Brazil, one of Latam’s first and most prominent markets for international investors, has decided to boost the tax advantages it offers companies. The Brazilian government intends to increase national and foreign capital capture by its economy. Foreign Direct Investment (FDI) fell 36% year over year in September 2023 to 52.7 billion dollars, which has generated concern for the government of Luis Ignacio Lula da Silva. Even so, the Latin American regional giant continues to be the country that attracts the most investments in the area.

New tax advantages in Brazil aimed at boosting FDI

The new tax incentives in Brazil, announced by Brazil’s Vice President Geraldo Alckmin at the beginning of 2024, are part of a plan by President Luiz Ignácio Lula da Silva to “reindustrialize” the largest Latin American economy, whose industrial production remains below pre-pandemic levels and is 18% lower than its ‘peak’ in 2011. Alckmin recently highlighted, “These new tax incentives in Brazil will attract investments. Our problem is low investment and low productivity. We have to act to increase both.”

The program aims to provide companies with tax benefits to buy new machinery and invest in transportation, encouraging ‘green’ projects such as electric and flexible fuel vehicles, renewable energy, and biofuels. Alckmin highlighted that the first measure establishes a program that reduces income taxes applied to transportation companies so that they invest in new technologies, as well as research and development. It will provide benefits of $721.34 million in 2024 and gradually increase to $4.1 billion in 2028.

Future projects and tax advantages in Brazil

The second measure consists of a bill sent to Congress that proposes 3.4 billion Brazilian reais in tax benefits for companies to renew their machinery. The initiative will also have a second phase. The government expects revenue losses linked to new tax advantages in Brazil to be offset by import taxes, including those on electric vehicles brought from abroad.

The measures come when Brazil is witnessing a reduction in foreign direct investment, which fell 36% between January and November 2023. Capital participation fell by 22.8%, while loan operations granted by parent companies to their subsidiaries or affiliates plummeted by 85% during the same period. However, in November 2023, FDI registered an encouraging increase of 2.6% compared to the same month in 2022, to $7.78 billion. At the end of November 2023, FDI totaled 57.7 billion, equivalent to 2.68% of GDP.

According to financial market forecasts, the Brazilian economy grew around 3% in 2023, where a sharp slowdown is expected in 2024. GDP expansion is expected to be limited to 1.5%. According to the latest ECLAC report, Brazil will lower the pace of economic expansion from 3% to 1.6%, while the IMF projects growth of 1.5% this year. The  Organization for Economic Co-operation and Development (OECD) foresees an expansion of 1.8% and the Brazilian Treasury of 2.2%. The GDP of South America’s biggest economy grew 2.9% in 2022, following the 5% rebound in 2021 (its most significant advance in 11 years) that followed the 3.9% GDP drop in 2020 due to COVID-19. Before the pandemic, Brazil had several years of weakness: GDP fell 3.8% in 2015 and 3.6% in 2016. Conversely, it grew 1.3% in 2017 and 2018 and 1.1% in 2019.

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Reigniting Industrial Growth is the goal

In conclusion, recently implemented tax advantages in Brazil underscore a strategic shift towards bolstering domestic and foreign investment in its economy. The proactive measures, spearheaded by Vice President Geraldo Alckmin and backed by President Luiz Inácio Lula da Silva, aim to reignite industrial growth. This measure is particularly crucial as the nation continues to grapple with post-pandemic economic recovery. By incentivizing companies to invest in modernizing machinery and embracing sustainable technologies, such as electric vehicles and renewable energy, Brazil demonstrates a commitment to fostering innovation and environmental stewardship while simultaneously stimulating economic activity.

The outlined tax advantages in Brazil encourage immediate investments in crucial sectors like transportation and signal a broader commitment to positioning Brazil as a competitive destination for global capital. By alleviating the tax burden on companies undertaking strategic investments, Brazil seeks to address the twin challenges of low investment and productivity, laying the groundwork for sustained economic expansion in the years ahead. Moreover, the government’s forward-looking approach, as evidenced by the phased implementation of tax incentives, reflects a nuanced understanding of the evolving needs of the economy and the imperative of long-term planning.

Amid concerns over Brazil’s recent decline in foreign direct investment (FDI), these initiatives represent a timely response to the evolving economic landscape, aiming to reverse the trend and bolster the nation’s attractiveness as an investment destination. While economic forecasts suggest a tempered growth outlook for the near term, the concerted efforts to leverage tax advantages in Brazil underscore a proactive stance towards revitalizing economic dynamism and fostering inclusive development. As Brazil navigates the complexities of a post-pandemic world, implementing targeted tax incentives emerges as a pivotal tool in driving sustainable growth and realizing the nation’s full economic potential.

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The Interoceanic Corridor of the Isthmus of Tehuantepec plans an ambitious 2 billion Mexican pesos investment in the first two years.

The Tehuantepec Isthmus Corridor project, one of the most important works of the current Mexican federal administration, has aroused the interest of 90 companies from various sectors to invest and establish themselves. This information is from a group of businessmen actively promoting the project.

Proistmo is promoting the Tehuantepec Isthmus Corridor project

Elena Achar, Director of Public Affairs and Communication at ProIstmo (an organization actively promoting the project), recently asserted that there is certainty regarding the plans to execute the Interoceanic Corridor of the Isthmus of Tehuantepec project. They state, “The eyes of the world are focused on the Isthmus of Tehuantepec Corridor; no one says no to it. In this project, uncertainty has no place. What there is is certainty. We want to completely eliminate that word because, in this project, certainty prevails. The investment  will indeed arrive, and we want the project to be well-planned and organized,” said

The Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) is a Mexican initiative that covers ten development poles, two strategic ports (Salina Cruz and Coatzacoalcos), and an extension of 303 km, and with which, according to the organization, it plans to have a positive economic impact in the south-southeast of the country.

The Interoceanic Corridor is focused on manufacturing and the movement of merchandise between the Pacific Ocean and the Atlantic Ocean through the isthmus, employing railways, ports, airports, and highways.

This project, which seeks to stand out in technology and innovation, inclusion of communities, and growth, is presented as a comprehensive solution for international investors, added ProIstmo.

“In America, there are only three isthmuses: the Interoceanic Corridor, the Panama Canal, and finally, the one in Nicaragua, which has never been launched, but it is there,” Armando González, VP, commented at a recent press conference on ProIstmo operations.

Although the idea is familiar, the current approach seeks to generate employability, consider industrial vocations, and promote sustainable development, addressing the lack of investment in onshoring in the southeast of Mexico, as stated by the project’s promoters.

With a focus on nearshoring and onshoring, the Interoceanic Corridor of the Isthmus of Tehuantepec project aims to boost the industry, strengthen the area, and catalyze communities’ well-being.

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One of the main goals is to create employment opportunities in Southeast Mexico

According to Armando González, VP of Operations at ProIstmo, there are 10 “poles of well-being development,” which seek to detonate economic zones, bring industry, and, above all, create employment opportunities in the region,” he stated.

The development poles are fundamental pillars that generate the conditions to change international logistics through technology, innovation, and inclusion.

The spokespersons revealed that Veracruz occupies third place in creating human talent nationwide and seeks to retain and attract international talent to consolidate itself as an engine of development, especially in places like Texitepec. In addition, they recalled that Asia is the largest supplier of raw materials, and the United States is the largest consumer, so these countries are emerging as key partners to strengthen the commercial relationship with North America.

The objectives of the Interoceanic Corridor of the Isthmus of Tehuantepec project include job creation, national and foreign investment, increased profitability, tax benefits, and solid economic outcomes.

With 11 industrial sectors, among which are pharmaceuticals, high technology in healthcare, agro-industrial activities, and logistics, the project aims to develop the area with almost 2 billion pesos in a couple of years to attract the first industries and demonstrate the benefits of settling in the centers of Tehuantepec.

The project’s promoters assured that the most relevant challenge is the creation of a comprehensive ecosystem that plays a crucial role in the success of the Interoceanic Corridor, consolidating it as an integral solution in the geopolitical and economic panorama of Mexico. The first two years will focus on infrastructure, laying the foundation for long-term sustainable development.

Figures from the Texistepec Well-Being Development Pole project

The plan provides for allocating at least 60 percent of the investment in development in the first two years of activity, reaching the figure of 1.86 billion pesos.

The investment in the development of the environment, specifically for the construction, equipment, and maintenance of the region’s local infrastructure, will amount to up to 15 million pesos.

The profitability of 262 hectares is contemplated with a focus on social benefits, covering sustainable projects and the educational and pharmaceutical sectors.

For investment in construction with an efficiency of 70% and 183 profitable hectares built, the  Tehuantepec Isthmus Corridor project will allocate 14 billion pesos.

The Interoceanic Corridor of the Isthmus of Tehuantepec emerges as a beacon of opportunity, drawing the attention of 90 companies across various industries to invest in its development. With a clear focus on urbanization and infrastructure, the project aims to enhance industrial growth and prioritize the well-being of local communities. Backed by a comprehensive vision encompassing technology, innovation, and inclusivity, the corridor is poised to redefine international logistics while catalyzing economic prosperity in the south-southeast region of Mexico. As the project progresses, it promises to unlock new avenues for job creation, investment, and sustainable development, solidifying its position as a transformative force in Mexico’s economic landscape.

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Peru is a land of opportunity for business investors, boasting natural resources, a growing market, and a favorable regulatory environment. However, to make informed decisions to invest in Peru, it’s essential to consider several significant variables that can influence the success and sustainability of ventures in the country. From economic and political stability to infrastructure and cultural nuances, each factor plays a crucial role in shaping the country’s business landscape. This comprehensive guide will delve into the main variables businesses intending to invest in Peru should carefully consider.

Economic Stability

Economic stability serves as the cornerstone of any successful investment venture. Peru has demonstrated remarkable economic resilience in recent years, with sustained GDP growth of approximately 2.5% driven by primary sectors and services and prudent fiscal management. Investors should monitor critical indicators such as inflation rates, GDP growth, and fiscal deficit to gauge the country’s overall economic health. Additionally, companies that seek to invest in Peru should consider the country’s reliance on commodity exports. This applies, in particular, to minerals like copper and gold. This can provide insights into potential risks associated with fluctuations in global commodity prices.

Political Stability and Governance

Political stability and effective governance are imperative for creating an environment conducive to business investment. Peru has made significant strides in strengthening its democratic institutions and fostering political stability. However, investors should remain vigilant of political unrest or policy changes that may impact business operations. Evaluating the government’s commitment to regulatory transparency, the rule of law, and the protection of property rights is essential for mitigating political risks.

Peru has made strides towards improving regulatory transparency, rule of law, and property rights protection, but challenges still need to be solved. Here’s a breakdown:

• Regulatory Transparency

Improvements: Peru has implemented online platforms for accessing regulations and streamlined business registration processes.

Challenges: Bureaucracy and a complex legal system can still create hurdles for businesses navigating regulations.

• Rule of Law

Improvements: Democratic institutions exist, but recent political instability highlights ongoing challenges.

Challenges: Corruption remains a concern, and enforcement of laws can be uneven.

• Property Rights Protection:

Improvements: Legal frameworks for property rights are generally established, but weaknesses exist in enforcement mechanisms.

Challenges: Land titling disputes, particularly in rural areas, can create uncertainty for investors.

Market Size and Potential

Peru’s population of over 32 million presents a sizable consumer market with significant growth potential for companies that seek to invest in Peru. Moreover, the country’s expanding middle class and increasing urbanization contribute to rising consumer demand across various sectors. Understanding consumer preferences, purchasing power, and market trends can help investors identify lucrative opportunities and tailor their offerings to meet the needs of Peruvian consumers.

Infrastructure

Investment in infrastructure is critical for driving economic development and facilitating business operations. Peru has considerably invested in improving its transportation networks, energy infrastructure, and telecommunications systems. However, challenges such as inadequate road connectivity, limited access to reliable electricity, and gaps in digital infrastructure persist, particularly in rural areas. Investors should assess the adequacy of infrastructure in their target regions and consider potential bottlenecks that may affect supply chains and logistics.

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Infrastructure

Investment in infrastructure is critical for driving economic development and facilitating business operations. Peru has considerably invested in improving its transportation networks, energy infrastructure, and telecommunications systems. However, challenges such as inadequate road connectivity, limited access to reliable electricity, and gaps in digital infrastructure persist, particularly in rural areas. Investors should assess the adequacy of infrastructure in their target regions and consider potential bottlenecks that may affect supply chains and logistics.

Labor Force

A skilled and productive workforce is essential for business success. Peru boasts a relatively young and educated labor force, offering a diverse talent pool across various industries. However, educational attainment and technical skills disparities exist between urban and rural areas. Additionally, labor regulations and union dynamics can influence labor costs and workforce flexibility.

The Peruvian government offers several worker training programs to improve employability and foster a skilled workforce. Here’s a breakdown of some key initiatives:

• National Employability Programme (Programa Nacional de Empleo)

This program, created by merging Impulsa Perú and Jóvenes Productivos programs, targets individuals aged 15 and above who face unemployment, underemployment, or social vulnerability.

It provides three primary services:

Technical and vocational training: Equips participants with practical skills relevant to the labor market.

Support for self-employment: Offers guidance and resources for individuals seeking to start their businesses.

Certification of labor skills: Recognizes and validates existing abilities acquired through work experience.

• Jóvenes a la Obra (Youth at Work) Program:

This program specifically focuses on young people aged 15-29 from low-income backgrounds.

It offers training in high-demand technical skills, career guidance, and job placement assistance.

• Capacitación Laboral (Job Training):

Provided through programs like Jóvenes Productivos and Impulsa Perú, “Capacitación Laboral” emphasizes practical skill acquisition for job seekers and employed workers.

It often includes workshops on resume writing and job interview preparation.

• Additional Considerations:

Ministry of Labor and Employment Promotion (Ministerio de Trabajo y Promoción del Empleo – MTPE): The MTPE plays a central role in overseeing and implementing various worker training programs. Their website (https://www.gob.pe/mtpe) can be a valuable resource for staying updated on current programs and eligibility requirements.

Program Availability: The specific programs and their availability may vary depending on region and target demographics.

Private Training Providers: Alongside government initiatives, numerous private institutions offer various training programs in Peru.

Conducting thorough research on local labor market conditions and labor laws is crucial for effectively managing human capital and deciding to invest in Peru.

Regulatory Environment

Navigating the regulatory landscape in Peru is paramount for ensuring compliance and minimizing legal risks. The country has implemented several reforms to streamline business regulations and promote investment to motivate individuals and companies to invest in Peru. However, bureaucratic inefficiencies, complex licensing procedures, and inconsistencies in regulatory enforcement remain challenges for some investors. Engaging with legal experts and local advisors can help navigate regulatory hurdles and ensure regulatory compliance throughout the decision-making process for investing in Peru.

Trade Policy and Natural Resources

Peru’s open trade policies and abundant natural resources present opportunities for export-oriented businesses. The country has entered numerous free trade agreements, providing preferential access to key markets worldwide. Peru has the following free trade agreements:

1 Multilateral Agreement: World Trade Organization (WTO)

1 Regional Trade Agreement: Andean Community of Nations (CAN)

18 Free Trade Agreements: Across Asia-Pacific, Europe, North America, Central America, South America, and the Pacific Alliance.

1 Partial Trade Agreement: Cuba

Furthermore, Peru’s diverse natural resource endowment, including minerals, agriculture, and renewable energy sources, offers scope for investment across various sectors. Understanding trade agreements, tariff structures, and resource availability is essential for formulating effective market entry strategies.

Exchange Rate Stability

Exchange rate fluctuations can impact the cost of doing business and affect profitability. Companies that invest in Peru transact business in the sol. This currency has experienced relative stability in recent years, supported by prudent monetary policies and foreign exchange reserves. However, investors should monitor macroeconomic indicators and external factors influencing exchange rate dynamics, such as global economic trends and commodity prices. Implementing hedging strategies and diversifying currency exposures can help mitigate exchange rate risks.

Regional Integration

Participation in regional integration initiatives can enhance market access and facilitate cross-border trade for companies that invest in Peru. The country is a member of various regional organizations, including the Pacific Alliance and the Andean Community, which promote economic cooperation and integration among member states. Leveraging regional integration frameworks can unlock market expansion and diversification opportunities, enabling businesses to tap into larger consumer markets beyond Peru’s borders.

Social and Cultural Factors

Understanding social and cultural dynamics is essential for building trust, fostering relationships, and navigating business environments effectively. Those who invest in Peru will find that the country represents a culturally diverse nation with a rich heritage shaped by indigenous traditions, colonial influences, and modern multiculturalism. Respect for local customs, languages, and social norms can enhance business interactions and contribute to long-term success. Furthermore, engaging with local communities and stakeholders in a socially responsible manner can help build goodwill and mitigate reputational risks.

Investing in Peru offers tremendous opportunities for businesses seeking growth and expansion in Latin America. However,  to invest in Peru, individuals and companies must navigate the complexities of the country’s business landscape. This requires careful consideration of various factors, ranging from economic and political stability to infrastructure, labor force, regulatory environment, and cultural nuances. By conducting thorough due diligence, leveraging local expertise, and adopting a strategic approach, investors can capitalize on the country’s potential and achieve sustainable success in the dynamic Peruvian market.

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Uruguay enjoys strong political and social stability and a consolidated democracy.

Foreign investors enjoy the same incentives as local investors when doing business in Uruguay. They are protected by a Law of National Interest that, from a tax point of view,  puts foreign and domestic companies on equal terms.

Political, legal, and social stability

Uruguay has enjoyed strong political and social stability for years, backed by a consolidated democracy and strong legal security. Currently, the political system has three majority parties alternating in government, always maintaining a strong respect for the country’s rules of the game and the essential foundations of economic activity.

Macroeconomic solidity

In recent years, the Uruguayan economy has achieved the most extended period of growth in history. This expansion was accompanied by an increase in Uruguay’s GDP per capita, from USD 10,000 in 2005 to over US$ 22,000 in 2024. This has allowed Uruguay to position itself as the economy with Latin America’s highest GDP per capita (measured in current US$). Doing business in Uruguay is facilitated by the fact that the country has a high Investor Grade that has been ratified by the leading credit rating agencies: Moody’s, Standard Poors, Fitch Ratings, and DBRS.

Access to an expanded market

Uruguay is the gateway to Mercosur. Free access to Mercosur allows companies doing business in Uruguay to access a market with more than 284 million people, with a combined estimated GDP of US $2.64 trillion. Combining Mercosur and the country’s FTA with Mexico, Uruguay has tariff-free access to a market of 400 million people, accumulating 76% of Latin America’s GDP and representing a foreign trade flow of almost 80% of the total from Latin America. Mercosur also has free trade agreements with Egypt, the EU, Israel, Japan, and Singapore.

Benefits for the investor

Foreign Direct Investment (FDI) received by Uruguay reached US$ 9.3 billion in 2022. One of the distinctive features of the country’s growth in recent years is the dynamism of investment. FDI in Uruguay has reached record levels, which has allowed it to position itself among the first recipients in South America in recent years. Uruguay is not only a large recipient of FDI but is also the leading country in reinvesting profits in Latin America. 65% of the total earnings from FDI are reinvested in Uruguay. This reinvestment percentage reflects the confidence of investors in doing business in Uruguay. Investors enjoy profitability and a good business climate.

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Ease of doing business in Uruguay

The country guarantees equal treatment for investors and operations free of restrictions for business activity, both in terms of capital mobility and dividends. This includes the purchase and sale of foreign currency. The country is continually working to achieve an adequate business climate and the greatest facility for the investor. In this sense, Uruguay has promoted a series of reforms that imply a significant improvement in the efficiency and agility of state processes, such as same-day business openings, invoicing, and electronic signature or single window for foreign trade, among others.

Modern logistics

Uruguay has a first-class port infrastructure in Montevideo, from where the densest road network on the entire continent is projected. Those doing business in Uruguay also benefit from excellent connectivity with neighboring countries. There is also a modern airport, designated as one of the best in the world. In both the country’s ports and airports, investors can operate under the free port/airport regime, allowing them to carry out logistical operations. This includes adding value to the merchandise and re-exporting without accompanying taxation. At the forefront of technology, Uruguay leads the ICT Development Index in Latin America, prepared by the International Telecommunications Union (ITU). This fact is also reflected in the degree of Internet penetration and mobile phone users, where Uruguay country occupies a prominent position in the region. At the same time, companies doing business in Uruguay benefit from the highest download speed in the area, thanks to its modern infrastructure.

Competitive national talent

Human resources in Uruguay are highly competitive, thanks to the combination of several factors: the high quality of basic, technical, and university training and the flexibility and ease of Uruguayan workers in adapting to new production processes or technologies. The Uruguayan workforce has been showing a continuous increase in its ability to master other languages, particularly English.

Efficient energy policy

Uruguay has “Uruguay Natural” as its country brand, which implies that its positioning strategy consists of showing buyers of its products that items made in Uruguay are produced in the most environmentally friendly way possible. This reflects the country’s great responsibility regarding environmental problems and constitutes added value for many consumers and organizations doing business in Uruguay.

Excellent quality of life

Metropolitan Montevideo is an area of 1.78 million inhabitants that, like Punta del Este, offers outstanding living conditions for executives doing business in Uruguay and their families with access to first-class health and education services. More and more foreigners from the northern hemisphere are choosing Uruguay as their residence. The country is recognized as having an exceptional quality of life due to its social safety nets, political stability, and high life expectancy. In recent years, Montevideo, the capital of Uruguay, has been ranked the city with the best quality of life in Latin America.

In conclusion, Uruguay stands out as a prime destination for foreign investment with its stable political and social environment, equal treatment for local and foreign investors, and robust economic indicators. With a thriving economy boasting the highest GDP per capita in Latin America and access to vast markets through Mercosur and other free trade agreements, Uruguay offers ample opportunities for business growth and expansion. The country’s modern infrastructure, competitive workforce, efficient energy policies, and excellent quality of life further enhance its appeal to investors. As Uruguay continues to prioritize reforms to improve the ease of doing business, it solidifies its position as a premier investment destination in the region, promising prosperity and success for those who choose to invest in its dynamic economy.

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Paraguay has emerged to reveal its strategic position to the world as a country of freedom, democratic conviction, respect for the rule of law, contracts, and free enterprise. Paraguayan leaders recognize that these elements are the foundation of attracting new investors to the South American nation. To further spur the nation’s economic progress, the government is concentrating on developing energy resources in Paraguay.

Energy is vital for development. With low-cost electricity and an ample and reliable supply, internal demand will be covered, and there will also be surpluses of energy resources in Paraguay for export.

Investors will be drawn to energy resources in Paraguay

Add to this the expectation of finding precious pockets of natural gas, whether in “traditional” basins or shale exploitation. The potential for attracting investment in the Paraguayan energy sector is positive in the long term. New infrastructure, storage plants, transportation pipelines, access roads, improvements in communications, and a business boom in real estate and technology services are urgently needed. Energy resources in Paraguay are a great engine of the economy.

Recently, the Paraguayan vice minister and head of the country’s gas, oil, and electricity industry sector, Mauricio Bejarano Martí, expressed his vision for the country as a leader in South American energy resources. Bejerano Martí highlighted some elements that every international investor should take into account when examining energy resources in Paraguay:

• Currently, the energy generated in Paraguay is 100% renewable (water generation)
• As relevant information: on Sunday, November 12, 2023, a record of 4,312 MW was recorded in electrical energy consumption.

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Brazil is the largest consumer of exported Paraguayan energy

In light of the above-noted information, the primary market for any surplus electricity generated by Paraguay could be, without detracting from the domestic market, Brazil (the largest market in Mercosur, bordering Paraguay). Brazil broke two records in the solar energy sector in September 2022. It surpassed 19 gigawatts (GW) of installed power from solar photovoltaic sources and reached the historical mark of 13 GW of installed power. (Source: Brazilian Photovoltaic Solar Energy Association Absolar et al. and also: analysis of the association and the National Confederation of Industry (CNI)). The data from these sources indicates that installed capacity could double in the future.

As an example, in electricity generation via solar, the demand is practically new since Paraguay has, as has already been indicated, water as its primary source of electricity generation (two binational hydroelectric plants). To further expand energy resources in Paraguay, the country is ready to embark on new initiatives related to solar energy. For this, legislation has been enacted that would stimulate the solar industry. The “maquila” legislation, for example, is a regime of investment incentives to export goods or services based on a contract with a foreign company; that is, it contracts the services of a company established in Paraguay to produce under this regime. This could be applied to measures aimed at expanding the export of Paraguayan energy production.

Additionally, there is a developing interest in investment in Paraguay’s oil and gas energy resources. This is even though gas is seen as a transition source between fossils and renewables. The reality is, however, that natural gas will always be a source of energy of global importance. This being considered, Paraguay has significant gas reserves, and only private investment is needed for their exploitation. Investors must take advantage of the new state stimulus for the sector to explore new territorial blocks.

Investments in photovoltaic and wind energy

The work for the future of energy resources in Paraguay is to diversify into solar photovoltaics and wind and significantly boost the E&E (exploration and exploitation) of oil & gas.

In the context of the aforementioned, Bejarano Martí has indicated that 2024 will be the first tender for solar photovoltaic generation (the Paraguayan government is developing a regulatory framework and a bidding document). Its initial objective is to fund the first important photovoltaic solar plant in Paraguay, 100 MW in Central Chaco (north of the country), to inject energy into the national power grid. This project aims to ensure that the country’s citizens have access to quality electrical energy. Additionally, there are plans for a floating solar plant project to be located in the reservoir between Paraguay and Brazil (Itaipú), which would add to energy resources in Paraguay.

Since January 6, 2023, Paraguay has had Law No. 6977/2023 in effect, “which regulates the promotion, generation, production, development, and use of electrical energy from non-conventional, non-hydraulic renewable energy sources.” The law declares that the generation of electricity via renewables may be carried out by natural or legal persons domiciled in the country and established following the legislation (SA-type companies established in Paraguay).

In conclusion, Paraguay stands poised at the threshold of significant progress in its energy sector, driven by a vision of sustainable development and economic prosperity. With a firm commitment to renewable energy, particularly hydropower supplemented by emerging solar initiatives, the nation showcases its dedication to environmental stewardship and technological advancement. As it prepares to embark on new ventures in solar photovoltaics and explores the potential of its oil and gas reserves, Paraguay beckons investors with a regulatory framework designed to foster growth and innovation. With laws in place to promote non-conventional renewable energy resources in Paraguay and ambitious projects on the horizon, the South American nation emerges as a place of opportunity in energy resources, poised to shape its future while contributing to regional energy security and sustainability.

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