Page 7 - TCL International VILLETA BUSINESS PLAN AND FEASABILITY STUDY

B. Business Climate

The country has a stable government with a favorable business
environment for investments. According to JP Morgan, Paraguay has a
long tradition of fiscal discipline and is in a favorable position to continue
to improve its rating. The most interesting fact is that the country’s goal is
to maintain its fiscal discipline; therefore, it passed a law called the “Law
of Fiscal Responsibility.” Moody’s, Standards & Poor’s and Fitch Rating
have continuously increased the country’s rating.

C. Business Opportunities

The government passed laws highly beneficial for investment and trade,
including a simplified tax system with the 10/10/10 base: Corporate 10%,
Value Added 10% and Personal 10%. In reference to the country’s
location, both 33% of South America’s GDP as well as 33% of its
population are within a 1,300 km. (approximately 800 miles) radius from
Asuncion.

The country’s GDP has increased 4.8% annually in the last decade and is
expected to maintain its growth close to 4% annually. The estimates for
this year are: FMI 3.5 %, BCP 4%, Banks BBVA, and Itaú 3.8 and 4%
respectively. Per the IMF, Paraguay is expected to have the second
largest economic expansion in the region.

Imports and exports from 2006 to 2016 have doubled. The former has
increased from 4.9 to 10 US$ billion, lowest in six years, and the latter
increased from 6 to 11 US$ billion in the referred period. Hence, the
growth during that period was 5 and 5.2% annually.

D. Advantages of the Location

Villeta is a city located 35 km. south of Asuncion. It is an industrial city
with numerous local and international companies; a number of them are
well recognized worldwide.

Some of the advantages are the following:

• During a dry season, the port of Villeta is not affected by the shallow
parts of the river located around Asuncion.
• It is one mile away from the existing government owned port of Villeta.
That port will be used by the projected terminal.
• It is served by roads which connect the site with the country’s
network.
• The government plans to build connecting roads around the City of
Asuncion and directing the flow to Villeta.
• The site has the basic infrastructure to start the logistics center
relatively soon.
• The site has a covered 140,000 sq. ft. warehouse, an office building
and is fenced.
• The logistics center will house a “custom house” to optimize and
speed up all import and export procedures.
• Having its location on the Paraguay River is advantageous should
future development indicated the addition of port facilities.

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