Index of "1996 Country Commercial Guides"
Index of "Economic and Business Issues"
Electronic Research Collections Index
ERC Homepage

```

U.S. Department of State 
Paraguay Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
 
                  COUNTRY COMMERCIAL GUIDE - PARAGUAY 
 
This Country Commercial Guide (CCG) presents a comprehensive look at 
Paraguay's commercial environment through economic, political and market 
analyses.   
 
The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annually at U.S. Embassies 
through the combined efforts of several U.S. Government agencies. 
 
 
                           TABLE OF CONTENTS 
 
Chapter 1.  EXECUTIVE SUMMARY 
Chapter 2.  ECONOMIC TRENDS AND OUTLOOK 
Chapter 3.  POLITICAL ENVIRONMENT 
Chapter 4.  MARKETING U.S. PRODUCTS AND SERVICES 
Chapter 5.  LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
Chapter 6.  TRADE REGULATIONS AND STANDARDS 
Chapter 7.  INVESTMENT CLIMATE 
Chapter 8.  TRADE and PROJECT FINANCING 
Chapter 9.  BUSINESS TRAVEL 
 
                           APPENDICES 
 
A.  COUNTRY DATA 
B.  DOMESTIC ECONOMY 
C.  TRADE 
D.  INVESTMENT STATISTICS 
E.  U.S. AND COUNTRY CONTACTS 
F.  MARKET RESEARCH 
G.  TRADE EVENT SCHEDULE 
 
 
Chapter 1.  Executive Summary 
 
Paraguay has undergone a dramatic political and economic opening since 
1989.  The process of democratic and market consolidation is not 
complete, however.  Interests and structures built up during the 
previous, closed system are obstacles to continued reform.  The Wasmosy 
administration has pledged to push the political and economic reform 
process forward, and has some major achievements behind it, such as 
judicial reform, including the naming of a new Supreme Court; a macro-
economic stabilization program featuring fiscal austerity which has 
weathered a financial crisis; and the successful privatization of the 
state airline and plans to sell off four smaller companies by the end of 
1995.  Even setbacks, such as the refusal of Congress to provide carte 
blanche approval for privatizations was met by an effort to involve the 
state companies in joint ventures with the private sector. 
 
Important problems remain, however, such as combating corruption (a 
recent financial scandal indicated its pervasive nature in both the 
pubic and private sector), strengthening protection of intellectual 
property and incorporating a booming, informal commercial sector into 
the formal economy.  Participation in Mercosur requires that the 
previously closed Paraguayan system learn to compete with neighboring 
aggressive entrepreneurs.  The government has recognized the need to 
rapidly improve basic infrastructure, the current state of which 
detracts from Paraguay's attractiveness for foreign investors.  This 
challenge, and the ensuing projects in road construction, electrical 
generation and distribution and telecommunications needed to surmount 
it, provide an excellent opportunity for foreign investors.  
Infrastructural projects include the Asuncion Bay reclamation project 
(which is backed by the IDB), the $2.4 billion Corpus hydroelectric 
project (to be financed by the private sector), and the development of 
the Hidrovia waterway linking Brazil, Bolivia, Paraguay, Argentina and 
Uruguay. 
 
Paraguay's strategic location within Mercosur, and its status as the 
region's lowest cost provider of electricity and labor, also offer 
important opportunities for industries looking to enter the 200 million 
consumer Mercosur market. Industrial zones are already planned near the 
Brazilian border to take advantage of these opportunities.  The booming 
re-export trade to Brazil and Argentina in merchandise from consumer 
electronics to heavy machinery, estimated at $5-10 billion a year, 
suggests the viability of using Paraguay as an entry point into 
Mercosur. 
 
Country Commercial Guides are available on CD-ROM or through the 
Internet.  Please contact STAT-USA at 1-800-STAT-USA for more 
information.  To locate country commercial guides via the Internet, 
please use the following address: WWW.STAT-USA.GOV.  CCGs can also be 
ordered in hard copy or on diskette from the National Technical 
Information Service (NTIS). 
 
Chapter 2.  Economic Trends and Outlook 
 
Paraguay's opening to international markets after decades of relative 
isolation has been codified through its membership in Mercosur (Southern 
Common Market).  However, overcoming interests and structures created 
under the previous closed regime continues to be one of the greatest 
challenges to the Government's reform efforts.  The Wasmosy 
administration continues to publicly affirm its commitment to continued 
economic reform and liberalization, and has embarked on a concerted 
effort to portray Paraguay as an attractive entry point into MERCOSUR's 
market of 200 million consumers.  This effort has been marked by the 
continuation of investment promotion legislation and policies which 
guarantee national treatment of foreign investors as well as full 
repatriation of capital.  The government privatized the state airline in 
1994, and has several privatization efforts as well as concessionary 
contracts in the works for joint ventures in telecommunications and 
electrical energy production and distribution.  
 
The formal economy is primarily oriented towards services (less then 
half of the $ 7 billion GDP derives from agriculture and industry), but 
over 300,000 families (over 40 percent of the population) derive their 
income from agricultural activity.  A large subsistence sector exists 
both at the urban and rural level.  Agricultural commodities (soybeans, 
cotton, lumber and cattle) continue to be the most important export 
items, but non-traditional exports are growing rapidly.   The formal 
economy has grown an average of 3-3.5% range over the past five years, 
but population has increased at 3% a year over the same period.  An 
informal sector, marked by both re-export of imported consumer goods 
(electronics, whiskies, perfumes, cigarettes and office equipment) to 
neighboring countries as well as thousands of micro-enterprises and 
urban street vendors, coexists with the formal economy.  There is no 
official estimate of the size of the informal sector, but private 
estimates place it between $5-10 billion. 
 
The Paraguayan government has stated publicly that it will continue its 
economic reform agenda in close coordination with its MERCOSUR partners.  
The government has also promised to undertake efforts to formalize the 
financial sector, after a financial shock forced the bail-out of the 
second and third largest domestic banks.  The reform efforts have been 
limited, however, and focused strictly at maintaining the stability of 
the system. 
 
Principal Growth Sectors 
 
New initiatives in energy (including the construction of a new $2.4 
billion hydroelectric facility),  telecommunications (a $120 million 
expansion of the existing system and opening up of the system for 
competition), infrastructure (road and dam projects throughout the 
country) all offer the possibilities for increased growth, but these 
projects are either in initial phases or still in the planning stage.  
Paraguay's continued integration into MERCOSUR also offers great 
potential for growth, but it is closely linked with the success of 
foreign investment promotion.  MERCOSUR's effects on the informal 
economy could be substantial.  However, the biggest contributor to price 
differences on re-export items is the varying level of excise taxes 
within the countries, not tariffs.  Non-traditional exports, such as 
finished agricultural products, light manufactures and small consumer 
items, are also growing rapidly (up 50% in 1994, with a similar increase 
projected for 1995) and their growth could accelerate if planned 
assembly operations for the Mercosur market are finalized. 
 
Government Role in the Economy 
 
The Paraguayan government is the single largest economic actor in the 
country.  It is the largest employer, with almost ten percent of the 
work force in either full-time or part-time positions.  The government 
budget, which was $3.3 billion in 1994, is almost half the size of GDP.  
Of this, approximately 80% is used for current expenditures, principally 
salaries, 15% for servicing foreign debt, and 5% for public sector 
investment. The government's greatest impact in the economy is in its 
policy making role, however.  The government has followed a stringent 
monetary policy aimed at controlling inflation (18.4% in 1994, with a 
12-15% target for 1995) and maintaining the value of the local currency, 
the Guarani (devaluation versus the dollar has remained at 4-5% during 
the last three years).  The government has also maintained fiscal 
discipline, although the preponderance of personnel and debt-service 
costs has led to budget surpluses at the cost of reduced public sector 
investment.   Efforts to legislate the President's structural reform 
program, such as a new Central Bank and privatization laws were 
rewritten by Congress, prompting partial vetoes of both laws.  Other 
draft laws covering telecommunications and banking have languished in 
the Congress.  The executive, however, has also been slow in presenting 
new patent and trademark legislation, although drafts of these laws are 
being finalized. 
 
Balance of Payments Situation 
 
Despite a $1.3 billion current account deficit, the Government posted a 
$364 million balance of payments surplus in 1995.  In addition, foreign 
exchange reserves grew by over 40 percent over 1993 levels to $1.07 
billion.  In 1993, the balance of payments surplus was $89 million, 
while a $351 million deficit was registered in 1992.  The dramatic 
turnaround in the balance of payments situation has come as a result of 
short term speculative capital in-flows and informal economic 
activities.  These increases were registered in errors and omissions 
which increased from $478 million in 1993 to $850 million in 1994. 
 
Infrastructure 
 
Infrastructure improvement and development is a stated goal of the 
Wasmosy administration.  There is currently only one international 
airport operating in Paraguay ten miles outside Asuncion.  It has full 
cargo and passenger service capability.  Construction of a second 
international airport outside Ciudad del Este on the Brazilian border 
was completed in 1993, but the airport has yet to open.  This airport 
lacks commercial cargo handling facilities, however.  Paraguay has a 
road network of approximately 30,800 kilometers of which 2,800 
kilometers is paved.  There are also 500 kilometers of gravel roads; the 
remainder are unpaved roads which are susceptible to closure from rains 
or inclement weather.  Over $200 million in new road work is being 
financed by regional and multilateral development banks.  Paraguay has a 
well-developed system of fluvial transport, linking it to the Atlantic 
through the Paraguay/Rio de La Plata system.  Asuncion is the major port 
in the country, but smaller ports exist along the length of the Paraguay 
and Parana rivers.  Paraguay's railway, with 370 kilometers of rail and 
the oldest wood burning steam locomotive still in regular service in 
Latin America, is scheduled for privatization in late 1995. 
 
There is an unmet, registered demand for 100,000 phone lines in 
Paraguay.  In 1995, the government issued a bid for the provision of 
80,000 new lines over a five year time period to meet this demand.  The 
bid is expected to be concluded in September 1995.  Paraguay and Brazil 
share the world's largest hydroelectric facility, Itaipu, with an 
installed capacity of 12,600 MW.  A second dam, Yacyreta, is a joint 
project with Argentina, which when finished will have an installed 
capacity of 4,050 MW.  Paraguay is also the lowest cost provider of 
electricity in the region, per studies realized by the state investment 
promotion office, Proparaguay.  Despite such low-cost production, only 
57.7% of the country is electrified, the rest of the population, 
predominately in rural areas, burn wood or charcoal for energy.  Potable 
water coverage is 27.7% nationally, with only 1.7% coverage in rural 
areas. 
 
Chapter 3.  Political Environment 
 
NATURE OF BILATERAL RELATIONSHIP WITH THE UNITED STATES 
 
Paraguay and the UNITED STATES have maintained generally good relations, 
except for the worst years of the Stroessner dictatorship.  U.S. 
mediation efforts following the WAR OF THE TRIPLE ALLIANCE (1865-1869) 
and the CHACO WAR (1932-1935) ensured Paraguay's independence and 
territorial integrity and helped to build a firm affection for the 
UNITED STATES among most Paraguayans.  The friendship and ties between 
the two countries have grown stronger during Paraguay's new era of 
democracy. 
 
Since the February 1989 coup which ended the thirty-five year 
dictatorship of PRESIDENT ALFREDO STROESSNER, the UNITED STATES has 
strongly supported Paraguay's transition to full democracy and the 
consolidation of its democratic institutions.  To assist Paraguay in 
these efforts and to help modernize Paraguay's economy, the UNITED 
STATES has provided development assistance through USAID and the PEACE 
CORPS.  Additionally, the U.S. funds a small military training program 
designed to promote the professionalization the armed forces, and since 
1989 has provided material and training to the Paraguayan anti-narcotics 
police under the terms of a bilateral agreement.  RECENTLY, Paraguay and 
the UNITED STATES signed a financial information exchange agreement to 
combat drug-related money laundering. 
 
MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE 
 
Most observers agree that Paraguay must reform its judicial system 
before it will be able to attract significant foreign investment.  THE 
1992 Constitution mandated the creation of a COUNCIL OF MAGISTRATES to 
implement the merit-based selection of a new judiciary.  This council 
was formed in late 1994, and has begun the process of judicial reform.  
A new Supreme Court was confirmed in April 1995.  However, the lower 
levels of the judiciary continue to function with many judges who were 
appointed during the Stroessner era. 
 
Many Paraguayans continue to be dependent on the export of primary 
agricultural products, principally cotton and soy.  However, the 
agricultural sector has been neglected for many years.  Now, growing 
discontent over this neglect and falling crop prices have politicized 
some Paraguayan peasants who have organized to demand new agricultural 
policies, price supports, and land reform.  A bumper crop and higher 
world prices in 1995 has given the government a respite from the 
pressure.  
 
The privatization of state-owned enterprises is a key plank in the 
Wasmosy administration's program.  The state airline was privatized in 
late 1994, and five smaller privatizations are scheduled for late 1995.  
Privatization of the largest state companies -- the telephone company 
(ANTELCO), the water company (Corposana), the cement company (INC), and 
the electric utility (Ande) -- has run into opposition from all 
political parties.  These objections are based on support for statist 
policies, reluctance to lose patronage opportunities, and/or distrust of 
the executive's commitment to a transparent privatization process. 
 
One of the government's most daunting tasks is dealing with the informal 
economy which many estimate to be at least as large as the formal 
economy.  The contraband trade distorts normal economic activity, 
complicates Paraguay's integration into the Mercosur, and contributes to 
a climate of corruption in the country. 
 
BRIEF SYNOPSIS OF POLITICAL SYSTEM, SCHEDULE FOR ELECTIONS, AND 
ORIENTATION OF MAJOR POLITICAL PARTIES 
 
Paraguay is a constitutional republic with a strong executive branch and 
an increasingly important bicameral legislature.  The judicial branch is 
independent, but as noted above, its reform and renewal, as provided for 
in the 1992 Constitution, have not been completed.  Paraguay is divided 
into seventeen departments, each with its own elected governor and 
departmental board.  The exact functions of the departments are yet to 
be defined by legislation.  The capital city of Asuncion is a separate 
administrative area, outside any department.  The municipalities have 
had elected mayors and city councils since 1991. 
 
The president is head of government and cannot succeed himself.  
Paraguay's armed forces consist of an ARMY, NAVY, and AIR FORCE.  The 
president is commander-in-chief.  Certain elements within the armed 
forces continue to wield considerable influence.  The Colorado party 
also holds substantial influence, but the combination of changes brought 
about by the political opening after the 1989 coup, the 1992 
Constitution and the election of an opposition-controlled Congress in 
May 1993, has improved accountability. 
 
The Colorado party, which has been the party of government for nearly 
fifty years, was out-polled by the combined opposition vote in the 1993 
election.  The collards remain divided as the result of a bitterly 
disputed December 1992 presidential primary.  Its dissident wing, which 
responds to defeated primary candidate LUIS MARIA ARGANA, often votes 
with the opposition parties in Congress.  The liberal party (PLRA) is 
the largest opposition group.  Led by former presidential candidate 
DOMINGO LAINO, the liberals also suffer from factional disputes.  The 
newest party is NATIONAL ENCOUNTER (PEN), an alliance of smaller parties 
and civic organizations whose main appeal is to the urban middle class.  
PEN placed third in the 1993 elections.  None of the parties is 
ideological, and each has elements influenced by populism, 19th century 
liberalism, and social democracy. 
 
The next scheduled national elections are in 1996 for mayors and 
municipal councils.  Paraguayans are scheduled to go to the polls to 
choose a new president, Congress and departmental governors in May of 
1998. 
 
Chapter 4.  Marketing U.S. Products and Services 
 
DISTRIBUTION AND SALES CHANNELS 
 
PARAGUAY does not have preferred or special marketing channels.  
Imported merchandise can be marketed through subsidiaries of the foreign 
companies, importers, distributors, and/or dealers 
 
USE OF AGENTS/DISTRIBUTORS; FINDING A PARTNER; Local Attorneys 
 
Foreign firms interested in establishing operations in Paraguay should 
hire experienced local attorneys and private sector expertise, including 
representatives, to assist them in operating in a complex business 
environment.  The selection of an appropriate agent/distributor is a 
determining factor in success or failure.  Many local companies offer 
specialized marketing skills to foreign companies interested in the 
local market. 
 
FRANCHISING 
 
Franchising operators are beginning to penetrate the market.  Several 
foreign companies have recently granted franchising rights to local 
firms in the areas of fast foods, laundry and clothing. 
 
DIRECT MARKETING 
 
Few companies have used direct marketing in the past.  Nevertheless, 
some companies have recently started using this method of reaching 
potential customers. 
 
JOINT VENTURES/LICENSING 
 
The civil code in force since 1987 does not have provisions for the 
establishment of joint ventures.  However, the government recognizes 
joint ventures formally established through formal legal contracts 
between the interested parties.  The government is also beginning to 
enter into projects using the BOT (build, operate, transfer) methodology 
in telecommunications and energy.  
 
Licensing agreements are widely used for the local production of 
international brands.  Many foreign firms have licensing arrangements 
with local companies in the areas of apparel, toiletries and cosmetics, 
pharmaceuticals, processed foods, and audio and video recordings.  
Trademark infringement, especially of internationally recognized brands, 
is a serious and growing problem in Paraguay. 
 
STEPS TO ESTABLISHING AN OFFICE 
 
The government of Paraguay allows the establishment of branches or 
subsidiaries of foreign companies.  The branch offices should be headed 
by a legally authorized representative.  The documents listed below, 
authenticated by a notary public and by the CONSUL in the country of 
origin, must be filed and registered at the civil registry in the 
Ministry of Industry and Commerce.  Within ten days of completing this 
step, the same documents must be registered with the inspection 
department of the Vice Ministry of taxation at the Finance Ministry. 
 
--copy of the foreign company's by-laws; 
--copy of the minutes of the foreign company's board of directors' 
meeting establishing a branch in Paraguay; 
--a general power of attorney by the head office to its representative 
in Paraguay. 
 
SELLING FACTORS/TECHNIQUES; SALES SERVICE AND CUSTOMER SUPPORT 
 
The importance of  support and follow-up work provided by U.S. 
manufacturers to their local representatives cannot be overstated.  At 
the onset, such support may entail expenditures for advertising and 
Spanish language promotional materials.  Even after the products have 
gained acceptance in the market, U.S. suppliers should maintain close 
contact with their local representatives to keep abreast of problems, 
and to assess the market jointly.  Periodic visits by officials of the 
U.S. companies help to reinforce ties with customers in Paraguay. 
 
Competitive prices and quality are important.  Generally, producers 
offering high quality products at competitive prices succeed quickly in 
the  market.  Most  importers prefer to do business with reliable 
suppliers.  Moreover,  importers prefer to buy goods from manufacturers 
and suppliers offering attractive financing. 
 
ADVERTISING AND TRADE PROMOTION 
 
The development of  advertising has progressed substantially in recent 
years.  The greater Asuncion area is by far the principal advertising 
center, having over one-third of the total population. 
 
The principal media for mass advertising are television and the press.  
Other widely used media include radio, billboards, signs, and direct 
mail.  Most advertisers prefer television and newspapers for their 
promotional campaigns.  The following newspapers are widely used by 
local advertisers: 
 
"DIARIO ABC COLOR" 
EDITORIAL AZETA S.A. 
SR. Aldo Zuccolillo, Director 
Casilla Postal 1321 
Calle Yegros 745 
Asuncion, Paraguay 
Ph:  595/21/491160 - Fx:  595/21/493059 
 
"DIARIO HOY" 
EDITORA HOY S.A. 
SR. Hugo Aranda (h), Director 
Av. Mariscal Lopez 2948 
Asuncion, Paraguay 
Ph:  595/21/602599, 660383 - Fx:  595/21/603400 
 
"DIARIO ULTIMA HORA" 
EDITORIAL EL PAIS S.A. 
SR. Demetrio Rojas-Cardoso, Director 
Calle Benjamin Constant 658 
Asuncion, Paraguay 
Ph:  595/21/496261, 496262 - Fx:  595/21/447071 
 
"EL DIARIO NOTICIAS" 
EDITORIAL CONTINENTAL S.A. 
SR. Nestor Lopez-Moreira, Director 
Casilla Postal 3017 
Av. Artigas y Brasilia 
Asuncion, Paraguay 
Ph:  595/21/292721, 292722 - Fx:  595/21/292840 
 
"La Nacion" 
Sra. Diana Dominguez de Rolon, Director 
Av. Zavala Cue entre Segunda y Tercera 
Fernando de La Mora, Zona Sur 
Paraguay 
Ph. (595/21) 512520/ Fx: (595/25) 512532 
 
SELLING TO THE GOVERNMENT 
 
Government procurement requires a public bid when the value of the 
purchase exceeds $60,000.  Foreign manufacturers/suppliers wishing to 
participate in government tenders must do so through their duly 
registered local representatives, which could be commercial firms in 
their line of business, a registered subsidiary of the company 
established in Paraguay or legal counsel. 
 
The "buy Paraguay" requirement obligates all government agencies to give 
preference to contractors when contracting for the construction of 
public works or the supply of services to the public sector.  This 
translates into a 15% premium for local firms over foreign competitors.  
Duly registered subsidiaries of local companies qualify for this 
preference. 
 
PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT 
 
Trademark infringement and counterfeiting remain a serious and growing 
problem in Paraguay.  Owners of patents, trademarks, and copyrighted 
materials are advised to register their products with the INDUSTRIAL 
PROPERTY OFFICE in the MINISTRY of INDUSTRY and COMMERCE. 
 
Chapter 5.  Leading Sectors for U.S. Exports and Investment  
 
Low import duties in Paraguay have encouraged the development of a 
flourishing commercial sector engaged in the import of manufactures from 
the United States and the Far East and their re-export to neighboring 
countries.  Although Paraguay has a population of only 4.5 million, 
tourist shoppers mainly visiting Ciudad del Este account for a market 
many times that size moving an estimated $5-10 billion annually.   
 
U.S. exports to Paraguay have soared as a result of strong demand for 
U.S. products by Argentine and Brazilian tourists visiting Ciudad del 
Este.  They are drawn there primarily to shop for quality goods at much 
lower prices than in their home countries.  Under its Mercosur (Southern 
Common Market) obligations, Paraguay must gradually increase its import 
duties to reach the agreed upon Mercosur common external tariff of 14-
20% by 2006.  However, the existence of high excise taxes in Brazil and 
Argentina, which are not covered in Mercosur, would continue to provide 
incentives to the import/re-export activities of Paraguayan merchants. 
 
Major infrastructure projects financed by the multilateral development 
banks in road construction, water and sewage and electrical power 
generation could offer excellent opportunities for U.S. engineering and 
construction service companies.  The planned privatization of the state 
water and sewage company, CORPOSANA, as well as concessionary 
arrangements in both electrical power distribution and 
telecommunications also offer important opportunities for foreign 
investment.  The Asuncion Bay reclamation project, with its mix of 
public and private investment, is a very attractive project.  The 
governments of Argentina and Paraguay have also announced their decision 
to go ahead with the $2.4 billion Corpus hydroelectric project by year's 
end.  An international bid for companies interested in building and 
operating the facility is expected by year's end. 
 
Best Prospects for Non-Agricultural Goods and Services. 
 
Given the informal nature of operations in Ciudad del Este, it is 
impossible to know the size of the market.  The products listed below, 
however, continue to be the best-sellers among Brazilian and Argentine 
tourists.  Our projections are based on interviews with Ciudad del Este 
merchants and observed trends in U.S. exports to Paraguay.  In rank 
order the most attractive export markets, along with projections of 
growth for U.S. exports in the sector, are: 
 
Sector    U.S. Exports (millions $)    1993     1994    1995*    1996* 
 
Computers and Peripherals (CPT)        62.3     142.6    175       200 
Office Machines and Equip (BUS)        83.7     127.7    160       190 
Photographic Equipment (PHT)           16.8      66.6     85       100 
Communications Equipment (TEL)         36.1      65.5     85       100 
Home Audio/Video Equipment (AUV        12.2      52.3     75        90 
Toys and Games (TOY)                   17.4      24.4     45        68 
Cosmetics and Toiletries (COS)         5.8       12.5     20        30 
 
* unofficial estimates. 
 
Chapter 6.  TRADE REGULATIONS AND STANDARDS 
 
Tariffs and Import Taxes 
 
Paraguay has the lowest tariffs and import taxes in the Southern cone.  
It is a member of the LATIN AMERICAN association (ALADI) and of 
Mercosur.  Mercosur went into effect January 1995 and tariff was 
eliminated between member countries and a common external tariff system 
was implemented.  There are 399 items on Paraguay's list of exceptions 
to Mercosur's common external tariff (CET), including the majority of 
goods re-exported to Brazil and Argentina.  The tariffs on these goods 
must be raised incrementally to reach the level of the CET by 2006.  All 
products, save for the 399 mentioned above, now have a 14-20 percent 
tariff applied to them. 
 
Import Licenses 
 
Paraguay has an open market and does not require import licenses, except 
in the case of guns and ammunition. 
 
IMPORT/EXPORT DOCUMENTATION 
 
Import and export operations must be processed through authorized banks 
and supervised by the CENTRAL BANK of Paraguay.  Documents required for 
imports are:  import statement issued by the bank; commercial invoice 
issued by the seller of merchandise; certificate of origin of the 
merchandise; Paraguayan consular invoice; and bill of lading. 
 
TEMPORARY ENTRY 
 
Paraguay has a system of temporary entry which allows admission of 
certain capital goods such as machinery, tools, equipment and vehicles 
to carry out public and private construction work.  The government also 
allows temporary entry of equipment for scientific research, 
exhibitions, training or testing, competitive sports, and travelers or 
tourists items.  Merchandise introduced in the country under the 
temporary entry system may be nationalized in Paraguay by complying with 
all the normal requirements for imports and paying the duties.  The 
temporary admission system allows entry of certain goods for subsequent 
re-export for a period running up to 12 months, which can be renewed for 
another period.  The government also allows temporary entry for a ten 
day period for merchandise in transit.  This system will be phased out 
by 2006, per Paraguay's commitments under Mercosur.  
 
LABELING, MARKING REQUIREMENTS 
 
Paraguayan regulations require that the country of origin be designated 
on domestic and imported products.  Expiration dates are required on 
medical products and some consumer goods.  Health warnings on hazardous 
products, such as cigarettes, must be labeled in a visible place. 
 
PROHIBITED IMPORTS 
 
There are no import prohibitions. 
 
FREE TRADE ZONES/WAREHOUSES 
 
Paraguay has several free trade zones and warehouses.  They are located 
in ARGENTINA (BUENOS AIRES, ROSARIO, and SANTA FE); BRAZIL (PARANAGUA 
AND SANTOS); CHILE (ANTOFAGASTA); and URUGUAY (MONTEVIDEO, NUEVA 
PALMIRA, and Colonia).  In early 1995, the government approved a law 
permitting free trade zones in Paraguay, but its application is being 
held up pending discussions with Paraguay's Mercosur partners. 
 
Chapter 7.  Investment Climate 
 
Openness to Foreign Investment 
 
There are no restrictions to foreign investment in Paraguay.  National 
treatment of foreign investors is guaranteed by law, as is full 
repatriation of capital and profits.  A number of fiscal incentives 
(contained in Law 60/90), including a 95% tax exemption for five years 
and duty free import of capital goods, are available to all investors.  
Tax laws were simplified in 1991, and corporations now pay only a 
corporate earnings tax of 30%.  If, however, profits are re-invested, 
the tax rate drops to 10%.  Paraguay's tax burden is the lowest in South 
America, with no personal income tax, limited business taxes and a 10% 
value added tax. 
 
The government concluded its first privatization, of the state airline, 
LAP, in 1994 after LAP went bankrupt.  The airline was bought by an 
Ecuadoran firm, Saeta, and began operation in early 1995.  Four other 
companies (rum, merchant marine, rail and steel) are set for 
privatization in 1995 and a French firm, Banque Paribas, won an 
international tender to handle their privatization.  Attempts to pass 
legislation that would allow the privatization of the state electricity, 
water and telecommunications companies was vetoed by the President after 
the Congress changed key provisions of the executive's draft proposal.  
A new arrangement featuring private sector provision of services is 
underway in telecommunications, and a concession of the distribution 
rights for the Yacyreta hydroelectric facility is also under discussion. 
 
Conversion and Transfer Policies 
 
There are no restrictions on conversion or transfer of foreign currency.  
In 1994, the government also permitted foreign currency contracts and 
business transactions in foreign currencies, legitimizing a long-
standing practice.  Law 60/90 permits the repatriation of capital and 
profits and provides guarantees against inconvertibility.  Repatriated 
profits are subject to a five percent tax on the amount remitted.  There 
are no controls imposed on foreign exchange transactions, which may be 
conducted at commercial banks and exchange houses.  The current exchange 
rate is 1,975 Guaranies to the Dollar. 
 
Expropriation and Compensation 
 
There is no record of any expropriations.  The 1992 Agrarian reform law 
does, however, allow for expropriation of private property.  The same 
law also requires adequate compensation.  In 1995, the Congress voted to 
expropriate 287,000 hectares of land from a private landowner, but the 
case has yet to be resolved.  Another increasing problem is land 
invasion, with parcels of land being awarded as political bounty by 
local politicians.  There is one case of a U.S. landowner being subject 
to such activity, and the case has yet to be resolved despite favorable 
judicial rulings in the landowner's favor. 
 
Dispute Settlement 
 
In December 1991, the Congress approved an Investment Guarantee Law (Law 
no. 117/91) establishing equal guarantees for national and foreign 
capital.  The law allows international arbitration for the resolution of 
disputes between foreign investors and the  government.  This investment 
guarantee law also regulates joint-ventures.  Paraguay became a member 
of the International Center for the Settlement of Investment Disputes on 
October 22, 1982 (law 944/82). 
 
The legal system in Paraguay is undergoing much-awaited change.  A new 
Supreme Court assumed power in 1995, and a Council of Magistrates is 
accepting application for almost 700 judgeships in the country.  It is 
expected that these two essential elements of legal reform will help to 
make the legal process more transparent.  Both the Commercial and Civil 
Codes cover bankruptcy.  Under current law, employee claims are first 
attended to during a bankruptcy, followed by state claims and finally 
private creditors.   
 
Performance Requirements/Incentives 
 
There are no performance requirements on investments. 
 
Right to Private Ownership and Establishment 
 
The 1992 Constitution guarantees the right of private ownership 
irregardless of the individual's country of origin. 
 
PROTECTION OF PROPERTY RIGHTS 
 
Despite a comprehensive framework of laws, some of them outdated, for 
the protection of intellectual property, infringement of trademarks and 
piracy is an endemic problem.  The executive agency charged with 
overseeing the problem, the Ministry of Industry and Commerce, has an 
enforcement program, including raids on counterfeiting facilities, but 
is constrained by a lack of resources as well as legislation which 
limits its powers.  The important re-export trade to neighboring 
countries has also driven the development of sophisticated networks of 
audio, video and software pirates as well as counterfeiters and 
trademark infringes.  The U.S. Government has ongoing discussions with 
the government on issues that must be addressed in order to establish an 
adequate intellectual property regime.  The Inter-American Development 
Bank is also working closely with the Paraguayans on strengthening their 
intellectual property regime, as the second $30 million tranche of a $70 
million investment sector loan is preconditioned on the introduction 
into the congress of modern IPR legislation (in accordance with World 
Intellectual Property Organization (WIPO) guidelines).  Paraguay's entry 
into Mercosur is also important, as the four members of the customs 
union  are planning to coordinate their IPR policies after the initial 
stage, focused on trade harmonization, is completed.    
 
--Patents:  The outdated patent law of 1925 established an OFFICE OF 
PATENTS AND INVENTIONS and the requirements and procedures for obtaining 
patents.  Patents are granted for 15 years and may be renewed.  In 
cooperation with the IDB and WIPO, the Government of Paraguay is 
preparing new patent legislation which it expects to present to the 
Congress in the third quarter of 1995.  
 
--Trademarks:  The illegal appropriation of well-known trademarks 
presents a serious problem, despite Paraguay's obligations under the 
Paris Convention and the Uruguay Round Accords, which were ratified in 
January and November 1994, respectively.  The executive has shown 
willingness to work with companies in protecting famous trademarks, but 
the bureaucratic process of challenging a trademark is cumbersome.  
Legal recourse can also be sought through the courts, but the system's 
lack of transparency increases the difficulty of the process.  Judicial 
reform begun in 1995, including the naming of a new Supreme Court, 
should improve that situation.  The government, in cooperation with the 
IDB and WIPO, is preparing new legislation which will bring Paraguay's 
trademark practices into accord with its international obligations.  The 
proposal is to be presented to congress in the third quarter of 1995. 
 
--Copyrights:  In 1991, Paraguay became a signatory to the BERN 
CONVENTION FOR THE PROTECTION OF LITERARY AND ARTISTIC WORKS.  Although 
the government has taken measures to fight piracy, widespread production 
and trade in pirated recordings, computer software and video cassettes 
remains a serious and increasing problem. 
 
REGULATORY SYSTEM:  LAWS AND PROCEDURES 
 
The CIVIL CODE and LAW 1,034/83 regulate business and industrial 
activities in the country.  Under the existing framework, the Ministry 
of Industry and Commerce is charged with overall industrial policy 
coordination;  tax and fiscal policy is handled by the Ministry of 
Finance; and the central bank is the principal coordinator of monetary 
policy.  All businesses need to be registered in three places;  the 
municipality for a business permit, the ministry of industry and 
commerce at the central civil registry; and the finance ministry for tax 
purposes.  The multiple registration procedure is very bureaucratic and 
can take months to complete.   Voting board members of companies 
incorporated in Paraguay are required to have local residency, which 
sometimes acts as an impediment to foreign investment. 
 
While private sector participation is still prohibited in some areas 
where state monopolies exist (telecommunications, water/sewage, 
electricity generation/distribution, oil importing, cement production), 
recent government actions have opened up the possibility of joint 
ventures with monopolies in these areas.  The sale of state steel, rum, 
rail and merchant marine enterprises is expected to begin by late 1995.  
The state airline, LAPSA, was already sold in 1994.  The government has 
made progress in liberalizing prices for certain basic products, such as 
sugar and bread.  Nevertheless, the government maintains price controls 
on a few goods and services, such as gasoline and medicines, which the 
government considers necessary for the welfare of the population.  The 
government also sets the price of public transportation and the minimum 
monthly wage.  all other areas of commercial activity are open.  While 
there are no legal prohibitions to fair competition, business practices 
developed as a result of decades of non-transparent operations during 
the Stroessner regime serve as an obstacle to government efforts to 
ensure transparency and foster competition.  Competition fostered by 
Paraguay's entry into Mercosur should also help to overcome this 
problem. 
 
CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
while government policies are geared to facilitate the free flow of 
financial resources in the country, the market has been slow to react to 
these policies.  There are no discriminatory credit policies and foreign 
investors are allowed to raise financial resources locally, yet few have 
done so because of the limited size of the local capital market; a stock 
exchange was reopened in October 1993, but only banks have taken 
advantage of the tax breaks offered to float short term bonds with 
guaranteed coupons; international accounting standards and guidelines 
issued by the INTERNATIONAL ACCOUNTING STANDARD COMMITTEE and the 
INTERNATIONAL FEDERATION OF ACCOUNTANTS have been adopted and are 
required for entry into the stock market, but few local companies have 
begun to apply them in internal accounting. 
 
In mid-1995, a financial crisis arose which highlighted some of the 
distortions in Paraguay's financial market.  The second and third 
largest local banks were intervened by the Central Bank after a 
prolonged liquidity crisis.  It was later discovered that these banks 
were involved in illegal activities such as embezzlement, misuse of bank 
funds, and operating unregistered banking activities.  The government 
moved immediately to shore up the system, guaranteeing deposits and 
later securing these guarantees with commercial bank loan portfolios.  
The crisis made it evident that the financial system, with spreads 
sometimes higher than 20 points on local currency, had developed 
distortions designed to circumvent existing tax and banking laws.  The 
government has stated publicly that it will work with the Congress and 
the banking sector to help correct these distortions.  A new Central 
Bank law was signed into law by the President in July, 1995, which gives 
the Central Bank and Superintendency of Banks greater oversight powers 
over the financial system. 
 
The banking system is comprised of 35 commercial banks (four of which 
are currently intervened by the Superintendency of Banks) and 64 finance 
companies.  Four banks are state-owned, 13 are foreign and the remainder 
are owned by nationals.  The banking system operates mostly on short to 
medium term credit (12 months is the usual maximum for commercial 
transactions, although private finance of vehicles and homes is 
available in longer terms) in both local and foreign currency.  Banks 
provide credit for commercial ventures, while the finance houses are 
used mostly for short term loans for purchase of consumer goods.  
Changes in late 1994 and early 1995 permit transactions and contracts in 
foreign currency.  Current law requires a reserve requirement of 18 
percent for banks and 15 percent for finance houses. 
 
Political violence 
 
There have not been any incidents reported over the past few years 
involving politically motivated damage to private or public projects 
and/or installations.  Since the overthrow of the Stroessner regime in 
February 1989, the democratic political system has allowed farmers and 
workers to increasingly use their freedom of expression and assembly to 
organize protests and strikes, but no private or public interests have 
suffered significant damage. 
 
BILATERAL INVESTMENT AGREEMENTS 
 
The following countries have bilateral investment agreements or treaties 
with Paraguay: 
 
Country        Type of Agreement or Treaty 
 
ARGENTINA      CONVENTION COVERING INVESTMENT AND INDUSTRIAL 
               HARMONIZATION, OCT. 22, 1968. 
 
BRAZIL         TREATY OF FRIENDSHIP AND COOPERATION 
               Authorizes the creation of binational 
               enterprises. 
 
CHILE          CONVENTION COVERING INVESTMENT AND INDUSTRIAL 
               HARMONIZATION.  SEP. 19, 1974. 
 
URUGUAY        CONVENTION COVERING COMMERCIAL INTERCHANGE AND 
               INDUSTRIAL HARMONIZATION AND INVESTMENTS 
 
FRANCE         CONVENTION COVERING THE DEVELOPMENT AND 
               PROTECTION OF INVESTMENTS. 11/30/79 
 
SOUTH AFRICA   CONVENTION ON ECONOMIC COOPERATION AND 
               INVESTMENT, AUG. 9, 1974 
 
TAIWAN         CONVENTION COVERING INVESTMENTS.  SEP. 25, 1975. 
 
UNITED         ACCORD ON THE PROMOTION AND PROTECTION OF INVESTMENTS, 
  KINGDOM      JUNE 4, 1981.  LAW NO. 92/91, which approves and ratifies 
               the accord signed DEC. 20, 1991. 
 
UNITED STATES  AGREEMENT RELATING TO INVESTMENT GUARANTIES  (OPIC),  
               SIGNED OCT. 28, 1955.  PARAGUAY, as a member of MERCOSUR, 
               jointly with ARGENTINA, BRAZIL, and URUGUAY signed the  
               "ROSE GARDEN AGREEMENT", a framework agreement to 
               encourage trade and investment.  AGREEMENT RELATING TO 
               INVESTMENT GUARANTIES (OPIC), SIGNED SEP. 24, 1992. 
 
OPIC Investment Insurance Program 
 
The United States and Paraguay signed, September 24, 1992, an INVESTMENT 
GUARANTY AGREEMENT which replaced the agreement signed in 1955.  In 
addition, the government issued a decree on the same day, delegating to 
the MINISTRY OF INDUSTRY and COMMERCE the authority to approve cases 
under the 1955 agreement.  This allowed OPIC to begin full operations in 
Paraguay on September 24, 1992. 
 
LABOR 
 
THE labor force was roughly estimated at 1,597,143 in 1992 and increases 
by approximately 50,000 new entrants annually.  The government estimated 
unemployment in the metropolitan area at 4.5% in 1995, based on the 1992 
census. However, private observers put the unemployment rate at 10-12 
percent, with another 20-25% under-employment.  With a population growth 
rate near 3% annually, one of the most serious challenges facing the 
government is the creation of enough jobs to meet the increasing labor 
demand.  The current restrictive monetary policy has succeeded in the 
fight against inflation but, at the same time, has reduced economic 
activity and worsened the unemployment situation.   Historically, excess  
labor has emigrated to ARGENTINA and BRAZIL in search of employment.  
Since 1991, Argentina's economic recovery has attracted thousands of 
Paraguayans to BUENOS AIRES in search of employment, bringing temporary 
relief to Paraguay's unemployment problem. 
 
The NATIONAL SERVICE FOR PROFESSIONAL PROMOTION (SNPP) is the government 
agency in charge of promoting and developing the technical training of 
the labor force.  In addition, there are universities, technical schools 
and other non-government entities that regularly produce professionals 
and trained technicians in several areas and branches of technology. 
 
A GSP program was reinstated in February 1991, after Paraguay's status 
as a beneficiary was suspended in 1987 for violation of labor rights 
under the Stroessner regime.  The restoration of trade benefits was in 
recognition of improvements in worker rights under the Rodriguez 
government and the promise that the government would pass a new labor 
code with internationally accepted protections for labor, which was done 
on October 20, 1993. 
 
FOREIGN TRADE ZONES/FREE PORTS 
 
Paraguay does not have any areas designated as duty free import zones 
within the country.  Trade areas are in operation at the major ports in 
Argentina, Brazil and Chile through which much of Paraguay's commerce 
passes.  A law allowing for the development of free trade zones and 
commercial areas was approved within the Mercosur context, but its 
application and adaptation to Mercosur regulations limiting the number 
of free trade zones in the customs union is still underway. 
 
CAPITAL OUTFLOW POLICY 
 
There are no prohibitions to investment in foreign countries.  There is 
no data available, however, on holdings or investments abroad.  TRADE 
sources report that Paraguayans have sizable investments in real estate 
in ARGENTINA, BRAZIL, URUGUAY, and the United States with a total 
estimated value of several billion dollars.  according to the CHAMBER OF 
BANKS, Paraguayans maintain about $3.6 billion in savings accounts and 
money-market accounts abroad.  Full repatriation of capital and profits 
by foreign investors is permitted, with a five percent tax issued on the 
amount of the transaction. 
 
MAJOR FOREIGN INVESTORS 
 
The major foreign investors in Paraguay during the past three years, by 
country of origin, were:  BRAZIL, ARGENTINA, FRANCE, UNITED KINGDOM, 
ITALY, GERMANY, and the UNITED STATES.  Foreign investment laws are 
among the most liberal in LATIN AMERICA.  Despite the incentives offered 
to investors, private investment was sluggish and insufficient to 
maintain a sustainable pace of growth.  According to government 
estimates, Paraguay needs $1 billion dollars annually in new investments 
to absorb the approximately 50,000 new entrants that increase the labor 
force every year.  The current investment level is closer to $200 
million. 
 
Chapter 8.  Trade and Project Financing 
 
BANKING SYSTEM 
 
The charter of the CENTRAL BANK of Paraguay and the current banking law 
provide the framework for the establishment and operations of banks and 
other financial institutions.  The CENTRAL BANK is responsible for 
administering, managing and directing monetary policy.  The bank is also 
charged with protecting monetary stability to encourage economic growth 
with low inflation.  The superintendency of banks, a division of the 
CENTRAL BANK, is charged with the supervision of banks and other finance 
companies.  Paraguay has 35 commercial banks, 64 finance companies, and 
30 foreign exchange houses.  There are 13 foreign private banks and four 
state banks; the rest are local.  Citibank is the only U.S. bank present 
in Paraguay. 
 
A recent bank scandal where the second and third largest local banks 
underwent a run underscored the fragility of the system.  The run was 
caused when illegal practices at these banks, including embezzlement by 
the managers, misuse of state funds and taking in unregistered deposits 
to avoid taxes, could no longer be financed through the capture of legal 
deposits.  The government stepped in quickly, guaranteeing all deposits.  
These guarantees are now secured with the loan portfolios of the 
commercial banks.  The crisis made clear that the system needed much 
more rigorous oversight by the banking superintendent.  New banking 
legislation, aimed at doing just this, is pending. 
 
FOREIGN EXCHANGE CONTROLS AFFECTING TRADING 
 
Paraguay does not have foreign exchange controls.  Importers and 
exporters can buy and sell foreign exchange freely at commercial banks, 
finance companies or exchange houses in Paraguay at the going market 
rate.  In June, 1995 the rate was 1,975 Guaranies per U.S. dollar. 
 
GENERAL FINANCING AVAILABILITY 
 
Financing, including both import and export financing, is extremely 
limited.  Local banks provide revolving credit for up to 360 days which 
may be renewable.  Relatively high nominal and real interest rates 
(generating a spread between deposit and loan rate of more than 20 
points) present a major obstacle to the availability of medium and long 
term credit.   
 
HOW TO FINANCE EXPORTS/METHOD OF PAYMENT 
 
The government does not have an institution to provide financing for 
exporters.  Local banks offer credit for up to 180 days which may be 
renewable to both importers and exporters.  Most importers and exporters 
obtain their financing from overseas.  Many involved in the re-export 
trade buy and sell in foreign currency, and often ship bank notes 
through local banks to their U.S. accounts.  Letters of credit are then 
issued based on these overseas accounts.   Moreover, Paraguay does not 
have the necessary monetary instruments to raise funds that would allow 
lenders to provide medium and long term credit to borrowers. 
 
TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE 
 
Local commercial banks provide exporters direct financing, pre-financing 
of exports backed by a letter of credit, and discounting of a letter of 
credit upon shipment of the merchandise.  EXIMBANK provides financing 
for U.S. exporters selling goods to Paraguay.  EXIMBANK financing can be 
obtained through Citibank, the only U.S. bank present in Paraguay.  
Local insurance companies offer insurance to importers and exporters. 
 
PROJECT FINANCING AVAILABLE 
 
THE WORLD BANK and the INTERAMERICAN DEVELOPMENT BANK provide project 
financing, for basic infrastructure projects, water systems and roads, 
included in their portfolios.  The current pipeline of approved and 
pending loans is close to $1 billion.  Infrastructure projects from 
regional banks, including road construction are also planned.  The 
government has also announced plans to have the private sector build and 
operate a third hydroelectric project, Corpus, along the Parana river. 
 
BANKS WITH CORRESPONDENT U.S. BANKING ARRANGEMENTS 
 
Nearly all  banks have correspondent banking arrangements with U.S. 
banks primarily in NEW YORK and Miami.  There are 35 commercial banks 
operating in the country.  The largest include:  CITIBANK, banco union, 
BANCO DE ASUNCION, BANCO UNION, LLOYD'S BANK, BANCO SUDAMERIS PARAGUAY, 
and BANCO ALEMAN PARAGUAYO. 
 
CHAPTER 9:  BUSINESS TRAVEL 
 
1.  BUSINESS CUSTOMS 
 
There are no specific local business customs going beyond the bounds of 
normal courtesy.  Introduction between persons are rather formal and the 
first name is seldom used in business circles.  Paraguayans are somewhat 
informal in observing prescribed appointment times.  For social events, 
it is customary to arrive up to 30 minutes late.  Persons are normally 
addressed by their academic or professional title, e.g. doctor, 
engineer, or licenciado, in the case of university graduates. 
 
2. TRAVEL ADVISORY and VISAS 
 
A passport is required.  U.S. citizens do not need visas for a three-
month stay.  A temporary residence visa can be obtained once in 
PARAGUAY.  THE temporary residence document is valid for one year and is 
renewable.  THE PARAGUAYAN identity document can be obtained based on 
the temporary residence.  Travelers can contact the PARAGUAYAN Embassy 
at 2400 MASSACHUSETTS AVE. N.W. Washington, D.C. 20008, phone:  (202) 
483-6960, or consulates in LOS ANGELES, Miami, or NEW YORK. 
 
3.  Holidays 
 
The following are national holidays in a calendar year: 
 
JANUARY 1         NEW YEAR 
MARCH 1           HEROES' DAY 
MARCH/APRIL       HOLY THURSDAY 
                  GOOD FRIDAY 
MAY 1             LABOR DAY 
MAY 15            INDEPENDENCE DAY 
JUNE 12           CHACO ARMISTICE 
AUGUST 15         FOUNDING of ASUNCION 
DECEMBER 8        VIRGIN of CAACUPE DAY 
DECEMBER 25       CHRISTMAS DAY 
 
4.  BUSINESS INFRASTRUCTURE 
 
ASUNCION has plenty of taxis.  A bus system does exist, but it is 
generally inadequate for business purposes. Telecommunications for 
national and international services are adequate, with a direct dial 
system available, fax and cellular telephony are also available.  Hotels 
are comfortably furnished and prices are reasonable.  Most types of 
foods are available at low prices by international standards.  Paraguay 
has no particular health risks and no special precautions need be taken.  
Tap water may be used for drinking purposes in the Asuncion area only.  
Sanitary conditions are generally adequate.  There are competent 
doctors, dentists and specialists in Asuncion. 
 
 
Appendices 
 
Appendix A:  COUNTRY DATA 
 
Profile 
 
--POPULATION:  PARAGUAY's population is around 4,300,000, with an annual 
growth rate close to 3%.  The population density is 11 inhabitants per 
square kilometer (28 persons per square mile).  About 90 percent of the 
population is of HISPANIC-GUARANI descent and 50 percent is less than 18 
years old.  The majority of the population is concentrated in the 
Eastern region of the country and about half of the population is 
settled in urban areas. 
 
--RELIGION:  The new 1992 Paraguayan Constitution abolished state 
official religion and established freedom of worship, cult and ideology.  
The majority of Paraguayans are ROMAN CATHOLICS.  
 
--GOVERNMENT SYSTEM:  Paraguay is a representative republic.  The state 
consists of three powers.  The executive branch is headed by the 
President of the Republic who is elected by direct vote for one five-
year term.  The legislative branch consists of two chambers, the Senate 
and Chamber of Deputies.  Members are elected by popular vote for a 
five-year period and are eligible for reelection.  THE CHAMBER of 
Deputies has 80 members, apportioned among the seventeen departments and 
the capital.  THE SENATE has 45 members based on national 
representation.  The judicial branch consists of the SUPREME COURT of 
JUSTICE, made up of nine members, courts of appeal and various district 
courts.  The country is divided  into 17 departments governed by 
popularly elected governors, and into municipalities governed by around 
200 elected mayors. 
 
--LANGUAGES:  The official language is Spanish, but the national native 
language is GUARANI. ENGLISH, PORTUGUESE and GERMAN are also understood 
by the business community in general. 
 
--WORK WEEK:  FOR persons over 18 years of age, work times are eight 
hours per day / 48 hours per week.  Night shifts must not exceed seven 
hours per day, or 42 hours per week.  Unhealthy work cannot exceed six 
hours a day or 36 hours a week.  Overtime is permitted for special 
reasons, but must not exceed three hours daily, occur more than three 
times a week, nor, when added to normal work hours, exceed 56 hours a 
week.  commercial working hours are 8:00 am to 12:00 noon and 3:00 pm to 
7:00 pm.  Monday through Friday, and 8:00 am to 12:00 noon Saturdays.  
Banking hours are 8:45 am to 4:00 pm Monday through Friday, but the 
public is received only up to 12:15 pm. 
 
 
Appendix B:  Domestic Economy 
 
(US$ millions, except where noted) 
 
                               1994          1995/1/         1996/1/ 
 
--GDP                          7,694         8,000           8,296 
--GDP growth rate 1995 (pct)       3.5           4.0             3.7 
--GDP per capita               1,796         1,810           1,825 
--GOVT. spending as pct of GDP    15.2          18.5            20.8 
--Inflation (pct)                 18.3          15.0            16.0 
--Unemployment (pct)              12.0          12.0            12.0 
--Foreign exchange reserves    1,038         1,100             800 
--Avg. exchange rate (US$1.00) 1,912         1,970           2,300 
--Foreign debt                 1,249         1,360           1,450 
--Debt service ratio (ratio 
  of principal and interest 
  payments on foreign debt 
  to foreign income)              -1.6          -1.4            -1.2 
--U.S. econ/military assistance    5.3           5.7            32.5 
 
/1/ estimate. 
 
--Appendix C:  Trade 
 
(US$ millions, except where noted) 
 
                               1994            1995/1/       1996 
 
--Total country exports        816.2            800           na 
--Total country imports      2,140.4          2,820           na 
--U.S. exports                 793.6          1,072           na 
--U.S. imports                  80.2             84           na 
--U.S. share of host country 
  imports (pct)                 37               38           na 
Imports of manufactured goods: 
--Total (from world)         2,140.4          2,820           na 
--From the U.S.                793.6          1,072           na 
--U.S. Share of manufactured 
  imports (pct                  37               38           na 
--Manufactured goods trade 
  balance with the U.S.       -713.4           -988           na 
--Projected avg. annual growth 
  rate from world thru  
  1996(pct)                     26               32           na 
--Projected avg. annual growth 
  rate from U.S. thru  
  1996 (pct)                    52               35           na 
 
Imports of agricultural goods: 
--Total (from world) negligible 
--From the U.S. negligible 
--U.S. share of agricultural 
  imports (pct)                                               na 
--Agricultural goods trade 
  balance with the U.S.                                       na 
 
/1/ estimate. 
 
Trade balance with five leading partners in 1994: 
--UNITED STATES (-713.4 a) 
--BRAZIL(-180.6 b) 
--JAPAN(-186.5 b) 
--ARGENTINA (-192.0 b) 
--European Union(+ 14.6 b) 
 
a) U.S. Census Bureau 
b) Central Bank of Paraguay 
 
PRINCIPAL U.S. exports in 1994: 
--8473 Parts & accessories for machines & units, etc. 
--8471 Printer units, data processing machines, etc. 
--2402 Cigarettes containing tobacco. 
--9010 Apparatus & equipment for photographic labs. 
--8520 tape recorder/reproducers, cassette type. 
 
PRINCIPAL U.S. imports in 1994: 
--9801 U.S. goods in chapter 88 returned after exported. 
--4104 bovine or equine leather. 
--4412 Plywood, veneer, panels, & similar laminated wood. 
--4402 attach? cases, briefcases, etc. 
--1602 meat bovine animal nesoi no veg prep airtit cntr. 
 
Appendix D:  Investment 
 
Foreign investment statistics available from official sources  reveal 
that foreign investment projects approved in 1994 amounted to U.S. 
dollars 211 million, broken down as follows: 
 
PROJECTED FOREIGN INVESTMENT 1994 
 
NO. OF US$ 
Countries                  projects               million 
 
Argentina                     24                    65 
Brazil                        22                    70 
Ecuador                        1                    36 
Italy                          4                    15 
Sweden                         1                     5 
Panama                         1                     4.8 
Colombia                       1                     4.8 
United States                  4.0 
Other                         19                     6.9 
 
Note:  There are no figures available for the amount actually invested 
as a result of the approved projects. 
 
Appendix E:  U.S. and Country Contacts 
 
1.  U.S. Embassy Trade Related Contacts 
 
U.S. Embassy Asuncion 
Mr. Francisco J. Fernandez, Economic and Commercial attache 
Ms. Beatriz Schaerer, commercial specialist 
Unit 4711 
APO AA 34036-0001 
U S A 
Ph:  (595/21 /213715 - Fx:  595/21 215079 
 
2.  AMCHAM and/or BILATERAL BUSINESS COUNCILs 
 
Camara de COMERCIO PARAGUAYO-AMERICANA 
SR. GEORGE MURPHY-LEE, MANAGER 
EDIFICIO INTERNACIONAL EL FARO, Piso 4 
CALLE GENERAL DIAZ 521 
ASUNCION, PARAGUAY 
PH & FX:  595/21/442135, 442136 
 
PARAGUAYAN-AMERICAN CHAMBER of COMMERCE of NEW YORK 
MR. JOHN TONELLI, PRESIDENT 
675 THIRD AVENUE, SUITE 1604 
NEW YORK, NY 10017 
PH:  (212) 432-0734 - FX:  (212) 432-0169 
 
3.  COUNTRY TRADE or INDUSTRY ASSOCIATIONS in KEY SECTORS 
 
camara de exportadores 
SR. LUIS ENRIQUE MORALES GUBETICH, Gerente 
CALLE ELIGIO AYALA 1834 
ASUNCION, PARAGUAY 
ph:  595/21/205740 - fx:  595/21/25369 
 
CAMARA PARAGUAYA de CONSULTORES 
SR. Ing. Pedro Cataldo, GERENTE 
CASILLA POSTAL 807 
EDIFICIO ARASA II, PISO 8, Oficina 807 
CALLE B. CONSTANT 973 
ASUNCION, PARAGUAY 
Ph:  595/21/496128, 441137 - Fx:  595/21/445706 
 
CAMARA Paraguaya de la Informatica y  
  las Telecomunicaciones (APUDI) 
SR. Felix Kemper, Gerente 
CASILLA POSTAL 2879 
CALLE PASAJE MOLAS 461, PISO 1, OFICINA 6 
ASUNCION, PARAGUAY 
Ph:  595/21/210369 - Fx:595/21/214005 
 
Camara y Bolsa de COMERCIO 
Dr. Ricardo Franco, Gerente 
CALLE ESTRELLA 540 
ASUNCION, PARAGUAY 
Ph:  595/21/493321, 493322 - Fx:  595/21/440817 
 
Centro de Despachantes de Aduana 
SR. Octavio Sallustro, Presidente 
CALLE GENERAL DIAZ 488, PISO 1, OFICINA 12 
ASUNCION, PARAGUAY 
Ph:  595/21/441829 
 
Centro de Importadores 
Sr. Oscar Yambay, Gerente 
CALLE MONTEVIDEO 671 
ASUNCION, PARAGUAY 
Ph:  595/21/490291 - Fx:  595/21/441295 
 
FEPRINCO--Federacion de la Produccion, 
  la Industria y el COMERCIO 
SRA. Ana Cabrera, GERENTE 
CALLE PALMA 751, PISO 3 
ASUNCION, PARAGUAY 
Ph & Fx:  595/21/446638 
 
UIP--UNION INDUSTRIAL PARAGUAYA 
Sra. Maria del Carmen Poletti, Gerente 
CASILLA POSTAL 782 
CALLE CERRO CORA 1038 
ASUNCION, PARAGUAY 
Ph:  595/21/212556, 212558 - Fx:  595/21/213360 
 
4.  Country Government Offices Relating to Key Sectors and/or 
Significant Trade Related Activities, e.g. Customs 
 
Direccion General de Aduanas 
Dr. Ruben D. Fadlala, Director General 
Calle Colon y Plazoleta del Puerto 
Asuncion, Paraguay 
ph:  595/21/493688, 493617, 493865 - fx:  595/21/ 
 
Ministerio de Industria y Comercio 
DR. UBALDO SCAVONE, SENOR MINISTRO 
AV. ESPANA 323 
ASUNCION, PARAGUAY 
Ph:  595/21/204833 - Fx:  595/21/206130 
 
Proparaguay--Direccion de Promocion de 
  las Exportaciones e Inversiones 
ING. FRANCISCO GUTIERREZ, DIRECTOR GENERAL 
CASILLA POSTAL 1772 
CALLE PADRE CARDOZO 469 
ASUNCION, PARAGUAY 
Ph:  595/21/208276, 208277 - Fx:  595/21/200425 
 
INTN--INSTITUTO NACIONAL de TECNOLOGIA y NORMALIZACION 
DR. ADALBERTO PASTOR, DIRECTOR General 
CASILLA POSTAL 967 
AV. GENERAL ARTIGAS y GENERAL ROA 
ASUNCION, PARAGUAY 
ph:  595/21/290266 - fx:  595/21/290873 
 
Ministerio de Agricultura y Ganaderia  
DR. ARSENIO VASCONSELLOS, SENOR MINISTRO 
EDIF. AYFRA, PISO 1 & 2 
CALLE PRESIDENTE FRANCO y AYOLAS 
ASUNCION, PARAGUAY 
Ph:  595/21/493698,491192  - Fx:  595/21/ 
 
Ministerio de OBRAS PUBLICAS y COMUNICACIONES 
ING. CARLOS FACETTI, SENOR MINISTRO 
CALLE GENERAL DIAZ y ALBERDI 
ASUNCION, PARAGUAY 
PH:  595/21/443473, 449785 - Fx:  595/21/448956 
 
Ministerio de SALUD PUBLICA y BIENESTAR SOCIAL 
PROF. DR. ANDRES VIDOVICH-MORALES, SENOR MINISTRO 
AV. PETTIROSSI y BRASIL 
ASUNCION, PARAGUAY 
Ph:  595/21/204601/3 - Fx:  595/21/207328 
 
5.  Country market research firms 
 
Benitez-Codas y Asociados 
Dr. Oscar Benitez-Codas, Partner/manager 
edificio inter-express, piso 14, oficina 1401 
calle herrera 195 
asuncion, paraguay 
ph:  595/21/498120 - fx:  595/21/442504 
 
fretes-ventre y asociados 
dr. leonardo Fretes-Ventre, partner/manager 
casilla postal 843 
calle humaita 994 
Asuncion, Paraguay 
ph:  595/21/491461, 448730 - fx:  595/21/493517 
 
monitor s.a. consultora 
dr. enrique bendana, general manager 
calle mariscal estigarribia 1731 
asuncion, paraguay 
ph:  595/21/207391/4 - fx:  595/21/207395 
 
6.  country commercial Banks (selected list per net assets) 
 
CITIBANK, N.A. 
SR. GUSTAVO MARIN, VICE PRESIDENTE y GERENTE GENERAL 
Casilla Postal 1174 
Calle Estrella y Chile 
Asuncion, Paraguay 
Ph:  595/21/494951, 494952 - Fx:  595/21/444820 
 
BANCO UNION S.A. 
SR. ISMAEL ARANDA, GERENTE GENERAL 
Casilla Postal 726 
Av. Mariscal Lopez 3333 
Asuncion, Paraguay 
ph:  595/21/606450, 607364 - fx:  595/21/606669 
 
BANCO DE ASUNCION S.A. 
SR. JOSE ALONSO, DIRECTOR GENERAL 
Casilla Postal 623 
Calle Palma y 14 de Mayo 
Asuncion, Paraguay 
Ph:  595/21/493191, 493192 - Fx:  595/21/493190 
 
Banco do brasil s.a. 
sr. Anisio Resende de Souza, Gerente General 
casilla postal 668 
calle nuestra senora de la asuncion y oliva 
asuncion, paraguay 
ph:  595/21/490121/2 - fx:  595/21/448761 
 
LLOYD'S BANK PLC 
SR. SCOTT DONALD, GERENTE 
Casilla Postal 696 
Calle Palma y O'Leary 
Asuncion, Paraguay 
Ph:  595/21/491090, 491091 - Fx:  595/21/443569 
 
interbanco--banco internacional s.a. 
Sr. SERGIO ROBERTO SOUZA-TAVARES, DIRECTOR GENERAL 
calle oliva 349 
asuncion, paraguay 
ph:  595/21/494992, 494993 - fx:  595/21/448587 
 
banco holandes 
Sr. PAULUS VIRGILIUS JANSEN, gerente general 
casilla postal 1180 
calle haedo e independencia nacional 
asuncion, Paraguay 
ph:  595/21/ 490001/8 - fx:  595/21/491734 
 
BANCO SUDAMERIS PARAGUAY S.A. 
SR. Giuseppe DI FRANCESCO, GERENTE GENERAL 
Casilla Postal 1043 
Calle Independencia Nacional y Cerro Cora 
Asuncion, Paraguay 
Ph:  595/21/444172/3, 494542 - Fx:  595/21/498187 
 
7.  Multilateral development bank offices in country 
 
Interamerican development bank 
Mr. Jose Agustin Riveros, Representative 
edificio aurora, piso 1 y 2 
calle caballero 223 
Asuncion, Paraguay 
ph:  595/21/492061/6 - fx:  595/21/446537 
 
The World Bank 
Mr. Nils Janson, resident representative 
edificio city, piso 3 
calle estrella 345 
Asuncion, Paraguay 
ph:  595/21/493755/6 - fx:  450305 
 
APPENDIX F:  MARKET RESEARCH 
 
1.  AVAILABLE and UPCOMING DOC/ISAS and IMIS:  
 
(ISAS= INDUSTRY SUB SECTOR ANALYSIS): Na. 
(IMIS= International market insights):  A monthly report, containing 
analyses of macro-economic trends is available. 
 
APPENDIX g:  TRADE EVENT SCHEDULE 
 
Because trade event schedules may change, firms should consult the 
export promotion calendar on the NTDB or contact the post for the latest 
information. 
 
The order of listing is:  event name; city; type and USG supporting; 
date. 
 
--EXPO '95--XIV international livestock, agriculture, industry, 
commerce, and services expo/fair.  asuncion.  International trade fair 
at which the u.s. embassy funds a stand in the local paraguayan-american 
chamber of commerce pavilion.  July 15-30, 1995. 
 
--EXPOCOSTURA/INTERMODA'95.  Asuncion.  Apparel industry organized trade 
exhibition.  August 9-12, 1995. 
 
--EXPOMATICA '95.  asuncion.  data processing industry organized trade 
exhibitnal livestock, agriculture, industry, commerce, and ion.  
September 19-23, 1995. 
 
--EXPO '96--XV internatioservices expo/fair.  asuncion.  International 
trade fair at which the U.S. embassy funds a stand in the local 
paraguayan-american chamber of commerce pavilion.  July 15-30, 1996. 
 
--EXPOCOSTURA/INTERMODA'96.  Asuncion.  Apparel industry organized trade 
exhibition.  August 9-12, 1995. 
 
--EXPOMATICA'96.  asuncion.  data processing industry organized trade 
exhibition.  September 19-23, 1995.
```

To the top of this page