Paraguay provides an ideal gateway to all the member states of the MERCOSUR (South American Common Market), a trade bloc comprising a population of some 280,000,000 in total, which makes it an attractive prospect for investors.
Paraguay is only two hours’ flight away from such important cities as Buenos Aires, Sao Paulo, Montevideo and Santiago. It is in the middle of the “Bi-Oceanic Corridor” (a railway line currently under construction) that will link the deep-sea ports of Chile with ports on the Brazilian Atlantic coast, providing easy access to major ports and markets in the region, as well as free ports located on the Atlantic and the Pacific coasts, these being currently Buenos Aires and Rosario in Argentina, Paranaguá, Santos and Rio Grande do Sul in Brazil, Antofagasta and Iquique in Chile, and Montevideo and Nueva Palmira in Uruguay. Consequently, Paraguay is the most convenient gateway to MERCOSUR, a potential market of 280 million people.
Labour costs in Paraguay are highly competitive, with the lowest social charges in the region. The price of real estate is extremely attractive. The average price is USD 500/hectare in the Eastern Region and between USD 100/hectare and USD 1000/hectare in the Western Region. Asunción has been declared the cheapest capital in the world for the fifth consecutive year by Mercer Human Resource Consulting, a British company. Paraguay produces the cheapest electricity in MERCOSUR. Ecovis’s experts also point out that Paraguay’s electro-intensive industries have the best infrastructure to meet the requirements of technological development.
The real-estate sector has experienced a growth boom, which has considerably changed the urban landscape, mainly of the country’s capital city but also of other major cities. In Asunción you can see the three majestic towers of the World Trade Center on the corporate axis, and the construction of two other WTC tower complexes is planned in Ciudad del Este and Encarnación in the south-east of the country. The construction sector has experienced growth of 6% on average over the past five years. In accordance with projected GDP growth of the order of 4% per annum, the rate of population growth and the growth of the middle class, investment of around € 6,800 million is expected in the next five years.
Currently major public works are in progress, designed to increase the coverage and quality of road infrastructure and services. On the other hand, the level of industrialisation is still low. According to World Bank data, Paraguay’s industrialisation index is 11.23% of GDP in 2017, which means that growth opportunities in the industrial sector are prominent.
Paraguay aspires to become a regional hub for cargo and passengers, given its central geographic location in South America. For this, the construction of five large airports in the country is projected, as well as all the logistics infrastructure that will be necessary to achieve this goal.
At the beginning of a new government, the expectation of the different economic sectors is to continue propping up growth with work, technology and innovation. The conditions are given to take advantage of these opportunities. Paraguay will give much to talk about in the coming years!
Lic. Romny Colmán, auditor, financial advisor, associate partner, ECOVIS C&M Consulting and Management, Asunción, Paraguay