- Oilseeds Complex: - Beef - Poultry - Pork. Economical Facts. Production structure. Soy beans

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1 Economical Facts Production structure The Paraguayan economy is mainly based on the agricultural sector. The decade of the 7 s registers high growth rates linked to the realization of the civil works of the Itaipú dam with Brazil, representing big flows of foreign currencies, capital and employment for the country. There is, in parallel, an expansion process of the agricultural frontier. During the transition toward democracy after Alfredo Stroessner s regime certain sectors have been developed greatly, such as the soybean and the meat, and liberalization processes of the economy have started, with a significant impact on the economic results. Soy beans Agriculture - Oilseeds Complex: Soybeans, Sunflower, peanuts, colza, sesame - Cereals: Wheat, Corn, Rise - Cotton - Sugar Cane - Stevia - Tobacco The Complex of Soybeans include Grains, Oil and Flour Represents the most important export product of Paraguay Paraguay is the Sixth larger producer of Soy bean in the world (USA, Brazil, Argentina, China, India, Paraguay); and the fourth larger exporter (Brazil, USA, Argentina, Paraguay) In 28/9 season, the sowing area was ha, and the estimated harvest will be roughly 6.6. tons. That implies a yield of kg/ha. Beef Livestock - Beef - Poultry - Pork Cattle are raised in natural conditions without the use of hormones of any kind. More than hectares are used for cattle raising, roughly 1 million cattle heads. The European Union has certified Paraguay as a high quality beef producer confirming a HILTON quota of 1. tons. The country has a sanitary status of Free of FMD with Vaccination and Free of BSE, conferred by the O.I.E. The beef industry has made high investments in their plants, most of which have been recently built and are working with the highest technology and productivity to ensure the consumer the best quality. Paraguay currently exports meat to some Arab countries (Lebanon, Saudi Arabia, Egypt, others). These exports are made under the Halal Rite, certified by the Islamic Centre of Paraguay and controlled by the authorities of the above mentioned countries.

2 Beef exports Main markets 1- Chile 2- Russia 3- Venezuela 4- Egipto 5- Israel 6- Brazil 7- Vietnam 8- Angola 9- Saudi Arabia M i l l i o n s U S $ 8, 6, 4, 2,, * T o n e s Millions US$ Tones Industry Paraguay has, in partnership with Brazil, the biggest hydroelectric dam of the world, Itaipu, located on the Parana River, developing a power of 12,6 MW. On the same river, in partnership with Argentina, is located the Yacyreta s dam and its 3,2 MW of installed power. Both accomplishments, in addition to entirely Paraguayan other ones, convert Paraguay into the biggest producer, per inhabitant, of revenues electric power in the world. The trade is a strong Paraguayan activity, generating a high level of revenues for the population, especially in Asunción, the capital, and in border cities such as Ciudad del Este and Encarnación. The fluvial transport constitutes a necessity for Paraguay because of its condition of mediterranean country. At the present time, the fleet of transportation barges with Paraguayan flag is the biggest of the Paraguay-Parana maritime route. This maritime route, navigable almost in all its extension on the Paraguayan riversides, is equipped with an important number of ports, most of them of private developments. Beef (mainly), pork and poultry The present world hydroelectricity production record belongs to Itaipú In 29, the Itaipú power plant generated 91,651,88 megawatts-hour (MWh), the fourth highest in 25 years of power production. The electricity generated by Itaipú in 29 would be enough to supply the entire worldwide consumption for about two days; serve a country like Argentina for 1 months; and Paraguay, a partner in this enterprise, for 9 years. It could also supply the electricity demand of 21 cities the size of greater Curitiba for one year. In 28, the Itaipú power plant reached a new historic record for electricity production by generating 94,684,781 megawatts-hour (MWh). The previous record had been set in 2, when Itaipú generated 93,427,598 MWh. The third greatest power production was set in 27, when the plant generated 9,62,3 MWh and the second greatest in 26, a total of 92,689,936 MWh. The vast Chaco s plain extends on the West of the huge Paraguay River, assigned fundamentally to the livestock farming production, cohabiting with the richest fauna and flora of the area. In the middle of the Great Chaco are the Mennonites colonies of the Paraguayan Chaco, a wealthy region constituted by the Fernheim, Menno and Neuland colonies, and with their respective capitals Philadelphia, Loma Plata and Neuland. This area constitutes the biggest Paraguayan milk products valley, responsible for more than half of the production of the important milk industry.

3 Main industrial sectors - Textile, clothes and leather - Wood and furniture - Milling and baking - Motorcycles - Sugar and organic sugar - Food and beverages - Chemical - Medicines Plenty of Renewable Power Ouput (Hidrolectric) ITAIPU AND YACYRETA O 1. U 8. T P 6. U 4. T Supply Demand Energy: GW/Hour/Year Year Supp Demand SURPLUS Currency and Finances Paraguay has gotten the oldest currency in Latin America and one of the few that did not suffer modifications. The Guarani, established as the country s legal currency in 1956, has not lost any zero so far, policy that has been very common in the other countries of the region. Paraguay also is monetarily the most stable country of Latin America, with the lowest inflation rate during the past 5 years and the lowest devaluation of its currency. When the winds of the hyperinflation blew on the South Cone of America, particularly Argentina, Brazil, Uruguay and Bolivia with variations of up to 1.% in their prices, Paraguay experienced very moderate inflation rates. Asunción is not in vain qualified as one of the three cheapest capitals of the world, according to the worldwide survey carried out every two years by The Economist Intelligence Unit (EIU), established in London. Nowadays, Paraguay has international reserves corresponding to 15.2% of its GDP and a foreign debt of 24%, invested at long terms with low interest rates, since the creditors of the country are mainly in development multilateral entities. This situation makes possible to guarantee the stability of its monetary indicators. The financial sector is integrated by a significant diversity of institutions. There currently are some 4 entities, among banks and financial companies offering all kinds of financial services. The liberalization of capitals in 1989 allowed Paraguay to have a great operation freedom in any currency. It is today possible to affirm that Paraguay is a country with two currencies: the Guarani and the US Dollar as well as the total freedom to open accounts in any currency at the institutions enabled by the Central Bank of 3 Paraguay. International reserves External debt Millions of US$ (April) International reserves External debt s/d (abril) 29

4 Macroeconomic figures Macroeconomic Variables * GDP per capita (US$) Population (thousands of inhabitants) Inflation Rate (%) 2,8 9,9 12,5 6 7,1 1,4 Fiscal Balance (% del PIB) 1,6,8,5,96,15 N/D Exports (Million US$) Imports (Million US$) International Monetary Reserves * Up to November RATE OF GDP GDP Composition by Sector Average:,15 Average: 4,61 Primary Sector 28% Services 59% Industry 13% GDP per capita % ,3 2,8 INFLATION RATE 9,9 12,5 US$ (Ene/Nov) 6 7,1 1, (Ene/Nov)

5 Trade between Paraguay and Italy Trade Balance between Paraguay - Italy Export 26 Import Balanc 29

6 Why Choose Paraguay for Investments? Optimal Investment Environment: Macroeconomic Stability Strategic Locations Young and trainable Labor Force 7 % < 3 years Lowest Tax Burden in the Region Available and Low Hydroelectric Power Cost Big Fresh Water Basin ( Guarani Aquifer) Optimal Climate and Fertile Soil Numerous Investments Incentive Tools Favorable Climate Conditions Paraguay is located away of natural disaster areas World Natural Disaster Areas

7 Connection To the global market Bolivia MULTIMODAL WAY Paraguay Brasil FLUVIAL WAY Argentina ROAD WAY Uruguay RAIL WAY Hydroway Paraguay-Paraná Involves 5 countries Influence area 3,2 Million km 2 3 Million People Length roughly km Production in this region: 25 Million Tons Quantity carried by Hydro way 12,5 Million Tons en 26 More than 4 terminal ports More than 12 Tugs More than 1.2 barges and other boats A Big Hydrographic Basin ( Guaraní Aquifer) Paraguay shares the biggest fresh water deposit in the world: The Guarani Aquifer

8 Available and Low Hydroelectric Power Cost MERCOSUR s electricity fees (US$/MW) US$ / MWh Enersul (Br) CGE (Ch) UTE (Uy) Edelap (Ar) Ande (Py) Fees ANDE (PY) REGIONAL AVERAGE DIFERENCE (%) Industrial 11 38,4-71% Home % Current Tax Law (Law 2421/4) Corporate Income Tax 1% (26) Personal Income Tax 1% (29) Value Added Tax (VAT) 1% Lowest Tax Burden in the Region

9 Investments Incentive Tools LAW 6/9 MAQUILA LAW (OUTSOURCING) FREE ZONES LAW LAW 6/9 MAIN BENEFITS: Common External Tariff waived for Capital Goods Imports VAT waived for Capital Good Imports Facilitation for Enterprise Incorporation No Restrictions whatsoever for Dividends repatriation