The Directorate of Investments and Special Regimes (DIE) of the Ministry of Industry and Commerce (MIC) revealed that in the third quarter of 2025 (July-September), Paraguay issued 74 certificates to foreign investors, who committed to approximately USD 6 million in national investment projects. These data show a tendency of continuity in foreign investment in Paraguay, despite a regional context that, due to the deceleration of world trade and tighter financial conditions, has not been as favorable. Paraguay, in this regard, has become a destination of greater interest for foreign capital in the region, as a country that stands out for its macroeconomic stability and investment incentives.
Changes in the Destination of Foreign Investment
The MIC highlights that foreign investment in Paraguay is becoming more diversified in the long term. If a few years ago the majority of these operations were destined for the primary sector (mainly, agriculture) and construction activities, recently more than half of the total foreign capital committed in the third quarter was destined for business services, industrial technologies, and light manufacturing. In this sense, foreign investments in Paraguay are consolidating themselves in the medium term as a form of productive insertion in global value chains and are gaining relevance as a result of industrial relocation and nearshoring trends.
More concretely, the technology-linked investment model is gaining a growing share of foreign investment in Paraguay. On the one hand, this activity is part of a governmental policy of digitalization and productive innovation. In this context, numerous incentives for industrial modernization have been launched in recent years, such as the National Innovation and Industrial Competitiveness Program, which has encouraged, among other things, the adoption of new technologies in production and logistics. On the other hand, certain segments of light manufacturing are also beginning to move to Paraguay. Production units of this kind are located in the country’s free zones and are able to reduce their tax burden and face simpler and more agile administrative procedures. Companies also committed to expanding certain services in the third quarter. In particular, back-office functions, logistics coordination centers, and some technical support services, among others. These operations take place in Paraguay’s main cities, such as Asunción and Ciudad del Este. The work and social insertion that these services generate is not limited to formal jobs, since training and human capital are also developed in the national territory.
Mercosur: The Main Source of Investment
The Mercosur region continues to be the main source of foreign investments in Paraguay. Of the 74 certificates that the DIE issued in the third quarter, about 50% corresponded to companies and investors from Mercosur countries. Brazilian investors registered the most projects of all countries in the region, with a total of 26 new investments. The main driver of these investments has been Paraguay’s lower energy costs compared to Brazil and the rest of the world, which is a competitive advantage that is maintained in the medium term. It should be remembered that the national energy matrix is mainly based on clean hydroelectricity from the Itaipú and Yacyretá dams. For the case of Brazil, investments have been prominent, especially in food processing industries, automotive, and plastics parts.
Following Brazil, Bolivia, Argentina, Uruguay, and Chile provided the second largest number of new investments. Bolivian investors have diversified their destinations and are beginning to expand logistics and agricultural input activities in Paraguay, for example. For its part, Argentine and Uruguayan investors have increased their presence, mainly in the construction, manufacturing, and wholesale and retail trade sectors. Finally, Chilean investments have been recurrently related to agri-food projects and renewable energy.
Expanding Extra-Regional Investment Partnerships
Paraguay is also expanding its investment relationships to other extra-regional countries, including a larger variety of European, Eurasian, North American, and Asian investors. European and Eurasian investors were responsible for around 35% of all new projects in the third quarter of 2025. Spain, Poland, Russia, Turkey, and Ukraine, in particular, have been financing projects in industrial services, infrastructure, and agribusiness. Finally, investors from North America and Asia were responsible for the remaining 15% of new projects. This group of countries, made up of investors from the United States, Canada, China, and South Korea, among others, has expanded its interest in Paraguay in recent years. This interest has been based on the long-term stability of the Paraguayan economy (characterized by low inflation and public debt, and relatively predictable fiscal policies) and its potential as a platform to the rest of the Southern Cone market, through Mercosur. As for Asian investments, several South Korean and Chinese investors have expressed interest in manufacturing components in Paraguay and assembling electrical and electronic goods. This may be part of a greater tendency of relocation of production and supply chains by companies that want to reduce logistics costs and diversify their operations across the Americas.
Foreign Investments in Paraguay: Key Strengths
One of the most important competitive advantages that explain the dynamism of foreign investments in Paraguay is the low tax burden. In this regard, Paraguay has a corporate income tax rate of 10% and a value-added tax (VAT) of 10%, which is one of the lowest in Latin America. Moreover, companies that operate under the Maquila Law only pay a single tax rate of 1% on the national value added, if their production is destined for export. Another structural advantage is related to low energy costs. Paraguay is a world leader in clean energy generation, whose production capacity far exceeds its domestic consumption. In the medium and long term, this means very low industrial rates for electricity in the national territory. In addition, in recent years investments have been made in infrastructure that improve logistics corridors that connect the main cities of Paraguay: Asunción-Ciudad del Este-Encarnación-Concepción. In this sense, road improvement projects, port facilities, and digital connectivity have significantly increased Paraguay’s connection to global trade routes. The improvement of the infrastructure in the country’s main river ports, a process that is still taking place, has also made the waterway formed by the Paraguay-Paraná rivers a strategic axis for the shipment of agricultural exports and industrial products.
Prospects: Paraguay’s Future as a Regional Hub
The government’s medium-term policy is expected to be increasingly focused on consolidating Paraguay’s role as a logistics and production hub for the rest of the Southern Cone. In this way, the state will prioritize policies that support industrial upgrading, digital transformation, and sustainable production. As new sectors continue to gain strength and diversity in foreign investments in Paraguay, these operations will be fundamental for shaping the next stage of Paraguayan development. With fiscal stability, abundant clean energy, and infrastructure connectivity, Paraguay will continue to attract foreign investors in 2026, looking for efficiency, sustainability, and regional insertion in an increasingly competitive environment.