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.