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In recent years, Paraguay has attracted numerous factories and companies under the “maquila” program. This is mainly due to the new policies and incentives that the national government has been promoting since 2000: low-cost electricity, less onerous labor regulations, suspension of import tariffs, a single 1% tax on domestic value added and other additional benefits. All this makes Paraguay a much more favorable scenario for producers, who prefer to leave their own country to set up their businesses in the Republic.

The maquila is a production system whereby companies located in Paraguay produce goods and services for export. It is developed between a parent company -contracting company located abroad- and a maquiladora -contracted company located in Paraguay-, which is responsible for developing the various production and value-adding processes. Such maquiladora company may, in turn, subcontract to other companies in the country in order to carry out the necessary processes within its productive structure. Any individual or legal entity, whether domestic or foreign, domiciled in the country and authorized to carry out commercial acts may operate as a maquiladora entity.

This production modality emerged in 1997 with the enactment of Law No. 1064 “On the export maquiladora industry”, which was regulated by Decree No. 9585 in 2000. The first operations under this regime started a year later, with 115 factories having been installed in Paraguay so far -89 of them since 2013-, while some 20 are preparing to start operations.

The maquila is nowadays in full expansion as a result of a joint work between the private and public sectors, through the National Council of Maquiladora Export Industries (CNIME), the Chamber of Maquiladora Companies of Paraguay (CEMAP) and other associations. In this context, the law firm Vouga Abogados has been involved in advising numerous maquila projects in Paraguay.

For further information on the maquila system in Paraguay, please contact: Rodolfo G. Vouga (rgvouga@vouga.com.py), Marco Colmán (mcolman@vouga.com.py) or Andrés Vera (avera@vouga.com.py).

In order to strengthen management transparency and thus have an efficient organization to achieve its purposes, the National Directorate of Intellectual Property (DINAPI), by Resolution No. 11/2017, established new rules on the documentation required for the registration of assignment, transfer, license and other legal business in relation to registered trademarks.

The aforementioned resolution arose within the framework of a process of standardization of procedures and services in charge of DINAPI, a public entity in charge of the execution of the national Intellectual Property policy and of the application of the different rules that regulate intellectual rights -by virtue of Law 4798/12-.

In this sense, the resolution establishes that for the registration of assignment or transfer of rights over trademarks registered in the General Technical Directorate of Industrial Property (DGPI), the interested party must submit the original or authenticated copy of the Public Deed wherein the legal business to be registered is recorded for transactions carried out within the national territory, or the due apostille or consular authentication of the documents formalized abroad. Likewise, it regulates the procedures in cases of licenses of use and mergers of companies.

The aforementioned regulation also reminds and clarifies the requirements that the Public Deed to which it refers must comply with, finally instructing the Head Office of Legal Acts -depending on the DGPI- to promote strict compliance with the established provisions. In this way, since they are regulated acts, the acts registered in the absence of the indicated formalities will be null and void.

In case you need further information about the new registration procedure for assignment, transfer, license of use and other legal transactions, please contact Laura Lezcano (llezcano@vouga.com.py) 

In accordance with governmental objectives, the Ministry of Public Works and Communications is developing various infrastructure projects nationwide, for which it is calling for bids from those interested in providing the required services.

Thus, for example, it foresees the construction of some 6,645 linear meters of bridges nationwide, including reinforced concrete, composite and metal bridges, at different points of the country. The goal would be the replacement of 12,000 linear meters of wooden bridges, having already been awarded more than 2,000 linear meters, while another more than 1,200 linear meters are under tender. This program began in 2015 and has resources until 2020, with financing from the Inter-American Development Bank (IDB), the Development Bank of Latin America (CAF), the Japan International Cooperation Agency (JICA) and a counterpart from the Local Fund.

It is also implementing the outsourcing of the road cleaning service since 2015. This year, a call for bids has been issued for the maintenance of the domain strip by levels of service for a total of 1,853 km of roads throughout the country. With this new call for tenders, more than 4,000 km of roads have already been tendered in three years, which shows that the modality is proving to be a success.

Guaranteeing Paraguay's growth requires an investment of around US$ 1 billion in infrastructure works executed, paid, built and completed each year, according to what was stated by the Minister of Public Works and Communications, Ramón Jiménez Gaona at the 2017 Economy Congress “Economic Regulation and Competition” -held at the end of July-, which is equivalent to 3.5% of the Gross Domestic Product. Being that the General Budget of the Nation currently limits infrastructure investment in the MOPC to US$500 million per year, it is vital for said portfolio to create favorable conditions for private capital investment in public works through tools such as the Public-Private Partnership Law and Law No. 5074 on “Turnkey” Projects.

For more information on bidding processes or private equity investment in public works, please contact Perla Alderete (palderete@vouga.com.py) or Walter Vera (wvera@vouga.com.py).

Source: Ministry of Public Works and Communications.

The Executive has issued the regulatory decree of the Maternity Leave Law, which establishes that prenatal leave is the mother's optional leave, which may be taken two weeks before the birth of the child, for which purpose the estimated date of delivery must be determined by the attending physician.

As for postnatal leave, it includes the period of rest that the mother enjoys after the birth of the child, this rest period is 18 (eighteen) weeks. In the event that the mother has chosen to take prenatal leave, the period of leave would be reduced to 16 (sixteen) weeks.

This leave also corresponds to the worker who has a minor under six (6) months of age under his/her care, because he/she has been judicially granted guardianship as a protective measure.

100% of the extension of the above-mentioned leaves will be paid by the worker's social security, and if she does not have it, it will be paid by the employer.

The father shall be entitled to paid leave at the employer's expense for fourteen (14) continuous and uninterrupted days in the event of the birth of the child, which may be used from the moment of delivery.

 The regulation also explains that the maternity allowance, which consists of the payment to the working woman on maternity leave, is 100% of the last taxable remuneration immediately prior to the use of the leave, as from the third year of effectiveness of the law.

The period of the subsidy must coincide with the period of pre- and post-natal leave and the payment of the subsidy is subject to the effective enjoyment of the maternity leave established in the Law.

On the other hand, the Social Security Institute is the entity in charge of paying the maternity leave allowance to all female workers affiliated to the social security system who are entitled to it in accordance with the provisions of these regulations.

The table below shows the payout % and the weeks of leave to be granted:

DATE	PERMISSION GRANTED	PAYMENT GRANTED
30/10/2016	18 weeks (126 calendar days)	75% of Salary
30/10/2018 onwards	18 weeks (126 calendar days)	100% of Salary

For further information, please contact Perla Alderete (palderete@vouga.com.py) or Walter Vera (wvera@vouga.com.py)

The Official Gazette of the Republic of Paraguay recently published the new Securities Market Law No. 5,810/17. Said Law regulates the public offering of securities and their issuances, public offering securities, stock exchanges, brokerage firms, and in general, other participants in the securities market, as well as the National Securities Commission.

It is worth mentioning that this regulation does not apply to issues made by the Executive Power through the Ministry of Finance or by the Central Bank of Paraguay.

The new law maintains in force the articles of the Civil Code and of Law No. 1163/97 “Regulating the Establishment of Commodities Exchanges” that do not contradict the recently enacted law. In addition, Law No. 1284/98 “Securities Market” and Art. 122 of Law No. 1,034/83 “Trader's Law” are repealed. 

Should you require further information or a copy of the Law, please do not hesitate to contact Cynthia Fatecha (cfatecha@vouga.com.py) or Carlos Vouga (cvouga@vouga.com.py). 

Vouga Abogados advised Tape Pora S.A. in all the contractual legal matters for obtaining the financing for the works related to the concession for the construction, duplication and adequacy of Route No. 7 “Gaspar Rodriguez de Francia” in the section between Pastoreo and Minga Guazú. The advice included the drafting of the contract for the acquisition of bonds, the trust agreement and all other legal documents necessary for the formalization of the transaction.

Six domestic banks and two foreign banks with local subsidiaries will finance 57% of the works. The banks signed agreements for the acquisition of bonds for Gs. 350,000,000,000,000, to be issued by the concessionaire Tape Porã through the Bolsa de Valores y Productos de Asunción S.A. for a term of 15 years, including a 2-year grace period, and a variable rate of 9% to 11.25% per annum, according to the installment payment term.

To provide security to investors, the structure also provides for the creation of an administration and source of payment trust, whereby Tape Pora transfers the entire right to collect tolls on the concessioned section of Route 7 to an autonomous patrimony that will be managed by Banco Atlas SAECA as trustee.

The banks GNB Paraguay, Familiar and Sudameris Bank will purchase bonds for 60 billion guaraníes each; Banco Itaú Paraguay will purchase bonds for 75 billion guaraníes; Banco Regional SAECA, for 65 billion guaraníes, while the banks Amambay and Bancop, and the financial company Solar will purchase bonds for 10 billion guaraníes each.

The total investment is USD 130,000,000, of which 57% will be covered by the bonds issued, and the other 43% with Tape Pora's own resources, i.e., generated by toll collection and shareholder contributions.

The work is scheduled to be completed in 28 months.

La apertura de ofertas será el miércoles 07 de junio a las 09:30, en el edificio central del Ministerio de Obras Públicas, bajo el llamado MOPC Nº 5/17 cuyo ID es 325818.

La obra se encuentra financiada por el Banco lnteramericano de Desarrollo (BID), y pretende beneficiar inicialmente a una población de 500.000 de habitantes y para luego extenderse 1.000.000 de habitantes.

Según la Dirección Nacional de Contrataciones Públicas (DNCP) el monto estimado para la inversión es de Gs. 104.430.000.000, para las zonas Bella Vista-Asunción.

En caso de precisar mayor información, favor contactar a: Marco Colmán mcolman@vouga.com.py o Walter Vera wvera@vouga.com.py 

Lex Latin (www.lexlatin.com) reported: “Teléfonica Celular del Paraguay S.A. (Tigo Paraguay), a subsidiary of Luxembourg-based Millicom International Cellular S.A., agreed to sell some 1,400 units of wireless communication towers to a subsidiary of American Tower Corporation (ATC) in a transaction for which Tigo will receive some 700 billion guaraníes - the equivalent of approximately US$126 million - to be paid in cash. The transaction was finalized on April 26, 2017.

The law firms Vouga Abogados, of Asunción, and Jones Day, with offices in Miami, São Paulo, Paris and New York, advised Millicom and Tigo Paraguay in connection with this transaction (...)”.

This article was published in LEX LATIN. For more information please visit the following link: http://lexlatin.com/noticia/tigo-paraguay-vende-torres-comunicacion-inalambrica-atc/

On Monday, April 24, 2017, Decree No. 6999/2017 was published in the Official Gazette of the Republic of Paraguay, which establishes the new General Tariff Regulations (RGT) proposed by the National Telecommunications Commission (CONATEL). Said decree repeals in its entirety the previous general regulation that was approved by Decree No. 16,761/2002.

The new General Tariff Regulation (RGT) conceptualizes the tariff in Article 3 in the following terms: “...is the price, whatever it may be, of a telecommunications service, which the Provider Company applies to its respective subscribers and users for the services actually provided, or for the services to be provided in the cases of advance purchase of services...”.

A novelty in the current regulation is the inclusion in Article 7 of the competence of the National Telecommunications Commission (CONATEL) to control the evolution of the sector and to carry out the required studies to prevent possible anti-competitive and discriminatory conducts, as well as artificial lows or increases in prices and tariffs, with the mention that when CONATEL identifies practices restricting competition, it will inform the National Competition Commission (CONACOM) about these facts. If CONATEL observes significant market power (SMP) by any of the operators in the sector, it will arrange for its treatment in accordance with the law and regulations.

In addition, the regulation establishes a catalog of serious infringements -Article 43- and minor infringements -Article 44-, as well as the mention of the corresponding sanctions in Article 46, which provides that “...the same shall be applied in accordance with the Law...”. Although the new regulation does not specify to which law it refers, we understand that the applicable law would be Law No. 642/95 “On Telecommunications”.

A point to note is that if this legal reference refers to the Telecommunications Law, this could generate doubts regarding the applicable penalties in case of non-compliance with the provisions of the new General Tariff Regulations - Decree No. 6,999/2017 -, since Law No. 642/95 provides taxatively in its Articles 103 and 104 the cases of minor and serious infringements, with the corresponding penalties in Article 105.

In the attached file you will find a copy of Decree No. 6999/2017 with the corresponding Annex.

For further information, please contact: Marta Martínez (mmartinez@vouga.com.py)

The implementation of compliance programs -compliance- as an opportunity to add value to companies was the topic addressed at a breakfast meeting organized by the law firm VOUGA ABOGADOS, with the support of Manpower Group and Pacto Ético Comercial.

The panel, held on Tuesday, March 28 at La Misión Hotel Boutique in Asunción, brought together numerous businessmen and executives in the area, who were able to share knowledge about best practices in the implementation of these programs and the way in which they add value to companies. The main speakers were Ms. Graciela Garay, Ethics and Compliance Director of CONMEBOL, Mr. Gonzalo Ruiz Díaz, Legal and Compliance Manager for the Southern Cone of Manpower Group and Mr. Miguel Almada, Legal Manager of TIGO Paraguay.

“To talk about Compliance is to understand the requirement to establish programs to ensure that a company complies with internal and external regulations,” said Rodolfo Vouga Zuccolillo, partner of Vouga Abogados and moderator of the event. “It covers not only anti-corruption issues, but also different aspects that impact the management of a company, such as compliance with environmental, labor, antitrust and other regulations. It is an issue that not only concerns large companies, but also organizations of any kind that seek to carry out a culture of transparent organization and growth”.

During the discussion, experiences in the implementation of compliance programs in national and multinational companies, practical recommendations in the management of these programs and experiences in the region were discussed, all aimed at strengthening a corporate model based on the commitment of all areas and effective leadership, capable of guaranteeing the profitability and competitiveness of a company, thus increasing its value and possibilities of success.

If you would like to learn more about compliancePlease do not hesitate to contact us: Rodolfo Vouga Zuccolillo (rgvouga@vouga.com.py) or Marco Colmán (mcolman@vouga.com.py)