A favorable political climate, solid democracy, social stability and a solid macroeconomic position make Uruguay “an ideal environment to make successful, predictable and profitable investments,” according to IDB references Matías Bendersky and Fabrizio Opertti.
In this context, the IDB will develop the first edition of Test&Invest, a business summit to be held between November 1 and 4 with activities between Montevideo and Punta del Este.
To learn more about this meeting and the IDB’s vision for the country, Coffee & Business he chatted with Bendesky and Opertti. Coming up a summary of the interview.
Where do you think are the great opportunities for the country to continue growing in terms of attracting investment?
Fabrizio Opertti (FO) – Uruguay is already considered today as a hub for both global services and clean production, although it is important to highlight that its international insertion continues to be concentrated on its natural resources. In this sense, advances in technology, both infrastructure and especially human capital, are the great challenge, but the country has been making progress in these areas given the opportunity to diversify foreign trade and that this drives it to achieve increases in productivity and generate more and better jobs. Many global companies have already chosen Uruguay as a hub (or center of operations). For example, it was the country chosen by Volkswagen in Latin America to implement a test phase for 100% electric cars.
One of the distinctive characteristics of Uruguay, and the reason why it was chosen, is the dense network of public chargers and connectivity throughout the territory, the good road conditions, which was evaluated by the foreign technicians who visited the country. on different occasions. Similarly, Nestlé invested US$ 35 million in Uruguay to create a new business unit in the country that allows it to export, and now, Nestlé Uruguay carries out more than 12 projects to supply different markets, both in Latin America and in the rest of the world. of the world.
In technological matters, Globant, an Argentine company that offers innovative technology and software services, opened its new offices in Uruguay in 2021, which will have more than 2,700 square meters in the World Trade Center in Montevideo. In addition, for the next three years it plans to double its local team and make an investment of approximately US$60 million.
In this context, the country can continue to grow in foreign investment with high added value and make a leap in both traditional and non-traditional sectors with a strong technological content such as agtech, fintech, edtech, cybertech and audiovisual, among others. An example of this is that of the multinational Microsoft, which recently announced that it will install its first artificial intelligence and internet of things laboratory in Latin America in Uruguay, which it hopes will become a conduit for more companies in the area to flourish abroad. .
At the Inter-American Development Bank (IDB), we believe that public-private collaboration in attracting investment is a determining factor, as shown by successful cases such as those of Ireland, Korea, Israel or Costa Rica itself in the region. .
What do you see as the main barriers to overcome at the country level?
Matías Bendersky (MB)- In this sense, and well related to the topics of the forum, the country has been working on overcoming three main barriers: greater international positioning and connectivity with the world; strengthening and coordination of institutions and processes to coordinate investment and reinvestment activities; and closely related to the technological innovation that makes the heart of the forum, the need to have a greater amount of talent, since it is a crucial bottleneck for the growth of these sectors.
We have been working on all these points together with the government and we have an ambitious agenda to continue propping up these barriers and transform them into opportunities. For example, the forum is a milestone for the positioning of the country, which we are co-organizing with the Ministry of Industry, Energy and Mining (MIEM), the Ministry of Economy and Finance (MEF), Uruguay XXI and the National Agency for Research and Innovation ( ANII), and we have also been working on the design of a Single Investment Window, to facilitate procedures and processes for investors.
On the other hand, we have developed the Finishing Schools program, together with Uruguay XXI and the National Professional Training Institute (Inefop), to train talent in the skills most in demand by multinational companies planning to set up in Uruguay and those with operations in the country involving exports of services.
What role does the IDB play or can play in this positioning of Uruguay?
FO- The Bank works to improve the lives of the inhabitants of the countries of Latin America and the Caribbean (LAC). In terms of trade, there are three types of costs that limit the integration of our region. First, the costs of transportation, logistics, and administrative processes in LAC, which are equivalent to 20% of production costs, are double the world average.
Second, information costs, which are related to access to data on market demand, are equivalent to about 6% of production costs. Finally, regulatory costs, equivalent to 10% of production costs, arise from the proliferation of divergent disciplines in free trade agreements.
In parallel, in the face of global business disruptions caused by the pandemic, global companies are seeking to make their regional value chains more resilient to the impact of both natural and geopolitical phenomena. According to a November 2021 McKinsey survey, regionalization remains a priority for most global companies, with nearly 90% of respondents expecting to seek some degree of regionalization in their value chains over the next three years.
This reconfiguration of global value chains, potentially encompassing both increased foreign direct investment (FDI) and the development of new suppliers closer to end markets, is an opportunity for LAC countries, including Uruguay, to can position themselves as an attractive destination for these investments.
Faced with these challenges and this opportunity, the bank accompanies the countries of the region by working under the framework of the “Three Is”: investment, infrastructure and integration. In terms of investment, countries must increase their efforts to attract them and open new markets for the region, and our estimates indicate that US$1 invested in investment promotion generates up to US$56 of additional FDI ($41 in new investment and $15 in reinvestment).
Regarding infrastructure, our countries must develop a sustainable infrastructure that reduces the time and costs of trade. Our recent research suggests that an increase in infrastructure investment of 1% of GDP generates additional GDP growth of 1.5% after four years, thus showing a significant multiplier effect.
Finally, in terms of integration, LAC must deepen and modernize its regional integration schemes, to offer an expanded market without friction and improve the business climate. This includes redoubling efforts to support countries to advance in the pending agenda of convergence of more than 33 preferential trade agreements, whose harmonization would result in an annual increase in intra-regional trade close to 12%.
That said, Uruguay Test & Invest seeks to be a milestone in the reactivation of trade and investment in Uruguay, helping the country in its international positioning as an investment destination and innovation hub in the region. Close to 600 participants from around 40 countries from all corners of the world are expected to participate.
The Test & Invest Summit
From the IDB and with the Uruguayan government as a strategic partner, the first edition of Test & Invest: Uruguay Business Summit will be held between November 1 and 4, 2022 and will include activities in Montevideo and Punta del Este.
On November 1 and 2, the strategic partners of the Uruguayan government will organize thematic visits in Montevideo for foreign visitors to clusters of national and foreign technological, biotechnological and audiovisual companies, free zones and technology parks.
On November 3 and 4, the summit will take place at the Punta del Este Convention Center and will feature presentations by international experts on cutting-edge topics in four strategic sectors: Information and Communication Technologies (ICTs), biotechnology, renewable energies and audiovisual services.
Activities will include business meetings (matchmaking) B2B (business to business) and B2G (business to government); a sample of innovation (showcase) and masterclasses (masterclasses) taught by international institutions, such as Newlab, Digital House and the New York Film Academy.
As described by Bendersky, registered participants will be able to join the matchmaking sessions, which will include the participation of technology-based startups, large companies and investors from Uruguay and other Latin American and Caribbean countries, Ireland, Israel, and the Republic of Korea, among others, as well as Uruguayan representatives in charge of public and private investment projects.
The main issues that will be addressed are those that the government has identified as strategic sectors for attracting investment in Uruguay, and these are: information technology, biotechnology, renewable energy and audiovisual services.
For example, the most recent trends in the information technology sector will be explored in a conversation that will include the Minister of Industry, Energy and Mining of Uruguay –Omar Paganini– together with high-ranking executives from companies such as Stefanini, Mercado Libre, NVIDIA , Hexacta and Meta. Likewise, the importance of sustainable investments and the opportunities for Uruguay in this matter will be addressed, in a panel with the participation of the Minister of Economy and Finance, Azucena Arbeleche.
Opertti pointed out that biotechnology as a driver of innovation and its contribution to economic growth and social development will be discussed, with the perspective of representatives of leading institutions and companies such as the Institut Pasteur, Xeptiva Therapeutics and the Insud Group. “We will also examine the opportunities and trends in renewable energy, and we will reflect on the opportunity to generate added value and qualified employment offered by the creative industries and audiovisual services with the eyes of various industry experts,” added the representative. of the IDB.
In addition, there will be exchange spaces on enabling dimensions such as the development of sophisticated human capital and the availability of sustainable financing, with the perspective of representatives of the Uruguayan Chamber of Information Technologies, the Massachusetts Institute of Technology (MIT), Harvard Business School, as well as officials from the Inter-American Development Bank.
Finally, the focus will be on the ecosystem for the internationalization of startups and for this they will have the vision of the executive director of Born2Global (Korea), companies such as Mana Common, Newlab and OurCrowd and with the lessons learned by the largest Uruguayan startups. growth such as dLocal and OrdensYa.
