Sebastian Ortiz Montaner
Economist and Diplomat
Paraguayan Embassy
Washington, D.C.
sortiz@mre.gov.py
LATAM FDI: Welcome, listeners, to another episode of the LATAM FDI podcast, where we bring insightful conversations with influential leaders in the Latin American region, particularly in economics. Today, we are honored to have the Paraguayan ambassador to the United States, Antonio dos Santos, with us. His name is Antonio dos Santos. Antonio, we’re eager to hear about your diplomatic mission in Washington and the economic potential of Paraguay that you’re here to discuss.
Antonio Dos Santos: Thank you for this wonderful opportunity to share about my country. As the Paraguayan ambassador to the United States, I’m based here in Washington, and I’m excited to talk about the economic potential of Paraguay and its appeal to foreign investors.
I received a law degree from Paraguay and a master’s degree from the American University in Washington. I have over 30 years of experience in diplomatic work. I’m a career diplomat for the Paraguayan Foreign Service. For some reason, most of my diplomatic career has been outside Paraguay in North America. I was Consul General in New York. I was also Consul General in Los Angeles and ambassador to the United Nations in New York. This is my fourth mission in the United States. Besides the US, I served at our embassy in Canada, and that’s it. So, for some reason, they keep sending me to the northern hemisphere of our continent. Other than that, I’m married, I have five children, and happy to be useful here for you.
LATAM FDI: Our discussion today is crucial in changing the perception of Paraguay’s economic potential. As the Paraguayan ambassador to the United States, I believe that our country offers significant opportunities for economic growth, opportunities that are often overlooked by many Americans. By engaging in this conversation, you, our audience, play a vital role in helping to shift this perception. Could you briefly give us an overview of Paraguay, highlighting its geographical and cultural attributes that might appeal to foreign investors?
Antonio Dos Santos: Of course, yes. If you look at the map of South America, you see that Paraguay is at the center of South America. We are a landlocked country. Paraguay is a relatively small country compared to Brazil and Argentina. We have a population of about seven million. But because we are part of Mercosur, a free trade agreement with Brazil, Argentina, and Uruguay, we have access to a market of almost 300 million people. So, whatever investors do in Paraguay, they can access a huge market, mainly Brazil and Argentina, along with Paraguay and Uruguay.
LATAM FDI: Pardon me for interrupting. How would you describe Paraguay’s economic landscape today
Antonio Dos Santos: Well, Paraguay is mainly involved in agribusiness. As the Paraguayan ambassador to the United States, I would say if you compared it to a state, Paraguay would be almost like Kansas because most of its GSP is produced by agribusiness. But also, today, we’ve been able to diversify the Paraguayan economy a lot. 70% of our GDP is contributed by several activities, including services, financing, and transportation. Take a look at where Paraguay is located. We are in the middle of a highway. We call it the highway, the Parana and Paraguay Rivers. Our rivers are as big as the Mississippi and Missouri Rivers. Paraguay has been able to build the world’s third-largest fleet of river barges. After the United States and China, there is Paraguay. This is because we can transport all the production of this huge region through the Paraguay and Parana Rivers. That’s why all the transportation companies have been established in Paraguay instead of Brazil, Argentina, or Uruguay. Those countries have higher taxes and complicated taxation systems. Paraguay has the triple 10: 10% corporate tax, 10% personal income tax, and 10% VAT. As the Paraguayan ambassador to the United States, I can say that nobody can beat that in our region. It is a very simple economy and country to establish a company.
You can do it in days. We don’t have any restrictions for foreign exchange transfers outside or inside Paraguay through the banking system. Of course, we’ve been cleared by all the international money laundering controls. We have no problem with that. There is an excellent business climate in Paraguay. As we discussed before, we didn’t reach the investment grade. But Paraguay is very close to getting there, and we are confident we will get there very shortly.
LATAM FDI: To give people an idea of the size of the Paraguayan economy, we were talking about its size relative to other US state economies. Could you give people an idea of that in a general sense?
Antonio Dos Santos: Our GDP is about 44 billion in 2023. We’ve been growing consistently in the last year, 4.5% in 2023 and 2.9% in 2022. Since 2014, we’ve been growing about three % every single year. So, this underscores the country’s resilience and economic potential. We did relatively well through the pandemic. Paraguay has been building its infrastructure during those years. We were building a road connecting the Atlantic and the Pacific Ocean, and we went riding and visiting through Paraguay. There are other big projects like a gas pipeline in the making. So, as the Paraguayan ambassador to Washington, I can say that it is a good opportunity for investment for any company. We are 100% clean, renewable energy through the big hydroelectric plants in Brazil and Argentina. Paraguay consumes only 10% of its clean, renewable energy; 90% of the energy we export to Brazil and Argentina. We still have a big margin for consuming our energy in Paraguay and a good opportunity for any company that wants to establish itself in Paraguay with clean, renewable energy.
LATAM FDI: You mentioned the importance of the agricultural sector to Paraguay’s economy. But one thing that I’ve been particularly interested in is the development of your manufacturing. Tell us a little about the maquiladora industry that is developing in Paraguay.
Antonio Dos Santos: Yes. As you mentioned, agribusiness is the best main source of foreign exchange in Paraguay. All the big American companies, Cargill and ADM, are established there. Minerva Foods is in Paraguay as well. We are in the top 10 in soy and top 10 in beef exports. However, there is also a new auto parts manufacturing company in Paraguay. The Korean companies are establishing themselves in Paraguay, as is the Japanese auto part industry. As you probably know, Brazil has a significant auto industry, and we’ve been able to complement that big industry with auto parts production in Paraguay. Auto parts, clothing, and fashion items are produced in Paraguay
LATAM FDI: Can you tell us a little about Paraguay’s workforce? What investors should know about the skill and education level there?
We have about 95% literacy in Paraguay. Our population is well-educated, and almost 70% of the country’s population is under 35 years old. As the Paraguayan ambassador to the United States, we have a young, vibrant population able to work, and we don’t have complicated labor regulations. As I mentioned, we have the triple 10: 10 % corporate tax, 10 % VAT, and 10 % personal income tax. So, it is probably the lowest tax burden in our region. If you compare it with other countries with very complicated tax systems, Paraguay is easy to do business. That’s why we’ve been able to attract many investments in Paraguay. I mentioned before that if you speak about transportation, Paraguay has the third largest river fleet in the world, just after the United States and China, because we have these large rivers, the Parana and Paraguay Rivers, that form what we call the highway. These rivers are huge, like the Mississippi and Missouri Rivers. We are transporting all the agricultural production of Mato Grosso, which is the south of Brazil, Bolivia, and parts of the state of São Paulo, as well as part of Argentina, through this river, through the seaports in the Atlantic.
We are also building the Interoceanic highway. It’s a road that links the Atlantic and the Pacific Ocean and goes right through Paraguay from Brazil to Chile. So that will save a lot of time for transportation.
LATAM FDI: You mentioned Paraguay’s triple 10 tax and other investor incentives. What other support does Paraguay, from the government’s view, offer to foreign investors? Are there training programs, for instance, or any other thing of that nature?
Antonio Dos Santos: As the Paraguayan ambassador to the United States, I can report that we have a lot of incentives for new industries established in Paraguay. Some taxes can be waived for several years. We have facilitation services for any company that will be established in Paraguay. We will also have a pipeline that will come from Argentina. They have a large gas resource, and Brazil consumes a lot of gas. We have investment guarantees and a legal framework to protect investment and ensure a stable business environment. Incentives for export-oriented production include programs like the maquiladora regime we mentioned before. Infrastructure development: There is also the investment in infrastructure projects to improve connectivity and support industrial growth. We mentioned access to renewable energy before. Paraguay has 100% renewable energy through the big dams we share with Brazil and Argentina, such as Itaipu and Yacyretá. Itaipu alone is one of the biggest hydroelectric projects in the world.
LATAM FDI: One of the things that is particularly surprising to me over the last several years of tracking some of Paraguay’s developments is that I often see it as the country noted as having the best business climate in South America. Beyond what we’ve already discussed, what other factors do you attribute that recognition to as the Paraguayan ambassador to the United States
Antonio Dos Santos: Paraguay has been consistently growing for the last 20 to 25 years. What investors are looking for is stability, as you know very well. We’ve been having elections regularly every five years. Predictability: I don’t want to make examples of other countries, but people know very clearly that some countries in a region are not very stable politically. We can also compare because, until the 1980s, Paraguay was governed by a dictatorship. Since the 1980s, we’ve been in democracy. As the Paraguayan ambassador to the United States, I can assert that democracy has been better for Paraguay than any other political system. In Paraguay, of course, there is political change that you have everywhere in the world. However, the important thing is that the democratic exercise is carried out every five years. We have a bipartisan political system. We have two big political parties. This is also insurance about stability because we’ve been observing in other countries that when there are many political parties, the countries are probably more difficult to govern. I’m not saying that a single political party should always win the election, but it’s always better if the population has the freedom to choose.
LATAM FDI: I agree. Given that the business climate has improved over the last few years, and you’ve been holding elections consistently, can you name some companies the listeners might have heard of that have succeeded in Paraguay?
Antonio Dos Santos: If we talk about American companies, I can say Cargill, ADM, Bunge, and Minerva Food. There is also a company called Millicom, which is a communications company. Teleconference has also been established in Paraguay. Paraguay is one of the countries that have more cell phones per person. I think there are more cell phones than the population in Paraguay. So, we are very well connected.
LATAM FDI: Looking to the future, what are Paraguay’s plans from a policy perspective for its diversification of the economy that you see as the Paraguayan ambassador to the United States?
Antonio Dos Santos: We’ve been trying to promote the forestry industry, the industries that produce paper, cartons, and all those byproducts. Because Paraguay is a flat country like Kansas. It’s almost 100% arable land. We have three harvests a year. We don’t have a harsh winter. We don’t have an earthquake or anything of a natural occurrence. Paraguay has already been deforesting the country for a long time. We still have about 40% of our forest, which is original. Our beef is almost 100% grass-fed from natural plains. That is a beef that is appreciated by a lot of people because it’s organic and without any chemicals.
LATAM FDI: Well, we’ve covered a lot of ground in a relatively short period of time. Hopefully, what the listeners have heard will generate questions that will hopefully get the word out even further about Paraguay and what it has to offer to investors. How do people contact you as the Paraguayan ambassador to the United States or your economic team with any questions they might have as potential investors?
Antonio Dos Santos: Well, we have a website and also, of course, all means of modern communications. We can give it to you. Do you want me to mention it right now? Well, yeah. We have social media, Instagram, Twitter, and all the communication channels you can imagine.
There is also something important that we discussed off the record before that people should know. Paraguay is the only ally of Taiwan in South America. I mentioned this because many people in the US are concerned about the influence of China in our region. Well, there is no influence of China in Paraguay whatsoever because we are not only a political ally of Taiwan but also a lot of trade and investment from Taiwan. We’ve been able to build a very strong alliance with Taiwan. We do it for a good reason. We’re convinced that Taiwan is a democracy. We also have a close alliance with Israel. Not many countries in the world are supporting Israel these days. Paraguay is one of the few countries that support Taiwan and Israel in all international forums, such as the United Nations. Paraguay is always supporting them because they are democracies.
LATAM FDI: Well, I’m sure many people in the United States will appreciate those sentiments. China will be a big challenge to all of the democracies shortly. The most we can do to be able to work together to promote democratic principles is probably the best situation for the world. One last question. It goes to contact information. Could you email me your social media links so I can include them in the transcript section of the podcast page? If there’s somebody in your office that I could make their LinkedIn page link available so they can go directly to your staff to ask questions, I’d appreciate that. Would that be possible?
Antonio Dos Santos: I have a very easy name, Sebastian Ortiz, sitting right here. He’s in charge of all the embassy’s economic affairs.
LATAM FDI: We will include Sebastian’s link to his LinkedIn page if that’s okay with you. I want to thank you for joining me today. It’s been a great pleasure to meet and speak with you. We wish you and your country a lot of success in the future. We hope Americans become more aware of Paraguay and participate in its economy.
Antonio Dos Santos: Thank you for the opportunity to talk about Paraguay. We’re very honored. Thank you so much.
