Investing in Brazil

Investing in Brazil

Apex-Brasil, one of Brazil's leading investment bodies, lays out points of attraction for Indian business to invest in Brazil. Brazil has been a top investment destination for many years, and it still is, despite the volatility generated by the recent crisis the country went through. Since 2010, Brazil has remained among the world's 10 main foreign direct investment (FDI) recipient countries. Last year (2017), nearly $75 billion in FDI were received by the country. This year, close to $80 billion are expected. The size of Brazilian domestic market is relevant for investors: Brazil has the fifth largest population in the world, with 208 million people - a third of all Latin American population. The country is also the seventh largest economy in the world, with a GDP of US$ 1.796 trillion (2016). Brazil's open and diversified economy, with a wide array of opportunities across multiple productive sectors, generates exciting possibilities for many investors, seeking to develop their business in such a vast and dynamic market. There are numerous opportunities, especially in areas where the country most needs investments, such as infrastructure. However, there are also prospects in sectors as energy, oil and gas, automotive, health care and R&D. Brazil is home to a competitive industrial sector, including Latin America's largest aerospace, automotive, oil and gas, mining, capital goods, medical equipment and chemical industries.

Sectors of interest

One good example is the wide range of opportunities in the renewable
sector. The country is the third largest global market and the largest Latin American market for renewable energies. Brazil's share of non-hydro renewables in its electricity matrix is expected to increase from 16.5 per cent in 2015 to 53 per cent in 2040. Also in the energy sector, Brazil has one of the largest
reserves and is home to one of the biggest oil discoveries made in the Western Hemisphere in the past 30 years: the ultra-deepwater oil finds off the country's southeast coast, known as 'pre-salt' oil. In addition, Brazil is one of the top producers and exporters of ethanol biofuel in the world. Both sectors have plenty investment opportunities for foreign companies. There is also a huge opportunity in the agribusiness sector. There is an increasing demand to feed the growing global population, expected to reach 9 billion by 2050. Brazil became one of the world's largest agricultural producers and exporters in the last two decades, becoming one of the greatest global food suppliers. As mentioned by the World Food Organisation (FAO), Brazil will be fundamental for the world's food security by 2030. Due to that, new investments in technology (Agritech) and agribusiness-related infrastructure are fundamental and represent an important opportunity niche for foreign investors.

Investment climate

Companies seeking to invest in Brazil should have in mind that the country has abundant natural resources, ranking as a major global player in raw materials. It is a major producer and exporter of agricultural products and mining products (especially iron ore), to name a few. Its forests are a vast source of wealth. The country is also water-rich, estimated to hold the biggest fresh water reserves in the world. Moreover, Brazil's largest cities are consolidating their position as global investment headquarters, not only for Brazil but for the entire Latin American region, since the country shares land borders with Argentina, Bolivia, Colombia, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela, as well as the French Overseas Region of French Guiana. Brazil is also a permanent member of the free trade agreement with the largest markets in South America, known as South American Common Market (Mercosur). One important reason for Brazil's constant need for investments is the fact that the country currently invests about 2 per cent of its GDP in infrastructure. However, an investment of at least 3 per cent of GDP would be necessary just to avoid the depreciation of the existing infrastructure.

Public-private partnerships

Therefore, the Brazilian government is seeking private partnerships and changing rules to grant more attractiveness and security for foreign investors. This effort for private money resulted in the launch of the "Crescer (To Grow) - Building a Brazil of Opportunities" program, designed to organise concessions and privatisations of infrastructure projects in highways, railways, ports, airports, mining, oil and gas, and electric power. Out of 145 projects qualified for the program, 56 already have been auctioned or renewed, which accounts for an execution of nearly 39 per cent of the schedule established by the Concessions Program of the Federal Government. The estimate of investments with auctions exceeds the amount of R$ 133 billion, and the grants total R$ 28 billion. Last, but not least, it is important to highlight that one of the main reasons for Brazil to continuously receive foreign direct investment and attract leading and innovative international businesses is the country's robust investment protection legislation, enforced by an independent judiciary and a fair regulatory environment, which provides security for investors.

Apex-Brasil

The Brazilian Trade and Investment Promotion Agency (Apex-Brasil) is a not-for-profit governmental agency linked to Brazil's Ministry of Foreign Affairs (MRE), and works to promote Brazilian products and services abroad, and to attract foreign investment to strategic sectors of the Brazilian economy. Apex-Brasil organises several initiatives aiming to promote Brazilian exports abroad. The Agency´s efforts comprise trade and prospective missions, business rounds, support for the participation of Brazilian companies in major international trade fairs, arrangement of technical visits of foreign buyers and opinion makers to learn about the Brazilian productive structure, and other select activities designed to strengthen the country's branding abroad. Apex-Brasil also plays a leading role in attracting foreign direct investment (FDI) to Brazil, by working to identify business opportunities, promoting strategic events and lending support to foreign investors willing to allocate resources in Brazil. All services provided to investors are free of charge. To strengthen and expand communication with investors, Apex-Brasil launched the brand “Invest in Brasil”, which identifies the investment promotion initiatives of Apex-Brasil regarding the FDI attraction. With a focus on sectors that are strategic for developing the competitiveness of Brazilian companies and the country, Apex-Brasil is one of the private sector's main partners regarding the analysis and implementation of productive investments in Brazil.

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