What should be changed to improve competitiveness in Uruguay?

What should be changed to improve competitiveness in Uruguay?

“It is one of the most important costs that the Uruguay and mainly affects the livestock production, that sells in dollars and buys in pesos. If you measure this delay, it means that you need more kilos of steer to pay for the same input as two years ago or to pay the same person you had working in the field,” Cortabarría graphed.

Cortabarría recalled that successive administrations had fiscal deficits and put a number on the current situation: “Today we are talking about about 2.5 billion dollars that the government spends more than it earns and that is financed through debt, which is taken into account. dollars in the international market, enters the country and is changed into pesos to pay costs such as salaries, pensions and public employment.”

For all this, he proposed “lowering public spending or increasing the GDP without increasing spending” and compared: “Today we are negative. Either we improve the inputs or we improve the outputs because if it does not affect the cost effectiveness of companies and the ability to investment, because a business that is not profitable stops being a business.”

In the same sense he spoke María Laura Rodríguez, responsible for Economic Advisory of the Union of Exporters of Uruguay (UEU), who warned Ambit that “in 2022 there was a significant gap when the dollar fell, in other countries it increased and since then a gap that could not be recovered.”

“This affects the exporter because he receives fewer pesos for every dollar he exports and those pesos he uses to pay salaries, fees or taxes yield less. AND Uruguay It is a country taking international prices, It is not something that can be transferred to the client. So, it creates a problem of cost effectiveness”Rodríguez noted.

For this reason, he proposed that these discrepancies with respect to how the currency evolves in the world should be “avoided” and he considered that this occurs because “Uruguay has a very small exchange market where some player moves and distorts, so it is good that The BCU authorities are attentive to these types of situations that divert us from a real exchange rate of balance.”

Container Exports Containers Port of Montevideo

Photo: Uruguay Country Brand

International insertion, logistics and reforms

In any case, Rodríguez warned that “the competitiveness It’s not just the dollar,” when highlighting other important factors such as “access to more markets and commercial agreements to pay less duty, as well as some internal costs that would have to be improved.”

For the person in charge of economic advice at the UEU, “on the market access side, we must continue working on pending agreements such as the Mercosur and the European Union” and, although he admitted that the regional bloc “is super relevant” for the sector, he was in favor of evaluating possibilities of flexibility “in the event that Mercosur does not advance at the speed we need.”

Regarding internal costs, he called for “some micro reforms at the regulatory level, since there are markets in which internal competition needs to be encouraged more, with the presence of monopolies or oligopolies that generate extortion and cost overruns”, as well as proposed “improving the efficiency of public spending.”

Finally, he referred to logistics, which “has an important impact on exporters’ costs” and was expectant regarding dredging 14 meters from the Port of Montevideo considering that he hopes “that it will be reflected in the costs that an exporter pays when moving a container.”

Lower the level of bureaucracy and eliminate obstacles

The economic advisor in the Chamber of Commerce and Services of Uruguay (CNCS), Ana Laura Fernandez, He focused on the number of customs controls, but mainly on “achieving a more efficient business environment,” for which he considered it essential to simplify some procedures and advance the debureaucratization.

“Moving forward to be more competitive exceeds the exchange rate variable. In that aspect, Uruguay has been following a fairly solid path, but in the microeconomics, the internal functioning of the markets and companies, there we understand that there is room to work,” Fernández said to Ambit.

When consulted by the free import, indicated that the CNCS is against protectionist measures. “It is not the path that Uruguay should take, but those market closures or those measures that block the entry and exit of goods must be eliminated. “We know that there are political costs and certain sectors must be weighed, but we are going to achieve that opening.”

“Many of our companies are importers, they trade in the local market and have requirements with controls on the entry of merchandise. Some have justifications for health, environment or energy efficiency, but others are from a long time ago and have a protectionist component that we are interested in attacking,” highlighted the expert from the Chamber of Commerce and specified that “the procedures vary according to the sector,” after which she graphed: “In clothing and footwear, “There are automatic import licenses and an asymmetry in the advance of IRAE on imports.”

In the sector of cosmetic, referred to some certifications, such as the issuance of negative certificates. “There is a certain product that would not fall within the control or standard and a negative certificate must be obtained, but we ask to extend the validity because they are companies that always export and import.”

Finally, on issues of energy efficiency, he regretted that “there are problems with regulations Mercosur which is required in Uruguay, which in many cases differs with that of the European Union” and added: “Products validated by the EU enter, but the regional standard is different and sometimes takes a time that exceeds commercial times.”

“We have weaknesses and we try to work from a constructive contribution, not putting all the blame on the public sector but collaborating from the sector private. When you see the results, perhaps they are meager for now. But in terms of awareness, we have managed to ensure that the issue is definitively on the table today,” Fernández said.

Source: Ambito

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