Demand for information technology (IT) hardware and accessories will continue to increase due to educational programs, increased Internet access, and continuing modernization of both the private and public sectors. U.S. companies must offer good products at competitive prices in order to cope with rising imports from China as well as other markets.
Government and private sector initiatives to develop technological parks, a strong and growing software sector, combined with increasing Internet usage in Uruguay, have maintained hardware imports at high levels. Projections show a continued increase for 2011-12. There is no local production of hardware. Government procurement represents approximately 30 percent of hardware purchases and demand is expected to increase. Modernization is ongoing since various public offices and services still require technological upgrades and the government is seeking to expand in e-Government initatives. Private sector investment in technology has also increased, thus current trends are encouraging for the hardware sector.
Multinationals consider Uruguay an excellent IT hub for their back offices as well as data and call centers. Companies such as Colgate-Palmolive, Microsoft, Sabre Holdings, Merrill Lynch and PriceWaterhouseCoopers are among the many companies that have already set-up their operations in Uruguay.
The Uruguayan government IT agenda includes:
• Implementation of e-Government.
• Global Internet Access - Increasing internet penetration to all homes.
• Implementation of the One Lap Top per Child Program (OLPC/CEIBAL) at elementary levels with the rollout of 500,000 laptops by 2011. In 2009, Uruguay was the first country to start distributing the laptops to public schools. It is currently undertaking pilot programs in high schools.
• Generating 500 new professional IT graduates per year
• Generating 1,000 new IT technicians per year
• Encouraging small businesses to expand the use of IT by identifying software and IT services as capital goods.
Uruguay is the South American leader in IT development. According to the International Telecommunication Union’s ICT Development Index [United Nations], Uruguay ranks in 54th place, making it South America’s best ranked country. This index compares 152 countries with 11 indictors that cover IT access, use and applications.
Distributors of hardware normally sell both equipment assembled abroad as well as products assembled locally using imported components and parts. Imports of hardware are mainly handled by distributors. Brands such as Acer, Asus, Dell, Gateway, HP, IBM, Lenovo, Samsung, Sony and Toshiba among others are easily found, including in supermarkets. There is no data available about the market share by brand, but buyers have become very price conscious. Pricing and financing are key factors when deciding which brand to purchase.
Computer ownership and Internet access ratios are among the highest in Latin America.
Uruguay enjoys the region’s highest literacy rate (over 97 percent), the telecommunications network is 100 percent digital, and the Internet penetration rate is one of the highest in Latin America. Given that Uruguay does not manufacture computer hardware equipment, further growth in Internet usage is expected to generate greater demand for computer imports.
Recent surveys show that in 2010 more than half of Uruguayan homes had a least one computer [53.4%] which represented an increase of over 18% from 2008. The local One Laptop per Child [OLPC] Program [Plan Ceibal] represents almost 40% of home computers, primarily in small towns and rural areas. Homes continue to be the leading users of computers and Internet. PC penetration rate in businesses varies, with larger companies more IT dependent than smaller ones, although numbers are also on the rise.
When comparing the ratio of PC ownership per every 100 inhabitants in Latin America, Uruguay is third after only Costa Rica and Chile and ahead of the region’s three largest economies, Argentina, Mexico and Brazil.
Market Access and Trends
There are no tariffs for items of MERCOSUR origin; for third countries, the Common External Tariff (CET) for IT ranges from 0 to 16%. However, Information Technologies and Telecommunications fall under a special regime until 2019 – a majority of items under HS codes 84.71 have 0 to 2% CET and most items under HS codes 84.73 are exempt from import tariffs. Goods imported as capital goods do not pay import tariffs. Licenses are not required for hardware or accessories.
All customary import channels exist in Uruguay -- agents, distributors, importers, trading companies, subsidiaries, and branches of foreign firms, among others. Sales outlets are usually traditional storefronts and supermarkets. No discount general merchandisers operate in Uruguay.
Local distributors do not have exclusivity clauses in their contracts allowing them to purchase different items from multiple sources. Major local hardware distributors work with various brands. A pro-forma invoice is required to initiate import procedures. Importers must be duly registered and a customs broker must handle their importation. Certificates of origin are mandatory.
The eight largest hardware importers represent almost 80 percent of the sector, about 60 mid-sized companies represent 9 percent, and the very small importers represent the remaining 11 percent.