Foreign investment tripled in Uruguay, reaching a record high.

According to an ECLAC report, Uruguay was the country that grew the most in the region in terms of FDI, with renewable energies as a relevant sector for attraction.
Publication date: 26/07/2023

Uruguay received in 2022 a record amount of foreign direct investment (FDI) of US$ 9.325 billion, a value that almost tripled that of 2021 with an increase of 155%, according to a report published by the Economic Commission for Latin America and the Caribbean (ECLAC). In 2021 it received US$ 3,657 million.

Uruguay was an exceptional case of growth, as the report highlights, “in 2022 foreign direct investment in the world did not maintain the growth of 2021”.

Intercompany loans accounted for the largest share of FDI (52%), reinvestment of profits came second (37%), and then income from capital contributions (11%). These three areas received more investment than in 2021.

The ECLAC report highlighted that renewable energies have been relevant in attracting FDI in the country. “In 2022, a US$ 628 million project was announced by the German (renewable energy) company Enertrag, which would be the first green hydrogen exploitation project in the country and in which methanol would be produced from green hydrogen, generated through wind and solar plants, an electrolyzer and conversion facilities,” the report said.

Enertrag’s objective, with the “Tambor Green Hydrogen Hub” project located in the department of Tacuarembó, will be to produce 15 thousand tons of methanol per year, converted into derivatives.

In addition to this project, the Chilean company Highly Innovative Fuels Global (HIF Global) announced the construction of a green hydrogen and eFuels plant in Paysandú, decarbonizing 150,000 vehicles annually. This project’s investment is estimated at US$ 4 billion, the largest in the country’s history.

On global trends in foreign direct investment in renewable energy, the report confirms that green hydrogen and clean technologies boomed in 2022.

“The challenge of attracting and retaining foreign direct investment that contributes to the sustainable and inclusive development of the region remains more relevant than ever, and countries have to make relevant policy efforts if they want to have FDI that supports their development process and materializes the potential that such investment has for capacity building, the creation of quality employment, technology transfer and the diversification and sophistication of the productive matrix. One of the main justifications for allocating public resources to attract investment is the potential of FDI to promote productive linkages and the transfer of knowledge and technology, thus supporting economic growth (ECLAC, 2010),” the report highlights.

Source: ECLAC

*The ECLAC publication uses the asset/liability principle. Using the directional criterion, the figure amounts to US$ 3.9 billion. For a detailed clarification of the difference between these two criteria, see FDI in Uruguay Report, pg 28.