7. Investment promotion and facilitation
The chapter reviews investment promotion and facilitation policy in Uruguay. It first provides an overview of the overall institutional and regulatory framework, including those regulating investment incentives. It also analyses the activities of the national investment promotion agency, Uruguay XXI, and benchmarks via-à-vis agencies in the OECD economies. Finally, it assesses the country’s investment facilitation and administrative simplification efforts and identifies possible improvements in the area of regulatory quality. It concludes with key policy recommendations.
As highlighted in the OECD Policy Framework for Investment (OECD, 2015a), investment promotion and facilitation – if adequately designed and implemented – can be powerful means to attract investment and ensure its contribution to economic development. As such, countries worldwide decide to not only remove restrictions on foreign direct investment and provide high standards of protection to investors, but also to proactively promote and facilitate investment, or certain types of investment, to maximise the benefits to the host economy. Considering that Uruguay has removed most formal barriers to FDI (Chapter 4), and is characterised by a stable macroeconomic framework and high level of protection to investors (Chapters 2 and 5), it can benefit from active and well-designed investment promotion and facilitation policies to help attract and retain investment that can assist its transition towards more innovation, diversification and high-quality employment.
As will be shown in this chapter, Uruguay has a generally conducive business climate and has reformed its regulatory framework for investment promotion and facilitation over time. These reforms have resulted in a wide range of government support provided to firms and favourable business conditions. According to the most recent surveys, the majority of foreign investors are either satisfied or very satisfied with the overall investment climate (Figure 7.1). In addition, despite general instability in the neighbouring region, Uruguay has thus far not suffered any large-scale divestments; and nearly 50% of investors decided to reinvest their earnings in the last five years.1 Still, there is perception that relatively timid progress on administrative simplification can hamper opportunities for private investment. The medium-term challenge will be to continue the reforms, in particular addressing existing administrative bottlenecks, deepening regulatory reform and paying more attention to investment facilitation, while also streamlining and improving the oversight of existing regimes for investment incentives.
Note: The survey took place in July-October 2018; 900 companies were contacted and 261 responded. The graph shows answers to the question: “How satisfied are you with Uruguay as a place to develop your business activities?”.
Source: Foreign Investors Survey (2018)
This chapter provides an overview of the current approach to investment promotion and facilitation in Uruguay, including the overall regulatory framework and institutional set-up, evaluation of the activities of the national Investment Promotion Agency (IPA), namely Uruguay XXI, and the scope for progress in the area of administrative simplification regulatory quality. It concludes with main findings and options for further reform.
Uruguay has developed elements of a national strategy for FDI attraction…
The legal framework for investment promotion and facilitation in Uruguay is defined by the Law on Investments (Law 16.906) and its regulatory decrees (e.g. Decree 02.012 of 2012), Law on Special Economic Zones (Law 19.566 and 15.921 and Decree 454/988), Law on Industrial Parks (Law 17.547) and a series of special sectoral regimes, governed by different laws and decrees (Table 7.1). In particular, the Law on Investments, enacted in 1998 and reformed several times since then (2007, 2012 and 2018), outlines the overall goals of Uruguay’s investment policy2, sets out general principles of treatment of foreign investors,3 and lists specific sectors that can benefit from investment support and outlines relevant criteria and applicable procedures.
In addition, several strategic documents aim to provide a long-term strategic vision for the development of the Uruguayan economy and are of relevance for the formulation of investment policy and the internationalisation of Uruguayan firms, more generally. For example, Visión Uruguay 2050 and the associated national development strategy (Estrategia Nacional de Desarrollo al 2050) aim to provide a vision for socio-economic development over the next thirty years (Box 7.1).4 The plan, elaborated under the leadership of the Office of Budget and Planning (Oficina de Planeamiento y Presupuesto, OPP)and officially presented in August 2019, explicitly mentions the insertion into the global market as one of its key elements.5 Several strategic economic activities are listed in the plan, together with broad measures for their development: i.e. bio-economy, digital economy, forestry and wood sector, renewable energies, creative industries, tourism, food products, global services.6
Besides the overall umbrella of the development plan, there also exists a more detailed strategy devoted specifically to productive transformation and competitiveness (Plan Nacional de Transformación Productiva y Competitividad), developed by Transforma Uruguay (Sistema Nacional de Transformación Productiva y Competitividad), a special dedicated body created in 2017. The plan, which was first developed in 2017 and extended in 2019, covers the 2017-2021 period, and includes several objectives linked to investment promotion and facilitation as well as specific projects to achieve them, together with the respective implementing agencies and applicable timelines (Box 7.1).7 The plan also lists key economic sectors (food products, creative industries, forestry and wood sector, global services and logistics, life sciences, pharmaceuticals and tourism) and includes sectoral roadmaps for some of them.8 It was elaborated through a consultative process, involving different private and public institutions, and was subject to public consultation.9
The elaboration of these strategic documents can benefit FDI attraction policy in Uruguay for several reasons. First, it has involved consultations and consensus-building that can help define national priorities and the role of investment within it. For example, the exchanges about priority sectors could lead to a more focused and unified approach to prioritisation at the national level. By virtue of including many horizontal projects, the process can also help strengthen inter-institutional cooperation, including on investment attraction. Finally, this effort could help broaden the scope of investment promotion and facilitation in Uruguay, going beyond the provision of investment incentives. Yet, in order to achieve tangible results, the institutions responsible for its coordination should have sufficient political clout and convening capacity to involve different government bodies and other relevant stakeholders, as discussed in the section on coordination. In addition, a degree of continuity by incoming government is necessary to build on the identified projects and develop new horizontal activities.
Several strategic documents in Uruguay touch on the role of investment promotion and facilitation policy. In particular, the National Development Strategy developed in 2019 outlines a long-term vision for Uruguay and the main priorities for the next thirty years (Visión Uruguay 2050). Internationalisation is one of the key strategic axis of the document.
In addition, the Plan on Productive Transformation and Competitiveness for 2017-2019, developed in 2016 and updated in 2019 (including in light of the National Development Strategy), includes more detailed goals relevant to business climate and investment attraction, such as: 1) consolidation of a function of attraction of investments of a strategic nature; 2) deepening the link between investment incentives and sustainable development goals; 3) adapting the presence abroad through the network of Embassies and Consulate to the requirements of a strategic investment attraction function; and 4) improving the efficiency of the public bureaucracy with a focus on the facilitation of procedures and procedures related to foreign trade and investments. In the area of internationalisation, the Plan also proposes to consolidate
Source: OECD based on information provided by Uruguayan authorities, including Transforma Uruguay and the Office of Budget and Planning and strategic documents
…which may help improve coordination related to business climate issues
As highlighted in the OECD Policy Framework for Investment (OECD, 2015a), investment promotion and facilitation policy is transversal by nature and involves different public and private actors. As such, the ability to coordinate effectively is one of important requirements of successful investment attraction policy. Uruguay has undertaken several steps in this direction, as part of the strategic planning described above.
For example, Law 19.472 of 2017 outlines the different actors in the area of productive transformation and competiveness (Figure 7.3) and provides a basis for inter-institutional cooperation. In particular, the Inter-ministerial Committee for Productive Transformation and Competitiveness (Gabinete Ministerial de Transformación Productiva y Competitividad), created in 2016, performs the overall oversight role and is supported by coordination teams composed of representatives of different Ministries and by the technical Secretariat (Secretaría de Transformación Productiva y Competitividad, or Transforma Uruguay). The role of the Committee is to provide the overall strategy and objectives, approve the national plan, set the guidelines, priorities and objectives for Transforma Uruguay, and evaluate its activities. Meanwhile, Transforma Uruguay and the coordination teams are in charge of articulating and coordinating specific projects and activities, overseeing the implementation of the Plan as well as monitoring and evaluation. Individual agencies are responsible for proposing and executing actions in the area of their responsibility and providing inputs for monitoring and evaluation.
The institutions involved in the National System for Productive Transformation and Competitiveness are also relevant for the formulation of investment promotion and facilitation policy in Uruguay. In particular, all of the Ministries represented in the oversight Committee have specialised units or teams responsible for drafting decrees that can influence investment policy.10 Yet, the universe of actors responsible for investment attraction is somewhat different. On the one hand, it is narrower, as it involves agencies and government units most closely responsible for investment attraction and dealing directly with investors. In this context, the Ministry of Economy and Finance plays a critical role in setting the overall policy direction; and the Unit for Private Sector Support (Unidad del Apoyo al Sector Privado, UnASeP), responsible for managing investment incentives, and Uruguay XXI, the national investment and trade promotion agency are key implementing agencies. On the other hand, it is broader as it involves other actors, both public and private, relevant to different aspects of firm internationalisation decisions, such as free zone operators, chambers of commerce, the Customs administration, among others. Figure 7.2 illustrates this in a schematic fashion. Therefore, a tailored approach to coordinating activities related to internationalisation support (i.e. trade and investment promotion and facilitation) may be needed. The new authorities are currently evaluating the advantages and disadvantages of the current approach to strategic planning and policy coordination, including the role of Transforma Uruguay and other relevant institutions.
Regardless of the specific institutional set-up in this area, the critical component will be to ensure the continuity in the articulation and execution of key horizontal projects in the area of trade and investment policy (e.g. single window for investment or reduction of barriers in selected sectors and under certain institutions) and ensuring that the coordinating institution has the technical capacity to ensure day-to-day management and oversight of relevant activities as well as sufficient political capital to ensure whole-of-the-government approach and buy-in from different stakeholders for critical reforms.
Note: The figure is presented for illustrative purposes only, is not exhaustive and does not imply a hierarchical structure or relationship between the various institutions.
Source: Government of Uruguay and the OECD.
As highlighted by various stakeholders in the process of this Review, a continuous long-term strategic focus on business internationalisation support is critical given Uruguay’s limited size and the resulting need to generate access to global markets. Stakeholders have argued that for several years that this has not been explicitly highlighted, which may have led to lesser degree of support and cross-agency coordination, but acknowledged recent efforts. If dully implemented and sustained, and supported by an effective coordination mechanism, the strategic planning could help create conditions for long-term focus and support. Its implementation may serve as an opportunity to broaden the scope of investment attraction in Uruguay, which has predominantly focused on provision of investment incentives, and allow the government to pay more attention to administrative and regulatory barriers hindering business activity.
Source: OECD based on the Law19.472 and information provided by Transforma Uruguay and the Ministry of Economy and Finance
…which may help better identify the scope of investment attraction in the country
Uruguay relies significantly on tax incentives to attract investment (Chapter 6). According to OECD estimates, tax incentives for investment accounted on average for 1.8% of Uruguay’s GDP in 2008-18.11 A recent study by ECLAC and Oxfam (2019) found an even higher estimate of 2.5% for 2017 (Figure 7.4), positioning Uruguay as the country with the highest fiscal cost of investment incentives in LAC. Besides their total cost, incentives are notable for the high number of different schemes available to investors (see Box 7.2 for an overview) and the share of investment they support (Figure 7.5).
Source: ECLAC/Oxfam (2019)
Overall, the gradual evolution of investment support schemes in Uruguay (Figure 7.6) has helped the government align better the provision of investment incentives with the goals of sustainable development and improve the overall control (Chapter 6). Yet, this gradual approach has also led to a creation of an overlapping web of incentive schemes. In particular, individual decrees added various activities over time, resulting in an extensive list (Table 7.1).12 At times the government also introduced temporary measures, applying to a particular period or type of investment (e.g. in 2018 and 2019).13 New incentives have also tended to be introduced in pre-electoral periods (Figure 7.7). For example, between 1987 and 2019, twice are many sectoral regimes or other laws bestowing investment incentives have been adopted in the two years prior to elections than two years afterwards.14 These different steps have led to a fragmentation of the legal framework for investment incentives.
As a result of such changes, the support that an investor may receive in Uruguay depends on the exact timing, location and scheme used at the time of the application for investment support. This may reduce the transparency of the system and increase the probability of customised treatment of individual investors, potentially opening opportunities for politically-motivated allocation of state support and lobbying by selected groups, tilting the level playing field for business.15 Moreover, investors requesting incentives under sectoral regimes outside of the COMAP system do not have to comply with the eligibility matrix managed by the Ministry of Economy and Finance, which aims to link the goals of investment promotion with sustainable development, potentially introducing further asymmetries. Hence, as highlighted in Chapter 6, and in line with the OECD Policy Framework for Investment, several measures could be considered to further improve the transparency and efficiency of the investment incentives system in Uruguay and minimise its costs, in particular through streamlining of the various provisions in the key underlying laws and making a more frequent use of in-built sunset clauses.16
Source: ILO (2018) based on data from the Central Bank of Uruguay, COMAP and Uruguay XXI.
The recent discussions and consensus-building on priority activities conducted as part of the national strategic planning may help assist in the more defined approach towards specific economic activities supported by the government. Table 7.2 provides an overview of the various priority sectors featured in the strategic documents and of those targeted by the national investment promotion agency. For example, the Plan on Productive Transformation and Competitiveness outlines eight priority sectors – i.e. ICT, food, forestry, creative industries, logistics, global services, tourism, biotechnology and pharmaceutical industries – and includes sector-specific action plans with relevant support measures.17 The sectors featured on Uruguay XXI’s website features sectors that belong to the universe identified in the Plan.18 As such, the Plan may outline the scope for prioritisation and provide an additional basis for coordination among the bodies involved in investment promotion and facilitation. Still, it will be important to ensure that priority sectors of different agencies are aligned in practice, also over time.
There are several different regimes for investment incentives in Uruguay, ranging from general benefits that are automatically available, a special more generous regime (COMAP) under the Law on Investments that requires an application and approval and further incentives under Free Zones and Free Ports, governed by separate Laws. Their key provisions are summarised below:
Corporate Income Tax (CIT) Law
40% deduction of qualifying capital expenditure in machinery, equipment, agricultural inputs and fertilisers; 20% deduction of qualifying capital expenditure for construction of buildings for touristic, industrial or agricultural purposes
General Incentives – Law on Investments1
Specific Incentives (COMAP regime) – Law on Investments2
CIT credits that range from 20% to 100% of new capital expenditures depending on the nature and size of the project. The amount of the tax credit and applicable period depend on a score obtained through a scoring matrix described in Chapter 6.
Exemption from net wealth tax: Movable goods benefit from an unlimited exemption, while construction projects are exempt for eight years in Montevideo and for 10 years in the rest of the country.
VAT returns for the local purchase of goods or services for construction projects.
Exemption from import tariffs and VAT for movable goods and construction material that does not compete with the national industry.
Sectoral regimes: CIT/VAT exemptions and credits, import subsidies, customs duties exemptions net wealth tax and rural cadastral tax exemptions, depending on the sector.3
Free Zones, Industrial Parks and Free Ports and Other4: Full tax holiday in FEZs;5 reductions in CIT and employer contributions for Industrial Parks6 and exemption from import duties in the port of Montevideo, Carrasco International Airport and several commercial ports.7 Transitory increases in tax credits also apply for specific time periods.8
Since the reform of the COMAP regime in 2007, which made the system more generous, the volume and number of projects supported under the Investment Law rose: in 2008-2018, COMAP approved 6 233 projects equal to USD 16,881 million in capital investment.9 More generally, the COMAP investment project support system together with FEZs regime account for a sizable share of total investment in Uruguay, estimated to amount to over 40% of total investment in the country over the period 2008-2016 (Figure 7.3).
← 1. Available for companies that engage in industrial or agricultural activities and invest in movable goods used in the production cycle (since 2014 limited to SMEs).
← 2. Activities are eligible for the COMAP regime if declared as promoted activities by the government (Art. 11, Law 16.906) and include industry, construction, tourism, retail, and generation of non-traditional renewable energies, and public-private partnerships, among others.
← 3. For a full list of sectoral regimes and the applicable incentives, see Table A A.1 in Chapter 6.
← 4. To be eligible for the preferential tax regime in FZs, a minimum of 75% of employees of FZ users must be of Uruguayan nationality. This threshold decreases to 50% if the FZ user is a service provider.
← 5. The tax holiday applies for the duration of the user contract. In the past, there has been no limit on such duration and those tended to vary between 15-50 years. Since 2007, direct FEZs users can carry out industrial activity in the zone for 15 years and a services activity for 10 years while indirect users can carry any type of activity for maximum of 5 years. Contracts can be extended in certain circumstances. (See Chapter 6 for more information).
← 6. Law 17.547, Decree 524/005, Decree 002/012.
← 7. Goods are treated as imports if they enter national territory after entering these ports (see Laws 16.246, 19.276 on the Free Ports regime and 17.555 for the Carrasco International Airport regime).
← 8. For example, Decree 218/018 established a 10% increase of the tax credit for projects submitted since establishment of Decree 143/018 and up to 28 February 2019.
← 9. Data provided by the government authorities as part of this Review.
Source: Ministry of Economy and Finance
Note: The bars in the figure above show the total number of laws related to allocation of fiscal incentives in Uruguay (i.e. laws on Investment, Free Economic Zones, Free Ports and Industrial Parks) as well as sectoral decrees providing incentives for particular sectors (as listed in Table 7.1) while the dotted lines identify the period of general elections in Uruguay.
Source: Information provided by Ministry of Economy and Finance, UnASep, and Uruguay XXI.
National investment promotion agency – together with its foreign offices and regional partners – can be an important and relevant actor in the institutional landscape for investment promotion and facilitation. The economic literature shows that, by providing potential investors with information on local business conditions, regulations and providers, among others, IPAs help bridge information asymmetries and attract investment into the local economy (Alfaro and Charlton, 2007; Harding and Javorcik, 2011; 2012; 2013). In this context, the number of IPAs has increased substantially (OECD, 2018a; Volpe Martincus and Sztajerowska, 2019). In addition, over 60% of such agencies in LAC perform both investment and trade promotion functions.19 In the case of Uruguay, Uruguay XXI, the national investment and trade promotion agency, established in 1996, serves this dual function (with investment promotion mandate and function being added in 2009). As the agency participated in the OECD-IDB survey of IPAs in 32 OECD and 19 additional LAC countries (Box 7.3), this section highlights the main findings regarding its activities and characteristics vis-à-vis other agencies, highlighting recent achievements and suggesting possible areas for future reform.
The OECD and the IDB have partnered to design a comprehensive survey of IPAs. The questionnaire provides detailed data that reflect the multiple recent policy developments as well as rich and comparable information on the work of IPAs in different countries. The survey was displayed and shared with IPA representatives from OECD and Latin America and Caribbean (LAC) countries in the form of an online questionnaire that was divided into nine parts:
National IPAs from 32 of the 35 OECD countries participated in the OECD- IDB survey (representing a 94% response rate) as well as 19 LAC countries (outside of the OECD area). The detailed data gathered through the survey has allowed rich cross-country analysis and served as a basis for a preparation of a mapping report of IPAs in OECD countries (OECD, 2018a) as well as benchmarking between LAC and OECD agencies (Volpe Martincus and Sztajerowska, 2019). It has since then been also used in other regions, including Middle East and North Africa and South-Eastern Europe.
While ubiquitous, IPAs are far from being equal – they vary significantly in size and ways in which they perform their functions (OECD, 2018a; OECD, 2019; Volpe Martincus and Sztajerowska, 2019). This, in turn, can have implications for their effectiveness and impact in terms of investment attraction. For example, the size of the agency’s budget per capita together with its targeting intensity are associated with both higher levels of (per capita) FDI stock and the (per capita) number of foreign affiliates in the economy; while the level of institutional independence is associated with a higher number of foreign affiliates per capita (Volpe Martincus and Sztajerowska, 2019). Hence, on top of conducting detailed impact evaluations–which Uruguay XXI has done recently (and will be discussed later) – comparing the different institutional and operational aspects across agencies in different countries can help identify the individual agency’s relative strengths and weaknesses. For this purpose, Figure 7.8 summarises Uruguay XXI’s characteristics relative to its regional LAC and OECD peers on various dimensions, ranging from size to the degree of interaction with stakeholders, which are discussed next.
Note: The figure shows radar graphs that compare each IPA with the LAC and OECD averages along relevant
dimensions captured by the indices defined above.
Source: Volpe Martincus and Sztajerowska (2019)
Uruguay XXI is a relatively small but growing and independent agency…
In general, Uruguay XXI is a highly independent agency that has undergone a number of institutional reforms and interacts with a large number of relevant stakeholders. With a total budget of USD 6.5 million in 2019, covering all of its different mandates, it is a relatively small agency compared to its OECD peers but it has a similar size to other IPAs in the region.20 The agency’s budget has also evolved over time, rising from about USD 60 thousand in 2007 to over USD 6 million in 2019 (Figure 7.9). The share of the agency’s budget dedicated to investment promotion has stayed broadly stable over time (at 10%) and, thanks to the creation of the aftercare unit, in line with the increases in the agency’s total budget.
The fact that other activities account for a large share of resources is closely linked to the agency’s dual function as both a trade and investment promotion organisation (TIPO). In particular, activities related to export promotion and the operation of the Single Window for Trade taken together account for as much of the agency’s total staff as investment promotion and aftercare activities (i.e. 30% of the total 90 employees in 2019, Figure 7.10). Other functions, such as competitive intelligence– i.e. gathering, analysing and disseminating information relevant to trade, investment and the overall business climate in the country – or the image-building and communications department support both types of activities, allowing the agency to benefit from internal synergies. It is also worth mentioning that the agency’s staff is highly educated and has relevant work experience: 80% of staff have a university degree and an even higher share have prior private sector experience. Perhaps unsurprisingly in this context, foreign investors that used Uruguay XXI services have shown high levels of satisfaction with the agency’s assistance, in particular in regards to the quality of information provided, installation assistance and aftercare.21
In terms of the institutional arrangement, Uruguay XXI is established as a public-private agency by Law 16.736 (Article 202). This status, which together with fully private agencies is more common in the LAC region than in OECD countries, allows the IPA greater independence, also enabling it to pay wages at a level similar to the private sector to attract qualified staff. All of the IPA’s budget comes from the Ministry of Economy and Finance. As with a majority of IPAs in the LAC region, Uruguay XXI also has a Board of Directors, which allows for the oversight of the agency’s actions and a representation of a broader group of stakeholders. For example, several Ministries are represented on the Board, in particular the Ministry of Foreign Affairs that serves as its President. The private sector and civil society representatives also jointly account for 45% of the agency’s Board.
It is worth noting that Uruguay XXI has no offices abroad – as most agencies in the LAC region – which differentiates it from its OECD peers that tend to have well developed foreign offices networks (Figure 7.11). To address this issue, Uruguay XXI has adopted creative strategies with the Ministry of Foreign Affairs in order to use existing facilities and staff of embassies and consulates abroad. For example, as part of the cooperation under a project supported by the Plan for Productive Transformation and Competitiveness, Uruguay XXI and the Ministry have signed an MOU and created a network of commercial attachés located in key embassies and consulates who obtain relevant training and materials to collaborate with the IPA to implement a market-specific action plan (so-called “Commercial Antennas” programme).22 Most recently, the agency has also developed a complementary “Business Developers” programme involving signing of contacts with private service providers to help with prospecting activities and contacts with investors abroad. Currently, European and North American markets are being prioritised.23
Uruguay XXI also interacts intensively with other government bodies, including the partner Ministries and other relevant agencies (e.g. Customs, Innovation institute, etc.), as well as representatives of the private sector and key ‘influencers’, among others. In fact, Uruguay XXI is among the top five LAC IPAs in terms of the number of different stakeholders with which it interacts, according to the OECD-IDB survey (2017). Potentially, this can be a powerful tool to overcome the agency’s limited size and, with time, it can also permit it to specialise more, leaving some activities to other government bodies. Indeed, IPAs whose strategies are more targeting-intensive collaborate with a broader range of entities (Volpe Martincus and Sztajerowska, 2019).24 This likely reflects the fact that defining and revising various multitier priorities and delivering properly tailored assistance to consistently identified beneficiary firms should be aligned with broader policy objectives, in general, and requires reaching consensus, coordinating, and cooperating with a larger set of stakeholders, in particular.
Source: OECD-IDB Survey of Investment Promotion Agencies (2017)
… that has invested in best practices on monitoring and evaluation…
As a small agency, the IPA not only depends on cooperation and creative partnerships with other agencies. It also aims to ensure that its actions achieve the maximum possible effect with limited resources. As such, Uruguay XXI has invested heavily in robust monitoring and evaluation (M&E) systems, particularly in internal data collection and analysis, and has crafted external partnerships to evaluate the effectiveness of its actions.
As a first step for effective M&E, an IPA needs to know well what it does, how it does it, and how these actions translate into firm investment decisions over time. For this purpose, IPAs use a customer relationship management system (CRM), which allows the agency to have an institutional memory and an overview of its past activities. It allows, among others, tracking firms’ assistance, sources of investment leads, and the investor’s eventual decision to establish or not. Most IPAs in OECD and LAC have a CRM (about 80%) albeit their quality differs widely (Volpe Martincus and Sztajerowska, 2019). Uruguay XXI developed its tailor-made system, which a priori covers all units of the agency and activities with investors, and since its roll-out in 2017 is continuously working on improving its use by its staff and coverage, a common challenge across IPAs.25 In 2019, a business intelligence unit was introduced, which used both internal and external data sources, and allows for an easier and more automated process of tracking of IPA’s performance indicators.
In addition, Uruguay XXI has done impressive work to systematise the information on the firms it assists as well as all foreign-owned firms operating in the economy. This is a non-trivial ask and not systematically done by other agencies, despite its critical value for allowing to better target investment promotion efforts. Meanwhile, Uruguay XXI conducted a data-collection effort to create a census of foreign-owned enterprises located in the country, generating a unique source of data on the activities of foreign firms in the country (which was formerly not available). This work has, among other thing, identified what share of firms that decided to establish in Uruguay have been assisted by the agency, which increased from about 9% at the time when the agency started to promote investment to 26% in most recent years. The information gathered also serves as a very useful tool for the agency’s prospective work and looking for reinvestment opportunities. It has also served as a key input into the impact evaluation of agency’s activities undertaken by the IDB, which studied the effect of the agency’s assistance on the probability that the firm locates in the economy. Employing advanced econometric techniques, the study has found statistically significant impact (Volpe Martincus et al., 2019, see Box 7.4), confirming the effectiveness of agency’s interventions. Last but not least, to have a further source of qualitative information in terms of areas of particular focus, the agency has also started conducting a survey of foreign investors (as is done in many OECD countries) in order to measure the overall level of satisfaction as well as the individual factors that contribute to contentment or dissatisfaction of investors. Such surveys are a useful tool to support the IPA’s policy advocacy efforts, and have, in fact, been used in various places in this Review. In 2020, the agency is also planning to conduct targeted client-satisfaction surveys with investors assisted by the agency to obtain tailored feedback on specific activities.
In a similar fashion, the agency has strengthened its collaboration with various external data providers and relevant agencies. For example, as part of an agreement with the Customs administration, the agency has access to daily firm-level data on imports and exports. It also obtains more aggregated data by sector on exports, jobs and sales from the Ministry of Economy and Finance (for the economy as a whole and the firms located in FEZs) as well as the Social Security Administration, among others. Finally, as part of a broader project on the impact of MNEs in the economy, the agency also managed to provide access to the IDB research staff to anonymised firm-level data from the Tax Office to better understand the nature of linkages between domestic- and foreign-owned firms. The various studies and the data analysis conducted through these exercises confirm Uruguay XXI’s impact on FDI attraction into the economy, controlling for all other relevant factors (Box 7.4).
Insights from the IDB impact evaluation of Uruguay XXI
The Inter-American Development Bank (IDB) and Uruguay XXI have partnered to undertake an impact evaluation of the agency’s activities on investment attraction. For this purpose, a collaborative and meticulous data collection and preparation process took place in order to complete the information on foreign-owned firms operating in the country and their assistance by Uruguay XXI, using the official national statistics, the data gathered by the agency as well as private data providers, such as Dun & Bradstreet data, jointly prepared by the IDB and the agency. As a result, information on the number of assisted firms, total number of firms located in the economy and those that could have potentially decided to locate was created, permitting a rigorous impact evaluation.
Using this data, the study by Volpe Martincus, Carballo and Blyde (2019) shows that the assistance of an enterprise by Uruguay XXI has a positive and statistically significant effect on the probability of MNE presence in the local economy. Specifically, such a probability increases by 5% and significant results are also found for the first establishment and the number of foreign affiliates. In addition, the effect is particularly strong for countries that are OECD members and those operating in the services sectors. As such, investment promotion is shown to have a potential to help diversify the productive base in the economy. The results are also robust to different specifications and confirmed by placebo tests; for example, regardless of whether the IPA reactively assists a firm or proactively seeks it out, the effect is found to be positive and statistically significant. The study also find similar effects in the case of CINDE, national IPA of Costa Rica.
A follow-up study in Uruguay has considered the extent of linkages between foreign-owned MNEs and domestic firms, and the effect of those linkages on domestic firms export capacity. In particular, Carballo, Marra de Artiñano and Volpe Martincus (2019), exploit firm-level tax data to identify and study buyer-seller relationships among firms in Uruguay. Among others, they show that foreign companies are responsible for 16% of total purchases and about half of them are foreign exporters; and, upon controlling for firm-, sector- year and destination-year fixed effects, they find that selling to foreign companies in Uruguay is associated with a 70% increase in the likelihood to become an exporter in the subsequent year. They also find a positive effect on the total and domestic sales, number of employees, and labour productivity when a firm is selling to an MNE. These results show the contribution of MNEs to domestic firms’ upgrading in Uruguay as well as the close link between the goals of investment attraction and export promotion. They also contribute to a better understanding of FDI spillovers, which in the past relied on aggregate data and assumptions on firm interactions based on sectoral characteristics.
Source: Volpe Martincus, Carballo and Blyde (2019); Carballo, Marra de Artiñano and Volpe Martincus (2019, Uruguay XXI
… and is increasing significantly its capacity in investment facilitation and aftercare
Studies suggest that the impact of IPAs may be particularly strong when such agencies bridge information asymmetries, for example, by providing high-quality- and timely information to facilitate installation of firms or assisting them with administrative procedures (e.g. Volpe Martincus et al., 2019). This is also confirmed by existing surveys in Uruguay; for example, three quarters of surveyed foreign investors have particularly appreciated the provision of relevant information on the country, sectors and markets as well as related services by Uruguay XXI (Foreign Investors Survey, 2018). The level of their satisfaction with such information and related services has been particularly high. Therefore, investment facilitation assistance provided by the IPA, including aftercare services, may be particularly important. In this context, it is worth considering what investment facilitation services Uruguay XXI offers relative to other agencies and what recent reforms have been undertaken in this regard to reflect on options available in the future.
Figure 7.12 provides an overview of the share of IPAs that undertake particular investment facilitation and aftercare services in OECD and LAC. In particular, while some activities are undertaken equally frequently by OECD and LAC agencies (and across IPAs) – such as provision of assistance with project definition – other types of activities tend to be a differentiating factor. For example, the assistance with access to financing, cluster programmes and recruiting local staff are frequently provided to firms by OECD IPAs but less so by agencies in the region. In the case of Uruguay, before the aftercare unit was created in 2018, relatively little attention had been given to investment facilitation and aftercare.
Note: The bars representing activities that Uruguay XXI did not conduct at the time of survey are highlighted in white.
Source: IDB-OECD Survey of Investment Promotion Policies (2017)
In particular, while all activities related to project definition were being offered to investors by Uruguay XXI, such as providing information on local suppliers and clients, organising site visits, airport pick-ups and investor meetings with potential providers; and provides some assistance in dealing with administrative procedures mostly by liaising with the responsible government bodies to facilitate resolution of problems. This can be further facilitated with the planned creation of a single window for investment. In addition, in the area of aftercare, while the agency was tracking the expansion and reinvestment plans of firms as well as providing ad hoc support to individual investors, no structured trouble-shooting or other types of support of this type was available until the new specialised unit was created. Hence, the recent and ongoing strengthening of agency’s capacities in this area is a positive development and can boost its ability to further assist investors.
Meanwhile, this is an area where many IPAs in LAC are assisting investors, in particular in regards to business registration, obtaining licences and work permits. In addition, foreign investors in Uruguay have expressed a particular interest in obtaining these kind of services (Figure 7.13).26 Thus, the creation of the aftercare unit in Uruguay XXI is a potentially important step forward. On the one hand, it may allow the agency to be more proactive in its support provided to firms as the assigned account managers specialised in specific sectors continue developing their contacts and relationships in those industries.27 On the other hand, it can also further strengthen its policy advocacy function (Figure 7.14). Finally, the current plans on the establishment of the single window for investment, under the responsibility of Uruguay XXI (as outlined in the Plan for Productive Transformation) can help boost significantly the agency’s ability to assist firms’ in business establishment and obtain relevant permits, responding to the demand raised by investors themselves.28 It can also help advance the broader investment facilitation agenda in the country, which is one of the remaining challenges for doing business in Uruguay – discussed next.
Note: The survey took place in July-October 2018; 900 companies were contacted and 261 responded. The graph shows answers to the question: “How important would it be for your company to provide the following aftercare services?”
Source: Foreign Investors Survey (2018)
Note: The bars representing activities that Uruguay XXI did not conduct at the time of survey are highlighted in white.
Source: IDB-OECD Survey of Investment Promotion Policies (2017)
Uruguay could reduce administrative burden to further improve business climate
As highlighted above and captured in the available business surveys, the ease of obtaining permits and broader regulatory quality appear to be remaining challenges to doing business in Uruguay. Performance in this area weighs on Uruguay’s position in cross-country rankings, such as the World Bank’s Doing Business or WEF’s Global Competitiveness Report, already mentioned in earlier chapters. While these types of rankings are mostly indicative, and should not be taken at face value, they may point to the general tendencies and areas of above-average and below-average performance.
In this context, one can observe, for example, that Uruguay’s ranking on WEF’s Index has not changed significantly over the past few years, oscillating around 76th place out of some 140 economies (Figure 7.15). Regarding the areas of strength, Uruguay has systematically scored above the regional average for the quality of institutions, political stability, control of corruption, transparency and accountability as well as the quality of infrastructure (WEF, 2012-2018).29 Meanwhile, bureaucratic procedures and restrictive regulations, on top of high tax costs, are highlighted as areas of potential attention in the WEF ranking (Figure 7.16, Panel A). These correspond to the areas raised as problematic by foreign investors operating in the country in the Foreign Investors’ Survey (2018) (Figure 7.16, Panel B). Potential areas of further attention by the government are also highlighted in the World Bank’s Doing Business ranking (Figure 7.17). In particular, Uruguay scores poorly in dealing with construction permits (155 out of 190 economies), registering property (115) and trading across borders (152) – the latter, however, being likely linked to the methodology of the Index itself – showing much higher scores in the area starting a business (65) or resolving insolvency (70). The areas where further progress could be achieved will be discussed below to highlight steps that can be taken and recent initiatives.
Note: The Foreign Investors Survey was conducted by Uruguay XXI on behalf of the Ministry of Economy and Finance in July-October 2018. 900 companies were contacted and 261 responded. Figure above shows answers to the question: “Why are you dissatisfied with Uruguay as a place to develop your business activities?”
Source: WEF’s Executive Opinion Survey 2017 and Uruguay XX’s Foreign Investors Survey 2018
Source: World Bank’s Doing Business Indicators (2019)
… by addressing specific remaining administrative bottlenecks …
While in the area of resolving insolvency30 and starting a business (the latter being analysed below), Uruguay has made important progress, several other areas may require government’s further attention. In particular, dealing with construction permits continues to be highlighted as problematic in the international rankings as well as by businesses consulted in this Review. In particular, the number of procedures and the time it takes to obtain construction permits remain above the OECD and LAC averages (Table 7.3). When one considers each step in the process, it is the request to obtain a report on fire risk from the National Fire Department (Dirección Nacional de Bomberos) that takes most time (i.e. 90 days on average in 2019, according to World Bank, 2019). The inspections by municipalities can also at times add additional delays to the process. This is not to say that no reforms were undertaken in this area: several amendments to the Building Code have been introduced to modernise the role of the fire brigades in the process and the introduction of an e-permit has helped reduce the number of procedures in place (from 30 in 2009 to 19 in 2019). Still, the average time it takes to obtain a construction permit (265 days) remains above OECD and LAC averages and investors report that both times and procedures can differ significantly in different parts of the country.
Registering property is another area where Uruguay scores relatively low. There has been some moderate progress over time: for example, procedures were streamlined by eliminating the requirement to obtain the municipality’s approval for property transfers in 2009. Rather than requiring a certificate for every transaction, the municipality instead checks a list of the properties subject to pre-emption rights and contacts only the parties concerned. Nonetheless, the time needed to register property has remained stable at 66 days, which is above the OECD and LAC averages (Table 7.4). Similarly, the associated cost in Uruguay (7% of the property value) is above that of comparison countries.
In this context, the government could consider developing specific projects to address the issues outlined above, for example as part of the Plan on Productive Transformation or related initiatives.
… building on the momentum of trade facilitation reforms
One area where the country’s score on Doing Business does not seem to capture adequately the full extent of Uruguay’s progress is the ease of trading across borders. Uruguay has introduced a series of important trade facilitation measures, which helped substantially improve the efficiency and predictability of its border procedures over time. For example, with the support of the IDB (through different programmes), the government has overhauled its Customs Code,31 undertaken a comprehensive modernisation programme of the Customs administration,32 established and expanded its Single Window for Trade (VUCE), and introduced a certification programme for Authorised Economic Operators (AEOs), offering certain users access to simplified customs procedures.33 Uruguay also ratified the WTO Trade Facilitation Agreement in 2016 (WTO, 2017).
In particular, as part of the Customs’ modernisation programme, an electronic customs declaration and risk-based inspection management system have been introduced, reducing substantially the share of goods inspected and the associated delays.34 The establishment and systematic expansion and evolution of the Single Window for Trade (VUCE) under the responsibility of Uruguay XXI, supported by the IDB, has also played an important role (see Box 7.5 and Figure 7.18). Today, it covers two thirds of all relevant documentation and integrates 24 different agencies35 According to the authorities, the programme has generated private sector saving of over USD 6.5 million by 2018, achieved through reduced waiting time, journeys and staff time involved in the processing of required documentation (WTO, 2018).36 In addition, 93% of its users described VUCE service as good or very good; and, according to the OECD Single Windows Indicators, Uruguay’s single window is one of the better performing ones in LAC, even if its coverage could be improved further (OECD, 2018b). The programme is currently undergoing an impact evaluation, supported by the IDB, that can shed light on further enhancements and provide lessons learned for the operationalisation of other one-stop shop solutions in the country.
Source: VUCE (2019)
All these various steps have led to a decrease in the average time spent by economic operators at the border. The average customs clearance time in Uruguay was eight hours in 2018.37 Users located in the SEZs and industrial parks as well as those benefiting from the AEO status also benefit from further simplified procedures and special facilities. In addition, Uruguay is also close to best performance on various aspects measured by the OECD Trade Facilitation indicators, notably automation of formalities, governance and impartiality, and involvement of the trade community (Figure 7.19). Still, the evaluation of VUCE can offer insights on possible improvements, for example in relation to its scope, inter-operability and in facilitating inter-agency cooperation.38 In addition, as average time spent at the border can vary substantially depending on the channel through which goods are processed (Volpe Martincus, 2016) and has been found to impact firms’ exports, this area requires the government’s continuous attention to ensure policy coherence. This is particularly important considering that new exporters tend to be subject to physical inspections relatively more frequently, and studies show that the effect can be so large as to cancel out the effect of trade promotion assistance provided by Uruguay XXI.39
Last but not least, through the Global Services Programme (Programa de Apoyo a los Servicios Globales de Exportación), approved in 2011 and implemented over several years with the support of the IDB to assist the development and internationalisation of key services sectors40 as well as other support measures (e.g. action plans within the Plan on Productive Transformation), the government is also aiming to facilitate trade in services that accounts for a large and growing share of Uruguay’s GDP and exports.
Note: For information on the methodology, please consult the OECD website: www.oecd.org/trade/topics/trade-facilitation/documents/trade-facilitation-indicators-methodology.pdf
Source: OECD Trade Facilitation Indicators, www.oecd.org/trade/topics/trade-facilitation
The Single Window for Trade in Uruguay (Ventanilla Única de Comercio Exterior, VUCE) was born as a part of the National Customs modernisation process that begun in 2007, and was implemented with the technical and financial support of the Inter-American Development Bank (IDB). The VUCE project was launched in 2012, led by the National Customs Authority and the Commission for Foreign Trade Affairs (CIACEX), and formally enshrined in law under the responsibility of the country’s national Investment Promotion Agency (Uruguay XXI) by the end of 2013.
From 2013 to 2015, VUCE conducted an in-depth analysis of applicable business processes, the underlying regulations and technological solutions that allowed the design for the electronic platform (www.vuce.gub.uy) that would centralise relevant foreign trade operations. In 2016, VUCE went live, allowing for the conduct of the first trade-related process, and has kept growing ever since. By 2019, it has integrated more than 70% of processes and reached a high volume of user participation. Today, VUCE covers more than 140 processes and 24 participating agencies, and involves cohesive collaboration between the public and the private sectors through the existence of appropriate operating procedures.
According to the IDB, from the start, the implementation of VUCE involved an articulation of long-term objectives relating to trade facilitation, system control, and electronic government, among others. Each objective was carefully defined in a multi-stakeholder process to help understand stakeholders’ expectations and introduce relevant performance measurement- and management control systems that were crucial to build a culture of continuous improvement. In addition, when integrating new processes into the platform, a baseline time and cost were established. This allowed for a systematic measurement of improvements over time. According to the IDB, the impact of VUCE is notorious in terms of increases in border procedures’ efficiency by reducing time and costs of the associated business operations. In addition, important progress has been achieved in terms of interoperability. For example, electronic certificates of origin allows for exchanges with several different countries; VUCE is also currently working on other interoperability projects related to ePhyto certificates.
There are multiple ongoing projects that add new services to the platform and reach new user segments. For example, the implementation of TUExporta system simplifying export operations for micro and small firms is showing early results, according to the IDB. More generally, the implementation of a single window of any kind is a dynamic process. As such, it is necessary to continuously review its objectives and new challenges, and adapt the course of action accordingly, taking into account customers’ needs and expectations. For this reason, VUCE measures twice a year customer- and user satisfaction to integrate the new insights into the platform’s roadmap, allowing for further improvements.
Overall, the case of the implementation of the Single Window for Trade in Uruguay shows that, far from being a technological challenge alone, it a process of cultural and organisational change. In this regard, political support and stakeholders´ engagement are key aspects for successful execution and continuous improvements. In this respect, the IDB has highlighted the importance of both long-term goals and tangible short-term results to continue motivating actors to be part of project. Going forward, the experience of VUCE may prove valuable when implementing other one-stop solutions in the country, such as the planned Single Window for Investment (Ventanilla Única de Inversiones, VUI).
Source: IDB
… reducing administrative burden through a single window for investment
As far as starting a business is concerned, Uruguay has made important improvements in the past two decades. In particular, the implementation of an online platform for business registration “Business a Day” (Empresa en un Dia) has significantly shortened the time needed to start a company in Uruguay from 43 days in 2006 to 6.5 days in 2019 –below both the OECD and LAC averages (see Table 7.5). Yet, as mentioned earlier in this chapter, the application for various permits and undergoing administrative procedures is highlighted as problematic by business. In this context, the government has proposed the establishment of a Single Window for Investment (Ventanilla Única de Inversiones, VUI), under the responsibility of Uruguay XXI, as part of the Plan on Productive Transformation and Competitiveness.41
As a first stage of implementation of VUI, Uruguay XXI has launched a call for an expert to undertake a mapping exercise of such solutions in different countries to inform its own choice on the eventual design, coverage and location of the mechanism, which is a highly welcome development.42 Indeed, the existing evidence points to a high diversity in this type of solutions in different countries and points to non-trivial choices related to organisation, modes of operation and resource-allocation for such a mechanism (see Table 7.6 and World Bank, 2009). In addition, Uruguay’s own experience in establishing and expanding over time the coverage of VUCE, can also be serve as a key input into the reflection on the appropriate way forward. A mapping of the various administrative steps required by firms in different sectors will be required to consider which of those steps could eventually be undertaken by VUI. This is, turn, can be an occasion for a broader administrative simplification. If implemented appropriately, VUI could potentially facilitate establishment of new investment projects, going beyond the sheer business registration. The government is currently planned to launch VUI in 2020, with all major permits to be covered by 2022.
…and a more general administrative and regulatory reform
The quality of regulation has a significant influence on the climate for business and investment. Poorly designed or weakly applied regulations can slow business responsiveness, divert resources away from productive investments, hamper entry into markets, reduce job creation and generally discourage entrepreneurship (OECD, 2015a). In this context, the challenge for governments is, on one hand, to balance their need to use administrative procedures as a source of information and as a tool for implementing public policies, and on the other, to minimise the interferences implied by these requirements in terms of the resources required to comply with them (OECD, 2009). There are various tools at the disposal of the governments to reduce administrative burden as well as to improve the quality of new regulations. These include periodic reviews of the stock of regulations, simplifying administrative procedures and introducing e-government services on top of developing better rules on creating new regulations and oversight of regulatory processes. They are summarised in the OECD Recommendation on Regulatory Policy and Governance and are subject to the OECD Regulatory Policy Reviews (Box 7.6).
The government of Uruguay has recently started taking steps to reduce the administrative burden in a more systematic fashion. For example, there is an ongoing ex post review of the stock of regulations with a view of their eventual simplification. In this context, Transforma Uruguay is undertaking two projects to map out all the administrative procedures under the responsibility of one ministry (Ministry of Industry) and all those affecting one sector (pharmaceutical sector). Once the pilot stage is concluded, the mapping process may be extended to regulations under the responsibility of other government bodies and to those affecting other sectors. This approach, gradual in nature, is indeed in line with best practices insofar as it allows for learning and adjustments as well as limiting costs associated with across-the-board review of the stock of regulations. Indeed, countries vary significantly in the use of ex post reviews of existing regulations (Figure 7.20), with Australia and United Kingdom being often quoted examples of best practices that may also serve as potential reference for Uruguay (OECD, 2018).43
Source: Indicators of Regulatory Policy and Governance (iREG), www.oecd.org/gov/regulatory-policy/measuring-regulatory-performance.htm
On 22 March 2012, the Council of the OECD adopted the Recommendation of the Council on Regulatory Policy and Governance (OECD, 2012). The Recommendation was the first international instrument to address regulatory policy, management and governance as a whole-of-government activity that can be addressed by sectoral ministries, regulatory and competition agencies to support the implementation and advancement of systemic regulatory reform to deliver regulations that meet public policy objectives and have a positive impact on the economy and society. These measures are integrated in a comprehensive policy cycle in which regulations are designed, assessed and evaluated ex ante and ex post, revised and enforced at all levels of government, supported by appropriate institutions. The principles provide countries with the basis for a comprehensive assessment of the performance of the policies, tools and institutions that underpin the use of efficient and effective regulation.
Through its work programme, the Regulatory Policy Committee of the OECD supports countries to implement the principles in the Recommendation. In particular, the OECD Regulatory Policy Reviews assess regulatory management capacities in different countries, including policies, tools and institutions for ensuring regulatory quality, using the Recommendation as an assessment framework. Several countries, including economies from the Latin America and the Caribbean region have undergone such reviews, or have otherwise been advised by the OECD on the possible reforms. For example, most recently Argentina underwent a review of its regulatory policy (OECD, 2019a) and Peru was advised on the implementation of regulatory impact assessment (RIA) at the central government level (OECD, 2019b). The government of Uruguay could consider undertaking a similar review to support its efforts to reduce administrative burdens faced by firms and improve the overall regulatory quality in the country.
Another approach that has been gaining ground in recent years is offsetting new regulations by reducing the existing ones (Trnka and Thuerer, 2019). While regulatory offsetting approaches (e.g. stock-flow linkage rules or net regulatory burden reduction targets) can provide a strong motivation for regulators to evaluate the worth of regulations in place, they need to be applied cautiously and after considering both costs and benefits of a regulation (OECD, forthcoming). For example, the Netherlands adopted quantitative targets for administrative burden reduction, while several countries adopted the “one-in, one-out” approach (e.g. United Kingdom, Germany and France).
Digitisation is another powerful tool at the hands of the government to automate certain processes and reduce the need for physical displacement to comply with regulations. In this context, progress in the use of e-services– including e-taxation, e-procurement, e-court, e-invoicing and others – as led by AGESIC (Agencia de Gobierno Electrónico y Sociedad de la Información y del Conocimiento) in Uruguay, and available on a dedicated website (www.gub.uy/tramites) – can facilitate administrative procedures and reduce territorial discrepancy in the application of regulations.44 It is important to remember that while digitisation principally facilitates access, the review and simplification of the underlying regulations can significantly reduce the administrative burden itself. It is, hence, encouraging that the government has started by mapping the applicable regulations to undertake the appropriate streamlining and offer digital services, both as part of the administrative simplification effort, thus-far led by Transforma Uruguay, and thanks to the plans to establish a single window for investment by Uruguay XXI.
Last but not least, while the individual initiatives aiming at simplifying and automating procedures, as those described above, can help improve firms’ interactions with public administration, a systematic approach to improving the overall process of creating new regulations is necessary to avoid accumulating burdensome regulations in the future. Progress in this regard is complex and requires several legal changes as well as improving the capacity and oversight of different regulatory bodies. Indeed, while Uruguay has made impressive progress on several aspects of World Bank’s World Governance Indicators45, notably control of corruption or voice and accountability, improving regulatory quality and government’s efficiency has been much more elusive (Figure 7.21).46
There are several tools at the government disposal that could help assist in the process of improving the overall regulatory quality in the country. Besides the use of ex post evaluation mentioned earlier, these include systematic use of stakeholder consultations and regulatory impact assessment (RIA) when developing new laws and regulations. They can help assess the intended and unintended consequences of proposed regulations and consider alternatives. Currently, there is no obligation to undertake ex ante RIA on proposed regulations in Uruguay. Meanwhile, RIAs is obligatory for all regulations in most OECD countries, as well as an increasing number of LAC countries (see Table 7.7).While several agencies have relevant mandates (e.g. AGESIC and OPP), there is also no single agency that is responsible for oversight of regulatory practices of all public institutions, including to provide required guidance and training. In fact, there appears to be some confusion as to what ex ante RIA is (see Box 7.7), and who would be responsible.
Considering that RIAs can allow the government to better control the inflow of new regulations, there might be value in adopting it as part of the process of strengthening the rules on creating new regulations and reflecting on the adequate institutional set-up for their oversight. Progress in this area may be particularly important for small and medium sized enterprises (SMEs), which tend to be disproportionally affected by the overtly burdensome administrative burdens (OECD, 2015a; OECD, 2009). It could be, hence, considered an important complementary measure to other actions taken by the government to proactively support SME development (see Box 7.8). Considering the weight of SMEs in the local economy (over 99% in terms of total number of firms and two-third of reported employment, OECD/CAF, 2019), reducing barriers to SMEs’ business activities through administrative reform can be a powerful lever to facilitate internationalisation and economic growth. The case of Mexico could provide inspiration. The amendment to the Federal Law of Administrative Procedure (LFPA) in 2000 established the Federal Commission for Regulatory Improvement (COFEMER) as the oversight body, and outlined the responsibilities of line ministries and tools for regulatory improvement, such as RIA; and further reforms were made in 2010 and 2012.47 More generally, undertaking an OECD Regulatory Policy Review can also help outline the available options.
Regulatory impact assessment (RIA) is both a tool and a process designed to help inform political decision makers on whether and how to regulate to achieve public policy goals. Improving the evidence base through an ex ante impact assessment is one of the most important regulatory tools available to governments.
The aim is to improve the design of regulations by assisting policy makers identify and consider the most efficient and effective options — including non-regulatory options — before making a decision. One method of doing so is by analysing the expected costs and benefits of regulation and of alternative means of achieving policy goals and to identify the approach that is likely to deliver the greatest net benefit to society. The consideration of a range of alternative approaches to traditional “command and control” regulation — including complementary measures such as co-regulation — helps to ensure that the most efficient and effective approaches are used in attaining policy goals. Experience shows that governments must lead strongly to overcome inbuilt inertia, risk aversion and a “regulate first, ask questions later” culture. At the same time, care must be taken when deciding to use light-handed approaches such as self-regulation, to ensure that public policy objectives are achieved.
To that end, the OECD Recommendation of the Council on Regulatory Policy and Governance provides that member countries should “Integrate Regulatory Impact Assessment (RIA) into the early stages of the policy process for the formulation of new regulatory proposals. Clearly identify policy goals, and evaluate if regulation is necessary and how it can be most effective and efficient in achieving those goals” (OECD, 2012).
Source: OECD (2019)
Recognising the importance of small and medium sized enterprises (SMEs) in the economy, there are several programmes aimed at supporting their business activity in Uruguay:
Automatic tax exemptions for investments by SMEs: The Tax Reform Law establishes automatic exemptions to investments for SMEs. In particular, it grants exemptions to the Corporation Income Tax (IRAE) of up to 40% to investment in certain movable property, and up to 20% in the case of investment in construction and expansion of hotels, motels and inns and real estate intended for industrial or agricultural activity. It sets a max. annual sales thresholds in line the SME definition in Decree 504/007 to access the exemption.
DINAPYME – a specialised agency for SME support: Article 305 of Law 16.170 creates the National Direction of Handicrafts and Small and Medium Enterprises (Dirección Nacional de Artesanías y Pequeñas y Medianas Empresas, DINAPYME), which will be in charge of the execution of programmes for development and support of SMEs. An interested company must commit to participate actively in the diagnostic and preparation of a development plan together with a technical advisor of DINAPYME that will visit the company. Support activities include: strategic planning, financial-, commercial- and marketing management, human resources, logistics, quality control, support in internationalisation; and can be provided in the amount of up to 60-80% of total costs, depending on the size of the company. In addition, to apply to the different existing programs for SMEs, companies must obtain an SME certificate from DINAPYME.
Additional support and financing through ANDE and FONDES: Law 18.602 of 2009 creates the National Development Agency (Agencia Nacional de Desarrollo, ANDE). The purpose of the Agency is to contribute to productive economic development via support to SMEs. The programmes are developed with special emphasis on the promotion of SMEs, and include instruments facilitating provision of financing, e.g. special credit lines, a system of guarantees and products offered through alliances with established financial institutions. In addition, the agency also provides financial and technical support for new business as well as grants for suppliers and SME development. In 2015, the Development Fund (FONDES, Fondo para el Desarrollo) was also created to support the financing of projects that contribute to economic development.
Activities of Uruguay XXI: Ever since its creation in 1996, Uruguay XXI had as part of its official mandate providing export promotion assistance to firms, including SMEs. Until 2016, the agency led a programme “Proexport”, assisting firms wishing to participate in sectoral fairs, events and missions abroad. In 2017, the programme was substituted by “Proexport+”, implemented in cooperation with several institutions, including UANDE, ENFIO ANII and DINAPYME and business associations, allowing eligible SMEs to obtain broader support for a series of activities included in the internationalisation plan that is developed at the start of the programme (e.g. capacity-building for entrepreneurs and staff, market studies, marketing, certification or product development). The assistance provided can reach up to USD 40 000 that can represent up to 80% of firms’ internationalisation costs. In addition, through the cooperation of Uruguay XXI, MEF and VUCE, a new simplified exports regime for SMEs was introduced in 2018, allowing SMEs certified by DINAPYME to export more easily small quantities of merchandise, below the value of USD 2000 (more information can be found on a dedicated website: www.tuexporta.gub.uy)
Administrative simplification and digitisation led by AGESIC: The agency helps rationalise and improve the efficiency of bureaucratic processes. As such, it identifies administrative requirements, analyses their necessity and supports their digitisation and interoperability of systems so as to the same information does not have to be shared more than once with the public administration. Currently, information on nearly 3 000 administrative procedures are available on a dedicated website (www.tramites.gub.uy). In addition, data is being gathered on the time required to comply with administrative procedures to register property (Transforma Uruguay, 2019)
Centres of Entrepreneurial Competitiveness in different regions (Centros de Competitividad Empresarial, CEE): Starting in 2018, special centres were established under the umbrella of Transforma Uruguay to support to SMEs, entrepreneurs, and cooperatives in different regions. The Centres undertake tailored diagnostic of the current needs of the client and possible ways of breaching the gaps. The centres provide capacity-building support and advice as to where to obtain external financing and link the companies and entrepreneurs with public bodies that provide relevant services and programmes as well as specialised service providers for which they can subsidise up to 80% of costs for SMEs.
Source: Uruguayan authorities, including Uruguay XXI, Transforma Uruguay, Ministry of Economy and Finance, AGESIC and ANDE
As explained elsewhere in this Review, Uruguay displays high level of transparency in terms of public access to information and availability of applicable laws and regulations.48 Many public documents and laws and regulations are available on the websites of different institutions. Still, there is no transversal legal obligation to undertake public consultations on the proposed legislation.49 As such, practices vary from institution to institution and depending on the specific topic.50
Businesses have been regularly calling for more frequent consultations on draft regulations and laws. A crucial step towards improving the framework for consultations was taken in 2008 with the adoption of the Law on the Right of Access to Public Information (No. 18.381). The law provides for general access to public information, defined as all information held by a government entity unless considered classified. The law requires government agencies to make public their organisational charts, responsibilities, salaries, and budget allotment and to produce regular reports. Authorities effectively implemented the law; there were no public outreach activities to encourage its use. Uruguay is ranked 19th in the most recent Global Open Data Index (it was 13th in 2014), and fourth for Latin America. In addition, to ensure fair access of stakeholders to the government, over the past two decades Uruguay has created new procedures and institutional arrangements to accommodate a wider set of views and opinions. For example, the Consultative Committee on Corporate Development includes representatives of business as well as trade unions and academia (Box 7.9) and tripartite social dialogue has been institutionalised through the Economic and Social Council (Consejo Económico Social), established by the 1943 Constitution and reinforced by the 1966 Constitution.
More generally, Uruguay has a multi-decade history of tripartite social dialogue, negotiation between employers and employees, and developments in labour and social protection. A catalogue of the different initiatives is also available online (Catálogo de Participación Ciudadana).51 Examples of public consultations include the Investment Law (Decree 455), the SEZ Law, the Social Housing Law (Ley de VIS), the Project Law on Innovative Procurement (Proyecto de Compras Públicas Innovadoras), and the National Plan for Productive Transformation and Competitiveness (Plan Nacional de Transformación Productiva y Competitividad) or establishing priorities for secondary education reform in 2015-17. Some examples also exist at the sub-regional level albeit with varying degrees of success in implementation.52
Overall, progress in systematising the procedures for prior consultation on all draft laws and regulations can help the government ensure that the different stakeholders, including investors have due access to the policy-makers, costs and benefits are dully assessed and alternatives are considered. Over time, the more systematic use of consultations and RIAs may help the government reduce the problem of a growing stock of burdensome administrative procedures over time.
The Consultative Committee on Corporate Development (Consejo Consultivo de Desarrollo Empresarial, CCDE) is a platform for public-private inter-institutional exchange and dialogue on policies for micro-, small- and medium-sized enterprises (MSMEs). Its origins can be found in Project N° 45 of the National Plan for Productive Transformation and Competitiveness (Plan Nacional de Transformación Productiva y Competitividad). CCDE’s functions include:
Inform about policies, programs, instruments and projects intended to help MSMEs grow.
Recommend appropriate measures to adapt policies, programs, instruments and procedures to the characteristics and needs of MSMEs.
Consolidate a space for public dialogue that spurs collaboration among public institutions, among private institutions, and between public and private entities.
CCDE’s members represent the public sector (relevant Ministries, agencies and Transforma Uruguay), corporate chambers (CCE, CIU, CNCS, CEDU, ANMYPE, UEU, CUTI, CNFR, CUDECOOP, CAMBADU), trade unions (PIT-CNT) and other stakeholders. Secretariat tasks are jointly performed by DINAPYME, ANDE, Instituto Nacional de Empleo y Formación Profesional, Instituto Nacional de Cooperativismo (INACOOP) and Secretaria de Transformación Productiva y Competitividad.
Investment attraction is a transversal policy area that spans different activities and requires coordination of various public and private bodies. It aims not only to promote a country as an attractive business location but also aims to remove undue obstacles to investment activity and facilitate firms’ business decisions. In the past, the approach to investment attraction in Uruguay relied heavily on the provision of investment incentives (reviewed in Chapter 6). With time, the government has attempted to transition from a volume-based approach to investment attraction and an indiscriminate use of such incentives to a more refined model that takes into account the attributes of investment to be attracted and broader development and societal objectives.
This process is ongoing and will involve a gradual reengineering of the system, including through streamlining of current incentive schemes and reducing progressively reliance on special arrangements. Strong commitment to decreasing administrative burdens and undertaking a more systematic reform of the regulatory quality system on top of further pursuit of specific trade and investment facilitation efforts, could help the government move in that direction. The recent strategic planning initiatives and changes to the institutional set-up for investment attraction can assist in this process and help ensure that support for firms’ internationalisation, a prerogative in the country of limited size, remains high on the political agenda and is continued by future administrations.
Ensure continuity in the implementation of strategic plans and the necessary support for firms’ internationalisation and investment promotion and facilitation reforms. Continuity can be achieved through the completion of the already foreseen projects under the current Plan on Productive Transformation and Competitiveness 2017-2021 and the use of similar tools going forward. Due to the small size of the Uruguayan economy, locally-established firms are faced with an imperative of seeking larger markets. As such, programmes to support firms’ global insertion should be well-articulated and coordinated, spanning trade and investment promotion, facilitation, capacity-building and linkage programmes. In its current reflection on the future institutional set-up for coordination in this area, the government should ensure that the responsible body has the technical capacity and the ability to convene all the relevant stakeholders to implement key reforms.
Consider further streamlining of various investment incentives schemes and potentially phasing-out some of them. As argued in Chapter 6, further progress can be achieved by embedding current investment incentives in the respective underlying laws to which they relate (e.g. CIT, VAT, Customs laws). This will help ensure greater transparency and level the playing-field across different firms, while helping to shield the allocation of incentives from electoral cycles. In addition, more frequent use of sunset clauses as well as a review and evaluation of the effectiveness of existing incentives will help the government assess their relevance, and assist in a potential decision on reducing or discontinuing some of them.
Continue strengthening the activities of the national investment and trade promotion agency – Uruguay XXI. The agency has grown dynamically over the past years, and has assumed new functions. It has also proven successful in managing the single window for trade (VUCE), and is currently developing a single window for investment (VUI). It has also just established a new aftercare unit, boosting the agency’s ability to provide tailored assistance to investor seeking expansions and reinvestment in the country. This work should be continued, in particular in light of recent positive results of evaluation of the agency’s activities.
Focus efforts on effectively streamlining administrative procedures and addressing specific regulatory bottlenecks. Procedures for obtaining construction permits and registering property remain particularly problematic, and could be improved. Meanwhile, the significant progress in business registration and trade facilitation could be capitalised on when rolling out VUI and advancing with the mapping and streamlining of regulations in specific sectors. The ex post review of existing regulations can help address, in the short and medium term, investors’ complaints about burdensome bureaucratic procedures, in particular if key bottlenecks are successfully identified and addressed.
Consider a wider reform to improve the overall regulatory quality and reduce administrative burden. Improving the overall regulatory quality can be the next step to ensure long-term improvement in the underlying regulations and reducing the administrative burden. While the country shows de facto high levels of transparency and access to information on the applicable laws and regulations, it lacks an overarching legal basis and institutional solutions to ensure good regulatory practices across different institutions, such as the obligation to undertake prior stakeholder consultation and regulatory impact assessment. Undergoing an OECD Regulatory Policy Review could potentially help the government outline available reform options in this regard.
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Notes
← 1. Information provided by Uruguay XXI as part of the Review.
← 2. Notably, it declare protection and promotion of investment by foreign and domestic firms as a matter of national interest (Article 1 of Law 16.906)
← 3. Among others, it establishes the principle of non-discrimination between foreign and domestic investors (Article 2); posits that foreign investment transactions do not require an additional prior approval or registration other than those required by domestic firms (Article 3); guarantees fair treatment of investment (Article 4) and their free transfer of capital (Article 5).
← 4. Both documents have been elaborated during 2015-2019, and further information can be found on the dedicated government’s website: www.estrategiadesarrollo2050.gub.uy
← 5. It is included under the pillar on sustainable productive transformation out of the two total of three (two others relating to social transformation and gender). Also, see a press release: www.opp.gub.uy/es/noticias/opp-presento-la-estrategia-de-desarrollo-2050
← 6. National Development Plan of Uruguay, p. 51-60.
← 7. All information regarding the plan can be found at: www.transformauruguay.gub.uy/es/plan-nacional
← 8. Dedicated roadmaps are available for the following sectors: food products, creative industries, forestry and wood sector, information and communications technologies (ICT) and logistics.
← 9. Consultations with different institutions and the public took place in September and October 2017 (see www.transformauruguay.gub.uy/es/detalle-de-contenido/proceso-de-consulta).
← 10. In addition, the Ministry of Transport and Works, in particular for all the legislation related to the national transport and logistics, is also relevant albeit not represented in the Committee.
← 11. Other studies, taking into account other forms of public support for investment (e.g. financial instruments and public budget) report a number exceeding 3% (Bértola, et al., 2014).
← 12. For example, while promoted activities are governed by the COMAP regime, some sector-specific schemes are fully independent (e.g. forestry); and the regime of FEZs and industrial parks are governed by separate Laws, the latter being currently under reform. Moreover, some sectors also benefit from dedicated Free Economic Zones (e.g. thematic ones dedicated to audio-visual, leisure and entertainment services and associated activities), and other forms of financial support (e.g. recently created fund for the audio-visual sector). See Chapter 6 for a more detailed description.
← 13. For example, see Decree 218/018 and the set of measures announced by the government on 9th September 2019, which includes support measures for 14 different sectors and activities. Further information available on the website of the Ministry of Economy and Finance: www.gub.uy/ministerio-economia-finanzas/comunicacion/noticias/paquete-medidas-estimulo-actividad-economica
← 14. The former number raises to seven if the electoral year is also counted. Besides sectoral decrees, the count includes laws pertaining to free zones, industrial parks and free ports.
← 15. Most recently, as part of negotiations with UPM, the largest investors in the country, regarding the opening of its second production plant in Uruguay, the government had to concede a creation of a dedicated free zone for the use of the company.
← 16. For example, the government could consider consolidating all tax-related provisions within the legal statutes from the incentives provide relief (e.g. income tax-, VAT, and customs law), and then amending the other existing laws and decrees to include references to those provisions in the relevant articles. Embedding such provisions in the Law will also reduce reliance on ad hoc decrees to provide additional incentives according to the political cycle fluctuations. Similarly, the government should consider bringing all companies under one single regime to avoid customised regimes provided to individual companies or groups of thereof. In addition, it could make a more systematic use of sunset clauses to avoid continuous expansion of the incentives system. Finally, continuous progress in monitoring and evaluation of the schemes can help the government review their adequacy and propose possible phase-outs or rationalisations.
← 17. For example, the action plan for audio-visual sector foresees a creation of fund to support local film production and a programme facilitating obtaining of financing for local projects. The action plans are available on the Transforma Uruguay’s website: www.transformauruguay.gub.uy/es/plan-nacional-1/plan-nacional-de-transformacion-productiva-y-competitividad
← 18. These are agribusiness, logistics (and infrastructure), and global services, while other available opportunities, e.g. in manufacturing, tourism and retail, are also listed. For more information, see Uruguay XX’s website: www.investinuruguay.uy/en/sectors
← 19. The earlier literature on the effects of trade promotion also finds a significant effect of export promotion on firm behaviour (e.g. Volpe Martincus and Carballo, 2010; Lederman et al., 2010)
← 20. In 2018, Uruguay XXI had a budget of USD 5.3 million while the median IPA in LAC region had a total budget of USD 5 million.
← 21. According to the survey of foreign investors conducted in 2018, 3%% of surveyed firms used some service of Uruguay XXI. Those firms have shown very high levels of satisfaction with services provided by the agency, i.e. about 90% and above.
← 22. For more information and progress in the implementation of the project, see the Transforma Urugay’s relevant website on the Plan on Productive Transformation and Competitiveness: www.transformauruguay.gub.uy/es/visualizador-de-proyecto-detalle?id=39
← 23. For further information, see Uruguay XXI website: www.uruguayxxi.gub.uy/en/who-we-are/llamados-licitaciones/business-developer-abroad/
← 24. Once the country size and level of development are controlled for, the number of entities the IPA cooperates increases with its targeting-intensity (Volpe Martincus and Sztajerowska, 2019).
← 25. For example, to assist in this task, the unit responsible for competitive intelligence has developed a guide for staff on how to use the system and encouraged junior staff to assist more senior staff members in providing the required detail.
← 26. For example, Foreign Investors Survey (2018) shows that investors value, and consider as highly important, not only the provision of information on the regulatory framework but also the agency’s help with procedures and advocating for improvements in the regulatory framework (i.e. policy advocacy).
← 27. For example, in 2017, the share of companies proactively approached by the agency, rather than assisted at the request of the company or a lead transferred from other parts of the government or third parties, was 33%; it has increased to 40% in 2018.
← 28. As part of the plan, the government is aiming to provide a fully digital single window for investment, managed by Uruguay XXI in cooperation with AGESIC and other relevant government bodies, which should be operational by 2020 and have the majority of permits integrated by 2022. For more information, see the government’s website: www.transformauruguay.gub.uy/es/proyectos-por-areas-de-interes/clima-de-negocios
← 29. For example, in 2018, Uruguay ranked among top 25 most corruption-free countries (Transparency International, 2018). In terms of scope for improvement, labour market efficiency is one of the areas where Uruguay scored the lowest in the 2018 Global Competitiveness Report, ranking 121st out of 161 economies.
← 30. The Act governing the insolvency regime in Uruguay has balanced business reorganisation and debtors’ rights, which have been the pillars of the traditional Uruguayan insolvency regime, with newer international trends seeking more efficient proceedings and creditor protections. Overall, the recovery rate has been relatively high and stable over time.
← 31. The new Customs Code (CAROU, Law No. 19.276 of 2014) formalised a series of trade facilitation measures, including the AEO programme and binding consultations and advanced rulings by the Customs administration on the applicable customs regulations.
← 32. See DNA (2007) and WTO (2018) for a further discussion its elements.
← 33. Being an AEO allowing certain users to benefit from simplified customs procedures and other facilities if they are approved by the Customs administration as complaint with certain requirements. For the official definition and further information, see Article 7 of the WTO Agreement on Trade Facilitation or the website of the World Customs Organisation (www.wcoomd.org). As of 2018, Uruguay had 50 AEOs certified covering different types of users.
← 34. The release of goods that pass through the green channel is authorised immediately. Goods that pass through the amber channel are subject to document checks and, in general, the average clearance time is 0.8 days; while goods that pass through the red channel and are subject to document checks and/or physical inspection, have an average clearance time of 1.7 days (WTO, 2018).
← 35. For more information, please consult VUCE’s website: www.vuce.gub.uy.
← 36. The programme has been estimated to generate a saving of more than 400 000 man-hours of low-value tasks and a saving of about USD22 per procedure conducted in VUCE (WTO, 2018: 19).
← 37. The customs clearance time is measured between the request of the verification channel and the release of the goods by customs. The data is based on information provided by the authorities.
← 38. The creation of the Inter-ministerial Committee for Trade Facilitation and the creation and increased coverage of VUCE over time go in that direction (Decree 252/15 and 156/2017).
← 39. Volpe Martincus (2016), using data for 2002-2011, finds that if shipments outside of the green channel had been authorised to leave customs within one day, exports would have been 5.9% larger; and note that this gain corresponds to more than six times the annual budget allocated to Uruguay’s national customs agency (DNA) and more than 100 times the annual budget of Uruguay XXI’s. In addition, according to estimates in Volpe Martincus (2016), average 16% (57%) of new (all) exporting firms supported by Uruguay XXI had transactions inspected over 2010–2015, and evidence suggests that the positive impact of trade promotion assistance on firms’ exports was weakened enough as to not even be significant in Uruguay.
← 40. See the IDB’s website for the initial project description and all the documentation related to monitoring and evaluation: www.iadb.org/es/project/UR-l1060. The programme has now been absorbed by, and this work continues through, the newly-created aftercare unit within Uruguay XXI.
← 41. For further information on the project, see www.transformauruguay.gub.uy/es/proyectos-por-areas-de-interes/clima-de-negocios
← 42. The information is available on Uruguay XXI’s website: www.uruguayxxi.gub.uy/es/quienes-somos/llamados-licitaciones/llamado-consultor-senior-ventanilla-unica-de-inversiones
← 43. In most countries, such reviews are undertaken on an ad hoc basis, while some countries introduced an obligation of periodic reviews of such type, including through the use of sunset clauses in the regulations themselves. Only 26% systematically require periodic ex post evaluation for existing primary laws and 21% for subordinate regulations (OECD, 2018c)
← 44. Data provided by the government authorities as part of this Review.
← 45. Data available at: www.databank.worldbank.org/Source/worldwide-governance-indicators. See Kaufmann et al. (2010) for the description of the methodology.
← 46. For example, the country is close to the levels of regulatory quality encountered in Peru and Costa Rica, nearly 70th percentile rank globally, but it fairs far behind Chile (that close to 90th percentile) and more high-income economies.
← 47. For example, the reforms allowed for a distinction between regulations that are expected to have moderate- and high impacts. An online tool – the Regulatory Impact Calculator – was developed to enable regulators to assess their proposed regulation at an early stage of the process. The RIA Manual was further modified to introduce additional types of RIAs, to focus on competition impact analysis, risk analysis, or a combination of both. Finally, COFEMER was empowered to request an ex post RIA to ministries and decentralised bodies that issued technical standards accompanied by high-risk RIAs (OECD, 2015b).
← 48. This is regulated by Law 18.381 of 2008 and Decree 232/010 of 2010.
← 49. This information is based on the answers provided by the government as part of this Review.
← 50. For example, when regulation is deemed to have environmental impact, Law 16.466 of 1994 obliges a Ministry in question to publish the regulation in advance with the view of interested parties being able to submit comments and suggestions.
← 51. It is available on the dedicated portal: www.catalogo-participacionciudadana.portal.gub.uy.
← 52. For example, in Montevideo, the city budget has been prepared through an inclusive process since 2009.