Q: According to fDi Markets, FDI into Paraguay grew from 798 projects in 2003 to 1061 in 2014. What led to this surge in investment?
A: In 2013 we attracted $360m in FDI according to our records, and we hope to reach $1bn by 2018. There are many reasons, one being that Paraguay has a consistent track record as a stable and rapidly improving business environment.
Second, Paraguay has managed to distinguish itself from its neighbours. Paraguay is not Brazil and it is not Mexico. It is not a place where you are going to have 100 million consumers, for example. Yet it is an easy-to-navigate country, in terms of the tax and fiscal system, and people are starting to discover that.
Third, Paraguay has distinguished itself as a profitable platform. For instance, we have the third largest fleet of barges in the world, and our landlocked location means that there has been a strong growth of waterways which connect the centre-west of Brazil and Bolivia to our rivers.
Q: Being positioned between large markets such as Brazil and Argentina, Paraguay faces stiff competition for FDI. What are Paraguay’s unique selling points and what kind of opportunities does it offer prospective investors, which are unavailable elsewhere in the region?
A: We used to see our landlocked position as a curse. However, this is one of our unique offerings. As Brazil’s farming and agribusiness industry expands westwards, and as it moves further inland and closer to our borders, Paraguay will play an important role in transporting its exports. This is because rather than transporting their produce over land in Brazil by trucks, Brazilian farmers find it much quicker to use Paraguay’s river barges to transport their produce on the Rio de la Plata through Buenos Aires in Argentina and Montevideo in Uruguay. Therefore the barge-building industry in Paraguay is growing tremendously. Right now we have an important Japanese shipbuilder which has invested in building 100 barges a year.
Our beef production is another opportunity for investment – Paraguay exports $1.4bn-worth of beef every year, and we are aiming to make it $3bn. So we are seeking $500m in investments in new slaughterhouses. Paraguay [is also looking] to become an efficient food producer, and so we have investment opportunities in our grain sector. While Paraguay currently produces 15 million tonnes of grain a year, we want to double this in the next 10 years.
Q: Paraguay has witnessed significant economic fluctuations recently. According to the World Bank its GDP shrank by 1% in 2012, before growing by 13% last year. Are you worried that this macroeconomic instability might hurt investor confidence in Paraguay?
A: The problem with looking at the cold statistics is that it does not capture some specific [anomalies]. The years 2012 and 2009 were very bad agriculturally as we suffered drought and this affected our GDP performance. Yet Paraguay has grown consistently at 4.8% over the past 10 years, and we are going to be among the top three fastest growing countries in Latin America this year.
The target we have set in our five-year development plan is in the vicinity of 6% [next year]. We are going to hit that target because we have planned to invest heavily in our infrastructure. Our country is also very solvent as our reserve-to-foreign debt ratio is two to one, so we will be able to withstand any headwinds in case something goes wrong.