Manaus Free Trade Zone as Brazil´s development policy...

Manaus Free Trade Zone as Brazil´s development

policy for the Amazon (4th June 2015 – Paris)

Corresponds to 59% of the country

BRAZILIAN AMAZON

Equivalent to 80% of Sulamericana Amazon

1/5 of broadleaved forests

primary the world

Humid tropical climate - 26ºC to 36ºC

Mineral Resources: oil

gas bauxite

casiterita niobium

other

5.3 million square kilometers

23, 596 million people

20,000km of navigable waterways

THE CONTEXT OF THE MFTZ IN BRAZIL

BRAZIL

Area: 8,502,365 km2

GDP 2012*: 2,2(trillion – US$)

GDP per capita 2012*: 11,320 US$

Population**: 204 million

Municipalities of

the State Capitals

Position

held in the

100 largest

capitals

GDP 2010 at current

prices (PPP U$S

1,000)

Relative Share of

GDP (%)

São Paulo/SP 1 228.348.530 11,38

Rio de Janeiro/RJ 2 101.021.794 5,03

Brasília/DF 3 78.300.578 3,90

Curitiba/PR 4 27.048.017 1,35

Belo Horizonte/MG 5 26.692.626 1,33

Manaus/AM 6 22.783.200 1,14

Porto Alegre/RS 7 21.949.887 1,09

Fortaleza/CE 8 19.846.445 0,99

Source: IBGE, GDP of municipalities in 2012 Conversion– Purchasing Power Parity for household Consumption Index - dec/2012 - IPEADATA

Current Prices

*Source: World Bank 2014

** Source: IBGE – Estimate 2014

WHAT HAPPENED HISTORICALLY ?

1912

DECLINE CYCLE OF RUBBER

- POPULATION

Manaus: 100 mil hab.

- REGISTRATION:

2.500 ABANDONED

HOUSES

- FLU EPIDEMIC 6 mil deads

1957

Law nº 3.173/57 - ZFM

- GEOPOLITICAL

INTEGRATION OF THE AMAZON TO NATIONAL SCENARIO

- POLULATE (Low Population

Density)

1967 – 1975 1ª CYCLE

DEC. nº 288/67 DEC. nº 356/68

- TRADE - COMMERCIAL

TOURISM - AGRICULTURE

- EXTENSION OF INCENTIVES WESTERN AMAZON

1976 – 1991 2ª CYCLE

Law nº 1.435/75

- REPLACEMENT OF IMPORTS

- INDICES NATIONALIZATION : I.N

- BASIS FOR CREATION OF FTAs (ALC´S)

- First urban PRESSURES in Manaus : rural exodus + immigration

- Manaus: 284 mil hab.

1992 - 1996 3ª CYCLE

Law nº 8.387/91

1997 – 2002 4ª CYCLE

- CONSTRUCTION OF BIOTECHNOLOGY CENTER OF

THE AMAZON(CBA)

- CENTER FOR SCIENCE, TECHNOLOGY AND

INNOVATION POLE OF INDUSTRIAL Manaus(CT-PIM)

- INTERIORIZATION OF DEVELOPMENT

PROGRAMME(PID-ZFM)

- DEPLETION OF THE FTAs (ALC´s)

2003…2015. 5a. CYCLE

- INVESTMENT ARRANGEMENTS IN PRODUCTION – Production Supply (until

2007)

- CONTINGENCY AND DECLINE OF - PID-ZFM

- 2009: INTERNATIONAL CRISIS

- DEC. 7.138/10: PRESIDENCY OF CAS

MDIC

- DEC 6.008/06: IMPLEMENTATION OF POLICY BY P&D THE WESTERN AMAZON

- COMMERCIAL OPEN

- BASIC PRODUCTIVE PROCESS

- FOUNDATION FTAs (ALC´S):

- CRUZEIRO DO SUL/BRASILÉIA/EPITACIOLÂNDIA = 1994

- MACAPÁ/SANTANA= 1992

- TABATINGA = 1991

- GUAJARÁ-MIRIM= 1993

- BOA VISTA/BONFIM= 1991/2008

Gen. CASTELO BRANCO Gen. ERNESTO GEISEL FERNANDO COLLOR E ITAMAR FRANCO

FERNANDO HENRIQUE LUIS INÁCIO LULA E DILMA

ROUSSEF JUSCELINO KUBITSCHEK

SPEVEA SUDAM Lei 5.173

1966

SUPERINTENDENCE OF THE MANAUS

FREE TRADE ZONE - SUFRAMA

Suframa is an independent federal agency under the Ministry of Development,

Industry and Foreign Trade (MDIC). Its objective is to manager and control the tax

incentives granted to companies that set up in the Manaus Free Trade Zone, as

well as to promote development strategies for the Western Amazon, assuming in

this way the role of an investment stimulation agency.

SUFRAMA

Ministry of Development,

Industry and Foreign Trade

PRESIDENCY OF THE REPUBLIC

THE CREATION OF THE MANAUS FREE TRADE ZONE (Law No 3,173/1957 modified by article 1st of Decree Law No. 288/1967)

“The Manaus Free Trade Zone is a free trade area for import and export operations. It

enjoys a few special tax incentives established for the purpose of promoting regional

development by rising the industrial, commercial and agricultural activities, creating an

economic enviroment that allows the growth regardless of regional factors and the far

distances from the markets where its goods are consumed."

DISTRICT FARMING AND CATTLE RAISING

INDUSTRIAL DISTRICT

AREA OF OPERATION AND CONTROL SUFRAMA

WESTERN AMAZON

AMAPÁ Macapá-Santana Boa Vista

RORAIMA

AMAZONAS

Manaus

Itacoatiara

Tabatinga

Rio Branco

Vilhena

RONDÔNIA

Guajará-Mirim

ACRE

Cruzeiro

do Sul*

SURINAME

GUIANA VENEZUELA

COLÔMBIA

EQUADOR

PERU

BOLÍVIA

Porto Velho

BRASIL Ji-Paraná

Bonfim

Brasiléia-

Epitaciolândia

FREE TRADE AREAS (07)

COORDINATION REGIONAL (05)

HOME BUILDING – ADMINISTRATION OF SUFRAMA

WESTERN AMAZON

AMAZON WEST (MANAGEMENT AREA AND CONTROL SUFRAMA)

AMAPÁ Macapá-Santana Boa Vista

RORAIMA

AMAZONAS

Manaus

Itacoatiara

Tabatinga

Rio Branco Vilhena

RONDÔNIA

Guajará-Mirim

ACRE

Cruzeiro

do Sul*

SURINAME

GUIANA VENEZUELA

COLÔMBIA

EQUADOR

PERU

BOLÍVIA

Porto Velho

BRASIL Ji-Paraná

Bonfim

Brasiléia-

Epitaciolândia

Free Trade Areas (09)

Regional coordination (05)

Headquarters SUFRAMA

AMAZON WEST

CONTROL SYSTEM

NATIONAL COMMODITY

IPI exemption, reduction in PIS

/ COFINS zero

CONTROL SYSTEM

foreign goods

For Inputs: II Suspension of IPI exemption,

reduction to zero of the PIS / COFINS

For Products: Exemption II and IPI and

reduced PIS / COFINS

SYSTEM OF

INDUSTRY INDICATORS

Reduction of 88% of II, IPI exemption,

differentiated tax rate of PIS / COFINS -

0.65% PIS and 3.0% COFINS

1º

4º 2º

3º

EXPORTS

(ALICEWEB)

TOTAL EXEMPTION

STRATEGIC AREAS SUFRAMA

Fonte: Planejamento Estratégico da Suframa

ORGANIZATIONAL DEVELOPMENT

INCENTIVE TAX MANAGEMENT

LOGISTICS TECHNOLOGY AND

INNOVATION

INVESTMENT

ATTRACTION

INTERNATIONAL

INSERT

PRODUCTIVE

DEVELOPMENT

INTELLECTUAL CAPITAL

AND

ENTREPRENEURSHIP

MAIN TAX INCENTIVES (MANAUS INDUSTRIAL POLE - PIM)

1. FEDERAL

IMPORTS (II) TAX - 88% reduction on inputs for the industrialization and proportional to the national added value when it comes to information technology goods.

EXCISE TAX (IPI) – Exempt

SOCIAL INTEGRATION PROGRAM (PIS) and SOCIAL SECURITY FINANCING (COFINS) - Zero rate at the entrances and in domestic sales inter-industry and 3.65% in sales of finished products to the rest of the country.

SUFRAMA

TAXES ON INCOME (IR) - Reduction of 75% of Income Tax and non-refundable, exclusively

for re-investment. Common throughout the Legal Amazon. SUDAM

2. STATE

TAX ON THE MOVEMENT OF GOODS AND SERVICES (ICMS) – Credit Stimulus between 55% to 100%. In all cases the companies are required to contribute to financing funds to higher education, tourism, R & D and small and micro enterprises.

SEFAZ/AM

COUNTERPARTS REQUIRED BY COMPANIES

CONCESSIONS GRANTED INCENTIVES

• Process compliance Basic Productive (PPB);

• Job creation in the region;

• Granting social benefits to employees;

• Incorporation of product technology and production processes

compatible with state of the art;

• Increasing levels of productivity and competitiveness;

• Reinvestment of profits in the region;

• Investment in training of human resources for the scientific and

technological development; and

• Industrial design approval with annual limits import of inputs.

ATLANTIC

OCEAN

PANAMA

CANAL

Miami

Los Angeles

PACIFIC

OCEAN

LOCATION IN RELATION TO MARKETS

POPULATION OF LATIN AMERICA

AND THE CARIBBEAN :

About 600 million inhabitants

NORTH

AMERICA

ASIA

CENTRAL

AMERICA AFRICA

EUROPE

Manaus

Porto

Velho

São Paulo

Belém

Tokyo

Taipei

Taiwan

Hong Kong

Caracas

Capital

Marine route

Road route

Air route Air and sea route

River route

DISTRIBUTION LOGISTICS - ZFM

BUE

MVD

RIG

SSA

SUA

FOR

PEC

PORTO VELHO

AP

PA AM

RO

BELÉM

BRASIL

River -road

Highway

ATLANTIC

OCEAN

Porto Alegre

SSZ

SEP

Belo Horizonte

Rio de Janeiro

São Paulo

MAO

South

North

Modal Transport : River-road most used Routes to Southeast and South of Brazil: •Manaus – Porto Velho – Cuiabá – Campo Grande – São Paulo: average from 7 - 10 days (River-road)

•Manaus – Belém – Goiânia – Porto Alegre: average from 10 - 12 days (River-road)

•Manaus – Belém: 4-5 days (by way of Amazon river)

•Manaus – Porto velho: 3 days (by way of Madeira river)

•Manaus – Boa Vista: 12-14 horas (highway) or 1 hour (airlift)

SOUTH FACING

POSITION

PORTS

• MANAUS

• FORTALEZA

• SUAPE

• SALVADOR

• SEPETIBA

• SANTOS

• RIO GRANDE

• MONTEVIDEO

• BUENOS AIRES

NORTH FACING

POSITION

PORTS

• BUENOS AIRES

• MONTEVIDEO

• RIO GRANDE

• SANTOS

• SEPETIBA

• SALVADOR

• SUAPE

• CEARÁ

• MANAUS

SUBSECTORS PARTICIPATION IN

ACTIVITIES OF BILLING PIM

BILLING FROM JAN to FEB/2015 – PIM In% of Activities by Sub-sectors

(*) Until Feb– Partial data

Source: COISE/CGPRO/SAP – SUFRAMA

Available in: Industrial Polo Performance Indicators Manaus, updated publication on 04/15/2015.

Electronics33,25%

Two Wheels15,87%

Computer Goods16,93%

Other12,21%

Chemical12,03%

Thermoplastic5,16%

Metallurgical4,54%

INDUSTRIAL SECTOR

BILLING OF INDUSTRIAL POLE MANAUS – PIM




2009 2010 2011 2012 2013 2014 2015 (*)

26,0

35,1

41,2 37,5

38,6

31,1

4,7

50,5

61,6

69,0 73,5

83,5

71,7

12,7

BILLING OF INDUSTRIAL POLE MANAUS - PIM

In Billions

Billing R$

Billing US$

INDUSTRIAL SECTOR

PRODUCTIVE INVESTMENT- PIM




2009 2010 2011 2012 2013 2014 2015 (*)

7,90

9,28

10,66 10,09

10,66 10,68

8,87

PRODUCTIVE INVESTMENTS BY COMPANIES ACTIVE IN PIM

In Billions

PRODUCTIVE INVESTMENT IN em US$

INDUSTRIAL SECTOR

MOVEMENT OF WORKFORCE– PIM

(*) Effective Workforce + Temporany + Outsourced

(**) Until Febrruary , Corresponding to a monthly average of informant System of indicators mith date companies plenums project approved by the board of directors

of Suframa - CAS



2009 2010 2011 2012 2013 2014 2015 (**)

92.700

103.663

119.985 120.288 121.631 122.100 115.998

MOVEMENT OF WORKFORCE

Workforce (*)

INDUSTRIAL SECTOR

SOURCE OF PRODUCTION SUPPLIES - PIM




2009 2010 2011 2012 2013 2014 2015 (*)

20,74% 19,18% 18,95% 15,35% 14,49% 14,89% 12,31%

25,42%22,30% 25,70%

24,04% 22,33% 22,10%20,56%

53,84% 58,52% 55,34%60,60% 63,18% 63,00% 67,13%

SOURCE OF SUPPLEIS - PIM

In %

Foreign Source

Regional Source

National Source

UNIVERSITY OF THE STATE OF AMAZONAS - UEA

Comprises the major part of the investment resources in R & D for goods from

computer manufacturing companies and the counterparts by state incentives.

43 undergraduate courses;

22.562 students enrolled;

7 Masters degrees;

2 doctoral programs;

Satellite lessons for

students from any

Amazonas community.

HUMAN DEVELOPMENT INDICES

FIGURE 1. POOR OF SPACE DISTRIBUTION IN BRAZIL NORTH IN 1991

Source: Makers for Economic Studies and Coordination for Companies – COGEC, using IpeaGeo Software 2.0.0


FIGURE 4. CLUSTERS TO THE SPATIAL DISTRIBUTION OF THE PROPORTION OF POOR IN

NORTHERN BRAZIL IN 1991



FIGURE 5. CHART WASTING MORAN FOR THE POOR OF PROPORTION IN BRAZIL NORTH IN 1991



FIGURE 6. CLUSTERS FOR DISTRIBUTION SPACE OF POOR RATIO IN BRAZIL NORTH IN 2000



FIGURE 8. CLUSTERS FOR DISTRIBUTION SPACE OF POOR RATIO IN BRAZIL NORTH IN 2010



FIGURE 10. SPACE OF IDHM DISTRIBUTION IN BRAZIL NORTH IN 1991



FIGURE 13. CLUSTERS FOR DISTRIBUTION OF SPACE IDHM IN BRAZIL NORTH IN 1991


SOCIAL PROGRESS INDEX IN THE AMAZON

FIGURE 16. DESCRIPTION OF THE FIVE LEVELS OF IPS IN THE MUNICIPALITIES OF THE AMAZON

Source: Social Progress Index in the Brazilian Amazon - IPS AMAZON 2014.


FIGURE 17. IPS – MUNICIPALITIES OF AMAZON



FIGURE 3. CHANGE IN IPS AND DIMENSIONS (MINIMUM, AVERAGE AND MAXIMUM) IN THE AMAZON

FIGURE 18. SOCIAL PROGRESS OF CONTENTS – IPS



FIGURE 19. RELATIONSHIP BETWEEN IPS AND INCOME PER CAPITA IN THE CITIES OF THE AMAZON



FIGURE 20. RELATIONSHIP BETWEEN IPS AND INCOME PER CAPITA IN THE MUNICIPALITIES OF THE

STATE OF AMAZONAS.



FIGURE 21. HUMAN NEED BASIC (1 DIMENSION OF IPS) MUNICIPALITIES IN THE AMAZON



FIGURE 22. GROUNDS FOR WELFARE (2 DIMENSION OF IPS) IN THE CITIES OF THE AMAZON


INDUSTRIAL POLE OF MANAUS - PIM

The Industrial Pole of Manaus

created economic alternative that

allowed the preservation of 98%

of native vegetation.

98,0

0,41

95,2

1,56

97,9

4,92

PIM

SAVANA

FLORESTA

ÁGUA

DESFLORESTAMENTO

81,3

31,6

Minério + Pecuária

+ Madeira

%Área Preservada

%Contrib. Desmat. 85-03

Principal Ativ. Econ.

87,6

3,11 62,4

13,98

Agro-Negócio

+ Pecuária

63,3

36,17

Agro-Negócio

+ Pecuária

23,5

2,49

BRAZIL COMPETITIVE PROFILE FIGURE 25. BRAZIL COMPETITIVE PROFILE

Source: FGV Projetos FT graphic. Photos Dreamstime, Istock; Getty images: available Financial TimesAmazon


FIGURE 26. BRAZIL COMPETITIVE PROFILE

Source: FGV Projetos FT graphic. Photos Dreamstime, Istock; Getty images: available Financial TimesAmazon

Regional Social Contability and Input-Output Matrix

Variáveis AM 2006 BR 2006 PE 2005 MG 2005 BR 2005 RS 2003 BR 2003

PIB 39.157 2.369.484 49.922 192.639 2.147.239 131.053 1.776.475

VA 32.976 2.034.421 42.936 167.301 1.842.253 119.584 1.547.141

Impostos s/

produto/PIB 15,8% 14,1% 14,0% 13,2% 14,2% 8,8% 12,9%

Consumo total/PIB 56,7% 80,3% 99,8% 66,8% 80,2% 74,3% 77,8%

Consumo

Famílias/PIB 36,4% 58,9% 67,6% 49,6% 58,9% 57,9% 58,0%

Taxa de investimento 19,7% 16,4% 13,3% 16,2% 15,9% 12,5% 14,6%

Importação/PIB 97,4% 11,5% 68,2% 61,8% 11,5% 54,6% 11,6%

Exportações/PIB 125,5% 14,4% 55,2% 77,9% 15,1% 64,7% 14,3%

GAE* 2,23 0,26 1,23 1,40 0,27 1,19 0,26

*Grau de Abertura da Economia – Definição do Manual de Contabilidade Nacional (Nações Unidas)

Fonte: Elaboração própria com base nas Tabelas de Recursos e Usos dos estados referenciados e do Brasil

TABELA 1 – RELAÇÕES PIB – BRASIL, AMAZONAS, PERNAMBUCO, MINAS GERAIS E RIO GRANDE DO

SUL 2006, 2005 E 2003

Regional Social Contability and Input-Output Matrix

Variável Brasil Amazonas Cingapura Hong Kong

Óti

ca d

a d

esp

esa

Consumo Final das Famílias 58,9 36,3 38,5 54,5

Formação Bruta de Capital Fixo 16,4 19,8 21,7 21,9

Exportações 14,4 125,5 232,7 205,5

Importações 11,5 97,4 203,5 194,1

Óti

ca d

a R

end

a

Impostos 15,3 17,1 4,5 4,6

Excedente Operacional Bruto e

Rendimento Misto 34,8 58,2 53,6 45,5

Rendimento do Trabalho 32,5 24,7 37,3 45,4

Fontes: Amazonas – TRU 2006-SUFRAMA, 2012; Brasil – TRU 2006 – IBGE, 2008; Cingapura e

Hong Kong – United Nations Statistics Division e Asian Development Bank.

Nota: Os dados são de 2006, exceto as informações referentes a Impostos, Excedente Operacional Bruto e Rendimento do

Trabalho, no caso de Hong Kong e Cingapura, que foram extraídos das TRUs referentes ao ano de 2005, cuja fonte é o

Asian Development Bank.

TABELA 2 – PARTICIPAÇÃO DE VARIÁVEIS EXTRAÍDAS DAS TRUS NOS RESPECTIVOS PIBS

BRASIL, AMAZONAS, CINGAPURA E HONG KONG – 2005/2006 (%)

RESULTS FIAM VII – YEAR 2013

The Amazon International Fair (FIAM VII) is a business event

held every two years by SUFRAMA.

Between 27 and 30 November 2014, the seventh edition was

held in the city of Manaus, with very positive results:

• 55 000 visitors;

• 300 exhibitors at the Grand Pavilion with exposure Industrial

Pole of Manaus products;

• U$ 17 million (R$ 40.8 million) traded in the Business Round;

• 1.200 people attended the Seventh journey of Seminars;

• Exhibition of regional products in the Amazon Hall;

• Round of Tourism Business;

• Exhibition of Creative Business;

• Participation of 07 countries: Argentina, Venezuela, Chile,

Peru, Colombia, Suriname and Poland.

http://www.suframa.gov.br/noticias/indexNoticias.cfm

http://www.suframa.gov.br/zfm_principal.cfm

http://www.suframa.gov.br/zfm_indicadores_do_pim.cfm

http://www.suframa.gov.br/noticias/publicacoes-mip.cfm

http://www.suframa.gov.br/noticias/livros-tecnicos.cfm

SUFRAMA LEADING PUBLICATIONS

SUPERINTENDENCE OF THE MANAUS

FREE TRADE ZONE - SUFRAMA

Thank You!

RENATO MENDES FREITAS, M.Sc.

Coordinator of Economic and Business Studies of SUFRAMA, Substitute.

Email: [email protected]

Phone. +55 (92) 3321-7204

mailto:[email protected]

Manaus Free Trade Zone as Brazil´s development policy...

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