presentation for fgv aug14
TRANSCRIPT
Doing Business in Brazil Overview, Opportunities and Challenges
FGV – Creating Innovative Businesses in BrazilAugust 2014
Doing Business in Brazil
Rio de Janeiro – Facts & Figures
AG
EN
DA
Introduction
The Role of the Institutions
Brazil – Facts & Figures
About Rio Negocios
Tonight’s Agenda
“…a slightly gangly adolescent, standing tall amid the world community, not fully grown into its new stature but confident and eager to make its mark”
Ricardo Amorim, Brazilian Economist
ABOUTBRAZIL
Brazil: too big to ignore
Source: Euromonitor International
“What makes Brazil unique is the strength of its domestic demand”
Neal Shearing at Capital Economics
USD 448Billion investment(2013-2016)
Oil and Gas = USD 203 Bi
Electric Energy = USD 83 Bi
Telecom = USD 51 Bi
Railways = USD 38 Bi
Highways = USD 35 Bi
Sanitation = USD 21 Bi
Ports = USD 12 Bi
Airports = USD 5 Bi
Source: BNDES
BNDES: Perspectives in InfrastructureInvestment by sector
ABOUTRIO
Belo Horizonte
São Paulo
Vitória
Curitiba
Brasília
Campo Grande
Rio de Janeiro Açu Port
Vitória Port
Rio Port
Santos Port500 km
AP4
AP5
AP3
AP2
AP1
SepetibaPort
Population: 6.5 M Logistics HUB – 2 ports, 3
airoports (2nd most important in the country)
56% of Brazilian GDP is within a 500km radius
All pre-salt reserves within a 500km radius
Framework
KEY FACTORS
Institutional Security
Demand for Commodities (Food, Mining, O&G)
Strong expansion in the Internal Market
National Factors
Public Safety
Alignment & New Political Generation
Regional Factors
International Events
Talent Pool Largest amount of courses with Best quality in science
Sectors Headquarters of investments captors 50% of the country targeted investments in sectors that
Rio has the lead (BNDES)
O&G
USD 400 billion investment over the next 10 years Logistics (ports of Sepetiba and Rio) Engineering Services Industries (Inhaúma Shipyard, COMPERJ) Technology
EFFECTS CHALLENGES
Business Framework
EFFECTS KEY FACTORS CHALLENGES
Global visibility
Unemployment Rate (Talent & Productivity)
Infrastructure
Waterfront Area: USD 4.5 B Transport: USD 8.5 B Sanitation, Environment and Olympic Areas
Industrial Expansion
CSA: USD 6.7 Bi investment (Brazil largest) O&G Chain and arrival of new companies in the sector:
Rolls Royce, Oil & States
Technological Development USD 1.6 B investment in new R & D Centers
Services & Real Estate 16,000 Housing Units in New Hotels (70%) 10,000 commercial units launched in 2012 (350 km ²)
Table Source: Estimates produced by the database of Aggregated Data Census 2010 by census tract, extracted 25/07/2012Graph Source: IBGE, Research, Coordination of Work and Income, Monthly Employment Survey
Unemployment Rate
Business Framework
Rio de Janeiro - RJ 48.90
Recife - PE 50.76
Vitória - ES 54.25
Salvador - BA 55.06
Brazil 56.12
Brasíl ia - DF 58.88
Porto Alegre - RS 59.26
São Paulo - SP 60.39
Belo Horizonte - MG 60.51
Curitiba - PR 52.82
Population 15-24 years old, working or seeking employment (%)
CHALLENGES KEY FACTORS EFFECTS
Professional Training
Bureaucracy
Construction of the city's image
Operating Costs
Commercial exploitation of the moment
• Project professional training of approximately 150,000 service professionals
Source: Rio Negócios, database of companies received
Shortage of areas
14%
12%
11%
11%11%
9%
9%
7%
7%4% 3%
2% Industry
Tech
Energy
HospitalityFinances
Infrastructure
Creative Economy
Consulting
International Representations
EducationHealthSales
+4K companies
% Of Sector Companies Received by Rio Negócios
Business Framework
38%
25%
15%
15%7% shipyard
steel
petro-chemical
automotiveothers
USD 19B
42%
29%
21%
8% logistics & transport
energy
urbandevelopment
sanitation
USD 24B
The Economic Hub of the State Investments
Source: FIRJAN “Decisão Rio 2012-2014”, Rio Negócios AnalysisNote: USD = 1.8751 (BACEN – Dec-31-11)
¹ Investments which does not restrict the one region of the state
South USD 7.6B
North WestUSD 0.5B
NorthUSD 13.9B
EastUSD 6.1B
CenterUSD 0.5B
“Baixada”USD 7.8B
City of RioUSD 18.4B
Various (all state)¹USD 58.2B
USD 113 B
51%
19%
24%4%
1%1%
O&G
infrastructureOlympicvenues
otherstourism
manufacturingindustry
investment by sectors investment by region
The economic center of the state investments
INTERNATIONAL
• 35% of working visas in Brazil were issued to Rio
• Ranked “Best Place to Live” by foreign residents in Brazil
LIFESTYLE • A unique culture that
promotes innovation and entrepreneurship
GEOGRAPHY• Over 90 km of beaches
• 30% of the city is made up of green areas
• Largest urban forest in the world
Global Citythe place to attract and retain talent
# of Courses - CAPES (Post Grad) - Grades 6 and 7# of Courses - MEC (Undergraduate) - Grades 4 and 5
-
4
8
12
16
20
24
28
32
2
7 8 8
14
27 Rio de Janeiro
Porto Alegre
Recife
São Paulo
Belo Horizonte
Campinas
Source: MEC, CAPES, Universities and RN analysisNote: Courses – Engineering, Physics, Chemistry, Math, IT and Business (Administration, Economics and Accounting)
-
30
60
90
120
150
31 35
43
75 76
128
Rio de Janeiro
Porto Alegre
Recife
São Paulo
Belo HorizonteCampinas
Talents: leader in academic excellence
Higher EducationRio is home to 20% of Brazil’s leading academic institutions
Latin American Center for R&D
USD1,6 billioninvestments
Focus RN
ENERGY
DIGITAL
ICT
INDUSTRY
FINANCIAL SERVICES
INFRASTRUCTURE
CREATIVE ECONOMY
EDUCATION
O&G – E&P, P&D, RTM
Startups, Software & APPs
Call & Data Centers, BPO’s
O&G, Bio-Pharma
Insurance & Reinsurance, VC’s & PE’s, Stock Exchange
Real Estate, Hospitality & Olympic Projects
Media & Audiovisual
International Universities
Why Rio• Petrobras, ANP, ONIP, Promimp • 63% of E&P & 75% of HQ of major energy comp.• USD 400B in investment over the next 10 years
• The city has a plan to turn Rio into the main digital technology hub in Latin America
• USD 1.0 B in Innovation Program• 4G ultra-broadband
• Pre-salt supply chain• USD 500M in Innovation Program
• 45% of Asset Manag.1 &60% of PE Managers 1
• 51% of Pension Funds Assets• National Reinsurance Center
• 17,000 new rooms (75 new hotels)• Waterfront Area: PPP USD 4.5 Bi• Mass Transportation System: 8.5 Bi investment
• 58% Brazilian movies released• 94% revenue of Brazilian production industry
• Rio is home to 20% of all the top rated universities in Brazil
1 not related to retail banks
Strategic Sectors
BRAZILDOINGBUSINESS
TOPICS DB 2014 Rank DB 2013 Rank Change in Rank
Starting a Business 123 20 121 11 -2 -9
Construction Permits 130 34 126 30 -4 -4
Getting Electricity 14 13 14 13 No change No change
Registering Property 107 25 103 24 -4 -1
Getting Credit 109 3 105 3 -4 No change
Protecting Investors 80 6 80 6 No change No change
Paying Taxes 159 64 160 69 1 5
Trading Across Borders 124 22 124 21 No change -1
Enforcing Contracts 121 11 121 12 No change 1
Resolving Insolvency 135 17 146 16 11 -1
Ease of Doing Business
Indicator BrazilLatin America &
Caribbean OECD
Procedures (number) 13 9 5
Time (days) 107.5 36.1 11.1
Cost (% of income per capita) 4.6 33.1 3.6
Advantages• Political Stability• Solid Institutions• Internal Market Growh• Investments in Infrastructure
Disadvantages• Overall Bureaucracy• Tax burdens - around 37% of GDP• Corruption• Operating Costs• Cultural Aspects / Time
The Great and the Not so Great
1. Relationships come first, second and third2. Time is relative3. Local commitment 4. Organizational structure5. Business meetings6. Language7. Personal Communication8. The Written Word9. Humor10. Appearance
Cultural Aspects
Federal LevelMinistry of Development, Industry and Commerce (MDIC)Ministry of Exterior Relations (MRE)APEX
State LevelUndersecretary of International RelationsCODINAgeRioFIRJAN
Municipal LevelRio Negócios
Public Institutions that can help
ABOUTRIONEGÓCIOSthe investment promotion agency of the City of Rio de Janeiro
Rio NegóciosFollowing in the footsteps of the world’s top cities to create the first municipal investment promotion agency in Brazil
How We Work
ENERGYO&G – E&P, R&D, RTM
HIGHTECHStartups, Soft wares
ITCData Centers
INDUSTRYO&G, Bio-Pharma
FINANCIAL SERVICESInsurance & Reinsurance,
VC’s & PE’s, Stock Exchange
INFRASTRUCTUREReal Estate, Hospitality &
Olympic Projects
CREATIVE ECONOMYMedia & Audiovisual
EDUCATIONInternational Universities
Our Focus & Opportunities How We Work
PRODUCT DEVELOPMENTDevelopment of Clusters and new opportunities
BUSINESS INTELLIGENCEAnalysis and sector information
BUSINESS PROMOTIONBusiness Campaigns
FACILITATIONAccelerating Projects
4 years: Track Record
56 Projects
USD 3.2B Investments
15K Jobs
USD 11M Payroll
Thank you!Tami Vivas
Institutional Relations ManagerRio Negócios