Javier Viveros
Vice Minister of Investments and Exports
Rediex Paraguay
jviveros@rediex.gov.py
LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we have conversations with people in the Latin American region and experts in their fields. Today, Javier Viveros is with us. He’s the Vice Minister of Investments and Exports for an organization called Rediex in Paraguay. Javier, could you tell us a little about yourself and your organization?
Javier Viveros: Yes, thank you very much, Steven. I am happy to be part of this program. And of course, I can tell you a little about myself, but I would like to start with my country, Paraguay. I don’t know if many people know where Paraguay is, what our identity is, or what Paraguay stands for. But Paraguay is a small country in the center of Latin America. We are a landlocked country surrounded by Brazil, Argentina, Uruguay, and Bolivia. We have the strength of our riverways, which helps us connect with the world. Of course, we are a very, very green country. We are the biggest producers of green hydroelectric energy in the world. We have two dams, Itaipu and Yacyretá. The first is with Brazil, and the other is with Argentina. There are a lot of business opportunities in Paraguay. I come from Asunción. I was born in Asunción, which is the capital of the country. I studied there. I made my career here in Paraguay. Then, I went to the Berkley Haas School of Business for a little while at the end of my studies. Now, I am working as vice minister of investment and export for Paraguay.
LATAM FDI: Today, we have a few questions for you. Is it all right if we get to them?
Javier Viveros: Yes, of course. Go ahead.
LATAM FDI: What are the key industries in Paraguay and those that offer the most business opportunities in Paraguay and the potential for foreign investment? How competitive are they?
Javier Viveros: Yes, Paraguay has a lot of things that make it very competitive. First of all, I would like to tell you that we are a beacon of macroeconomic stability. Paraguay is the country that built this economic stability in its policy for economics. We have an inflation rate of 4% on average. Also, we have an average GDP growth of 4% every year. We have a debt of 33% of the GDP, so it’s pretty stable. Most of the region sees us as a very stable country for doing business. That’s why we are leading the business ranking in Latin America for the fourth consecutive year. Another thing I’d like to tell you is that we recently achieved an investment grade. That is a very important thing for us, and it has dramatically changed our situation as a country. The eyes of the world are now watching Paraguay and what we are doing. With this, we can tell you that we also have a very convenient tax scheme, which is 10% for the corporate tax, 10% for the taxes for individuals, and 10% for the VAT. That’s it. It’s straightforward. That gives you an average of 34 % profit in every business we have here. Because of these things, there are many business opportunities in Paraguay.
That makes our country very attractive for some businesses. I want to tell you more about it.
LATAM FDI: One of Paraguay’s most successful programs in recent years has been its maquiladora program. Please explain how you attract foreign investors and outline the cost advantages they can expect.
Javier Viveros: Excellent. First, I wanted to tell you more about Paraguay’s sectors and business opportunities. The industry I think is the most important right now is agribusiness. Agribusiness is very important in our country. It’s almost 70% of the nation’s GDP, so it’s essential. However, we also have other sectors, such as land and biomass; livestock and meat are robust here in Paraguay. Of course, as you tell the audience, manufacturing under the Maquila Regime is very strong here because many companies from Brazil or Argentina are coming to produce the goods here. Then, it is supported again by their countries or other countries in the region. I want to explain the maquiladora industry to you more. The maquila is something very, very simple. It’s like you only have to pay 1% as tax for the goods you produce in the country and exports. The main thing about maquila is that you have to produce these goods in Paraguay and export them all. You can only leave 10% of your production in the country. That is how you get this tax discount. This regime is very popular. We have more than three hundred companies operating in this regime, representing more or less 1.2 billion dollars of exports for our country. So that’s more or less the 10 % of the country’s exports. So That is growing very fast. Of course, we are facing a lot of challenges with the regime. So, we are constantly adjusting the law. But now we offer an excellent opportunity for companies considering entering the Mercosur market.
LATAM FDI: What role, speaking of Mercosur, does Paraguay play in terms of its participation in Mercosur? And how does Mercosur help Paraguay access regional and international markets?
Javier Viveros: As I told you, Paraguay is a very stable country. We offer many business opportunities in Paraguay for companies and foreign companies that want to establish themselves in the country. Of course, maquila is very important, but we also have other incentives. For example, law 690 allows you to import goods of capital without paying any taxes. You can establish your factory, for example, or your facilities here in Paraguay. You can combine that, for instance, with the maquiladora. After that, you produce here and export to the region, and you will have access to a market of almost three hundred million people in the Mercosur region. So, we are a door of entry for the Latin American market, a very stable one. People are starting to understand this. Of course, we are receiving a lot of investors interested in business opportunities in Paraguay, what we are doing, and how Rediex can help them to establish their investment in our country.
LATAM FDI: What infrastructure developments and connectivity options are available to support supply chain logistics, trade operations, and business opportunities in Paraguay?
Javier Viveros: So, in Paraguay, as I told you, waterways are very, very important. It’s a vital trade route, particularly for agricultural exports. Seventy percent of agricultural exports are transported by water. It’s essential for us. The main thing about this is that we have to invest here. So that is also a wonderful opportunity because we doubled the logistics volume in the water transport here in Paraguay with some investment. That is also a good opportunity. Many of these companies I told you about in the maquiladora industry have installed their facilities in Alto Parana, a state near Brazil. Our roads and highways are also vital because they connect us with neighboring countries like Brazil and Argentina. This year, we are investing more than 400 million dollars in new roads to connect the country, not just with our neighbors, but also with other regions that need more development, for example, the Chaco region, which is something exciting for business opportunities in Paraguay in the future, especially in the area if logistics, because the road will pass through the Chaco. It will connect São Paulo with Iquique. Puerto de Santos, near San Paulo, will connect with Iquique on the other side of the continent. It will be like the Panama Canal but built as a highway.
LATAM FDI: You mentioned that most Paraguayan companies participating in the maquiladora industry are from Brazil and Argentina. Is there any US investment in the maquila industry in Paraguay? Do US companies seek business opportunities in Paraguay?
Javier Viveros: We have some US companies in the maquiladora industry here in Paraguay, especially in the food sector. It is very important. They produce and process the food here because we have the raw material and then send it to the US and other countries, not just the US. Maybe the capital could be from the US, but the destination of the goods could be anywhere. No, that’s not a problem. It’s not a limitation of the maquiladora program.
LATAM FDI: How does Paraguay’s skilled workforce and labor market flexibility align with the needs of foreign businesses seeking business opportunities in Paraguay?
Javier Viveros: First of all, I need to tell you that in Paraguay, on average, the people are 26 years old. We have a lot of potential for the labor and the workforce. Also, the Paraguayan worker is a laborer who is eager to learn. I can tell you this example. Fifteen years ago, we had no auto parts factories in Paraguay. We have companies in this industry, and 90 % are Paraguayan. Of course, if there’s a company from other parts of the world, maybe they will bring some people to work as a matter of trust, skills, or something very specific. But the bulk of them are from our country. So, I think that’s a very positive thing to mention.
LATAM FDI: What’s the labor market in terms of regulatory issues? Are there flexible labor practices? What are the wages like for companies that seek business opportunities in Paraguay?
Javier Viveros: The minimum wage here in Paraguay is $370 per month or something like that. Our labor laws are very flexible, and you only have to pay Social Security, which is called IPS here. The employee pays only 9% of their salary for IPS, and the employer pays 16. 5%, then that’s it. It’s very easy to manage this, and it’s, I think, the most competitive in the region.
LATAM FDI: What political and economic stability factors make Paraguay attractive for companies that want to make long-term investments?
Javier Viveros: Maybe I can summarize this because we have investment grade. That is our quality certification right now. Of course, we must improve a lot in some areas, but we are working on that. But the main thing to consider for companies seeking business opportunities in Paraguay is we are very stable, politically speaking, and that’s something essential when establishing a new business. When you think about a new country in Latin America, of course, you evaluate that it is not just because we have the seal; it’s because that’s been happening for the last maybe 20 years in Paraguay.
LATAM FDI: Well, we’ve only had a brief time to speak about business opportunities in Paraguay, but in that short time, we’ve discussed some critical issues related to the country. When people listen to these podcasts, our experience is that they have questions for the speaker. Is there any way that people who may have questions about Paraguay can contact either you or one of your representatives?
Javier Viveros: Yes, of course. We have a website, www.rediex.gov.py. You will find a section for contact, and you can send us an email or reach us on our social networks. We always respond to messages. This is open, and usually, the team and I are very, very, very attentive to all the questions of the audience.
LATAM FDI: Another thing that we would like to do, if possible, would you allow me to put a link to your personal LinkedIn page on the page on which the podcast sits? Would that be, okay?
Javier Viveros: Yes, okay. No problem. We are open to business.
LATAM FDI: Well, that sounds great. I want to thank you for joining me today. And I wish you the best of luck in your efforts to bring more investment and employment to the people of Paraguay.
Javier Viveros: I wanted to thank you for this vital opportunity to discuss business opportunities in Paraguay, promote our country, and tell the world about what we are trying to achieve here. Paraguay is like a hidden gem in Latin America. I invite all your audience to learn more about our country. We are here to help, and I hope you visit sometime.
LATAM FDI: Thank you for joining me and taking the time to make this podcast.
Javier Viveros: Thank you very much, Steven. My pleasure.