Uruguay – a jewel of a country that should be considered by Indian investors

by Dave

Uruguay is a country few outside Argentina and Brazil know about – each Dec-Feb rich Brazilians and Argentines flock to the fashionable resort of Punta del Este, the Riviera of Latin America. I am convinced it offers excellent opportunities for Indian investors in corporate farming and forestry – not to mention IT services and serving as a final assembly/logistics hub for product distribution in Mercosur countries.
My business partners at Allied Venture put together a 3 minute video showing some of the country’s highlights.

The country is most famous for lending its name to the Uruguay round of international trade talks, launched in 1986 that ushered in the WTO in 1995. I visited the country for the first time last April, been back many times since and have become a fan of it.

The country’s landscape of farms stretching to the horizon reminded me of Central Illinois (where I went to college) and Iowa, while the capital city of Montevideo, I imagined, was what a Spanish/Italian coastal town was like 40 years ago. Very quaint and charming with an easy-going pace of life. Plus, the people were super friendly, polite and courteous. The few Europeans I met then said the country had the most amazing quality of life at one of the lowest costs in the world. After a few more trips there I wholeheartedly agree.

It has first world human development indicators – a skilled workforce with 98% literacy rate, and life expectancy at birth of 76 years. It also has great weather – temperate year-round with no extremes of climate. It was recently ranked highly on the Global Peace Index – it is a democracy with no racial, religious or ethnic conflict.  Probably a few reasons why TCS setup a global software development center, in a free trade zone on the outskirts of Montevideo.

To reiterate, Uruguay offers excellent opportunites for Indian investors in the area of agribusiness – especially farming, food processing and forestry. There are no restrictions on foreign ownership of land which is available in abdundance; the country has 10% less land area than the Indian states of Gujarat/Karnataka. While Gujarat/Karnataka have 50million/53 million people (over 5 crores), Uruguay has just 3 million (30 lakhs) people. In Uruguay, there are 4 cows for each person, and each cow, on average, has 2 soccer fields worth of grazing area to itself!!

Argentines and Brazilians own vast tracts of farmland – main crops include soy, wheat and corn.iThe country is a fresh water paradise - no irrigation pumps are necessary for farming, it is rain-fed, ground water bubbles up right below ground level. The Yale University developed Environmental Sustainability Index ranked Uruguay Number 3 out of 146 countries – a country’s high score resulting from substantial natural resource endowments, low population density, and successful management of environment and development issues. For comparison, the U.S. ranked 45 and India 101. Farming is highly mechanized and farm sizes of 1000 hectares (2500 acres) can be operated by 3 to 4 people all contracted, not on the payroll.

What the country lacks is a domestic pool of capital, but if this can be sourced from overseas the possibilities are numerous. There are no restrictions on bringing capital into the country or repatriating capital (the economy is dollarize with the local currency – Uruguayan peso being fully convertible). By national law, foreign investors are treated on parity with domestic investors. The country has signed investor protection agreements with more than 25 countries including the United States, the U.K., Germany and amazingly India. It has good banking infrastructure and an all-weather road network. It offers access to the Mercour trade bloc of 250 million plus Mexico (with which it has a bilateral free trade agreement). Setting up final assembly facilities can qualify one for tariff-free access to these markets. A few investment possibilties include setting up food processing, textile finishing, pharma packaging units.

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