Development

and Investment

Department

Doing Business in Rio

Grande do Sul Grande do Sul

Porto Alegre, March 2012

Marcus Coester - CEO

Rio Grande do Sul Development Agency - AGDI

Rev. 1

Outlook

• Wide range of opportunities in Brazil

• Sports events:

– World Cup 2014

– Olympics 2016

• Pre Salt and emerging offshore industry

• Agribusiness, equipment and technology• Agribusiness, equipment and technology

• New technologies: semiconductors, biotechnology

• Clean energy: wind power, biofuels

• National broadband programme

• Rio Grande do Sul mature and diversifiedindustry

• Universities and research infrastructure

• Highly trained labor force

• Quality of life

Brazil

• Population: 195 million(5th)

• Average age: 29

• Language: Portuguese

• Area: 8,514,877 sq km (5th)• Area: 8,514,877 sq km (5th)

• Coastline: 7,491 km

• GDP/PPP: US$ 2.172 trillion(8th)

• GDP per capita: US$ 10,800

• GDP growth for 2010: 7.5%

• Unemployment rate: 6.7%

Rio Grande do Sul

• 11 million inhabitants

• 95,5% literacy rate

• Capital City: Porto Alegre

• Life expectancy of 75 years

• Small business european• Small business europeanbackground

• Second health and hospital cluster in Brazil

• HDI: 0.832 (among 30 best countries)

• Unenployment rate: 4.5%

• Focus on sustainability andlong term projects

Main Markets

Paraguay

GDP: US$ 18.5 billion

Population: 6.5 million

Radius of 1.4

thousand km

Mercosur

GDP: US$ 2,608.8 billion

Population: 244.6 million

Brazil

GDP: US$ 2,172 bilion

Population: 193 million

Uruguay

GDP: US$ 48 billion

Population: 3.3 million

Argentina

GDP: US$ 370.3 billion

Population: 41.8 million

Population: 6.5 million

The Gaucho

Soccer

• World

Champions

• Grêmio 1983

• Internacional • Internacional

2006

• Brazilian

Champions

• Libertadores da

America

ChampionsGRE-NAL

Land of Presidents

7 presidents came

from Rio Grande do

Sul, including

President Dilma

RousseffRousseff

Getúlio Vargas (1930-1945)

Dilma Rousseff (2011-2014)

Governor Tarso Genro

• Rio Grande do Sul Governor 2011-2014

• Minister of Luiz Inácio Lula da Silva 2003-2010– Minister of Justice

2007-20102007-2010

– Minister of InstitutionalRelations 2006

– Minister of Education2004-2005

• Mayor of Porto Alegre 2001-2004

• Mayor of Porto Alegre 1993-1996

Development Structure

StateGovernor

Develop.Secretary

Finance

Develop.Council

Develop.Secretary

AGDI Badesul BRDE Banrisul

FinanceSecretary

Investor Office

• Coordination of Government Departments• Infrastructure

• Environment

• Taxes

• Financing

• Land• Land

• Interface with• Municipalities

• Business Associations

• Universities and Education

• Federal Government

• Permanent interaction between key actors in the investment process

Rio Grande do Sul

Industrial Highlights• 3rd largest industrial park of Brazil

• 1st center for agricultural equipment

• 1st center for transport equipment production

• 1st producer of leather and footwear

• 2nd center for metal products • 2nd center for metal products

• 2nd center for machines and equipment

• 2nd center for chemical products

• 2nd center for rubber and plastics

• 2nd center for furniture

• 2nd center for beverage production

• 4th center for food manufacture

• 4th center for vehicle production

Industry Geography

AGRIBUSINESS

METAL MECHANICAL

AND MACHINERY

ELECTRONICS

AND SOFTWARE

AUTOMOTIVE

OFFSHORE

AND SOFTWARE

WIND POWER

PETROCHEMICAL

Innovation and Quality

• PGQP - Industrial

Quality and

Productivity

Program since 1992

• Metrology Network

• International

Innovation

Conference – Porto

Alegre

Industrial Districts

• 5 state owned industrial districts

– Alvorada-Viamão

– Guaíba

– Bagé– Bagé

– Montenegro – Triunfo

– Rio Grande

• Regional/municipal industrial districts

• Technology parks

• Private industrial districts

Tecnosinos

Technology Parks

• In operaton– PUC

– Tecnopuc (60 companies)

– FEEVALE– Valetec (21 companies)

– UNISINOS– UNISINOS– Tecnosinos (53 companies)

– 10,000 people

• 10 other parks beingimplemented

• RS Tecnópole – R$ 12 million destined to park infrastructure

Research Centers

Universities and

Education• 111 undergraduation

and graduation

institutions

• 1.635 courses1.635 courses

• 125.557 students

• UFRGS: 625 research

groups / 15,000

persons

Universties Highlights

• Federal University of Rio Grande do Sul (UFRGS): 4th position overall.

• Pontifical University of Rio Grande do Sul (PUCRS): 3rd position among the private universities.

• University of the Vale dos Sinos (Unisinos): 4th position among the private universities. private universities.

• The Universities of Rio Grande do Sul has THE HIGHEST proportion of professors with master and doctor degree (75%) (Synopsis of the Superior Level Education – 2009 – MEC).

• The post-graduation courses offered by the Universities of Rio Grande do Sul in Computer Science, Engineering and Material Sciences are ranked among the best in Brazil (Triennial Evaluation CAPES - Ministry of Education 2010).

3,14

2,98

2,92

2,9

3

3,1

3,2

Weighed GCI- Universities

Univerisities

Qualification

2,81

2,68 2,67

2,4

2,5

2,6

2,7

2,8

2,9

RS MG PR SC SP RJ

GCI – General Courses Index

Sourcee: MEC/INEP – Censo da Educação Superior

32

2123

27

02125

30

35

PhD and Masters deegree scholarships for every 100 thousand inhabitants -

2010

R&D&I

17

2123

16

021

016

012

016

012

010

00

05

10

15

20

25

RS SP SC RJ PR MG

Fonte: GEOCAPES - 2010

Professionalization

Structure

113 institutionsofoftechnologicaland technicaltraining

001001

000001

001

001

Number of Senai units for every 100 thousand inhabitants

Technical Training

000

000000

000

000

000

000

000

RS SC MG PR SP RJ

Source: IBGE and State Senai sites (RS, RJ, MG, PR, SP).

1621,611504,41

1137,041070,32 1068,89 1054,67

800

1000

1200

1400

1600

1800

Average salary for the metal mechanic and automotive industry’s labor force

Average Salaries

0

200

400

600

800

SP RJ PR RS MG SC

Weighed average of salary costs of the last 6 months for Automobile technician, mechanical

engineer, automation engineer, vehicle builder, vehicle painter and assembly team operator

Source: RAIS – Ministério do Trabalho (Ministry of Labor)

Logistics

• InternationalAirports

• Regional Airports

• Roads• Roads

• Railroads

• Ports

• Pipeline

• Uniquewaterwayssystem

Agribusiness

• Premium beef

• Wine and grape juice

• Rice, soya and corn

• Dairy products• Dairy products

• Food

• Aviculture

• Fruit

Automotive

• More than 700 companies– GM

– Pirelli

– Parker

– John Deere

– Marcopolo– Marcopolo

– Guerra

– Randon

• More than 80,000 employees

• 12 % of Rio Grande do Sul’sindustrial GDP

• US$ 15,5 billion in sales in 2010

Emerging Industry

• Offshore

• O&G Equipment andServices

• Wind Power

• Genetic Engineering• Genetic Engineering

• Medical Devices

• Semiconductors

• Creative Industry

• Clean Technology

• Nuclear Medicine

• Functional food

Offshore Industry

• Ecovix (ERG I) –Construction of 8 FPSO hulls in Rio Grande

• Quip – Constructionof the P-55, P-58 andP-63P-63

• Estaleiro Wilson Sons – Shipyard for supply boats in Rio Grande

• Estaleiros do Brasil S.A. – Shipyard in São José do Norte

• IESA – Offshore yardin Charqueadas

Rio Grande Shipyard - Ecovix

Offshore Supply Chain

Raw materials

Metal-Mechanic

Electrical and

Electronic products

Equipment

Automation

Offshore yards

Heavy equipment

Heavy structures

Shipyards

Wind Power

• Established

– 9 wind farms: 282 MW

• Forecast 2014

– 44 wind farms: 1,056 MW

• Investments 2011-2014:• Investments 2011-2014:

– Brazil: US$ 10.5 billion

– RS: US$ 2.32 billion

• Potential

– Brazil: 143.5 GW

– RS: 15.9 GW

Semiconductors

• Ceitec

• HT Micron

• SMDH

• Others comming• Others comming

International

Cooperation• 2011

– Korea

– UKTI - SDI

– Chamber of Commerce

• AMCHAM

• AHK POA

• Brasil - Texas

– China Invenst

– IESingapore

– EDB Singapore

Mission to South

Korea

• May 26 to June 4, 2011

• 67 representatives

– State Government

– City Mayors

– Companies– Companies

– Universities

– Brazilian Embassy

– Banco do Brasil - Seul

• Business agenda

• MOU between FIERGS and KOMEA

• Brazil Partner Country

• Presence of Governor

Tarso Genro

• 350.000 Visitors, 4.200

ExhibitorsExhibitors

• 50 Companies from Rio

Grande do Sul, 16

Supported

• 3 Technolgy Parks

• Rio Grande do Sul

Seminar

Investiment

AnnouncementsSector Projects Estimated Value (R$ m)

Pulp & Paper 1 4.200

Automotive 8 2.973

Offshore 7 2.784

Oil & Gas Industry 2 1.690

Petrochemical 3 754Petrochemical 3 754

Agriculture Machinery 3 668

Agrobusiness 11 535

Semicondutors 1 370

Machines & Equipment 3 248

Electrical Equipment 5 192

Others 16 467

Total 60 14.881

Business

Opportunities• Infrastructure, housing and health: US$ 555 million

• Expansion of Aeroporto Salgado Filho (Porto Alegre): US$ 192 million

• Subway (Porto Alegre) estimate: US$ 1.36 billion

• Waterways Project of Mercosur: US$ 132 million

• Irrigation system (PAC-II): US$ 330 million

• Hydroelectric plants: US$ 2 billion

• Wind farms: US$ 2 billion

• Offshore industry: US$ 1.5 billion

• Automotive: US$ 1.5 billion

• Petrochemical: US$ 1.5 billion

• Pulp and paper: US$ 1.5 billion

• Estimated total: US$ 12.57 billion

Conferences and Tradeshows

in Rio Grande do Sul

March, 5 – 9 Expodireto – Não-Me-Toque - Agribusiness

March, 20-23 FIMEC - Novo Hamburgo – Shoes and Leather Eq.

March, 20-23 Feira do Polo Naval RS – Rio Grande - Offshore

March, 25-29 FIMMA - Bento Gonçalves – Furniture Equip.March, 25-29 FIMMA - Bento Gonçalves – Furniture Equip.

May, 15 – 17 BITS (Business IT South America) – Porto Alegre

Aug/Sept, 28 - 02 Expointer – Esteio - Agribusiness

October, 2 - 5 Mercopar Industrial – Caxias do Sul - Industrial

November Innovation Conference – FIERGS – Porto Alegre

Mercopar

• Subcontracting and Industrial Innovation Fair

• Caxias do Sul – October 2012

• Over 500 Exhibitors

• 30.000 Visitors

• Sectors• Sectors

• Industrial Automation

• Rubber

• Electrical and Electronic Products

• Energy and Environment

• Metal-Mechanical Industry

• Industria Services

Conclusions

• Consolidated industrial structure and skilled labor

• Emerging industry: offshore, wind power, semiconductors, medical devices...

• Plenty of investments and opportunities in diversifiedareasareas

• Production base for Brazil, Mercosul and other regions

• Hub for research and new technologies

• Focus on quality of life and sustainability

• Right time for planning and implementing new business

in Brazil and Rio Grande do Sul

sports, culture,

entertainment and

oudoor life

AGDI – Rio Grande do Sul Development Agency

Marcus Coester – CEO

Phone: +55 51 3288 6734

E-mail: marcus-coester@agdi.rs.gov.br

Thank you!