Many investors are unaware of the strong profitability that is offered to invest in Paraguay, one of the more stable markets in Latin America, with a recent history of steady growth.
This includes an increase in the gross domestic product (GDP) of almost five-fold between 2002 and 2020, even despite a recent drop in less aggravated by the pandemic of COVID-19.
In September, the president of the inter-American Development Bank (IDB), Mauricio Claver-Carone, called Paraguay as one of the best countries in Latin America and the Caribbean to do business.
“If I were a foreign company, one of my first destinations would be Paraguay, due to the current investment environment that is ideal for business,” said Claver-Carone during a meeting with paraguayan president Mario Abdo Benítez.
According to Claver-Carone, that is, in part, the reason for which Paraguay was one of the five countries of the region that really increased the foreign direct investment during 2020.
5 reasons to start an investment
Businesses and entrepreneurs should seek to invest in Paraguay for the following five reasons:
- A young workforce and competitive
Paraguay has one of the work force more young people in the region, with a mean age of 26.3 years. This workforce is also increasingly urbanized, as 62.5% of the population currently lives in urban areas.
Given that the country has a gross national income (GNI) of 5.140 dollars per capita in 2020, there are employees available at very competitive prices.
In addition, Paraguay has been seen to increase the domain of the English language in the last few years and is now among the top five nations in the region in terms of English proficiency, so that makes it even more attractive to do business.
- Strong profitability of real estate
Paraguay has one of the sectors of real estate strongest in the region, with returns on investment, often up to 50% higher than in other markets in the region, and the purchase of rental housing.
These good performances are strengthened by a tax regime under, with a value added tax (VAT) of only 10%, that offers even more reasons to invest in Paraguay.
The opportunities offered by the real estate market paraguayan have attracted a growing interest of investors, with a special influx of capital from the neighboring Argentina in recent years.
- A perspective increasingly international
Paraguay, which before was economically isolated from the world, is adopting a perspective increasingly international and oriented to the outside that encourages foreign investment.
Well, it has started discussions with Chile, on what would be the first treaty of free trade agreements (FTAS), bilateral in the country, to complement the agreements that you have in force through its membership of the Common Market of the South (Mercosur), an economic partnership that also includes the other nations of the Southern Cone: Argentina, Brazil and Uruguay.
Also, the country adopted new rules on transfer pricing in line with the standards set by the Organization for Economic Cooperation and Development (OECD), an organization of international trade known as the “club of good practices” to which Paraguay is intended to be incorporated as a full member.
- Facilitation of the residency to those who invest in Paraguay
Among the measures the country has taken to encourage more people to invest in Paraguay is to speed up the process of residence.
In December of 2020, the then minister of Finance, Benigno Lopez, announced that the country would take measures to reduce the time of obtaining a residence by investment of two years just a few months.
That's despite the fact that Paraguay had already had one of the regimes of residence most favourable to the investors of the region.
- Ease of doing business
Paraguay is a country pro-business that not only fosters a great extent FDI, but also has a regime that facilitates investment.
This includes that there is no history of seizures or sudden changes in the rules of investment, a robust set of labour laws and the strict protection of intellectual property, which provides an important investor confidence.
The country also has a process of formation of companies with a minimum of paperwork, an industrial base established for those who want to enter into the manufacturing sector and a sector of innovation in growth.
