Why are many Brazilians moving to Paraguay?

The university’s career is one of the few examples of Brazil’s strong presence in Paraguay, where the main engines of the economy – from agribusiness to the textile and auto parts sector, among others – have a decisive participation of Brazilian investors, according to government officials, businessmen and analysts interviewed by BBC News Brasil.

And what inspired these changes? Students report more attractive study costs in Portugal, and businessmen and investors are attracted by the tax system, export facilities to Brazil, electricity and labor supply (Read more stories below)

Brazil’s extensive presence in Paraguay today is no longer limited to the so-called “Brasigueos,” a term used to refer to Brazilians who settled in the country, mainly in the soy sector, explains economist Fernando Masi, director of the Center for Analysis. and expansion of Paraguay’s economy.

In 2021, according to the latest data from Itamarati, Paraguay is the first destination of Brazilian immigrants in Latin America, with about 246 thousand people. The number represents about 30,000 more Brazilians living in neighboring countries than in 2016.

But local estimates indicate that the number may actually be much higher than the official one, since not everyone registers at consulates, which is the basis of the Itamarati survey.

The Brazilian presence in Paraguay represents about half of the total of 596,000 Brazilians living in other South American countries.

With a population of 6.7 million inhabitants, Paraguay, for example, has almost three times more Brazilian citizens than Argentina, which has about 46 million inhabitants and officially 90,000 Brazilians.

In the world, Paraguay is the third country, after the United States (1.9 million) and Portugal (275 thousand), with the largest Brazilian community.

The highest concentration is in Ciudad del Este, where 98,000 Brazilians live, compared to more than 80,000 in Buenos Aires, according to official data.

University student Felipe Monteiro lives in Ciudad del Este, where he attends an evangelical church founded by Brazilians. He says he feels practically at home.

“I live two kilometers from Ponte da Amizade (which connects Brazil’s Ciudad del Este to Foz de Iguaçu), and here Paraguayans speak Portuguese”, says Monteiro, who wants to be the first doctor in the family.

The cost of university and the cost of living in Paraguay forced him to stay in the country.

“I have a cousin who studies medicine at a private university in Belem and pays a monthly fee of R$8,000. Here, I started paying R$1,200 and now it’s R$1,900, because the annual increase is increasing year by year. But it’s affordable,” he says.

In his fifth year of college, his colleague, 38-year-old Pedro Nogueira from Ceará, earned a degree and worked as a business administrator while selling what he had to study medicine in another neighboring country, Argentina. But he says rising inflation in Argentina led him to request a transfer to Paraguay’s Universidad Integración de las Américas.

“In Argentina, it was unacceptable not to speak Spanish in the classroom and on oral exams. In Paraguay, it is different. Everyone speaks Portuguese. Today, I am grateful for the Argentine approach. But it became expensive and I asked for a transfer here. Even so, it’s paying off,” Nogueira said.

He calculates that, in daily expenses including monthly fees and rent, he spends about R$3,500.

“I found people in Brazil did not disguise their prejudices when I told them that I had studied medicine in Paraguay. But my plan is to become a doctor like others studying in Brazil or elsewhere. I have medical relatives who studied in Bolivia, revalidated their diplomas and today practice their profession in Brazil”, he says.

The National Council of Higher Education (CONS), responsible for university education in Paraguay, estimates that 30,000 students study medicine in public and private Paraguayan universities, “of which 95% to 97% will be of Brazilian origin”.

According to CONS press office, the majority of Brazilian university students are mainly concentrated in private universities.

According to Paraguayan organizations, between 2006 and 2010 new private higher education institutions emerged in the country, with 28 universities and 23 higher institutions opening, mostly in the health sector.

In terms of business and investment, Paraguay is seen as an “Eldorado”, as the director of the Paraguay Brazil Chamber of Commerce, Junio ​​Dantas, defined to BBC News Brasil.

“It is a country that offers many opportunities, especially for neighboring states, such as Paraná, Mato Grosso do Sul and also Santa Catarina. Paraguay is a country that offers a very big competitive advantage in terms of taxes.”

Dantas, who owns a technology company in the country, said there are Brazilians in all sectors, mainly in agribusiness.

“Manpower is abundant here. Paraguayans are great to work with. Electricity is very cheap as it is abundant. Proximity to Brazil helps a lot and the tax system makes the country attractive and competitive for investment”, he says.

Paraguay shares the Itaipu hydroelectric station with Brazil and the Yasireta hydroelectric station with Argentina. The country has tax incentive laws and laws for the generation of so-called maquiladas, which are part of the production chain between the two countries, as Francisco, vice minister of industry at the Ministry of Industry and Trade, explained to BBC News Brasil. Ruiz Diaz.

Paraguay’s maquilas were created to attract investment and create jobs, Ruiz Díaz said. Under this regime, companies import and export used inputs to a factory in Paraguay to convert them into final products, without paying taxes and paying only 1% as insurance for the operation, the deputy minister explained.

The inspiration for this model came from the Mexican system in its trade alliance with the United States.

“Seventy percent of Paraguay’s exports to Brazil are maquila fruit. Example textile sector. Brazilian companies bring in lines from Brazil, make the clothes here and send them to garment factories in Brazil,” he says.

Brazilians, the deputy minister said, are, for example, present in bioethanol, grain and meat.

“In terms of beef, we have slaughterhouses here in Brazil that export products to Brazil and other countries,” he says.

Dantas, of the Paraguay-Brazil Chamber of Commerce, said the organization estimates that about 400,000 Brazilians are present in Paraguay, mainly in the border region – a much higher number than Itamarati estimated.

But why this strong presence of Brazil in the neighboring country?

Ruiz Diaz says this is the result of a process that accelerated with the commodity boom from 2003-2004.

He recalled that, until the 1940s, Paraguay was a country dependent on exports to Argentina. But, in the following decades, successive governments began to seek greater relations with Brazil, with strategies to increase the population in the border regions, with incentives to distribute land.

However, due to the difficulties caused by the lack of infrastructure, many have given up these lands or sold them at a low price.

Over the years, the region began to prosper and laws were created in the 1990s, the deputy minister said, tax and maquila incentives, in the 2000s investors – mainly from Brazil, began to take advantage when they began to need machines. It happened To develop their enterprise in the territory of Paraguay.

Ruiz Díaz added that Argentina’s continued economic crisis has complicated relations and exchanges with other neighboring countries.

“When we look at the history of Brazil and Argentina, Paraguay, of all the MERCOSUR countries, is the one that took the longest to develop”, he says.

For him, his country became attractive not only for its tax simplification but also for the opportunities available in the country.

“When we look at the numbers… in 2003, in Makila area, exports were US$ 5 million (annually) and now they have exceeded US$ 1 billion. Twenty times more,” he said.

For Ruiz Díaz, in the case of maquilas or maquiladoras, since 2013 the auto parts have moved to Paraguay with the installation of companies that export the product to Brazilian automakers.

“Paraguay has a lot of energy and the cheapest in the region, abundant labor, a friendly, favorable tax system. This allows Brazil to supply raw materials under highly competitive conditions.

In addition to Brazil, the country now has a presence of companies from several countries such as Japan, Germany and the United States.

In addition to the maquila and tax system, Ruiz Díaz noted that economic reforms, which included inflation and fiscal targeting, were carried out in the 2000s and maintained throughout this period, which helped build confidence among foreign investors.

Fernando Masi from Cadep said, however, that the next government, to be elected on April 30, should look for options to increase tax collection for the necessary investments in infrastructure and social sectors.

“Tax collection in Paraguay is very low. But whoever is elected will maintain the same policy of macroeconomic balance that has been implemented in the country”, he said.

Studies indicate that the race for the presidency will be mainly between Santiago Peña of the ruling Partido Colorado and Efren Alegre of the opposition Concertación.

According to Masi, Paraguay’s economy is expected to grow between 4.5% and 5% in 2023, higher than the 1.4% forecast for Brazil, according to the Institute of Applied Economic Research (Ipea).

One of Paraguay’s main challenges, analysts say, is fighting poverty, which affects 27% of the population, and social inequality.

Masi added that Brazil’s presence today is “much more visible” and diverse than in recent times.

“Before, it was the so-called brasigueos, who dedicated themselves to soy cultivation. Today, they are investors in the slaughterhouse, Maquila, which is mainly concentrated in auto parts, textiles and plastics and creates many jobs in Paraguay. And now, students too with a strong presence in various fields in the last ten years,” the analyst said.

Dantas of the Paraguay Brazil Chamber of Commerce, who has already lived in countries in Africa and Portugal and settled in the neighboring country 25 years ago, sees Brazil’s presence as being decisive for Paraguay’s industrialization.

“There are more than 200 maquiladoras operating in the country. Between 70% and 80% are of Brazilian origin, demonstrating the strength of Paraguay’s Brazilian business community.