18+ Pros And Cons of Doing Business in Paraguay (Explained)

Paraguay is a developing country that shares its border with countries like Argentina and Bolivia.  The country has maintained good relations with the neighbouring countries, which makes it easier for businesses to establish an international trade.

The country provides high encouragement to foreign companies and investors to start their industry and investment in the country. 

If you are looking for a business site to expand or start your business, this article will help you. This article highlights some interesting aspects of doing business in Paraguay.

Benefits of Doing Business in Paraguay The Drawbacks of Doing Business in Paraguay 
English as the primary business language High working hours 
Gender equality Small Population 

Advantages of Doing Business in Paraguay 

  • Geographic Location:

Paraguay has a large amount of area available for developing businesses and industries. The country has maintained good relationships with its neighbouring countries, which helps companies and markets trade smoothly at the international level.

Moreover, the country shares its market with a variety of other country’s markets. This attracts a large number of business owners and entrepreneurs to the country.

  • Stable economy:

Paraguay has a stable yet developing economy. The economic graph has been developing for the past few years. The developing financial chart shows more opportunities for investors to invest in the country.

Moreover, the stable economy also helps businesses develop and grow in the country rapidly. The GDP of Paraguay is 4,079 crore USD, which is still increasing and will rise with time.

  • Resources:

Paraguay is blessed with natural resources. The agriculture sector is booming in the country because of the availability of abundant land and water resources.

Mining industries are also well developed in the country because of the minerals available in the country. This makes a large number of business owners and entrepreneurs attracted to the country. 

  • Tax Incentives:

Paraguay’s government has designed highly remarkable tax policies to attract a large number of business owners and investors to the country.

The corporate tax is 10%. VAT is also 10%. On the other hand, income tax is 15%. One can establish an offshore company in the country with 100% foreign ownership. The country provides both investment-friendly and business-friendly tax incentives.

This attracts a large number of foreign investors and entrepreneurs to the nation.  

  • High education:

Paraguay has a high education system. The country successfully produces a large number of skilled graduates every year.

The education system focuses on developing practical knowledge and skills rather than just theoretical concepts. This makes the workforce able to deal with technical problems and issues more efficiently. 

  • Skilled Labour:

Many successful companies have originated from the country due to the availability of a high-quality workforce.

Paraguay’s literacy rate is 94%, which is highly remarkable and makes the country a more preferable location to expand and develop a business.

  • Technology and Innovation:

Paraguay is a technologically advanced country. The country has developed at an extensive rate in terms of technology from the past few years.

The research and development industries are positively booming and growing in the country. 

  • Numerous Developing Sectors:

The pharmaceutical industry, engineering sector, manufacturing sector, biotechnology industry are remarkable in the country.

Many well developed and large business companies have originated from the country. The credit goes to the technological resources available in the country. 

  • Well-Developed Transportation System:

The nation also has a unique aviation system which aids business owners to travel and reach different countries in manageable time zones.

The transportation system in the country is also excellent which makes it easy and efficient to travel in the country.

Disadvantages of Doing Business in Paraguay 

  • Poor population:

The purchasing power of the population in Paraguay is not remarkable. 70% of the population is below the poverty level in the country. This makes the businesses not develop at a rapid rate in the country.

The companies of luxury goods do not grow in the country. Investors face problems in investing the capital in the right company because of poverty. Poverty leads to many discrimination in the country.

This brings hurdles in the growth of the country’s economic graph and leads to an unhealthy environment for the development of businesses and industries.

  • Construction Permits:

Construction permits are a time-consuming process in the country. Multiple government departments have to be visited to get the construction permission.

Applications are needed to be filed, and documents are prepared for the procedures. Moreover, multiple inspections are carried out by the government authorities to ensure safety measures during construction.

This takes a lot of time for the company and causes delays in the business’s development and growth.

  • Solving insolvency: 

Solving insolvency is a highly time-consuming process in the country. The company wastes its lots of time in getting out of the insolvency whirls.

It takes up to years for business companies to reach a satisfactory solution. Moreover, the recovery rate is also prolonged.

The company suffers from a high economic crisis after insolvency, which makes it challenging to grow and develop at the same pace after bankruptcy gets resolved.

  • High Corruption Rate:

The corruption rate is high in the country. The government departments are ready to take bribes and prepare legal documents. This leads to an unhealthy environment for businesses to expand and grow. The small companies and startups find it hard to develop in the country due to the corruption rate. However, the situation is getting better. 

The country ranked at 149th position among 170 countries for having a high corruption rate. Corruption and bribery cause an increased effect on the growth of the economy of the country. This makes the future of business opportunities and investment incentives weaker in the country.

  • Culture:

The people in Paraguay are highly stringent about their culture and heritage. They have strong beliefs from their ancestors, followed by every generation. They don’t readily accept the change from any perspective.

This leads to a slowdown in the growth and development of the country. Moreover, the business community doesn’t warmly approve foreign business companies. This causes foreign companies and marketers to face difficulty to grow and evolve in Paraguay.

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