Business barriers

Doing business in Latin America, is it really as hard as people make out?

The World Economic Forum Regional Risks for Doing Business Survey highlights that many Latin American countries face similar challenges: failures of national governance, social instability and unemployment. All of these have been amplified by the economic crisis following the outbreak of the COVID-19 pandemic. In this dispatch, we look at the ease of doing business in Brazil and Argentina.

The regional head of a multinational accountancy firm gave us his perspective on doing business in Brazil, “Brazil is big and the ease of doing business varies a lot. Rio Grande do Sul and Tocantins are as different realities as Germany from Lithuania. Brazil never does well in these rankings [124 out of 190] because there has been a lack of modernisation of bureaucratic processes which leads to administrative bottlenecks and corruption and there is also high taxation. Brazil would also benefit from adopting international standards of quality recognition.”

“Brazil never does well in these rankings [124 out of 190] because there has been a lack of modernisation of bureaucratic processes which leads to administrative bottlenecks and corruption.”

Regional head, multinational accountancy, Brazil

Starting a business in Argentina is also full of obstacles, due to the imposition of national, provincial and municipal regulations, with the general objective of finding new ways of tax collection. A start-up CEO in Buenos Aires complained, “Argentina has many problems related to starting a business. There are so many obstacles and administrative costs that I constantly wonder if it is worth starting a business. I have full time members of staff who waste almost all of their time making sure we comply with every regulation. There are also some procedures that are so complex you need to hire professional help. Many businesses here relocate to Uruguay because it is much simpler to do business there.”

“There are so many obstacles and administrative costs to starting a business that I constantly wonder if it is worth it.”

CEO, start-up, Buenos Aires

The impacts of COVID-19 also present new risks for business in Latin America, according to the Economist Intelligence Unit. In this context, policy-makers lack room for manoeuvre to increase fiscal stimulus for companies without creating concerns over creditworthiness that would result in macroeconomic instability for governments. These new post-pandemic risks are considered additional challenges to the political and macroeconomic stability issues inherent to the region.

In contrast to the regional trend, Uruguay has consolidated its position as a regional business hub by making it easier to open a business in the country through multiple economic incentives and procedural initiatives. For instance, the Uruguayan Chamber of IT recently launched the TestUruguay network with detailed information on how to open a business, the guidelines to follow and the bodies that need to be approached.

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