The Maquila Sector Consolidates as an Engine of Economic Development in Paraguay

by | Jan 21, 2025 | FDI Latin America

Natalia Cáceres, Executive Secretary of the National Council of Export Maquila Industries (CNIME), highlighted the growing importance of the maquila sector in driving economic development in Paraguay. In a recent interview, Cáceres emphasized the arrival of new companies, the expansion of established industries, the capture of new markets, and the sector’s positive impact on generating formal employment and supporting social and labor reintegration programs.

The maquila regime is consolidating as a driver of economic and industrial growth for Paraguay, attracting foreign investment, generating quality jobs, diversifying export offerings, and contributing to social reintegration,” Cáceres stated. This model has diversified the economy and strengthened the country’s position in international markets.

Growth of the Maquila Sector

In terms of growth, maquila industries in Paraguay experienced an approximate annual increase of 22%. The year 2024 closed with over USD 1.1 billion in exports and the creation of nearly 30,000 new jobs tied to the sector. This performance underscores the importance of the maquila regime as a strategic pillar of economic development in Paraguay.

The trade balance for maquila industries was also notably positive in 2024, with exports exceeding imports by 94%. This reflects the competitiveness and high added value of products manufactured in Paraguay under this regime.

Currently, more than 300 companies across various sectors operate under the maquila program, creating a significant impact on the local economy. In 2024, the industry successfully exported to 15 new markets, furthering its internationalization and opening new opportunities for Paraguayan industries.

Diversity in Maquila Production

The maquila industry in Paraguay spans a wide range of sectors, making it a diversified driver of economic development. Among the most notable products are auto parts, textiles, footwear, chemicals, home appliances, and electronic devices. Additionally, sectors like food and beverage processing play a significant role in the maquila regime. This diversity fuels economic growth and generates specialized employment in various fields.

Products manufactured under the maquila regime are recognized for their high quality and competitiveness, enabling them to meet the demands of strict markets in North America, Europe, and Asia. For example, major international automotive manufacturers utilize auto parts produced in Paraguay, while exported textiles and footwear are acclaimed for their design and premium finishes.

Origins of Investments

The success of the maquila regime in Paraguay is also tied to the attraction of foreign direct investment. Investors from Brazil, Argentina, the United States, and China have found Paraguay appealing due to its tax incentives, macroeconomic stability, and skilled workforce. The legal framework of the maquila regime offers benefits such as tax exemptions on exports and the importation of raw materials, which has been key to attracting foreign companies.

Brazilian companies, in particular, have led investments in the sector, leveraging geographical proximity and trade agreements that facilitate the export of products to regional markets. Meanwhile, U.S. and European companies have invested in high-tech and advanced manufacturing sectors, contributing to knowledge and technology transfer within Paraguay.

Job Creation and Training

One of the standout aspects of the maquila sector is its ability to generate formal, quality employment. According to Cáceres, many maquila companies offer training programs for their staff, enabling workers to acquire technical skills and improve their long-term career prospects. These initiatives benefit employees and enhance companies’ competitiveness by fostering a highly skilled workforce.

The impact of maquila on Paraguayan society is also reflected in labor and social reintegration programs promoted by various companies in the sector. These initiatives target vulnerable groups, including youth, women, and individuals seeking to re-enter the workforce, promoting inclusion and social development.

Future Prospects

With sustained growth and a significant impact on the national economy, the maquila sector is positioned as a strategic pillar of economic development in Paraguay. Product diversification, attracting new investments, and expanding into new markets will remain key factors in consolidating its role as an economic driver.

The maquila regime represents an opportunity for industrial growth, job creation, skill development, and improved quality of life for thousands of Paraguayans. In this context, Paraguay positions itself as an attractive destination for investment and international trade, with the maquila sector leading toward a more prosperous and sustainable future.

By leveraging the maquila regime, Paraguay enhances its reputation as a regional leader in economic competitiveness, further solidifying its foundation for long-term economic development in Paraguay.