Top Sectors for Investment in Uruguay

Uruguay has a strong democratic tradition, characterized by its political and social stability. It has an open and growing economy, with reliable and high-level institutions and a modern and attractive investment regime. To the credit of its developing business environment, it’s one of the fastest-growing countries in Latin America.

The significant growth of the country in the last decade is associated with a sharp increase in investment. In Uruguay, Foreign Direct Investment (FDI) has reached record levels, allowing the country to position itself among the main recipients of FDI, in terms of GDP in South America. We explore the main economic sectors that stand out for investors looking to form a company in Uruguay.

Why invest and do business in Uruguay?

Uruguay is a country with a positive track record and trajectory for political, democratic and social stability, and macroeconomic solidity. This combination creates a highly advantageous environment for foreign investment and developing successful business ventures.

Uruguay offers a very favorable environment for company expansion and incorporation in various sectors of the economy. Its various commercial incentives – such as its world-renowned Free Trade Zones – attract a wide variety of companies from different sectors. While many of Uruguay’s emerging sectors remain largely unsaturated, foreign investors should consider their market entry strategies now.

Agriculture Uruguay

Uruguay is still an essentially agricultural country, and there are valuable opportunities in this sector. Agribusiness is an area undergoing continuous improvement.

Agriculture and agribusiness development is crucial

Uruguay is still an essentially agricultural country, and there are valuable opportunities in this sector. Agribusiness is an area undergoing continuous improvement. Agriculture is a crucial driver of the Uruguayan economy, representing three-quarters of goods exports.

The country’s main agricultural wealth lies in livestock and animal products, with its two main revenue-generators being sheep and cattle. Sheep and cattle meat, wool, leather and other by-products dominate Uruguay’s main exports.

Around 5% of the national territory is cultivated land for agricultural outputs. Cereal crops such as wheat, corn, rice, and sugarcane are the predominant crops, which have had explosive growth in the last 25 years. Other popular crops for Uruguay include beer barley, soybeans, among others.

Uruguay, as a country that ensures reliable and superior quality products, has attracted top-level companies as a destination for its operations. From here, they provide the world with agricultural products, whose demand will continue to grow.

Increasing investments in forestry

Uruguay forestry top export

Last year, the forestry industry became the main export item in the country, which is a big shift in export commodity trends for the agriculture-focused country.

Last year, the forestry industry became the main export item in the country, which is a big shift in export commodity trends for the agriculture-focused country.

Finnish company UPM has recently made a US$3 billion-dollar investment into a second wood pulp plant in Uruguay, which will serve to boost production and job growth. Additionally, pulp maintains its current prices (considerably high compared to 2016-2017). A second plant will increase the chain’s outputs and contribute another 5.5% to GDP in 2022.

In recent years, forestry activities have begun to expand rapidly. This industry in Uruguay represents around 3.6% of the Gross Domestic Product (GDP). Forestry generates approximately 25,000 jobs, contributes US$280 million to the country in tax payments, and its sales abroad total about US$2 billion. When evaluating the generation of employment, this sector generates, on average, 30 jobs per 1,000 hectares, surpassed only by dairy and rice.

Technology developing a number of industries

Services such as tourism, finance, and the software industry have been transformed by introduced technologies in recent years.
Aiding tourism are new online platforms allowing holidaymakers to more easily make reservations, booking flights, hotels and services. Apps such as Pedidos Ya (a restaurant app) was developed by Uruguayans and it’s an example of the kind of software we provide as a country.

An industry that has grown especially as a result of technological innovation during the beginning of the twenty-first century is software, which has become a successful export product for Uruguay.

In the tourism sector, technology uptake has boosted Uruguay’s reputation to countries. The country has implemented a tax-free system with the use of credit and debit cards, for example.

Financial inclusion law

The banking system was transformed by the implementation of Ley de Inclusiòn Financiera (the Law of Financial Inclusion), in which all services and suppliers must offer the option for clients to access their finances by credit or debit card. This, in turn, supports tourist and foreign migrant experiences, reduced taxes and reduced the need to operate commercially or run personal errands in cash. Also, this law supports greater consumption of entertainment and food services, reducing the value-added tax paid when customers use credit or debit cards over cash.

Public transport

Uruguay’s domestic market has a range of demonstrably positive experiences with implementing new technologies. One example is the transport of the capital bus, where the workers have gradually been able to connect with the technological advances, and where the public institutions – such as the Intendencia de Montevideo – have had a strategic intervention.

The system used in the public transport in Montevideo has changed with the implementation of a Transport Card (Similar to the Leap in Dublin or the Oyster Card in London). This card is loaded with money in any kiosk and can be used for bus travel within Montevideo. By doing this, the IMM has information of the most used bus lines, the traffic produced by them and it also leaves out (or at least reduces) the use of cash on the buses, making it easier for the workers to charge the tickets and avoid robberies.

Renewable energy

Uruguay renewable energy

Uruguay sources about 97% of its electricity from alternative sources, and is one of the first to promote large-scale electric vehicle mobility.

Uruguay has great potential for growth in the renewable energy sector. Its wind, solar, and biomass resources are profound providers of electric capability. The country sources about 97% of its electricity from alternative sources, and is one of the first in the region to promote large-scale electric vehicle mobility.

As a leader in the region, Uruguay is focused on developing infrastructure to further support alternative energy outputs and innovations. For example, Uruguay is a crucial element in Latin America’s first electric vehicle highway, spanning 300 kilometers and offer electric charging stations at various points in the journey. This highway is set to expand across the Brazilian border.

Innovators who are finding new ways to use alternative energy to reduce greenhouse gas emissions and support sustainable development will do well in Uruguay’s trailblazing renewable industries.

Work with us for your expansion

There are many favourable opportunities in Uruguay for doing business, which are complemented by the country’s advantageous tax and trading environment. To make the most out of Uruguay’s commercial potential, work with trusted local experts who can guide your business to success.

At Biz Latin Hub, our experienced Uruguay team provides a suite of multilingual market entry and back-office services to clients expanding into the country.
Our legal and financial experts ensure your business is compliant through every step of company formation and operational processes, and is the best position to succeed.

Reach out to our friendly Uruguay team here for personalized assistance.

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