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Foreign Direct Investment

FDI flows to Paraguay remain weak compared to flows towards its neighbours. According to UNCTAD’s World Investment Report 2022, FDI inflows to Paraguay totalled USD 122 million in 2021, a slight increase from USD 120 million in 2020. The total stock of FDI in the country is estimated at USD 6.3 billion in 2021. Inflows continued to mostly target the country's natural resources and agri-food industries. Paraguay's main investment partners are the US, Brazil and Spain. In 2020, the Brazilian investment holding company ECB Group started construction on an USD 800 million renewable fuel plant, the so-called Omega Green complex, which will produce advanced biofuels. Furthermore, the construction of a USD 150 million hotel complex that includes a convention centre, restaurants, a casino, luxury shops and an amusement park on San Francisco Island began in mid-2019. For that, the American company Vimerica Development will invest in the project via its subsidiary Vimerica SA along with local and foreign investors.

In Paraguay, most sectors are open to foreign investment; however, several remain under public monopoly, such as the electricity sector. Paraguayan law grants investors tax breaks, allows full repatriation of capital and profits, supports assembly plant operations and guarantees national treatment for foreign investors. Foreign investment is not subject to screening, and foreign entities are permitted to own property. Despite reforms to the public sector and strengthened legal protections, business climate remains challenging due to corruption and insecurity linked to drug trafficking. The political climate, the poor condition of infrastructure and the lack of transparency in regulations are major obstacles for investors. Additionally, labour regulations are outmoded and restrictive. However, Paraguay is able to offer low cost electricity and seeks to become, in the long-term, a centre of integration between the Pacific and the Atlantic. Paraguay also grants investors a number of tax breaks under Law 60/90. The reforms that have been recently implemented by the government - such as the law regulating public-private partnerships - should lead to greater investments.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 110192474
FDI Stock (million USD) 6,7087,0458,384
Number of Greenfield Investments* 687
Value of Greenfield Investments (million USD) 3,41379127

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Paraguay Latin America & Caribbean United States Germany
Index of Transaction Transparency* 6.0 4.1 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 6.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.