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Foreign Investment in Uruguay

The number of foreign investment proposals coming to Uruguay is fast on the rise. So far this year, the Uruguayan government has approved 69 projects totaling over 543 million US dollars and has granted 148 million in tax exemptions. A total of over one billion US dollars of new investment projects are expected to be approved in 2008.

Uruguay’s 2007 rate of Foreign Direct Investment as a percentage of Gross Domestic Product was higher than its neighbor’s, Argentina and Brazil. Most recent foreign investments have been in forestry, industry, construction, and mining.

The largest new investment project approved in the month of July, 2008, was a plywood production plant by the US Weyerhauser company, representing an investment of over 86 million US dollars.

The largest foreign investment in Uruguay’s history was the construction of a pulp mill located on the Uruguay river in Fray Bentos. The state-of-the-art mill was built at a cost of 1.2 billion US dollars by the Finnish company, Botnia. The mill started operations in 2007 and is expected to raise Uruguay’s GDP by 1.6%.

The construction of a second large pulp mill was approved by Uruguay’s environmental authority June 18th, 2008. The mill will be built by the Spanish company Ence, SA, which has borrowed 1.23 billion euros (equal to 1.91 billion US dollars) to build a mill near Uruguay’s Punta Pereira. The plant will make cellulose from Eucalyptus trees and will also double as a power plant creating energy from the plant’s production waste.

Sweden, Japan, and Portugal are also considering setting up pulp businesses in Uruguay. Uruguay is the most technologically developed country in Latin America and is seen by many companies as having greater stability and a more reliable legal system than neighboring countries.

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