All Eyes On Paraguay: Foreign Investors Flood In

“Investors must come here to see how rich economically, culturally, socially and politically the country is.”

— MarIo LoPez, Foreign Investor

With compelling incentives including tax breaks, full repatriation of capital and profit, and equal rights for foreign investors and local businesses, as well as a strategic position at the heart of Mercosur, Paraguay is seeing a rush of foreign investment from its neighbors as well as from farther afield in Europe, North America and Asia. A business-friendly approach from the Cartes administration has helped drive interest.

Well-versed in advising international companies seeking to do business in Paraguay, Hugo Berkemeyer, partner in Berkemeyer Law Firm, says clients often ask him whether Paraguay is an attractive proposition with only 7 million consumers. “It is a small market by Latin American standards,” says Berkemeyer. “However, the possibility of expanding a business from Paraguay into other markets such as Brazil and Argentina is a game changer, a strategic decision made by some companies.”

Paraguayan-Chilean beverage company Bebidas del Paraguay saw a chance to enact its international expansion strategies when it acquired Pulp, Paraguay’s most recognized national brand of soft drinks. “Paraguay is a country with great opportunities,” says CFO Andrew Mac Gregor. “It is experiencing a period of growth greater than that of many countries in the area, and this growth is happening hand-in-hand with a growth in domestic consumption and investment.”

According to the report of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) in 2014, the return on investment in Paraguay is 22%, second only to Peru in the region. Investors in Paraguay can achieve far greater profitability compared to neighbors Argentina (10%), Uruguay (8%) and Brazil (6%).

Guatemalan businessman Mario Lopez saw this opportunity early on, building Asuncion’s most prestigious real estate development, the US$300 million Paseo La Galería shopping, corporate and hotel complex. Lopez credits the Cartes administration for helping investors move forward with their plans. “The fact that Cartes is more of a businessman than a politician simplifies things a lot,” he says. “It provides a great business environment in which investors are happy to participate, including myself.”

Meanwhile, the expansion of Paraguay’s middle class has driven a consumption and real estate boom, attracting prestigious international companies such as Zara, Cinemark and Armani/Casa. “Investors must come here to see how rich economically, culturally, socially and politically the country is,” says Lopez. “This country has been isolated for many years, but now things have changed and Paraguay is in the spotlight.”