February

2011

Tourism and Real Estate

2

1. Why invest in the sector in Uruguay?

Tourism is an expanding industry both worldwide and in Uruguay with investment opportunities available in multiple sub-sectors.

Tourism accounts for approximately 6% of Uruguayan GDP.

Uruguay offers very attractive natural conditions for several types of tourism, all located at very short distances from each other: renowned beaches on the eastern littoral, rural tourism in the hinterland, hot springs along the western littoral and urban tourism in cities such as Montevideo and Colonia.

Infrastructure is constantly being updated for visitors to enjoy the best services. Examples include the Montevideo Airport and the Colonia River Terminal, both opened in 2009.

In addition, Uruguay’s privileged location, rich soils, reasonable property prices and a healthy financial system are advantages that make investments attractive and, above all, safe.

Uruguay’s proximity to Argentina (and Buenos Aires in particular) and southern Brazil ensures a constant inflow of tourists.

The Ministry of Tourism and Sport is the national authority for tourism. The Ministry promoted the creation of the 2009-2020 National Sustainable Tourism Plan, which encourages diverse activities with a stable legal framework that promotes sector investments through significant tax exemptions.

The region’s recent high economic growth is reflected on present can real estate and tourism investments on course that will ensure a sustained increase in foreign visitors to the country.

3

2. Incoming tourism in Uruguay and the world

2.1. Major global tourism trends: fairly constant annual growth, Europe and USA as significant origins and destinations, seasonal peak in July and August1

International tourism has been on the rise over the last 15 years. The number of tourists has expanded from 534 million in 1995 to an estimated 940 million in 2010. There was less pronounced growth between 2001 and 2003 and a slight decline in 2009 due to the international crisis, but a recovery was seen in 2010.

In South America, the number of tourists per year rose 76% between 1995 and 2008, reflecting a higher growth than the world average (72%). Income from tourism doubled between 2000 and 2008, from US$ 475 to US$ 946 million. Similar growth has been seen in nearly all regions of the world. See Figure 1. Figure 1. Incoming international tourists (millions)2

In 2009, Europe received 52% of international tourists, followed by the Asia-Pacific region (21%), the Americas (16%), the Middle East (6%) and Africa (5%). The most significant change since 1995 has been the higher relative growth of the Asia-Pacific region in comparison with Europe and the Americas. See Figure 2.

1 Source: World Tourism Organization (UNWTO) Tourism Barometer. 2 Source: World Tourism Organization (UNWTO) Tourism Barometer, 1 and 6/2010, 2010 estimated.

4

Figure 2. Incoming international tourists per region, 2009 (millions of tourists and percentages)3

The pattern of income distribution from international tourism is similar to the one reflected in the previous chart except for the relative importance of the Asia-Pacific region and the Americas which is more significant.

Figure 3 shows the arrivals of international tourists for the 10 principal tourism destinations (of the 120 destinations covered by the World Tourism Organization – UNWTO). Argentina, Brazil and Uruguay have been added to the chart for comparison purposes. The figure shows that Uruguay, a country with a small population, is ranked fifth in terms of the number of tourists in comparison to population, denoting the importance of tourism for the country.

3 Source: World Tourism Organization (UNWTO) Tourism Barometer 6/2010.

5

Figure 3. Incoming international tourists per region (2009, percentage of population and figures in millions)4

4 Source: tourists - UNWTO, Tourism Barometer 6/2010; population - Wikipedia, estimated population for early 2011. Note: chart

includes the 10 major tourist destinations plus Argentina, Brazil and Uruguay.

6

114% 112%

83%74%

63%45%

33% 29%19% 18% 10% 4% 2%

0%

20%

40%

60%

80%

100%

120%

140%

F ranc e S pain Malays ia Italy Urug uay United

K ing dom

Turkey G ermany Mexic o US A Arg entina C hina B raz il

Tourists 74 52 24 43 2 28 26 24 22 55 4 51 5

Population 65 47 29 58 3 63 78 82 113 312 42 1,333 202

7 Incoming to

8

2.2. Incoming tourism in Uruguay

Visitors and annual exports

Incoming tourism in Uruguay has expanded over the past five years. The number of visitors rose from 1.8 million in 2006 to 2.1 million in 2009. An estimated 2.4 million are expected for 2010.5 Tourism exports, in turn, rose from US$ 594 million in 2005 to US$ 1,311 million in 2009 and are expected to reach US$ 1,560 million in 2010.6 See figures 4 and 5.

The World Tourism Organization (UNWTO) and the WTO.Themis Foundation, in collaboration with the IE Business School and the Ministry of Tourism and Sport of Uruguay (MINTUR) are performing a case study entitled, “Natural Uruguay: the differentiation of an emerging tourist destination.” This study, which is the first to be carried out on a tourism destination, is focused on analyzing the increase in per visitor spending related to the increase in tourism income in Uruguay over the past 10 years.

5 Note: 2010 estimate based on data from first half of the year. 6 Source: www.bcu.gub.uy. Note: 2010 estimate based on MINTUR data on spending growth by tourists in the first half of the year

(19%). 7 Source: www.mintur.gub.uy. Note: 2010 estimate based on data from first half of the year.

8 Source: www.bcu.gub.uy. Note: 2010 estimate based on data from first half of the year.

Figure 4. Uruguay: annual visitors (thousands)7

Figure 5. Uruguay: annual tourism exports (US$ millions)8

9

Major tourist destinations

Uruguay’s main tourism destination is Montevideo (33% in 2009), followed by Punta del Este (26% in 2009). Overall, visitors to the coastal region account for 40% of all tourists. See Figure 6. The highest growth areas in the country over the past five years are Colonia and the coast of Rocha. The following map shows the four major tourist areas plus Montevideo.

10

Figure 6. Visitors per destination (2009, in thousands and percentages)9

Figure 7. Visitor spending per destination (2009, USD millions)10

Total visitor spending in 2009 was US$ 1,300 million. Punta del Este received 46% of the total spending, followed by Montevideo at 33%. See Figure 7.

Average stay per person according to lodging type and main destination

The average length of stay in 2009 was 7.2 days. The 821,000 visitors staying in hotels (39%) stayed for an average of 5.5 days. Meanwhile, the 1.125 million visitors staying in houses (54%) stayed between 8 and 12 days, depending on whether they rented homes or stayed with family and friends. See Table A1 in the Appendix.

Origin of visitors to Uruguay

Most of the tourists who entered the country in 2009 reside in Argentina (73%) and Brazil (12%), but a significant number of Chileans and Paraguayans also came to Uruguay. Europeans and North Americans accounted for 8.4% of the total. See Table A2 in the Appendix.

Visitors according to travel reason

Although most incoming persons state recreation or visits to family or friends (84%) as reasons to enter the country, many come for business or professional reasons (154,000), conferences seminars or study (20,000), sport (14,000), health reasons (11,000) and other (140,000). See Table A3 in the Appendix.

Daily per person spending according to lodging type

Daily per person spending went from US$ 86 in 2009 to US$ 104 for hotel visitors and to US$ 95 for those staying in houses (rented or owned). Spending was US$ 116 per day in 2009 for those visiting Punta del Este. In the first half of 2010, average daily spending per tourist was US$ 93.

9 Source: www.mintur.gub.uy. Total visitors: 2,099,000. 10 Source: www.mintur.gub.uy. Total spending: USD 1,297 million.

11

Visitor spending breakdown

Total spending by tourists in 2009 was US$ 1,300 million. Major spending areas were: lodging (26%), food (24%), shopping (12%), transport (7.5%) and other (30.5%).

2.3. Cruise ship tourism11

The number of cruise ships stopping in Montevideo and Punta del Este has increased over the last five seasons. Cruise ship arrivals went from 99 in 2005-06 to 179 in 2009-10. The total number of visitors rose from 111,000 in 2005-06 to nearly 300,000 in 2009-10, as seen in the following two charts.

11 Source: www.mintur.gub.uy.

12

Figure 8. Cruise ship arrivals per port and season12

Figure 9. Cruise ship visitors per port and season (in thousands)13

In the 2009-10 season, most cruise ship visitors were Brazilian (53%), Argentine (23%), North American (12%), European (5.5%), rest of the Americas (4.5%) and other nationalities (1.7%). See Table A4 in the Appendix.

Cruise ship visitor spending in Uruguay, 2009-10

Total cruise ship visitor spending was US$ 17.8 million, averaging US$ 61 per person. Total spending was US$ 10.5 million in Punta del Este and US$ 7.3 million in Montevideo.

Purchases accounted for 71% of spending, followed by food (16%), tours (6%), transport (1%) and other (6%).

2.4. Specific data on tourism types

Beaches are the Uruguayan main attraction, with the coast concentrating 40% of visitors.14 Punta del Este, other areas of Maldonado and Rocha feature fine sand beaches, water suitable for swimming in summer, a maritime landscape, hospitality and security. Punta del Este is where real estate investments are concentrated.

Montevideo and Colonia are known for urban tourism. Montevideo has high hotel occupation rates throughout the year (70% on average).15

Rural tourism has grown over the last 10 years. Farms outside the capital are used to provide recreation and a place to rest. The western littoral region near the Uruguay River features hot spring tourism facilities.

12 Source: www.mintur.gub.uy. 13 Source: www.mintur.gub.uy. 14 See page 8 of this report. 15 Information provided by Oscar Iroldi, Montevideo Tourism Conglomerate coordinator.

13

Rural Tourism16

Rendering of rural tourism services is regulated by decree 371/2002.

On 2009, 122 rural establishments were surveyed, of which 23 were in Maldonado, 21 in Colonia, 13 in Rocha, 12 in Lavalleja and the remaining were spread out through the rest of the country. The greatest concentration is found within 300 km of Montevideo.

Rural tourism characteristics

1. Country Hotel. Contact with nature, yet with the comforts of a hotel. High level service with hints of rural life. Possibility of related activities. Lodging and all-inclusive services offered.

2. Guest Ranch. Contact with the past and history, ranch traditions. Attended by host family. Possibility to participate in ranch activities. Comfortable, home-like. Livestock or farm production. All inclusive services and activity days in the countryside.

3. Country Inn. More modern infrastructure adapted to tourism. Comfort and good level of service. Attended perhaps by host family. Activities depend on the area and activity of the farm/ranch. Lodging, all inclusive services and activity days in the countryside.

4. Tourist Farm. Small properties focusing on farm activities, which set the context for the farm’s cuisine. May or may not be attended by the host family. Farm’s own products used for consumption and sale. Offers day activities and an authentic country restaurant.

5. Country House. Concept that includes everything not included in the previous establishments. No lodging. Activities, recreation, food. Offers day activities and an authentic country restaurant.

Of these establishments, 68% receive foreigners. 57% state they receive visitors from Europe, 30% from North America, 30% from Mercosur countries, 99% from Latin America and 16% from other countries.

16 Based on a study by STI-MINTUR-SUTUR-CEADU (2009).

14

Hot Springs Tourism17

There are more than 10 hot spring centers in the western littoral region of Uruguay. Significant investments have been made in several complexes. These centers have pools of different sizes featuring water from the Guaraní Aquifer with temperatures up to 44°C (111°F). Hot spring developments include hotels, bungalows, motels, restaurants, tennis courts, healing centers and parks.

These hot springs complexes include, from north to south, Arapey (Artigas department), Salto Grande and Daymán (Salto department); and San Nicanor, Guaviyú and Almirón (Paysandú department). The sources of the hot springs were discovered during petroleum prospecting by state-oil company ANCAP.

Recent investments include Arapey Municipal Hot Springs, a 600-hectare complex, located 80 km north of the city of Salto. The 5-star Hotel Arapey Thermal Resort and Spa has also opened in the area.

Nearby, the Altos del Uruguay golf club and hotel is currently under construction (as of December 2010). On the 60-hectare area including an 18-hole golf course (11 holes were opened in September 2010), an infrabasaltic perforation will be made for a 1,200 meter well to extract thermal water to supply the 5-star hotel. The hotel will feature 120 rooms, 20 suites, a hot tub, two indoor and outdoor pools, a gym and spa. The investment will total USD 18 million and will include a landing strip for small aircrafts.18

17 Source: www.viatermal.com. 18 El País newspaper, 22

nd of September 2010.

15

3. National Sustainable Tourism Plan 2009-2020 In June 2009, Uruguay released its National Sustainable Tourism Plan for the 2009-2020 period, which is leaded by the Ministry of Tourism and Sport (MINTUR).

The plan aims for Uruguay to be an internationally recognized friendly and safe tourism destination that is committed to sustainable development with quality services, qualified people and full coordination among key sector players.

The plan’s strategic orientation is based on following five lines of action:

1. An economically, environmentally and socio-culturally sustainable tourism model. 2. Innovation and quality, driven by competitiveness. 3. Increased capabilities, employment quality and commitment of players in the tourism

system. 4. Marketing and promotion to broaden demand and cultivate loyalty. 5. Tourism as a tool for social, territorial and political integration while conscious of diversity.

One of the aspects of the national plan is a Nautical Tourism plan to position Uruguay as a Nautical Tourism Destination in the southern cone of South America. Investments will be made in three types of infrastructure: sport vessel ports, boating areas and river facilities, for which integration is sought among nautical activity companies in the area.

16

4. Tourism related services: hotels As of April 2009, there were 488 hotels in Uruguay, 18% more than in 2002. The number of rooms rose 12% in that period. Most hotels are located in the department of Maldonado, mainly in the city of Punta del Este. See Tables 4.1 and 4.2 and Table A5 in the Appendix. Table 1. Hotels in Uruguay (2009)19

Stars Hotels Rooms Number of beds

***** 12 42

1,504 2,127 **** 42 2,233

4,882

*** 154 5,386 11,093

** 140 3,350 7,117

* 74 1,485 3,063

Not rated 66 1,506 3,957

Total 488 15,464 32,239

Table 2. Hotels in Uruguay per department (2009)20

Stars Maldonado Montevideo Colonia Rocha Salto Paysandú Rest of country Uruguay

***** 4 3 1 0 1 0 3 12

**** 17 13 6 2 0 1 3 42

*** 56 18 16 12 7 1 44 154

** 36 21 12 10 5 2 54 140

* 11 18 2 4 0 1 38 74

Not rated 19 11 5 9 6 2 14 66

Total 143 84 42 37 19 7 156 488

Of the 543,190 tourists who visited Punta del Este in 2009, 38.3% stayed in hotels. The distribution was as follows: 1 star - 1,963 (0.4%); 2 star - 9,089 (2%); 3 star: 47,284 (8.7%); 4 star: 109,958 (20.2%); 5 star: 29,780 (5.5%); not rated: 8,151 (1.5%). Some 324,323 tourists (59.7%) stayed in rental houses or in homes of family and friends. Other lodging types included: campsites – 2,450 (0.5%); apartment hotels – 5,487 (1%); timeshares – 2,610 (0.5%); other – 2,095 (0.4%).21

19 Source: MINTUR, data as of 30th

of April 2009. 20 Source: MINTUR, data as of 30

th of April 2009.

21 Source: Maldonado Tourism Observatory, 2009 year book; Quo Vades consulting firm.

17

5. Recent investments

An approximation of investments in the tourism sector over the last few years can be made using information on investments promoted in accordance with law 16,906 of 1998 and decree 455/007. Figure 10. Promoted tourism sector investments (US$ millions)22

The following are some significant investments on course and later we will examine other undertakings grouped by location.

5.1. Carmelo Golf operated by Four Seasons, department of Colonia23

Carmelo Golf is a closed development consisting of 220 lots and 12 farms with a golf course, driving range, lakes, equestrian area and polo field. The project is a joint venture between the Real Assets and Eidico companies of Argentina. The undertaking is located on route 21 in Carmelo across from an exclusive 44-room hotel operated by Four Seasons. An international airport serving the highest number of private flights in Uruguay is located 7 km from Carmelo in the department of Colonia.

Carmelo Golf is located among pine and eucalyptus trees near the La Plata River. Rooms are distributed in 90 m2 bungalows and 120 m2 suites with views of the countryside and the river. The complex includes a spa, gym, indoor and outdoor pools, beach, two tennis courts, two restaurants, a convention center and casino.

The total investment amount will be US$ 15 million. Sales prices for lots vary between US$ 40,000 and 350,000.

22 Source: COMAP. Note: 2010 estimate with data as of 30th

of September 2010. 23 Source: www.ciudadbiz.com, business news website, 8

th of November 2010.

18

5.2. Hotel Fasano and Las Piedras Villas development, Punta del Este24

Located eight kilometers from La Barra in the department of Maldonado on the top and side of a hill, this 480-hectare complex opened in December 2010 with a total investment of more than US$ 100 million. The hotel consists of 34 bungalows ranging between 38 and 120 m2 in size and is administered by Hoteles Fasano of São Paulo, Brazil. It was designed by Brazilian architect Isay Winfield.

The project also features 295,000 m2 lots surrounding a golf course designed by Arnold Palmer. Homes have been built on some of the lots. In addition, there is a section with one and five hectare properties.

The complex includes a polo field, tennis courts and a beach on the Maldonado Stream.

5.3. The Setai hotel and development in José Ignacio, department of Maldonado25

The Setai José Ignacio is located in the beach resort town of José Ignacio, Maldonado. It is located on a 25-hectare property and has 1,300 meters of oceanfront space.

The undertaking consists of two areas:

An oceanfront boutique hotel in the main area with 10 individual villas.

A residential area consisting of 40 lots to the east and west of the hotel for luxury homes.

This exclusive boutique hotel will feature a wide range of services, including retail, recreation, leisure and a spa that will also serve villa owners. The main building will have 2,800 m2 of space and will house administrative and recreational activities of the hotel and spa, including a restaurant, Club Setai and 10 exclusive suites. The hotel will offer lodging in two-bedroom villas located on the property.

The residential area consists of 40 individual lots averaging 2,000 m2 in size. 26 of the lots are oceanfront and the rest are in the second and third rows from the oceanfront lots. The lots were designed for large and exclusive residences ranging from between 250 to 500 m2.

The total investment for the hotel and general infrastructure is approximately US$ 40 million.

5.4. Hotel Rivera Casino Resort, city of Rivera26

This project, located in the city of Rivera on the border with Brazil, consists of three sections totaling 13,000 m2 of space. A 4-star hotel will feature 60 rooms, a restaurant, conference hall, spa, game room and pool.

Another building will include slot machines and a restaurant.

A third part of the project is a remodeling of the former Hotel Casino building and will feature casino table games, a slot machine room and six VIP rooms and will be connected to the hotel complex via a glass bridge over Uruguay Street.

24 Source: El Observador newspaper, Café y Negocios section, 16th

of November 2011. 25 Source: Seinco, 29

th of November 2010.

26 Source: www.ciudadbiz.com, 3rd

of November 2010.

19

The total investment by the Boldt-ICM-Manteo consortium is estimated at US$ 27 million.

5.5. Hotel projects underway in Montevideo27

In 2009, Montevideo had 9,700 hotel beds28 and new projects currently in construction will add another 1,200. The following are the main projects underway.

Regency Hotels Group.29 Regency, a business group of local capital, has three hotels in Montevideo and is building one more in the Carrasco area with a US$ 3.5 million investment.

Sofitel Montevideo Casino Carrasco and Spa. Remodeling underway.30 The municipality of Montevideo awarded the reconstruction and 30-year concession of the Carrasco Hotel Casino to a consortium led by Codere of Spain along with the AGG company of Argentina, other international investors and the Sofitel hotel operators, the premium brand of French chain Accor. Sofitel administers 134 luxury hotels in 50 countries. More than US$ 60 million will be invested in the project. The hotel will feature 119 luxury rooms and will open in 2012. Codere is a Spanish multinational renowned for private casinos in Europe and Latin America. Accor is already represented in Uruguay through the Ibis Hotel, located on Montevideo’s rambla, or seaside avenue.

Hotel Esplendor Cervantes Montevideo. Remodeling underway.31 Argentine business group Fën administers 17 establishments in several countries in Latin America and will remodel and administer the Cervantes Hotel, which has been declared a historical heritage site of the city. The hotel is located downtown and will feature 85 rooms and a multipurpose hall for corporate events, parties and tango galas, with an original design (boutique hotel). The total investment amount will be US$ 8 million. The opening is scheduled for 2011.

Pestana Montevideo Hotel. Remodeling underway in the former Jockey Club building.32 Portuguese business group Pestana Hotels & Resorts administers 88 hotels, 43 of which are on three continents and 45 luxurious and historic hotels in Portugal, in castles, monasteries, palaces and fortresses. In Montevideo, the hotel is located on the capital’s main avenue, 18 de Julio, 100 meters from Plaza Independencia. The hotel will feature 100 rooms on 15 floors with a spa, indoor pool and halls for events and conventions. Neela of Spain is the owner of the building, which will be leased for 30 years. This undertaking will be the 13th for the company in South America and the investment will total US$ 20 million. The opening is planned for 2012.

Hilton Garden Inn (part of the Hilton chain). Next to Montevideo Shopping Center and the World Trade Center, featuring 120 rooms and a US$ 10 million investment currently underway.

27 Source: El Observador newspaper, 14th

of July 2010 and El País newspaper, 3rd

of September 2010. 28

Source: Montevideo Tourism Conglomerate strategic plan, 2009. 29 Source: El País newspaper, Economía y Mercado section, 8

th of November 2010.

30 Source: El País newspaper, 25th

of November 2009, 10th

of September 2010. 31 Source: El País newspaper, 8

th of November 2009.

32 Source: www.portaldeluruguay.com, 9th

of March 2010.

20

After Hotel. Located in Pocitos/Buceo, with 90 rooms and a US$ 8 million investment underway.

Urban Express Hotel. Located in downtown Montevideo next to the Adela Reta Auditorium. Opened in September 2009 with 30 rooms.

5.6. Projects underway in Punta del Este, Punta Ballena, La Barra and José Ignacio

To illustrate the growth of real estate investments in the greater Punta del Este area, we present some large projects currently underway financed mainly with foreign capital. Also included is an undertaking by the municipality of Maldonado.

Sales prices for lots vary between US$ 30 and 150 per m2, while apartment prices do not exceed US$ 3,000 per m2 on average.

Convention Center and Fairgrounds. The municipality of Maldonado is in the process of awarding the construction of a convention center and fairgrounds on a property in El Jagüel, located a few minutes from downtown Punta del Este and the city of Maldonado. The site has convenient connections to highways, the airport and port. The first stage includes the construction of a convention hall and preparation of a 12,000 m2 fairground. The second includes another convention hall and a 6,000 m2 expansion of the fairground area. The plan and financing proposal were presented by architect Carlos Ott and Bilkoy S.A. A bid is pending for the construction and management stages.

21

The following are some projects under construction as of November 2010:33

Silente Club de Mar. A project of Argentine capital located on the rambla (Seaside Avenue) in the Rincón del Indio neighborhood. Four buildings on a 3.5-hectare lot with units ranging from 160 to 718 m2 with ocean views plus 22 houses of 180 m2 each. Each unit has two parking spaces. The complex has a par 3 pitch and putt course, heater covered pool, outdoor pool, tennis court, club house, gym, spa, business center, reading room and kids’ club.

Blue Bird. A project of Swedish capital. An oceanfront tower on La Mansa beach with two and three bedroom units ranging from 130 to 300 m2.

One. Argentine and Uruguayan capital project featuring four 25-floor towers on a 28,000 m2 property with ocean views. Units have three and four suites each and services and conveniences of a 5-star hotel.

Le Parc 1 and 2. An oceanfront tower of Argentine capital featuring 24 floors of 2 and 3 bedroom ocean view luxury apartments, all with housekeeper quarters.

Laguna de los Cisnes. European capital project, 15 minutes from Punta del Este and 4 km from the Laguna del Sauce airport. 238 hectares divided in 224 half-hectare lots and 120 hectares of common space, 20 hectares of a lake and 4,000 hectares for watersports. Prices start at US$ 29 per m2.

Swan Lake Forest. European capital project, located on route 12 km 5 facing Sauce Lake in the Cumbres de La Ballena hillside. On this 50-hectare development, 5 hectares will be allotted for a hotel that will be completely independent from the rest of the development. Lots sizes range from 1,000 to 4,800 m2.

Green Park. Argentine capital project located in Punta Ballena. A private club with apartments surrounded by 140 hectares of virgin forest.

El Puertito. European capital project. A development in Punta Ballena 9 km from the airport and 15 km from Punta del Este on Sauce Lake. Of the 9-hectare area, 6 are for exclusive use and 33% consist of common spaces.

Villa Lagos. European capital project, development in La Barra. This project is located in Buenos Aires neighborhood along route 10. It is a large residential development consisting of 13 maritime farms between 4 and 5 hectares each and villas between 700 and 900 m2.

Pueblo Coyote. Argentine capital project. A development in La Barra in an area with vineyards consisting of 29 lots of 2,000 m2 each. It has a tennis court, studio, boutique winery and clubhouse with a pool and barbeque area.

Laguna Estates. Spanish capital project. A development in La Barra located on route 104, 15 km from Punta del Este. It consists of 81 lots of between 5,000 to 10,000 m2 with tennis courts and a clubhouse.

Laguna Escondida. Argentina capital project, a hotel and development in José Ignacio. The project is on two properties accounting for approximately 120 hectares. The residential and hotel/spa area will be developed on an 86-hectare tract north of the highway. The second 12-

33 Source: ciudadbiz.com, 12 November 2010.

22

hectare tract on the beach will house the beach club and residences with lot sizes ranging from 1,800 to 7,000 m2 with a front greater than 35 m.

Las Coronillas. Argentine capital project, development in José Ignacio. Total surface area is 100 hectares consisting of 55 properties of 8,000 m2 each with 50 hectares of lake and park areas, 4,500 m of roads, club house, pool, bonfire area, stables and corrals, children’s area and horse and bicycle trails.

Veramansa. A complex by the Alvear business group of Argentina. It consists of several buildings and 800 m2 lots (average) surrounded by trees and lakes and a direct access to the beach. The investment will total more than US$ 30 million and will include a 5-star spa. Apartments range in size from 180 to 400 m2 and feature an international level of luxury.

5.7. Projects underway in the city of Colonia34

Over the last few years, real estate in the city of Colonia has seen significant growth. On the coastal avenue, the lot prices exceed US$ 500 per m2 and properties sell for more than US$ 2,200 per m2. 80% of the apartments on the coastal avenue are purchased by Argentines who use them as second or retirement homes.

In 2010, real estate projects were announced with investments totaling more than US$ 5 million, including the Altos de Virrey hotel, the Costa Colonia condo hotel, and several apartment buildings, all along the coastal avenue.

6. Prices and costs in the Uruguayan real estate sector

6.1. Real estate market

The largest real estate investments have been made in Montevideo and Punta del Este and consists of two main types: horizontal properties (condominiums) and individual houses. Both are linked to the tourism industry, especially in Punta del Este, due to the fact that most buyers are foreigners and because the properties are rented to tourists in summer.

34 Source: El Observador newspaper, Café y Negocios section, 17th

of October 2010.

23

The National Statistics Institute (INE) provides construction costs and existing home sales prices for Montevideo. Costs are categorized into 10 housing types in order of price.35 Sales price classification includes variables such as type (horizontal property, etc.), age (decade of construction), neighborhood, size (m2) and use (housing, office, retail, other).36

The following is a cost and sales price comparison for specific horizontal properties in Montevideo. For the comparison, we have selected the highest cost properties (luxury tower with elevator and heating). Regarding sales price, we have selected the top four highest price areas and the 75th percentile.

Table 3. Montevideo: comparison between used unit sales price and construction cost, 2007-2009 (US$/m2)37

Year Construction

cost Used unit sales price

Punta Carretas Pocitos Parque Rodó Malvín Average

2009 958 1,564 1,448 1,362 1,331 1,426

2008 928 1,507 1,294 1,158 1,273 1,308

2007 753 1,314 1,152 974 1,066 1,127 Note: cost per square meter includes: materials, compensation, equipment depreciation, benefits and general expenses of the construction company, value added tax and social security (BPS). Does not include land value, professional fees, construction permit costs and real estate commissions. The annual per square meter cost was calculated by averaging 6-month costs in Uruguayan pesos from the INE and applying the inter-bank exchange rate (ask price) averaging the monthly exchange rate taken from www.ine.gub.uy/índices de precios y salarios/cotización de monedas. The sales price refers to used horizontal properties at the 75

th percentile.

35 See www.ine.gub.uy/actividad/actividad inmobiliaria/indicadores de actividad y precios del sector inmobiliario.

36 See www.ine.gub.uy/indices de precios y salarios/precios de la construcción de viviendas.

37 Source: INE National Statistics Institute. For costs: www.ine.gub.uy/indices de precios y salarios/precios de construcción de

viviendas. For sales prices: www.ine.gub.uy/actividad/actividad inmobiliaria/indicadores de actividad y precios del sector inmobiliario.

24

No cost data exists for Punta del Este, but we estimate that costs are perhaps only slightly higher than in Montevideo. However, per square meter sales price data for housing is available (horizontal properties and individual houses). For example, the average sales value per square meter in Punta del Este was US$ 1,623 and the 75th percentile was US$ 2,024. In Pine Beach, the average value was USD 1,997 and the 75th percentile was USD 2,401.38

6.2. Montevideo office market39 The supply of office space has expanded and is able to satisfy the requirements of domestic and multinational firms. The office market in Montevideo began a renewal process in 2009, which began with the start of the construction of World Trade Center III in 2007. At the end of the third quarter 2009, two class A+ buildings were opened which added 48,175 m2 of office space to the market, plus three class A buildings that provided 9,798 m2 of space. Eight construction projects are expected to be completed in 2010 and six more are expected for 2011. See Figure 11.

Following the international trend, developers are beginning to show concern for the environmental and renewable resources by seeking LEED standards developed by the United States Green Building Council for new buildings.

Figure 11. Change in inventory of class A+, A and B offices in Montevideo, 2003-2014 (thousands of m2)40

Figure 12 shows forecasted changes in office space locations in Montevideo between 2009 and 2014. Existing buildings have a vacancy rate been zero and less than 5% in some cases. Figure 12. Inventory of A+ and A offices in Montevideo in 2009 and estimated growth for 2009-2014 (thousands of m2)41

40 Source: Colliers International, Q4 2009. Does not include officies in the Zonamerica free zone. Includes offices in the Aguada

Park and WTC free zones. 41

Source: Colliers International, Q4 2009.

25

Figure 13. Per category average rental prices for official buildings in Montevideo, 2009 (US$/m2)42

There is a wide range of prices in the market due to various promotions developers have included in their marketing mix. For example, for a class A building, monthly rental prices vary from USD 14 m2 in areas such as Tres Cruces to up to USD 26 in Ciudad Vieja. See Figure 13.

Figure 14 shows rental prices and monthly expenses for some large buildings.

Figure 14. Average office rental prices in Montevideo, 2009 (US$/m2)43

42 Source: Colliers International, Q4 2009.

43 Source: Colliers International, Q4 2009.

22,717,4

8,8

4,33,5

2,0

0

10

20

30

A+ A B

Precios de alquiler mensual (US$/m2)

Gastos comunes mensuales (US$/m2)

26

8.7

9.0

18.0

18.0

20.0

20.0

24.0

2.0

2.2

3.5

1.4

3.5

2.5

3.5

0 5 10 15 20 25 30

T orre de los P rofes ionales

T orre E l G aucho

Aguada P ark

P laza Mayor

T orre J uncal

T orre Marigot

World T rade C enter

G as tos mens ualesde expens as(US $/m2)P recios de alquilermens ual (US $/m2)

7. Human resource training

Uruguay offers a wide range of human resource training in tourism, especially in the mid-range. The following are some examples: 7.1 ORT University. Tourism Management Technician degree (two years). Preparation to assume supervisory responsibilities in medium and large tourism organizations or management of small companies, including hotels, gastronomy services, travel agencies and transport services. 7.2. Montevideo Polytechnic Institute (ITHU). Two year courses: Expert in Gastronomy and Expert in Hotel Management. One year courses: Expert in Tourism and Professional Organizer of Congresses and Events. 7.3. Polytechnic University of Uruguay (UTU). The following courses are offered: Expert in Tourism (three years), Expert in Performance and Recreation (one year), Expert in Lodging Management (two years), Expert in Tour Guide and Touristic Circuit Design (two years). Travel Agency Sales and Reservation Assistant (two years), Tour Guide, Hotel Receptionist-Concierge (two years).

8. Sector investment promotion and regulation

27

8.1. Investment promotion

In Uruguay, several regulations offer benefits for investments in tourism. Some benefits are for all industries, while others are specific to the tourism sector. The following are two recently introduced incentives for investment promotion and a third existing system to provide income tax exemptions for investments.

Recent investment promotion legislation

The Investment Promotion and Protection law of 1998 (no. 16,906) established the general promotion framework while decree number 455/007 (26th of November 2007) is the current applicable regulation. Decree number 175/003 (7th of May 2003) adapts said regulation specifically to the tourism sector.

Applicants may select either system, or a combination of benefits from both in accordance with the following.

A – General investment promotion system: chapter 3 of law 16,906 – Investment Promotion and Protection Law and Regulatory Decree 455/007.

This system is applied to any type of company that is subject to the IRAE corporate income tax in the agriculture-livestock, manufacturing, retail or service sector and that invests in:

moveable fixed assets directly linked to the company’s activity, including computer hardware, utility vehicles.

fixed improvements (materials and services for civil projects), excluding those for residences.

Investment projects must be declared as promoted by the Executive Branch. If a company belongs to a promoted economic sector, it still must apply to the COMAP application commission (at the UNASEP private sector support unit) to receive tax benefits.

Applications are submitted to COMAP44, which has set timeframes (30, 45 or 60 days according to investment amount) to establish benefit amounts and promotion status with the Executive Branch. If the timeframe is not met, it is understood that the project has been approved.

The IRAE corporate income tax exemption is the principal benefit and consists of deducting investments made from taxes payable, in accordance with certain conditions regarding investment amounts and fulfillment of certain objectives.

1) Investment amount

Seven investment sizes have been established so that the higher the invested amount, the higher percentage of the investment that can be deducted from IRAE payable, and the longer the period available for the deduction. See Table 4.

Table 4. Project sizes according to investment amount, percentage of IRAE income tax deduction and timeframe45

44 COMAP and UNASEP offices are open to the public in the Uruguay Fomenta building located at Rincón 518, Montevideo.

28

Project Size in Indexed Units (UI) millions

Project Size in US$ millions

maximum % of investment to be

deducted from taxes

Maximum term for deduction

Small less than 3.5 less than 0.4 60% 5 years

Medium S1 3.5 to 14 0.4 to 1.4 70% 15 years

Medium S2 14 to 70 1.4 to 7.0 80% 20 years

Large S1 3.5 to 140 7 to 14 90% 25 years

Large S2 140 to 500 14 to 50 90% 25 years

Large S3 500 to 7,000 50 to 704 100% 25 years

Very large more than 7,000

more than 704 100% 25 years

2) Fulfillment of certain objectives in line with economic policy

2.1. Percentage of investment to be deducted from taxes

Objectives include: employment creation; domestic added value creation; export growth; decentralization or location outside Montevideo; clean technology use; increase in research, development and innovation; impact of the project on the economy.

Each objective is assigned a score between 0 and 10. Each project size according to the investment amount, weighs differently for each objective, and there is a maximum score for each size.

2.2. Maximum timeframe for tax deduction

For the small size projects, the maximum terms are: three years (1 to 4 points), four years (5 to 7 points) and 5 years (8 to 10 points).

The maximum term for projects of very large economic significance is 25 years. For medium and large projects, the maximum term is calculated by applying the ratio between the points obtained and the maximum possible points (a higher score provides a longer term for deductions).

After the end of the term, non-deducted benefits are lost.

If the company does not initially have taxable income, the deduction remains on hold until taxable income is obtained for a maximum of four years.

The term is in effect from the first year the company has taxable income, starting in the fiscal year the project was presented.

A detailed explanation regarding score calculation and other requirements can be found at: www.mef.gub.uy/comap_reg_actual.php and www.mef.gub.uy/comap_circulares.php.46

Other exemptions

45 Source: developed in house based on decree 455/007. To determine the dollars column, UIs were calculated at UYP 2.0916 and

the exchange rate at UYP 20.807 (31 August 2010), according to www.ine.gub.uy, price and wage indices. The maximum

investment amount for small projects is USD 351,800 using the indicated exchange rates.

46 Tax Bureau query no. 5172 of 23 December 2008 clarifies certain specific application aspects.

29

Exemption on IP capital tax on movable fixed assets during the productive life of these assets. For civil works projects, the exemption period is up to eight years if located in Montevideo and up to 10 years if located outside the capital.

Import duties and taxes on movable fixed assets are exempt when declared non competitive with national industry by the National Industry Bureau at the Ministry of Industry and Energy.

VAT on local purchases of materials and services for civil works projects may be returned (similar to the export system).

B – Specific investment promotion system for the Tourism Sector: decree number 175/003.

Decree number 175/003 classifies tourism activities into two groups, with different incentives for each:

a) Tourism projects: lodging, cultural, commercial, conventions, sport, recreational, leisure or health activities that entail increasing tourism demand, approved in accordance with law 16,906 and this decree.

b) Hotels, apartment hotels, inns, motels and tourism ranches already built or to be built.

Under this system, meeting the objectives of decree 455/007 is not required.

a) The following are exempted for Tourism Projects

for civil works, VAT on local purchases and VAT on imports for the project, IP capital tax for 11 years and 50% of import taxes on these goods. For IRAE corporate income tax, civil works can be amortized over a 15-year period.

for equipment, VAT on local purchases and VAT on imports for the project, IP capital tax for 5 years and 50% of import taxes on these goods. For IRAE corporate income tax, civil works can be amortized over a 5-year period.

b) The following is exempted for hotels, apartment hotels, inns, motels and tourism ranches already built or to be built:

for equipment, VAT on local purchases and VAT on imports for the project, IP capital tax for 5 years and 50% of import taxes on these goods.

C – Alternative application of the general investment promotion system and specific system for the Tourism Sector.

Exemptions from both systems can be combined (decrees 175/003 and 455/007), which are presented for comparison purposes in Table A6 in the Appendix.

30

Investment exemption system (IRAE corporate income tax)

A long-standing system exists in Uruguay known as the Investment Exemption system that is found in income tax regulations (IRAE corporate income tax that taxes income at 25%).47 This system provides an exemption on IRAE up to 40% for income invested in the acquisition of fixed assets (machinery, equipment, utility vehicles, computer equipment, etc.) and up to 20% of income invested in construction or building expansions.48

The tourism sector is especially considered since the law states that assets for the furnishing and refurnishing of hotels, motels, rest stops, and the acquisition of televisions and buses for hotels are included. In building construction and expansion, hotels, motels and rest stops are specifically mentioned.

Exemptions are presented along with tax returns.

8.2. Sector regulations

Hotels, apartment hotels, inns and motels

These four categories for tourist establishments are principally regulated by decrees 384/997 (15th of October 1997) and 210/001 (6th of June 2001).

The latter requires hotels, apartment hotels, inns and motels to be registered and authorized prior to operations by the Ministry of Tourism and Sport (MINTUR). Requirements include valid municipal authorization for the type of establishment (valid for five years) or municipal authorization in process (in this case, the registry is provisory for an 18 month period).

Decree 384/997 establishes the one to five star system for each of the four tourist establishments (except for motels, which have just three levels).

Ratings are performed in accordance with parameters established in the decree.49 Services rendered by the establishments must be in accordance with the minimum required for the rating.

A Rating Commission, which operates under the Tourism Ministry, ratifies or rectifies the rating of the establishment and is able to revise it during the period of validity.

The classification and rating (stars) must be indicated on all publicity, correspondence, bills and other documentation and must be displayed on a distinctive sign at the main entrance and at the reception area of the establishment. Establishments may not use any denomination or indication different from what corresponds to its class and rating.

47 Amended text 1996, chapter 4, IRAE corporate income tax, valid in accordance with law 18,083 dated 27 December 2006 and

IRAE regulatory decree 150/007 dated 26 April 2007. 48 In both cases, exempted income may not exceed 40% of net income in the period. If the exemptible amount of the investment

exceeds this percentage, it may be deducted over the following two periods. 49

Items from the tourist establishment classification table, decree 384/997 dated 15 October 1997: 1) construction aspects of

rooms, 2) construction aspects of common areas, 3) room furnishings, 4) general furnishings, 5) personal services (i) 6) personal services (ii), 7) languages and 8) general services. For details: http://www.mintur.gub.uy/images/stories/pdf/hoteles/matriz_hotel.xls.

31

See the Tourism Ministry’s website on regulations and decrees for details on the following tourism operators: travel agencies, organized campsites, hostels, real estate agencies, adventure tourism, rural tourism services and auto rental companies.

The Tourism Operators page on the same site offers registry instructions and forms (the same from the preceding paragraph, plus Tour Guides and Convention Halls).

32

APPENDIX

Table A1 – Uruguay: visitors according to lodging and length of stay in days, 200950

Table A2 – Visitors to Uruguay per country of residence, 2009 (in thousands)51

L odg ing typeThous ands of vis itors

Averag e s tay

Hotel 821 5.5O wn house 193 11.9R ented house 182 10.2House of family/friends 750 7.7C ampsite 42 9.9None 70 0.5Apartment hotel 20 6.5T ime share 3 5.4O ther 18 5.5Total 2,099 7.2

Arg entina 1,530 72.9%G reater B uenos Aires 1,120 53.4%C entral and littoral 231 11.0%O ther Argentina 179 8.5%B raz il 250 11.9%P orto Alegre 66 3.1%O ther southern B razil 124 5.9%S ão P aulo 45 2.1%O ther B razil 15 0.7%P arag uay 47 2.2%C hile 63 3.0%North Americ a 81 3.9%R es t of Americ as 27 1.3%E urope 95 4.5%Other / no data 6 0.3%T O T A L 2,099 100.0%

TableA3 – Reasons for visiting Uruguay, 2009 (in thousands)52

Table A4 – Nationality of cruise ship visitors, 2009-1053

Vis it family and friends 469 22.3%R ecreation and touring 1291 61.5%B us iness and profess ional reasons 154 7.3%S port 14 0.7%C ongress , seminar, s tudy 20 1.0%Health 11 0.5%T rans it 89 4.2%R elig ious 5 0.2%O ther / no data 46 2.2%TOTAL 2099 100.0%

Thous ands %B razil 154 52.7%Argentina 68 23.3%North America 36 12.3%E urope 16 5.5%O ther Americas 13 4.5%O ther / no data 5 1.7%Total 292 100.0%

50 Source: www.mintur.gub.uy, statistics 51 Source: www.mintur.gub.uy, statistics 52 Source: www.mintur.gub.uy, statistics 53 Source: www.mintur.gub.uy, statistics

33

Table A5 - 5 star hotels in Uruguay, 201054

Montevideo Punta del Este Radisson Montevideo Victoria Plaza Downtown Conrad Punta del Este Resort

& Casino Punta del Este

Sheraton Montevideo Punta Carretas Solanas Forest Resort Portezuelo

Hotel Belmont Carrasco Mantra Resort-Spa & Casino La Barra

Las Cumbres (inn) Portezuelo

Villa Roma inn Parque Golf

Estancia Vik José Ignacio

Fasano Hotel La Barra

Department of Colonia Department of Salto

Sheraton Colonia Golf & Spa Resort Colonia del Sacramento

Arapey Thermal Resort & Spa

Arapey hot springs

Hotel Four Seasons Carmelo Carmelo Horacio Quiroga Thermal Spa Salto

Radisson Colonia Hotel & Casino Colonia del Sacramento

Table A6 – Comparison of general (decree 455/007) and tourism sector (decree 175/003) investment promotion systems

VAT LOCAL PURCHASES VAT ON IMPORTS IP capital tax Civil works Equipment Civil works Equipment Civil works Equipment

Decree 175/003,

section a - Tourism Projects

VAT credit for local purchases of goods for civil works

VAT credit for local purchases of goods for equipment

VAT exemptions on imports of goods for civil works

VAT exemption in import of goods for equipment

IP tax exemption for civil works for 11 years

IP tax exemption for equipment for 5 years

Decree 175/003,

section b - Hotels, etc.

Not applicable VAT credit for local purchases of goods for equipment

Not applicable VAT exemption in import of goods for equipment

Not applicable IP tax exemption for equipment for 5 years

Decree 455/007

(regulations of law 16,906

article 3)

VAT credit for local purchases of goods for civil works

Not applicable 100% exemption of fees and taxes (including VAT) on imports of goods for civil works projects declared as not competitive to domestic industry

100% exemption of fees and taxes (including VAT) on imports of movable fixed assets declared as not competitive to domestic industry

Exemption from IP capital tax for civil works projects for 8 years in Montevideo and 10 years outside the capital

Exemption on IP capital tax on movable fixed assets for entire useful life.

54 Source: consultations with various specialists. Some hotels are in the process of being rated 5 stars by the Tourism Ministry and

for this reason, this table may differ from Table 2.

34

Table A6 (continued) – Comparison of general (decree 455/007) and tourism sector (decree 175/003) investment promotion systems 55

IRAE corporate income tax IMPORT TAXES

Civil works Equipment Civil works Equipment

Decree 175/003, section a – Tourism Projects

Civil works can be amortized over 15 years

Equipment can be amortized over 5 years

50% exemption on all taxes on imports of goods for civil works

50% exemption on all taxes on imports of goods for equipment

Decree 175/003, section b – Hotels, etc.

Not applicable Not applicable Not applicable 50% exemption on all taxes on imports of goods for equipment

Decree 455/007 (regulations of law 16.906 article 3)

Exemption of a maximum amount and term of 100% of the amount invested and for 25 years, in

accordance with applicable objectives and indicators and project size

100% exemption of fees and taxes on imports of goods for civil works projects declared as not competitive to domestic industry

100% exemption of fees and taxes on imports of movable fixed assets declared as not competitive to domestic industry

State institutions supporting the tourism sector

Ministry of Tourism and Sport, Minister: Dr. Héctor Lescano. Rambla 25 de Agosto de 1825 esq. Yacaré S/N, Tel. 1885 100, www.mintur.gub.uy.

Municipal governments also have tourism areas or departments.

Business institutions related to tourism and real estate

Association of Hotels and Restaurants of Uruguay (AHRU): www.ahru.com.uy

Association of Private Construction Promoters of Uruguay (APPCU): www.appcu.org Chamber of Hotel and Tourism Industry of Uruguay (CHITU): www.camtur.com.uy Construction Chamber of Uruguay: www.ccu.com.uy

Construction League of Uruguay: www.ligaconstruccion.org Real Estate Chamber of Uruguay: www.ciu.org.uy Rural Tourism Society of Uruguay (SUTUR): www.turismoruraluy.com Uruguayan Association of Congress Organizers (AUDOCA): www.audoca.com Destination Punta del Este: www.destino-puntadeleste.com.uy Punta del Este Tourism Cluster: www.pacpymes.gub.uy/web/turismo Business Chamber of Maldonado: www.camaramaldonado.com Rocha Tourism Conglomerate: www.rochaenelmundo.org.uy Colonia Tourism Conglomerate. Martín Cuadrado: mcuadrado@coloniaturismo.com

Departmental Tourism Association of Colonia: www.coloniatotal.com.uy

Montevideo Tourism Conglomerate. Oscar Iroldi: turmvd@gmail.com<0

Web Portal of the Americas: www.portaldeamerica.com

55 Source: developed in house based on UNASEP data.

35

Uruguay at a glance56

Official name República Oriental del Uruguay (Oriental Republic of Uruguay)

Location South America, bordering Argentina and Brazil

Capital Montevideo

Surface area 176,215 km

2. 95% of the territory has soil suitable for agriculture and

livestock activities Population 3.4 million

Population growth 0.3% (annual)

Per capita GDP US$ 9,458

Per capita GDP (PPP) US$ 13,019

Currency Uruguayan peso ($)

Literacy 98%

Life expectancy at birth 76 years

Form of government Democratic republic with presidential system

Political divisions 19 departments

Time zone GMT - 03:00

Official language Spanish

Main economic indicators

2005 2006 2007 2008 2009

Annual GDP growth rate 7.5% 4.3% 7.5% 8.5% 2.9%

GDP (PPP) US$ millions 32,048 34,602 38,235 42,543 43,551

GDP, US$ millions (current) 17,367 20,035 24,262 32,207 31,606

Exports (US$ millions), goods and services57

5,085 5,787 6,936 9,291 8,551

Imports (US$ millions), goods and services 4,693 5,877 6,775 10,217 7,775

Trade surplus / deficit (US$ millions) 393 -90 166 -926 796

Trade surplus / deficit (% of GDP) 2.3% -0.5% 0.7% -2.8% 2.5%

Current account surplus / deficit (US$ millions) 42 -392 -212 -1.502 258

Current account surplus / deficit (% of GDP) 0.2% -2.0% -0.9% -4.7% -0.8%

Overall fiscal balance (% of GDP) -0.4% -0.5% 0.0% -1.4% -2.2%

Gross capital formation (% of GDP at current prices) 16.5% 18.6% 18.6% 20.2% 19.1%

Gross national savings (% of GDP) 17.6% 16.9% 19.0% 17.9% 17.1%

Foreign direct investment (US$ millions) 847 1,493 1,329 1,840 1,139

Foreign direct investment (% of GDP) 4.8% 7.5% 5.4% 5.7% 3.6%

Exchange rate peso / US$ 24.5 24.1 23.5 20.9 22.5

Reserve assets (US$ millions) 3,071 3,097 4,121 6,329 8,373

Unemployment rate (% of EAP) 12.2% 11.4% 9.7% 7.9% 7.7%

Annual inflation rate 4.9% 6.4% 8.5% 9.2% 7.5%

Net foreign debt (US$ millions) 8,938 9,157 9,662 8,254 11,123

56 GDP data was taken from the IMF; data on foreign trade, FDI, exchange rate, international reserves and foreign debt was

provided by the Central Bank of Uruguay (BCU); population growth, literacy, unemployment and inflation data comes from the National Statistics Institute (INE). 57 2008 and 2009 data includes a partial estimate of production activity in Free Zones and the information regarding the survey

coordinated with CUTI for software related activities.

36

Investor Services

About Us

Uruguay XXI is the country’s investment and export promotion agency. Among other functions, Uruguay XXI provides no cost support to foreign investors, both those who are evaluating where to make investments as well as those currently operating in Uruguay.

Our Investor Services

Uruguay XXI is the first point of contact for foreign investors. Services we provide include:

Macroeconomic and industry information. Uruguay XXI regularly prepares reports on Uruguay and the various sectors of the economy.

Tailored information. We prepare customized information to answer specific questions, such as macroeconomic data, labor market information, tax and legal aspects, incentive programs for investments, location and costs.

Contact with key players. We provide contacts with government agencies, industry players, financial institutions, R&D centers and potential partners, among others.

Promotion. We promote investment opportunities at strategic events, business missions and round tables.

Facilitation of foreign investor visits, including meeting organization with public officials, suppliers, potential partners and business chambers.

Publication of investment opportunities. On our website, we periodically publish information on investment projects by public entities and private companies.

www.uruguayxxi.gub.uy

inversiones@uruguayxxi.gub.uy

08 Otoño