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THE BEST OF BRAZIL

Brazil is a competitive and dynamic industry leader in clean and renewable energy. It is the 10th largest industrial producer, 3rd main market for biodiesel, and home to the world's 10th largest oil reserves. Brazil is also a significant market for personal computers, scientific articles, aircraft, cell phones, automobiles, TV sets, and medical equipment. The country offers sustainable economic growth, a growing middle class, strong domestic market, increasing job opportunities, and attractive sectors for foreign direct investment.

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THE BEST OF BRAZIL

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  1. THE BEST OF BRAZIL TO THE WORLD

  2. BRAZIL Competitive and dynamic industry that ranks among the world’s top Leader in clean and renewable energy 10th largest industrial producer 3rd main market for biodiesel Home to the world’s 10th largest oil reserves 3rdlargest market for personal computers 13th largest producer of scientific articles 3thmain aircraft manufacturer 4thlargest market for cell phones, automobiles and TV sets 5th largest market for medical equipment

  3. Macroeconomic and social structure for a period of long-term transformation BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED) Brazil has been experiencing medium to high rates of GDP growth over the past decade. Growth of Brazilian GDP GDP average growth (%) The international crisis affected the country’s growth in 2009. However, by the second semester, Brazil had already retaken the growth path. In 2010, after the world crisis, Brazilian economy expanded at a 7.5% rate. The strength of our domestic market and a great emphasis on investments are the main drivers of our growth. Source: Ipeadata and IBGE. Elaborated by APE/BNDES (*) Forecasts based on IIF

  4. Sustainable economic growth and social and environmental sustainability BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED) The Brazilian middle class reached 105.5 million in 2011, representing 53% of the population. Growth of the population’sPurchase Power Middle class is expected to continue expanding in the following years. Class incomes (millions of inhabitants and share of population) The average wage for the C class is R$ 1.450,00, whilst minimum wage is R$ 678 ,00 (as of January 2013) Source: Ministry of Finance.

  5. Minimum wage BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED) Increase of the minimum wage, job creation and social benefits sustain the population’s purchase power. Real minimum wage has grown 72% since 2002. Growth of the minimum wage Source:Central Bank of Brazil.

  6. Strong domestic market, vast and diverse population BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED) From 2004 to 2012, 2,050 thousand new jobs were created each year on average. Net employment generation (thousands of jobs) The unemployment rate fell 35% over the last 6 years and reached 5.6% in July 2013. The quality of jobs in Brazil can be verified by the increasing level of job formalization. * * January to August 2013 Source: Ministry of Finance.

  7. BRAZIL Growing opportunities in the youth labor market • The growth of the Brazilian economy increased the number of job opportunities for young people, which has been accompanied by an improvement in their level of education.

  8. Increasing number of individuals with professional and educational qualification BRAZIL Between 2009 and 2012, the proportion of people with professional training among the working age population increased from 21.6% to 24.9%. Proportion of people with educational qualification Source: Ministry of Finance.

  9. Measures to Stimulate Investment: Reduced Costs BRAZIL BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED)

  10. Democratic stability and institutional security to investors BRAZIL ATRAÇÃO DE INVESTIMENTOS ESTRANGEIROS DIRETOS (IED) Brazil has become the third main destination of FDI in the last decade, attracting investments for several sectors of its economy. FDI record in 2011: US$ 66.6 bi ForeignDirect Investment- Economic Sector (% of total and US$ bi) From January to July 2013, Brazil received US$ 35.2 billionin FDI. Estimated FDI for 2013 amounts to US$ 65 billion. Source: Brazilian Central Bank.

  11. Top priority host economies for FDI for 2011 – 2013 new investments announced for Brazil BRAZIL

  12. What is driving strong FDI inward? Local manufacturing 3rd largest market for computers (behind US and China) Informationtechnology 55 Millions households with TVs (10 Millions with cable TV) Non-exhaustive Consumerelectronics cce 4th largest market for cell phones Telecom 4th largest market for automobiles Transportation & auto parts 2nd largest market for ATMs and 5th largest for medical equipment Automation & medical equipment

  13. Attractive Sectors for FDI Oil & Gas Semiconductors and Displays Aerospace and Automotive Real Estate Infrastructure Renewable Energy R&D Activities

  14. Attractive Sectors Oil & Gas US$ 330 billion in public and private estimated investments over the next 10 years; High demand for machinery and equipment for the exploration of oil & gasin pre-salt layer reserves in the Atlantic Ocean; In line with national government policies for the development of the national supply chain for the sector (minimum nationalization level required for Petrobras suppliers). Chart - Source: ONIP – National Organization of Petroleum Industry

  15. Attractive Sectors Semiconductors and Displays • Industry attractiveness: specific legislation (PADIS); payroll tax reduction for design activities (PBM), funding and loans, grants, skilled workforce. • Impact on the trade balance: • Superior to US$ 4.7 billion in 2011, trend of speed up growth; • Semiconductors and Displays: more than 80% of the deficit of the Brazilian Electronic Complex. • Key partners: • Freescale HT Micron Gemalto SIX • Smart IC Brasil CEITEC * estimates

  16. Attractive Sectors Aerospace Industry volumes of the Brazilian airline industry, 2006-2012 • Brazilian airlines industry represents total revenue of 10 billion USD, experienced strong growth during 2010 after suffering decline in 2009. The industry is predicted to continue to grow strongly through to the end of the forecasted period in 2015. • Industry volumes increased with a CAGR (CompoundedAnnualGrowth rate) of 9.5% to reach a total of 101,4 million passengers in 2012. The industry volume is expected to rise to 106.6 million passengers by the end of 2015, representing a CAGR of 9.4% for the period 2010-2015. • Domestic flights had the highest volume in the Brazilian airlines industry in 2012, with a total of 92.2 million passengers, equivalent to 91% of the industry’s overall volume. • Growth of business jets • Increased outsourcing development and manufacturing • Good prospects for MRO (Maintenance, RepairandOverhaul) • Very good size of labor pool (over 27,100 aerospaceengineersandtechniciansin 2009) • Support from federal and local government to foreign investors. • R&D expenditures and patents application. Source: ANAC – National Civil Aviation Agency Brazil Government policy towards foreign investment index, score from 0 to 5, 5 = best, 2012 and quality of support expected from government in setting up index, score from 0 to 10, 10 = best practice, 2012 4 4 7 5 Argentina Brazil Canada Chile China France India Mexico The Economist Intelligence Unit, Market Indicators and Forecasts, August 2012 and IBM-PLI assessment based on IFC, Global Investment Promotion Benchmarking, 2009 Source: IBM-PLI Plant Location International

  17. Attractive Sectors Real Estate • A combination of factors have boosted the real estate sector in Brazil: • GDP per capita/employment, credit/interest, confidence, industry, consumption. • Expected 20-25% IRR in several opportunities in real estate. • Main real estate opportunities: • Logistics/Industrial parks • Very limited offer + high demand • Diversified industry = wide range of opportunities • Shopping malls • The number of shopping malls in Brazil has been growing fast (7% only in 2011). • Hotels • Expansion driven by major events (2014 World Cup, 2016 Olympics and others) and domestic demand. • Around 3,000 new hotels are expected to be constructed until 2015 to match the growing demand.

  18. Attractive Sectors Infrastructure • The Growth Acceleration Program (PAC in Portuguese) invested US$ 20 billion only in logistics on the last 2 years. • There are 870 ongoing projects for the expansion of railways, highways, waterways and airports.

  19. Attractive Sectors Infrastructure Several major infrastructure programs were announced over the last two years, with investments adding around US$235 billion over the coming years, not to mention the major urban infrastructure works required for the 2014 World Cup and the 2016 Olympics.

  20. Attractive Sectors Renewable Energy • High-end technology sector with rich supply chain; • National objective of increasing energy production and maintaining the cleanest energy matrix in the world; • Brazil has a long history of clean energy production and features potential to grow also in other sources: • Wind energy; • Solar energy (distributed generation); • PCH (small hydroelectric plants). • The goal is not only to produce clean energy, but also to attract productive investments to the supply chain. Installed Capacity • Key Players: • WOBBEN • BIOENERGY • IMPSA • ALSTOM • SHARP • SAMSUNG • SUZLON Source: Ministry of Mines and Energy

  21. Attractive Sectors R&D Activities • Government priority: • Brazilian Industrial Policy focused on innovation and technological development; • Several incentives: payroll tax reduction and funding; • The Brazilian Government announced an US$ 8 billion investment to support innovation projects for the next 3 years. • Promising prospects: Brazil has been rapidly approaching the top ten group of countries that publish high level scientific papers (with nearly 2.9% of total) and is the leading country in Latin America. • R&D centers from many important global key players: GE, Siemens, Embraer, Fiat, Tenaris, Schlumberger and Google, among others.

  22. FOREIGN DIRECT INVESTMENT (FDI)ATTRACTION SUPPORT TO FOREIGN ENTERPRISES Strategic incorporation in the decision-making process Support in identifying the best location in Brazil Contact with the national network of Apex-Brasil partners Identification of investment opportunities Schedule of meetings and on-site visits

  23. Apex-Brasil - Brussels: +32 (0)2 211 05 30 Apex-Brasil - Brasília: +55 (61) 3426 02 02 investinbrasil@apexbrasil.com.br www.apexbrasil.com.br

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