Why Invest in Paraguay?

Fidel Macul, Jr.

Fidel Macul, Jr.

With a population of over 5 million and a GDP of $28.3 billion, Paraguay’s economy ranks 96th, according to the International Monetary Fund, and proves to be one of the most stable countries in the region with an inflation rate of 3.7% in 2013.

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There are several reasons for investing in Paraguay. In 2010 and 2013, Paraguay experienced the greatest economic expansion of South America, with a GDP growth rate of 14.5% and 13.6% respectively.
In terms of agriculture, it is the third-largest producer of soybeans in South America and fourth in the world after the United States, Brazil and Argentina.

Likewise, Paraguay is the world’s second-largest producer of stevia, sixth-largest exporter of corn, tenth-largest exporter of wheat and eighth-largest exporter of beef.

But it is the soybean crop and the growth of international commodities prices that have boosted agribusiness in Paraguay and led to the expansion of cultivated lands since 2000. Grain sowing surface is currently expanding at a calculated rate of 8% to 10% annually. Soybean is thecop for new cultivation.

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The soybean crop covers 63% of the cultivated area, followed by corn (21%), wheat (14%), and sunflower and rapeseed (1% each).
Since 2003, soybean sowing area has grown from 1,550,000 million hectares (ha)(4,518,015 tons) to 3,157,600 million  has (9,367,298 tons).

Corn cultivated area and production grew from 440,000 million ha (1,120,000 tons) in 2003 to 983,899 million ha (3,935,596) in 2013. In 2012 exports totaled 2,576,281 tons.

Wheat area went from 325,000 million ha in 2003 to 500,000 in 2013, while sunflower expanded from 44,550 tons in 2003 to 53,758 million ha with a total production of 95,587 tons in 2013.

Rapeseed experienced exponential growth, soaring from 6,000 cultivated ha and 10,000 tons in output in 2003 to 82,339 ha and 111,886 tons in 2012.

Growth in rice has been substantial, increasing from 307,000 tons in 2009 to 580,000 in 2013. However, rice production is still only 10% of what it can be the near future. Currently, the Paraguayan government is planning to plant 80,000 hectares. But eventually over 1 million hectares could be planted. Paraguay has an unlimited water source, mainly from the Paraguay River, with enough water to secure grain production and, depending on rice prices and beef production. Land values are also gaining importance depending on farmers having direct access to fresh water, and being able to manage climatic events.

Paraguay is expected to show a large expansion of its sowing area within
the next five years as almost one-fifth of the country’s total surface has
proven to be suitable for agriculture and remains untouched.

In 1997 Paraguay approved the Maquila Law. This business regime, along with other comparative advantages of Paraguay, offers investors excellent conditions to benefit from lower tax and production costs, which make Paraguay a strategic partner for the production and participation in international trade.

Some other key points that make Paraguore than interesting option for investing are:
■ Low Taxes: Paraguay offers a special low-tax policy for foreign companies willing to invest in the country.
■ Low Labor Costs: Due to its taxes policies, the labor cost in Paraguay is lower than most of the other countries in South America.
■ Low-cost Energy: Partnered with Brazil, Paraguay owns and manages the ITAIPU bi-national hydroelectric dam. It is the world’s largest generator of renewable clean energy. With all 20 generating units operating, generation levels may reach 100 billion kilowatts-hour. The country not only self-provides energy but also exports all exceeds to Brazil. Paraguay’s energy production is 8,700 megawatts, while its current domestic demand is 2,300 megawatts.
■ Water Availability: Right beneath Paraguay runs the Guarani Aquifer, which is considered the largest reservoir of fresh water in the world.
■ Logistics: Stratted in the heart of South America, Paraguay is surrounded and crossed by some of the region’s most important rivers. This allows an easy way in and out for products. Likewise, its geographic location facilitates access to neighboring countries.

For all these reasons and more, Paraguay appears as an excellent option for those keeping their eyes and ears open for new business opportunities.

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