Brazil: still a good place to invest

Know where and how to invest your money and your company time in Brazil

Once saw as an economy similar to China, since offered high growth rates, Brazil is now among the other countries that has a more down to earth GDP expected growth. That fact might disappoint some investors, but in the other hand, there is still fertile soil for those who know how and where to invest in the strongest and most powerful economy in South America.

According to Fernando Henrique Cardoso, Brazil’s former president, “It’s not as bad as some say now, and it was never as good as some said then”. There is a lot of money to be made with investments in infrastructure, technology and education. Specially infrastructure, since Brazil will host the 2014 World Cup and the 2016 Olympics and there are still chances to invest into it. 

The key to invest in Brazil lies in the bottlenecks. 

Indeed, the greatest opportunities seem to lie in precisely the areas that have been holding Brazil’s economy back the most.

Take education: Many economists have blamed falling productivity for Brazil’s recent downshift in growth, and said better schools are a huge part of any medium-term solution.

Infrastructure, too, has been attractive because Brazil’s government knows the economy can’t grow faster without massive private-sector investment in ports, airports and railroads that are overburdened after last decade’s boom.

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Agriculture: Brazil and Haiti sign cooperation agreement

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Haiti Prime Minister Laurent Lamothe continued his Brazilian trip Tuesday with a meeting with Brazilian Foreign Minister Antonio de Aguiar Patriota to discuss a cooperation on the agriculture sector.

The two sides agreed to facilitate the ratification of an agreement called “Hope-Help,” which would cover incentives in Haiti’s textile sector and “create thousands of jobs,” according to a statement from Lamothe’s office.

Agriculture

The two sides discussed the issue of bioethanol production, in which Brazil has become a global leader.

Haiti and Brazil signed a Memorandum of Understanding on the issue of increasing agricultural production capacity to ensure food security, an issue which has plagued Haiti in recent years due in part to a series of natural disasters that crippled its agricultural sector.

Brazil is currently supporting the cotton production sector in Haiti, following an agreement signed with the United Nations last year.

Another bilateral agreement signed Tuesday covered academic and research programmes.

Lamothe began his Brazil visit on Monday.

Source: Caribbean Journal

Infrastructure: Brazil offers better terms for investors

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Brazil is sweetening terms for major infrastructure contracts to whet investor appetite and draw private capital and expertise needed to upgrade its deficient roads, railways and ports, the man in charge of planning the projects said on Tuesday.

Bernardo Figueiredo said Brazil needs to double its current level of investment in infrastructure to at least 80 billion reais ($39.2 billion) a year if it wants to resolve a transport crunch that has stymied the economy in recent years.

About half of that sum needs to come from private investors, Figueiredo, the head of government infrastructure agency EPL, told the Reuters Latin America Investment Summit.

Figueiredo said there was heavy interest from institutional investors in Europe and the United States during “road show” presentations that he gave earlier this year.

However, President Dilma Rousseff’s government has recently had to improve the targeted profitability of the projects. Many investors balked at the leftist leader’s effort to engineer a relatively low rate of return, part of her plan to reduce Brazil’s comparatively high profit margins in many industries.

Brazil recently raised the internal rate of return – a measure of profitability – for highway concessions from 5.5 to 7.2 percent previously.

Railway projects, including a planned Rio de Janeiro-Sao Paulo bullet train, will offer rates of return of between 7 and 7.5 percent compared to about 6.3 percent previously, Figueiredo said.

The higher returns may help ease investors’ concerns about doing business in a country with a promising economy, but a recent history of delays on big-ticket projects.

“The only risk that investors like to take is the risk of earning money; they dislike any other risks on principle,” said Figueiredo, an economist with 40 years experience in the transport industry.

“We recognize that the state has limits in its ability to finance and manage these projects so we need to turn to the private sector for capital and expertise,” Figueiredo said.

He said Brazil is also studying the creation of a new investment vehicle so that foreign pension funds can more easily participate in the projects.

The idea is to pool pension fund investment in a neutral fund that can bid for a stake in a project and become a partner with the winning consortium that executes it, while also investing in other projects to spread risk, Figueiredo said.

BULLET TRAIN: Infrastructure bottlenecks

The world’s seventh largest economy is striving to overcome serious transport bottlenecks that have pushed up its production costs and reduced its competitive edge as a top global commoditiesexporter. Ships wait for weeks off-shore to dock at clogged ports to load soy that has doubled in price since leaving farms by truck.

Diagrams scribbled on the wall of Figueiredo’s meeting room show the railway lines that Brazil is planning to build, crisscrossing the huge country to connect its farming and mining hinterland to coastal and river ports for export.

Last August, Rousseff announced a 133 billion reais drive to build new highways and about 10,000 km of railroads in public-private partnerships.

Auctions of road contracts will begin in July and railways in September with concessions to be decided by December, he said.

Figueiredo said public financing will be raised from 70 to 80 percent for the high speed train project, a planned 350 kph (217 mph) train between Brazil’s two largest cities, and minimum bids for the 40-year concession will be lowered by 5 to 10 percent.

The decision to raise the government’s stake seeks to spread the risk after no bidders emerged for the high-speed project during an auction in 2011. Figueiredo said companies from a dozen countries, including Spain, are interested in the next auction, to be held in September.

Spanish Public Works Minister Ana Pastor, visiting Brasilia to lobby for her country’s businesses, said on Tuesday that a Spanish consortium of state-run and private companies was very interested in the Brazilian project.

“The Spaniards are very excited about the high speed train project. They won a similar project in Saudi Arabia,” Figueiredo said. “She said the Brazilian project is an absolute priority for Spain, because this is a good opportunity and they have invested a lot in high speed know-how.”

Companies from Chile, Argentina and Mexico are interested in the building of roads and trains in Brazil, and port reform legislation approved by Congress last week will allow more investment in private ports and the reorganization of state ports to improve efficiency, he said.

The government expects the drive to overhaul Brazil’s infrastructure will have a multiplier effect on its sluggish economy, creating demands for steel for rails and other goods and services. Figueiredo noted as an example that over the next 15 years Brazil will need 15,000 new locomotives and 100,000 train cars.

Brazil’s agricultural research institute Embrapa estimates that the planned railway lines will open up more than 60,000 hectares of new farm land that can grow some 200 million tonnes of grains.

Source: Reuters

Brazil 2014 Fifa World Cup to be Protected by US Robots and Israeli Drones

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Brazil is gearing up to host “one of the most protected sporting events in history” which will be fortified with sophisticated US robots and Israeli drones along with German-made tanks.

Brazil has ordered 30 PackBot 510 robots which are used in the US military as part of the latest security measures for the Fifa World Cup to be held in 2014.

The robots have been bought from iRobot in the US as part of a $7.2m (£4.74m) deal. Each unit costs between $100,000 and $200,000.

“iRobot continues its international expansion, and Brazil represents an important market for the company’s unmanned ground vehicles. iRobot is excited to be providing the company’s state-of-the-art robotic technologies to Brazil as the country prepares for several high profile international events, including the 2014 World Cup,” senior vice-president of the company, Frank Wilson.

According to the manufacturer, the robots perform “multiple missions for troops and public safety professionals, enhancing situational awareness, reducing risk and increasing mission success”.

Equipped with cameras, the PackBots can be remotely operated. Nearly 2,000 such robots are operational in Iraq and Afghanistan.

Pope, Olympics and 2014 World Cup: Security is the word in Brazil

Brazil has allocated nearly $900m (£592.m) for the sporting event.

The litmus test for the robots will be when Pope Francis arrives on his first visit in July. The security measures have also been devised keeping in mind the Rio Olympics 2016.

Brazilian police will be equipped with advanced facial recognition camera glasses which will enable them to capture 400 images per second.

Brazil has also ordered several Israeli-made drones costing nearly $25m and German-manufactured anti-aircraft tanks.

These deals are in addition to a contract signed with Russia for purchase of medium-range missiles and artillery batteries. Reports suggest that Brazil is also considering buying more fighter jets to strengthen its defence.

Source: International Business Times

A report about real estate investments in Brazil?

As the countdown begins to the start of the World Cup in 2014, Brazil is shaping up to be a hot spot for property investors as well as sports fans.

Leeds-based international property investment specialists Emerging Real Estate say a transformation is taking place across the country as Brazil prepares to host the world’s biggest football event- with positive spin-offs for those looking to beat the global economic downturn.  

Real estate investments in Brazil?

A survey released in December by UK based property consultancy Knight Frank highlighted that Brazil currently has the most effervescent property market in the world. According to their Global House Price Index, prices in the country rocketed 15.2% in the 12 months until the third quarter of 2012 – the largest increase globally.

Tim Morgan, chairman of Emerging Real Estate, explains: “Forbes is forecasting that the World Cup will bring in around £36 billion into the Brazilian economy by 2014. By 2012 Brazil had invested almost £7 billion in infrastructure projects such as stadiums, airports, improved roads and public transport, improving the lives of ordinary Brazilians and also making the country even more attractive to prospective investors.

“However, it would be an impossible task without the help of private foreign investors and the last few years have seen a huge increase in the amount of overseas investment in the country.

“The region of Natal in the north-east of the country is one current property hotspot that has seen a lot of changes recently due to the World Cup. The new Greater Natal International airport being built there will be open shortly and roads have been built or upgraded.”

Foreigners looking to invest in the Brazilian property market have even more reason to be energised about the market as the Brazilian government is extending tax breaks to them as  a means to encourage growth in the country’s real estate market.

Those seeking to invest in Brazilian real estate will remain exempt from paying a financial transaction charge on real estate investment trusts traded on the country’s stock exchange. This is just part of an overall plan to develop funding alternatives for local builders, many of which are overly dependent on loans from the state development bank BNDES, the main source of long term corporate financing in Brazil.

Emerging Real Estate will soon be offering new investment opportunities in Brazil for investors with a social conscience as part of the “Minha Casa Minha Vida” programme – which means My House My Life – and which aims to ease the chronic shortage of housing in the country.

Tim says: “Brazil has a massive shortage of suitable residential property for its rapidly growing population. In 2009 the Brazilian Government took decisive action and launched the massive “Minha Casa Minha Vida” programme to develop suitable social housing.

“The initiative was designed to build and provide affordable housing for people on low to moderate incomes and harnesses investor funds to build the properties. The programme aims to build 3 million homes over 5 years with phase 1 focusing on the first 1 million homes. June 2011 saw the start of phase 2, focusing on the construction of another 2 million homes. The scheme has been widely praised and recognised as a great success story so far. Those in need of housing are able to access quality housing and returns for investors are high.

“We see this project as a fantastic opportunity for our investors for a number of reasons. Brazil has long attracted property investors who have purchased holiday homes which they then rent out to fellow tourists. While this is of course still an option, the global economic downturn has inevitably led to fewer people going on long haul holidays at the moment.  

“However, the domestic market in Brazil is thriving and demand for homes has never been higher. We are recommending the domestic residential property market to investors as a way to make their money work harder for them in these difficult times – the huge demand makes the risks low but the substantial returns available make the rewards high.”

The Brazilian real estate market is in great demand as incomes rise domestically and there is greater profitability for people who build in the country. As a result most industry experts and surveys suggest that the gross operating margin of the real estate market in Brazil will become twice the amount reported in the United States and China.

Source: Bdaily

Brazilian Agriculture Confederation Supports The Delimiting Of Indigenous Territories

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BRASILIA, Brazil, May 14, 2013 /PRNewswire/ — Today, for several reasons, the indigenous question occupies a prominent place on the agenda of the Brazilian government, the Congress, the Justice and the lives of farmers in the country. The National Confederation of Agriculture and Livestock of Brazil (CNA) reports that, for the first time, the President of Brazil is taking charge and assuming the task of managing the different interests involved. And it does so in an unprecedented way, calling various organs of the government to broadly analyze the land problems, in all its aspects.

Last week, the President’s Chief of Staff, Gleisi Hoffmann, spent six uninterrupted hours on the Agriculture Committee of the House of Representatives. In discussion with lawmakers, she heard documented complaints on the issue of anthropological reports with fraudulent information justifying the creation and expansion of indigenous areas. The reports were issued by the National Indian Foundation (FUNAI) – the agency responsible for Indigenous policy and for assistance to Indigenous people inBrazil.

When FUNAI determines, through an anthropological report, that an area is indigenous, it becomes Federal land, therefore, annulling all documentation of land ownership. Conflict is created because the farmer, on this land with legal authorization by the Brazilian state, having spent decades working the land and paying taxes on it, is immediately evicted without rights to indemnity. The government pays the farmer only the minimum for improvements which have been made on the property (buildings and infrastructure), always in small amounts that prevent him from restarting his life and resuming production elsewhere.

Brazilian Agriculture And Indigenous Communities

Allegations reinforced the decision of Palacio do Planalto (the Federal Government in Brazil) to expand board decisions on the boundaries within government. So far, the problems related to indigenous communities have been treated in the Executive Branch, exclusively by FUNAI. This Foundation has always focused its activities on expanding and creating new indigenous reserves, indiscriminately and to the detriment of their other duties of assistance to these people.

For decades, the boundaries were being made in sparsely populated areas, especially in the Amazon. In recent years, however, FUNAI has been demarcating indigenous lands and expanding outside the Amazon Rain Forest, often in areas which have been occupied by non-Indian Brazilians for decades and, in some cases, for centuries. This is precisely what has caused the recent agrarian disputes, because these are areas with strong agricultural vocation.

One of the most controversial actions of the FUNAI occurs in Mato Grosso do Sul, state of the Brazilian Midwest, one of the largest agricultural producers in the country. In this state, farmers who have occupied the region, encouraged and legalized by the government itself, are threatened with the loss of their land, creating legal uncertainty and disregard for property rights. In neighboring Mato Grosso State, it was absurd to destroy the entire infrastructure of a town of 4,500 inhabitants, with public schools for 600 children, producing a devastating scenario similar to that of a civil war.

CNA requires only that the Constitution is enforced. The Supreme Court already decided, in a recent decision declaring the continuous demarcation of the Raposa Serra do Sol (judgment of 3388/2009/RR PET) constitutional, that demarcated indigenous lands can not be expanded.

After carefully going over article 231 of the Social Order of the Federal Constitution in 1988, the leadership of the CNA came across the following text: “the Indigenous people are recognized …. the original rights to lands they traditionally occupy (in 1988), making the Federal government in charge of demarcating, protecting and enforcing all of its assets.”

The intention of the constituent when using the verb “occupy” in this was to create what many have called “indigenous fact”, setting the date of the enactment of the Constitution as a framework for the identification of areas traditionally occupied by indigenous people. But FUNAI ignored this article and the new demarcations continued. Today, the indigenous territory totals 110.9 million hectares, with a population, according to the Brazilian Institute of Geography and Statistics, 517,383 Indians living in villages. This area corresponds to 12% of the territory of the country.

It is important to remember that the entire Brazilian agriculture, one of the largest in the world, occupies only 27.7% of the territory and generates, in this space, 40% of the country’s total exports, 25% of GDP (Gross Domestic Product) and a third of the jobs for Brazilians.

Definitely, Brazil, in order to continue producing food for Brazilians and for the world, must not give up this area.

From 1988 to now, indigenous communities have gained more than 96.6 million acres, but remain unattended in their social demands, such as health. This was revealed in a survey commissioned by the CNA Datafolha Institute – Institute for Opinion Research linked to the newspaper Folha de S. Paulo, one of Brazil’s biggest media outlets- at the end of last year. CNA decided to find out what the Indigenous people think and want for themselves, because in Brazil, the indigenous issue landed in the political realm and produced a meaningless polarization.

Datafolha did 1,222 interviews in 32 villages with more than a hundred inhabitants of the country. They asked about the main problem faced by them in their personal lives; 30% responded that the biggest difficulty is the access to healthcare. Unemployment and the lack of basic sanitation tied for second place with 16% of those questioned. The territorial issue in this case is practically disappears. It is only mentioned by 24% of respondents when asked about the main problems in Brazil, and it is not something they are concerned with in their daily lives.

CNA supports the government’s initiative to discuss and decide on indigenous issues from the working group that brings together diverse trained technicians. Together they are able to consider the matter, taking into account the economic and social reality of the country. It is a mistake to think that the agrarian question boils down to a conflict between the indigenous population and agribusiness. Other things being discussed are the construction of dams, roads and ports, as well as the exploitation of minerals and the very presence of the Armed Forces throughout the national territory.

The working group created has representatives from FUNAI, as well as the Ministries of Agriculture, Livestock and Supply, Agricultural Development, Cities, Justice and the President’s Chief of Staff, and the Brazilian Agricultural Research Corporation (Embrapa). This group brings together knowledge and expertise to evaluate the various aspects involved in the expansion and creation of new indigenous reserves, making the process fairer for all Brazilians involved, whether Indigeneous or non-Indigeneous people.

This conflict between white Brazilians and Brazilian Indigenous people, artificially created by FUNAI, is unnecessary because the government has ownership of 40% of the territory, which could be allocated to any Brazilian, including Indigenous people. There is, therefore, no need to endanger the areas of food production in the country, which occupies only 27.7% of the territory.

Contact: 1-253-218-9542, pedro@theinformationcompany.net

SOURCE National Confederation of Agriculture and Livestock of Brazil