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OVERVIEW ON AMCHAM BRAZIL INSTITUTIONAL PROFILE

OVERVIEW ON AMCHAM BRAZIL INSTITUTIONAL PROFILE. WHAT. WE ARE. 72. MOST VALUABLE BRANDS BELONG TO AMCHAM MEMBER COMPANIES. OF THE 100. COMPANIES FROM MORE THAN 40 NATIONALITIES. The largest among the 104 Amchams outside the U.S

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OVERVIEW ON AMCHAM BRAZIL INSTITUTIONAL PROFILE

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  1. OVERVIEW ON AMCHAM BRAZIL INSTITUTIONAL PROFILE

  2. WHAT WE ARE 72 MOST VALUABLE BRANDS BELONG TO AMCHAM MEMBER COMPANIES OF THE 100 COMPANIES FROM MORE THAN 40 NATIONALITIES • The largest among the 104 Amchams outside the U.S • Providers of the most active and complex set of products and services compared to those of all other associations • Average of 16 participations of member companies per year • Generators of content and proposals • More than 1,700 activities in 2013 for the business audience • Seminars, Business Round Ups, Open and Strategic committees • Relevant discussions about international trade, logistics, marketing, finance, sales & distribution • Amcham representatives were 1,652 times on the media in 2013 United States Switzerland Great Britain Germany Italy Argentina Canada TheNetherlands Portugal Belgium Sweden Mexico Australia Chile Ireland Austria Colombia SouthKorea Denmark Finland India SouthAfrica Antiguaand Barbuda DutchAntilles ThePhilippines Honduras Israel Luxemburg Norway Paraguay

  3. WHAT WE DO Defense of free enterprise, respectingsocietyandtheenvironment andincreasingcompetitivinessbystrengthening Brazil-U.S. relations GOVERNMENTAL RELATIONS • Key role in connecting private and public sectors in Brazil and the U.S., considering some main issues such as the cotton dispute within WTO, the Generalized System of Preferences and the Global Entry program in the U.S. • AMCHAM ACTIVITIES (2013) • 150 thematiccommittees; • More than 2,000 speakers, among CEO/director-level business leaders, besides governmental and diplomatic authorities; • More than 60,000 executives participated in business seminars and committees.

  4. Foreign Partnership: access to services designed for companies that want to understand the overall opportunities and challenges of the Brazilian market • 1 year special membership • Up-to-Date Brazil Highlights Presentation + Industry Focus + Foreign Trade and Regulatory Overviews • Trade Intelligence Monthly Update Newsletter • How To Do Business and Invest in Brazil Series • Support from the AMCHAM Brazil’s Trade Intelligence Unit • Business Contact Information • Matchmaking for meetings with companies associated to AMCHAM Brazil • Current Foreign Partners (15) segments IT Agribusiness Health Real Estate Clothing F&B Health Metallurgy Manufacturing

  5. Internationalization Program: advanced services designed for companies that are ready to go to Brazil • Brazil with Z Project: business intelligence consulting project tailored-made for your product • Compass Project: real estate and tax analysis to head your company to the best site location • Sourcing: report on specific contact information of 10 potential suppliers, business partners or industry/services associations in Brazil • Matchmaking: schedule of up to 5 meetings with specific companies according to a profile • How To Do Business and Invest in the U.S: opportunity to promote your company’s expertise in 2,000 booklets aimed at helping Brazilian investors and exporters to enter the U.S. market • Trade Missions: opportunity to receive Brazilian buyers and suppliers in your company or to AMCHAM Brazil support in visiting companies in 13 cities in Brazil.

  6. Exploring opportunities in Agribusiness, Infrastructure and Information Technology 8th – 12th September 2014 • Objective: • Contribute to the development and generation of business and provide access to information about important fields in the Agribusiness, Infrastructure and Information Technology industry in Brazil; • Facilitate commercial activities through content, business opportunities, investments and partnerships; • Organize meetings and technical visits in enterprises, businesses, associations, universities and governmental entities.

  7. HOW TO DO BUSINESS AND INVEST IN BRAZIL

  8. FREQUENTLY ASKED QUESTIONS commondoubtsonhow to do business in Brazil • Do I need a VISA? • Yes, you need a VISA to go to Brazil; • The validity for tourist and business visa varies according to the nationality of the traveler. • Expatriates can have temporary work visa, temporary resident visa and also permanent resident visa. • What are the main taxes in the country and their differences? • Profit: the Corporate Income Tax (“IRPJ”) and the Social Contribution on Net Profits (“CSLL”) (jointly referred as Corporate Income Taxes – “CIT”); and • Revenue: PIS and Cofins ; • Manufactured Products: IPI; • Financial transactions: IOF; • State and Municipal taxes: ICMS, ISS, IPTU, ITBI, etc. • How long does it take to open a business? • The process takes on average three months; • There is necessityof a legal representativeresident in Brazil; • A bankaccount must be open andthecurrencyused must be Real. • When can my company repatriate profits from Brazil? • There is no minimum period and any type of previous authorization. • What are the most common types of partnership used in the country? • MOU, LOI and Joint Ventures. • Does my company need a minimum capital to be open? • As a general rule, no minimum capital is required to open a business in Brazil. • Is there taxes to repatriate profits from Brazil? • The profit can be remitted abroad with no limitation and it is not subject to income tax withholding. • What are the main types of companies to be established in Brazil? • Sociedade Anônima: corporate capital is divided into shares, shareholders must subscribe and pay at least 10% of the capital; • Sociedade Limitada: corporate capital is divided in quotas, there is no minimum corporate capital. • What are the resources to foster foreign investment in Brazil? • There are a sort of resources, as PPP for example; • Department of Commerce and Promotion Agencies in the States. More information about the Brazilian market on: www.amcham.com.br/howto

  9. WHY TO DO BUSINESS AND INVEST IN BRAZIL

  10. FDI, DEBT & INTERNATIONAL RESERVESprotectionagainstexternalshocks

  11. ForeignDirectInvestments • According to UNCTAD, Brazil received US$63 billion on FDI in 2013 • Major investments' sectors and number of projects*: • IT (105) • Industrial Production (94) • Services (53) • Retail (44) • Finances (35) • Mining (35) • Automotive (33) • Chemicals (32) • Transportation and logistics (17) • Equipments (16) • Real Estate and construction (12) • Clean Technology (11) • Energy (8) • Major countries thatinvest in Brazil: • USA • UK • Spain • Germany • Japan FDI - Major cities of destinations and number of projects* *Data from 2011 • Public and private investments in Brazil represents 18% of GDP.

  12. MAJOR INFRASTRUCTURE PROJECTS Goal: 2 international airports 270 regional airports US$ 18.7 bi Goal: 10,000 Km US$91.1 bi Goal: 511 km US$35.6 bi Goal: 7,500 km US$42 bi Goal: 159 ports US$54.6 bi Data in billion dollars Exchange rate: US$1.00 – R$2.30 Source: Ministério da Fazenda

  13. Commodities BOOM challenges to expandBrazil’sshare (1,3%) at global trade • Commodity prices boomed from 2009 on, fostered mainly by Chinese consumption. • Brazilian exports of both finished goods and raw materials responded to a South-South diplomatic effort to diversify trade relations with developing countries • Challenges for the Brazilian trade policy: how to get a diversified exports in terms of products and add more value to the global supply chain?

  14. TRADE BALANCE (2013)maintaining high levels of total trade • Exports : US$ 242.2 billion (-1%) • Imports: US$ 239.6 biillion (+6,5%) • Surplus: US$ 2.56 billion • Trade Flow: US$ 481.8 billion (+2,6%) • Main Trade Partners: • China: US$ 83.3 bn (17,3% share) • U.S.: US$ 60.85 bn (12,6% share) • Argentina: US$ 35.4 bn (7,3% share) • Top Suppliers: • China: US$ 37.3 bn (15,6% share) • U.S.: US$ 36 bn (15,03% share) • Argentina: US$ 16.4 bn (6.8 % share) • Top Buyers: • China: US$ 46 bn (19% share) • U.S.: US$ 24.85 bn (10,3% share) • Argentina: US$ 19 bn (7,8% share)

  15. TRADE BALANCE (1st semester, 2014) maintaining high levels of total trade • Exports: US$ 110.532 billion (-2.6%) • Imports: US$ 113.022 billion (-3%) • Deficit: -US$ 2.490 billion • Trade Flow: US$ 223.554 billion (-2,8%) • Main Trade Partners: • China: US$ 42.285 billion • U.S.: US$ 30.405 billion • Argentina: US$ 14.452 billion • Top Suppliers: • China: US$ 23.880 billion (21.6% share) • U.S.: US$ 12.792 billion (11.6% share) • Argentina: US$ 7.418 billion (6.7% share) • Top Buyers: • China: US$ 18.405 billion (16.3% share) • U.S.: US$ 17.613 billion (15.6% share) • Argentina: US$ 7.034 billion (6.2% share)

  16. U.S. – BRAZIL TRADE BALANCEBrazil’s deficit on the post-crisis period

  17. U.S. – BRAZIL TRADE BALANCEMain ports of entry SAO LUIS - PORT - MA MANAUS - PORT - AM RECIFE - PORT (SUAPE) - PE VITORIA - PORT - ES RIO DE JANEIRO - PORT - RJ PORTO DE PARANAGUA - PORT - PR SANTOS - PORT – SP CAMPINAS - AIRPORT – SP SAO PAULO - AIRPORT - SP PORTO DE RIO GRANDE - PORT - RS

  18. BRAZIL AS A GLOBAL PLAYER Brazilian Companies in the U.S: • Braziliancompanies are looking for global competitiveness • AmongForbes ranking named Global 2000, withthelargestcompanies in the world, 31 are Brazilian • Petrobrás – 20th • Itaú Unibanco – 42nd • Banco Bradesco – 45th • Banco do Brasil – 67th • Vale – 87th • Internationalizationmovementsspeciallydirected to Latin America

  19. INCOME & UNEMPLOYMENTgrowing purchasing power • The minumum wage in Brazil is R$724,00 (around US$314,78)* • From 2002 to 2014, minimum wage rose 72.31% • Unemployment rate went from a peak of 13.1% in mid-2004 to 4.3% in 2013 • Unemployment rate in 2013: 4,3% (Lowest since 2002) • Challenges: Unions pressure for higher wages *Exchange rate: US$1,00 – R$2,30

  20. SOCIAL MOBILITYthedream of a middleclass country • Income transfer social policies focusing on erradicate extreme poverty by 2014 • Requirements for Families: enrolling their children in schools and take them to periodic medical appointments • Outcomes: By 2009, C class comprised, for the first time in history, more than half of the 190 million Brazilian population • For the first time in their lives, a large portion of Brazilians gains access to bank account and credit, housing, travelling and basic consumer goods (refrigerators, TV sets, ovens, mobile phones, etc.)

  21. TAXATION Increasinglifecost in the country • Brazil has more than 60 types of taxes, in a Federal, State and Municipal scope. • On the ranking of working days to pay annual taxes, Brazil is in the second position. A citizen must work 150 days in order to pay its taxes, and the taxes account for 36,3% of the GDP. • This average is different considering each type of social classe in Brazil: • Low wage (until R$ 3.000): 143 days -> 39% of personnal wage • Medium wage (from R$ 3.000 until R$ 10.000): 159 days -> 43% of personnal wage • High wage (more than R$ 10.000): 152 days -> 42% of personnal wage • Some productshave a veryhighpercentageof taxes withintheirprices, such as cigarretes (80%), vodca (82%) andforeign perfumes (78%)

  22. The Great Discrepancystructuralbottlenecks for Brazil’scompetitiveness • SizeandefficiencyoftheState • Labor qualification • Enormousinfra-structuregap • Lowlevelofinvestment

  23. New approach Governmental policies (2012-2013) • Strengthening of thedomesticmarketconsumption • Taxreductiononspecificsectors • Vehicles • Construction • Textiles/clothing • Interest rate reduction: publicbanksleadingtheway to theoffer of more creditatlowercosts • Barriers for imports • Major goals (2014): • Reach/maintain GDP growthat 1,10% • Preventinflationfromsurpassingestablishedtargets • Push for reformsonports sector to increaseexportscompetitiveness • Increasethelevel of privateandpublicinvestments

  24. Energy Information Technology Pharmaceuticals & Healthcare Automotive Metal Logistics Industry Focus: Challenges and Opportunities:

  25. ENERGY oil, gasandrenewable sources • 44.2% of the domestic supply of energy comes from renewable sources • The electricity production is 83.8% from renewable sources • Federal Government has just negotiated with concessionaries to cut energy costs up to 32% to businesses and 18% to households • The Program of Incentives to Alternative Electricity Sources aims to install 3,300 MW of capacity from wind, biomass and SHP plants • Electricity actual consumption of 467,700 GW is forecasted to reach 730,000 GW until 2020 • Second biggest oil producer in South America • Pre-salt oil layer forecasted to add at least 1.9 million bpd by 2020 • Despite being an oil exporter, Brazil still has to import refined oil • Petrobras is the fifth largest energy company in the world and had US$23,5 billion net income in 2013 • Brazil is the second largest producer of biodiesel • Around 45% of the fleet is adapted to use ethanol (made from sugarcane, 6.6 times more efficient than corn ethanol), the share of ethanol in gasoline is likely to raise to 25%

  26. INFORMATION TECHNOLOGY growingdemand for innovativeservices Main Clusters • 7th largest market: Brazilian IT market grew over 15% in 2013 • The country represents 47.4% of the IT market in Latin America • Companies: 10,700 (94% small or median) • Forecast: reach US$ 200 billion until 2020 • Employment: 1.3 million • Software investments (2013): R$25 billion (US$10.8 billion*) • Highlights: The industrial and financial sectors represent almost 50% of the user market • Brazil reached 125mobile subscribes per 100 people (forecasted to reach 170 until 2015) and 10broadband subscribes per 100 people (forecasted to reach 13 until 2015) • Federal programs: Start Up Brasil with US$40 million to finance national or foreign services´ and software´s start ups. +IT has US$ 243 million to invest on financing, tax exemptions, education, infrastructure and R&D. *Exchange rate: US$1.00 – R$2.30

  27. Pharmaceuticals & Healthcare open doors for R&Dandinnovation Main Clusters • Pharmaceuticals • 8º largest market for medications and drugs • 400 companies (380 Brazilian) • Revenue 2013: US$ 24.78 billion (4.2% of the GDP) • 16% growth compared to 2012 • Investments: US$ 139 milliononclinicalresearches • Foreign Trade (2012): deficit of US$ 6,6 billion • Government launched US$ 5 billion investment plan to foster mainly innovation • GDP Share (2013): 10,2% • Highlights: generics unit sales grew 17% and personal care reached 3rd global position with US$ 43 billion in revenue • Healthcare • Free access to health services is provided through the Unified Health System (SUS). • 80% of the population depends solely on this system that has over 6,000 accredited hospitals and pharmaceutical public companies • Besides SUS there are private healthcare plans and health insurance plans available, covering 58.6 million people • The health care sector accounts for US$ 416.46 billion

  28. AutomotiveIndustry strategic sector for GDP growthandemployment • Companies: • Assemblers: 29 • Autoparts: 500 • Dealers: 5,116 • Industrial Units: 53 • Productioncapacity/year: • 4.5 million (vehicles) • 109 thousand (agriculturalmachinery) • Revenue: US$ 106.8 billion – theforthmarket in the world • Investments (2012-2016):US$ 26,2 billion • Vehicles production grew almost 10% (2013) • Employment (2013): 1.5 million • Brazil is the world’s 4th largest vehicle market • Biggest assemblers: VW, GM, Fiat, Mercedes-Benz, Ford • 2014 Forecast: • 7 newplants: Chery, JAC Motors, Fiat, BMW, Suzuki, Honda andNissan • Growth: 1.1% onsalesand 0,7% onproduction Main clusters (number of assemblers)

  29. MetalS leadership in Latin America Steel production parks • 29 mills controlled by 11 business groups in 10 states • Major steel consuming sectors: Construction; Automotive; Capital goods, Machinery and Equipment (including Agricultural); Housewares and Commercial. • Crude Steel Production: 34.2 million tons • Brazil is the 9th largest producer of steel in the world • Largest steel manufacturer in Latin America • Main products exported to USA: • Semifinished products of iron or nonalloy steel • Nonalloy pig iron containing by weight 0.5 percent or less of phosphorus; • Other alloy steel in ingots or other primary forms • Largest steel & metal companies in Brazil: • Arcelor Mittal Brasil • Usiminas • CSN • Gerdau Aços Longos • Gerdau Açominas

  30. Logistic & Infrastructure largeeventsandPPPs • The most important port in the country is the port of Santos, in the State of São Paulo, the busiest container port in Latin America • The highway network accounts for 61.8% of the cargo transported in the country • Forecast: • BNDES (National Bank for Economic and Social Development) will invest US$400 billion between 2014 to 2017 in infrastructure projects. This amount represents a 36.2% increase compared to 2009-2012. Major segments: • Oil & Gas US$ 184.5 bi • Transportation & Logistics US$ 74.7 bi • Electric Energy US$ 61.7 bi • Telecommunication US$ 42.8 bi • Sanitation US$ 36.9 bi International Airports Ports Highways Railroads 212 thousand km 29 thousand km 28 international airports 37 public ports

  31. ThankyouCamila MouraInternational Affairs and Trade ManagerAmerican Chamber of Commerce – AMCHAM Brazil(+55) 11 5180-3756camila.moura@amchambrasil.com.br

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