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Brazil:New Initiatives for Industrial and
Technological Development
Opportunities for Foreign Investors
June 2004
Luiz Fernando Furlan
Minister of Development, Industry and Foreign Trade
It keeps being successful, but there is still more to know
There is a Brazil that many people know
Soccer Carnival CoffeeAmazon forest
The Brazil that you must know
Innovation, technology, competitiveness and productivity
GDP: US$ 500 billion (2003);
Per capita income: US$ 2,800 (2003);
6,300 Ph.D. graduated every year;
97% of the children aged 7 to 14 are in school.
The Brazil that you must know
The number of current accounts in Brazilian banks increased by 28%, from 56 to 71.5 million (2000-03);
In 2003, from 18.7 millions of income tax declarations, 18.2 were submitted through the internet (97.3%);
Almost 100% of the import/export procedures are performed electronically through Siscomex – an integrated trade system;
In 2003, the volume of bank transactions made through the internet by individuals increased by 27.9%, reaching R$ 1.5 billion.
The Brazil that you must know
430
50
400
330
Brazil India Mexico China
The Brazil that you must knowPhone lines (fixed + mobile) per 1,000 inhabitants
Source: International Telecommunication Union / 2002
75
6
69
19
Brazil India Mexico China
The Brazil that you must know Personal Computers per 1,000 inhabitants
Source: International Telecommunications Union / 2002
The Brazil that you must knowUsers of Internet per 1,000 inhabitants
Source: International Telecommunications Union / 2001
84
16
46 46
Brazil India Mexico China
Source: MDIC, IBGE
Bas
e:
2002
= 1
00The Brazil that you must know
Industrial Production
91
93
95
97
99
101
103
105
jun/00 jun/01 jun/02 jun/03 jun/04
The Brazil that you must knowVehicles Output
Source: Anfavea
(x 1000)
1.586
1.357 1.691
1.817
1.793
1.828
1.990
1998 1999 2000 2001 2002 2003 2004*
The Brazil that you must knowShoes Output
Source: IBGE
543 554 544 516 499
580610
642 650
1995 1996 1997 1998 1999 2000 2001 2002 2003
(millions of pairs)
13524
4443 9895
1422019146
25578
1998 1999 2000 2001 2002 2003
The Brazil that you must knowCell Phones Output
Source: MDIC
(x 1000)
31147
29604
26717
27865
24996
25760
25237
26153
1996 1997 1998 1999 2000 2001 2002 2003
The Brazil that you must knowSteel Output
Source: MDIC
(x 1000 ton)
8064,7
55,3
52
47,350,4
2817,4
3,9
2002 2003 2004
Exports Imports Balance
Source: Secex/MDIC last 12 months ending in May
US$ billion
The Brazil that you must knowTrade Balance
Target for 2006: US$ 100 billion
Competitive and High Added Value Export Sectors:
Exports total in 2003: US$ 73 billion –Break down:
Transport materials: US$ 10.6 billion – [14.5%];
Aircraft: US$ 1.9 billion – [2.6%];
Vehicles and parts: US$ 4.1 billion – [5.6%];
Steel and metallurgical products: US$ 7 billion – [9.6%];
Petrochemical sector: US$ 4.9 billion – [6.7%];
Mobile phones: US$ 1.2 billion (to USA only) – [1.6%].
Source: Central Bank of Brazil (*forecast)
Interest payments/Exports Net external debt/Exports
3,6
1,8
1,0
1,5
2,0
2,5
3,0
3,5
4,0
1998 2000 2002 2004*
20
24
28
32
36
1998 2000 2002 2004*
%
19,9
36,4
16
External ExposureThe Brazil that you must know
Industrial Modernization
Economic growth,Improvements in competitiveness
and efficiency
Innovation and technological development
Targets
Focus of the New Development Initiative
Development and Sustainable Growth
Enhancement of the country’s technological base in areas that show potential for national and international growth;
Creation of a favorable environment for private and public investments;
Coordinated actions with states, metropolitan regions and local governments;
Employment and income generation;
Improvement of the image of Brazil abroad.
Guidelines
Initiatives for Industrial, Technological and Foreign Trade Development
Competitiveness and innovation:
R$ 15 billion (almost US$ 5 billion) of governmental investments;
Creation of the National Council on Industrial Development;
Creation of the Brazilian Agency for Industrial Development;
Horizontal and vertical policies.
Competitiveness and innovation:
Future bearer sectors
(Biotechnology, Nanotechnology, Biomass)
Strategic options
Semiconductors Software
Capital goods Medical and pharmaceuticals products
Initiatives for Industrial, Technological and Foreign Trade Development
BNDES – Programs and credit lines:
PROSOFT (US$ 35 million): US$ 26 million already made available by June;
MODERMAQ (US$ 860 million);
PROFARMA (US$ 172 million);
Customized Capital Goods (US$ 172 million);
Initiatives for Industrial, Technological and Foreign Trade Development
Investment Room
The Brazilian Administration is setting up an investment
room designed to help foreign investors to invest in Brazil;
Its objective is to bring together decision makers from
important related areas in Federal Government and make
them ready and available to get in touch with anyone
willing to invest in Brazil;
Fast track policies to overcome burocracy.
8% 8%
10%
28%
7%7%
31% Others Telecommunications
Finance
VehiclesChemicals Energy Trade
FDI Composition – 2000-2003Major Sectors
Source: Central Bank of Brazil
(US$ 82 billion, FDI inflow)
Announced Investment Plans(US$ millions)
Sector 2003 2004 Share (%) 2003 / 2004 (%)
Mining 6 495 11 401 34,5 140,8
Steel 764 5 720 17,3 648,7
Transports 232 3 334 10,1 1 337
Mechanical/Metallurgy 1 036 3 195 9,7 208,4
Electro/electronic 75 2 275 6,9 2 933,3
Telecommunications 863 2 078 6,3 140,8
Infrastructure 12 941 1 484 4,5 -88,5
Chemical products 457 804 2,4 75,9
Petrochemicals 247 750 2,3 203,6
Others 3 805 1975 6,0 -52
Total 26 915 33 016 100 22,7
Source: BNDES/MDIC
2004 Outlook
FDI: US$ 14,25 billion forecast (Central Bank)
Infrastructure: R$ 298 billion PPA 2003-2007
Investment announcements: 71% growth (2003 / 2002)
Exports: US$ 83 billion Target for 2006: US$ 100 billion
GDP growth: 3.5% (2% due to exports)