Uruguay: The stable center reaches out
The Miami Herald / May 11, 1998
By Larry Luxner
MONTEVIDEO, Uruguay -- The smallest member of the six-nation Mercosur trade bloc, Uruguay -- with a population of only 3.2 million -- is often overlooked by investors aiming their sights at much more lucrative Argentina and Brazil.
Now, a new organization own as Uruguay 21 hopes to change that. Today, the government agency kicks off a three-day promotional conference at the Biltmore Hotel in Coral Gables aimed at luring investment to Uruguay -- whose political and economic stability long ago earned it the title "Switzerland of South America."
In February, Uruguay's jobless rate fell to 10.1%, the lowest in three years. The National Statistics Bureau attributed the good news to President Julio Maria Sanguinetti's fiscal reforms and government policies encouraging foreign investment in agribusiness, manufacturing and tourism.
Earlier this month, Sanguinetti -- scheduled to speak at the Miami meeting May 13 -- announced a plan to accelerate economic reforms and improve the competitiveness of Uruguayan public and private enterprises. The plan, which seeks to cut both inflation and unemployment, envisions the privatization of state entities and the granting of long-term concessions to private interests in the areas of road building, port and airport operation, water and sewer systems and gas pipelines.
"Uruguay is a very small country wedged between two very large countries," says David Michaels, president of the Uruguayan-American Chamber of Commerce in New York. "We all know that Uruguay cannot compete from an industrialized point of view, but it can compete from the point of view of quality -- not quantity -- in manufacturing and in services. Also, it can develop its strength by being the innovator in the region. Uruguay has always been a buffer in the region, it's a neutral country and it can maintain that role of providing innovations that are beneficial for the whole region."
Helping Uruguay is the fact that Montevideo is the administrative capital of the Mercosur trade bloc, whose founding and associate members now include Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay.
"We've had more inquires in the last 12 months than we've had since 1985 when we founded the chamber," said Michaels, attributing the interest partly to Asia's lingering financial crisis. "Money is looking for places to go, and Mercosur is now being recognized as an important trading bloc, on par with the European Union."
In late March, nine international consortia representing firms from Argentina, Belgium, Brazil, Canada, France, Germany, Italy and the United States submitted 30 offers to construct and operate Montevdeo's new Carrasco International Airport. The $180 million project, being supervised by the Ministry of Defense, includes the rehabilitation of paved surfaces, a drainage system, extension of the main runway to 3,000 meters and a secondary runway to 2,250 meters. The government will decide by Jun. 30 which consortia will qualify.
Likewise, a consortium formed by British Gas, Amoco and Argentina's Bridas recently won the bid to construct a 150-mile gas pipeline between Buenos Aires and Montevideo. Construction on the Gasoducto del Sur will begin in October and be completed by late 1999, with gas deliveries to begin Jan. 1, 2000. The $100 million pipeline will initially transport two million cubic meters of natural gas a day to southern Uruguay, later rising to five million cubic meters.
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