In the center of South America, less than two hours by plane from Buenos Aires, São Paulo, Santiago de Chile, Montevideo, Santa Cruz, is the Republic of Paraguay.
Let’s face it: at first, the lack of coastline and the fact that it is a small economy can make you less attractive at a hurried glance. But, if we go just a little bit in detail, we will check that it has a privileged location:
- Situated between Brazil, Argentina and Bolivia, with access to the main international routes and the confluence of Paraná and Paraguay, which flows into the estuary of the Río de la Plata. This allows easy access to the main commercial and logistics environments of South America.
- The membership as a founding member of Mercosur, the largest commercial block in Latin America that, as an integrated market, allows access to almost 300 million consumers and 82% of the GDP of South America.
With Paraguayan nationality, which can easily be obtained after three years of residence, you get the right to move, reside and work in the entire Free Residence Area composed of the rest of the Mercosur countries (Brazil, Argentina, Uruguay) , the Andean Community (Colombia, Bolivia, Ecuador and Peru) and Chile.
In addition, the Mercosur countries have free trade agreements with numerous countries in the world, such as the Andean Community, Israel, Egypt, as well as bilateral agreements (the so-called Economic Complementation Agreements) with Mexico, Chile, Cuba, the India and several countries of South Africa. Other agreements are being negotiated with the countries of the Persian Gulf (Saudi Arabia, Arab Emirates, Kuwait, Qatar, Bahrain and Oman), Jordan, Turkey, South Korea, etc.
The main wealth of Paraguay comes from the cultivation of soybeans and cereals and from the livestock industry for the production of high quality beef.
This supposes a series of advantages:
1. The dependence on commodities opens up a virgin market for a large number of local initiatives with foreign investment: real estate, companies in the Maquila Regime, etc.
2. Commodities tend to be considered risk investments because of their fluctuation due to external causes (droughts, pests, etc.). In return, they offer a high rate of return and continue to be less risky than other stock trades.
Paraguay’s total foreign trade in 2017 (imports and exports) increased 12% more than in the same period of 2016.
For years, Paraguay has been able to boast an annual trade surplus of over one billion Euros and only recently, in 2017, it fell below this figure and due to the value of imports.
Business opportunities include both export, but especially the importation from foreign companies of goods and services that can then be distributed throughout the free trade area; This does not mean that the product passes physically through Paraguay, but that its fiscal benefits can be exploited when acquired by a local buyer. However, keep in mind that each case, product and service should be evaluated by [our] experts.
For example, the special regime set up for the maquiladoras (import of materials to be manufactured by local labor) can be used along with the tax advantages for the investment of foreign capital.
When selling in Paraguay, there are no price controls or other types of restrictions.
Currently, and only as a panoramic to see what exists today and study business opportunities, the main increase in Paraguay’s imports during 2017 was:
- Consumer goods 23%, up to 3048 million dollars due to the increase in food, beverages, paper and derivatives, textile products and the acquisition of durable goods such as automobiles and electronic devices.
- Intermediate goods, the rise of 19% to 2,650 million dollars was motivated by purchases of fuels, chemicals, asphalt or metals.
- Capital goods, with an increase of 28%, up to 3217 million dollars, from the purchase of agricultural machinery, medical instruments and vehicle repair.
One third of Paraguay’s total imports come from the other Mercosur countries, mainly Brazil. The rest, most of it comes from China and the United States. European brands are not present among the main sellers in Paraguay and any contact in that sense can only be a novelty that brings new products to the market.