INVESTMENT AND TRADING WITH URUGUAY Juan Martín Olivera

Seoul, South Korea

May 29, 2012

Misiones 1424, 2nd Floor 11000 Montevideo, Uruguay

Tel.: (598) 2916 58 59 Fax: (598) 2916 58 63

jolivera@olivera.com.uy www.olivera.com.uy

Uruguay: a small country among giants

Geographical location: South America, bordering

Argentina and Brazil

Area: 176,215 km2

Population: 3.4 million

Capital city: Montevideo

Language: Spanish

GDP: USD 40,265 million

GDP per capita: USD 11,998

Literacy rate: 98.3%

Why Uruguay?

• Strongest democracy and social and political stability in Latin America.

• Continued economic growth and investment despite global slump.

• Excellent labor value for money in the region, with highly skilled Human

Resources.

• Highest internet, broadband and PC penetration in Latin America.

• Attractive free zone, free port and free airport regimes, and broad investment-

related tax exemptions.

• Access to MERCOSUR, a US$2,5-trillion-GDP free trade zone that also

includes Argentina, Brazil and Paraguay.

Clear rules and political and social stability

Ranking Uruguay in South America

Low Corruption (Transparency International 2011)

2

Democracy Index (The Economist Intelligence Unit 2011)

1

Economic Freedom Index (Heritage Foundation 2011)

2

Prosperity Index (Legatum Institute 2011)

1

Political Stability (World Bank – World Governance Indicators 2011)

1

Quality of Living (Mercer Quality of Living City Ranking 2011)

1

Low Corruption (Transparency International 2011)

New Zeland 1

Canada 10

Japan 14

Chile 22

USA 24

Uruguay 25

Spain 31

South Korea 43

South Africa 64

Argentina 100

Democracy Index (Economist Intelligence Unit 2011)

Norway 1

New Zeland 5

Uruguay 17

USA 19

Japan 21

South Korea 22

Spain 25

Chile 35

Argentina 51

Colombia 55

Economic Freedom Index (Heritage Foundation 2011)

Hong Kong 1

New Zeland 4

Chile 7

USA 10

Japan 22

Uruguay 29

South Korea 31

Spain 36

South Africa 70

Argentina 158

Clear rules and political and social stability

Strong economy

0

1

2

3

4

5

6

7

8

9

2004 2005 2006 2007 2008 2009 2010 2011

Cumulative Annual GDP

Growth Rate (2004–2011): 5.8%

10,5

9,7

8,5

7,5

4

2,8

2,6

0 5 10

China

India

Uruguay

Argentina

Rusia

Japan

USA

FDI percentajge of GDP

(2010)

BENEFICIAL REGIMES FOR THE INVESTOR

Promotion of foreign investments

• Government recognizes the important role of the FDI and maintains a

favorable investment climate.

• Domestic and foreign investors are treated equally.

• Investments do not require prior authorization or registration.

• No exchange control. Free transferability of capital and profits from foreign

investments.

• Investment projects may qualify for corporate Income Tax rebates ranging from

51% to 100% of the amount invested, plus rebates of other taxes. Corporate

income tax is set at 25%.

Temporary admission regime

• Similar to a drawback regime, allows companies to import inputs free of

tariffs for up to 18 months, as long as these are used to produce goods to

be exported.

• Manufacturers can enter tariff-free: raw materials, supplies, parts and

intermediate products used to manufacture products to be later exported.

• Also covered under this regime are products that are consumed in the

production process without being incorporated in the finished exported

product, as well as containers and packing material.

Free Trade Zones

• FTZs are duty-free areas within Uruguayan territory.

• FTZs have developed as important poles of commercial and industrial activity

and services for the rest of the world.

• The entrance and exit of goods to and from the FTZ are not considered

importations or exportations.

• FTZ Companies are 100% exempt of:

• Corporate income tax

• Net Worth tax

• Import levies

• Any other tax created or to be created in the future

• National monopolies are not applicable in FTZs.

BUSINESS OPPORTUNITIES

Information Technology and Telecomunications

• #1 software exporter in Latin America (US$ 68 per capita, followed by Costa

Rica with US$ 33)

• #1 technology country in Latin America (Latin BusinessChronicle’s Latin

Technology 2010 Index)

• Highest total telephone penetration in Latin America:123 mobile lines per 100

residents in 2009

• Connection to Global Crossing cable due in 2012 will enable a much faster

connectivity

• Broad tax benefits

Logistics and Transport

• Optimal logistic location in South America’s Southern Cone where the Río de la

Plata, Paraná and Uruguay Rivers converge with the Atlantic Ocean.

• Deep water ports operating under free port regimes. Important grains and chips

terminal in the Montevideo port coming soon.

• 65% of in-transit merchandise in the region goes through Uruguay

• New airport terminal, new ring road in Montevideo and expansion of highway to

conect all the coast.

• Government has stressed the importance of renewing and expanding the

highway infrastructure and important incentives are to be expected in future

public bids.

Forestry and Agriculture

• Uruguay is mainly an agricultural country where 70% of total exports are

composed of cattle meat, wheat and mix of cereals, rice, milk and other

dairy products.

• Uruguay is one of the world's largest producers of soybeans, greasy wool,

horse and cattle meat.

• Forestry has experienced an outstanding development, representing 13%

of the exports. Uruguay has received billionaire investments in two pulp

mills and related business. Only 21,5% of the areas destined to forestry

has been used.

Oil, Gas and Mining

• Despite the global crisis, british and french companies, plus other consortiums

have presented exploration and production bids for blocks off the Uruguayan

coast at depths of between 50 and 2,000 meters

• More explorations at the north of the country are scheduled.

• This raises prospects for energy independence and within, in the future, a

significant reduction in energy costs.

• Important iron deposits have recently been found and are attracting foreign

investments, which might place Uruguay in a position similar to Australia,

Brazil, Canada or Sweden.

Renewable energies

• Hydro power is already a big energy source in Uruguay.

• Power generation from biomass and wind farms already in place, with

important tax benefits.

• Strategic development plan: add 500 MW of renewable energy to the national

energy matrix by 2015 (200-300 MW wind, 200 MW biomass and 50 MW small

hydro).

• State-owned utility UTE’s public bid for 150MW of wind power is an important

step in this sense.

• Soon Uruguay will have Nº1 position in the Americas in the proportion of non-

traditional renewable power generation capacity out of its total power capacity.

URUGUAY: A GATEWAY TO MERCOSUR

Uruguay: a gateway to MERCOSUR

• Suitable market for the development

of international activities and an

attractive business center with a

tradition of stability

• Member of Mercosur together with

Argentina, Brazil and Paraguay

(Venezuela is under integration

process)

• Mercosur is currently a Customs

Unions with a 200 million consumers

market

• Common tradition assures the

continuity of the regional integration

regime

INVESTMENT AND TRADING WITH URUGUAY Juan Martín Olivera

Seoul, South Korea

May 29, 2012

Source:

Uruguay XXI – Investment and Export Promotion Agency

www.uruguayxxi.gub.uy

Misiones 1424, 2nd Floor 11000 Montevideo, Uruguay

Tel.: (598) 2916 58 59 Fax: (598) 2916 58 63

jolivera@olivera.com.uy www.olivera.com.uy