|BENEFITS OF DOING BUSINESS WITH BRAZIL
ARTICLE BY ROSALIENE BACCHUS
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As the world’s tenth largest economy and fifth largest country, Brazil is a regional economic power. Its
abundant agricultural, mineral, and energy resources have led to the development of an extensive industrial
base, diversified economy, and infrastructure. Lower inflation coupled with a strong currency regime, reduction
in the government debt, and high commodity prices have all contributed to stable economic growth. Living
standards have risen and a growing middle class has emerged.
According to The Global Competitiveness Report 2009-2010, published by the World Economic Forum in
Geneva, Brazil’s main global competitive advantage lies in its growing domestic market (ranked 9th out of 133
economies). Its population is estimated at 191.9 million (IBGE–Brazilian Institute of Geography and Statistics,
October 2009), of which 109 million are economically active (Central Bank of Brazil, Economic Indicators,
August 2009). Moreover, the financial situation of Brazilian households has improved as a result of income
transfer programs, minimum wage increases, tax exemption measures, and low inflation.
The Consumer Confidence Index (ICC) issued by the Getúlio Vargas Foundation (FGV) reveals that Brazilian
consumer confidence continues to increase steadily since February 2009. The index for September 2009 is a
few points lower than the same period last year. Renewed consumer confidence is evident in retail sales
figures released by IBGE in October 2009. Retail sales for August 2009 increased 0.7 percent in volume and
0.8 percent in value over July 2009. When compared with August 2008, retail sales represented an increase
of 4.7 percent in volume and 8.0 percent in value.
Other competitive advantages evident in The Global Competitiveness Report 2009-2010 include a highly
sophisticated business sector (32nd); facility in absorbing and adapting foreign technology (36th); knack for
generating innovation (43rd); and one of the most sophisticated financial markets in the region (51st).
Export incentives are available to producers and manufacturers for promoting Brazilian exports. For imported
goods that will be used in the manufacture of products for export, the Special Customs Drawback Regime
provides suspension and exemption of import tariffs, excise tax (IPI), and value-added tax on sales and
services (ICMS). Other tax exemptions comprise social security on billings (COFINS) and contributions to the
social integration program (PIS/PASEP).
Since opening its market to imports in the 1990s, Brazil has gradually reduced its import tariffs and trade
barriers. Importation has also been encouraged as a means of regulating internal market prices of certain
products as well as supplementing shortfalls in local production. In addition, as a means of stimulating the
expansion, modernization, and restructuring of its industrial park, the Brazilian government offers reductions
on import tariffs or tax deductions for imported capital goods not available locally.
Low-cost financing for capital investments for micro, small and medium-size enterprises (MPMEs) is available
through the National Bank for Social and Economic Development (BNDES). Financing also covers importation
of equipment, production of goods and services for export, and commercialization in foreign markets.
To further stimulate exports among the MPMEs, the Foreign Trade Chamber (CAMEX) of the Ministry of
Development, Industry and Foreign Trade (MDIC) approved the creation of Proex Financing – Export
Financing Program – on 26 August 2009. Exports of approved products by eligible firms will obtain financing
and export credit guarantee.
An active participant and voice for other developing economies at the World Trade Organization, Brazil is
committed to expanding its global market and opening its markets to foreign competition. As the country
prepares to host the 2014 Soccer World Cup and 2016 Olympics, investment opportunities as well as the
need for goods and services will abound in transport infrastructure; construction in urban infrastructure, sports
complexes, and hotels; and telecommunications network expansion.
Article published in the Brazil Explore Magazine, Los Angeles, California, USA, December 2009.
Reprinted with permission.