South America’s Rising Star?
“Paraguay is the world’s 10th-largest exporter of wheat.
“It’s also the world’s eighth-largest beef exporter, seventh-largest exporter of corn, sixth-largest producer of soy, fifth-largest exporter of chia and soy flour, and fourth-largest exporter of yucca flour and soy oil.
“The country has the third-largest barge fleet in the world (after the United States and China) and is the third-biggest exporter worldwide of yerba mate.
“Paraguay is the second-biggest stevia producer and exporter in the world and the world’s #1 exporter of organic sugar.
“Paraguay is also a competitive and tax-friendly investment hub. You pay no tax on yields earned from an investment in the Asuncion stock exchange, and both the value-added (or sales) tax and the rate of corporate tax are 10%. This corporate tax rate compares nicely with those in Argentina (35%), Colombia and Brazil (34%), and Peru (30%).
“At about 400,000 square kilometers, Paraguay is the size of California. It has a total population of 7 million (70% of which is younger than 30 years old), a working population of 3.1 million, and a GDP of US$26 billion. The guarani is the official currency; the current rate of exchange between the guarani and the U.S. dollar is about 4,600 to 1.
“Paraguay’s capital, Asuncion, is located in the center of the country alongside the Paraguay River (think Mississippi River) and serves as a regional hub. You can fly from Asuncion to most anywhere you’d want to go in South America—Buenos Aires, Montevideo, Sao Paolo, La Paz—within two hours. The country beyond the capital is divided into 17 departments, and the country overall is natural disaster risk free.
“GDP and GDP per capita are both expanding, and the 10% rate of personal income tax is the lowest in the region. Elsewhere in South America, earners are paying 35% to 40%.
“Inflation is historically a one-digit number and has not surpassed 5% in recent years. This speaks to the country’s stability…”
That’s how Stan Canova, a financial advisor in Asuncion, introduced attendees at last week’s Global Asset Protection and Wealth Summit to the current and expanding opportunities on offer in Paraguay. As Stan explained, Paraguay qualifies right now as a “blue ocean” market, an investment arena awash with opportunity from a guarani-based certificate of deposit (paying 6%) to a bond investment on the local stock exchange (average yield 15%, which, remember, is tax-free in Paraguay).
We, of course, are most interested in emerging property investment opportunities, rural, urban, and agricultural. The very young population, as it matures, is all going to need places to live, making the local housing market an interesting bet right now.
And, in the current global climate, a country with such an impressive agri-track record is definitely worth a close look.
We were delighted to be able to include Stan’s Opportunity In Paraguay 101 overview as part of last week’s conference in Belize City. For the past half-dozen years, friends and colleagues have been urging us to make the trip south to Asuncion to see what we might see. Stan’s report persuaded us not to put off this scouting trip any longer.
Lief and I are making our Paraguay plan. More soon.
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