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The Paraguayan export maquiladora industry is booming

by | Nov 19, 2023

The Paraguayan export maquiladora industry continues with its positive trajectory: its exports are almost double those of last year, and its purchases of inputs for production have increased by 75%.

The jobs generated by the 227 manufacturing plants in the sector already exceed pre-pandemic levels, according to data provided by the Ministry of Industry and Commerce.

The maquiladora industry is an asset to Paraguay’s economy

Since its inception, the Paraguayan export maquiladora industry has proven to be a valuable tool to support the development of Paraguay’s national economy. Currently, more than 220 manufacturing plants operate under the country’s maquiladora regime, generating jobs for thousands of Paraguayans and substantial income for the country.

It is essential to mention that the maquila regime produces goods and provides services, offering preferential conditions to investors to increase their competitiveness considerably.

Since it entered into force in 2003, the importance of the Paraguayan export maquiladora industry has grown year after year, and exports under this regime have experienced an increase compared to the total exported by the country.

In 2003, the maquiladora regime represented only 0.3% of the country’s total exports, and in 2021, this figure reached 7.7%, thus confirming the measurable growth of this sector.

The accumulated export of the Paraguayan maquiladora industry at the end of last August 2023 was USD 561 million, and it is expected to reach a record level of export under this regime by the end of the year, reaching approximately USD 850 million to USD 900 million. This figure would represent around 8% of the total value exported by Paraguay.

The figure registered in the eighth month of this year represents an increase of 90% compared to the same period last year, which was USD 295 million, according to the National Council of Maquiladora Export Industries (CNIME) statistical report.

Likewise, exports in August alone total goods shipped by the Paraguayan export maquiladora industry reached USD 67 million. This represents a growth of 43% compared to 2020 and 34% compared to 2019.

Regarding the destinations of goods shipped abroad by the Paraguayan export maquiladora industry, 90% were sent to countries of the Southern Common Market (Mercosur). Specifically, Brazil’s participation represents 79%, followed by Argentina (with 9%) and Chile (2.9%). Likewise, the United States participates in 2.7%, Uruguay at 2.4%, and Ecuador at 0.8%.

87% of exports are concentrated in five items: auto parts, clothing and textiles, aluminum and its manufactures, food products and plastics and its manufactures.

In the auto parts sector, exports this year amounted to USD 155.9 million, with this item having a 28% share. For their part, clothing and textiles were exported for USD 98.9 million; aluminum and its manufactures for USD 84.7 million; food products for USD 79.8 million; and plastics and their manufactures, for USD 67.4 million.

Other sectors that also work under the Paraguayan export maquiladora regime are pharmaceutical products, pet food, various manufacturing, leather, footwear and their components, tobacco, wood,  and metallurgical products.

Import of inputs for the Paraguayan export maquiladora industry

Regarding the import of inputs for the production of goods, this figure has increased by 75% compared to the January-August period of last year.

As of August 2023, purchases of inputs for use in Paraguay’s maquiladora industry had already reached USD 360 million, a figure much higher than last year, which reached USD 206 million, and that of 2019, which was USD 266 million.

In August alone, input purchases were worth USD 42 million, registering a growth of 69% compared to the same month in the last year (2022), which was USD 25 million.

With these results, the trade balance of the Paraguayan export maquiladora industry registers a surplus of USD 201 million. It represents an improvement of 89% compared to the same months of the previous year.

Employment in the maquiladora industry

Regarding employment, there has been a significant recovery. In this sense, in Paraguay, 227 maquiladora manufacturing firms generate 21,261 jobs, of which 92% (19,4560) are dedicated exclusively to products for export.

It is worth mentioning that this sector was also hit hard in recent years due to the COVID-19 pandemic, and as of April 2020, the number of people employed had been reduced to 15,153.

However, the number of people employed in Paraguay’s maquiladoras has already returned to the same levels recorded in previous years and has even exceeded them. The employment generated by the Paraguayan export maquiladora industry is mainly concentrated in sectors that require high levels of worker skill.

A sector with a lot of growth potential

Francisco Ruíz Díaz, Executive Secretary of the CNIME, said that the positive activity that this sector is experiencing is due to several factors, such as a favorable international scenario, a greater number of maquiladora companies, and the macroeconomic stability that Paraguay enjoys.

Ruíz Díaz also highlighted the excellent and rapid recovery that the sector has had. “We thought that the recovery would take a little longer, perhaps in two years,” he said, highlighting that the figures currently being registered are significantly above historical levels.

The future growth of the Paraguayan export maquiladora industry holds profound significance for the country’s economy, encompassing multifaceted benefits that extend across various sectors. At its core, the maquiladora industry has emerged as a linchpin for economic development, catalyzing increased employment, foreign exchange earnings, and overall industrial progress. As the global economy becomes increasingly interconnected, Paraguay’s strategic positioning within the maquiladora landscape provides a gateway to international markets, fostering trade relationships and attracting foreign direct investment.

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