News from Brazil

Politics & Government News

In Brazil on April 18, 2014 at 9:05 am

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POLITICS

Next week, President Rousseff’s ambition of creating an international civil code governing the use of the web will come a step closer to fruition as the world meets in São Paulo to discuss the issue at NETmundial – the “Global Multistakeholder Meeting on the Future of Internet Governance” (FT beyondbrics).

“Fifty shades of pink” is how Luiz Felipe d’Avila of the Centre for Public Leadership, a think-tank, describes Brazil’s political spectrum. In fact, the country has just 32 registered parties. But Mr d’Avila is correct when it comes to tinge: 26 have names that are Pythonesque combinations of words like “social”, “democrat” and “workers”. “Even those who are not on the left do not call themselves the right,” says Jairo Nicolau, a psephologist at the Federal University of Rio de Janeiro (The Economist).

Eduardo Campos, the centrist former state governor running third in Brazil’s presidential race, plans to lower the tax burden and set a formula to automatically raise fuel prices at state-run oil company Petrobras if he wins the October election. In a wide-ranging interview, Campos defended those and other reforms championed by Brazil’s business community, which has largely soured on left-leaning President Dilma Rousseff after three-plus years of slow economic growth (Reuters).

With Brazil’s economy struggling, a scandal at its state-run oil company and nearly three-quarters of voters saying they want change from their government, President Dilma Rousseff looks vulnerable in her bid for re-election this October. But for her to lose, somebody else has to win. And her two main rivals have big, potentially fatal flaws of their own (Reuters).

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DEFENSE & SECURITY

Savis Tecnologia e Sistemas S.A., the lead company of the Tepro Consortium, hired by the Brazilian Army to integrate and implement the Sisfron (Integrated Border Monitoring System) Project, recently concluded the delivery of the Military Operations Center of the Western Military Command, in the city of Campo Grande, Mato Grosso do Sul. This is Sisfron’s first Command and Control Center, which incorporates cutting edge equipment and will make it possible to analyze the data collected by the sensors, to have situational awareness, and to support decisions and the communication of instructions for the operations under the responsibility of the Military Command of that area. As of this date, a significant part of defining the systems that will allow the physical implementation of the tactical communication, optronics, infrastructure, command and control centers, electromagnetic signal sensors, surveillance, monitoring and reconnaissance subsystems have been concluded, as well as an advance in executing the strategic communications network. The progress of the work, which is now underway, moves forward on schedule and according to the contract signed with the Brazilian Army (Embraer).

In place for seven month in the Brazilian Senate, the Espionage CPI (Parliamentary Commission of Inquiry) failed to identify those responsible for the interception of Brazilian data by the US government. The committee’s final report points out weaknesses of Brazilian cyber security and makes general suggestions for improving the system (Folha).

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OPINION

Be welcome to check out Brazil Weekly’s interview with Professor Bolivar Lamounier and find out Why you shouldn’t get too excited about Brazil’s new middle class…

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CITY BRIEFS

Check out Brazil Weekly’s new feature City Briefs, a series of introductions to the country’s main economic centers, packed with relevant info for business travelers. First to hit the net were the Brazil Weekly City Briefs on Brasilia, the federal capital of Brazil, Belo Horizonte, the country’s third economic centre and Sao Paulo, the global megacity. Latest City Brief deals with Rio de Janeiro, the Marvelous City!

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SOCIAL

Brazilians were once more optimistic about their country. That’s what Datafolha found in the results of its most recent poll in 2013 on whether or not people are proud to be Brazilian, the assessment of the country as a place to live, and expectations with regards to inflation, employment and purchasing power, among other economic aspects. To calculate the evolution of the general mood of the population, the institute has now created a new indicator, the Datafolha Confidence Index (IDC), a product of the reviews of selected research topics frequently look at during its research (Folha).

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Do we need intercultural communication or should we just be yourself? Read the column at Rotterdam Week.

Business & Economy News

In Brazil on April 18, 2014 at 9:05 am

ECONOMY

For decades low productivity has been responsible for the poor performance of Brazil’s gross domestic product (GDP). Today, FGV-IBRE’s The Brazilian Economy reports, increasing productivity -which rebounded slightly last year but is still far from stellar – is more urgent if the country wants to achieve more robust economic growth without pressure on wages and inflation, because the labor force is expected to decline as the population ages (Rotterdam Week).

The Economist picked up the story this week: Brazilian workers are gloriously unproductive. For the economy to grow, they must snap out of their stupor, the newspaper writes.

If Brazil had the key to the two largest markets in the world (the US and Europe) it would see its foreign trade jump 18% or US$ 86 billion a year. The net result of these two free trade agreements would however create a deficit of US$ 600 million as exports would grow US$ 42.8 billion while imports would increase by $ 43.4 billion. The calculations were done by professors Vera Thorstensen and Lucas Ferraz of the Getulio Vargas Foundation for the Institute of Industrial Development Studies (IEDI), that brings together 44 leaders of large companies such as Embraer, Gerdau, CSN and Cosan (Folha).

The unemployment rate can baffle a Brazil watcher. How can the economy be growing at its lowest level since the credit crisis of 2008-09, yet unemployment continue to decline. Brazil’s unemployment figures beat consensus and came in at 5%. Consensus was 5.4%, an increase from February unemployment of around 5.1%. Again, the improvement in the unemployment rate is being driven by a contraction in the labor force, which fell by 0.3% month over month and shrunk a little over half a percent from March 2013 (Forbes).

Lastly, while Brazil was part of the so-called Fragile Five emerging market economies late last year, it is now seen as turning the corner. Everyone has had enough, and now it is time to make things better: more investment in infrastructure, continued improvement in Brazil’s public education system, a Central Bank that is more serious about inflation, and a Finance Ministry that is less wishy-washy about taxes (Forbes).

BUSINESS

The Brazilian Development Bank (BNDES) has created a program to stimulate investments in innovation and increase the competitiveness of smaller companies. With a total budget of R$ 500 million, the BNDES Support Program for Innovative Micro, Small and Medium-sized Enterprises (BNDES MPME Inovadora) is already in operation, and its expiry date (the Bank’s deadline to submit financing requests) ends on December 31, 2015 (BNDES).

Soy has become the billion dollar gift of the ‘Maggi’ family. Once known as the hardest working man in the Brazilian soy business, Blairo Maggi has joined the ranks of the world’s billionaires. He is joined by three others, including his mom (Forbes).

Eike Batista, who was Brazil’s richest man for most of the past decade, is under investigation for allegedly engaging in insider trading while he chaired his now-bankrupt oil-producing and shipbuilding firms, securities industry watchdog CVM said. In a statement sent to Reuters, Rio de Janeiro-based CVM confirmed that Batista is a respondent in six of nine probes that executives of his Grupo EBX conglomerate are facing for breaching securities rules. In two of them, regulators are examining whether Batista allegedly took advantage of his access to privileged information (Reuters).

The tycoon who built the world’s biggest sugar-cane operation by buying mills in Brazil is about to dominate rail freight transport in the country. Cosan, the sugar maker controlled by billionaire Rubens Ometto, won approval from ALL-America Latina Logistica SA controlling shareholders to buy the train operator for about $3 billion in an all-stock deal, Bloomberg reported.

Brazilian chief executive officers are fighting to keep their salaries secret. Companies from Embraer SA to Itau Unibanco Holding SA to Vale SA, all with American depositary receipts, don’t disclose compensation for top officials, contrary to international norms in countries like the U.S. and U.K. Four years after securities regulator CVM ordered release of expanded pay details, more than a third of Brazil’s most-traded companies are refusing to do so as a court case against the decision plays out. Bloomberg explains why.

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AGRI ETC.

The ethanol industry is undergoing the greatest crisis in its history and the Rouseff administration’s economic policy is responsible. That is the warning sent out by Elizabeth Farina, president of Unica (Sugarcane Industry Union). In the five past harvests, 44 (out of 384) plants have closed. Of the operating plants, 33 are filing for bankruptcy and 12 will not crust cane this year (Folha).

AUTOMOTIVE

SAG arrives in Brazil to produce fuel tanks for trucks. The Austrian company brings pioneering machinery to Latin America and will supply to Mercedes-Benz, Scania, Volvo and other companies in the sector that until then had to import the product (InvesteSP).

Renault will invest 240 million euros ($331 million) to build additional vehicle models and a new logistics centre in Brazil. The company’s Curitiba plant will begin production of two new vehicles at an investment cost of 162 million euros in 2014-19, Renault said in a statement. A further 78 million euros will be spent on a new parts distribution centre to support Renault’s sales network in the region (Reuters).

AVIATION

The first of a series of major infrastructure programmes promised to the Brazilian public as part of the tournament has finally been inaugurated – or at least “the first phase of the first phase” of the project. On Wednesday, Ms Rousseff presided over the opening of a new terminal at the international airport in the capital, Brasília (FT beyondbrics).

Guarulhos International Airport, in Guarulhos (SP) opened its own VIP room for passengers on international flights. Prices are: US$547 per person for connection flight passengers and R$364 for other passengers. Called “Villa GRU”, located at Terminal 1, at the international area, the lounge is operating since Friday (Folha).

During the first quarter of 2014 (1Q14), Embraer delivered 14 jets to the commercial aviation market and 20 to the business aviation market, for a total of 34 aircraft, compared to 29 aircraft delivered in the same period of 2013. On March 31, 2014, the firm order backlog totaled USD 19.2 billion, an increase of USD 1 billion over December 31, 2013.

At a ceremony held at the company’s headquarters in São José dos Campos, Embraer delivered the first E175 jet to United Airlines. This aircraft is part of the contract signed between the two companies in April of 2013 for a firm order of 30 E175 jets. The E175s will be operated by Mesa Airlines of Phoenix, AZ, under the United Express brand and are configured in a 76-seat dual class layout.

BANKING & FINANCE

The Brazilian Development Bank (BNDES) took out a US$ 500 million loan from the Japanese Tokyo-Mitsubishi Bank UFJ (BTMU). Of the total resources, some US$ 400 million will be earmarked for the BNDES and US$ 100 million will be allocated to its subsidiary in London (BNDES PLC), under a BNDES guarantee. The loan is the first fundraising effort carried out by the London subsidiary. It is a pilot operation which initiates the operational activities of the BNDES office in the British capital (BNDES).

MINING & STEEL

Vale informed that Banco Nacional do Desenvolvimento Econômico e Social (BNDES) approved a financing contract of R$ 6.2 billion to implement the Carajás Serra Sul S11D and CLN S11D projects. The financing term is ten years and the funds will be disbursed within three years according to the projects’ plans. The S11D project consists of development of a mine and processing plant located in the Southern range of Carajás, in the Brazilian state of Pará, with an estimated nominal capacity of 90 million tons per year (Mtpy) of iron ore. The CLN S11D project includes investment in railway and port, increasing the estimated nominal logistics capacity of the Carajás Railway and of Ponta da Madeira maritime terminal to approximately 230 Mtpy.

Vale concluded the transaction announced on September 18, 2013, transferring 20% of the total capital of VLI S.A. (VLI) to Mitsui & Co., Ltd. (Mitsui) for R$ 1.5 billion and 15.9% to the Investment Fund of the Fundo de Garantia do Tempo de Serviço – FGTS (FI-FGTS), whose assets are managed by the Brazilian bank Caixa Econômica Federal, for R$ 1.2 billion.

OIL & GAS

SBM Offshore presented the findings of its internal investigation, which it started in the first quarter of 2012, in reaction to allegations of bribery in Brazil, Angola and other countries. The investigation, which was carried out by independent external counsel and forensic accountants, focused on the use of agents over the period 2007 through 2011. In summary, the main findings are that “the Company paid approximately US$200 million in commissions to agents during that period of which the majority relate to three countries: US$18.8 million to Equatorial Guinea, US$22.7 million to Angola and US$139.1 million to Brazil.” (Rotterdam Week).

Nestor Cerveró, ex-director of Petrobras’ international department, testified to Congress yesterday regarding the controversial purchase of the Pasadena oil refinery in the United States. Cerveró’s version of events differed from the government’s in several key aspects, but it still frustrated the opposition, who were hoping for something more incriminating. In a testimony that lasted for more than five hours, Cerveró argued that the clauses omitted in the summary that underpinned the deal were not significant. This directly contradicted President Dilma Rousseff’s version of events (Folha).

Local & LatAm News

In Brazil on April 18, 2014 at 9:03 am

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THE LATIN PACIFIC

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A new section in Brazil Weekly, aiming top provide information on the latest Latam developments, mainly on the Pacific coast:

Mammoet, world leader in Engineered Heavy Lifting and Transport, has effectively turned the port of Güiria, Venezuela into a temporary Heavy Lift Terminal by employing its new Mammoet Terminal Crane, the MTC-15. The port of Güiria saw its need for heavy lifting increased after PDVSA, the Venezuelan National Oil Company, decided to build a new power plant 20 kilometers further inland (Rotterdam Week).

Mammoet also completed a project involving the heavy lifting, transportation and reassembly preparation of an entire methanol plant. The plant was moved from the most southern part of Chile to Louisiana, USA over a distance of 8,720 kilometers (5,450 miles) (Rotterdam Week).

Mexican offshore company Naviera Integral and Damen Shipyards Group signed a contract for four more Damen Fast Crew Suppliers 5009 (Rotterdam Week).

An International Monetary Fund (IMF) mission visited Panama City during February 11-21 to conduct the country’s annual consultations. The delegation concluded that Panama’s economic performance remains buoyant, outlook favorable, in spite of certain local and international risks. The IMF therefore thinks a tighter fiscal policy is recommended (Rotterdam Week).

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WEEKEND BREAKS!

Brazil Weekly now offers another new feature: Weekend Breaks! Over the next months we will show you how to enjoy your weekend out of town when staying in Brazil’s biggest business cities. First online was your Weekend Break out of Belo Horizonte, to the famous historic town of Ouro Preto, a must to visit. Our latest addition is your Weekend break from Sao Paulo to Guarujá, check it out!

ATLANTICO WEEKLY

Be welcome to visit Brazil Weekly’s sister publication Atlantico Weekly, with news about Angola, Mozambique and Cape Verde, three upcoming Portuguese speaking countries.

AMAZON

Transitional forest on the edge of the Amazon is relatively resistant to fire, but when affected by extreme drought, the biomass dominated by trees starts being taken over by savannah. Such is the conclusion of an experimental burn that was started ten years ago and suggests that the Amazonian rainforest is more vulnerable to climate change that was originally thought (Folha).

NORTH EAST

The first day of the military police strike in Bahia caused chaos in the city of Salvador with looting and mass thefts affecting school activities as well as transportation. The military police announced the strike the day before yesterday, less than two months before the opening of the World Cup. Salvador considered one of the main host cities will be hosting six games. Governor Jaques Wagner (PT party) suggested the strike was politically motivated and asked for federal troop reinforcement that started arriving yesterday. 2500 members of the army and 250 members of the national forces will be mobilized (Folha).

PROJECT OF THE WEEK

setindowntown

Render of a new apartment complex for downtown Sao Paulo, the Setin Downtown at the Praça da República.

RIO

Brazilian authorities unveiled an infrastructure budget of 24.1 billion reais ($10.76 billion) for the Rio 2016 Olympic Games, 25 percent more than planned, as they try to reassure the world they can deliver facilities on time. The budget covers 27 projects in urban development and public transport, including 8 billion reais for a newly added fourth metro line for Rio, Brazil’s congested second largest city, where getting around town is an ordeal (Reuters).

SAO PAULO

After a process of canonization that has lasted for more than 400 years, the Spanish missionary José de Anchieta (1534 – 1597) will finally be declared a saint by Pope Francis at the beginning of April. Known as the founder of the city of São Paulo, the “Apostle of Brazil” travelled through various Brazilian cities in the 16th century. Eventually, he chose to settle in Itanhaém, a coastal city 56 miles from São Paulo, where he lived for 32 years – more than half his life (Folha).

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