The Korea Herald

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Paraguay turns to public-private partnerships to modernize nation

With current expenditures at $400 million annually, about 2 percent of GDP, the South American nation has the lowest infrastructure investment in the region.

By Korea Herald

Published : Nov. 3, 2013 - 19:36

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South Korea could get a huge portion of the $35 billion worth of Paraguayan infrastructure projects that the landlocked country is embarking on as it looks to transform itself into a logistics and services hub for South America.

Following the promise to lift his nation out of poverty by Paraguayan President Horacio Cartes after his inauguration in August and the passage of public-private partnership legislation Tuesday, the South American nation’s top diplomat here declared that his country was now open for business.

“I attended two engineering conferences in October and from discussions ahead of another one on Nov. 6, South Korean companies indicated they are now extremely interested in investing in Paraguay,” Paraguayan Ambassador to South Korea Ceferino Valdez told The Korea Herald at his office in Seoul’s Hannam-dong on Thursday.

Paraguayan Ambassador to South Korea Ceferino Valdez talks about public-private partnership legislation during an interview with The Korea Herald at his office in Hannam-dong, Seoul, Thursday. (Philip Iglauer/The Korea Herald) Paraguayan Ambassador to South Korea Ceferino Valdez talks about public-private partnership legislation during an interview with The Korea Herald at his office in Hannam-dong, Seoul, Thursday. (Philip Iglauer/The Korea Herald)
President Cartes introduced PPPs as a way to attract foreign investment in infrastructure projects and modernize Paraguay, which is one of the poorest countries in Latin America. In 2011, infrastructure investment was $400 million, about 2 percent of GDP and much lower than the other countries in the region, according to a report by the Development Bank of Latin America.

Valdez said he believed that the investments will transform Paraguay into a logistics and commercial hub connecting Paraguay with the region and the Atlantic Ocean with the Pacific.

In discussing the PPP law, one Paraguayan lawmaker said the investment needed to be raised to at least $2 billion a year for the country to catch up with its neighbors, according to a recent media report.

Cartes said he would seek sustained annual economic growth of 8 percent by boosting infrastructure and agriculture investments.

Cartes, a former tobacco magnate, said he wanted $2.5 billion annually in public and private investment to boost the landlocked nation’s $26 billion economy. The world’s fourth-largest soybean exporter, Paraguay is also seeking foreign investment in irrigation, ports, airports and highways,

Valdez said the law’s passage was a determining factor in attracting South Korean investment. There is also already reportedly commercial interest from the United States, too.

But one day before the law passed in the Senate, the upper chamber of Paraguay’s legislature, some 20,000 workers filled the streets in the downtown district of Asuncion, the country’s capital.

Ex-President, Sen. Fernando Lugo also opposed the PPP legislation, condemning it as an attempt to push through privatization. “With the law everyone will pay the price and just a select few will get richer,” he reportedly said via Twitter.

Valdez described several projects that he said could give South Korean firms a competitive advantage. “We are looking at such projects as waterways, railroads, highways, airports, bridges as well as sewage infrastructure, and Korean companies have the technology, the know-how and the financing.”

Paraguay is looking to modernize its international airport in Asuncion, as well as regional airports in Chaco and near Concepcion in northern Paraguay.

South Korean companies are working with Paraguay on dredging and expanding the Paraguayan river into a major transportation corridor.

The Korea International Cooperation Agency created an engineering and feasibility study for a 600-kilometer, bi-oceanic railway project that will help strengthen trade links between Brazil, Argentina and Paraguay.

The rail plan would connect Paraguay’s eastern provinces to an unprecedented transport corridor running from Brazil to Chile, and would bring President Cortes closer to his goal of transforming the country into a services and logistics center for all of South America.

The new law will encourage foreign investment in that multi-billion rail plan, as some $4 billion is reportedly open to PPP investment.

The law also opens basic services, such as water and sanitation, to private involvement. A delegation from one large South Korean corporation with global brand recognition is now meeting with Paraguayan officials in Asuncion on such involvement.

Valdez has been extremely busy in October and November. An unprecedented 11 delegations from his country have visited or are scheduled to visit South Korea, he said.

Additionally, representatives from Paraguay, along with representatives from several other Latin American nations, will participate in the sixth High-Level Forum on Korea-Latin America Partnership on Nov. 5.

Paraguayan Central Department Gov. Blas Lanzoni will visit South Korea for the forum, which will be hosted by the ministries of land, infrastructure and transport; security and public administration; health and welfare; and foreign affairs.

By Philip Iglauer (ephilip2011@heraldcorp.com)