brazil investment climate.pdf
TRANSCRIPT
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BRAZILS INVESTMENT CLIMATE - 2011
DURVALDE NORONHA GOYOS JR.SENIOR PARTNER - NORONHA ADVOGADOS
BRAZILIAN EMBASSYOCTOBER 17, 2011.
London | Lisbon | Shanghai |Beijing | Miami | Buenos Aires | Johannesburg
So Paulo | Rio de Janeiro | Braslia | Curitiba | Recife | Belo Horizonte | Campo Grande
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1. Brazilsome geopoliticalfundamentals
1.1 Map of Brazil;
1.2 Strategic Advantages;
1.3 Oil Production;
1.4 Ethanol Production and
1.5 Somes of Energy.
2. Brazils economy2.1 Population and income;2.2 GDP;
2.3 External debt;
2.4 International reserves;
2.5 Inflation;
2.6 Exchange rates;
2.7 Interest rates and
2.8 Current account.
POINTS OF PRESENTATION
3. Brazils foreign trade
3.1 Overview of Brazils foreign trade;
3.2 Main suppliers;
3.3 Main buyers;
3.4 Main exports;
3.5 Main imports;
3.6 Main markets;
3.7 Exports by added value and
3.8 Trade in agricultural products.
4. Brazils investment flows
4. 1 Inbound and
4. 2 Outbound
5. Conclusion: Brazilian EconomyUnder Dilma Roussefs administration
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1.1 Map of Brazil
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1.2 Strategic Advantages
Pop over 100 Millioninhabitants
GDP overUS$ 1 Trillion
GDP,Population,Agriculture
Arable land over20 millions
hectars
ARG
KZT TUR
UKR
AUS
IDN
PKT
NIG
BRAUSA
INDRUS
CHI
BGL
MEX JPN
CAN
GER UK
NLD KOR
SPN
ITA
FRA
Source:Fiesp
http://flagpedia.net/bangladeshhttp://flagpedia.net/indiahttp://flagpedia.net/the-united-stateshttp://flagpedia.net/brazilhttp://flagpedia.net/nigeriahttp://flagpedia.net/indonesiahttp://flagpedia.net/pakistanhttp://flagpedia.net/mexicohttp://flagpedia.net/francehttp://flagpedia.net/spainhttp://flagpedia.net/south-koreahttp://flagpedia.net/italyhttp://flagpedia.net/the-netherlandshttp://flagpedia.net/the-united-kingdomhttp://flagpedia.net/germanyhttp://flagpedia.net/canadahttp://flagpedia.net/argentinahttp://flagpedia.net/turkeyhttp://flagpedia.net/kazakhstanhttp://flagpedia.net/australiahttp://flagpedia.net/the-people-s-republic-of-chinahttp://flagpedia.net/japanhttp://flagpedia.net/russia -
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20051.85 million barrels a day
2006Brazil achieves self sufficiency in oil
2007Discovery of Tupi oilfield with estimated 10 billion of barrels
of oil.The discovery could double the Brazilian reserves.
2008Discovery of Carioca oilfield with estimated 70 billion barrelsof oil. Discovery puts Brazil's oil reserves among the world's largest 1
20102.1 million barrels a day
20112.6 million barrels a day 2
Fundamentals
Source:1- Financial Times, July 8 20082- Petrobras, February 2011 estimate
1.2 Oil Production
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Fundamentals
27 billion liters/year (2009)
70 billion liters/year (2020)* Estimate
Increase in cultivated area by 67,000 hectares
Creation of 20,000 direct jobs and 60,000 indirect jobs Investments in production chain estimated at around
USD 1,5 billion for the next years
CO2 emission reduction by 3.5 million tons/year
1.3 Ethanol Production
Source: Sugar Cane Industry Union - UNICA
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Fundamentals
Source: Brazilian Ministry of Mines and Energy
1.4 Sources of Energy
86%
14%
55%
45%
0
20
40
60
80
World Brazil
Renewable Non-Renewable
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2.1 a Brazil's Social Development: Division by Classes in 2009
Source: FGV
Brazil's Economy
15%
55%
30%
%
Classes A/B
Classe C
Classes D/E
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2.1 b Middle Class in % of the Brazilian Population1992/2011
Brazil's Economy
32.52
30.98
36,5237.39
36.37
38.69
37.6437.64
45.08
47.06
49.9653
55
0
10
20
30
40
50
60
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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2.1 cSalaries Growth
Source: DIEESE
Brazil's Economy
20%
8.33%
15.38%
16.67%
8.57%9.21%
12.05%
9.68%
6.86%
0%
5%
10%
15%
20%
25%
2003 2004 2005 2006 2007 2008 2009 2010 2011
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2.1 dReal Growth of the Minimum Wage1996/2011
Minimum Wage today in SP: R$ 600,00
Source: DIEESE
Brazil's Economy
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-4.20%
-0.30%
4.50%
1.50%
4.70%
12.40%
3.60%
1.23% 1.19%
8.23%
13.04%
5.10%
4.03%
5.79% 6.02%
10.30%
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35.03
28.6528.82
26.8828.14
26.5928.03
22.66
19.1918.11
16.0015.32
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
1 2 3 4 5 6 7 8 9 10 11 12
2.1 e Poverty in % of the Brazilian Population1992/2010
1993 1995 1996 1998 1999 2002 2003 2005 2006 2007 2009 2010
Source: CPS/FGV
Brazil's Economy
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158.8
136.4
123.3
103.8108.9
97.4
84.3 79.0 76.0
63.0
51.3
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
1 2 3 4 5 6 7 8 9 10 11
2.1 g Number of Minimum Wages Required to Acquire a Basic Car
Source: FIPE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Brazil's Economy
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2.2 a Brazils GDP in US$
Source: Brazilian Institute of Geography and Statistics - IBGE
Brazil's Economy
2003 2004 2005 2006 2007 2008 2009 2010
GDP
(Billion)552 663.4 882 1,006 1,300 1,378 1,922 2,090
Population
(Million)178.9 181.5 185.5 186.7 188.9 196.0 199 203
GDP per
capita(Thousand)
3,10 3,66 4,77 5,41 6,91 7,030 9,658 10,295
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2.2 b Economic Growth % (GDP)
Source: Brazilian Institute of Geography and Statistics IBGE/IEDI * Estimate March, 2011
Brazil's Economy
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2003 2004 2005 2006 2007 2008 2009 2010 2011
1.10
5.70
3.20
4.00
6.10
5.20
-0.60
7.50
4.00
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Source: MTE - CAGED
2.2 c Brazils GDP 19912011
Brazil's Economy
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1.0
-0.5
4.7
5.3
4.4
2.1
3.4
0.0
0.3
4.3
1.3
2.7
1.1
5.7
3.2
4.0
5.7
5.1
0.0
7.5
4.0
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2.2 d Biggest Economies - Projected 2011 - GDP US$ Trillion
Source: The Economist
Brazil's Economy
B il' E
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2.3 Development of External Debt
Brazil's Economy
Source: Central Bank * April, 2011
Year Gross Amount (US$ Billion) Net Amount (US$ Billion)
2000 216,9
2001 209,9
2002 210,7
2003 214,9 165,6
2004 201,4 148,42005 169,4 115,6
2006 172,6 86,76
2007 193,2 12,86
2008 200,2 (-28)
2009 201,4 (-62)
2010 288,6 (-51)
2011* 355 (-120)
il
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Brazil's Economy2.4 Brazilian International Reserves
Year US$ Billion
2003 49,3
2004 52,9
2005 53,8
2006 85,82007 180,3
2008 193,8
2009 238,5
2010 288,6
*2011 355
Source: Central Bank *April, 2011
B il' E
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Brazil's Economy2.4 a Brazilian International Reserves
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
2003 2004 2005 2006 2007 2008 2009 2010 2011
49.3 52.9 53.8
85.8
180.3
193.8
238.5
288.6
355.0
Source: Central Bank *April, 2011
US$ Billion
B il' E
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Source: Brazilian Institute of Geography and Statistics - IBGE
Brazil's Economy2.5 a Brazilian Inflation Rates
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
12.53%
9.30%
7.60%
5.69%
3.14%
4.46%
5.90%
4.31%
5.91%6.50%
F d t l f B il' E
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6.0
4.0
2.0 1.5
6.5
3.5
2.5 2.52.5 2.5 2.5 2.5
10.0
8.0
6.0 5.5
10.5
7.5
6.56.5 6.5 6.5
6.5 6.5
8.9
6.0
7.7
12.5
9.3
7.6
5.7
3.1
4.5
5.9
4.3
5.9
8.0
6.0
4.03.5
8.5
5.5
4.5
4.5
4.5
4.54.5 4.5
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0 2 4 6 8 10 12 14
Tolerncia Mn. Tolerncia Mx. IPCA META
Fundamentals of Brazil's Economy2.5 b Brazils Inflation Rate Targeting
Source: Central Bank / IBGE
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
B il' E
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1.813 1.775
1.770
1.595
2.332
2.3121.961
1.741
1.8831.8051.779
1.736
1.8191.802
1.7541.7551.6901.701
1.715
1.665
1.673
1.660
1.628
-
0.500
1.000
1.500
2.000
2.500
2.6 Exchange Rates of the Real Against the US Dollar
Brazil's Economy
B il' E
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2.7 World's Interest Rates
Country Nominal Rate Inflation Real Rate
Turkey 6,25% 4,16% 2,09%
Russia 8,00% 9,50% -1,50%
Brazil 12,00% 6,50% 5,50%
South Africa 5,50% 3,70% 1,80%
Mexico 4,50% 3,57% 0,93%
India 5,75% 9,30% -3,55%
Euro Area 1,00% 2,40% -1,40%
China 6,06,% 6,01% 0,05%
Japan 0,00% 0,00% 0,00%
USA 0,25% 2,10% -1,85%
Source: Trading Economics * Estimate 2011
Brazil's Economy
Brazil's Economy
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US$ Billion
2.8 Brazil's Current AccountBrazil s Economy
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-23.502
-30.452-33.416
-25.335-24.225
-23.215
-7.637
4.177
11.679
13.98513.643
1.551
-28.192-24.302
-51.822
42.200
-60
-40
-20
0
20
40
60
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
B il' E
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2.9 Main problems yet to be solved
Taxes are not competitive;
Interest rates are very high;
Brazilian currencyovervalued;
Labour costs and
Infrastructure.
Brazil's Economy
F ig T d
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Foreign Trade3.1 Brazils Balance of Trade
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
US$ Billion
0
50
100
150
200
250
300
350
400
2004 2005 2006 2007 2008 2009 2010 2011
Exports Imports Balance Flow of Trade
Foreign Trade
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Foreign Trade3.2 Major Suppliers Countries to Brazil
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.3 Major Countries for Brazilian Exports
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.4 Main Products Exported
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.5 Main Products Imported
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.6 a Major Suppliers Markets to Brazil
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.6 b Major Markets for Brazilian Exports
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Foreign Trade3.7 Products Categories of Exports
Source: Development, Industry and Trade Ministry - MDIC * June 30, 2011
Foreign Trade
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Products Position between main exporters % of Total Global Exports
Orange juice 1 81%
Poultry 1 35%
Sugar 1 33%
Coffee 1 30%
Tobacco 1 27%
Bovine Meat 1 24%
Ethanol 1 13%
Soy 2 32%
Soy Oil 2 28%
Pork 4 11%
Cotton 5 5%
Source: MDIC * December 2010
Foreign Trade3.8 Brazilian Trade in Agricultural products
Investment Flows
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Investment Flows4.1 Foreign Direct Investment: Inflows
Source: Central Bank
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
32.80
22.50
16.60
10.10
18.10
15.10
18.80
34.70
45.10
25.90
50.00
70,00 *
*Central Bank Estimate
Investment Flows
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212224
2440
404045
515253
60108
158223
232
0 50 100 150 200 250 300
LuxemburgSweden
Hong KongSingapore
MexicoItaly
SwitzerlandBelgium
GermanyRussiaSpainChina
CanadaFrance
United KingdomUSA
US$ Billion
Source: Unctad, World Investment Report 2008
Brazil
Investment Flows4.1 Foreign Direct Investments: Inflows by Country - 2008
Investment Flows
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Investment Flows4.2 Foreign Direct Investment: Outbound
Source: Central Bank
US$ Billion
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
3.20 2.80 3.102.00
11.10
4.00
29.30 29.60
34.10
22.30
28.00
Investment Flows
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Source: Unctad, World Investment Report 2008
US$ Billion
USAUnited Kingdom
France
Germany
Spain
Italy
Japan
Hong Kong
Belgium
Switzerland
Russia
Brazil
Holland
Canada
China
Belize
Investment Flows4.2 Foreign Direct Investment: Outflows by Country - 2008
Foreign Trade
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Sound policies ofLulas government are to be sustained;
Inflation targeting maintained;
Interest rates policies are to be maintained;
Over appreciation of Real is to be maintained;
Some tax reforms will take place; Some reforms in Labour Law to take place;
Public management to be improved;
Foreign Trade balance to decrease;
Current account deficit to grow;
Economy to continue to grow at about 5% per year; and
Brazils economy is poised to overtake Frances, Britainsand Germanys by the end ofRoussefs administration.
Source: Brazilian Ministry of Foreign Affairs
Foreign Trade5. Dilma Roussefs Administration: The Brazilian Economy andForeign Trade
NORONHA ADVOGADOS
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Address:4th floor, 193/195 Brompton RoadLondon SW3 1NEEngland UK
Phone: (44-20) 7581-5040Fax: (44-20) 7581-8002
Contact:Vera Helena de Moraes Dantas
NORONHA ADVOGADOS
Located in one of the main financial centers of the city, the So Paulo office is the headoffice of Noronha Advogados and the oldest, having been opened in June 1978.
The London office, opened in 1987, has partners admitted in England and Wales, isregulated by the SRA and supports investments and business with Brazil.
Address:Av. Brig. Faria Lima, 1485 17andar Torre Norte01452-002 So Paulo SP
Brasil
Phone: (55-11) 5188-8090Fax: (55-11) 5184-0097
Contact:Durval de Noronha Goyos Jnior
Lilian Thom
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NORONHA ADVOGADOS
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Durval de Noronha Goyos Jr.