Page 1


An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Sunday 2nd November 2014

For futher information on this report, please visit:

Investment Magnet

Road to Success

Fields of Gold

President Horacio Cartes has created a pro-business climate

Massive investment in key infrastructure supports growth

A wealth of natural resources has put Paraguay on the FDI map

BusinessFocus 29th Floor, One Canada Square Canary Wharf, London E14 5DY United Kingdom Tel. +44 20 7712 1699 Fax +44 20 7712 1501

PARAGUAY The country with the largest potential in Latin America


Paraguay: Land of Opportunities Latin America’s best-kept secret, Paraguay is taking advantage of its natural and human resources with the help of international investors.


ffering impressive macroeconomic, social and political stability at the heart of South America, Paraguay is an increasingly popular destination for international investors looking to take advantage of the probusiness country’s great strategic position, and excellent natural and human resources. Bordered by Brazil, Argentina and Bolivia, the ambitious republic of 6.8 million people benefits from free trade access to its neighbours and several other countries in the region through full membership of the vast continent’s common market: Mercosur. Paraguay has also benefitted from preferential access to the lucrative EU market since earlier this year when the European Commission granted enhanced access to the huge trading bloc through the Generalised Scheme of Preferences (GSP). The EU is currently the second-largest investor in Paraguay after the US, and EU foreign direct investment (FDI) flows into Paraguay more than tripled from €11 million to €39 million, with public-private sector entity REDIEX (La Red de Inversiones y Exportaciones del Paraguay) credited with creating this enviable success. Earlier this year, the Economic Commission for Latin America (ECLA) noted that Paraguay is the second most profitable country in Latin America for local and international investors, with a robust 22% return on investment. This track record of progress is illustrated by the strong economic growth Paraguay has enjoyed for a decade and its economy is forecast to grow exponentially over the coming years. This growth has been driven by its huge agricultural sector and a fast-growing manufacturing industry that has supported the production and export of raw materials. Since his election in August 2013, Paraguayan President Horacio Cartes has introduced a raft of new laws aimed at attracting fresh FDI, including legislation to establish and promote public-private partnerships (PPPs) and rules promoting financial responsibility—Fiscal Responsibility Law (FRL)—and greater transparency. The government’s vision for the country is the transformation of Paraguay into a “world-

“Companies, including those from the UK, are bringing investment, knowledge and skills. We want to grow fast, but not at too rapid a rate.” Horacio Cartes, President of Paraguay

Horacio Cartes, President of Paraguay, is embracing foreign investment.

class food producer connected to the world, with high rates of law and public safety and an administration that promotes solidarity, transparency and zero tolerance to corruption, as President Cartes notes. “The world has changed,” he says. “We want to be attractive to FDI and so need to look at the long term. To achieve this, we need to lighten the weight of the state, move forward to a smaller state and diminish taxes on workers. The major players of the economy are the ones that work, so to progress on different levels, we need to move in that direction. The progress should come through the generation of wealth. “Paraguay is a country that captivates. We have excellent resources like good quality soil, plenty of fresh water, electricity, clean energy and favourable weather for farming that allows us to harvest twice per year. We have a larger territory than Germany, but only seven million inhabitants, as well as a strategic position at the heart of South America. We want to focus on the long term: credibility—showing that we won’t change the rules in the middle of the game—and political and economic stability.”

Resource-rich republic with modern business climate Nestled between two of South America’s economic giants, Paraguay was once overlooked by many foreign investors in favour of its larger neighbours, but the ambitious and resource-rich country has moved into the spotlight and now boasts one of the fastest-growing economies in the region. Offering a welcoming and modern business environment constructed on the core pillars of political, social and economic stability, Paraguay possesses a wealth of investment opportunities across a diverse economy featuring a range of competitive advantages. These include low labour costs and the lowest tax burden in the region, strategic position, preferential access to major foreign markets, low energy costs and a strong and flexible supply chain. The government of President Horacio Cartes provides generous tax breaks and incentives to foreign companies that invest in key economic areas such as food pro-

duction and processing, energy, infrastructure development, manufacturing—shoes, textiles, clothing, leather and metalwork—livestock and agricultural activities, logistics and freight operations, banking and financial services and real estate. Paraguay is currently the region’s largest exporter of “clean electricity”—energy generated from renewable sources. Given its natural network of waterways, Paraguay’s energy industry has always focused on hydroelectric power stations, although wind farms are an increasing area of interest. The country’s rich terrain means its agricultural industry has long been the republic’s most important sector. Paraguay is currently the world’s second- largest producer and exporter of stevia (a natural sugar substitute) and the world’s third-largest grower and exporter of yerba mate. In addition, the republic is the fourth-largest exporter and sixth-largest producer of soyabean in the world and the sixth-largest exporter of corn and seventh-largest exporter of meat globally.

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Paraguay is blessed with fertile soil and an ideal crop-growing climate.

In early August, Paraguay’s economy was given a major boost when it received the largest amount of foreign capital in its history, $1 billion through a 30-year bond that will be used to finance energy, transport and other major infrastructure projects such as housing and roads. “We are giving the right signals and the international community is recognising that this is a serious and different government seeking opportunities for the benefit of its citizens,” a delighted President Cartes said. The head of state, who enjoyed outstanding success in the private sector in different business spheres, including farming, before entering politics, emphasises the country’s huge potential for growth, but says such expansions should be taken one step at a time. “We have a bright and optimistic future. Companies, including those from the UK, are bringing investment, knowledge and skills as well as researching new gas fields and improving our logistical capabilities. We want to grow fast, but not at too rapid a rate. We have to take care to maintain the balance between attracting investment and transmitting that wealth generation to our country and citizens. One of our best assets is our people: 74% of them are under 35 years of age and have an excellent attitude to work.” In February, Naoyuki Shinohara, deputy managing director of the International Monetary Fund (IMF), visited the capital Asunción and said he was impressed by the government’s ambitious agenda of growth-enhancing reforms and poverty reduction initiatives. “The reforms would help improve Paraguay’s social and economic development, increase productivity growth, and support the country’s transition to a dynamic emerging market economy over the next decade,” he said. “The Central Bank of Paraguay (BCP) has made important advances in implementing an inflation-targeting regime along with greater exchange rate flexibility. Paraguay has strong economic fundamentals to manage regional and other shocks. The country’s solid fundamentals, including low debt, sizeable official reserves, small fiscal and current-account deficits, greater exchange rate flexibility and below-target inflation, as well as a sound financial


The modern metropolis of Asunción is the perfect HQ for companies.

“We are very interested in having relations with the UK and want to showcase all the opportunities for business that Paraguay offers.” Carlos Gustavo Fernández Valdovinos, Central Bank of Paraguay President

system and increased policy certainty brought about by the FRL and the inflation targeting regime, have provided the government with better buffers than in the past to cope with the impact of softer commodity prices, tighter external financing conditions and regional shocks. Overall, the outlook for Paraguay is positive.” Price stability, the smooth functioning of the payment system and the soundness of the financial system is a constitutional mandate for the BCP, and the praise from the IMF for its policies and forward-thinking approach was warmly welcomed by BCP president Carlos Gustavo Fernández Valdovinos. “The recent upgrade of our credit ratings is a real boost for us, and is even more valuable when the rest of the region is getting downgraded. It differentiates us from the rest of the emerging markets,” he says. “We are reassuring investors with our commitment to price and financial sector stability. We also have a lot of external buffers to guarantee there won’t be an artificial devaluation of the local currency, because we can convert it to USD. “We are very interested in having a relationship with the UK and want to showcase all the opportunities for business that Paraguay offers. What we offer is not just Paraguay per sé,

Manufacturing and Industry set to fuel strong GDP growth One of the key objectives of the current Paraguayan administration is its opening up to the world through new transport infrastructure in order to overcome physical barriers and the removal of intangible hurdles, such as red tape, that will maximise its huge manufacturing and trade potential. “We are not only a rich country in terms of natural and human resources and their low cost, but we are aware of where we want to go and the steps we must take to achieve our goals,” explains Industry and Commerce Minister, Gustavo Leite. “We understand competitive cost is not a sustainable advantage by itself, so we want to promote a manufacturing culture with a strong foundation in innovation, scientific and technical education. We are the fourth largest exporter of soyabean, the eighth largest exporter of beef and we want to become the fifth in 2020. The biggest challenge we face is to transform the production of soyabeans, corn, poultry and beef for export. Slowly we are getting there.” Highlighting what he believes are his country’s strongest selling points for medium and long term investors, Minister Leite adds: “Paraguay has

four key elements for the long-term, which are a young population, clean and sustainable energy, water, and a manufacturing system ready for explosive growth. It’s important we invest in the quality and competitiveness of these resources.” With the help of government agency REDIEX, the ministry is pursuing investors interested in a range of manufacturing operations, including textile, apparel, leather and footwear production, and food and drink packaging and processing. Minister Leite is optimistic agricultural production could triple in the medium to long term and that the manufacturing sector, which expanded 7% in 2013, could follow a similar trend if demand from buyers in Brazil and China continues on an upward trajectory. “The main challenge is to ensure investment in innovation and sustainable development and to grow at least 5-7% per year, gaining competitive improvements in human resources and production and keeping good relations with neighbouring countries and the world in general.”

Ministry of Industry and Commerce Av. Mcal. López 3333 c/ Dr. Weiss Tel: +595 21 616 3000 | Fax: +595 21 616 3000 | E-mail:, |


Huge investment in roads has given the green light to growth.

Paraguay’s fine natural resources are matched by its young labour force.

but the largest market in South America: Mercosur. We have some advantages over other countries such as Brazil or Argentina in terms of macroeconomic stability and cost. We are a simple country with the triple 10% (10% VAT, 10% personal income tax and 10% corporate tax). Paraguay is a land of opportunities; a boat ready to sail into development. There are many seats left, but investors should hurry, as they are filling up quickly.” This summer, the Paraguayan government cancelled the combined $62.5 million in debts involving Société Générale de Surveillance SA (SGS) and Bureau Veritas, Inspection, Valuation, Assessment and Control (Bivac). The payment is a clear sign of the government’s desire to secure better credit ratings and interest rates, and was authorised by Minister of Finance, Germán Rojas. “We want to encourage the implementation of mega-projects on infrastructure through PPPs that seek to guide road infrastructure, airports, bridges and waterways, among others,” he states. “The main objective is to develop the necessary infrastructure to ensure economic development in all sectors and to generate a sustainable economic growth cycle. We want to boost total investment to 25% of GDP from 15%. This would boost the growth rate of 4.5% to 6-7% annually. Although the stakes are high, we are convinced that Paraguay has the right conditions for an economic take-off.

“British companies and professionals are currently developing oil and hydrocarbon activities and we are seeking to strengthen economic and social ties with the UK.” Given Paraguay’s ideal climate and soil for cash crops, such as soyabean, corn, sesame, rice, sugarcane and cassava, the country’s agricultural industry is one of the largest and most important components of the national economic landscape, and a key area of employment. While ministers are eager to diversify the economy, the sector remains ripe for investment and growth. “We want the agricultural sector to become more industrialised and transform the outputs we get into inputs for the livestock industry and, subsequently, outputs for exports,” says President Cartes. “The livestock industry is increasing in quality and experiencing excellent growth. If we had unlimited investments, we would have a unique livestock industry. We also need to diversify into other interesting areas, such as fish or cut flowers, and take advantage of their huge potential.” Spearheading this drive to modernise and expand the key industry is Agriculture Minister Jorge Gattini, whose department is focused on increasing the productivity of the primary sector so it becomes more competitive and diverse. This goal includes developing cassava production, making natural fruit and vegetable concentrates, new banana and pineapple plantations, and the raising of cattle for export. “Previously, we processed 30% of soyabeans—we now process 50-55%, which allows us to sell products with more added value,” Minister Gattini states. “There is, however, still a great opportunity for growth, which is what really matters to businesses and investors. We want to convert grain into animal protein such as poultry, pork, milk and fish among other outputs. This will be crucial so that we don’t have to depend strictly on the export of soyabeans and get a higher added value. “We believe in inclusive production for small producers. We are the world’s third largest exporter of cassava, yet overall productivity is low. If technological improvements are incorporated, we could easily triple the quantities without needing a high level of investment.

“We still have very cheap, but productive, land in the Chaco region for cattle, sugarcane and soyabean.” Jorge Gattini, Minister of Agriculture

Massive Infrastructure Improvement Program Powers Prosperity Last year, Paraguay embarked on the first phase of a major infrastructure development program that comprises almost a dozen priority projects in areas including energy generation, transport, and water and sanitation. Featuring more than $8.3 billion of investment, the 2013-2018 infrastructure blueprint features an electricity masterplan that will boost the amount of electricity generated, a portion of which will be exported in exchange for foreign revenue. Led by the Ministry of Public Works and Communications, the spending plan includes brand new infrastructure as well as improvements to existing buildings, roads and waterways. New roads and bridges account for around half of the vast total, with more than 2,000 miles of roads scheduled for construction. Nearly 10,000 miles of existing roads will be improved and scores of wooden bridges will be replaced by concrete structures. A state-of-the-art electric urban commuter train will be installed that will link several districts of Asunción to areas outside the city. Some of the electricity that will power the train will be generated and distributed from the $2.5 billion invested in new energy infras-

tructure. Through this clear and strong commitment to improving the business environment and citizens’ general living standards, the ministry is sending out a positive message to enterprises of all sizes interested in investing in Paraguay. “We are well aware we need substantial investment in infrastructure that is maintained in the long term in order to achieve a sustainable growth both economically and socially,” says Minister of Public Works and Communications, Ramón Jiménez Gaona. “The public sector cannot achieve alone the standards of performance for infrastructure investments, which is why we’re working on new laws that will enable the private sector to help finance these projects. “We are going to create logistics corridors from east to west by road or rail to join Atlantic ports and Pacific ports. In addition, we will create another north-south corridor through the Paraguay River and the Parana River to connect with the Atlantic. We currently transport 20 million tonnes of cargo per year and just need the right investment to enhance the figures and connect Paraguay, Bolivia and the three Brazilian border states to the Atlantic.”

Ministry of Public Works and Communications Oliva y Alberdi Nº 411, C.P. Nº 1221, Asunción, Paraguay Tel: 595 (021) 4149000 | E-mail: |


PHOTO: Senatur-Secretaria Nacional del Turismo

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Horacio Cartes greets foreign investors during an official visit.

“To become the ‘Heart of South America’, Paraguay needs communication veins… we’re designing an aggressive infrastructure plan to connect the country both internally and externally.”

Tranquil Ypacaraí Lake is one of the most beautiful in Latin America.

bureaucracy and corruption in the region. Companies established here are happy. They make profits and pay very competitive taxes. The workforce is young, with strong work and education ethics. We have wonderful people and that is the greatest asset of our country. “To become the ‘Heart of South America’, Paraguay needs sophisticated communications veins. This is why we are designing an aggressive infrastructure plan to connect the country both internally and externally. We want to transform the Paraguay River into the Mississippi of South America. The trend of internationalisation is settling and promises to increase in the short term. Two British companies are already here looking for gas fields. This is also an open country, with excellent technology.”

Competitive location Gustavo Leite, Minister of Industry and Commerce

There is an international market that is not satisfied and we have to seize this opportunity and take advantage.” Minister Gattini also reveals how the government wants to invest substantial sums in improvements to irrigation systems and the productivity of horticultural crops. “We are working with the Ministry of Public Works and Communications to achieve this. They are going to build routes in those locations with a high-production density, so more efficient communication networks will be achieved, opening access directly to the final markets,” he says. “We are going to invest many millions of dollars in irrigation infrastructure and will subsidise 50-70% of this investment. This presents an opportunity for new irrigation systems, plastic greenhouses, and small agricultural machinery for the producer, such as roto growers, automatic planters, and so on. We still have very cheap and productive land in the Chaco region for cattle, sugarcane, and soyabean development. “Plenty of work is needed to create roads and infrastructure so that our country is better connected. We see vast potential for growth—$800 million to $1 billion—in the agrochemicals and fertilizers sector, which presents an opportunity to develop the proper equipment for each agro-ecological system.” Asked what the government can offer investors in the agriculture sector and other business areas, Minister Gattini said that the government is seriously focused on creating the necessary bureaucratic and fiscal conditions that are most favourable for them. “Investors can expect legal certainty, since there is absolute respect for private property and we are convinced that the best way to grow is through FDI. Paraguay now has the best macroeconomic conditions and legal frameworks for FDI in Latin America,” he says. Meanwhile, Gustavo Leite, Minister of Industry and Commerce, says Paraguay wants to follow the example of Singapore as it looks to take a further step up the international trade and development ladder. “We want to be a simple and safe country with the least

“We want to encourage the implementation of mega-projects on infrastructure through PPPs, that seek to guide infrastructure.” Germán Rojas, Minister of Finance

Paraguay’s location gives it a sharp competitive edge and the government is investing heavily in new transport-related infrastructure so that domestic agricultural products can be shipped abroad, and it can serve as a gateway to the Pacific coast for produce like grains and seeds. “Our biggest challenge is our best opportunity,” President Cartes says. “We need to improve our logistics in order to further develop our industries and to achieve this, we need to invest in infrastructure. When farmers in the western region of Brazil want to move their products to the Pacific Ocean to export to China, the fastest way to go is through Paraguay, so we need to take advantage of that.” Paraguay’s Minister of Public Works and Communications, Ramón Jiménez Gaona, is heading a major infrastructure development plan focused on turning the country into a logistics hub. He believes UK business can play a crucial role in this area. “British companies have an admirable reputation and influence, and they can help us create concrete and successful projects in the shortest possible time,” he says. “We are very interested in leadership that has a cascading effect.” A dynamic and successful government agency, REDIEX is dedicated to driving Paraguay’s continued socioeconomic development through the promotion of exports and the evolution of a business environment aimed at attracting major FDI. With its headquarters in Asunción, the agency plays a key role in the government’s drive to boost exports through the facilitation of global networks and joint activities involving the public and private sectors. REDIEX’s strategy is centred on mechanisms that enhance trade and investment flows, and the construction and implementation of policies that improve the competitiveness of those sectors related to the production of goods and services.

For further investment information, please contact:

☎595 21 616 3006


Accelerating economic activity has provided Paraguay with the green light to socioeconomic growth in towns and cities across the country.

Golden Gateway for Investors The British Government aims to triple exports to Paraguay over the next four years and double UK investment in the republic.


ilateral diplomatic, trade and commercial bonds between the UK and Paraguay have tightened considerably in recent years and, as a result, the British government is targeting a tripling of UK exports to the ambitious Latin American nation and a doubling of UK investment by 2018. Further evidence of this blossoming relationship was seen a little over a year ago when the British Embassy in Asunción was formally reopened by Britain’s Foreign Office Minister, Hugo Swire, following an eight-year break. The embassy, which will be used to engage and encourage British businesses looking to export to Paraguay, opened in October 2013 as British officials sought to take advantage of the country’s high growth, strong business climate and positive messages from the Paraguayan government on inward investment opportunities for British companies.

“The new Paraguayan Embassy is already actively supporting British companies looking to invest or expand operations in Paraguay.” Hugo Swire, UK Foreign Office Minister

Accompanied by Paraguayan Foreign Minister Eladio Loizaga, Minister Swire hailed the opening of the embassy as a symbol of the UK’s continued engagement in Latin America. Speaking during a special ceremony to mark the occasion, he said: “The Foreign Secretary [Philip Hammond] has made it one of his goals to halt the UK’s retreat in Latin America and bolster our presence across the continent. This is the next step in that important process. “I am delighted to be here to witness the start of a new stage in our relationship. This embassy, and our new ambassador, Jeremy Hobbs, will help to increase awareness of the UK in Paraguay, and will work closely with the Cartes administration to build and extend our links. The new embassy is already actively supporting British companies looking to invest or expand operations in Paraguay. I look forward to hearing more good things as the embassy continues to expand.” Dealing with lost British passports may soon become a more frequent task for embassy staff given the steady rise in foreign visitors from the UK, with this trend also seen in rising visitor numbers from other parts of the world who have taken advantage of greater transport connectivity.

Blessed with stunning scenery, welcoming climate, rare biodiversity, colourful history and an abundance of cultural treasures, Paraguay offers something for everyone. The present government views tourism as a key component of its national economic development strategy and a commercial sphere that can enhance the country’s global presence through the hosting of business-oriented events and leisure activities. The sector is sure to benefit from substantial public and private sector investment in transport, communications and hospitality infrastructure, such as roads, airports, hotels and restaurants, as well as support services like organised tours and adventure activities. President Cartes highlights some of his nation’s magnificent attractions: “We have waterfalls, reservoirs, natural parks, the Dakar Series [a prestigious international off-road motorsport event] and a lot of history. There are so many wonderful and unexplored places here,” he says. Marcela Bacigalupo, Paraguay’s Tourism Minister, is quick to highlight data from the World Tourism Organisation that shows foreign tourist numbers increased by 7% year-on-year in 2013, above the global average of 4.5%. She reveals the sector generated an impressive $270 million in revenue last year, but says her office is determined to bolster that figure by increasing the amount of international tourist arrivals and the length of the average stay. “We know where we need to go and the great potential for tourism that we possess,” Minister Bacigalupo states. “We are positioning Paraguay as a destination for business and corporate travellers for conferences, meetings, seminars and events, due to our low operating costs and quality of related services. “It is time to make a significant difference. Paraguay is a small country, but it has a lot of potential. Obviously, we are pleased to record annual tourism growth of 7%, but we want this figure to rise so we can boost its importance and share of the national economy. “Paraguay is an unexplored, but not unknown destination. There is momentum in economic growth, we are attentive to an international audience and we are home to impressive biodiversity in its natural state. Paraguay is highly attractive for international events and tourism routes that highlight some of the region’s best natural and cultural treasures, such as the Iguazú Falls, which can be easily accessed from Ciudad del Este, the Guaraní language and our famous hospitality. “We have a segmented and niche tourism market and want to focus on the development of nature tourism such as the Pantana—a vast region of unspoiled wetlands and wilderness—which attracts foreign scientists to study the native flora and fauna. We have already received expressions of interest from private investors in the UK to develop eco-lodges in the Pantanal and the Chaco region, and river tourism also

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content


Soaked in history, nature and culture, Paraguay is incredibly proud of its roots, but focused on the future and major infrastructure projects.

has huge potential. Consensus and communication are important if we want the tourism sector to be relevant in the portfolio of investment projects. This does not come overnight, but is being built. “It is very gratifying to see we have a list of projects agreed with the financial sector, nationally and internationally, to attract FDI. “It is important to note that domestic investment represents a quantum leap, not only in Asunción but also in other regions and other sectors and this is because of our macroeconomic stability.”

Building the future With more than $8 billion of fresh investment earmarked under the 2013-2018 national infrastructure development plan, there are plenty of opportunities for local and foreign firms to win contracts for major projects in areas like transport and communications networks, health and education, energy generation and transmission, manufacturing, and service-sector activities, including tourism. This upbeat view is echoed by Finance Minister, Germán Rojas, who says the manufacturing and industrial infrastructure that will be created will gradually move away from a focus on the production of raw materials to value-added goods. “Promoting investment to develop the potential of the manufacturing sector of the Paraguayan economy is crucial,” he says. “We want to strengthen economic and social ties between Paraguay and the UK by connecting profitable and safe investment opportunities with financial and entrepreneurial projects of large UK companies. These are clearly complementary features that could be exploited through PPPs. “Paraguay is a country with ample comparative advantages for investment, extremely favourable conditions in terms of natural and human resources, with a recent history of economic growth and strong stability. We see an excellent opportunity to enchance relations with the UK, and strengthen economic and social ties. We await the arrival of investors and economic players who possess the initiative to take advantage of all the opportunities that exist in our country.” Founded 40 years ago, Benito Roggio e Hijos S.A. is an award-winning design, civil engineering and construction company that has gone from strength to strength over the past four decades and is set to capitalise on this major capital expenditure. With the motto “Building the Future since 1974”, the firm has worked on scores of important infrastructure projects throughout the country, with its portfolio including work on airports, roads, canals, communication and power networks and a liquefied petroleum gas (LPG) plant. With the capacity to develop projects of varying dimensions and complexity, the company is ideally positioned to take advantage of the strong flow of FDI into Paraguay through participation in private and public sector infrastructure projects. “Paraguay has the worst infrastructure in Latin America, so this major investment in new projects is long overdue,” Oscar A. Franco V., president of Benito Roggio e Hijos S.A., says. “The country needs to accelerate the pace of investment in roads, railways, waterways and airports, and increase capital expenditure on other infrastructure projects. It’s a country with great potential and private-sector involvement will be very important, but success cannot be achieved without the cooperation of the public sector, which has to become more efficient.” The senior executive believes challenges are opportunities and is eager to form alliances with foreign companies, especially those from the UK.

“We have good funding capacity because of the trust banks and other entities have in us. In this sense, we must show companies and investors that we are backed by our extensive experience and good practice. We have a global vision and can be an important vehicle for companies who want to establish their business here. You have to know who to talk to and this is one of our many advantages. From our side, we are not adventurous and we are not going to associate with any company without first studying it.” Franco V. sees the potential for mutually-beneficial relationships with foreign firms, particularly enterprises from the UK which he respects and admires. “We are very interested in working with British investors and there would be lots of advantages for them through a partnership with us, such as the recognition and experience we have and our knowledge of how everything works,” he states. “It would be very positive for us as well since the influence of British companies worldwide is great, both in Europe and in Asia. We need to bring them here with serious and achievable projects. Hopefully, we can find some affinity.”


Beef sector takes seat at top table One of the world’s leading producers and exporters of beef, Paraguay has opened up its livestock sector to herds of foreign investors.


atin America has long been famous for its mouth-watering meat and premium fruits and vegetables, although the focus on beef has traditionally been directed at cuts from Argentina, Uruguay and Brazil. However, this trend is now changing as greater numbers of international consumers become aware of the outstanding quality and taste of Paraguayan meat. According to US government data, Paraguay is now the world’s eighth-largest exporter of beef— ahead of Argentina in eleventh place—and the country aims to become one of the top five exporters by 2020. Substantial increases in herd size due to FDI from investors attracted by lower land prices mean national beef production is expected to reach a record 540,000 tonnes, carcass weight equivalent (CWE) this year. Exports are expected to account for nearly two-thirds of that total, with the two key markets, Chile and Russia, purchasing the majority of those 320,000 tonnes. The export market will substantially increase in 2015 if, as expected, Paraguayan meat passes strict European Union health and sanitary tests that will enable exports to re-enter the huge trade bloc, after suffering an outbreak of foot and mouth disease in 2011.

“In recent years, the growth we have experienced has been remarkable. We are young and have a great future.” Germán Ruiz Aveiro, President of ARP

Asociación Rural del Paraguay (ARP) is the national meat trade association that has represented and defended the interests of the country’s livestock industry for nearly 130 years. ARP seeks to make livestock an instrument of Paraguay development, social responsibility and respect for the environment. The group supports, promotes and participates in the socioeconomic development of Paraguay, especially in rural areas, and aims to boost members’ economic, social and cultural standards. In addition, ARP is involved in the development and improvement of supplementary and related industries and services. “ARP aims to create the right conditions for growth, and represent the country and the agriculture and livestock sectors, promoting the quality of our food and all the opportunities for development and investment,” says Germán Ruiz Aveiro, president of ARP. “In recent years, the growth we have experienced has been remarkable. We are young and have a great future. We have 20 different offices in every department

with a presence in all regions. The company is a way to gather people in the region and give some visibility at both national and international levels. “Paraguay is the leading provider of meat to Chile and Russia and will return to the EU shortly. Meat consumption is forecast to increase 50% over the next 35 years and it is a very profitable product. We aim to have a presence in as many markets as possible, and to achieve this, we attend fairs in Europe and China and events elsewhere in the world.”

Meaty investment Founded less than five years ago by Brazilian meat industry experts, Frigorífico San Pedro S.A. has established itself as a key player in the Paraguayan meat sector, with the supplier of superior cuts highly regarded in international markets for its outstanding quality that bosses attribute to virtually all its cattle being raised in fields on natural grass. Through its focus on quality, safety, social responsibility, respect for the environment and solid commitment to customers, the company has enjoyed tremendous growth, and presently exports to Asia, Africa, South America, the Caribbean and Europe. In addition to producing industrialised cuts of beef, the forward-thinking company is also a supplier of tanned leather. Ronaldo Ferreira Martins, president of Frigorífico San Pedro S.A., is only too happy to highlight the rapid growth his firm has experienced. “In 2011, we processed 80 animals per day and had an annual turnover of $30 million,” he says. “Because of the large profits that we made and subsequently reinvested in the company, we currently have a turnover of $320 million per year, process 1,400 animals per day and employ more than 1,100 workers. We will reinvest a further $50 million and build 2,500 jobs through 2016. We are taking advantage of the momentum Paraguay is experiencing and are promoting the company and attracting foreign investors who want to come here. “Paraguayan meat is a highly respected product throughout the world. We export a lot to Russia and Chile. In Brazil, we have refrigeration companies that have helped us to position ourselves and create a strong brand for our product. In addition, Paraguayan meat has improved a lot genetically. Servicio Nacional de Calidad y Salud Animal [National Quality and Animal Health Service] does very good work in health controls and vaccination programmes, and is educating cattle breeders on maintaining animal health standards. All of these initiatives give confidence in the success of the long-term market.” According to Ferreira, Frigorífico San Pedro S.A. and other industry players are currently experiencing annual growth of 100% and have access to around 14 million

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

cattle, with that figure expected to grow to 20 million by 2020. “This represents tremendous growth in the next six years and one of the markets that is going to be opened soon to Paraguayan meat exporters is Europe,” Ferreira says. “We are qualified for the European market, but the country is not. With the rating that Paraguay will obtain, we can export and create an added value of much more than 20%. “Frigorífico San Pedro S.A. is looking at this market because it’s very important. That’s why we are investing to improve equipment and to achieve a higher quality product, creating a strong brand in Europe, and conquering the market, as we did with Russia.” How does the company plan to achieve this ambitious goal? Ferreira explains: “Our strategy is to create alliances with overseas customers. We have partners in every market, which helps us build the brand and strengthen our product. This is what we want to do with the European market; look for three or four clients and concentrate on supplying them.” The senior executive believes European consumers have yet to taste Paraguayan meat and experience its exceptional quality and value. “We have to start from scratch in Europe and demonstrate that our meat is of superior quality,” he says. “Some of the world’s best cattle breeds are here and there are long-term investment opportunities to improve them further.” Switching the spotlight to his firm’s range of competitive advantages, he concludes: “We distinguish ourselves through a very high quality product and service in which we continue to invest so as to improve. We will have our quality standards verified by international certifications by the beginning of next year to be ready for the European market.” Established in 2009, Bioexport S.A. is a wholly-owned Paraguayan supplier of agricultural products that include black and white sesame, chia, bean sprouts and rice to major international markets across the European Union, Middle East and Asia. An innovative enterprise with a focus on quality over quantity, the company has embraced new technology that has allowed it to boost payment and invoicing systems which, in turn, has improved industry transparency and efficiency. Such investment has also aided the collection and analysis of industry data and statistics. In addition, Bioexport S.A. has received many plaudits for its strong commitment to corporate social responsibility (CSR), which the firm achieves through its work


with thousands of growers and farmers throughout Paraguay. “Sesame is enormously important and one of the main foundations for Paraguay’s farmers,” says Arturo A. Fernández O., president of Bioexport S.A. “We collect 8,000 tonnes of sesame per year. We were the first company involved in black sesame, produced in Itapua, and also buy white sesame. We now work with 5,000 producers of black sesame and 15,000 producers of white sesame. “We have grown 43% in the last year. We work with 65,000 hectares of land and expect to reach 100,000 hectares in 2015. Up to $7-8 million worth of sesame is grown in Itapua, and all of that money stays in the region. Since sesame is typically grown in the summer, we have diversified cultivation with chia, which can be produ-

“Our strategy is to create alliances with overseas customers. We have partners in every market, which helps us build the brand and strengthen our product.” Ronaldo Ferreira Martins, President of Frigorífico San Pedro S.A.

ced during winter once they have reaped the sesame. Almost 100% of it is produced organically. Beansprouts have a high concentration of proteins and vitamins. In this sector, we need a lot of investment to help develop it and we also need to send a message to the world that we have the conditions to develop these crops. One challenge we face is that the growth in rice production is faster than the growth of the processing industry. “We sell everything we produce. We are also developing the cultivation of rice in the country and are taking part in several hydrological projects to optimise production and water resources within the different regions. We go to trade fairs and industry events and cooperate with the government to reach as many potential markets and clients as possible. Our target is to help our country increase international awareness of all the opportunities that Paraguay offers.”

Paraguayan food for a growing world population When examining the main challenges the future of our planet faces, one of the most frequently repeated is regarding the food production to supply a growing world population. In this context, Paraguay demonstrates its commitment to increase agricultural production and develop related industries in order to continue positioning itself as a top provider of quality nourishment for the world. At present, Paraguay’s production feeds more than 60 million people, and forecasts estimate an increase in harvests that will allow Paraguay to feed more than 100 million people in 2025.

CAIASA: A Contribution for the Future Motivated by the imminent growth of Paraguay’s agricultural production, CAIASA was born to become the greatest agro-industrial complex of soybean processing in the country, as a result of a joint venture between Bunge and Louis Dreyfus Commodities. With an investment of over $200 million, this modern industrial facility consists of a port terminal with two docks; silos for storage of soyabean meal, grains and oilseeds; tanks for oils; and one crushing plant. State-of-the-art technology equipment in all processes at the complex and compliance with the most demanding world quality standards make CAIASA one of the most modern and efficient agro-industrial plants in the world, processing over 4,500 tons of soyabeans per day, which represents almost 20% of Paraguay’s production.

Benefits for Paraguay and the World CAIASA directly employs 200 people, and thousands more indirectly due to the trickle-down effect of the industry throughout the agro-industrial chain that affects services, fluvial transport and fuel sectors among others. CAIASA represents an important advancement in the path of development for Paraguay.

When consulted about the other effects of industrialisation of soyabean production in Paraguay, Diego Puente, CEO of CAIASA, lists the many benefits, highlighting among them the development of other industries like energy, construction, road and fluvial transport; the increase in hard currency incomes to Paraguay; and access to markets with higher value-added products; as well as the growth of related industries such as aviculture, livestock, aquaculture, dairy, food processing and biofuels. Along with CAIASA came significant infrastructure investments in ports and transportation equipment, such as river barges and tugs to move goods to regional transhipment ports. In the port adjacent to the plant, the flow of barges is impressive, confirming that the shipping industry is a major beneficiary of this industrialisation, while Paraguay continues to reach a better position in the region and the world. The industrialisation of soyabeans contributes greatly to local farmers, the agriculture sector, and the Paraguayan economy as a whole. Given that there is a constant demand for raw materials all year long, this sector’s activity guarantees the producer better prices and reduced logistical costs. Finally, greater industrialiation lowers the costs in the whole food chain, so Paraguayans will have additional access to quality food at reasonable prices.

Sustainable approach The long-term perspective of the company implies a strong commitment to sustainability, as CAIASA needs to ensure year-round activity for many years to come. This means that the company will always promote a responsible use of natural resources throughout the process, as well as a commitment to all the people within the value chain, as only this can ensure it will meet its goal of processing Paraguayan food now, and in the future.


One of the world’s largest exporters of beef, Paraguay is also ahead of the herd when it comes to agricultural products like soyabeans and sugar.

Agriculture Ripe for Investment Fertile soil, a favourable crop-growing climate and vast tranches of unspoiled land combine to make agri-business an attractive option.


iven its vast wealth of natural resources and enviable strategic location near major consumer markets, Paraguay has traditionally put the performance, expansion and growth of the national agricultural industry at the heart of its economic policies and strategies. The Cartes administration has continued this trend by earmarking the sector for greater industrialisation, more modernisation and the transformation of outputs into inputs for the livestock industry for meat exports. Paraguay’s Agriculture Minister, Jorge Gattini, underlines the importance of achieving the goal of boosting agricultural productivity so that the sector becomes more competitive at an aggregated level. “We understand that safety of our food production process is vital to gain entry to international markets and a key feature to enter the premium market,” he states. “It is also very important to have good quality and a suitable price. For example, we know that technology replaces unskilled labour but it also is complementary to human capital. That’s why we are in a process of training human capital to manage the technology that we want to incorporate. For this, the Ministry of Labour is implementing Sistema Nacional de Promoción Profesional [National System of Professional Promotion] where skilled jobs good enough to fit the operational processes of the project implementation are generated.” Cooperation between government departments, state-owned entities and private enterprise is vital for the overall socioeconomic health of the agricultural industry and the nation’s overall economic growth prospects, Minister Gattini explains. “We

are very involved in the formation of PPPs as the state does not have enough resources to fund all these projects. For instance, in the case of cassava production, the government will contribute 75% of the project value, while the remaining 25% will be provided by the private sector. We take care of the financing of fixed assets, and the private sector is in charge of training or technical assistance. “We are the world’s largest exporter of organic sugar. Some cooperatives are vertically integrated and export all over the world to ‘Fairtrade’ standards. We are keen to increase the production and export of sesame and chía, which can be processed to make oils.” Cabinet colleague and Finance Minister, Germán Rojas, is eager for the agricultural industry to remain a core pillar of economic growth and for international investors, especially those from the UK, to make the most of his country’s natural assets. “Paraguay’s economic growth is closely linked to the performance of the agricultural and livestock sector; meat and soyabean are critical items,” he says. He does, however, believe potential investors should look at other areas of the economy, and highlights how the manufacturing and industrial infrastructure planned for the coming years will gradually move away from a focus on the production of raw materials to value-added goods production. “With all the investment plans that we want to boost, we expect to change the productive matrix of the economy,” Minister Rojas says. “Promoting investment to develop the potential of the manufacturing sector of the Paraguayan economy is crucial. We want to strengthen economic and social ties between Paraguay and the UK by

A GROWTH INVESTMENT Through hard work, determination and $20 million of investment since 2008, Seagro has grown into a leading grower and exporter of rice.

The future of the country is in the field Rural Association of Paraguay

SEAGRO S. A. Ruta Graneros del Sur Km 16, Fram, Itapúa, Paraguay Tel: +595 985 286967 / +595 761 265563 |

I m p ort- E x p ort

An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

connecting profitable and safe investment opportunities with the financial and entrepreneurial projects of large UK companies. These are clearly complementary features that could be exploited through PPPs.”

Creating the engineers of tomorrow According to Industry and Commerce Minster, Gustavo Leite, the government is fully aware the competitive cost by itself is not a sustainable advantage, hence the desire to promote a manufacturing culture with a “strong foundation in innovation, scientific and technical education”. “To achieve this, we signed an agreement with the National University of Asunción to increase the number of engineers in the next 10 years and this is a great challenge,” he says. “Consequently, we are not only a rich country in natural and low-cost human resources, but we are also well aware of where we want to go and the steps we must take to get there. “Paraguay is a major food producer of grain, meat and derivatives and as the world’s population is forecast to increase substantially, we need to take advantage of this opportunity. We are the fourth-largest exporter of soyabeans and the eighth-largest exporter of beef but we want to become the fifth in 2020. “The biggest challenge we face is to transform the production of soyabeans, corn, poultry and beef for export, but we are getting there. In agriculture in general, I believe we can triple our annual production. Our manufacturing sector has grown by 7% in the last year, which is good, but still very small. We must work to develop it further, and foreign investors can play an important part in helping us achieve this.”

The rice advantage Founded by Ukrainian immigrant Pedro Semeniuk nearly 25 years ago, Seagro S.A. has steadily grown into a leading rice producer for domestic consumption and shipment to major markets in Africa, as well as Israel, the US, Brazil and Chile. The company, which also owns more than 4,000 cattle, now has European markets in its sights and is eager to hear from UK investors seeking a foothold in the local agricultural industry. “In 1990, I planted 15 hectares of rice and today I grow 7,200 hectares’ worth,” says the dynamic entrepreneur. “Thanks to modernisation and the use of cutting-edge technology, we have managed to grow in productivity, volume and quality. We are proud all of our achievements and hard work.” “We are growing by 10% per year in the rice sector alone, and in the next five years we expect to grow by 15-20% annually. Our biggest market is Brazil, but we need new markets and to be able to diversify our portfolio.” According to the experienced executive, Paraguay’s wonderful agricultural potential is unknown in some parts of the world, as are its excellent growing conditions, which he highlights as unpolluted land, good weather and the use of non-aggressive agrochemicals. “We need foreign partners to come and to see the reality, and to realise that Paraguay is a good place to invest capital and make good money,” Semeniuk adds. “We have to study how to open up the European market. It is our hope that Europe knows us, knows our product and the quality that we have. That’s all we need to increase our visibility.” It is not just smaller agricultural enterprises that have enjoyed success in Paraguay, however; the household names are also enjoying decent returns on investment










through a range of interests and activities. A sustainable agriculture company with a significant presence in Paraguay for the last four years, Monsanto delivers agricultural products that are focused on empowering farmers—large and small—to produce more from their land while conserving natural resources such as water and energy. The company’s leading seed brands include crops like corn, cotton, oilseeds and fruits and vegetables. Monsanto also produces leading in-the-seed trait technologies for farmers, which are aimed at protecting their yield, supporting on-farm efficiency and reducing costs. Monsanto’s business leader for Bolivia, Paraguay and Uruguay, Fernando Giannoni, explains why the company decided to enter the Paraguay market. “Our biggest part of the Latin American business was Argentina, but we saw huge potential in the Paraguayan agro-business and its stakeholders, and now collect royalties from our technologies,” he says. “We opened our office in 2010 and have since brought the latest technologies for corn and soyabean, to increase the quality and life of the products.” The regional representative welcomes the industrialisation of the agriculture industry and says Paraguay needs to convert grain in value-added products such as ethanol or animal protein. “Vertical integration is a very attractive option for agribusiness in the future, the key issue is how to integrate your business with other activities,” he says. “We want a solid system based on good equipment and technology that takes into account all the stakeholders. Cotton, for instance, is a small farmer’s business so we need to work together so that they can grow with us and we train them in the crop and in other matters. My advice for newcomers? Paraguay is different from Brazil and Argentina in agro-business. It has a different culture, so you need to learn it and act locally. It is a new country with a lot of opportunities.”

Embracing investment Since his election victory, President Cartes has embraced business friendly legislation that aims to simplify commercial and investment processes, reduce red tape and cap the length of time it takes to set up a business or presence in the country. “Our challenge is to ensure investment in innovation and sustainable development, and to grow about 5-7% per year, maintaining low crime rates, gaining competitive improvement in labour and production, and keeping good relations with neighbouring countries and the world,” says Industry and Commerce Minister, Gustavo Leite. “Of course, we also want to provide stability in terms of legislation and taxation. We are currently developing a law to reduce bureaucracy in the public sector and to reassure the international community that fiscal conditions will not change without notice overnight—there won’t be unpleasant surprises in this field. “The government knows where the country is, where it wants to be and what must be done to get to that position.” As Paraguay’s economy has grown and living standards for its workers have improved, so the desire for greater access to fiscal products like mortgages, loans and insurance has increased, creating opportunities across the entire financial services spectrum. Proud to be a wholly-owned Paraguayan car insurance company that is available around the clock for more than 21,000 holders of its comprehensive range of policies, original avisos cervepar curv.pdf 1 corner 06/08/14 14:59 La Consolidada S.A. de Seguros boasts aeng presence in every of the country.


As the country’s economy continues to blossom, Paraguay’s vast agricultural industry continues to grow and provide lucrative FDI opportunities.

With more than 50 years’ experience, the group enjoys an excellent reputation among businesses and individuals seeking protection against breakdown, fire, accident or theft, with its modern and instantly-recognisable fleet of tow trucks based in many towns and cities. “In Paraguay, insurance is taken out because it is required by banks and other entities, so clients are forced to take it,” says Juan Carlos Delgadillo, president of La Consolidada. “The percentage of people who take it out voluntarily is lower so we need to raise awareness. I see the insurance industry developing at the pace achieved by the country over the next five years, since the insurance sector accompanies economic growth and I expect we will have to broaden our product offer by 2020.” Turning to why Paraguay is such a safe and secure destination for British investments, the experienced executive adds: “We have proven political, economic and legal stability, and are an agricultural and livestock-producing country that also sells raw materials without industrial process. “This will encourage the participation of the insurance sector. As Paraguay modernises, there will be a positive correlation between GDP growth and the growth of our sector, which will be excellent for the sustained growth of our company.”

Brewing up business Established more than a century ago with just a small production plant, Cervepar has grown into Paraguay’s leading brewery and alcoholic drinks manufacturer with several manufacturing sites. In 2006, the group was acquired by international brewery giant AmBev and boasts a ubiquitous presence in Paraguayan society through its various brands. “Cervepar has many different brands, local ones such as Pilsen and Bavaria, and international brands like Brahma, Stella Artois and Budweiser that we produce under licence,” says Jorge Talavera, Cervepar’s law and corporate affairs manager. “We also import some other beers, such as Patagonia and Kilmens, depending on the timing and demand. We export Brahma and Budweiser to Bolivia, Uruguay, Peru and Ecuador, and want to export Pilsen to the US and Central America. We are testing the Spanish market too.We always aim to have a diversified portfolio and innovate through different varieties and formats. Cervepar also takes care of distribution directly by our people or through our authorised distributors within the country. “We have a Paraguayan glass factory in our group that produces some of the packaging materials for both local and international markets. To summarise, we are an important company in the national value chain because we buy all the inputs locally where possible for the beer and for the packaging.”

Berkemeyer plays a key role in identifying the legal requirements of investors Tel: +595 21 446 706 Asunción, Paraguay

The largest taxpayer in Paraguay and with more than 6,200 employees, Cervepar plans to invest around $300 million in the five-year period to 2018, with the capital expenditure covering the upgrade of equipment and the development of marketing and exports plans. “It would be very interesting to sell our products in the UK, not only commercially, but also to position the Paraguayan brand for other countries as London could be a window to the European market,” Talavera adds. As more foreign companies invest in different areas of the Paraguayan economy, so the importance of utilising experienced local companies that know the commercial and industrial terrain, legal and tax systems grows. Since its foundation in 1951, Berkemeyer Attorneys and Counselors has provided expert legal services to clients at an international and local level, gaining a global reputation for quality, expertise and professionalism.

“We need foreign partners to come and see the reality, and to realise that Paraguay is a good place to invest capital and make good money.” Pedro Semeniuk, Seagro S.A. Founder and General Manager

The firm provides legal advice on virtually all areas of law, including general practice, mergers and acquisitions, commercial contracts, employment, environmental, energy and telecommunications, investment, finance, commercial transactions, franchising, licensing and agency law, corporate finance, joint ventures, project finance, and private equity. “We have 63 years of history representing foreign companies and ensuring that their rights and conditions are the same as the local ones,” says partner Hugo T. Berkemeyer. “We offer the framework necessary for them to thrive in the country. Our commitment is not only legal, we advise them so they understand the country, its culture, how people work. We give integral and comprehensive assistance; we are the local partner that supports them and ensures the success of their business. “Paraguay has simple tax laws and a tax system that is very convenient for investors. In addition to tax advantages, there is freedom of currency exchange as investors can bring and take out capital without limitation, so investment is open in every area of the economy.” Miguel A. Solano-López C., Ambassador Extraordinary and Plenipotentiary of the Embassy of Paraguay in the UK, says: “We are the world’s fourth largest producer of soyabeans; 99% percent of our soyabeans are sold in the commodities market. They are not processed as we still don’t have the investment and necessary machinery, but we want to change that. Our beef basically sells itself, that’s why you do not see much publicity. “President Cartes is one of the most successful businessmen in Paraguay; he is not a politician. His inauguration was very unusual as he made it clear he wanted to invite lots of businessmen, who outnumbered local and foreign political leaders for the first time. The message is we have a red carpet to welcome you and your investment.”


Paraguay - November 2014  

Latin America’s best-kept secret, Paraguay is taking advantage of its natural and human resources with the help of international investors.

Paraguay - November 2014  

Latin America’s best-kept secret, Paraguay is taking advantage of its natural and human resources with the help of international investors.