As Paraguay plans for its COVID-19 vaccination drive, the country’s growing technology sector will be an important element in the nation’s economic recovery after the crisis of the global pandemic. If doing business in Paraguay is something that interests you, learning about three startups in Paraguay that have fared well during the pandemic could provide you valuable market insight and ideas on how to approach your own commercial activities in the country known as ‘the Heart of South America.’
Although Paraguay is not necessarily the first destination that foreign investors think of when looking to enter South America, the country has made significant efforts to attract foreign investment and offer a favorable environment for international organizations. In 2019, foreign direct investment inflows into the country reached reached $391.8 million (all figures in USD).
According to Benigno López, Paraguay’s Minister of Finance, as part of a government strategy to boost economic regeneration after the pandemic, local authorities are working to lower tax rates for foreign companies looking to settle down in the country, as well as to speed up the migration processes involved in granting Paraguayan residence visas to investors.
As indicated by World Bank data, the South American country has undergone consistent economic growth and oversaw a significant reduction in poverty over the last decade, while it is expected to bounce back to 4% growth in 2021 following the ructions of the pandemic.
Paraguay has various free trade zones (FTZs) located in the Argentina-Brazil-Paraguay tri-border area, including Zona Franca Internacional and Zona Franca Global del Paraguay, both of which offer attractive tax exemptions to foreign investors. While Paraguay is landlocked, it has a number of important inland ports, with the largest being the industrial city of Villeta — around 35 km south of capital city Asuncion.
Read on to learn about three Paraguay startups that are expected to grow after the pandemic, or go ahead and contact us now to discuss your business options.
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The impact of the pandemic on business in Paraguay
Although Paraguay was internationally recognized for its good performance in fighting the COVID-19 contagion curve, its economy was seriously affected by the restrictions imposed to stop the spread of the virus. According to a report (automatic PDF download) published by the United Nations Development Program (UNDP), a 2.5% contraction of the country’s economy was forecast for 2020, with economic losses estimated at $3.09 billion.
The service industry, which employs 61.9% of the working population, was the most affected by COVID-19 in Paraguay. This industry includes the restaurant and hotel sector, which registered an 80% drop in sales and economic losses estimated at $838 million. By comparison, the manufacturing sector was the second-most affected, and experienced losses of $468 million, while the commerce sector saw losses of $298 million. Other sectors affected by the pandemic include transportation and professional services providers.
On the other hand, as indicated by the UNDP, the agriculture sector experienced record growth during the hardest months of the pandemic, becoming the only economic sector benefiting from restrictions imposed by Paraguayan authorities on public movement and activities to limit the spread of the virus. The economic activities least affected by the pandemic include logging, fishing, mining, and cattle raising. In addition, the e-commerce sector registered a growth of 113% from January to September 2020.
Paraguay startups: the established players
The following are well established players in the Paraguayan market, having begun as startups in Paraguay:
Taxit — virtual tax management
Taxit is the first virtual and mobile tax processing and settlement system in Paraguay. It offers its users the possibility of accessing updated information about their tax status, as well as making tax inquiries and receiving professional advice from tax specialists in Paraguay. By using Taxit, people can pay their taxes, using just their smartphone or computers. To guarantee the security of the transactions made through this application, Taxit maintains encryption standards employed by banks and subjects its processes to vulnerability analysis regularly.
Monchis — on-demand delivery
Monchis works as a food delivery app and e-commerce platform that allows local restaurants and food businesses to offer their products virtually. With more than 200,000 active users and about 700 affiliated local restaurants, Monchi is a startup that has managed to position itself as one of the most used food delivery apps in the South American country, competing with international companies like Uber Eats and Glovo. Monchi offers business owners the possibility to monitor their sales in real-time, as well as to download sales reports, helping businesses to better analyse their performance.
MUV — ride hailing
MUV is known locally as the Paraguayan Uber, and offers different types of rides across multiple cities in the South American country. This startup seeks to become the safest mobility solution in Paraguay, offering its clients the possibility of accessing a service that operates 24 hours a day, while obtaining an automatic digital invoice for each trip. MUV has more than 6,000 affiliated drivers, and to date this mobile app has completed more than 3 million trips in the country.
3 Paraguay startups to keep an eye on after the pandemic
The following Paraguay startups grew during the pandemic and should be expected to continue on their upward trajectories in 2021:
Pura Raza — livestock management
Pura Raza is a startup in Paraguayan that allows virtual management of information generated by businesses in the livestock industry, providing innovative solutions to the country’s agricultural sector. Founded by Ariel Coronel, Pura Raza offers different services to farmers and cattle breeders, including the administration of procedures before government authorities, genealogical registration of cattle, and breed identification. Pura Raza also works as a virtual network to connect livestock professionals. Pura Raza was shortlisted as one of the 20 most innovative startups by the ‘InnovandoPy Startups 2019’ program.
Currently, this startup provides its services to 10 major companies focused on livestock in Paraguay, having only been founded in 2019. With Paraguay a major beef producer, and neighboring two other major producers in Argentina and Brazil, Pura Raza can be expected to continue to grow after the pandemic.
Pase Libre — Startup in Paraguay focused on non-member gym access
Pase Libre is a pioneering startup in Paraguay, which allows its users to find gyms in their area and access them on a day-pass basis. Users subscribe to and pay via the app, and never need to subscribe to the individual gyms. Founded by César Gutierrez, Pase Libre provides its clients with photos and detailed information about each gym, including hours of operation, specific services, trainers, and specialties. Currently, Pase Libre has established alliances with more than 60 gyms in several cities in Paraguay.
While gym-going was severely affected by the pandemic, it is an pastime that can be expected to bounce back quickly and an innovative solution to increase access among users and increase traffic for gym owners looks to be well positioned for the post-pandemic.
Biz Latin Hub can help you doing business in Paraguay
At Biz Latin Hub, our multilingual team of experienced Back office specialists is equipped to ensure a successful market entry, helping you reach your business objectives in Paraguay. With our full portfolio of company formation, corporate accounting, legal, immigration, and back-office services, we can be your single point of professional support for your business expansion not only in Paraguay, but in any of the other 15 countries across Latin America and the Caribbean where we operate.
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