foreing direct investments in brazil - 2013
TRANSCRIPT
October, 2013
Ministry of External Relations Department of Trade and Investment Promotion
Investments Division
FOREIGN DIRECT INVESTMENTS (FDI) IN
BRAZIL
• Surface: 8.5 million km2
• Population: 192 million (2011)
• Labor Force: 104 million (2011)
• GDP 2012: US$ 2,25 Trillion
BRASIL
• A safe place for investment:
– Sustained economic growth
– Fiscal responsibility
– Solid institutions
– Democratic government
– Growing domestic market
– Trade-Flow of US$ 465 billion in 2012
BRASIL
• Social Respect:
– Brazil is a peaceful and multi-ethnic nation
– Immigrants and religions are respected
– Non-conflict interactions, non-use of force in international law, peace promoter among nations
BRASIL
• 2012. BRAZIL: 4th main FDI destiny in the world
(after US, China and Hong Kong) • 2011. FDI in Brazil reached record high:
US$ 69.5 billion
BRASIL
BRASIL – Inward FDI Flow (2001-2012)
(US$ billion)
0
10
20
30
40
50
60
70
80
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
BRASIL – Inward FDI Stock (2011)
Main regions of origin
Europe 58%Noth America 24%Asia 8%Central America and Caribbean 6%South America 2%Africa, Middle East and Oceania 2%
BRASIL – Inward FDI Stock (2011)
- 20 40 60 80
100 120 140
United
Sta
tes
Spain
Belg
ium
United
Kin
gdom
Fra
nce
Japan
Germ
any
Italy
Canada
Sw
itzerl
and
Distribution of stock by country of origin (2011) (US$ billion)
BRASIL – Inward FDI Stock (2011)
15%
40%
45%
Crop, livestock and mineral extraction
Industry
Services
FDI Resource Application – Main Sectors 2011
BRASIL – Inward FDI Stock (2011) FDI Resource Application – Main Activities 2011 (US$
billion)
0102030405060708090
Fin
ancia
l and
auxili
ary
serv
ices
Bevera
ges
Tele
com
munic
ation
Oil
and g
as
extr
action
Ele
ctr
icity,
gas a
nd
oth
er
utilit
ies
Com
merc
e,
except
vehic
les
Moto
r vehic
les,
traile
rs,
sem
i-
traile
rs a
nd r
ela
ted
Meta
llic m
inera
l
extr
action
PRIORITY SECTORS:
• INFRASTRUCTURE
• OIL & GAS
• RENEWABLE ENERGIES
• AGRIBUSINESS
• RESEARCH & DEVELOPMENT
BRASIL - INVESTMENT OPPORTUNITIES
PRIORITY SECTORS: INFRASTRUCTURE
LOGISTICS INVESTMENTS PROGRAM (PIL) Launched in August 15th, 2012
• Aimed at providing Brazil with a modern, integrated and efficient transportation network, strengthening the competitiveness of the Brazilian economy by reducing logistics costs by at least 30% by the time the program reaches completion. The plan will raise investment of over $250 billion.
• A defining characteristic of the PIL is its openness to international business.
INFRASTRUCTURE - PIL
The program will auction contracts for the following infrastructure needs:
HIGHWAYS
•Widening and extending 7,500 kilometers of highways, with various stretches of road to be auctioned to the private sector following a concessions contract model. •Total estimated investiment: R$ 52 bi •R$ 30,7 bi Invested in 5 years •Concession contracts will be awarded for 30 years
INFRASTRUCTURE - PIL
RAILWAYS
•Construction of 10,000 kilometers of railway. Stretches of track are to be auctioned to the private sector following a concessions contract model. •Total estimated investiment: R$ 91,1 bi •R$ 56 bi Invested in 5 years •Concession contracts will be awarded for 35 years
INFRASTRUCTURE - PIL
PORTS
•Upgrade of existing and creation of new ports (both maritime and inland waterways), which have been opened up to private investment under a new regulatory framework.
New Expected Private investments in concessions, leases and in Private Use Terminals:
Total estimated investiment: R$ 54,2 bi •R$ 31 bi invested until 2014/15 •R$ 23,2 bi invested in 2016/17
INFRASTRUCTURE - PIL
AIRPORTS
• Development of 689 regional airports and aerodromes, including 5 international airports that are auctioned under concession contracts to the private sector. Regional airports: • Estimated investment on the 1st phase: R$ 7,3 bi in 270 regional airports • Partnership with states and municipalities for the management of the airports • Administrative concession
OIL & GAS
• Brazil is currently the 9th largest oil producer in the world and the 15th largest holder of proven oil reserves.
• The Government aims for Brazil to be the 5th largest producer by 2020 with output of 6.4 million barrels of oil equivalent per day (sum of oil and natural gas).
• Estimates of Brazilian pre-salt reserves indicate a potential for 70 to 100 billion barrels of oil equivalent.
OIL & GAS
• The first pre-salt layer bidding round was held on October 21st, 2013. The first field tendered is Libra, in the Santos Basin, with estimated reserves of 12 billion barrels.
• The pre-salt round will award rights under production sharing agreements. The Brazilian Government plans to hold new rounds of Pre-salt biddings every two years.
SUPPLY CHAIN
• There is a high demand for machinery and equipment for the exploration of oil & gas, particularly in the Pre-salt layer reserves.
OIL & GAS
LOCAL CONTENT SUPPLY POLICY
• To further develop Brazil’s O&G industry, the government instituted minimum levels of local content for products and services for the sector. Any new bids with the National Petroleum Agency or contracts with PETROBRAS for equipment and services must comply with an average 70% local content requirement. Not only does this promote strong internal investment, but local content is expected to improve post-sales services and maintenance, delivery times as well as hedge against global demand-causing delays.
OIL & GAS
• The demand for equipment and services by PETROBRAS and other foreign operators in the next 10 years far extends beyond the capacity of the current local supply chain.
Research and development (R&D)
• R&D has become key in O&G in Brazil, driven by increasing demand for non-conventional oil, improved recovery from existing fields, cost-effective solutions for new development in deep-sea fields, as well as new materials for Pre-salt basins.
RENEWABLE ENERGIES
• Brazil is the 9th largest consumer of energy in the world. Driving Brazil’s energy are massive renewable energy resources, such as hydroelectric, wind and solar power.
Domestic Energy Supply (2012)
39%
12%5%2%14%
9%
15% 4%
Petroleum and oil products
Natural Gas
Coal and coke
Uranium
Hydraulic and electricity
Firewood and charcoal
Sugar Cane Products
Others
RENEWABLE ENERGIES
• With abundant natural resources, strong government incentive programs, compelling financing options and a clear policy choice on the part of the government to encourage the development of renewable energy, the sector is one of the most attractive for foreign direct investment.
• INOVA-ENERGIA is a Support Plan for Technological Innovation in the Electric Sector. The budget will be $1.5 billion.
RENEWABLE ENERGIES: WIND
Best Investment Opportunities:
• Development of specific systems for the Brazilian climate and stronger and more stable winds, such as cost-effective blades, turbines and metal parts;
• High-technology components such as generators, automation and monitoring systems as well as high-tech inverters and converters;
• With the net-metering system approved in April 2012, several small companies are investing in services and technology for isolated systems and micro and individual wind-farms, directed at small businesses and farms in isolated locations. Smaller, less expensive systems will be in demand as well as lead and nickel batteries to support these systems.
RENEWABLE ENERGIES: SOLAR
Best Investment Opportunities:
• Isolated systems and distributed generation, specifically systems for residential and small business use are anticipated to grow rapidly due to the recent introduction of the net-metering system;
• Municipalities and government will continue to stimulate the sector by including solar energy systems in public works, buildings and parks and will require components such as batteries, self-commutated inverters, monitoring and automation systems;
• Demand for locally manufactured components, such as inverters, lead, and gel batteries, as well as supply chain, will grow due to local content requirements for government financing.
AGRIBUSINESS
• Modern, efficient and competitive, Brazil has grown into one of the world’s largest agricultural producers and exporters in the past two decades. According to the OECD-FAO Agricultural Outlook for 2010-2019, “Brazil is the fastest growing agricultural sector by far, growing by over 40% to 2019, when compared to the 2007-09 base period”.
• Gains in productivity, management efficiency, research, innovation and technological development have revolutionized the country’s agribusiness sector. Combined with the largest extension of arable land in the world – 388 million hectares (almost 960 million acres) of farmable, fertile land – and rising demand to feed a growing global population expected to reach 9 billion by 2050, the fundamentals driving demand for agribusiness in Brazil are strong.
AGRIBUSINESS
• Brazil’s leadership in the agribusiness sector has been achieved as a result of favorable growing conditions and long-term investment in research and development of tropical farming technologies.
• Advances in farming techniques and technology have been pioneered by the Brazilian Agricultural Research Corporation (EMBRAPA), whose research is responsible for the internationally renowned opening of Brazil’s semi-arid cerrado region in the Midwest of the country to soybean, cotton, corn and other crop farming. Today, EMBRAPA is on course to repeat its success by opening up a new agricultural frontier in a region called MAPITOBA, which collectively refers to new agricultural production in the states of Maranhão, Piauí, Tocantins and Bahia.
RESEARCH & DEVELOPMENT
LIFE SCIENCES
•Brazil is an ideal location for companies aiming to diversify the Life Sciences activities in a market which offers both scale and robust growth rates. The fundamentals driving the market in the Life Sciences sector include the sheer size of Brazil’s consumer market, fast-growing healthcare expenditure in both public and private healthcare services and the gradual shift to an aging population.
•Healthcare is responsible for 9% of Brazil’s GDP, with the country operating both a universal healthcare system called SUS (Sistema Único de Saúde) that accounts of almost half of total healthcare spending and caters for 80% of the population, as well as a private healthcare industry.
•There are a number of incentives and conditions in place that make Brazil a top destination for foreign investment and technological development in the Life Sciences sector.
RESEARCH & DEVELOPMENT
SEMICONDUCTORS
• With a young population and emerging middle class avid for new technology, the demand for electronic goods on Brazil’s consumer market is huge.
• Brazil ranks high in the strongest performing semiconductor markets – 2nd largest mobile phone market, the 4th largest consumer electronics market, the 3rd largest computers and peripherals market, the 4th largest financial cards market and the 7th largest industrial high-tech goods market.
• In order to seize upon this opportunity created by such strong demand to create wealth, jobs and contribute to national economic development, the Government of Brazil has identified semiconductors as a priority sector for attracting investment. To incentivize business in the semiconductors sector, the federal government has adopted several initiatives.
Investments Division Telephone: +55 61 2030-8960
www.brasilglobalnet.gov.br
THANK YOU!