Barings Investments, a firm specialized in providing financial services for agribusiness, M&A and Wealth Management in Latin America, has just launched its new office in Asuncion, due to the high demand which exists in Paraguay for specialized financial services.
Emerson Pieri, head of Latin America for Barings Investments, hired Carlos Avila, who will be heading the new office and developing the business in Paraguay. Carlos Avila previously worked for Credit Andorra Group’s Valores Casa de Bolsa, as private banking financial advisor dedicated to buying and selling stocks and bonds on Paraguay’s stock exchange.
Barings Investments is diversifying participation in various business areas, looking for new opportunities outside the agribusiness and WM sectors. The company’s first venture is to try to attract a group of financial institutions to Paraguay to invest in the infra-structure sector. The first meetings, which aim to capture about half a billion dollars to build toll roads and airports with public and private funding, took place during the second week of January. For the first time, local companies like BYB Construcciones, Ferrere Abogados and private investors will have the support of an international firm such as Barings Investments to bid for a PPP project.
Why do business in Paraguay?
Paraguay, with a population of 7 million people, is a country with a vast wealth of natural resources. The country is crossed by several rivers which make up the Rio de la Plata Basin, which provides hydroelectric power to the Itaipu and Yacyreta power plants which are shared with Brazil. Other key activities in the country include highly automated agriculture and livestock production.
The latest data published on activity in Paraguay could not be more favorable for promoting investment and business in the country. According to the World Bank, Paraguay rates higher than Brazil on the scale of ease of doing business. According to a study by Brazil’s National Confederation of Industry, labor is 21% cheaper in Paraguay than in Brazil and electricity is 64% cheaper. Foreign direct investment to Paraguay grew by 230% between 2013 and 2014, compared with a 2% drop in Brazil. Indeed, Paraguay stands out in a region where overall FDI fell 16% in 2014 and which is expected to fall by as much as 10% this year. The International Monetary Fund expects Paraguay to expand by 3.8% next year, while a growth of only 0.8% is expected in the rest of the region.
In 1997, Paraguay reviewed their industry views by offering incentives to foreign companies willing to assemble low-end factory goods for the world market. Given the country’s inclination to political turmoil, (the overthrow in 2012 of President Fernando Lugo didn’t help) investors were opposed at first, but the situation has changed with the recent political changes.
Since Horacio Cartes, a tobacco magnate, was elected president in 2013, promising to turn Paraguay into a stable democracy with an improved economy, the government’s fiscal responsibility is improving and the country’s debt remains stable. Prior to his election as president, Horacio Cartes endorsed a bill passing an income tax (until then Paraguay lacked this type of revenue collection) to pay for public services and control the underground economy.