Brazilian companies now make up the majority of firms utilizing Paraguay's maquila regime to reduce taxes and operating costs.
This shift highlights a growing trend of regional industrial relocation where firms seek more favorable regulatory environments to maintain competitiveness. The movement suggests a strategic pivot by Brazilian businesses to leverage lower labor and utility costs across the border.
Approximately 70% [1] of the companies that have established maquila operations in Paraguay over the last 25 years [2] are Brazilian. These firms are primarily concentrated in industrial hubs such as Ciudad del Este and other maquila clusters [1], [2]. The attraction stems from a combination of tax incentives, and a regulatory framework designed to reduce the overall tax burden for foreign investors [1], [2].
According to reports from Folha de S.Paulo, seven out of every 10 companies that settled in Paraguay under this regime during the analyzed period are from Brazil [1]. The maquila system allows these firms to import raw materials and export finished goods with minimal tax obligations, creating an industrial corridor between the two nations [2].
A spokesperson for the Paraguayan Ministry of Development, Industry and Commerce said the ministry does not monitor these specific movements. However, the official said that the government continues to support initiatives aimed at innovation and competitiveness [2].
While the trend has been consistent over two and a half decades, there was a noticeable increase in activity between 2025 and 2026 [1]. This surge reflects a broader effort by Brazilian industry to hedge against domestic costs by shifting production to the neighboring state [2].
“Seven out of every 10 companies that settled in Paraguay under this regime during the analyzed period are from Brazil.”
The concentration of Brazilian firms in Paraguay's maquila zones indicates a structural shift in South American manufacturing. By utilizing Paraguay as a low-cost production base, Brazilian companies can lower their overhead while maintaining proximity to their primary markets. This creates an economic interdependence where Paraguay gains industrialization and employment, while Brazil exports its industrial capacity to optimize profit margins.
