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Shipbuilding Industry (May 2010)


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Shipbuilding Industry (May 2010)

  1. 1. May 2010 0Shipbuilding Industry Investment Opportunities in Uruguay
  2. 2. WHY INVEST IN THE URUGUAYAN SHIPBUILDING INDUSTRY?In 2006, a promising phase began in the Uruguayan shipbuilding industry sector favored byintense commercial activity in the port of Montevideo. As a result, the shipbuilding industryhas been operating with a high degree of installed capacity utilization. Invoicing hasexceeded USD 20 million per year with new domestic and international investments beingmade. Given the forecasts for strong demand, new investments are continually appearing.The industry’s current demand results from high levels of activity and profitability of othersectors, including: transportation, fisheries, petroleum, defense and security services,research, tourism and others.Uruguay has numerous advantages that are leading to expanded development of itsshipbuilding industry: The port of Montevideo is located at a strategic position along the Atlantic coast of South America. Proximity to large fishing areas. Proximity to a maritime corridor with high traffic of Panamax and Post- Panamax ships. Good international reputation for services. Potential market for construction of barges and tugboats. Creation of a local cluster with significant government support and commitment. Favorable legal framework for shipyards. Highly qualified and specialized human resources.Industry descriptionThe shipbuilding industry includes various activities, such as: construction, transformation,repair, maintenance and dismantlement, as well as manufacturing of machinery andaccessories. This industry requires high levels of capital and is intensive in terms of highlyskilled labor.The shipbuilding industry has two classifications: heavy and light. The former includes fleetsfor river and ocean transportation, while the latter entails mainly sport, tourism and coastalfishing vessels.Uruguay Shipbuilding Industry Cluster AssociationIn 2007, the Uruguayan Shipbuilding Industry Cluster Association began to take shape whenthe government and the private sector assumed the responsibility of transforming the2
  3. 3. industry through a clustering of the sector. The aim was to increase competitiveness and tobecome an active tool and meeting point for all players that participate in ship constructionand repair activities.With economic support and methodology of the European Union, the Shipbuilding Clusterconsolidated between 2007 and 2009, through the drive and coordination of the Ministry ofIndustry, Energy and Mining.The cluster has active participation from over 50 players including shipbuilders, shipyardsand dockyards, from private and government sectors, maritime shops, suppliers, educationinstitutions, private and government organizations and the sector employees’ union.Currently, the Shipbuilding Industry Cluster Association’s new strategic plan has thefollowing guidelines: (i) education and training, (ii) technology and innovation, (iii) marketand (iv) shipbuilding industrial pole.South Atlantic Shipbuilding Industrial PoleIn February 2010, the Uruguayan government and the Uruguay Shipbuilding Industry ClusterAssociation signed a gratuitous loan agreement to access an 87-hectare government-ownedproperty for the development of a shipbuilding industrial pole near the port of Montevideo.The aim is for Cluster members to carry out productive shipbuilding projects, eitherindividually or through joint ventures with domestic or foreign investors.This pole will be able to be used by Cluster Association members or by other companiesworking through joint ventures with Association members. Investments will be made withprivate capital and will be used exclusively by the investors themselves. Users of the poleshall make payments to the Cluster Association for maintenance, technology and training.This area will be suitable for the construction of the following: 1. Repair docks whose sole function is ship repair, excluding any type of commercial port activities. 2. Dry and floating docks, synchrolifts, drydocking and vessel launching ramps, travelift and any other means for drydocking vessels. 3. Shipyards can be set up for vessel construction or vessel parts in various materials. 4. The following shops can be set up: repair, boiler, mechanic, electricity, electronics, carpentry, hydraulics, refrigeration, etc. 5. Ship construction support shops can be set up for treating surfaces, tubing, boilers, etc.The site will have a technology center and a training center. Those interested inparticipating in the pole must present their project for evaluation to the Cluster Associationadministrative commission. The shipbuilding pole will be responsible for all national,municipal and environmental permits.3
  4. 4. Location of the South Atlantic Shipbuilding Industrial PoleThe Uruguayan market and the regionUruguayThe country is in a central geographic location for maritime and terrestrial networks in thesouthern region of South America. Sustained port activity growth in the capital city ofMontevideo and a firm push towards multimodality to enable Uruguay to become a regionallogistics pole offer a promising future that can lead to increased ship traffic in the country’sports. As such, developing a large ship repair center in the South Atlantic is a possible andachievable goal that has been set by the recently created Uruguay Shipbuilding IndustryCluster Association.Since its onset in the 18th century, the shipbuilding industry in Uruguay has had peaks ofactivity in terms of both construction and repair, but has also seen lows, mainly inconstruction. However, in terms of repairs, activity has been sustained throughout time,with various levels of intensity.Currently, Uruguay is seeing an increase in demand for ship repair, mainly due to thesustained growth in port activity and significant demand by the fishing fleet.In terms of ship construction, there have been recent local investments that required theconstruction of barges, which in addition to possible additional increases in demand have ledto an upsurge in activity, not just in terms of production, but also in investment,infrastructure and technology.4
  5. 5. Physical Volume IndexShip production has been on the rise over the past few years. In 2009, the sectors PhysicalVolume Index was 43% above the base year (2006). The year 2007 saw a peak in activitywith a 62% increase as compared the base year. Uruguayan shipbuilding industry physical volume index (vessel construction and repair) 180 162 160 145 143 140 120 110 95 100 100 87 81 80 60 40 20 0 2002 2003 2004 2005 2006 2007 2008 2009 Source: Uruguay XXIs calculations based on data from the National Statistics Institute (INE).Employed Personnel IndexThe employment indicator shows that in the last three quarters of 2009, the sector hadimproved as levels are clearly higher than in previous years. The highest value was seen inthe last quarter of 2009, reaching 204 (base year 2006). Uruguayan shipbuilding industry employment index 250 197 204 190 187 200 166 154 141 138 139 135 150 123 131 131 96 98 100 83 50 0Source: Uruguay XXI’s calculations based on data from the National Statistics Institute (INE).5
  6. 6. On average, the Employed Personnel Index for 2009 was 81% higher in comparison to thebase year.In terms of the number of workers, according to figures studied by members of theshipbuilding industry cluster, the largest private company (Tsakos Industrias Navales)employs between 300 and 400 operators, including permanent staff, seasonal staff andcontractors. The navy’s repair and construction service employs 150 operators and theremaining specialized shops have an average of 10 operators.Number of vessels entering the port of MontevideoIn 2009, 4,881 vessels entered into the port of Montevideo, 7% less than in 2008. This is anunavoidable consequence of the drop in world trade during 2009, which was of about 12.2%in terms of volume according to the World Trade Organization. Number of vessels entering the port of Montevideo 2,500 2,000 1,500 1,000 500 0 River passenger Fishing Coastal and ocean 2006 747 2,134 2,264 2007 729 2,082 2,213 2008 676 2,352 2,204 2009 840 2,068 1,973 Source: Uruguay XXI’s calculations based on data from the National Statistics Institute (INE). data.Until 2008, international trade had risen faster than the global economy, leading to a boomin the ship construction industry and the appearance of shipyards in Asian countries thathave absorbed 90% of worldwide vessel production. Asian countries have positionedthemselves as the main exporters in the industry.In terms of competition or regional shipbuilding industry complementation, we mustconsider the region’s countries (Argentina and Brazil) and the Paraguay – Paraná – La PlataRiver Hydroway.6
  7. 7. Paraguay – Paraná – La Plata River Hydroway The Paraguay – Paraná – La Plata River Hydroway is a transportation system serving mostly agricultural products (soy and others), minerals, (iron and manganese) and fuel. Large loads may be transported along the Hydroway. It is the main river communication and transportation artery for the countries who share it: Argentina, Bolivia, Brazil, Paraguay and Uruguay. The region is considered to be one of the richest in Latin America. Its main rivers include the Paraná, Paraguay and Uruguay rivers. This system is about 3,440 km long from the Cáceres port in the extreme north (Brazil) and the Nueva Palmira port in the extreme south (Uruguay). The Hydroway project ensures daytime and nighttime navigation throughout the year with convoys formed by various cargo barges. It is the natural exit point for the production of large areas ofexcellent productivity and has extensive possibilities for industrial development. Thesecharacteristics are a benefit for existing regional and emerging markets since they allow forthe economic development of the countries involved.ArgentinaThe Argentine industry is composed of a few, yet large shipyards as well as a large number ofsmall and medium sized productive units. 80% of vessel construction and repair shipyardsare located in the province of Buenos Aires.The Buenos Aires Association of the Argentine Shipbuilding Industry and the Chamber ofShipbuilding Industries in Uruguay have an agreement entitled “Frame Agreement forCooperation, Exchange and Aid” where the main objective is defined as “to join forces and7
  8. 8. strategies to carry out actions favoring each country in particular and Mercosur in general,and the mutual defense and benefit of labor, production, commerce and society.”Number of vessels entering the port of Buenos AiresIn 2009, ship traffic in the port of Buenos Aires totaled 1,873 ships, 16% less than in 2008(2,228). Of the ships that entered in 2009, 973 were coastal ships and the remainder wereoverseas ships. Number of vessels entering into the port of Buenos Aires 2300 2200 900 overseas ships 2100 2000 2,228 1900 973 coastal ships 1800 1700 1,873 1600 2008 2009 Source: Uruguay XXIs calcculations based on statistics from the port of Buenos Aires.BrazilThe Brazilian shipbuilding industry has over one hundred shipyards that have the capacity tobuild ships ranging from small fishing vessels to large sophisticated ships. 70% of theseshipyards are located in Rio de Janeiro. Likewise, other shipyards are located in shipbuildingdevelopment poles along the country’s littoral region. The Brazilian industry’s main clientsare national builders and state-owned petroleum companies that are mainly financed by theMerchant Marine Fund (FMM).The shipbuilding industry, which had poor performance at the end of the 1990s, started torecover in 2000 with the off-shore platform fishing sector, maritime support vessels, theirequipment and components, and later, the refurbishment of Petrobras fleets and localpurchasing plans. This led to construction contracts for 10 petroleum ships at a cost of USD1,160 million for the renovation of the Petrobras fleet. Additionally, 42 new ships will beacquired in the next few years. Nevertheless, the Brazilian shipbuilding sector has the needto attract skilled labor, to overcome outdated technology and to expand productioncapacity.The Rio Grande port is the southernmost ocean port in Brazil, and the second largest interms of cargo movements in the country. Ship traffic in the Rio Grande port during theJanuary-March 2010 period was 447 ships. In 2009, ship traffic totaled 2,983 ships, 7% less8
  9. 9. than 2008, which had 3,214 ships. In the indicated period, ships with the greatest sharewere long haul ships. Number of vessels entering the port of Rio Grande 3500 Coastal 3000 362 Interior navigation 483 2500 Long haul 1,426 2000 1,146 1500 Coastal = 96 Interior navigation = 157 1000 Long haul = 194 1,426 1,354 500 0 2008 2009 Jan - Feb 2010 Source: Uruguay XXI’s calculations based on statistics from the port of Rio Grande.Prospects for sector investment Saturated demand in Brazilian shipyards means that the surplus could be partially attained by the Uruguayan shipbuilding industry and could even promote its expansion in terms of investments. The Brazilian shipbuilding industry seeks to supply itself mainly from ship parts. Negotiations are underway with Brazil so that products that are manufactured in Uruguay with Brazilian supplies are considered to be Brazilian for the 70% consumption guidelines. Over 1,600 barges use the Paraguay – Paraná Hydroway transporting products from South America. 1,000 of these barges must be replaced soon and 2,000 must be added. 3,000 barges are needed for the Hydroway over the next few years.11 Source: Symbarge 08 is an event promoted by the Pan-American Institute of Navaland Port Engineering (IPIN) to ensure that the regional shipbuilding industry is able to face the great challenges posed by river logisticsalong the Hydroway.9
  10. 10. Large investments and companies in the Uruguayan shipbuilding sectorThe sector’s most notable fixed capital investments include a slipway, two drydocks ownedby SCRA (the Construction, Repair and Armament Service of the Navy), a floating dockowned by Tsakos and one owned by the National Port Administration (ANP).In 2008, construction ended for the last two tugboat barges by two member organizations ofthe Shipbuilding Chamber of a total of four that were built by Uruguay to transport cellulosepulp on the Uruguay River.In the Appendix there is a list of some of the companies and workshops related to theindustry.Legal and tax frameworkIn terms of promotion and tax frameworks, there is a consensus that although some aspectscould be improved, legislation for shipyards, slipways and docks is very good. The 1984 lawstates: “all taxes, including Value Added Tax, shall be excluded for the import of materials,raw materials, capital goods and in general everything necessary for the development of thenational shipbuilding industry activity." It includes reimbursements for repair exports.Practically everything that is imported is exempt from taxes and there are no royalties.These exemptions for the sector offer advantages as compared to Brazil and Argentina.Furthermore, the Uruguayan customs system is more agile and flexible than that of Braziland Argentina, which facilitates the entrance of supplies from the rest of the world.Likewise, there are laws granting Corporate Income Tax (IRAE) exemptions wheninvestments are made through consortiums and where there are over 150 employees.10
  11. 11. APPENDIXDomestic and foreign investment promotionForeign investors in Uruguay enjoy the same benefits as domestic investors and do not needprior authorization to set up in the country.Law 16,906 (dated 7 January 1998) declares the promotion and protection of domestic andforeign investment of national interest. Decree 455/007 updated the regulations of this law.Investment projects in any industry that are submitted and promoted by the ExecutiveBranch may use between 51% and 100% the amount invested as partial payment of thecorporate income tax (IRAE), according to project classification. The normal IRAE tax rate is25%.In addition, moveable fixed assets and civil works are exempt from wealth tax (IP) and valueadded tax (IVA) can be recovered for purchases of materials and services for the latter.Likewise, the law exempts import taxes and charges for movable fixed assets declared non-competitive to domestic industry.Specific government incentives for the shipbuilding sectorGovernment participation in the development of the shipbuilding industry has beensignificant. For this reason, the development of port infrastructure has been one of the toppriorities for the last few government administrations. The strategic development plan2 ofthe National Port Administration (ANP) emphasizes not only the port of Montevideo, butalso the ports of Colonia and Sauce de Juan Lacaze3.Highlights of ANP’s strategy for industry fortification include the following: Boosting the development of a national port system with a vision of the future and a re-launch of the activity in Uruguay. Shipbuilding Industry Cluster initiative. International promotion and search for strategic agreements for national port development. Improvements in management efficiency and expansion of infrastructure of the port of Montevideo. Position Uruguay as a port and logistics pole for the region that connects Chile, Bolivia and Paraguay with the Atlantic Ocean.2 Executive Branch decree 508/2008.3 ANP Resolution 112/2009 states that the ports of Colonia and Sauce de Juan Lacaze shall be complementary ports as of 9 September2009.11
  12. 12. Initiative to develop a fishing terminal in Montevideo Bay to improve port activity and to enable improved operations of the shipbuilding industry at the port. The Ministry of Defense also supports the development of the sector. In partnership with the private sector, the navy has made significant investments in infrastructure and personnel training for the construction of barges in light of the current outlook and in anticipation of the possible demands of the Hydroway.Trade agreements and investment protectionGeneral trade agreements Uruguay has been part of the World Trade Organization (WTO) since its creation in 1995 and is part of the Latin American Integration Association (ALADI, 1980) along with ten South American countries plus Cuba and Mexico.In the framework of ALADI, the Southern Common Market (Mercosur)was formed in 1991 with Argentina, Brazil and Paraguay. Mercosurbecame a customs union in 1995, with the free movement of goods,the elimination of customs duties and non-tariff barriers betweencountries, and a common external tariff for countries outside the bloc.Venezuela is currently in the process of joining Mercosur. Within the framework of ALADI, Mercosur has signed free trade agreements with other countries in South America: Chile (1996), Bolivia (1996), Colombia, Ecuador and Venezuela (2004) and Peru (2005), and has an agreement with Israel (2007), all of which form respective Free Trade Zones, with tariff reduction schedules that should be completed no later than 2014/2018,according to the country.Uruguay also signed a bilateral free trade agreement with Mexico (2003), which allows forthe free movement of goods and services between both countries.Investment protectionUruguay has signed investment security, protection and promotion agreements with 27countries, including Finland, France, Spain, the U.K. and the U.S.12
  13. 13. Specific trade agreements for the shipbuilding sectorThe Uruguayan government was able to help lift Brazil’s double taxation on repairs madeoutside Brazilian borders, thus allowing for future repairs of the Petrobras fleet. Theseservices could not be provided before on account of price competition.The Montevideo Service Protocol, in effect since 2005, includes the complete liberalizationof services among Mercosur countries within a ten-year period. Likewise, Brazil has alreadyliberalized repair services of its ships abroad for members, although these may not be paidwith resources from the Merchant Marine Fund.In effect since 1975, the Maritime Cargo Transport agreement with Brazil grants exclusivityfor transportation among its ports for companies from both nations. Since 1994, there hasbeen a similar arrangement with Argentina with the Maritime Passenger Transportagreement.General government export incentivesRefund of VAT paid for supply purchasesRefunds of VAT on purchases are made generally by discounting VAT charged on sales andpaying the difference to the State. Since this tax is not charged on exports, VAT included inpurchases of inputs is refunded at the request of the company. The DGI tax bureau extendscredit certificates that can be used in paying other taxes.Refund of other taxesThe State refunds other internal taxes that make up the cost of a product exported througha notional percentage on FOB value determined by the Executive Branch (currently 2%).Temporary admissionImported supplies, components, packaging and molds that will be incorporated in theproduction of exported goods are exempt from both customs duties and Value Added Tax.The only requirement is for exports to occur within a period no greater than 18 months.If the final product has imported supplies of 50% or less of the total value, it remains ofMercosur origin, which is required for intra-zone tariff exemptions. This system is set toexpire in 2010 for Mercosur, but is expected to be renewed.Export financingThe Central Bank of Uruguay (BCU) has an export pre-finance system. If pre- or post-exportbank financing is obtained, 30% (or 10% in some cases) can be deposited in the BCU, whichwill pay interest on the total financing amount rather than only on the deposit.13
  14. 14. Special customs systemsFree ZonesThere are the 10 Free Zones or customs enclaves formanufacturing activities or services to third countries wherecustoms duties and taxes are not paid on entry and exit of goodsand services. In addition, broad exemptions from national taxes aregranted, such as the IRAE income tax, but not for social securitypayments for domestic personnel.A minimum of 75% of Uruguayan citizens on total staff is the only requirement, although thispercentage may be reduced with prior approval by the Executive Branch.Free Port and customs warehouses Montevideo and other ports in the country operate under a system enabling the free movement of goods, which are exempt from applicable import taxes and surcharges for activities including handling, fractioning, repackaging, etc. (that do not imply manufacturing).Private or bonded warehouse systemsThis system grants companies the possibility of having enclosed areas where themerchandise is stored (in transit) with authorization from Customs. In-transit merchandisecan be unloaded or reloaded at any given moment, free of import and export taxes and anyinternal taxes.There are three types of private warehouses: (i) Commercial warehouse: merchandise can only be the objective of operations to ensureconservation, impede deterioration and facilitate dispatch, such as revising, weighing,removing samples, repairing, substitution and re-labeling bulk items and all other analogousoperations that do not increase the value nor modifies its nature; likewise remittances canbe fractions but bulk items many not be fractioned. (ii) Bonded warehouse: merchandise can be also the objective of operations destined tofacilitate commercialization, such as fractioning, conglomerating and conditioning bulkitems, mixing, selecting, classifying, dividing and establishing assorted lots or larger volumesand all other analogous operations that increase the value of the merchandise withoutchanging its nature. (iii) Industrial warehouse: merchandise can be the objective of operations destined tochange its nature, including the addition of local parts, articles and products such asindustrialization of raw materials, semi-manufactured products, adjustments, assembly,mounting, vehicle finishing, machinery and all other analogous transformation operations.14
  15. 15. When merchandise from abroad stored in private or bonded warehouses authorized forsuch purposes enters the local market, it shall pay the corresponding taxes as if they camedirectly from outside the national customs territory.When local merchandise enters bonded warehouses, it shall do so in accordance withapplicable export laws.InstitutionsShipbuilding Industry Chamber: The Shipbuilding Industry Chamber is the associationrepresenting the Uruguayan shipbuilding sector and is part of the Chamber of Industries ofUruguay. http://www.camaranaval.comUruguay Shipbuilding Industry Cluster Association: CompaniesANP: The National Port Administration is the Uruguayan decentralized service responsiblefor port management.ALIANZA ASTILLERO: Shop focused on ship repair and construction with more than 300 tonsof new ship block construction including bow and stern blocks, sides, wave breakingbulkheads and more. Welding procedures and qualified welders at client’s request.ASTILLERO GADATUR: Shipyard focused on vessel construction and repair specializing inwork boats. The company is currently in the process of building a vessel for the MaritimePilots Society of the Port of Montevideo with an innovative construction for this type ofvessel.ASTILLERO NEREUS: Shipbuilder focusing on recreational fiber glass vessel construction.Representative for Zodiac boats and Suzuki outboard motors. The company has largefacilities for the repair of fiberglass vessels.ASTILLERO VICTORIANO: Shipbuilder focusing on innovative, high added value recreationalfiberglass vessel construction. Currently, the company is in the process of working withBrazilian shipbuilders for the development and production of vessels for this market nicheinternationally.LEONER: Works in mechanics and boilers and is focused especially on floating repairs.METALDIS: Currently works on equipment and facilities for the manufacture and repair ofparts, pipes, stainless steel, mechanized parts, alignment and balance of axels for propellershafts in small vessels.15
  16. 16. MOVILUNO: Company focusing on electrical, electromechanical and hydraulic repairs andcurrently represents Damen Shipyards of Holland. Specializes in logistics management forlarge projects.NITROMAR S.A.: A maritime shop mainly dedicated to the repair, modification andrefurbishment of vessels. Staff members with more than 25 years of experience inshipbuilding. Work is generally performed floating on the port of Montevideo, with thesupport of its facility’s shop.RIN S.A. MARINE ENGINEERING: Founded in 1974, the company has experience in ship andcontainer repairs and has been working in drydocks for 31 years. The company repairs 80%of the fleet of ships in the port of Montevideo.STARSIKOL: Maritime shop specializing in ship motor mechanics. Company has investmentsin specialized lathe and gasket making machinery. Represents ZF for ship transmission andpropulsion systems and focuses on the repair and sale of motors and propulsion systems.CONSTRUCTION, REPAIR AND ARMAMENT SERVICE OF THE NAVY (SCRA): This company isdedicated to repair and construction of all types of ships entering the La Plata River.TALLERES EL TIMÓN: Shop with excellent staff in mechanics and adjustments. Floating anddrydock ship repair. Has advanced slipway project on littoral where it currently performsrepairs.TIFEREY: Recently created joint venture by partners with long history in maritime activitiesas builders, operators and specialized shop owners. Currently developing a project to set upin the Shipbuilding Pole.TSAKOS INDUSTRIAS NAVALES S.A.: The Tsakos group participates in maritime activitiesthrough a fleet of over 70 ships, with an approximate transportation capacity of 8 milliontons and an international presence with offices located on five continents. The Tsakosshipyard in Uruguay is located in the heart of the natural port in the city of Montevideo. TheTsakos group has offices in 11 countries with Montevideo being its only office in SouthAmerica.VARADERO DINVERT: Constructed by the Kambara firm of Japan. The company is focusedon ship repair and construction. Its 24 hectare surface area has an 80-meter long, 30-meterwide and 4-meter deep ramp. Works with fishing boats, tugboats and barges.16
  17. 17. Specialized maritime suppliersAEROMARINE: Company focused on the supply, development and maintenance of advancedelectronic systems, marine electronics, radio communications, satellite communications andbroadcasting. Company represents many parts and equipment suppliers in the sector.ENDUMAR: Company focused on manufacture and assembly of pipework, sandblasting,shotblasting and painting of piping. Also performs industrial electromechanical assemblies,pantograph metal cutting and manufacture of ship parts. Currently transforming its systemsto clean technologies.GEOTEC: Company focused on meeting demands for goods and services in areas including oilhydraulics and hydraulic mechanical elements, electronics and IT.IMPROMET: Engineering service company focused on industrial solutions in metallurgy,construction, equipment assembly and complete industrial plants. Has 1,300 square metersof space for manufacturing.MARINE SURVEYOR GROUP: A group of companies and associates dedicated to consultingrelated to construction and operation of ships and their cargo, as well as land and air transport,accident investigation, ship and facilities protection and other activities.MERCOSURVEY: Company dedicated to consulting related to construction of ships, repair, shipoperation, cargo, accident investigation, ship and facilities protection and other activities.Performs implementation of quality systems including OHSAS 18000.RENNER: Industry and Maritime Division has made high performance anti-corrosion paintsfor over eight decades.SANDONATO: Metallurgy company focusing on the shipbuilding market.SCINCE TECHNOLOGIES: Company focused on satisfying market demand in the area of NonDestructive Testing (NDT) in all techniques. Has top level NDT with ASNT certification,complemented with approved equipment for each application.TURBOPOWER: Shop specializing in repair of all types of marine motor turbos. Has latestequipment in the area of dynamic balancing of rotors.17
  18. 18. Uruguay at a Glance (2009)4 Official name República Oriental del Uruguay (Oriental Republic of Uruguay) Location South America, bordering Argentina and Brazil Capital Montevideo 2 176,215 km . 95% of the territory has soil suitable for agriculture and Surface area livestock activities. Population 3.3 million Population growth 0.3% (annual) Per capita GDP USD 9,458 Per capita GDP (PPP) USD 13,019 Currency Uruguayan peso ($) Literacy 98% Life expectancy at birth 76 years Form of government Democratic republic with presidential system Political divisions 19 departments Time zone GMT - 03:00 Official language Spanish Main Economic Indicators 2004-2009 4 2005 2006 2007 2008 2009Annual GDP growth rate 7.5% 4.3% 7.5% 8.5% 2.9%GDP (PPP) USD millions 32,048 34,602 38,235 42,543 43,551GDP, USD millions (current) 17,367 20,035 24,262 32,207 31,606 5Exports (USD millions), goods and services 5,085 5,787 6,936 9,291 8,551Imports (USD millions), goods and services 4,693 5,877 6,775 10,217 7,775Trade surplus / Deficit (USD millions) 393 -90 166 -926 796Trade surplus / Deficit (% of GDP) 2.3% -0.5% 0.7% -2.8% 2.5%Current Account Surplus / Deficit (USD millions) 42 -392 -212 -1,502 258Current Account Surplus / Deficit (% of GDP) 0.2% -2.0% -0.9% -4.7% -0.8%Overall fiscal balance (% of GDP) -0.4% -0.5% 0.0% -1.4% -2.2%Gross capital formation (% of GDP at current prices) 16.5% 18.6% 18.6% 20.2% 19.1%Gross national savings (% of GDP) 17.6% 16.9% 19.0% 17.9% 17.1%Foreign direct investment (USD millions) 847 1,493 1,329 1,840 1,139Foreign direct investment (% of GDP) 4.8% 7.5% 5.4% 5.7% 3.6%Exchange rate peso / USD 24.5 24.1 23.5 20.9 22.5Reserve assets (USD millions) 3,071 3,097 4,121 6,329 8,373Unemployment rate (% of EAP) 12.2% 11.4% 9.7% 7.9% 7.7% 4 Source: GDP data was taken from the IMF; data on foreign trade, FDI, exchange rate, international reserves and foreign debt was provided by the Central Bank of Uruguay (BCU); population growth, literacy, unemployment and inflation data comes from the National Statistics Institute (INE). 5 2008 and 2009 data includes a partial estimate of production activity in Free Zones and the information regarding the survey coordinated with CUTI for software related activities. 18
  19. 19. Investor Services About UsUruguay XXI is the country’s investment and export promotion agency. Among other functions,Uruguay XXI provides no cost support to foreign investors, both those who are evaluating where tomake investments as well as those currently operating in Uruguay. Our Investor ServicesUruguay XXI is the first point of contact for foreign investors. Services we provide include: Macroeconomic and industry information. Uruguay XXI regularly prepares reports on Uruguay and the various sectors of the economy. Tailored information. We prepare customized information to answer specific questions, such as macroeconomic data, labor market information, tax and legal aspects, incentive programs for investments, location and costs. Contact with key players. We provide contacts with government agencies, industry players, financial institutions, R&D centers and potential partners, among others. Promotion. We promote investment opportunities at strategic events, business missions and round tables. Facilitation of foreign investor visits, including organization of meetings with public authorities, suppliers, potential partners and business chambers. Publication of investment opportunities. On our website, we periodically publish information on investment projects by public entities and private companies.19