My (very smart) Dutch colleague Petra Benes summed Paraguay up so perfectly: “a country for pioneers”, she said. There are export markets that are you first pick. Latin America might come in your second or third wave of exporting. And within Latin America, Paraguay would struggle to make it to your first round, just like Bolivia or Ecuador, for example (unless you sell something very specific to these markets). Even for my fellow Uruguayans, Paraguay always comes “afterwards”. After the US, after Israel, after Spain, for many!
But why? And should you be looking at Paraguay earlier on?
During my recent visit to Asuncion, the capital of landlocked Paraguay (not to be confused with coastal-rich Uruguay, particularly when it comes to football!), I came up with some reasons why I would love to do more business in Paraguay, but also saw why some would hesitate…
In terms of the “love about Paraguay”:
- Low taxes. I mean, who can’t fall in love with 10% VAT, when you come from 22% in Uruguay? Low taxes are also offered to investors and they are key to attracting much needed manufacturing operations and real estate investment.
- Young population. Two thirds of Paraguayans are under 30. And believe me, that’s so evident when you walk around Asuncion.
- Potential. This is highly subjective, but you know when you visit a country and you feel there’s so much to do, so much to develop? Particularly when you come from Uruguay or Chile, Paraguay offers just so much potential “to do things” and the young labour force to do it! As Petra said, “pioneers”. You could be “the first one” here (whether you work on website design, interior decoration, media content production, electrical engineering, ecommerce, hospitality, fintech and more…)
What I really don’t like:
- Corruption. Widely accepted and part of “how things work” in Paraguay. No wonder why the country ranks 130th in Transparency International’s Corruption Perception Index 2015 (out of 163 countries in the world). For comparison, fellow Mercosur members Argentina, Brazil and Uruguay rank 107th, 76th and 21st respectively (yes, Paraguay is, according to this index, quite a bit more corrupt than Argentina or Brazil – shocking, isn’t it?)
- Inequality and poverty. Apart from social and moral implications, inequality is inefficient economically. There are a lot of people that won’t be able to afford your imported products or services. Having said this, a wealthy upper class and an aspirational upper middle class mean that there are a lot more premium and luxury retailers and service providers interested in Paraguay, many coming from Brazil, Argentina and even Uruguay (for example, in architecture, franchising, retail and more). Asunción does have a Harley Davidson dealership and a Carolina Herrera store, after all…
- Slow pace. I am used to second gear in Latin America. I can take it. But Paraguay seems an awful lot slower than most markets I work with every day (Uruguay, Colombia, Peru, Chile…). Relationships count and things take (an awful lot of) time. Bureaucracy is a nightmare. Be prepared.
That might partly explain why exporters who cover Paraguay tend to fall into three groups:
- Those that have already covered their priority Latin American markets and decide to “try it out” in Paraguay
- Those that see Paraguay as a key logistical/manufacturing hub for Brazil (and in some cases, Argentina)
- Those that have something to offer that appeals to Paraguay in particular, such as agricultural products/services
Do you fall into any of these groups?
Are you ready for Paraguay or will you give it a miss?
Leave us your comments!
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