News from Brazil

Archive for March, 2013|Monthly archive page

Politics & Government News

In Brazil on March 28, 2013 at 8:28 pm

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POLITICS

Former President Luiz Inácio Lula da Silva had nearly half of all his international trips, made after he left office, financed by large construction companies with interests in the countries visited. All of these countries are in Latin America and Africa, according to official documents obtained by Folha. The two regions were foreign policy priorities of the Workers Party (PT) politician during his two terms in office. Politicians and businessmen familiar with Lula’s travels told Folha he helped leverage interests of giants such as Camargo Corrêa, OAS and Odebrecht in those places.

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INTERNATIONAL

President Dilma Rousseff said she was “very satisfied” with agreements reached at the Fifth BRICS Summit that has just concluded in the South African city of Durban. President Rousseff said the meeting represents a new, important step toward the consolidation of the BRICS group of emerging economies that hopes to play an increasingly significant role in global decision-making. The president was especially pleased with progress toward the creation of the BRICS Development Bank. At the two-day summit, the leaders agreed to set up the development bank and to prepare for the establishment of the Contingent Reserve Arrangement among BRICS members (Xinhua).

China and Brazil agreed to establish a swap line of about $30 billion in their respective currencies. The currency swap is worth 190 billion yuan or 60 billion reais, the People’s Bank of China said. China is Brazil’s biggest trading partner, with imports and exports between the two countries reaching $75.5 billion last year. China’s central bank said the three-year swap agreement will only be used in case of a credit crisis and could be rolled over after expiration (Bloomberg).

China stands ready to work with Brazil to build a new paradigm of state-to-state relationship amid deepening economic globalization, promote trade and investment at the same time, with enhanced cooperation in key sectors, increased point-to-point cooperation in industries, and diversified bilateral trade (Xinhua).

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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!

DEFENSE & SECURITY

The Brazilian Air Force (FAB) and Embraer Defense & Security have successfully concluded the Critical Design Review (CDR) of the KC-390 military transport aircraft. During the CDR, the definitive aerodynamic and structural configurations, as well as the architecture and systems installations were confirmed, and meaning that the design is sufficiently mature to begin the detailed project and manufacture the prototypes of the aircraft (Embraer).

OPINION

Be welcome to check out our latest article, a reaction to a recent article in The Economist: Can Brazil Conquer Africa’s Booming Markets?

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SOCIAL

Forget about the new C-class, it’s the A-class, stupid! New research from Brazil is showing that the A-class, the country’s richest group, is tripling its share among the population towards 2017. And surprise, surprise: their biggest numbers won’t be found in Rio or Sao Paulo but in the South-West of Brazil, Valor reported…

After decades as second-class citizens under Brazil’s constitution, maids and caretakers have finally won an equal seat at the table. A constitutional amendment that Congress passed this week will remove a clause treating domestic servants as a distinct category of worker. Now, under the amended constitution, maids can expect the same rights as other Brazilian workers – ranging from employer-paid daycare to overtime wages on workdays longer than eight hours (Reuters).

Business & Economy News

In Brazil on March 28, 2013 at 8:27 pm

– NEW EDITION –

BRAZIL WEEKLY’S BRAZIL’S NEXT 10 HOTTEST BUSINESS CITIES

Check out our revised, 2013, edition! No doubt the biggest and most important business centres of Brazil are the megacities of Sao Paulo and Rio de Janeiro and do not forget most other state capitals like Belo Horizonte, Salvador da Bahia, Recife, Fortaleza, Curitiba and Porto Alegre. But Brazil is big and there are plenty of other fast developing cities, not being state capitals. So for a minute forget Sao Paulo, Rio and those other 2014 World Cup host cities and check out Brazil Weekly’s Brazil’s Next 10 Hottest Business Cities 2013.

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…

ECONOMY

International oil prices are up, demand for oil products in Brazil is growing, but the main Brazilian oil company is suffering from lower production and profits. This is more than just a corporate problem. Two government activities make a potentially explosive mixture: an energy policy that sets actual fuel prices, and short-term policies to stimulate economic activity and control inflation. The FGV-IBRE’s The Brazilan Economy Edition of March 2013 weighs the options.

The unemployment rate in February 2013 was estimated at 5.6% for the group of six metropolitan areas surveyed. The rate was considered statistically stable in relation to those of January (5.4%) and of February last year (5.7%).The employed population (1.4 million persons in the group of six areas surveyed) remained stable in terms of both monthly and annual comparison. The Monthly Employment Survey is conducted in the metropolitan areas of Recife, Salvador, Belo Horizonte, Rio de Janeiro, São Paulo and Porto Alegre (IBGE).

Brazil’s current account deficit was the widest ever for the month of February, as exports fell while imports rose. The deficit in the current account, the broadest measure of trade in goods and services, widened in February to $6.6 billion from $1.7 billion a year earlier, the central bank said in a report distributed today in Brasilia. Analysts forecast a gap of $6 billion, according to the median estimate from 18 economists surveyed by Bloomberg. Foreign direct investment in February rose to $3.8 billion from $3.7 billion in January, the central bank said. Economists forecast investments of $3.5 billion, according to the median estimate of 14 analysts surveyed by Bloomberg.

Brazil’s Institute for Applied Economic Research (IPEA) said the country’s 0.6 percent growth rate in the last quarter of 2012 was the highest of the last six quarters, indicating the worst was over. The IPEA also said this “cyclical recovery” of the Brazilian economy was different in key ways from previous recoveries. In order to boost growth, the IPEA stressed that investments, which fell 4 percent in 2012, should be increased. According to the institution, that process has already begun, with investments starting to rise again in the last quarter of 2012. However, the government should find more ways to spur investment, so that the country’s economic growth does not depend mainly on public and consumer spending (Xinhua).

BUSINESS

Brazil remains the leading destination for empty containers from pesticide products. Currently, the National Institute for Processing Empty Containers (inpEV), an NGO responsible for disposal of the material, collects 94% of the total amount discarded. In the last 13 years, more than 246,000 tons of containers have been recycled. In 2012 alone, 37,379 tons were processed, representing an increase of 9% compared to 2011. In 2013, 40,000 tons of empty containers are expected to be processed (Portal Brasil).

EON, Germany’s biggest utility, plans to buy as much as 1.56 billion reais ($776 million) in shares of MPX Energia SA from billionaire Eike Batista making it the largest shareholder in the Brazilian company (Bloomberg).

State-controlled Eletrobras, Brazil’s largest power utility holding company, posted an unexpected net loss of 6.88 billion reais ($3.42 billion) for last year compared to a profit of 3.73 billion in 2011 (Reuters).

 

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AGRI ETC.

In 2012, 31.118 million cattle head were slaughtered, accounting for an increase of 8.0% in relation to 2011 and a new record in the time series of cattle slaughter per year. The national and international price reduction and the rise in the exports of meat contributed to the increased supply of the product. In the cumulative index of 2012, 35.980 million pigs and hogs were slaughtered, a growth of 3.2% in relation to 2011. On the other hand, chicken slaughter, accounting for 5.238 billion animals, represented a 0.9% reduction over the volume registered in 2011 (IBGE).

Brazilian sugar-cane producers probably won’t start construction on new sugar and ethanol mills until the government revises its pricing policy for gasoline, according to the former head of the sugar-cane association Unica. Ethanol producers have little control over the price consumers will pay for the renewable fuel at the pump because it competes with gasoline, the price of which is set by state- controlled oil company Petrobras, said Marcos Jank, who presided over the trade group Uniao da Industria de Cana-de- Acucar from 2007 to 2012. Some ethanol producers are selling the fuel at a loss, he said in an interview today. Cane processors may invest as much as $8.5 billion expanding existing plants through 2020 and won’t undertake any new projects (Bloomberg).

AVIATION

Embraer Executive Jets set three speed records for the light weight class C-1.f Group III (13,225 to 19,842 pounds), when a Phenom 300 flew from the Company’s headquarters at Melbourne International Airport (MLB) in Melbourne, FL, to Daugherty Field (LGB) in Long Beach, CA, with only one fuel stop (Embraer).

As a consequence of the approval by the U.S. Bankruptcy Court of the agreement between American Airlines and Republic Airways Holdings Inc., under which Republic will operate the EMBRAER 175 for American Airlines, the Purchase Agreement between Embraer and Republic Airlines – announced on January 24 – for up to 94 E175 jets (47 firm orders and options for an additional 47 aircraft) is now effective and will be included in Embraer’s first-quarter backlog. The new aircraft will be operated by Republic under the American Eagle brand in American Airlines’ regional network (Embraer).

Gol Linhas Aereas Inteligentes SA is cutting back flights to return to profitability, the Brazilian airline said as it reported a steep quarterly loss, Reuters reported.

BANKING & FINANCE

Disbursements from the Brazilian Development Bank (BNDES) reached R$ 21.2 billion in the first two months of 2013, an increase of 39% if compared to the same period last year. The main highlights were the increase in releases for machinery and equipment, which indicated that investment in industry has resumed, and the large disbursement from the BNDES to micro, small and medium-sized companies. Up 112% (R$ 6.9 billion disbursed), industry led the growth of the BNDES releases in January/February. The high was in all industrial segments, among them transport equipment, metallurgy, chemical and petrochemical industries. Read on at BNDES.

BM&FBOVESPA has won the “IR Magazine Awards” award for Best Investor Relations (IR) by a Latin American Company in the US Market. The “IR Magazine Awards – US 2013” was the 18th edition of what is one of the most prestigious international awards for companies and professionals. It seeks to recognize the outstanding in the investor relations area.

Ratings agency Fitch warned Brazil that weak economic growth and looser budget policies could delay any upgrades of the country’s sovereign credit rating. Fitch rates Brazil BBB with a stable outlook (Reuters).

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OIL & GAS

The Petrobras Board of Directors is calling Ordinary and Extraordinary Shareholders’ Meetings to be held on April 29, 2013, at 03:00 pm, in the auditorium of their Headquarters at Avenida República do Chile 65, 1st floor, city of Rio de Janeiro (RJ), to discuss the following matters.

Petrobras has launched an auction to sell its interest in Nigerian oil fields, in a sale that may fetch up to $5 billion, as the company seeks to raise cash and embarks on a capital spending plan (Reuters).

Units of Royal Dutch Shell Plc, Repsol SA and OGX Petroleo e Gas SA were given approval by Brazil to bid in an auction of oil rights in May, the country’s first since 2008. China’s Sinopec is a minority investor in the Repsol unit that won approval. A unit of Brazil’s Queiroz Galvao construction infrastructure and energy group also won approval (Reuters).

SBM Offshore and its partners have won a $3.5 billion contract from Petrobras to build two oil platforms.

REAL ESTATE

Homebuilder PDG Realty SA posted a fourth-quarter net loss of 1.787 billion reais ($886 million), saying it has nearly halted new construction while new executives scour its books to account for cost overruns and delivery delays. After tripling the size of its operations in three years to become Brazil’s biggest homebuilder in 2011, PDG has scaled back sharply as it struggled to stay within its budgets and timetables (Reuters).

Brazil Regional News

In Brazil on March 28, 2013 at 8:26 pm

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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!

TRAVEL

The Global Business Travel Association (“GBTA”) has released its latest report on Brazil. Strengthening domestic and global economies will place Brazil on a strong growth path in 2013. Brazilian total business travel spending is expected to grow 14.3% in 2013 to $34.5 billion, while domestic business travel spending has grown 8.3% a year over the last 12 years, and is forecast to grow 12.9% to $27 billion in 2013. International outbound travel spending is on target to expand by 20.2% in 2013, reaching $7.1 billion and demand for hotel rooms and air travel has been strengthening from both domestic and international outbound travelers; however there is an increasingly large gap in supply. Brazil currently ranks 8th in the business travel global rankings, and is on track to surpass Italy, France and the UK over the next two years (full report).

A new rule proposed by Anac (National Agency of Civil Aviation) orders air companies that lose a passenger’s luggage will have to pay promptly a R$301 (US$ 150) expense allowance. The measure, approved by the board of directors of Anac two day ago, will take effect this year. The project also calls for a reduction from 30 to seven days in the period airlines have to find the lost luggage. If it isn’t found, the company will have two weeks to compensate the passenger. Today, the maximum period is 30 days (Folha).

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.

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PROJECT OF THE WEEK

Render of a bridge for Rio’s new metro Line 4, linking Ipanema to Barra da Tijuca.

RIO

Rio de Janeiro mayor Eduardo Paes has confirmed the closure of Rio’s 2016 Olympic track and field stadium due to structural problems. The announcement follows an assessment by an unnamed private construction company, which said the Engenhao Stadium posed a safety risk due to “cracks” and “movement” in the roof’s support structure, according to local media. Speaking during a press conference on Tuesday night, Paes said the stadium would be closed for an “indefinite period” (Xinhua).

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SAO PAULO

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Politics & Government News

In Brazil on March 22, 2013 at 11:54 am

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POLITICS

Businessmen rate Minas as the country’s best-managed state. The state spends over 8% of its budget on public investment, down from 13.2% before the world financial crisis in 2008 but up from 5.1% in 2003. Poverty has fallen faster than in Brazil as a whole. Minas has the best-performing schools and comes fourth in health care. Its performance-related pay system for state employees, which rewards teams rather than individuals, is held up as a model by the World Bank. Now the state’s former governor, Aécio Neves, may run for President. The Economist analyses his chances.

President Dilma Rousseff’s government meanwhile scored a record high approval rating of 63 percent, suggesting Brazilians agree with the way she is handling the country’s sluggish economy. The survey conducted by polling firm Ibope said it was not only Rousseff’s highest approval rating so far, but the highest ever for a Brazilian president during his or her first term. Rousseff is in the third year of her four-year tenure. Rousseff’s popular predecessor, Luiz Inacio Lula da Silva, had only a 39 percent approval rating in the same period of his first term (Xinhua).

President Dilma Rousseff announced a national plan to improve consumer protection. On World Consumer Rights Day, Rousseff stressed the plan’s importance, saying it would constitute a state policy when fully implemented. The National Consumption and Citizenship Plan, or Plandec, comprises three basic measures: more transparency, especially for online purchases and banking services; a greater emphasis on reconciliation between parties in conflict; and more effective fines or sanctions to punish offenders (Xinhua).

According to the Brazilian constitution, public servants may not earn above R$28,059.29 monthly – the wage of a Supreme Court Justice. Yet since the Lei de Acesso à Informação (Freedom of Information Law) was passed last May, it has emerged that many public servants earn salaries that far exceed that ceiling (The Rio Times).

President Dilma Rousseff swore in three new ministers in the capital city of Brasilia: PMDB party congressman Antonio Andrade as agriculture minister, PDT party general secretary Manoel Dias as labor minister, and former Strategic Affairs Secretary Wellington Moreira Franco as the civil aviation minister. The ministers replace Mendes Ribeiro, Carlos Daudt Brizol and Wagner Bittencourt, respectively. Bittencourt will take up the post of vice president of state development bank BNDES (Bloomberg).

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INTERNATIONAL

The governments of Brazil and Mexico have decided to resume the Agreement for Exemption of Short-Stay Visas in Ordinary Passports, which was concluded on November 23, 2000. The agreement allows citizens of one country to enter the territory of the other without a visa for periods of up to 90 days from the date of entry. This period is renewable, provided that the total stay does not exceed 180 days in a one-year period. The implementation of the agreement had been suspended on September 8, 2005, with effect from October 23 of the same year (Portal Brasil).

Portuguese engineers and architects will be able to have their diploma recognized almost automatically in Brazil. The change, at first, will be restricted to a group of federal universities – it will be up to public institutions to recognize the foreign undergraduate degree. It’s a first step that could have repercussions in other courses (Folha).

The United States and Brazil are moving toward closer cooperation on fighting tax evasion, with Brazil recently ratifying a formal tax information exchange agreement between the two countries (Reuters).

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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!

DEFENSE & SECURITY

Embraer Aircraft Holding, Inc. signed a 10-year lease on a 40,000-square-foot hangar at Jacksonville Airport in which the A-29 Super Tucano aircraft for the U.S. Air Force Light Air Support (LAS) program will be assembled.  Preparation of the facility is currently underway. The LAS aircraft are urgently needed to support the successful withdrawal of U.S. troops from Afghanistan (Embraer).

OPINION

Be welcome to check out our latest article, a reaction to a recent article in The Economist: Can Brazil Conquer Africa’s Booming Markets?

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SOCIAL

In partnership with various agencies, the Secretariat for Human Rights of the Presidency of the Republic (SDH/PR) has established the forms in which people adopted by foreigners can access data regarding their origin. A booklet is to be produced with guidelines on the subject (Portal Brasil).

Business & Economy News

In Brazil on March 22, 2013 at 11:53 am

– NEW EDITION –

BRAZIL WEEKLY’S BRAZIL’S NEXT 10 HOTTEST BUSINESS CITIES

Check out our revised, 2013, edition! No doubt the biggest and most important business centres of Brazil are the megacities of Sao Paulo and Rio de Janeiro and do not forget most other state capitals like Belo Horizonte, Salvador da Bahia, Recife, Fortaleza, Curitiba and Porto Alegre. But Brazil is big and there are plenty of other fast developing cities, not being state capitals. So for a minute forget Sao Paulo, Rio and those other 2014 World Cup host cities and check out Brazil Weekly’s Brazil’s Next 10 Hottest Business Cities 2013.

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…

ECONOMY

The year 2012 ended with puny annual GDP growth of only 0.9%. The rate for the final quarter was 0.6%, exactly in line with our forecast. Unlike GDP, which behaved exactly as predicted, indicators released since then have surprised analysts—in some cases positively, in others not so much. FGV-IBRE analyses what could go well and what could go wrong this year. In summary, activity in the first quarter will be good. Unfortunately, there are still doubts about whether it can be sustained for the entire year. IBRE polls indicate that, other than manufacturing, a number of sectors of the economy are still quite cautious. Among relevant short-term issues is one particularly crucial question: why is business confidence rising so slowly, with occasional bumps, while real interest rates are still very low in historical terms and the government has been taking several steps to stimulate consumption and investment?

Investment in Brazilian industry is likely to contract 9.5 percent this year, the São Paulo State Federation of Industrialists said, throwing cold water on hopes that rebounding manufacturers could bolster a fragile economic recovery. FIESP, as Brazil’s most influential industry lobby group is known, based its estimates on a survey of more than 1,200 companies reporting investment intentions for 2013. Less spending on machinery and equipment could hamper economic activity in the short term and contribute to chronic inflationary pressures, researchers said, as supply falls farther short of robust consumer demand in Brazil’s economy (Reuters).

In January 2013, the total of salaried employed persons in the industry remained stable (0.0%) in relation to December 2013 (in the seasonally adjusted series), after registering 0.1% in November and -0.3% in December. With those results, the index of the quarterly moving average posted a negative change of 0.1% in the quarter ended in January against the previous month’s level, after having held steady for five months in a row. The industrial employment contracted 1.1% in the monthly index of January 2013 – the 16th consecutive negative result in this kind of comparison, and kept the falling pace next to the one seen in the last quarter of 2012 (-1.2%) – all comparisons against the same period a year ago. The annual rate (index accumulated in the last 12 months), recording a -1.4% drop in January 2013, kept the downward trend begun in February 2011 (3.9%) (IBGE).

In the preview of March 2013, the Industry Confidence Index (ICI) signals a decrease of 2.3% compared to the outcome for February, going to 104.2 points, converging to its historical average. The General Price Index – Market (IGP-M) recorded a 0.24% change in the second 10-day period of March. For the same period of February, the index rate was 0.34%. The second 10-day period of IGP-M in March corresponds to February 21st-March 10th (IBRE).

BUSINESS

Not even Andre Esteves can save Eike Batista’s crumbling empire, according to bond traders. OGX Petroleo e Gas Participacoes SA’s $2.6 billion of bonds due 2018 fell 12.02 cents to an unprecedented 81.07 cents on the dollar in the past two weeks, wiping out a record gain on March 7 when Batista announced Esteves’s Grupo BTG Pactual would help manage the finances of his six publicly traded companies and people with knowledge of the deal said BTG also offered a $1 billion credit line (Bloomberg).

Batista is getting some relief from his logistics company. LLX Logistica SA’s 19 percent rally in the past month was the biggest among major Brazilian stocks and global peers after Batista focused the company on being an oil services port by luring Petrobras and Waertsilae (Bloomberg).

Brazil’s requirement that wind- turbine suppliers buy locally is increasing costs for providers from Vestas Wind Systems A/S to Suzlon Energy Ltd., who say the rule will probably drive away some companies. Turbine makers must buy or make all of their main parts domestically for their customers to be eligible for cheap loans from state bank BNDES. To comply with regulations announced in December, some companies will have to build factories that may cost more than $100 million (Bloomberg).

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AGRI ETC.

As much as a fifth of the sugar- cane mills in Brazil’s center south, the world’s biggest producing region, may close or get sold this year because they are selling ethanol at a loss, according to a member of the country’s lower house. The government’s plan to raise the blend of ethanol in gasoline to 25 percent from 20 percent in May won’t be enough to make mills profitable and an anticipated tax cut for the renewable fuel will probably reduce prices at the pump (Bloomberg).

But Raizen Energia SA expects to increase production of ethanol and sugar by 10 percent for the season that starts in April. Raizen, a joint venture between Brazil’s largest sugar producer, Cosan SA, and Royal Dutch Shell, should see its sugar output increase by 10 percent to 4.4 million tonnes while ethanol production should rise by the same amount to 2.2 billion liters, thanks to an expected record cane harvest in Brazil (Reuters).

Farmers in Mato Grosso have harvested more than 85% of the soybeans in the state and in municipalities such as Lucas do Rio Verde in central Mato Grosso; the 2012/13 soybean harvest is complete. According to the president of the Rural Society, Julio Simpak, the soybean yields obtained in the municipality have been disappointing. At the start of the growing season, soybean yields in the municipality were expected to be in the range of 58 sacks per hectare (3,480 kg/ha or 50 bu/ac), but recent assessments put the average yield at just 48 sacks per hectare (2,880 kg/ha or 41.7 bu/ac) (Soybean & Corn Advisor).

China’s leading soybean trader, the Sunrise Group, will cancel almost 2 million tonnes of Brazilian soybean cargoes because shipments have been delayed by severe port congestion (Reuters).

PORTS

The number of vessels waiting in the harbor at the Port of Paranagua in southern Brazil surpassed 100 this week and another 22 vessels are expected to arrive at the port within 48 hours (Soybean & Corn Advisor).

Brazilian dock workers called off a national port strike set for next week and said they are willing to relax rules that allow unions to control labor assignments at terminals, following talks with the government over reform of the country’s ports (Reuters).

AUTOMOTIVE

Volkswagen AG expects sales growth in Brazil to slow this year. Sales of cars and light trucks are likely to expand around 2 percent in 2013, down from 6 percent growth last year. That would be the weakest sales growth in a decade for Brazilian passenger vehicles, highlighting a challenging moment for the world’s fourth-largest auto market and a key element of VW’s global growth plan (Reuters).

AVIATION

Newly-merged LATAM Airlines Group SA’s net profit dived 96.6 percent in 2012 to $10.96 million, hammered by the cost of Chilean airline LAN’s takeover of Brazil’s TAM and higher taxes in Chile. Latin America’s largest carrier said it saw a “significant improvement” in major market Brazil this year, however it was still slashing its planned capital expenditures for the 2013 to 2015 fleet by $1.2 billion (Reuters).

BANKING & FINANCE

Moody’s Investors Service lowered the long-term issuer ratings of Brazilian state banks BNDES and Caixa Econômica Federal, citing their eroding capital position after years of rapid credit expansion (Reuters).

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MINING & STEEL

Vale informs that it has lifted force majeure (FM) on a number of its coal sales contracts in Mozambique. FM was declared on February 15, 2013 following heavy rainfall since early February in Tete, Mozambique, creating serious challenges to the Linha do Sena railway, thus impacting shipments of metallurgical coal at approximately 500,000 metric tons (Vale).

Vale said the cost to develop its suspended potash project in Argentina had almost doubled to near $11 billion amid a dispute with the nation. Inflation and exchange rate fluctuations led the cost of the Rio Colorado project in Mendoza province to surge from the budgeted $5.9 billion (Bloomberg).

Steel distribution companies in Brazil sold 317,900 tonnes of flat products in February, a drop of 13.8 percent from the prior month, industry group Sindisider said. February sales were 7.5 percent below the amount sold a year earlier. Distributors bought 8.7 percent less steel in February from the previous month. Inventory rose 2.4 percent from September to the equivalent of 3.1 months of sales, or 970,400 tonnes. Analysts at several banks said recently that demand for both long and flat steel products, including coated and rolled steel, remains weak (Reuters).

OIL & GAS

Petrobras and its partners in Block BM-S-11, BG E&P Brasil and Petrogal Brasil, announce negotiations are under way for the contracting with consortium QGOG/SBM (Queiroz Galvão Óleo e Gás S.A./ SBM Offshore) of two FPSOs for production development at Lula Alto and Lula Central, in Lula Field, in the pre-salt cluster of Santos Basin. Each FPSO will be connected to 18 wells, 10 of which are production wells and 8 injectors. Production is expected to begin in January 2016 at Lula Alto and in March 2016 at Lula Central (Petrobras).

Petrobras is raising less than forecast through asset sales as it seeks cash for a $237 billion investment plan aimed at refocusing on exploration at home.The disappointing results reflect a glut of available properties in the Gulf of Mexico, where competitors are also trying to unload deep-water blocks, and the fact that the potential value of the company’s Brazilian holdings are being devalued by that government’s decision to hold its first oil auction since 2008 later this year (Bloomberg).

Brazil Regional News

In Brazil on March 22, 2013 at 11:52 am

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BEST ENGLISH BOOKS ON BRAZIL

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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!

TRAVEL

The Global Business Travel Association (“GBTA”) has released its latest report on Brazil. Strengthening domestic and global economies will place Brazil on a strong growth path in 2013. Brazilian total business travel spending is expected to grow 14.3% in 2013 to $34.5 billion, while domestic business travel spending has grown 8.3% a year over the last 12 years, and is forecast to grow 12.9% to $27 billion in 2013. International outbound travel spending is on target to expand by 20.2% in 2013, reaching $7.1 billion and demand for hotel rooms and air travel has been strengthening from both domestic and international outbound travelers; however there is an increasingly large gap in supply. Brazil currently ranks 8th in the business travel global rankings, and is on track to surpass Italy, France and the UK over the next two years (full report).

FIFA WORLD CUP 2014

FIFA general secretary, Jérôme Valcke, said that “all World Cup stadiums” must be ready by December. “It is imperative for the World Cup, FIFA and Brazil,” said the leader, who in previous visits to the country admitted that Itaquerão, the chosen stadium for the World Cup opening, would only be ready in February 2014 (Folha).

According to invoices obtained by Folha, the business group responsible for the 2014 World Cup VIP packages performed fraudulent overpricing in the housing of the Brazilian team during a friendly match paid for with public funds.

A recent survey of about 20 leading local corporations and travel agencies, suggests Brazil’s airports and roads will actually see substantially less traffic during the World Cup than on normal business days (Reuters).

AMAZON

Managed by the Brazilian Development Bank (BNDES), the Amazon Fund ended 2012 with 36 approved projects, totaling R$ 439.8 million. Of that amount, some R$ 134.7 million is earmarked for efforts related to sustainable production activities, R$ 154.6 million for institutional development of environmental agencies, R$ 45.8 million for environmental and land-title regularization, while R$ 104.8 million is allocated for scientific and technological development (BNDES).

Amazonian indigenous groups protesting environmental damage halted the construction of the Belo Monte hydroelectric plant. The groups asked the construction company to compensate local communities, whose land would be affected by the dam, the third largest in the world. According to Xingu Vivo, an NGO group, 150 people from indigenous groups occupied the site in Belo Monte. Norte Energia, the construction company, put the number of protesters at 60. Norte Energia has evacuated its 4,500 workers and employees from the site (Xinhua).

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.

PROJECT OF THE WEEK

Render of the Palmas Business Center, planned for Palmas, capital of Tocantins State.

NORTHEAST

Rio Bravo Investimentos, the Brazilian asset manager founded by former central bank President Gustavo Franco, is seeking to raise as much as 400 million reais ($203 million) for a fund that will invest in companies in the nation’s Northeast region. “We are hunting for middle-size companies with fast growth,” Chief Investment Officer Paulo Bilyk said. “The Northeast is where we found a number of those companies with better quality at an interesting price,” said Bilyk. Private-equity firms are targeting the region as growth there outpaces the business hubs of Sao Paulo and Rio de Janeiro. Kinea, Darby Overseas Investments Ltd., Vinci Partners Investimentos Ltda. and Graycliff Partners LP are among firms that have purchased assets in the Northeast (Bloomberg).

RIO

Macaé, located 180 km north of the city of Rio, today is a city transformed. Since the discovery of enormous oil and gas deposits in the Campos Basin in 1974, the once modest fisherman’s village of Macaé has grown by leaps and bounds, with no signs of development slowing (The Rio Times).

Oscar Niemeyer lived for 104 years and left an amazing legacy of highly admired works. The features of his designs made the architect a worldwide known artist and his works are some of the best known sites of several cities around the world. Rio de Janeiro and Niterói are some of those cities. You can tour 13 must-see works in both these cities, reference designs within the lifework of this artist. Check it out.

But there is more. Rio de Janeiro’s military strongholds are remains of a time when the city was the capital of colonial Brazil, centuries ago. These guarded forts protected the city’s treasures and preserved the history of the nation. They occupied strategic positions, where soldiers could foresee the coming of ships, friends and foes. Today, these strongholds are protected areas with a privileged view of the main natural beauties of Rio de Janeiro and Niteroi (Rio Official Guide).

SAO PAULO

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Politics & Government News

In Brazil on March 15, 2013 at 10:57 am

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POLITICS

President Dilma Rousseff announced tax relief on the basic food basket. Speaking on national television and radio on International Women’s Day, Rousseff said that all products in the basic food basket will be free of federal taxes. The president said she expects the measure to stimulate agriculture, industry and commerce and generate more jobs (Portal Brasil).

Brazil announced 20 to 80 percent tax cuts for television, broadband and mobile Internet businesses as an incentive to expand the country’s communication network. In return for the tax breaks, the companies are required to purchase local materials and invest in less developed regions of Brazil. The tax cuts are expected to bring in some 18 billion reals (9.15 billion U.S. dollars) in new investment by communication companies over the next few years for network expansion (Xinhua).

President Dilma Rousseff signed into law a bill stripping oil-producing states of billions in royalty earnings to share them with non-producing regions, but a legal challenge is expected to the hotly-contested change. Rio de Janeiro, Espirito Santo and Sao Paulo states, all on the southeast coast where most of Brazil’s offshore oil is produced, have vowed to challenge the law in the supreme court, claiming the way it was passed violates the constitution (Reuters).

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INTERNATIONAL

Living in the sanctuary of Qom in Iran for six years, Rodrigo Jalloul, 27, from São Paulo, has become the first native Brazilian to be officially recognized as a Shiite cleric. Jalloul is now a hojatoleslam, the equivalent of a position below the Ayatollah in the Shiite hierarchy (Folha).

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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!

DEFENSE & SECURITY

In line with the directives of the National Defense Strategy, which determines the density of units in the Amazon region and border areas, the Brazilian Army is to create a new military command. The new command, known as the Northern Military Command (CMN), will cover an area of approximately 1.722 million square kilometers, in the states of Amapá, Maranhão and Pará (Portal Brasil).

Defense ministers of Brazil and Spain met and voiced their readiness to strengthen the two countries’ cooperation in defense. In the meeting, the two pledged to continue defense collaboration, especially in promoting the exchanges of technology and defense materials. They also discussed, among others, natural disaster prevention, military equipment purchases and cyber-security cooperation (Xinhua).

OPINION

Be welcome to check out our latest article, a reaction to a recent article in The Economist: Can Brazil Conquer Africa’s Booming Markets?

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Business & Economy News

In Brazil on March 15, 2013 at 10:56 am

– NEW EDITION –

BRAZIL WEEKLY’S BRAZIL’S NEXT 10 HOTTEST BUSINESS CITIES

Check out our revised, 2013, edition! No doubt the biggest and most important business centres of Brazil are the megacities of Sao Paulo and Rio de Janeiro and do not forget most other state capitals like Belo Horizonte, Salvador da Bahia, Recife, Fortaleza, Curitiba and Porto Alegre. But Brazil is big and there are plenty of other fast developing cities, not being state capitals. So for a minute forget Sao Paulo, Rio and those other 2014 World Cup host cities and check out Brazil Weekly’s Brazil’s Next 10 Hottest Business Cities 2013.

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…

ECONOMY

Retail trade in the country started 2013 with increase in volume of sales (0.60%) and in nominal revenue (1.3%), in comparison with the seasonally adjusted results recorded last month. Concerning sales volume, the result is positive once again after interruption of increase in December. Nominal revenue, on the other hand, now records its eighth consecutive month with increase (Full story on IBGE).

The rise of the national industrial output, between December 2012 and January 2013, in the seasonally adjusted series, result from the increase seen in nine of the 14 places surveyed. The highlights were the sharpest expansion registered by Paraná (11.3%), offseting part of the 9.2% loss accumulated in November and December. Ceará (9.3%), Rio Grande do Sul (7.1%) and Rio de Janeiro (3.1%) grew above the national average (2.5%) and Amazonas (1.9%), Minas Gerais (1.6%), São Paulo (1.6%), Santa Catarina (0.6%) and the Northeast region (0.3%) closed the set of places with positive rates. On the other hand, Goiás (-4.9%), Pará (-3.1%), Bahia (-2.1%), Pernambuco (-1.0%) and Espírito Santo (-0.5%) registered this month’s drops. More on IBGE.

After advancing 0.7% in January, the Leading Indicator of Employment (LIEmp), by the Getulio Vargas Foundation, settled in February, changing -0.3%, considering seasonally adjusted data. The movement suggests that the pace of hiring of manpower in the coming months will be moderated. The components that contributed most negatively to the fall of the LIEmp were the indicators for the Services Sector that measure companies’ satisfaction with current business situation and the ones that measure impetus for hiring of manpower in the following months. These indicators decreased 2.4% and 2.9%, respectively, compared to January (IBRE).

Read the latest World Bank report on Brazil: The Brazilian Competitiveness Cliff. A World Bank blog post by one of the authors can be found here: Despite improved prospects for 2013, the recent sharp downfall of production, investment and exports of the Brazilian manufacturing industry has signaled to policy makers the need to readdress their priorities. Some of the economic drivers from last decade have been exhausted. Going forward, old competitiveness issues will need to be tackled forcefully, particularly as the global economic recovery stays feeble, writes Otaviano Canuto.

BUSINESS

Vale SA investors stand to benefit as a decade-long court battle over $15 billion in back taxes that’s been weighing on the miner’s stock nears an end. The Supreme Court is set to rule by June on a similar case brought by Coamo Agroindustrial Cooperativa, a farming group from the southern state of Parana that’s suing tax authorities to avoid levies on profits from foreign units. A ruling in favor of the group would be in line with the legislation of most other countries, according to Peixoto & Cury Advogados, a legal firm that specializes in corporate law, including tax issues. The case is being watched as a benchmark for Brazil’s biggest exporters — from Vale to beermaker Cia. de Bebidas das Americas to steelmaker Gerdau SA (GGBR4) — who are fighting a combined $44 billion in tax claims (from Bloomberg).

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AGRI ETC.

The National Food Supply Company (CONAB) expects domestic production of grains in the 2012/13 season to reach 183.5 million tons. The projection is part of the sixth survey conducted for the current season. The volume represents an increase of 10.5% over the 166.1 million tons in the previous cycle (Portal Brasil).

Suzano Papel e Celulose SA, Brazil’s most indebted pulpmaker, will suspend investments in the region’s biggest biomass-pellet project and its Piaui pulp plant as it seeks to cut debt. The projects will be shelved until the company lowers its net debt to 2.5 times its earnings before interest, taxes, depreciation and amortization (Bloomberg).

JBS SA is opting to invest more cautiously this year as the world’s No. 1 meatpacker seeks to protect profits and scale down debt amid a challenging beef market, Chief Executive Officer Wesley Batista said (Reuters).

AVIATION

Embraer released its4th Quarter and fiscal year 2012 results. During the 4th quarter of 2012 (4Q12), Embraer delivered 23 commercial and 53 executive aircraft and ended the year with total deliveries of 106 commercial and 99 executive aircraft (77 light jets and 22 large jets). As a consequence, 2012 Revenues totaled US$ 6,177.9 million, in line with the annual Revenue guidance range of US$ 5.8 to US$ 6.2 billion (more).

Embraer S.A. has selected UTC Aerospace Systems, a unit of United Technologies Corp., to provide the electric power generation and distribution system for the second generation of E-Jets, which are planned to enter service in 2018. The company will supply the main and auxiliary electric power generators; main and secondary electric power distribution; emergency electric generation system; batteries and converters (Embraer).

Gol Linhas Aereas Inteligentes SA’s turnaround plan is faltering as the airline flies the emptiest jets in Brazil. Even after paring its schedule, Gol filled only 64.9 percent of available domestic seats in February, a peak summer travel period because of Carnival. Latam Airlines Group SA’s Tam unit, Sao Paulo-based Gol’s biggest rival in Brazil, had a load factor of 75.1 percent (Bloomberg).

Dutch and French airport operators Schiphol and Aeroports de Paris are interested in bidding together for a stake in Rio de Janeiro’s airport which has been put up for sale (Reuters).

BANKING & FINANCE

In Brazil, declining participation by local investors has foreshadowed equity losses. The proportion of trades by individuals on the Bovespa exchange dropped to a three-year low of 26.4 percent in 2010, before the benchmark index tumbled 18 percent the following year. The rate slid to 17.9 percent in 2012, the lowest level on an annual basis since 1999. The Bovespa is retreating faster than any equity gauge in the world’s 20 biggest markets in 2013 (Bloomberg).

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MINING & STEEL

Vale informed that it communicated to the Argentinean government that it is suspending the implementation of the Rio Colorado project, as in the current macroeconomic environment the economics of the project are not in line with Vale’s commitment to “discipline in capital allocation and value creation”. In case of resuming the implementation, preference will be given to the project’s current employees, the company announced.

CBMM generates more than $600 million in annual profit. It is worth at least $13 billion, based on the Moreira Salles family’s sale of a 30 percent stake to a group of Asian steelmakers for $3.9 billion in 2011. Learn all about the company and its product, niobium, at Bloomberg.

Brazil Regional News

In Brazil on March 15, 2013 at 10:55 am

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BEST ENGLISH BOOKS ON BRAZIL

Be welcome to check out Brazil Weekly’s book store in cooperation with Amazon.com! Browse the Brazil Weekly Store for highly relevant maps, books on politics, economics and history as well as travel or tourist guides and translated Brazilian literature. Click on the categories and watch our slide shows go by, packed with Brazil Weekly’s picks. You order straight with Amazon, one of the best online stores in the world. Enjoy!

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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!

FIFA WORLD CUP 2014

Foreign police will infiltrate supporters of their countries to collect data and try to avoid riots during the 2014 World Cup. They will pass on information to the Brazilian authorities, but can not perform “direct intervention in possible incidents” (Folha).

AMAZON

The president of the Logistical Planning Company in Brazil (EPL) announced that work on Tocantins River barging operation is set to start within one year (Soybean & Corn Advisor).

An enormous construction site sits just 25 kilometers south of the city of Rondonopolis, Mato Grosso along highway BR-163. When completed, it will be the largest grain processing/storage/transportation complex in Latin America. The complex is situated at the terminus of the Ferronorte Railroad, which is the only rail line in Mato Grosso. Eventually the rail line will progress northward through the heart of Mato Grosso and end at the Amazon River, which is about 2,000 kilometers north of Rondonopolis (Soybean & Corn Advisor).

ATLANTICO WEEKLY

Be welcome to visit Brazil Weekly’s sister publication Atlantico Weekly, with news about Angola, Mozambique and Cape Verde, two upcoming Portuguese speaking countries. Read the Grand Tour of Cape Verde, Atlantico Weekly’s visitor’s guide to Cape Verde’s main islands, and read our forecast Cape Verde in 2030, a realistic glimpse of the small nation’s bright future and check out Entrepreneurs of Cape Verde, a series of interviews with local entrepreneurs. But there is much more…

PROJECT OF THE WEEK

Render of one of the buildings planned for the EXPO2020, for which Sao Paulo is the lead contending host city.

RIO

The rate at which average Rio property prices have risen over the past five years is four times greater than that at which average wages have gone up, according to a report by O Globo newspaper. Industry experts say wealthy Brazilians have encouraged skyrocketing prices, which have outpaced financing options for many and exposed a widening gulf between the richest and the rest (The Rio Times).

SAO PAULO
USD 30 Billion. This is the amount that the Government of the State of São Paulo, which accounts for 33% of Brazilian GDP and 22% of Brazilian population, has available for the accomplishment of new Public-Private Partnerships. These PPP projects were presented at Mipim by Investe São Paulo, the Investment Promotion Agency of the State Government. It’s the first time the institution takes part in the international fair.

Check out what’s on at the prestigious Sala Sao Paulo!

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Politics & Government News

In Brazil on March 8, 2013 at 10:49 am

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POLITICS

Brazil’s Congress overturned a presidential veto on parts of an oil royalty bill, setting up a prolonged legal battle with producer states and prompting oil-rich Rio de Janeiro to order a suspension of payments on the state’s obligations in protest. Rio’s state government, which calculates a loss of 3.1 billion reais ($1.58 billion) this year because of the new legislation, ordered the suspension of all except legally mandated expenses like salaries to public employees and transfers to municipalities, until Brazil’s Supreme Court can rule on the royalty dispute (Reuters).

Just past the mid-point in her first term, President Dilma Rousseff faces several difficult economic and political decisions that will define the rest of her presidency. Check them out at Reuters.

The online version of the English without Borders program went live. Initially, two million individual passwords will be offered to undergraduate and graduate students enrolled in public and private universities, and to students from private institutions who have obtained at least 600 points in every edition of the National Secondary Education Examination (ENEM) since 2009 (Portal Brasil).

Brazil has the most deaths by gunshot among the 12 most populous countries in the world (36,792 deaths by gunshot in 2010; the runner-up, Mexico, had 17,561). Regarding firearm violence, Brazil is ahead of very populous countries such as China and India in relative and absolute figures. The data are in the “2013 Map of Violence,” which analyzes the 2010 data of the Ministry of Health. Brazil has an average of 19 deaths by gunshot per 100,000 residents. But many states were above 30 deaths, such as Espirito Santo, Bahia, Paraíba and Pernambuco. The average in Alagoas is more than twice that of Brazil: 55.3. Four cities had an average above 100 deaths by gunshots per 100,000 residents. Two are in Bahia, Simões Filho and Lauro de Freitas. The two others are in Paraná (Campina Grande do Sul and Guaíra). The states with the lowest levels, less than 10 per 100,000 residents, are São Paulo, Santa Catarina, Piauí and Roraima (Folha).

Unions representing Brazilian port workers announced that they will strike 36 Brazilian ports on March, 19th. The announcement was made even though the unions and the government are still in negotiations concerning workers unease about the government’s plan to privatize Brazil’s ports. A series of mini strikes were staged in mid-February to bring attention to the workers concerns, but the mini strikes were called off after the government agreed to reenter negotiations and suspend a hefty fine they levied against the unions because the government considered the mini strikes illegal (Soybean & Corn Advisor).

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INTERNATIONAL

The Environment Minister, Izabella Teixeira, signed a commitment with representatives of the United Nations Food and Agriculture Organization (FAO) and the Federation of Industries of the State of São Paulo (FIESP) to work together with Brazilian agriculture to find ways to reconcile access to ecogenetics (genetic traits related to different responses to environmental factors) in food production and technological innovation. The purpose of the meeting was to discuss biodiversity targets and the Nagoya Protocol, one of the most important environmental pacts since the Kyoto Protocol (Portal Brasil).

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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!

DEFENSE & SECURITY

The Metal Structure Fabrication Unit (UFEM), an important part of the Submarine Development Program (Prosub), was inaugurated by President Dilma Rousseff in Itaguaí (Rio de Janeiro). The delivery of the unit, the construction of which began three years ago, is the first part of the infrastructure that will enable the country to build and maintain conventional and nuclear-powered submarines in the national territory. Started by the Navy in 2008, Prosub is the result of cooperation between Brazil and France and provides for the manufacture of five submarines. Four of these will be conventional, diesel-electric powered submarines and one will be nuclear-powered, implementing entirely national technology (Portal Brasil).

The strategic planning for public security and defense during the FIFA 2014 World Cup was approved during a meeting at the headquarters of the Eastern Military Command (CML) in Rio. The document covers the rules that are to guide sports competitions, including with regard to cyber defense and counter-terrorism, for the Confederations Cup, which takes place in June 2013, and the World Cup, which is to be held next year. As of now, there are specific guidelines applicable to these major events, focusing primarily on integration between the different ministries and sectors of federal, state and municipal government (Portal Brasil).

OPINION

Be welcome to check out our latest article, a reaction to a recent article in The Economist: Can Brazil Conquer Africa’s Booming Markets?

SCIENCE & EDUCATION

Research and development in information and communication technologies (ICTs) in the country is to receive an investment of R$ 300 million over the next five years. The initiative is part of an agreement between the Federal Government, through the Ministry of Science, Technology and Innovation (MCTI) and the Ministry of Education (MEC), with Intel Brazil. The amount will be applied by Intel to invest in and fund research in Brazilian universities. At the same time, the Federal Government will provide scholarships to students and researchers through an official notice to be released later this semester. The research will focus on the education, energy and transportation sectors, with the measure expected to involve 300 researchers, including collaborators, university researchers and scholarship students (Portal Brasil).