Doing Business in Paraguay

8/9/2019 Doing Business in Paraguay

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Doing Business in

ParaguayCountry Cost Elements

Technical Unit for Industrial Studies

UTEPI

United Nations IndustrialDevelopment Organization(UNIDO)

MINISTERIO

DE INDUSTRIA

Y COMERCIO

Ministerio del Desarrollo


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Doing Business in Paraguay: Country Cost Elements

Ministry of Industry and Commerce (MIC) and United Nations Industrial Development Organization (UNIDO).

Ministry of Industry and CommerceAvda. Mcal. Lpez 3,333 and Dr. WissTel.: (+595-21) 616-3000; 616-3092; Fax: (+595-21) 616-3208Asuncin, ParaguayE-mail: [email protected]: www.mic.gov.py

United Nations Industrial Development OrganizationVienna International Centre, P.O. Box 300, A-1400Tel.: (+43-1) 260260; Fax: (+43-1) 2692669Vienna, AustriaE-mail: [email protected]: www.unido.org

November 2007

Project manager: Diana Hubbard (UNIDO)International consultant: Manuel AlbaladejoNational coordinator: Anbal Gimnez Kullak (MIC)National adviser: Csar Pastore Britos (MIC)

Researchers: ngel Bentez Vera (MIC)Guido Brtez Gmez (MIC)Nathalia Rodrguez Romero (MIC)

Editing: Jos Hidalgo, Roger Peniston-BirdDesign and layout: Andrs Dvila

The information contained in this report may be used provided that the source is cited as follows:

UTEPI (2007). Doing Business in Paraguay: Country Cost Elements. Cooperation between the United Nations Industrial Development Or-ganization and the Industry Division of the Ministry of Industry and Commerce. Asuncin, Paraguay.

Suggestions and comments: Technical Unit for Industrial Studies (UTEPI), [email protected]

ISBN: 978-99953-838-2-4

Copyright: ALL RIGHTS RESERVED. TOTAL OR PARTIAL REPRODUCTION WITHOUT DUE AUTHORIZATION IS PROHIBITED. THEDEPOSIT REQUIRED UNDER LAW 1328/98 HAS BEEN EFFECTED.


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F O R E W O R D

For Paraguay to find its place in an increasingly globalized and competitive world requires clear poli-cies that will promote economicgrowthwithemphasison theindustrialsector, that areorientedtowardssus-tainabledevelopmentandthatwillencouragethegenerationofbetteremploymentopportunitiesinordertoimprove the quality of life of the Paraguayan people.

Thebusiness climate for the successful development of enterprises and for attracting new investmentis improving, thanks, inter alia, to macroeconomic stability, legal conditions andthe simplification of proce-dures for starting up new businesses. The result has been a steady increase in domestic and foreign invest-ment in recent years.

Intheeffectiveutilizationofbusinessopportunities,theavailabilityofinformationplaysakeyrole.Inthis context, the Ministry of Industry and Commerce, through theIndustry Division and the Investment andExportsNetwork,andinordertomeettheneedsofthebusinesssectoronanexpandingbasis,haveproducedthis important analytical reference tool which it is placing at the disposal of the productive sector.

Thepresentdocument,DoingBusinessinParaguay:CountryCostElements2007,isthefruitofajointeffort made by the public and private sectors, with technical and financial support from the United NationsIndustrial Development Organization (UNIDO), to collect, arrange and classify information concerningtransactionsand coststhat needstobetakenintoaccount when makingdecisions oninvestment inParaguay.

It is our hope that this report will serve as a useful reference guide for local and foreign investors, aswellashelpingtoidentifyobstaclesthatstillneedtoberemovedifoptimumconditionsaretobeensuredforParaguay to become a destination for investment.

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Translatedfrom Negocios en el Paraguay: Elementos del Costo Paspublished in November 2007


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C R E D I T S A N D A C K N O W L E D G M E N T S

ThereportDoingBusinessinParaguay:CountryCostElements2007hasbeenpreparedwithinthefra-mework of the first stage of the project of the United Nations Industrial Development Organization in Para-guay entitled Institutional Support and Capacity Building in Competitiveness Analysis (XP/PAR/06/001),

within the Industry Division (SSEI) of the Ministry of Industry and Commerce. This study aims to meet theneeds of investors for information relevant to decision-making, particularly as concerns the costs of the ne-cessary procedures.

TheworkwascarriedoutunderthesupervisionofAnbalGimnezKullak,DeputyMinisterforIndus-tryandNational Project Coordinator, andDiana Hubbard,Chief oftheCommercial Analysis andConformityInfrastructure Unit of UNIDO. Manuel Albaladejo, an international adviser, offered assistance and made

available his valuable experience during the first stage of the work; Csar Pastore, Director-General for In-dustrial Policy, acted as national economic adviser.

The team of professionals of the Technical Unit for Industrial Studies (UTEPI) were responsible forplanning,organization,collectionofdataandthedraftingofthereport;theteamconsistedofngelBentez(researcher), Guido Brtez (researcher) and Nathalia Rodrguez (coordinator). Thanks are expressed to allthe UTEPI staff for the review and analysis of the various sections of the document.

Jos Hidalgo (Corporationfor Development Studies -CORDES-) wasthe editorof theoriginal Spanishtext; Roger Peniston-Bird edited the English translation, and Andrs Dvila (CORDES) was responsible forthe graphics.

Morethan120institutionsinthepublicandprivatesectorscooperatedinthepreparationofthedocu-ment, including: sixgovernment ministries andtheir departments concernedwith matters relating to inves-tors; the decentralized State agencies; the Central Bank of Paraguay, banks and financial institutions in thepublic and private sectors; private sector organizations and associations; and 13 municipalities, includingthecapital,Asuncin,andthemaincitiesoftheinteriorofthecountry.Wearedeeplygratefultoalltheseins-titutions,sincetheworkwouldnothavebeenpossiblewithouttheircooperation.Thanksarealsoexpressedtoallinstitutions andindividualswhocontributeddirectlyorindirectly tothepreparationof this report.

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T A B L E O F C O N T E N T S

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Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

C r e d i t s a n d a c k n o w l e d g m e n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

A b b r e v i a t i o n s a n d a c r o n y m s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x v i i

CHAPTER 1. Issues of interest to the investor . . . . . . . . . . . . . . . . . . . . . . 1

1.1. General information about Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2. Economic environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.3. The Paraguayan industrial sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.4. Domestic and foreign investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CHAPTER 2. Incorporation of companies . . . . . . . . . . . . . . . . . . . . . . . . 9

2.1. Institutional relationship and regulatory framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2. Processes of incorporation, registration and monitoring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2.1. Modernizationandtechnologicaldevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2.2.Approval andregistration through theUnifiedSystemfor theOpeningof Businesses . . . . . . . . . . . . 10

2.2.2.1.Registration withthe Directorate-Generalfor Public Registers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2.2.2.2.Immigrant visas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

2.2.2.3.Business licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

2.2.3.Feesofnotariespublic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.2.4.Services,monitoringandauditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.3. Environmental licences and certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.4. Industrial registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

CHAPTER3.Industriallandandpropertyrentalcosts . . . . . . . . . . . . . . . . . 17

3.1. Industrial parks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.1.1. TechnologicalPark Itaip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.1.2.TaiwanIndustrialPark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

3.1.3. AvayIndustrial Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.1.4. MERCOSURPark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.2. Property taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19


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CHAPTER 4.Employment a nd labour c osts . . . . . . . . . . . . . . . . . . . . . . . 21

4.1. Legislation and labour institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.2. Minimum wages and statutory benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.2.1.Minimummonthlywages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.2.2.Sectoraltables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

4.2.3.Additionalbenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

4.2.4.Regulationsonworkinghours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

4.2.5.Terminationcosts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

4.2.6.Socialsecuritycontributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4.3. Labour market recruitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4.4. Public and other holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CHAPTER 5. Communication services . . . . . . . . . . . . . . . . . . . . . . . . . 27

5.1. Legal and institutional framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

5.2. Fixed telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275.3. Mobile telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

5.4. Internet services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

5.5. Postal service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

CHAPTER6.Electricity, drinkingwaterand fuel costs . . . . . . . . . . . . . . . . . 33

6.1. Electricity sector and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

6.1.1.Legislationandinstitutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

6.1.2. Electricity production andconsumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

6.1.3.Pricesystems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

6.2. Drinking water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376.3. Cost of fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

CHAPTER 7. Other industry costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

7.1. Fees for trademark, design and patent registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

7.2. Fees for public services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

7.3. Membership in chambers of commerce and industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

CHAPTER8.Accreditationand certification agencies . . . . . . . . . . . . . . . . . 45

8.1. National Accreditation Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

8.2. National Institute of Technology and Standardization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458.3. National Service for Animal Health and Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

8.4. National Service for Plant and Seed Quality and Health. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

CHAPTER9.Transportationservicesand infrastructure . . . . . . . . . . . . . . . . 49

9.1. Road and land transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

9.2. Rail transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52


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9.3. Maritime transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

9.4. Storage facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

9.5. Air transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

9.6. Insurance services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

CHAPTER 10. Cost of living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5910.1. Costs for the rental of housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

10.2. Domestic service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

10.3. Security services for dwellings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

10.4. Health insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

10.5. Education: School enrolment and tuition fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

10.6. Rental of vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

10.7. Vehicle insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

CHAPTER 11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

11.1. Tax on income from commercial activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6311.2. Tax on personal income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

11.3. Value added tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

11.4. Excise tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

11.5. Vehicle licence tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

11.6. Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

11.6.1.Taxondocumentsanddeeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

11.6.2.Taxonagriculturalincome. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

11.7. Other municipal taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

11.8. Agreements to avoid double taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

CHAPTER 12. Financial costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

12.1. Reference interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

CHAPTER 13. Foreign trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

13.1. Export regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

13.1.1.Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

13.1.2.Exportsofsoyaandmeat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

13.1.3.Certificateoforigin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

13.1.4. Drawback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

13.2. Import regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

13.3. Customs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

13.4. Foreign trade agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

CHAPTER14.Incentivesforinvestmentandexports . . . . . . . . . . . . . . . . . . 81

14.1. Law 60/90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

14.2. Maquiladora regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83


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14.3. National Regime for Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

14.4. Regime for Imports of Raw Materials and Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

14.5. Free trade zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

L e g i s l a t i o n c o n s u l t e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 9

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

TABLES

Table 1: Manufactured exports per capita, 2000-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table 2: Types of companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Table 3: Registration of enterprises through the Unified System for the Opening of Businesses . . 11

Table 4: Requirements for the registration of commercial companies. . . . . . . . . . . . . . . . . . . . . . 12Table 5: Requirements for the registration of single-owner businesses and single-owner limitedliability companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Table 6: Tariffs for immigration visas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Table 7: Business licence charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Table 8: Fees of notaries public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 9: Requirements for obtaining the Environmental Impact Statement . . . . . . . . . . . . . . . . . 15

Table 10: Additional environmental impact studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table 11: Requirements for obtaining industrial registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table 12: Minimum monthly wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Table 13: Sectoral tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Table 14: Additional benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Table 15: Annual leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Table 16: Cost of night work and overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Table 17: Termination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table 18: Social security contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table 19: Wages on the freely-contracted labour market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Table 20: National public holidays and other holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Table 21: Cost of and time needed for telephone line installation . . . . . . . . . . . . . . . . . . . . . . . . 27

Table 22: Telephone charges by category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Table 23: Cost of mobile phones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Table 24: Mobile phone plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Table 25: Internet rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 26: Rates for regular national mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31


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Table 27: Rates for airmail and the international Express Mail Service*. . . . . . . . . . . . . . . . . . . . 32

Table 28: Development of electricity coverage in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Table 29: Costs for connection to the electricity grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Table 30: Electricity rates, low and medium voltage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Table 31: Electricity rates, high and very high voltage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Table 32: Electricity rates for electricity-intensive enterprises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Table 33: Prices of electricity supply for residential consumers . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Table 34: Prices for electricity supply for industrial consumers. . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Table 35: Connection charges Empresa de Servicios Sanitarios del Paraguay S.A.. . . . . . . . . . . 37

Table 36: Drinking water rates Empresa de Servicios Sanitarios del Paraguay S.A. . . . . . . . . . . 38

Table 37: Drinking water rates sanitation boards and private companies (average) . . . . . . . . . 38

Table 38: Prices for fuels in the capital and the metropolitan area . . . . . . . . . . . . . . . . . . . . . . . . 39

Table 39: Fees for trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Table 40: Fees for patents and utility models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Table 41: Monthly charges for refuse collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Table 42: Monthly charge for public lighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Table 43: Fees for membership in chambers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Table 44: Accreditations with the National Accreditation Agency. . . . . . . . . . . . . . . . . . . . . . . . . 45

Table 45: Procedures for exporting and importing products of plant origin . . . . . . . . . . . . . . . . . 47

Table 46: Basic characteristics of the road infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Table 47: Fees at the toll stations managed by the Ministry of Public Works and Communications 50

Table 48: Tolls charged by Tape Por . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Table 49: Land transport freight costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Table 50: Duty-free storage facilities granted to Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Table 51: Cost of maritime shipping to major ports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Table 52: Monthly storage costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Table 53: Incentives for imports at particular terminals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Table 54: Port costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Table 55: Flight time between cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Table 56: Air fares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Table 57: Air freight costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Table 58: Rates for insurance of international freight against all risks . . . . . . . . . . . . . . . . . . . . . 58

Table 59: Rental costs per month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Table 60: Monthly wages for domestic service in Asuncin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Table 61: Monthly cost for security services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Table 62: Monthly cost of health insurance plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61


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Table 63: School enrolment and tuition fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Table 64: Cost of rental of vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Table 65: Tax on personal income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Table 66: Value added tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Table 67: Excise tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Table 68: Vehicle licence tax in Asuncin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Table 69: Vehicle licence tax in the interior of Paraguay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Table 70: Other municipal taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Table 71: Bilateral tax agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Table 72: Reference annual interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Table 73: Credit options through the Development Finance Agency. . . . . . . . . . . . . . . . . . . . . . . 71

Table 74: Procedure for exporting soya using the Single Window for Exports . . . . . . . . . . . . . . . 74

Table 75: Process for exporting meat using the Single Window for Exports . . . . . . . . . . . . . . . . . 74

Table 76: Certificates of origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Table 77: Certificate of origin for wood products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Table 78: Fees of customs clearance agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Table 79: Import regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Table 80: Other taxes and charges payable in customs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Table 81: Foreign trade agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

DIAGRAMS

Diagram 1: Population of Paraguay by age group, forecast for 2007 . . . . . . . . . . . . . . . . . . . . . . . 2

Diagram 2: Changes over time in the gross domestic product, 2000-2007 . . . . . . . . . . . . . . . . . . . 2

Diagram 3: Structure of the Paraguayan economy in 2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Diagram 4: Inflation and interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Diagram 5: Average monthly exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Diagram 6: Outstanding external debt as a percentage of the gross domestic product . . . . . . . . . . 5

Diagram 7: Domestic investment and net flows of foreign direct investment . . . . . . . . . . . . . . . . . 7

Diagram 8: Share of imports of hydrocarbons in the total imports of Paraguay . . . . . . . . . . . . . . 38Diagram 9: Changes over time in the number of passengers transported (1998-2006) . . . . . . . . 57

Diagram 10: Trends in investment under the incentives regime established by Law 60/90 . . . . . 82

Diagram 11: Development of exports using the maquiladora regime . . . . . . . . . . . . . . . . . . . . . . 83

Diagram 12: Trends in the production of motorcycles and bicycles . . . . . . . . . . . . . . . . . . . . . . . 85


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BOXES

Box 1: Macroeconomic forecasts for 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Box 2: Goals, achievements and services of the Unified System for the Opening of Businesses . . 10

Box 3: Potential of the Paraguayan hydroelectric sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Box 4: Outlook for the fuels sector in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Box 5: Land transportation: outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Box 6: Development Finance Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Box 7: Investment and Exports Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75


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I N T R O D U C T I O N

The availability of information, besides being an essential condition for successful decision-making,helps to minimize the costs of transactions and reduce the risk of errors in the operations of enterprises.

Thedifferentprocessesinvolvedinsatisfyingaparticularproceduralrequirementareusuallyhandledby a numberof different institutionsand departments,which generates a high bureaucratic cost. In order tosimplify the requirements for investing in Paraguay, the Industry Division and the Investment and ExportsNetwork,with theassistance ofUNIDO, have preparedthepresent document,settingoutthe main economicand legal aspects that need to be known to and considered by potential investors and by those already esta-blished in the country.

The preparation of the document has required consultations with the official institutions responsibleforeach procedure, surveys of enterprises offering differentservices and summariesof the laws anddecreesrelatingtothebusinessenvironment.Animportantadvantage ofthereport istheup-to-datenatureof theda-taandinformationgiven;thedatawascollectedbetweenJuneandNovember2007.Thetablesshowingthecostsforthe differentproceduresareexpressed inboth guaranesand UnitedStates dollars;theexchangera-te used represents the average for September 2007, namely 5,012 guaranes to one dollar.

The document is divided up in the following manner. Chapter 1 describes the main characteristics ofthe country, the culture, the economic environment, trends in investment flows and participation in worldmarkets.

Chapters 2 to 8 discuss aspects relating to the operation of enterprises: the procedures for starting upoperations, the industrial areas available for establishing plants, labour costs, labour regulations, access toroad communicationsandservicesthatareofferedtoenterprises.Informationis also givenonthecostsof ba-sicservices, such aselectricityandwater, andotherindustrialcostssuch as thosefortrademarksandregistra-tion, public services and membership in chambers of industry; the agencies responsible for the certificationofproductsarealsodescribed.Chapters9to14detailotherfactorsthataffectenterprises,suchastheroadin-frastructure,transportcostsandlivingcostsinthecapital,thenearbytownsandParaguay'smaincities.

Anotherspherethataffectsthecapacityofacountrytoattractinvestmentrelatestotaxes.Thetaxesle-vied on differenteconomic activities arespecified. Regarding thefinancial area, referenceinterest rates andthe products offered on the Paraguayan financial market are indicated. Concerning foreign trade, thedocu-ment includesa chapter describing exportand importregimes.Lastly, a summary isgivenofthemainincenti-

ves offered to enterprises under special regimes designed to promote andaccentuate Paraguay'sexportpro-file.

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A B B R E V I A T I O N S A N D A C R O N Y M S

ADSL Asymmetric Digital Subscriber Line

AFD Development Finance Agency (Agencia Financiera de Desarrollo)

AFIDI Phytosanitary Import Accreditation (Acreditacin Fitosanitaria de Importacin)

ALADI Latin American Integration Association (Asociacin Latinoamericana de Integracin)

ANDE National Electricity Administration (Administracin Nacional de Electricidad)

ANNP National Authority for Navigation and Ports (Administracin Nacional de Navegacin y Puertos)

BCP Central Bank of Paraguay (Banco Central del Paraguay)

CAB Basic Environmental Questionnaire (Cuestionario Ambiental Bsico)

CADELPA Cotton Chamber of Paraguay (Cmara Algodonera del Paraguay)CAMP CentreforArbitrationandMediationofParaguay(CentrodeArbitrajeyMediacindelParaguay)

CAN Andean Community (Comunidad Andina de Naciones)

CAPADI Paraguayan Internet Chamber (Cmara Paraguaya de Internet)

CAPECO Paraguayan Chamber for Cereals and Oilseeds (Cmara Paraguaya de Cereales y Oleaginosas)

c.i.f. cost, insurance and freight

CMC Council of the Common Market

CNCSPNational Chamber of Commerce and Services of Paraguay (Cmara Nacional de Comercio y Servi-cios de Paraguay)

CNIME

National Board of Maquiladora Industries forExport (Consejo Nacional de Industrias Maquiladoras

de Exportacin)CONACYT National Council for Science and Technology (Consejo Nacional de Ciencia y Tecnologa)

CONATEL National Telecommunications Commission (Comisin Nacional de Telecomunicaciones)

COPACO S.A. Compaa Paraguaya de Comunicaciones S.A.

CPI Consumer Price Index

CTA Customs Procedure Centre (Centro de Trmites Aduaneros)

DGCE Directorate-General for Foreign Trade (Direccin General de Comercio Exterior)

DGEECDirectorate-GeneralforStatistics,SurveysandCensuses(DireccinGeneraldeEstadsticas,Encues-tas y Censos)

DGGC Directorate-General for Major Contributors (Direccin General de Grandes Contribuyentes)

DGM Directorate-General for Migration (Direccin General de Migraciones)

DGPI Directorate-General for Intellectual Property (Direccin General de Propiedad Intelectual)

DGRP Directorate-General for Public Registers (Direccin General de Registros Pblicos)

DIGECIPOADirectorate-General for the Quality and Harmlessness of Products of Animal Origin (Direccin Ge-neral de Calidad e Inocuidad de productos de Origen Animal)

DINAC National Directorate of Civil Aviation (Direccin Nacional de Aeronutica Civil)

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DINATRAN National Transport Directorate (Direccin Nacional de Transporte)

DNA National Customs Directorate (Direccin Nacional de Aduanas)

DRE Directorate for Special Regimes (Direccin de Regmenes Especiales)

EAP economically active population

EMS Express Mail Service

EPH Permanent Survey of Households (Encuesta Permanente de Hogares)

ERSSAN Regulatory Body for Public Health Services (Ente Regulador de Servicios Sanitarios)

ESSAP Empresa de Servicios Sanitarios del Paraguay S.A.

FEPAMA Wood Industry Federation of Paraguay (Federacin Paraguaya de Madereros)

f.o.b. free on board

FOCEM StructuralConvergenceFundofMERCOSUR(FondodeConvergenciaEstructuraldelMERCOSUR)

G guaranies

GATT General Agreement on Tariffs and Trade

GDP gross domestic product

GSM Global System for Mobile CommunicationsGSP Generalized System of Preferences

ICT information and communications technologies

IDB Inter-American Development Bank

IMF International Monetary Fund

INTNNational Institute of Technology and Standardization (Instituto Nacional de Tecnologa y Normali-zacin)

IPS Social Security Institute (Instituto de Previsin Social)

ISC excise tax (Impuesto Selectivo al Consumo)

ISIC International Standard Industrial Classification of All Economic Activities

ISO International Organization for Standardization

ITU International Telecommunication Union

kW-h kilowatt-hour(s)

MAG Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganadera)

MCC Millennium Challenge Corporation

MERCOSUR Southern Common Market (Mercado Comn del Sur)

MH Ministry of Finance (Ministerio de Hacienda)

MIC Ministry of Industry and Commerce (Ministerio de Industria y Comercio)

MJyT Ministry of Justice and Labour (Ministerio de Justicia y Trabajo)

MOPC Ministry of Public Works and Communications (Ministerio de Obras Pblicas y Comunicaciones)

MW-h megawatt-hour(s)

ONA National Accreditation Agency (Organismo Nacional de Acreditacin)

PETROPAR Petrleos del Paraguay

PROCAR Property Register Programme (Programa de Catastro Registral)

PTI-MD Technological Park Itaip - Margen Derecha (Parque Tecnolgico Itaip - Margen Derecha)

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PYMES small and medium enterprises (pequeas y medianas empresas)

RAN National Regime for Motor Vehicles (Rgimen Automotor Nacional)

REDIEX Investment and Exports Network (Red de Inversiones y Exportaciones)

RUC Single Taxpayers' Register (Registro nico de Contribuyentes)

RUE Single Register for the Exporter (Registro nico del Exportador)

SEAM Secretariat of the Environment (Secretara del Ambiente)

SENACSA National Service for Animal Health and Quality (Servicio Nacional de Calidad y Salud Animal)

SENAVENational Service for Plant and SeedQuality andHealth (ServicioNacional de Calidad y Sanidad Ve-getal y de Semillas)

SET Taxation Division (Sub Secretaria de Estado de Tributacin)

SNC National Cadastre System (Sistema Nacional de Catastro)

SOFIASystemfortheFiscalOrganizationofCustomsLevies(SistemadeOrdenamientoFiscaldeImpuestos

Aduaneros)

STP Technical Secretariat for Planning (Secretara Tcnica de Planificacin)

SUAE Unified System for the Opening of Businesses (Sistema Unificado de Apertura de Empresas)

UIP Paraguayan Industrial Union (Unin Industrial Paraguaya)

UNDP United Nations Development Programme

UNESCO United Nations Educational, Scientific and Cultural Organization

USAID United States Agency for International Development

UTEPI Technical Unit for Industrial Studies (Unidad Tcnica de Estudios para la Industria)

VAT value added tax

VUE Single Window for Exports (Ventanilla nica de Exportacin)

WTO World Trade Organization

ZFI International Free Trade Zone (Zona Franca Internacional)

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Issues of interest to the investor

TheParaguayaneconomyhasshownpositiveresultsinthelastfouryearsandtheprospectsfor2007areencouraging. This constitutes a favourable setting for attracting investment and for successfulbusiness activities.Thisfirstchapter presents Paraguays maincharacteristics and its macroeconomic indicators, obtained fromthe official institutions responsible for preparing them.

1.1. General information about Paraguay

Paraguay is situatedinSouthAmerica,sharing borders with Brazil, Bolivia andArgentina andhavingan areaof406,752km2. Theriver Paraguay divides thecountryinto tworegions:theEastern andWesternRegions.

Paraguayisblessedwithabundantwaterresources,asitformspartoftheGuaranAquiferousSystem,consi-dered the largest freshwater reserve in the world. In addition, the numerous rivers that traverse the countrymake its soil very suitable for the cultivation of various products, some of them exportable, such as soya,co-tton, etc.

Thecopious watersof theriver Paran provide thecountry with abundant hydroelectric energy, produced atthe binational Itaip and Yacyreta power stations and at the national Acaray plant.

Paraguay hasvarious sitesofnatural andhistorical interest,suchas theJesuit ruins ofJessandTrinidad,de-clared world heritage sites in 1993 by the United Nations Educational, Scientific and Cultural Organization(UNESCO). The hydroelectric dams, the numerous national parks, ranch tourism and many other attrac-tions bring large numbers of tourists to the country every year.

Paraguay is a nation with an identity of its own, having two official languages, Spanish andGuarani, and itscustomsaredeeplyrootedinthepopulation,themajorityofwhomareyoung,asisshownindiagram1.The-re is consequently abundant labour available in Paraguay.

1

C H A P T E R 11

GENERAL INFORMATION OF PARAGUAY

Location: South America (shares borders with Brazil,Bolivia and Argentina)

Capital: Asuncin

Area: 406,752 km2

Population:* 6,119,642

Official languages: Spanish and Guarani

Currency: Guaran

Grossdomesticproduct(GDP)percapita,2007forecast(currentUSDollars)** 1,858

* Forecast for 2007 by the Directorate-General for Statistics, Surveys and Censuses (DGEEC).** Forecast by the Ministry of Finance (MH).


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1.2. Economic environment1

According to official forecasts, economic growthin Paraguay for 2007 will be 4.5%. If this prediction provescorrect,itwillbethefifthconsecutiveyearwithpositiveresults,encouragingaclimateofoptimismandeco-nomic stability.

Theseresultsaresupportedbythedynamicnatureofdomesticdemand,whichistheresultoftheincreaseininvestment andin levelsof publicand privateconsumption,andalsobygrowing externaldemand, whichhasled to an increase in Paraguayan meat exports.

2


Diagram 1: Population of Paraguay by age group, forecast for 2007

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80+

Source: Technical Secretariat for Planning (STP)/Directorate-General for Statistics, Surveys and Censuses.

Diagram 2: Changes over time in the gross domestic product, 2000-2007

-1

0

1

2

3

4

5

2001 2002 2003 2004 2005 2006* 2007**

* Preliminary figures.** Forecasts.Source: Central Bank of Paraguay (BCP).

Agegroup

Population

Percentagevariation

(constant1994dollars)

1 The data were taken from official statistics of the Central Bank of Paraguay.


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Inconstantterms,theGDPofParaguayincreasedfromUSUS$8,228millionin2005toUSUS$8,560millionin 2006, the most dynamic sectors being animal production, services and manufacturing industries.

In2004, the rateof realgrowthof GDP was 4.1%, the highest since2001.Thiswasa consequence ofthe reco-very of important meat markets and the good performance of the crop-farming sector, supported by the in-crease in international prices.

Ascanbeseenfromdiagram3,thesectorswiththehighestsharesintheeconomyofParaguayarecommerce,crop production, government services and animal production.

It may be said that the positive growth of the Paraguayan economy in recent years has been due to the goodperformance of the services (mainly telecommunications), animal production and manufacturing sectors.In addition, crop production has benefited from the increase in international prices and favourable climaticfactors.

Inflation, for its part, fell from 14.6% in 2002 to 2.8% in 2004. In 2005 and 2006, however, inflation increa-sedagain, reaching 9.9% and 12.5% respectively. Accordingto the preliminary economic report for 2006 ofthe Central Bank of Paraguay, inflation has resulted primarily from the increases recorded in the volatileitemsoftheConsumerPriceIndex(CPI)basket,whichhavebeenaffectedbyacommercialpolicyseekingtoencouragelocalproductioninordertobringaboutself-sufficiencyintheshortandmediumterm.InOctober2007,cumulativeinflationreached7%,mainlyasaresultoftrendsinthepricesoffoodstuffs,affectedbyex-

ternal factors including, inter alia, the costs of agricultural inputs.

Based on a weighted average of private banks, the real active interest rate for loans in foreign currency de-creased from 9.94% in 2002 to 8.29% in September 2007; for loans in national currency, the rate fell from34.22%in2002to18.44%inSeptember2007,representingasignificantdecrease.Thistrendmaybedueto

various factors such as theloweringof interest rates worldwide, theappearance of alternativecreditpossibi-lities and greater liquidity in the market.

3

Chapter 1. Issues of interest to the investor

Diagram 3: Structure of the Paraguayan economy in 2006

1.1

1.2

2.0

2.0

2.1

2.1

2.3

2.5

2.8

3.33.9

4.2

4.5

6.3

6.5

7.1

7.5

17.9

20.4

0 5 10 15 20 25

F A B . D E P R O D U C T O S N O M E T A L IC O S

R E S T A U R A N T E S Y H O T E L ES

ELECTRICIDA D Y A GUA

ALQ UILER DE VIVIEN DA

F O R E S T A L

B E B ID A S Y T A B A C O

INT ERM ED IAC ION FINA NC IERA

TEXTILES Y PR END AS D E VESTIR

SERVICIOS A LA S EM PR ESAS

P R O D U C C IO N D E C A R N E

C O N S T R U C C IO N

CO M UNICA CION ES

T R A N S P O R T E S

SERVICIOS A HO GA RES

O T R O S

G A N A D E R IA

S E R V C IO S G U B E R N A M E N T A L E S

AGR ICULTURA

CO M ERC IO

Source: BCP.

Share in GDP (%)

C o m m e r c e

C r o p p r o d u c t i o n

G o v e r n m e n t s e r v i c e s

A n i m a l p r o d u c t i o n

O t h e r s

S e r v i c e s f o r h o m e s

T r a n s p o r t

C o m m u n i c a t i o n s

C o n s t r u c t i o n

M e a t p r o d u c t i o n

S e r v i c e s f o r e n t e r p r i s e s

T e x t i l e s a n d c l o t h i n g

F i n a n c i a l b r o k e r a g e

B e v e r a g e s a n d t o b a c c o

F o r e s t r y

L e t t i n g a n d d w e l l i n g s

E l e c t r i c i t y a n d w a t e r

R e s t a u r a n t s a n d h o t e l s

M a n u f . N o n m e t a l l i c p r o d u c t s


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Diagram5showsthat,fromJanuary2006toSeptember2007,theguaranappreciatedvis--visthedollar.Itshould be stressed,however, that theUnited States currency has been losingvalue in relation to many othercurrencies.

One of the commitments of the present Paraguayan Government is to lower the external debt. Between theend of 2003 and May 2007, the outstanding debt was reduced from US$2,478 million to US$2,174 million,representing a decrease of 12.3%, and it is hoped that this trend can be continued. If so, net internationalre-serves, which are currently at levels close tothe level of the external debt, could comeinthe mediumtermtoexceedit,puttingParaguayinabetterpositiontocomplywithitscontractedobligations.Atthepresenttimethe external debt represents 24.1% of Paraguays GDP (diagram 6).

4


Diagram 4: Inflation and interest rates

0%

5%

10%

15%

20%

25%

30%

35%

40%

2002 2003 2004 2005 2006 2007*

Inflation

Interestrate, foreign currency

Interestrate, national currency

* Cumulative inflation as at October 2007 and interest rates in September 2007.Source: BCP.

Diagram 5: Average monthly exchange rate

4,000

4,500

5,000

5,500

6,000

6,500

Ene-06 Feb-06 Mar-06 Abr-06 May-06 Jun-06 Jul-06 Ago-06 Sep-06 Oct-06 Nov-06 Dic-06 Ene-07 Feb-07 Mar-07 Abr-07 May-07 Jun-07 Ju l-07 Ago-07 Sep-07

Source: BCP.

Guaranes/Dollar

s


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In the year 2004, the Law on Administrative Reorganization and Fiscal Adjustment was adopted, aimed atthe formalization of the economy, improved competitiveness, more equity in the tax burden and incentivesfor investment.2

1.3. The Paraguayan industrial sector

Betweentheyears2003and2006,theParaguayanindustrialsectorshowedanaveragegrowthof2.9%.Ma-nufacturedexports,fortheirpart,increasedatarateof11.4%betweentheyears2000and2005.Duringthisperiod, the most important role was played by medium- and high-technologyproducts,exports of which in-creased at rates of 33% and 26% respectively.

Table 1 shows manufactured exports per capita for all Latin American countries. As may be seen, Paraguayrankedfifteenthin 2005, movingup one place in relationtothe year 2000. Atthe sametime, whereas manu-

5


Diagram 6: Outstanding external debt as a percentage of the gross domestic product

0%

5%

10%

15%

20%

25%

30%

35%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*

* Preliminary estimate.Source: Ministry of Finance.

The Ministry of Finance and the Central Bank of Paraguay have made the following forecasts for 2007:

Real GDP growth 4.5% Inflation (movement of CPI) 7.1% Net international reserves (millions of US$) 2 015.0 Average nominal exchange rate (G/US$) 5 043.0

Nominal GDP (millions of US$) 11 402.5 Per capita GDP (current US$) 1 858.0

Asmaybeseen,2007couldbethefifthconsecutiveyearinwhichtheParaguayaneconomyachievespositiveresults,whichwouldcontinue to promote a greater flow of foreign capital into the country.

It is important to note, however, that the increase in international monetary reserves, which went up from US$531.9 million inJuly 2007 to US$2,150 million in June 2007, was partly due to momentary factors such as the reduction of the interest rate, theflow of remittances, the good year enjoyed by soya producers, etc

Box 1: Macroeconomic forecasts for 2007

DebtaspercentageofGDP

2 See chapter 11, Taxes.


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factured exports of Paraguay per inhabitant came to US$76.4 in 2005, the average for the region wasUS$374.2.

The destinations of many Paraguayan manufactured exports are concentrated in the region, mainly in the

countries of the Southern Common Market (MERCOSUR). In 2006, 69% of Paraguayan manufactured ex-ports went to Latin America and64.2% totheMERCOSURcountries. Further away, other importantdestina-tionsformanufacturedexportsfromParaguayaretheUnitedStatesofAmerica,whichaccountsfor10.51%,Italy (3.54%) and China (2.86%).

Manufactured exports represent29%of total exports from Paraguay, themost important being products ba-sed on natural resources, followed by low-technology products, medium-technology products and, lastly,high-technology products.

1.4. Domestic and foreign investment

The Government of Paraguay, through the Ministry of Industry and Commerce, has been making efforts toattract greater flowsof investment tothecountry, both domesticandforeign.In this context, therearespecialregimeswhichtheinvestorcantakeadvantageof,suchasthatprovidedbyLaw60/90ontheSystemofFiscalIncentives for the Investment of Domestic and Foreign Capital, the Maquiladora Regime, the National Regi-me for Motor vehicles and the Regime for the Importation of Raw Materials and Inputs.3

6


Table 1: Manufactured exports per capita, 2000-2005

Ranking

Country

Current US Dollars per capita

2005 2000 2005 2000

1 1 Mexico 1 693.8 1 465.7

2 2 Costa Rica 1 242.8 1 020.1

3 3 Chile 1 217.6 570.5

4 6 Argentina 570.9 367.4

5 7 Brazil 459.9 242.9

6 5 Uruguay 458.4 374.8

7 10 Guatemala 304.1 117.4

8 11 Peru 299.5 99.9

9 9 Colombia 216.3 130.5

10 4 Venezuela 196.2 470.0

11 8 El Salvador 179.6 144.412 14 Ecuador 149.5 90.6

13 15 Honduras 144.1 58.6

14 13 Bolivia 97.6 98.3

15 16 Paraguay 76.4 54.3

16 12 Panama 65.3 99.5

17 17 Nicaragua 51.2 30.0

Note: The data for El Salvador correspond to the year 2004.Source: United Nations Commodity Trade Statistics Database (UN Comtrade).

3 For more details on these regimes, see chapter 14 concerning systems of incentives for investment and exports.


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According to the national accounts published by the Central Bank of Paraguay, between 1996 and 2006 do-mestic investment (measured by gross fixed capital formation) reached its highest level in 1997 and, fromthenon,decreaseduntil2002.Since2003,however,domesticinvestmenthasshownanupwardtrend(dia-gram 7).

In 2006, according to estimates by the Central Bank of Paraguay, net flows of foreign direct investment in-creasedsubstantially.Ascanbeseenindiagram7,foreigndirectinvestmentwentupfromUS$5.6millionin2002 toapproximately US$103million in2006. Themaindestinationsof foreign directinvestment were thefood and beverages sector, chemical industries and telecommunications.

7


Diagram 7: Domestic investment and net flows of foreign direct investment

0

50

100

150

200

250

300

350

400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*

0

500

1,000

1,500

2,000

2,500Foreign directinv estment

Domestic investment

*Preliminary figures.Source: BCP.

F

oreigndirectinvestment(milliondollars)

Domesticinvestment(milliondollars)


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.


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Incorporation of companies

Enterprises maybe divided into twotypes: there are single-ownerbusinesses and there are companies,with two or more partners. In this chapter we shall consider companies and the procedures requiredfor their legal incorporation.2.1. Institutional relationship and regulatory framework

TheincorporationofcompaniesissubjecttotheCivilCode,Law438/94onCooperativesandLaw117/93onCapital and Industry; the legislation recognizes ten types of companies, detailed in table 2.

The articles of association must be transcribed by a notary public, then presented to a judge for civil mattersundertheauspicesof a lawyerand,when thejudgeso authorizes, registered with theDirectorate-GeneralforPublic Registers, a dependency of thejudicial branch of government, with a view to obtainingthe necessarylegal personality.

2.2. Processes of incorporation, registration and monitoring

2.2.1. Modernization and technological development

Asfrom2007,effortshavebeguntoacceleratetheproceduresforstartingupanenterprise.Forthispurpose,the Unified System for the Opening of Businesses (SUAE) has been established; the aim is to facilitate and

9

C H A P T E R 22

Table 2: Types of companies

Types of companies Number of partners Form of capital contribution

Simple partnership Two or more Cash and/or kind

General partnership Two or more Cash and/or kind

Simple commandite (sociedad en comandita simple) Two or more Cash and/or kind

General partners

Limited partners

Partnershiplimitedbyshares(sociedadencomanditaporacciones) Two or more Shares

General partners

Limited partners

Cooperative society 20 or more Contribution certificatesCapital-and-industry partnership Two or more Business capital and labour, knowledge or skill

Private limited company (sociedad de responsabilidad limitada) Two to twenty-five Corporate shares (cuotas sociales)

Open company (sociedad annima) Two or more Shares

Source: Paraguayan Civil Code, Law 438/94 on Cooperatives and Law 117/93 on Capital and Industry.


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simplifytheprocessofincorporationofenterprisesandmakeitlessbureaucratic.ThisSystemisbeingdeve-loped within the framework on an inter-agency agreement which receives support under the Umbral Pro-gramme.4

In its first stage, SUAE seeks to reduce the time, cost and number of steps needed for the incorporation of anenterprise. In a second stage, it is planned to modify the legal aspects in order to simplify requirements andprocedures.SUAEalsohasanonlineserviceforfollowingupthestatusofregistrationoftheenterprise,avai-lable through its website or through the website of the Ministry of Industry and Commerce.5

2.2.2. Approval and registration through the Unified System for the Opening of

Businesses

SUAE, a system developed by the Ministry of Industry and Commerce, centralizes all the procedures for thestart-up of an enterprise, thus reducing the cost of the process both in terms of money and time.

There are six institutions in which the procedures for the legal initiation of an enterprise have to be carried

out. Table 3 details these institutions and the procedures to be carried out in each one.

At thepresent time, SUAE includes only theservices of theMunicipalityof Asuncin.Consequently, if thein-vestor wishes to set up a business in another locality, the procedures must take place in the correspondingmunicipality. The procedure involves obtaining approval of the premises and the business licence.

10


BelowareshownthegoalsthatweresetwhenSUAEwasestablishedandachievementsuptoJune2007.Asmaybeseen,thetimethat it takes to start up an enterprise has gone down from 74 to 25 working days, on average.

Goals for the first stage:

Reducing enterprise start-up time from 74 to 36 working days.Reducing the number of steps from 17 to 9.Reducing the cost per registration from US$725 to US$250.

Achievements up to the present date:

Time required for the start-up of an enterprise: 25 working days on average (it may take less).Number of steps required: six.Average cost per registration: US$80 (following the methodology used by the World Bank).

Services:

Entry in the Register of Legal Entities.Entry in the Public Mercantile Register.Certification of Registration and of Entry in the Single Taxpayers Register (RUC).Certification of Worker and Employer Registration with the Social Security Institute.Certification of Employer Registration with the Ministry of Justice and Labour.Approval of the premises.

Commercial licence.Source: http://suae.mic.gov.py.

Box 2: Goals, achievements and services of the Unified System for the Opening of Businesses

4 TheUmbral Programmehas beendesignedby theGovernment of Paraguay,is sponsoredby the Millennium Challenge Corporation (MCC), implemented by thePresidentialCouncil for Modernization of Public Administration and administered financially by the United States Agency for International Development (USAID).Among itsactivityareas,the Programme provides for the design and implementation of 1-stop shops user support centres to facilitate the legal incorporation of enterprises.

5 http://suae.mic.gov.py (http://www.mic.gov.py).


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Investorswhoareforeignnationalsmustobtainresidencevisas,whichareissuedbytheDirectorate-Generalfor Migration.

Thefollowingsections discuss the procedures for registration in the public register, and for obtainingimmi-grant visas and business licences. These procedures can be complied with through SUAE.

2.2.2.1. Registration with the Directorate-General for Public Registers

TheDirectorate-General forPublicRegisters (DGRP), which comes under thejudicial branch, is responsiblefor granting enterprises legal personality. The necessary steps are the following.

First, a public document containing the articles of association of the enterprise must be transcribed by a no-tary public. The cost of this procedure is specified in Law1.307/87 on the Fees of Notaries Public and descri-bed in section 2.2.3 below.

When the public document has been drawn up, it is presented to a court for civil matters so that its registra-tion with DGRP can be approved.

Within DGRP, theenterprise isentered inthePublicRegisterofLegal Entities,afterverification that thenameadopted by it is available. Finally, the enterprise or company is given legal personality, which enables it to

commence its activities.Table 4 shows the requirements for registration of the different types of commercial companies.

Therequirementsforsingle-ownerbusinessesandsingle-ownerlimitedliabilitycompanies(EIRL)arediffe-rent. Table 5 shows the costs for forms and the corresponding rates.

11

Chapter 2. Incorporation of companies

Table 3: Registration of enterprises through the Unified System for the Opening of Businesses

Steps Instructions Services Cost (Guaranes)

1 Directorate-General for Public RegistersRegistration of legal entities

46,916Entry in the Public Mercantile Register

2 Ministry of Justice and Labour (MJyT)* Certification of Employer Registration with MJyT 1,000

3 Ministry of Finance Certification of Registration and of RUC Entry Free of charge4 Social Security Institute CertificationofWorkerandEmployerRegistrationwiththeSocial Security Institute

5 Municipality of Asuncin**Approval of the premises

10,200Business licence

6 Directorate-General for Migration (DGM)*** Residence visa 365,940

Summary

Total Guaranes**** 424,056

Total US Dollars**** 80

Approximate time 25 days

* The cost is G1,000 per form.** The cost in the municipalities varies, depending on the locality in which investment is desired.*** Applies only to foreign investors.**** The amount in guaranes is calculated by UTEPI and the amount in US Dollars is the average cost calculated by SUAE.Source: SUAE.


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2.2.2.2. Immigrant visas

Thegranting of visas for immigrants is theresponsibility of theDirectorate-General for Migration, which re-ports to the Ministry of the Interior.

Table6setsouttherelevantscaleoftariffs,establishedbyExecutiveDecreeNo.7,402of26April2006.

2.2.2.3. Business licences

Thebusiness licence is oneof therequirements forthecommencementof commercial activities andits issueis the responsibility of the municipality where the trade premises are located.

12


Table 4: Requirements for the registration of commercial companies

RequirementsCosts

Guaranes US Dollars

Sworn statement form for registration 3,000 0.60

Form for judicial proceedings concerning registration 5,000 1.00

Proceedings fee 18,766 3.74Fee for entry in the Register of Legal Entities 23,458 4.68

Fee for entry in the Public Mercantile Register 23,458 4.68

Special fee for entry in the Public Mercantile Register 18,766 3.74

Total 92,448 18.45

Source: SUAE.

Table 5: Requirements for the registration of single-owner businesses and single-owner limited liability companies

RequirementsCosts

Guaranes US Dollars

Form for registration 5,000 1.00

Proceedings fee 18,766 3.74Judicial fee for entry in the Public Mercantile Register 18,766 3.74

Special fee for entry in the Public Mercantile Register 23,458 4.68

Total 68,990 13.76

Source: SUAE.

Table 6: Tariffs for immigration visas

Category Guaranes US Dollars

Permanent residence 406,600 81.13

Temporary residence 365,940 73.81

Change of occupation 203,300 40.56

Change of category 406,600 81.13

Certificate of settlement 81,320 16.23

Certificate of return 81,320 16.23

Certificate for customs purposes 81,320 16.23

Fine (art. 32), Regulatory Decree No. 1,8295/97 328,405 65.52Source: Directorate-General for Migration.


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The Municipality of Asuncin has its own by-law establishing a taxation system; the other municipalities ofParaguay(referredtoasthemunicipalitiesoftheinterior)aregovernedbyLaw620/76anditsamendmentsin Law 135/91.

Table7givesthescalesforthepaymentofthechargeforthebusinesslicenceinAsuncinandintheothermu-nicipalities.Thelicencechargeismadeupofapercentageoftheamountoftotalassetsdeclaredbytheenter-prise and a basic tax, which also depends on the amount of the assets.

2.2.3. Fees of notaries public

ThefeeschargedbynotariespublicareestablishedinLaw1,307/87ontheFeesoftheNotariesPublic.Table8 shows the most important rates from the point of view of an investor.

13


Table 7: Business licence charges

Asuncin

Total assetsBasic tax Percentage of

total assetsGuaranes US Dollars

Lower limit Upper limit Lower limit Upper limit Guaranes US Dollars

0 100,000 0 20 2,300 0.5 0.00%

100,001 500,000 20 100 2,300 0.5 0.85%

500,001 1,000,000 100 200 5,700 1 0.80%

1,000,001 5,000,000 200 998 9,700 2 0.55%

5,000,001 10,000,000 998 1,995 31,700 6 0.40%

10,000,001 50,000,000 1,995 9,976 51,700 10 0.28%

50,000,001 100,000,000 9,976 19,952 163,700 33 0.22%

100,000,001 300,000,000 19,952 59,856 273,700 55 0.20%

300,000,001 500,000,000 59,856 99,761 673,700 134 0.18%

500,000,001 1,000,000,000 99,761 199,521 1,033,700 206 0.15%

1,000,000,001 1,500,000,000 199,521 299,282 1,783,700 356 0.13%

1,500,000,001 2,000,000,000 299,282 399,042 2,433,700 486 0.10%

2,000,000,001 2,500,000,000 399,042 498,803 2,933,700 585 0.08%

2,500,000,001 Upwards 498,803 Upwards 3,333,700 665 0.05%

Interior of Paraguay

1,000,000 1,000,001 200 200 13,800 3 0.00%1,000,001 3,000,000 200 599 13,800 3 0.85%

3,000,001 6,000,000 599 1,197 34,200 7 0.80%

6,000,001 30,000,000 1,197 5,986 58,200 12 0.55%

30,000,001 60,000,000 5,986 11,971 190,200 38 0.40%

60,000,001 300,000,000 11,971 59,856 310,200 62 0.28%

300,000,001 600,000,000 59,856 119,713 982,200 196 0.22%

600,000,001 1,800,000,000 119,713 359,138 1,642,200 328 0.20%

1,800,000,000 3,000,000,000 359,138 598,563 4,024,200 803 0.18%

3,000,000,001 6,000,000,000 598,563 1,197,127 6,202,200 1,237 0.15%

6,000,000,001 9,000,000,000 1,197,127 1,795,690 10,702,200 2,135 0.13%

9,000,000,001 12,000,000,000 1,795,690 2,394,254 14,602,200 2,913 0.10%

12,000,000,001 15,000,000,000 2,394,254 2,992,817 17,602,200 3,512 0.08%

15,000,000,001 Upwards 2,992,817 Upwards 20,002,200 3,991 0.05%Sources: Asuncin Ordinance No. 331/06, Law 620/76 and Law 135/91.


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Thedeterminationoftheamountofthefeeforeachpublicdocumentisbasedon:(a)thepriceoftheobject;(b) the value assignedto the object bythe parties;(c) the amount ofa loanortotal value ofan obligation; (d)thevalueortotalcostofacontract;and(e)thecapitalauthorized,subscribed,paidin,issued,increased,re-duced, liquidated or withdrawn.

2.2.4. Services, monitoring and auditing

It is for the law courts to settle legal disputes in which a company may be involved.

Asfrom2002,underLaw1,879,theCentreforArbitrationandMediationofParaguay(CAMP)wassetupun-der the National Chamber of Commerce and Services of Paraguay(CNCSP).The purpose of this Centre is to

promote, in institutionalized form, the application of alternative, extrajudicial methods for the solution ofdisputes in companies.

Finally, the Directorate-General for Taxation Monitoring, under the Taxation Division (SET), is responsiblefor monitoring compliance with tax obligations, apart from those under the supervision of the Directorate-General for Major Contributors (DGGC).

2.3. Environmental licences and certificates

Under Law 293/93 on Environmental Impact Assessment and other legislation in force, all projects that

affecttheenvironment(i.e.,thataffectlifeingeneral,biodiversityandthequalityorutilizationofnaturalorenvironmental resources, or require a significant quantity of such resources) are obliged to undertake anevaluation of their environmental impact.

The Secretariat of the Environment (SEAM) is in charge of the coordination, supervision and implementa-tion of environmental measures, and for ecological and environmental management in general. Thus thisagencyexecutes andregulatesenvironmentalpolicyandis thebodyresponsibleforissuingtheEnvironmen-talImpactStatement.ThisStatement,whichmustbeissuedforallprojectsinvolvingpossibledamagetothe

14


Table 8: Fees of notaries public

Value of the legal documents Tariff

Up to G1,000,000 Five times the minimum daily wage*

Over G1,000,000 2% of the value of the legal documents

Above G50,000 000 1.75% of the value of the documents

Above G75,000,000 1.50% of the value of the documents Above G100,000,000 1.25% of the value of the documents

Above G150,000,000 1.00% of the value of the documents

Above G200,000,000 0.75% of the value of the documents

Other items

For the transcription of the articles of association Ten minimum wages

Administrative expenses Five minimum wages

Drafting of articles of association 20%onwhatiscalculatedforthelegaldocuments

* At the present time, the minimum daily wage is G51,607.Source: Law 1,307/87 on the Fees of Notaries Public.


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environment, constitutes a licence for beginning or continuing the work or activity in question. In addition,this documentisanindispensable requisitefor obtainingsubsidies ortaxexemptionsandfor takingadvanta-ge of the various special regimes offered by the Paraguayan Government.

Table 9 shows the costs of the requirements for obtaining an Environmental Impact Statement. The normalprocess is as follows. The Basic Environmental Questionnaire (CAB) is obtained and must be completed byan environmental consultant accredited by SEAM.6 The CAB is then submitted along with the Municipal Lo-cationCertificateand,iftheprojectislocatedoutsidethecapital,theno-objectioncertificatefromtheOfficeof the Governor of the corresponding department.7

Within a maximum period of 30 days fromthe submission of these documents,SEAM will rule as towhetherornotitisnecessaryforanenvironmentalimpactassessmenttobecarriedout.Ifsuchanassessmentisneces-sary, the investor must cover the costs set out in table 10.

It should be noted that the Directorate for Technical Matters Concerning the Environment, attached to theMinistry of Industry and Commerce, provides information and guidance on environmental regulations inforce to industrialists, investorsandconsultants,andadvises them on adjustingtheir projects to these requi-rements.

15


Table 9: Requirements for obtaining the Environmental Impact Statement

RequirementsCosts

Guaranes US Dollars

Basic Environmental Questionnaire 375,000 74.82

Notarized copy of the title deed 46,915 9.36

Municipal Location Certificate 72,350 14.44

No-objection certificate from the departmental Governors Off icel free of charge free of chargePhotocopy of the identity card of the proponent 400 0.08

Collection of the environmental decision 70,372 14.04

Environmental consultant Depending on nature of project Depending on nature of project

Source: SEAM.

Table 10: Additional environmental impact studies

RequirementsCosts

Guaranes US Dollars

Environmental impact study* 70,372 14.04

Environmental management plan* 70,372 14.04

Study on effluent disposal* 70,372 14.04

Environmental consultant** Depending on nature of project Depending on nature of project

* These payments cover the submission of these documents, but not the study carried out by the environmental consultant and SEAM experts.** Some indicative prices are between US$400 and US$2,000.Source: SEAM.

6 The list of environmental consultants accredited by SEAM will be found on its website: www.seam.gov.py.

7 The majority of the 17 Governors Offices in Paraguay issue the certificate free of charge, and the others charge a very low fee.


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2.4. Industrial registration

For purposes of theregistrationof industrial enterprises,the Ministry of Industry andCommerce, in itsReso-lution No. 228/07, has established that industrial activities are understood to mean the transformation, inessence and/or form, of raw materials or other materials into new products, including assembly activities,

and that an industrial establishment is an economic unit which, coming under a single legal entity, devotesitself exclusively or principally to a category of industrial activity at a single location. Theobject of theregis-ter is to provide basic information on industrial activities for purposes of formulating national industrial po-licy.

TheDirectorate for Industrial Registration, dependingon the Ministry of Industry and Commerce, is the or-ganin chargeof issuing industrial registrationcertificates, which arenecessarysothat industrial enterprisesof any kind can take advantage of the tax benefits and incentives for investment offered by the ParaguayanGovernment.8 If the project is in its initial stage, theenterprise receives a provisional certificate, valid for sixmonths, and the certificate valid for three years is issued to it subsequently.

The process for obtaining industrial registration is the following: the Directorate for Industrial Registrationreceives all the required documents, following which an expert appointed by the Ministry of Industry andCommercecarriesoutatechnicalcheckoftheestablishmentand,finally,onceadecisionhasbeentaken,theindustrialregistrationcertificateisissued.Theaveragetimeneededfortheseproceduresisoneweek.Atthepresent time, the Industrial Register is being digitalized and this will allow the documents necessary for ob-taining industrial registration to be submitted via the Internet.

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Table 11: Requirements for obtaining industrial registration

RequirementsCosts

Guaranes US Dollars

Request for renewal or registration Free of charge Free of charge

Industrial registration form Free of charge Free of charge

Authenticated photocopies of: RUC registration, identity card of the responsible officer, articles ofassociation, titledeed or rental contract,balancesheets,municipal licence and receipt of paymentofthe technical verification fee

Free of charge Free of charge

Environmental l icence and photographs of the industrial establishment Free of charge Free of charge

Technical verification fee 200,000 39.90

Source: Directorate for Industrial Registration.

8 See chapter 14 concerning systems of incentives for investment and exports.


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Industrial land and propertyrental costs

3.1. Industrial parks

Factories may be erected in cities or on their peripheries, but development poles facilitate theformation of production clusters. This leads to the concept of the industrial park, which offers anappropriate infrastructure for the development of industrial activities.Theseparks,besidespromotingdevelopmentintheareainwhichtheyaresituated,encouragetherelocationofindustryfromhighlyurbanizedareasandthegroupingoffactoriessothatsynergiescanbecreatedamongthem.

Industrial parks, in which industrial activities areestablished with their sites and infrastructure determinedin advance, provide commonservices forthese activities. In general, such parks offer certain minimum con-ditions such as:reinforced internal streets, illuminationof streets and approaches, sewerage andstorm dra-ins and basic services.

Another advantage offered by these areas is the lower cost of land, infrastructure and common services,which are centralized. Mention may also be made of greater reliability in the supply of electricity, drinkingwaterandtelecommunications. It shouldbe stressed, inaddition,that there is more effectiveenvironmentalcontrol in industrial parks.

3.1.1. Technological Park Itaip

In June 2006, the Technological Park Itaip was started up, with the aim of promoting the economic and so-cial development of Paraguay through the practical application of scientific and technical knowledge.

TheTechnological Park Itaip MargenDerecha (PTI-MD) includes an industrial park of 54 hectares, situa-ted in the area that housed the workers during the construction of the Itaip Hydroelectric Power Station.9

Thisareahasbeenoverhauledandisawaitinginvestmentunderthe comodato10 systemintheestablishmentof industrial activities on the site, using or altering what exists or erecting new premises.

There is alsoa sitewith anarea of154 hectares inthe townofHernandarias. Althoughthere are no construc-tedpremiseshere,itisreadyfortheestablishmentofindustrialactivitiesofanykind,usingthe comodato sys-

tem.

The industrial park situated in PTI-MD also benefits from the experience of other organizations establishedon the site, such as the Industrial Incubator and the Technological Research Centres. Apart from these orga-nizations, PTI-MD can boast of seven organizational units, programmes for cooperation between universi-

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C H A P T E R 33

9 See box 3, Potential of the Paraguayan hydroelectric sector.

10 The comodato isa contractunderwhich onepartymakesavailable an objector movable orimmovable property,freeof charge, fortheotherpartysuse.The user,who acqui-res possession but not ownership of the property, must return it when its use ends.


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ties and enterprises, telecentres for making available information and communications technologies (ICT)to the Paraguayan population, the Environment Unit and a cultural centre.

The industrial park offers all basic services: electricity, drinking water and access to telephone lines.

InspiteoftheshorttimeinwhichPTI-MDhasbeenoperating,severalenterpriseshavealreadystartedbusi-

ness. Noteworthy in the Industrial Incubator are two companies producing machinery and developing re-searchprocesseswithaviewtoimprovedproductionofbiodiesel,andanenterprisethatdevelopssoftware.In the Enterprise Centre there are three companies engaged respectively in the production of motorcyclesand three-wheeler vans, motor vehicle parts and textiles. Two further companies are engaged in the finalproceduresforstartingupoperations;theywillbedevotedtotheproductionofsatchels,handbagsandsuit-cases and of computer and telecommunication products.

ThemainachievementsofPTI-MDaretheattractionandestablishmentofdirectproductiveinvestmentandthe development of new high-technology industrial sectors.

3.1.2. Taiwan Industrial Park

TheTaiwan Industrial Park is situated in the department of Alto Paran, 23 kilometres from Ciudad del Esteandonly5kilometresfromGuaranInternationalAirport,locatedinthetownofMingaGuaz.Theparkco-

versanareaof40hectaresand,inviewofitsproximitytoCiudaddelEsteandthecommercialzoneintegra-tedwithMERCOSUR,isstrategicallysituated,whichrepresentsabigadvantageforcommercialinvestment.

Itshouldbestressedthat,inthenearfuture,aConsultationCentrewillbeestablishedtohelpinvestorssolvetheirproblemsandconcerns.Industrialandcommercialadvicewillalsobeofferedandtheinvestorswillha-

veathandthetoolsfortakingadvantageoftheincentivesofferedbytheMinistryofIndustryandCommerce.Therateofoccupationoftheparkis36%,whichmeansthat64%oftheparkisavailablefornewinvestment.

At the present time three enterprises are operating, devoted to the production of fishing articles, tape forpackaging, and stuffed animals and toys, respectively, and employing about 200 workers. These same com-panies have already submitted expansion projects for an approximate amount of US$5 million which, if im-plemented, will allow the creation of 300 new jobs in the period 2007-2008.

Apartfromtheexcellentrentalpricesofferedinthepark,in2007and2008allinvestorssettingupoperationswill be exempt from rental payment, and in 2009 and 2010 rebates of 50% are envisaged. After this period,the rent will be US$0.625 (G3,133) a month per square metre. Plots of different sizes can be rented, depen-ding on the investors needs. The possibility of selling the lots is currently under study.

The park is totally walled and urbanized and equipped with sanitary systems, drinking water, a permanentsecurity service, electricity with the parks own substation, asphalted streets, green areas and recreationareas.In addition,all thelots have communication andfire prevention systems.Condominiummaintenancecharges are US$0.1 (G500) per square metre a month.

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3.1.3. Avay Industrial Park

The Avay Industrial Park is situated in the town of Villeta, 35 kilometres from Asuncin and 1,500 metresfrom the port of Villeta, one of Paraguays main port terminals. The area of the park is 350 hectares.

Theadministrationoffers sewerageandstormdrains,drinkingwaterandfixedtelephone lines.Thereare al-

socompletelyasphaltedstreets,apermanentsecurityservice,aporterslodgeserviceandasubstationoftheNational Electricity Administration, ensuring a reliable and secure electricity supply for all users. There is afirefighting vehicle to deal with fires.

The average purchase price of the sites is around US$7 (G35,084)per square metre, but the price varies de-pending on the capacity occupied andthe proximity of the plot to the access gates and to the river Paraguay,

whichflowsalongsidethepark.Instalmentsmaybepayablemonthlyoryearly,asstatedinthecontract.Theminimumsizeofasite,accordingtotheinternalregulationsofthepark,ishalfahectare;noupperlimithasbeen established.

Thechargesformaintenanceandsecuritytobepaidmonthlybyusersdependontheareaoftheplotandthebuildings on it. However, the average charge per hectare is US$173.16 (G867,900).

There are 10 industrial undertakings operating in the park at the present time, engaged in the manufactureofchemicalproductsandagrochemicals;twograinsiloshavealsobeensetup,andthereareenterprisespro-ducing spurge oil and paper bags and recycling plastics.

3.1.4. MERCOSUR Park

TheMERCOSURIndustrialParkisstrategical

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