate in the country.

While adopting COVID-19 containment measures, this administration has striven to keep our main economic engines running, so as not to bring a sudden stop to our leading productive sectors. In 2021, Uruguay’s GDP change will return to positive territory. This would in part be thanks to the quick vaccination campaign that is currently taking place, in which Chinese vaccines play a critical role.

The Uruguayan government has adopted a series of measures to consolidate the country’s macroeconomic position, both in the fiscal and monetary fronts. In addition, the current administration has promulgated a new Executive Decree which contains enhanced tax incentives for new investment projects; exemptions for these could rise to 90% of the corporate income tax for a period of up to 20 years.

The administration headed by President Lacalle has also issued new legislation to facilitate the process by which, through acquiring domestic firms or real estate, foreign citizens may obtain tax residency in the country.

The Government of Uruguay is also seeking a deeper integration of the country into world markets, and is thus ambitiously pursuing a further opening of our economy. This would be achieved by way of a reduction of import tariffs and a more flexible approach to external trade negotiations, all in the framework of our regional bloc (MERCOSUR).

It is believed that these decisions will further strengthen Uruguay’s already robust investment profile and enhance the profitability of new investment projects. In this sense, the Embassy of Uruguay in China is at the disposal of prospective investors to guide them into the myriad opportunities that the country presents.