Biznews (BN): Thanks to its great political, legal and social stability, as well as a stable macroeconomic policy, Uruguay has become a very attractive destination for foreign investors. This makes Uruguay one of the fastest growing economies in Latin America and the largest recipient of foreign direct investment (FDI) in relation to the size of its economy over the last decade. Regarding this, you stated, “We do not only ask for investments, but there are also things that we have to offer to investors.” What are Uruguay’s competitive advantages and how would you describe the current business and investment climate in the country?

Dr Tabaré Vázquez (TV): Indeed, today Uruguay is a country that receives a high percentage of FDI relative to its GDP. What should be highlighted in this regard is that it has been achieved in a relatively short period of time.

When we arrived in government in 2005, Uruguay was in an extreme position; it was the penultimate country in Latin America in terms of receiving FDI, above only Haiti. This has been reversed today, with Chile being the first and Uruguay the second-largest FDI recipient. Uruguay also has a very high reinvestment rate. This is thanks to the confidence generated by what the country was setting itself up to do and what it has been achieving. Confidence was also gained thanks to a highly respected and respectable legal system, completely autonomous and offering serious guarantees to foreign investors.

Secondly, Uruguay is the safest country in the Latin American region. While we have some problems, that no country in the world can currently escape from, Uruguay is a country where you can live and do business without any problems. You can walk the streets of Montevideo, the interior, the spas and so on, with maximum security. That is also attractive to those who come to invest; because you do not have to just invest, you can also work and live in the country.

Thirdly, Uruguay is considered by Transparency International, for example, as the least corrupt country in the entire Latin American region and one of the least corrupt countries in the world. This is very relevant. In Uruguay you can do very good business without having to resort to anything that is not part of the current legal and constitutional order.

Fourthly, Uruguay has a very important investment law, which we should highlight: First, a foreign investor receives the same treatment as a Uruguayan investor. Second, a foreign investor can repatriate profits at any time; he can send what he earns to his country. Third, if a part of those profits is reinvested, it qualifies for new incentives. As a result of these measures, today the reinvestment rate for FDI is around 60-61%, the highest in Latin America.

On top of these things, you can add the fact that Uruguay has a very important social stability. At the moment, we have a poverty index of approximately 8.7 and studies by the Economic Commission for Latin America and the Caribbean have not detected any extreme poverty. Uruguay is the country in the Latin American region with the highest GDP per capita. It is currently almost USD$17,000 a year and our goal is for this to rise to USD$20,000 by the end of this term of government in 2020. We also have the lowest GINI coefficient in the region, with a score of 0.35, which establishes that we not only have a higher GDP, but also a better distribution of wealth. It is not the Uruguayan government saying this, but also the World Economic Forum.

In addition to the points I have already highlighted, Uruguay offers good opportunities for investors in the energy and infrastructure sectors, and we have initiated a USD$12.5-billion Strategic National Infrastructure Plan. From this, state-owned, private and public-private- partnership projects worth some USD$6-7 billion are already underway. Soon, we will be inaugurating a jail, the result of one of the public-private ventures, which will allow us to end the problems of overcrowding in prisons in Uruguay. It is a prison that will be managed by a private company and controlled by the Uruguayan state.

In the agricultural sector, Uruguay also offers good opportunities; and of course in tourism, where Uruguay has been growing. This past year, 2017, we predicted a 2% GDP growth and we actually saw a growth of more than 3%. We have reduced our fiscal deficit to 3.3% and by the end of this year we aim to be at 2.9%, with the aim of reaching 2.5% by the end of this term of government, with GDP growth located around 3.5% — the highest in the region and we already show above regional average growth.

This is roughly what Uruguay is and what Uruguay can offer to foreign investors.

BN: The Minister of Economics and Finance, Danilo Astori, recently said that, “in order to succeed in foreign markets, it is necessary to compete and, naturally, the main pillar of competition is innovation and the integration of technological knowledge.” The Minister of Foreign Affairs, Rodolfo Nin Novoa, agrees and said, “Uruguay cannot compete internationally in terms of quantity and must focus on quality as a differential seal.” What innovations is Uruguay applying to be more competitive internationally, with quality as a differential seal?

TV: First of all, no country in the world, however powerful can produce everything, can do everything and this is even more true when we talk about a small country like Uruguay. Therefore, Uruguay has to prioritise certain things and focus on quality rather than quantity.

In the agricultural sector, for example, Uruguay is a pioneer where the traceability of meat products is concerned. Whoever buys a piece of Uruguayan meat in any part of the world can, with a computer and the reading of a barcode: know the genetic origin of the animal, in which geographical region of Uruguay it was raised, how it was fed, the establishment that raised it, its domestic movements (if it was sold from one establishment to another), when it was refrigerated and how the meat was prepared. Our value certificate has opened a very important market niche and Uruguayan meat, which is of very high quality, receives high prices. We are expanding this traceability of cattle to other goods in Uruguay — such as honey and agricultural products — so that the consumer knows that Uruguay is not just a natural country, but it also takes care of its production and is very concerned with the safety and health of its food products. We have been internationally recognized for this work.

BN: Uruguay has experienced a real energy revolution in the last decade, with the best electricity supply in Latin America (97% based on renewable energies), emerging as the world leader in wind-power generation in 2016 and doubling its electricity exports in 2017.

TV: We contributed, for example, to innovation when in our first term of government (2005 - 2010) we drew up, developed and implemented a Strategic National Energy Plan. Uruguay was an importer of energy in 2005 — we had to import oil, that we do not have, at least for the moment, and the rest of our energy came from hydroelectric power. When we had droughts or oil prices went up, it was a drama for the country. As we also wanted to influence environmental responsibility in the country, we developed this Strategic National Plan for environmentally friendly energies. We bet strongly on wind energy, as well as solar energy and biomass. As a result, today we are practically independent of oil-produced energy and of hydroelectric power, which we continue to use, as it is friendly to the environment. Uruguay went from being an importer of energy to being an exporter of energy. We sell clean energy to Brazil and Argentina. Not only does the Uruguayan state sell, but so does our private sector. For example, a private company is selling wind power to Argentina.

BN: Uruguay also stands out as the country in Latin America with the highest Internet penetration and fastest download speed.

TV: Exactly. Uruguay has also advanced in communications. We have optical fibre in practically all the national territory and at the end of this government the whole country will be covered. In addition, we have an underwater cable connecting Maldonado with Miami, which has two connections to Brazil, where Uruguay has two state-owned centres to offer the services of this cable. It is directly connected to the US and in turn with Europe, which makes connections in Uruguay truly excellent.

We have achieved enormous progress in closing the gap in access to technology for the different social classes in the country. Today, Uruguay is almost at the level of countries in the developed world in terms of connectivity. We have a very high connectivity, much higher than the Mercosur countries. With our Plan Ceibal and Ibirapitá Plan, we have made the technology available to all children in public schools free of charge, by providing them and their teachers with laptop computers. In secondary school, at the technological university, all young people have free-of-charge access to the internet and high-level work platforms. All Uruguayan authors are on the computer platforms of both the Ceibal Plan and the Ibirapitá Plan, which also cover the other pole of the population: the elderly. Retired people receive a tablet for free up to a certain price level and have access to all the programmes that Plan Ceibal offers: movies, television programmes, the press, the possibility of connecting with their relatives abroad and doing their paperwork from any part of the country.

We are making strong progress in becoming a 100% digital, 100% electronic government, a goal that we are going to achieve and to which we are very close. In the year 2020, any procedure, including the payment of invoices, will be done throughout the country from a mobile phone.

Uruguay is working very hard on innovation, science and technology. We have a branch of Paris’ Pasteur Institute here in Montevideo and there are young people from France who come to work here and ones from here who go there. Teachers also move between both countries. We have a close relationship with the Weizmann Institute of Israel and we have a science faculty at our own University of the Republic. We are working hard in order to, this year, set up the third public university in Uruguay, to accompany the University of the Republic and the Technological University. The bill for this, which is already in the hands of the parliament, is aimed at creating a University of Education. We want all of our teachers to be university students and have a third level of education. We are very focused on generating quality in the education and preparation of our teachers. We are also preparing a bill to create the University of the Sea, which will also cover inner rivers and lagoons, since Uruguay is very rich in water.

These are some of the activities we are working on in Uruguay in terms of science, technology and innovation.

BN: Germany is Uruguay’s largest trading partner in the European Union (EU) and fifth globally. On the other hand, Uruguay has experienced a strong inflow of German FDI in the last decade. During your official visit to Germany in early 2017, Chancellor Angela Merkel said that your visit was very important, because your potential has not been yet exploited. You said, “I believe that the political relations between Uruguay and Germany are at a peak of understanding and even of common dreams," but you both also agreed that there is room for common trade to become even stronger. In which areas would you like to see more cooperation and what opportunities would you like to highlight to German investors?

TV: Focusing strictly on the commercial issue, which is important, but not the only one, we should highlight the great joint effort that Germany and Uruguay are putting in to promote the free trade agreement between Mercosur and the EU. For us, it is of the utmost importance that this treaty is achieved, as the Chancellor of Germany told me it was for her, during our personal talks. I know that she is working very hard and putting all her effort in so that we can move forward and I hope that in the course of this year we will have good news about it. Decades of work have gone into this issue. It seemed there was a political opportunity in 2007 to sign a treaty, but problems arose. Some countries of the EU that, of course, I will not judge or criticise, put up obstacles, because they understood that the products of the Mercosur would compete with theirs and they would lose markets. It is understandable, but I think we have to work hard to achieve this free trade agreement, that will ultimately benefit the people — the Europeans and the ‘Mercosurians’ — enormously. This is the main objective and hopefully, in a short time, it will be understood that a treaty with these characteristics ends up benefiting both blocs.

It is a time to build bridges between different countries, especially when protectionist policies begin to emerge that complicate a world that advances on commercial multilateralism. The road to follow is to achieve bilateral agreements between countries, between regions, between countries and regions — and Uruguay participates in this.

In this area, it should be emphasised that there is very good cooperation between the port of Montevideo and the port of Hamburg, between both port institutions, which has allowed us to achieve substantial progress. If you walk through the port of Montevideo you will recognise its quality, for which the main advisers were the ports of Germany. Today, the port of Montevideo and the port system of Uruguay are working at full capacity and Montevideo is the exit port for the products of Bolivia and Paraguay. It is becoming a point of reference for interoceanic trade.

As for the rail sector, we have launched an international tender that closes in March for a railway line that will go from the heart of Uruguay, Durazno, to the port of Montevideo. In Durazno, UPM of Finland will, almost with complete certainty, build its second cellulose-pulp plant, the third in the country and there is already an agreement in relation to the project’s first stage. UPM has one plant on the Black River, there is another on the River Plate at the mouth of the Uruguay River and this one is going to be in the centre of the country. Once it is at full capacity, it will position Uruguay as one of the five most important countries in the production of cellulose pulp and its derivatives, as it will also carry out innovation into a series of products that have cellulose as a starting point.

Peter Ferdinand Drucker said that, “the best way to predict the future is to create it.” What future would you like to create for Uruguay at the end of your second term?

I am also convinced that the future can be shaped and moulded from the present. I am convinced that the political project that I represent is the best political model for Uruguay to improve the lives of its people. It is an inclusive political project, deeply human, that wants to grow, but at the same time this growth should be distributed according to parameters of social justice — a country without exclusions for all Uruguayans; egalitarian; a country without discrimination of any kind, not of race, sex or religion; a country that respects all individual freedoms. Uruguay is already considered the country that respects the most individual freedoms in the entire American continent, alongside Canada. This is the country of which we dream and the country that we are working on from the present to shape that future.