general aspects about doing business in brazil
TRANSCRIPT
Profa. Celina M. Ramalho
General Aspects About
Doing Business in Brazil
Professor Celina Martins Ramalho
Campinas September 25, 2018
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Profa. Celina M. Ramalho
AGENDA
1. INTRODUCTION
2. THE WORLD ECONOMY
3. BRAZILIAN ECONOMY
4. ECONOMY 4.0
5. 10 REASONS FOR INVESTING IN BRAZIL - CAMPINAS
6. FINAL CONSIDERATIONS
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INTRODUCTION
1. INTRODUCTION
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Motivation and challenges on doing business in
Brazil
• Insight into Brazil’s economy
• Essentials to successfully invest in the Brazilian Market
• Brazil is an open and diversified economy
• Wide array of opportunities across multiple productive
sectors
• Brazil’s government efforts to help support international
investors and business projects
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Question:
• How can Dutch firms create dedicated partnerships with
Brazilian business partners in which all parties appropriate a
fair share of the value created?
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http://www.clicrbs.com.br/especial/rs/caminhos-do-
algodao/19,0,2956858,Holanda-e-um-dos-principais-
parceiros-comerciais-do-Brasil.html
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RANKINGS ON DOING BUSINESS TOPICS -
BRASIL
PROTECTING MINORITY INVESTORS 43º
GETTING ELECTRICITY 45º
ENFORCING CONTRACTS 47º
RESOLVING INSOLVENCY 80º
GETTING CREDIT 105º
REGISTERING PROPERTY 131º
TRADING ACROSS BORDERS 139º
DEALING WITH CONSTRUCTION PERMITS 170º
STARTING A BUSINESS 176º
PAYING TAXES 184º
OVERALL 125º
Brazil stands among
the 190 economies
measured.
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RANKINGS ON DOING BUSINESS TOPICS -
NETHERLANDS
STARTING A BUSINESS 20º
DEALING WITH CONSTRUCTION PERMITS 76º
GETTING ELECTRICITY 52º
REGISTERING PROPERTY 30º
GETTING CREDIT 105º
PROTECTING MINORITY INVESTORS 62º
PAYING TAXES 20º
TRADING ACROSS BORDERS 1º
ENFORCING CONTRACTS 69º
RESOLVING INSOLVENCY 8º
OVERALL 32º
Netherlands stand
among the 190
economies measured.
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2. THE WORLD ECONOMY
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ONE ROAD, ONE BELT AND
INTEROCEAN ROUTE IN LATIN AMERICA
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FOREIGN DIRECT INVESTIMENTS IN
BRAZIL, AMONG TOP 10 HOST ECONOMIES
(2016)
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• CONSTITUTION – 1988: democracy, social rights, market economy
• DEMOCRACY: Executive, Legislative and Judicial
• THREE LEVELS OF EXECUTIVE GOVERNMENT: Federal, State and Municipal
• DIRECT ELECTIONS AND ONE REELECTION FOR President, Governors and
Mayors.
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3. BRAZILIAN ECONOMY
Profa. Celina M. Ramalho
ECONOMY
• 2,5% GDP average in last 10 years
• Target inflation regime centered in 4,5% and 1,5% s.d.
• Basic interest rate defined by BaCen around 6,5% and 8%
• 7th in world economy with US$ 2 trillion GDP
• 208 million people, consumer class, 6% illiteracy, 6% down
poverty line, 98% child vaccination
• 2,6 million cars yearly in the internal market, 3 years
renewal, 70% flex fuel engine
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Profa. Celina M. Ramalho
Brazilian Economy and Prospects (*)
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Ano PIB % Inflação %Taxa de Juros
SELIC %Câmbio US$
2012 0,9 5,84 7,5 2,1
2013 2,3 5,91 9,9 2,35
2014 0,1 6,41 11,15 2,65
2015 -3,8 10,67 14,15 3,87
2016 -3,6 6,29 13,65 3,35
2017 1 2,95 7 3,16
2018* 2,7 - 1,36 3,5 - 4,09 6 - 6,5 3,37 - 3,83
2019* 3 - 2,5 4 - 4,11 8 3,4 - 3,75
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4. ECONOMY 4.0
DISRUPTIVE TECHNOLOGIES
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- CPqD
- Techno Park
- Parque Tecnológico de São Carlos
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INFRAESTRUCTURE IN BRAZIL
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LABOR FORCE
69%
21%
10%
SERVICE INDUSTRY AGRICULTURE
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1. LEADING REGIONAL ECONOMY
2. GLOBAL DESTINATION FOR
INVESTIMENT (USD 85 BILLION)
3. RESILIENT DOMESTIC
MARKET (207 MILLION PEOPLE)
4. DIVERSIFIED ECONOMY
5. ENERGY POWERHOUSE
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5. 10 REAZONS FOR INVESTING IN BRAZIL
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6. LARGE POOL OF
WORKERS
7. EXTENSIVE RAW
MATERIALS
8. CAPACITY TO ENDURE
9. GLOBAL PLAYER, THE “B” IN BRICS
10. GATEWAY TO LATIN AMERICA
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Business opportunities
• Diversified economy
• One of the largest consumer markets in the world
• Highly productive agriculture sector
• Broad and sofisticated industrial base
• One of the most solid and prudently regulated financial sector in
the G20
• The largest stock Market in Latin America
• Abundant natural resources
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BRAZIL, WORLD SUPER POWER IN
AGRICULTURE (USDA, 2016)
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FARMING MODELS AND SUSTAINABILITY
• Rehabilitation of degraded pastures
• Tillage System
• Crop-livestock-forest integration and agroforest systems
• Biological Nitrogen Fixation, as a substitute for nitrogen fertilizers
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GROSS VALUE OF BRAZILIAN
AGRICULTURE AND LIVESTOCK
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BRAZILIAN AUTOMOTIVE INDUSTRY
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Marks
• AGCO (Massey Ferguson) • Agrale • Audi • BMW • Caminhões Metro-Shacman • Caterpillar • CNH (Case and New Holland) • DAF • Fiat Chrysler Automotive • Ford • General Motors • Honda • Hyundai • Iveco
• Jaguar and Land Rover • John Deere • Mahindra • Man (Volkswagen Trucks e
Buses) • Mercedes-Benz • Mitsubishi • Nissan • Peugeot Citroën • Renault • Scania • Toyota • Volkswagen • Volvo
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INVESTMENTS AND PRODUTION IN THE
BRAZILIAN AUTO SECTOR
YEAR INVESTMENTS
(MILLION USD) PRODUCTION
(UNITS)* YEAR
INVESTMENTS
(MILLION USD) PRODUCTION
(UNITS)*
2000 1.745 1.605.848 2009 2.721 3.076.000
2001 1.825 1.675.522 2010 3.872 3.382.163
2002 1.042 1.663.790 2011 5.339 3.417.782
2003 748 1.684.715 2012 5.347 3.402.963
2004 820 2.124.177 2013 - 3.712.386
2005 118 2.357.172 2014 - 3.146.386
2006 1.572 2.403.680 2015 - 2.429.421
2007 2.136 2.825.276 2016 - 2.156.356
2008 3.197 3.050.631 2017 - 2.699.672
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RENEWABLE ENERGY &
ENVIRONMENTAL SOLUTIONS
SOURCE 2016 2024 ESTIMATE
HYDRO 68,6% 56,7%
ALTERNATIVE ENERGY* 16,2% **27,3%
THERMO*** 14,7% 14,4%
NUCLEAR 2,6% 1,6%
*Biofuel, Wind.
** Includes Solar
*** Natural Gas, Industrial Gas, Oil and Coal
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Hidrelética de Itaipú
103 million MWh in 2.016
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WIND ENERGY
YEAR TOTAL MEGA-WATT YEAR TOTAL MEGA-WATT
2005 27,1 2013 3.484,1
2006 235,4 2014 5.979,6
2007 245,6 2015 8.733,4
2008 341,4 2016 10.747,3
2009 600,8 2017 13.205,0
2010 932,4 2018 16.137,5
2011 1.535,1 2019 16.938,6
2012 2.529,0 2020 17.257,2
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BIOFUEL PRODUCTION OVER TIME
(THOUSANDS OF m³)
YEAR PURE BIODIESEL B100 ETHANOL YEAR PURE BIODIESEL B100 ETHANOL
2005 0,7 15.821 2011 2.672,8 22.682
2006 69,0 17.844 2012 2.717,5 23.226
2007 404,3 22.527 2013 2.917,5 27.476
2008 1.167,1 27.526 2014 3.422,2 28.480
2009 1.608,5 25.691 2015 3.937,3 30.232
2010 2.386,4 27.376 2016 3.801,3 28.692
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TOTAL OIL PRODUCTION (IN THOUSANDS
OF BARRELS).
YEAR TOTAL PRE-SALT LAYER
2006 628.797
-
2007 638.018
-
2008 663.275 25.587
2009 711.883 6.756
2010 749.954 16.317
2011 768.471 44.394
2012 754.409 61.488
2013 738.715 110.538
2014 822.293 179.820
2015 889.667 280.055
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INFRAESTRUCTURE & LOGISTICS – PUBLIC
PROGRAMS AND OPPORTUNITIES
SPECIAL TAX REGIME
INFRASTRUCTURE DEVELOPMENT
(REIDI)
NATIONAL PLAN OF LOGISTICS AND TRANSPORTATION
(PNLT)
INVESTMENT PARTNERSHIPS PROGRAM (PPI)
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Profa. Celina M. Ramalho
TRANSPORT INFRASTRUCTURE AND
SERVICES
PROJECTIONS FOR FREIGHT
TRANSPORTATION GROWTH IN BRAZIL
TYPE 2019 2031
ROAD 44% 38%
RAIL 36% 43%
WATER 14% 15%
PIPELINES 5% 4%
61,1% 20,7%
13,5%
4,2% 0,4%
CURRENT FREIGHT TRANSPORTATION IN
BRAZIL
ROAD RAIL WATER PIPELINES AIR
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HEALTHCARE SYSTEM
48%
21%
30%
1%
CURRENT HEALTHCARE SPENDING IN BRAZIL
PUBLIC SPENDING PRIVATE HEALTHCARE INSURANCE
PERSONAL SPENDING NON-PROFIT HEALTHCARE SERVICES
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PRIVATE EQUITY AND VENTURE CAPITAL
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INDUSTRY & TAX INCENTIVES
EX-TARIFF IPI
EXEMPTION RECAP
REINTEGRA SMALL
COMPANIES REGIME
INNOVATION LAW
IT LAW
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SPECIAL TAX REGIMES BY SECTORS
REIDI
• SPECIAL REGIME OF INCENTIVES FOR THE DEVELOPMENT OF INFRAESTRUCTURE
PADIS
• PROGRAM OF SUPPORT FOR THE TECHNOLOGICAL DEVELOPMENT OF THE SEMICONDUCTOR INDUSTRY
RETID
• SPECIAL TAX REGIME FOR THE DEFENSE INDUSTRY
REPES
• SPECIAL TAX REGIME FOR PLATFORMS OF EXPORTATION OF INFORMATION TECHNOLOGY SERVICES
REPORTO
• SPECIAL TAX REGIME FOR MODERNIZATION AND EXPANSION OF THE PORT STRUCTURE
RETAERO
• SPECIAL REGIME FOR THE BRAZILIAN AEROSPACE INDUSTRY
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Profa. Celina M. Ramalho
FEDERAL REGIME INCENTIVE PACKAGES
PADTV
• BRAZILIAN DIGITAL TV INDUSTRY DEVELOPMENT SUPPORT PROGRAM
RECAP
• SPECIAL TAX REGIME FOR CAPITAL GOODS ACQUISITION BY EXPORT COMPANIES AND SHIPYARDS
REINTEGRA
• SPECIAL TAX REGIME FOR REINSTATEMENT OF TAXES FOR EXPORTER COMPANIES
RETAERO
• SPECIAL REGIME FOR THE BRAZILIAN AERONAUTICS INDUSTRY
REPENEC
• SPECIAL INCENTIVE REGIME FOR THE DEVELOPMENT OF THE OIL INDUSTRY INFRASTRUCTURE IN THE NORTH, NORTHEAST AND MIDWEST REGIONS
REPETRO
• SPECIAL IMPORT AND EXPORT CUSTOMS REGIME INTENDED FOR THE EXPLORATION AND PRODUCTION OF OIL AND GAS
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EXPORT PROCESSING ZONES (EPZs)
Main benefits • For purchases of goods and services on the domestic market,
suspension of:
– IPI (tax on manufactured products) – Cofins (social contribution – tax presumptive profit) – Pis/pasep (social contribution on gross revenue)
• For imports of good and services, the suspencion of:
– II (import tax) – Afrmm (additional freight charge for the renovation of the
merchant marine) – IPI – Cofins – import – Pis/pasep – import
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EXPORT PROCESSING ZONES (EPZs)
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• BRAZILIAN SUPPORT SERVICE by SEBRAE System in States
• Supported by States tax rent, gives orientation for small entrepreneurs
SMALL BUSINESS SUPPORT
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Operação Lava-Jato
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INTELLECTUAL PROPERTY
• IP international standards have been duly incorporated into Brazil’s
legislation and, in some aspects, the country’s domestic legislation provides
protection beyond TRIPs (Trade-Relatad Aspectis in Intelectual Property
Rights) requirements;
• The country has also established domestic laws protecting industrial design
and IC (Integrated Circuit) layout design;
• Brazil adopted international trademark classification systems and
examination standards;
• In 2016, Brazil acceded to the Hague Convention Abolishing the
Requirement of Legalization for Foreign Public Documents, which speeds up
the processing of documents between signatories.
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CHALLENGES FOR BRAZIL AS AN EMERGING ECONOMY
SHORT TERM:
• Presidential ellections
• Social mobilization
• Economic temporary downward
LONG TERM:
• Infrastructure
• Education & Health
• Private investments
• Public debt: reforms in 2019 are necessary
• Diplomatic relations
• New commercial relations
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6. FINAL CONSIDERATIONS