You’ve Never Considered the Next Great Emerging Market
May 23rd, 2008 | By Tom Dyson | Category: Emerging MarketsI asked my taxi driver if he knew where I could buy an AK-47. The driver studied me for a second. He paused. And then he said, “I know somewhere… Vamanos.”
Ciudad Del Este is a smuggling town. It’s on the eastern edge of Paraguay, about a five-hour drive from Asuncion. It sits on the border with Brazil and Argentina. It’s the “three-frontier town.”
Here’s the thing about Ciudad Del Este. There’s no tax in Paraguay, so the city has become the largest inland trading post in South America. You can sell anything you want at cost from Asia. Electronics are the big market… laptops, cell phones, and digital cameras. Brazil and Argentina have high import and value-added taxes. So bandits come from Brazil and Argentina, buy cheap merchandise in Ciudad Del Este, and smuggle it back.
Huge quantities of cocaine and marijuana flow through this town into Brazil. The same is true of real Paraguayan passports and guns. (I was asking for an AK-47 not because I needed one, but I was curious to see how easy it would be to buy one here.)
You can buy anything in Ciudad Del Este’s huge, open-air market. I spent the afternoon wandering around, browsing fake DVDs, Rolexes, shoes, clothes, computers, perfumes. I could have bought a Sony Vaio laptop for under $1,000… a dozen socks for a dollar… or a 30 milliliter bottle of designer perfume for $23. The market is dirty and loud. It goes on for blocks and blocks. I never found the edge.
Ciudad Del Este has huge populations of Koreans, Taiwanese, Lebanese, Syrians, and Chinese. They run import-export businesses. The Russian, Nigerian, and Chinese mafias all operate here.
It’s also a safe house for Arab terrorists. The State Department says Ciudad Del Este is a significant source of funding for both Hezbollah and Hamas. In 2001, CNN said this town is “a terrorist paradise.”
———- Advertisement ———-
The Safest Place for the US Dollar…
If you’re looking for a way to safeguard your wealth without putting your money into volatile stocks, you might be the perfect candidate for an ancient money-making secret.
Some investors are calling it “The Secret Currency” – and it’s already helped build some of the world’s greatest family fortunes.
But this moneymaking strategy is available to regular Americans too. You just have to know when and how to take advantage of this unique investment.
To find out more about this opportunity, click here.
—————————————
I drove back and forth between Brazil and Paraguay five times. I didn’t need a passport… a visa… money… identification… nothing. When I checked in at the airport in Asuncion, they had no computers behind the check-in counter. They filled in my boarding pass by hand.
The scene in Ciudad Del Este is pure raucous capitalism… and I couldn’t wait to see where the taxi driver took us to buy guns. I was hoping for an illegal warehouse or some cinderblock shack in the shantytown, but he went to a fishing and hunting store. We looked at Glocks, Turkish rifles and other guns, but they were more expensive than the same guns in the U.S.
“We have to bring these in across a lot of borders,” explained the woman behind the counter…
Paraguay is a landlocked country with low taxes. So it serves as a “trampoline” for merchandise into other countries. That should make Paraguay a very attractive place for capital. According to one person I met, Ciudad Del Este is the second-largest free-trade area in the world, after only Hong Kong. It generates 60% of Paraguay’s GDP.
But corruption is the problem. Every time large firms try to start a project, the local bureaucrats steal everything… including the machinery. Also, most of the capital leaves Paraguay with the Asian and Lebanese traders… and with the smugglers. It doesn’t stay in Paraguay. So 40% of Paraguayans live in terrible poverty.
This year, Paraguay has a new government… for the first time in 61 years. If the new administration can clean up corruption and resist the temptation to raise taxes, Paraguay could be a fantastic place to invest over the next 10 years.
In my next DailyWealth column, I’ll show you how…
Good investing,
TomSource: You’ve Never Considered the Next Great Emerging Market
Tom Dyson is the editor of the 12% Letter and a contributing editor, with Dr. Steve Sjuggerud, of DailyWealth. He started his professional career at Salomon Brothers, before moving to Citigroup, where he worked for an international bond trading desk in London. In 2003, he qualified to the Chartered Institute of Management Accountants, left Citigroup and moved to the USA to become a fixed income analyst at Stansberry Research.
