LatinFinance - July/August 2014 - 63

Foreign direct investment | PARAGUAY

that they are working a lot towards this."
Meanwhile, Sesto is confident
that infrastructure work to improve
shipping conditions down the Paraguay
River (mainly through public-private
partnerships) will bear fruit. "They
have been working seriously to dredge
the river and set up a real channel for
sailing," he says.
"Officials have long acknowledged the
necessity of dredging the river, but this
is the first time that people are actually
doing it."
Nevertheless, there have been some
setbacks, too. Rio Tinto Alcan last year

suspended plans to set up in a large
aluminum smelter in the country. Leite
would not speculate on the reasons for
the move, which he says was temporary.
But as Paraguay tries to boost its
industry, it also needs an educational
upgrade, a more skilled labor force.
"Paraguay was identified as an
interesting market," says Johannes
Freiesleben, deputy rector of the
Paraguayan-German University (UPA), a
50/50 non-profit joint venture between
SRH University from Heidelberg,
Germany and the Paraguayan business
association UIP. The university was

incipient manufacturing base. Here we are working with
global centers of innovation to replicate their experiences in
Paraguay, in a concerted effort, with academia, the private
sector and government.
LF: How would you describe the prospects for foreign
direct investment?
GL: I would not give any figures but I do feel we are going
to get more than last year and the previous year, which was a
record year. We have already reached the
level of investment in 2012 in the first five
months of 2014.
So I expect the level of FDI to be at
least double the level of 2012. Paraguay
now needs investment in infrastructure,
and it needs to bring the historic level of
investment of 18% of GDP to go to hopefully
23% by the time president Cartes leaves
office in 2018.
That means increasing the pace of
investment of about $1 billion a year
from the private sector by 2016 and to
complement this with $2 billion or $2.5
billion from the public sector. We need to
reach these figures in order to be successful.

launched in Asunción last March.
"The economy is growing. Paraguay
has a young population. But it is not
on the map of many people yet. And
they need to train some good people
internally to meet the huge demand for
engineers," he says.
Little more than 50 students
areregistered, but the aim is to attract
some 500 students per year in the
medium term. "We may not be able
to close the [skills] gap on our own,
but maybe we will contribute towards
reducing it," says Enrique Bendaña,
rector of UPA. LF

I also see that Paraguay is the only country in South
America that has an SGP+ preference system with the
European Union. This means we can enter the European
market with zero tariffs, at least for the next five years. We
are a very interesting, cost effective, competitive country to
manufacture basic processes, which in Europe have become
expensive.
We are in a position to make a good name for ourselves, a
good image: a good reputation. And then the Mercosur-EU free
trade agreement is still on the table. It will
happen sometime, sooner or later. We are
still holding together, we are still trying to
make Mercosur work.

LF: How important is it for Paraguay
to remain an open country?
GL: Paraguay is small, and as a small
country, it needs to take advantage of all its
markets all over the world. It is like the small
guy who wants to play basketball. He has to
be quick; he has to be flexible, and he has to
play damn well.
If we were India, with one billion
inhabitants, maybe we would think
differently. But in Paraguay we have a
OPEN COUNTRY: Trade minister Gustavo
6.5 million market, so our only option to
Leite says Paraguay must foster global
LF: Is Brazil at the center of your
develop is to reach to the world market.
links
strategy?
Therefore Paraguay is going to sustain
GL: I would not say central. Brazil has been our largest
its efforts to be open and in good relationships with all the
trading partner and our largest investor. It has niches in our
markets in the world.
economy. This is what has been agreed by president Cartes and
In the near future, by 2020-25, the reality of the world will
Rousseff: that our economies should integrate more in this part
mean the whole of South America will fully be integrated. Your
of the region without taking anything from the other.
name will not matter. We understand that in South America,
I also see that the Asian population is growing and will
we will be a lot stronger if we are united, because the world
be demanding more food. I see that in the medium term, the
now works around negotiating blocs.
target for the food business is Asia - no mistake about that.
The trend is that the blocs will be integrated. LF

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