In an interview with Accountant José Luís Sablich, Partner and Director of PRICEWATERHOUSECOOPERS – Zona Franca, we discussed the competitive positioning of Uruguay and Zonamerica in the region as well as the services provided by the PWC branch from its Zonamerica office.

What services are currently being offered by PWC from Zonamerica?

Our offices located in Zonamerica offer the typical services and solutions of our organization: Audit, Advisory, Tax & Legal and, in particular, those connected with all stages of foreign investment advisory, whether as part of a business mission, or by means of contacting potential investors through our international network or taking part in specific international forums. The main focus of our Zonamerica branch is to attract investors and give them support in the assessment and implementation of projects, assisting in design, localization, adequate tax planning, outsourcing of administrative and accounting processes, staff recruitment and providing them with control solutions.

Can you please describe the steps multinational companies go through in the decision making process of establishing operations in another country (or moving a business unit) What critical variables are considered?

Depending on the strategy and goals defined by the company, specific projects are designed that take into consideration various phases and stages, the forecasted schedule, and the dimensions to be considered: processes, organization, technology, infrastructure, financing, etc. For instance, it is increasingly frequent to find in the agendas of multinational companies, projects related to the concentration of support activities (non-core company processes) with the aim of increasing efficiency, reducing costs and improving the quality of internal customer services. In this type of projects, support services are concentrated in a geographical place instead of being delivered in the different locations where the company operates. Once such a project is designed and its scope defined, the next step is the selection of a location that fulfills the critical requirements of the project.

Even when each project has its own critical factors, there is a general definition including both qualitative and quantitative factors.
Among the former we find: general business atmosphere, which includes political and economic stability, level of beurocracy and corruption, transparency of regulations and the development of the financial system; domestic staff availability; labor regulations flexibility; accessibility and infrastructure (closeness to international airports, frequency of flights within the region, telecommunications and real state infrastructure); attractiveness for international staff (including cost of living, safety, international schools and the quality of health service).
The weight of each factor may vary according to the business model involved and to whether the focus is on the market or the objective of the unit is to provide support to certain processes of the company.
On the other hand, some of the quantitative factors are labor costs, housing and infrastructure costs, telecommunication costs, local tax burdens and working capital requirements.
A cost model is drawn including startup investment (infrastructure, equipment, working capital), project financing, operational costs (labor, technology, logistics), tax burdens, and incentives.
By combining the cost model and the qualitative factors analyzed a shortlist of candidate cities (2 or 3 locations) is drawn. These cities are then analyzed in depth, checking the actual availability of each option, negotiating prices, tariffs, incentives, subsidies on recruitment and/or training, availability of required personnel, etc., thus obtaining a final ranking of possible locations.

Based on the variables you mentioned, how is Uruguay (Zonamerica) positioned compared to other countries in the region in the rankings included in your reports?

In comparison to other countries and cities in the region, Uruguay, and Zonamerica in particular, are usually placed in the shortlist of candidate cities for investment. From that moment on starts the final analysis for in-field validation and the final decision

How do you view the future evolution of these variables and of the positioning of Uruguay (Zonamerica) in the ranking?

It is actually an interactive sequence. As long as Uruguay, and Zonamerica in particular, continue to attract, through their strategy, important individual projects, an investment cluster will develop. A cluster is formed by several projects in the same business area, such as for example call centers, shared service centers, biotechnology centers, etc., and a series of related companies and/or projects, which create synergy. This means higher attractiveness for investors, a reference positioning for certain type of investments and creates a multiplying effect. It is also important to be in permanent contact with investors, to meet their needs, and to provide them with reliable information.

What are your reasons for placing Uruguay (Zonamerica) in this position in your rankings?

Geographical location within the region, political and economic stability, first class infrastructure, highly developed telecommunications, educational level of the population, competitive labor costs, in particular for technical staff, availability of personnel, an adequate legal framework, high level of safety, above the region average. All this needs to be supported by an adequate advertising and promotion strategy, in coordination with local authorities, in order to place us in the agendas of potential investors. It is crucial to have accurate, reliable, updated, standardized information concerning qualitative and quantitative factors to supply to companies and consulting firms specialized in localization projects, in order to ensure the participation in their analyses.

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