Various European companies, particularly from France, are now considering Paraguay as a production location, while they reevaluate their supply chains and production facilities worldwide. The country’s economic stability, combined with competitive production costs and strategic South American location, alongside its appealing maquila regime, make the country an attractive destination. International firms find Paraguay an emerging production destination as these factors influence their decisions on relocating production to Paraguay.
A Strategic Move by French Industry Leaders
The president of the Paraguayan-French Chamber of Commerce, Benoit Libourel, disclosed that numerous leading French firms are currently in detailed negotiations to move their production facilities to Paraguay. The production of tubular structures for greenhouses is one sector currently under evaluation. These companies are studying methods to use Paraguay’s production capabilities and export systems to better access Latin American markets. As supply chain diversification becomes a strategic imperative, relocating production to Paraguay is emerging as a practical and competitive alternative for French manufacturers.
Libourel explained how Paraguay’s landlocked location in South America enables superior logistic connections with major consumer markets like Brazil, Argentina, and Uruguay. French manufacturers that specialize in industrial and agricultural products can use this opportunity to enhance their market reach throughout Latin America.
Paraguay’s Maquila Regime: A Competitive Edge
Paraguay draws its main appeal from its maquila regime, which was created under Law No. 1064 in 1997, and received additional support from Decree No. 9585 in 2000. Under this regime, companies manufacture products and deliver services for export based on agreements with foreign parent companies. Under the maquila system, businesses can import raw materials and equipment without paying duties as long as they export their finished products.
Companies that are relocating production to Paraguay under this framework receive multiple benefits. Among them are:
- Complete exemption from import duties on both their inputs and capital equipment.
- A favorable 1% tax on value-added production instead of standard corporate tax rates.
- Access to competitive, young, and trainable labor.
- Streamlined regulatory processes through the National Council of Export Maquiladora Industries (CNIME).
- A legal framework that attracts sectors such as textiles, electronics, automotive parts, and agricultural machinery.
Energy Abundance and Economic Stability
French businesses find it attractive to relocate their production to Paraguay due to its remarkable energy infrastructure. Massive hydroelectric plants, including the Itaipú and Yacyretá dams, enable Paraguay to rank among the largest exporters of renewable electricity worldwide. The energy resources available provide both a sustainable and stable power supply while maintaining some of the lowest operational costs globally.
Paraguay’s government has maintained low inflation rates relative to neighboring countries through careful fiscal management, which boosts investor trust. The Central Bank of Paraguay projects that stable GDP growth will continue thanks to rising exports, the diversification of agriculture, and industrial growth through maquila production.
A Trade Relationship Poised for Growth
The trade relationship between Paraguay and France is dynamic since the two countries already have strong economic connections. Libourel pointed out that Paraguay delivers a substantial part of the petitgrain oil, which perfumers use and fulfills approximately 40% of France’s needs for this product. The bulk of French exports to Paraguay consists of high-value products, such as cosmetics, machinery, and vehicles.
The existing trade relationship between Paraguay and France has potential for further expansion to achieve a more balanced economic partnership. Relocating production to Paraguay will strengthen the economic relationship between the nations and decrease reliance on distant Asian manufacturing centers. Recent global supply chain disruptions have accelerated the adoption of this strategy.
The EU-Paraguay Investment Forum 2025: A Key Milestone
The EU-Paraguay Investment Forum 2025 will take place in Asunción from June 24–25. It represents a key event organized by Paraguay’s Ministry of Industry and Commerce via Rediex in partnership with the EU’s Global Gateway initiative.
The forum aims to:
- Promote investment opportunities in sustainable industries.
- Facilitate public-private dialogue.
- Create strategic business relationships between firms from Europe and Paraguay.
The forum will focus on renewable energy, green hydrogen, and sustainable forestry, while also highlighting sustainable logistics. These sectors align with Paraguay’s strategic development goals and the European Union’s increased focus on Environmental, Social, and Governance (ESG) criteria.
It will provide project site tours, matchmaking sessions, and roundtable discussions to serve as an ideal platform for companies interested in relocating production to Paraguay.
Sustainability and Responsible Investment
The Forestry and Land Use Portal operated by INFONA (the National Forestry Institute) will demonstrate Paraguay’s sustainable land use initiatives at the forum. The transparency tool attracts responsible European investment by providing dependable data and control mechanisms in forestry projects.
The key principles of French and European businesses—focused on ESG compliance, supply chain traceability, and environmental conservation—align precisely with Paraguay’s development model.
An Ideal Climate for Export-Led Industrialization
Through its maquila regime, Paraguay has achieved export-led industrialization, now drawing considerable investments from Brazil and Argentina, alongside Asian nations that include South Korea. The inclusion of French and other European manufacturers will enhance the country’s industrial diversity and expand its network of international economic partners.
Paraguay currently exports maquila-produced goods primarily to:
- Brazil (around 70%)
- Argentina
- Chile
- The United States
This list of export destinations may expand as more French and European companies begin relocating production to Paraguay, aided by an increasing number of trade and investment treaties.
The Road Ahead: A Win-Win Opportunity
As economic globalization grows, more intricate and regionalized, companies strive to minimize risks through operational diversification. Firms aiming to reach these objectives find Paraguay particularly attractive for operational realignment within Latin America. The combination of the maquila regime, advantageous tax environment, renewable energy access, and strategic location makes relocating production to Paraguay an attractive option.
French companies discover multiple advantages when they move their production facilities to Paraguay that go beyond simple cost reduction. They benefit from:
- Proximity to important, expanding markets throughout Latin America.
- Trade incentives and simplified regulations.
- An alignment with sustainability goals and ESG principles.
The establishment of an operation in a politically stable and business-friendly setting.
Conclusion
The movement of manufacturing operations toward Paraguay continues to accelerate as progressive European businesses pursue operational efficiency along with resilient and sustainable production solutions. Paraguay is prepared to receive new and broader industrial investment thanks to active support from organizations including the Paraguayan-French Chamber of Commerce, Rediex, and CNIME.
French enterprises evaluating their business strategies find Paraguay ready to function as both a manufacturing center and a strategic ally for constructing robust and sustainable supply chains ahead. Relocating production to Paraguay represents not just a tactical maneuver, but a forward-looking commitment to resilience, sustainability, and regional integration.