Doing Business in Paraguay: Opportunities, Investment Sectors, Advantages and Pitfalls

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World Law Group

[co-authors: Sigfrido Gross Brown, Jorge Ignacio Gross Brown]*

In this new series, “Doing Business In,” we asked our members about the current business climate in their countries, investment opportunities, and what others should know about doing business there.

1. What is the current business climate in your jurisdiction, including major political, economic, and/or legal activities on the horizon in your country that could have a big impact on businesses?

Paraguay is steadily reactivating following the pandemic. For the next few years, banking, infrastructure, and construction will remain the key pillars of economic development. Paraguay has a focused agenda to keep investing in public infrastructure with support from the financial system.

On the other hand, the agro-exporting sector (soy, wheat, corn, and meat products) and the fluvial transport industry remained strong during the pandemic and are also a pillar of Paraguay's economy.

The Itaipu Binational Dam will continue to be a hot topic as new negotiations approach between Paraguay and Brazil for the energy purchase price. Many business opportunities will result from the negotiation process and the eventual outcome of such negotiations.

2. From what countries do you see the most inbound investment? What about outbound?

Most inbound investments come from regional countries such as the United States, the European Union, Brazil, Uruguay, and Chile. Likewise, since Paraguay's economy is mainly supported by agribusiness, we see inbound investments from countries home to all major agro-exporters of the world.

Paraguay's outbound investment is still comparatively small to inbound investment. However, we see a variety of destinations, again mostly regional, e.g., United States, Brazil, Uruguay, Chile, Bolivia, Peru, Colombia, etc.

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

Public-private infrastructure projects (PPPs) and financial and industrial sectors, as well as real estate development, have been attractive to foreign investors for some time now, and the trend is likely to continue for some years. Additionally, we have seen development in the agro-industrial sector to transform raw materials into finished or semi-finished goods.

4. What advantages and pitfalls should others know about doing business in your country?

Paraguay is a country with a solid macroeconomic background. However, the government understands that a strong economy is key to encouraging private (foreign and local) investment. From 2005 to 2018, Paraguay's economy grew at an average rate of 4.4% (a stronger pace than its regional peers) and, since 2013, Paraguay has regularly issued sovereign debt with a credit rating that is improving at a steady pace and is poised to reach investment grade soon. Paraguay's economic growth has been primarily supported by considerably low tax pressure, foreign investment promotion, investment in public infrastructure, and commodities exports.

A relevant pitfall is a heavy bureaucracy involving the public sector, such as incorporating a company or purchasing land (i.e., through public registries). However, the government has been working hard toward eliminating these obstacles. For example, in 2020, the government launched a digital platform to incorporate a legal entity in 72 hours.

5. What is one cultural fact or custom about your country that others should know when doing business there?

Having a good reputation and a strong local network can take you a long way. When involved in public procurement processes, it is generally advisable to have a local strategic partner.

*Gross Brown

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