Accelerating the Attraction of European Capital into Key Sectors like Sustainable Forest Production and Renewable Energy

Paraguay is preparing to emerge as a new center for European investment through the '2025 EU-Paraguay Investment Forum,' to be held over two days, June 24-25, in the capital city, Asunción. This high-level event, jointly promoted by the European Union's (EU) 'Global Gateway' strategy and Paraguay's Investment and Export Network (Rediex) under the Ministry of Industry and Commerce (MIC), will focus on strengthening economic ties and fostering cooperation between businesses and investors from both sides.

Strategic Forum Objectives and Expected Outcomes

This forum is poised to be a significant opportunity for Paraguay to secure key drivers for sustainable growth in a rapidly changing global economic environment, while simultaneously allowing the EU to deepen its economic partnership with the South American region. Notably, the EU's 'Global Gateway' aims to support global infrastructure investment and digital transformation, strengthen value chains, and attract responsible investment. Paraguay, by presenting a sustainable development model consistent with the EU's strategic direction, is emerging as an ideal partner for mutual benefit.

The main objectives of the forum are as follows:

Strengthening Economic Ties: Deepening trade and investment relations between the EU and Paraguay to promote mutual economic growth.
Enhancing Cooperation: Providing practical cooperation opportunities for businesses and investors from both sides and identifying joint projects.
Attracting Sustainable Investment: Informing European investors about Paraguay's sustainable development potential and encouraging investments that consider environmental and social responsibility.
Policy Support: Facilitating policy dialogue to improve the investment environment and contributing to the establishment of legal and institutional frameworks.
This forum will offer practical value to participants through high-level presentations, expert discussions, project site visits, and match-making sessions between investors and projects. The focus is on creating concrete opportunities that can lead to actual investment agreements and financing, beyond mere information exchange.

Sustainable Forest Production: Paraguay's New Growth Engine

One of the most highlighted sectors at this forum is sustainable forest production. With vast natural resources and a stable economy, Paraguay is positioning itself as a key investment destination for European investors seeking not only profitability but also positive environmental and social impact.

According to Rediex estimates, Paraguay's forest industry has the potential to create over 100,000 direct jobs. This signifies a substantial contribution to local community income growth and employment stability, beyond mere economic effects. Sustainable forest investment applies a 360° approach that integrates environmental, social, and economic criteria to ensure responsible and continuous management.

To achieve these goals, Paraguay is adopting technological tools and innovative management models. In particular, INFONA's (National Forest Institute) 'Forest and Land Use Portal' provides real-time information and enhances transparency, supporting effective forest management. This portal offers satellite imagery, geospatial data, and information on deforestation and reforestation activities, allowing investors to clearly understand and manage the environmental impact of their projects. Such transparency aligns with the Environmental, Social, and Governance (ESG) standards required by European investors, making Paraguay an attractive partner for sustainable impact investment.

The importance of sustainable forest production:

Climate Change Mitigation: Forests play a crucial role in mitigating climate change by acting as carbon sinks. Sustainable forest management maximizes carbon sequestration capacity and preserves biodiversity.
Local Economic Revitalization: It creates employment and increases income in rural areas through the production of timber and non-timber forest products, and ecotourism.
Biodiversity Conservation: Responsible forest management maintains ecosystem health and protects diverse flora and fauna habitats.
Water Resource Protection: Forests play a vital role in protecting water resources, preventing soil erosion, and improving water quality.
In Paraguay's case, with vast forest resources spanning the Amazon rainforest and the Gran Chaco region, enormous potential can be realized through sustainable forest investment. This includes not only afforestation projects for sustainable timber production but also attracting international funding through forest carbon offset projects.

Other Strategic Sectors: Renewable Energy and Sustainable Logistics

Beyond forest production, this forum will address other strategic sectors essential for Paraguay's sustainable development.

Renewable Energy and Green Hydrogen: Paraguay is a global producer of renewable energy, relying on hydropower from the Itaipu Dam and Yacyretá Dam. Based on this abundant renewable energy, it has very high potential for green hydrogen production. Green hydrogen, produced by electrolyzing water, plays a key role in achieving carbon neutrality in various sectors including transportation, industry, and power generation. Europe is actively developing and commercializing green hydrogen technologies, and Paraguay can provide European companies with a stable green hydrogen production base. This will contribute to achieving energy transition goals and building new industrial ecosystems for both sides.
Sustainable Logistics and Transportation: Efficient and environmentally friendly logistics and transportation systems are crucial for national economic development. As a landlocked country, Paraguay urgently needs to improve its logistics infrastructure. This forum will discuss investment opportunities in modernizing and expanding road, rail, and waterway transportation systems. In particular, waterway transportation via the Paraguay River serves as a major inland transportation artery in South America, and building eco-friendly transportation systems utilizing it can achieve both reduced carbon emissions and increased logistics efficiency. Discussions may also include the establishment of electric vehicle charging infrastructure and the introduction of biofuel transportation methods.

Paraguay's Investment Attractiveness and Government Efforts

Paraguay maintains a relatively stable macroeconomic environment in the South American region and offers various incentives to attract foreign investment. Low corporate tax rates, non-discriminatory treatment of foreign investors, and relatively low labor costs make Paraguay an attractive investment destination.

The Paraguayan government is consistently working to improve the investment environment. Rediex, in particular, provides one-stop services to help foreign investors successfully settle in Paraguay, assisting with project identification, information provision, and legal and administrative procedures. Additionally, ongoing efforts to combat corruption and enhance transparency contribute to gaining investor confidence.

Examples of successful foreign investment:

Agriculture and Livestock: Paraguay is the world's fourth-largest soybean exporter and a major beef producer, with active foreign investment in the agricultural sector. Large agricultural companies from neighboring countries like Brazil and Argentina have entered Paraguay to expand their production bases.
Automotive Parts and Textile Industry: In recent years, there has been an increase in automotive parts and textile production facilities being attracted to Paraguay due to lower labor costs and preferential tariff benefits. Many companies, in particular, are leveraging the advantage of excellent access to the Brazilian and Argentinian markets.
Energy Industry: Investment in energy production and transmission infrastructure continues, based on the potential for hydropower.
The Future of EU-Paraguay Cooperation
The '2025 EU-Paraguay Investment Forum' is expected to open a new chapter in bilateral relations. The EU aims to strengthen its ties with the South American region and contribute to sustainable development through responsible investment. Paraguay can accelerate its economic growth and build a national image of environmental protection and social responsibility through EU investment.

The specific investment projects and agreements to be discussed at this forum will play an important role in diversifying Paraguay's economic structure and promoting a shift towards high value-added industries. In particular, cooperation in sustainable forest production, renewable energy, green hydrogen, and eco-friendly logistics can contribute to transforming Paraguay into a 'green hub' in the South American region.

Attention is drawn to whether Paraguay can actively attract European capital and technology in the future, thereby strengthening its national competitiveness and moving towards a sustainable future. This forum will be an important step in confirming that potential and presenting a concrete roadmap.